Vision Health Care Inc · 10KSB · For 12/31/96

Filed On 3/31/97   ·   SEC File 333-03530   ·   Accession Number 897069-97-158

Annual Report -- Small Business   ·   Form 10-KSB
Filing Table of Contents

Document/Exhibit                   Description                      Pages   Size 

 1: 10KSB       Vision Health Care's Form 10-Ksb                      39±   195K 
 2: EX-2        Ex. 2.2 - 1st Amendment to Asset Purchase Agmt         3±    16K 
 3: EX-2        Ex. 2.3 - Put & Security Agreement                    15±    69K 
 4: EX-2        Ex. 2.4 - Promissory Note                              7±    33K 
 5: EX-2        Ex. 2.5 - Assignment of Deposit Account                2±    12K 
 6: EX-2        Ex. 2.6 - Assignment Of                                2±    12K 
 7: EX-16       Letter on Change in Certifying Accountant              1      6K 
 8: EX-27       Financial Data Schedule                                1      9K 

10KSB   ·   Vision Health Care's Form 10-Ksb
Document Table of Contents

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 U.S. SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549

 FORM 10-KSB

[X]   ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF
 THE SECURITIES EXCHANGE ACT OF 1934
 For the Fiscal Year Ended December 31, 1996

 [_]   TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934
 For the Fiscal Year Ended December 31, 1996

Commission File No. 333-3530

VISION HEALTH CARE, INC.
 (Name of small business issuer as specified in its charter)

Florida                                       59-3356439
(State or other jurisdiction of                    (I.R.S. Employer       
incorporation or organization)                    Identification No.)     

 1511 N. Westshore Boulevard, Suite 1000
                            Tampa, Florida                   33607
                 (Address of principal executive offices)     (zip code)

(813) 289-2020
(Issuer's telephone number, including area code)

 Securities registered under Section 12(b) of the Act:  NONE

 Securities registered under Section 12(g) of the Act:  NONE

Title of Each Class:  NONE

   Check whether the issuer (1) 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 [_]

   Check if no disclosure of delinquent filers pursuant to Item 405 of
Regulation S-B is contained herein, and no disclosure will be contained,  
to the best of registrant's knowledge, in definitive proxy or information 
statements incorporated by reference in Part III of this Form 10-KSB or   
any amendment to this Form 10-KSB.  [X]                                   

  Issuer's revenues for the fiscal year ended December 31, 1996 were
$14,514.                                                                  

     As of March 26, 1997, there were outstanding 422,373 shares of Common
Stock, $0.01 par value per share.  The aggregate market value of the      
voting stock held as of March 26, 1997 by non-affiliates of the registrant
computed based on the price at which the stock was sold on December 31,   
1996 (the date of the last known transaction) was $4,223,730.             

DOCUMENTS INCORPORATED BY REFERENCE:

Documents                                              Form 10-K Reference

Transitional Small Business Disclosure Format (check one):

Yes  [_]     No [X] 

PART I

ITEM 1.   DESCRIPTION OF BUSINESS                                         

General                                                                   

Vision Health Care, Inc. (the "Registrant" or the "Company") was
formed as a Florida corporation in May 1995 for the purpose of purchasing 
substantially all the operating assets of Vision Care, Inc., a non-stock, 
not-for-profit Florida corporation ("VCI").  VCI was formed in 1968 to    
engage in the management, administration and provision of prepaid vision  
care services in Florida.  At the time VCI was founded in 1968, Florida   
law required that entities licensed to offer prepaid vision care service  
plans be not-for-profit corporations.  Florida law was amended in 1993 to 
allow for-profit enterprises to be licensed to offer prepaid vision care  
service plans.                                                            

 In the face of cost-cutting challenges faced by the entire health
care industry, a group of officers and directors of VCI determined that   
VCI's business could be best furthered through a for-profit enterprise.   
Accordingly, those officers and directors organized the Company for the   
purpose of purchasing substantially all of VCI's assets at a price equal  
to their market value and continuing VCI's prepaid vision care service    
plan business.                                                            

   In March 1996, the Company signed an agreement with VCI (the "Asset
Purchase Agreement")  to acquire substantially all of VCI's assets (the   
"Acquisition").  The Acquisition was consummated and became effective as  
of January 1, 1997.  Following is a description of the Company's business,
including VCI's business as it was conducted prior to the Acquisition.    

The Plans                                                                 

    As a reaction to the continued rapid increases in the cost of health
care, including vision care, employers and insurers have sought means to  
reduce the cost of direct fee-for-service reimbursement plans.  In        
particular, health maintenance organizations ("HMOs"), preferred provider 
organizations ("PPOs") and other third party health organizations have    
been developed to offer a broad range of health care services, including  
vision care services, based on capitated fees for membership.  VCI's      
prepaid vision care service plans, which offer specified services and     
products at pre-determined prices (the "Plans"), historically have been   
offered under the name "VSP" via a license from Vision Service Plan,      
which operates directly or through license arrangements in other states   
(see "VSP License Agreement" below), or under VCI's internally developed  
program targeted at HMOs and PPOs known as Primary Plus.  The Plans       
constitute a large portion of the assets purchased by the Company from VCI
pursuant to the terms of the Asset Purchase Agreement.                    

     The Company does not anticipate making any significant changes to the
way VCI managed, administered and provided its products and services.     
However, the Company does intend to place more emphasis on the cost-      
effective access to health care, build on VCI's reputation to deliver     
vision health care services efficiently and effectively, and expand       
services.  Management believes that the ability to do that is             
significantly enhanced by a for-profit corporate structure which provides 
the corporation with flexibility that a not-for-profit entity does not    
have, including, among other things, the ability to raise capital through 
stock offerings.                                                          

    The Company contracts with public and private employers, HMOs, PPOs,
health insurance carriers, self-insured corporations, unions and other    
associations (collectively, the "Sponsors") to provide prepaid group      
managed vision care services to members, clients or employees of the      
Sponsors who choose to participate in a Plan (the "Participants").  The   
Sponsors provide access to a large number of potential Participants       
thereby enabling the Company to reach a greater number of persons         
without the economic burden of marketing directly to the public.  As of   
December 31, 1996, VCI had contracts with 503 Sponsors.                   

     To the extent necessary, the Company develops a Plan for each Sponsor
that is tailored to meet the needs of the particular Sponsor and its      
members, employees or clients.  Then, in exchange for fixed payments made 
by the respective Sponsors for each enrolled Participant or by the        
enrolled Participants themselves, Participants obtain eye health          
examinations, corrective lenses and frames through the Company's network  
of more than 1,100 Providers for no additional payment, unless there is a 
deductible or a required co-payment.  Participants may select glasses and 
other vision products covered by the Plan, or choose from a wide variety  
of upgraded frames and lenses at an additional cost.  Upgraded items      
include, among other things, designer frames, designer sunglasses, tints, 
ultra-violet filters, anti-reflective coatings, specialty lenses, sports  
and occupational eyewear, photochromatic lenses and polycarbonate lenses. 
Complete contact lens services, including testing, fitting and servicing, 
as well as post-cataract and pediatric eyecare services are also          
available.                                                                

 Management determines an appropriate premium for a Sponsor's Plan
based upon a number of factors, including the total number of Participants
in the Plan, the services to be provided to Plan Participants and the     
historical use of the Plan's services by similar Participants.  The exact 
premium amount is then negotiated by management and the Sponsor at the    
time the Company enters into an agreement with the Sponsor.  The amount of
the premium is included in the agreement between the Sponsor and the      
Company and generally cannot be adjusted until the expiration of the      
current term of such agreement.  The term of the agreement generally      
ranges between one and two years.  Moreover, an agreement typically is not
terminable by either the Sponsor or the Company (although the Company may 
terminate the agreement for the Sponsor's failure to remit premiums)      
 unless the terminating party provides the non-terminating party with notice
of cancellation ranging from 30 to 180 days prior to the expiration of the
term of the agreement.  Historically, approximately 95% of the Sponsors   
renewed their contracts with VCI.                                         

     Sponsors contract for Plans because they are a relatively inexpensive
way of providing an additional health care benefit to members, clients,   
 employees and other beneficiaries.  In addition to tailoring a Plan to meet
the needs of a particular Sponsor and its members, employees or clients,  
the Company also prepares all Plan literature and claim forms for Sponsors
and their Participants; recruits Providers to provide eyecare services to 
Participants; provides data processing services for billing accounts, and 
renders payments to Providers and other vendors in connection with eyecare
services rendered to Participants; monitors utilization of services by    
Participants; and provides quality control procedures relating to         
services.  The Company believes that Sponsors typically offer their       
members, clients or employees participation in the Plans as a health care 
option or as an enhancement to the basic benefits offered to such members,
clients or employees.                                                     

The Company believes there are several features of the Plans in 
addition to the advantages discussed above that make choosing a Plan a    
smart decision for Sponsors.  First, the Plans are convenient.  The       
Company provides a state-wide panel of Providers from which a Participant 
can choose in order to get the maximum benefit from a Plan. The Company   
uses a pre-certified benefit form which allows a Participant utilizing the
services of panel Providers to receive covered services without making any
payment (unless the particular Plan requires a deductible or co-payment)  
or completing any claims paperwork.  In addition to convenience, the Plans
provide quality and cost control.  The Company maintains quality control  
standards for examinations and lens fabrication and encourages its panel  
Providers to order high quality frames.  Quality control is also enhanced 
by committees that review claims and resolve complaints.                  

     The Company also receives revenues through its administrative service
programs for managing Sponsors' self-funded plans.  In exchange for       
processing claims, providing data processing for billing accounts, and    
performing other services for those Sponsors, the Company receives a cost 
reimbursement and an administrative fee.                                  

In short, the Company believes that it has acquired from VCI an 
effective structure for providing vision care products and services to    
Sponsors and Participants.  Accordingly, the Company anticipates operating
its business in much the same manner that VCI operated its business for   
more than 28 years.                                                       

VSP License Agreement                                                     

    Substantially all of VCI's revenues were derived from Plans marketed
under the service marks "Vision Service Plan", or "VSP," as the result of 
a service mark licensing agreement with Vision Service Plan, the nation's 
largest provider of prepaid vision service plans.  Vision Service Plan is 
a non-profit PPO that has been providing vision care benefits for more    
than 40 years and was one of the first PPOs to focus exclusively on group 
vision care, designing and administering its first vision benefit plan in 
1954.  Vision Service Plan has expanded to become the largest vision      
network in the country, with more than 23,000 providers.  Vision Service  
Plan offers vision care service plans directly in 47 states and the       
District of Columbia, and indirectly in the remaining 3 states (including 
Florida) under service mark licensing agreements with other providers of  
prepaid vision care service plans.                                        

In 1988, VCI and Vision Service Plan entered into a service mark
license and reciprocal service agreement (the "License Agreement"), giving
VCI the exclusive right in Florida to use the federally registered and    
common law service marks "VSP" and "Vision Service Plan" in exchange for  
license fees equal to $2,000 per year.  The License Agreement (which was  
assigned to the Company in the Acquisition) gives the Company the         
advantages of being associated with the largest vision care network in the
U.S. while maintaining the advantages of local control over the quality of
vision care services.                                                     

 Under the License Agreement, the Company also provides reciprocal
services through its Providers to participants in other VSP plans who     
happen to reside in Florida but whose sponsors are based outside the      
state.  These sponsors have contracted with another VSP entity, whether   
Vision Service Plan or one of its other licensees, for prepaid vision care
services for their covered participants.  Likewise, under the reciprocal  
arrangements with Vision Service Plan, Participants who reside outside    
Florida but whose Florida-based Sponsors have contracted with the Company 
for Plan coverage utilize the services of VSP provider networks in other  
states.                                                                   

  Revenues from VCI Plans offered under the VSP name, including both
prepaid and administrative service programs (net of claim costs),         
accounted for approximately 83.6%, 88.4% and 91.8% of VCI's revenues in   
1996, 1995 and 1994, respectively.  Additionally, revenues from reciprocal
business for services provided by VSP Providers to Florida residents      
participating in non-VCI plans offered by Vision Service Plan or its      
licensees in other states accounted for approximately 1.3%, 1.5% and 3.1% 
of VCI's revenues (net of claim costs) in 1996, 1995 and 1994,            
respectively.  The Company estimates that as of December 31, 1996, there  
were approximately 31,500 Participants residing out-of-state who were     
covered by VSP reciprocal arrangements under VCI Plans.                   

  Prior to the Acquisition, Vision Service Plan notified VCI that it
intends to terminate the License Agreement effective December 31, 1997.   
While the reason for the notification was not disclosed by Vision Service 
Plan, VCI advised the Company that it believes Vision Service Plan is     
considering offering vision care service plans directly in Florida.  The  
Company, through authorized representatives, has conducted several        
negotiation sessions with certain officers and directors of Vision Service
Plan in an attempt either to extend the License Agreement or to establish 
a transition period during which Vision Service Plan would forebear from  
actively marketing and selling vision care service plans directly in      
Florida under the service marks "VSP" and/or "Vision Service Plan" to     
avoid product confusion in the relevant market among patients and         
Providers.  An agreement in principle for such a transition period has    
been reached and has been approved by the Board of Directors of both      
Vision Service Plan and the Company, subject to review and preparation of 
a formal document by the attorneys for Vision Service Plan and the        
Company.  The agreement in principle provides for an 18-month transition  
period at the conclusion of which Vision Service Plan will begin selling  
its vision care service plans directly in Florida under the service marks 
historically used by VCI and the Company.  During and at the conclusion of
the anticipated transition period, the Company believes that it will be   
able to (1) maintain many of its Sponsors, Participants and Providers by  
converting Sponsors' plans from VSP Plans to the Company's own proprietary
plans and (2) negotiate arrangements for the provision of services on a   
reciprocal basis to Participants out-of-state.  However, there can be no  
assurance that it will be able to do so.  The VSP service mark is well    
known and management believes that it gave VCI and gives the Company a    
marketing advantage with Sponsors.  Moreover, if the License Agreement is 
terminated, the Company eventually would lose virtually all revenue from  
reciprocal business in Florida for out-of-state VSP Plans.                

Primary Plus                                                              

    Primary Plus, which was purchased by the Company in the Acquisition,
was created by VCI in 1993 to take advantage of the additional revenue    
potential generated by the shift in emphasis in health care to HMOs and   
managed care.  It serves as a proprietary vehicle for Plans marketed to   
HMOs, which generally use Providers who traditionally have not been panel 
Providers under the VSP Plans marketed by VCI.  By contrast, VSP Plans are
marketed primarily to businesses, school boards, and other governmental   
agencies.  As a result of the differing needs and objectives of the groups
targeted by each type of Plan, the rates and products of the two types of 
Plans are very different.  Primary Plus usually includes all medical and  
surgical eyecare as well as routine eye examinations, eyeglasses and      
contact lenses, while VSP Plans generally only cover routine examinations,
eyeglasses and contact lenses.                                            

As of December 31, 1996, 12 HMOs with approximately 320,000     
Participants in the aggregate have contracted for Primary Plus Plans.     
Primary Plus Plans accounted for approximately 11.4%, 5.8% and 2.4% of    
VCI's revenues in 1996, 1995 and 1994, respectively.  Revenues generated  
from Primary Plus Plans are lower than those generated from VSP Plans due 
to the competitive nature of the managed care market and the less         
expensive benefit packages offered to Primary Plus Participants.  Primary 
Plus is able to compete in this market by directing patient volume to     
Providers who are willing to accept lower reimbursements and negotiating  
competitive lab arrangements that lower Primary Plus' corresponding       
expense levels.  Given the increasing emphasis on health care cost        
containment and the concomitant growth in HMOs, the Company intends to    
emphasize the marketing of Primary Plus to HMOs.                          

As of December 31, 1996, Primary Plus also was providing        
 administrative services to two PPOs covering approximately 275,000 members.
Similar to its administrative service programs discussed above (see "The  
Plans"), the Company receives revenues on a cost reimbursement plus       
administrative fee basis.                                                 

The Providers                                                             

    The Company's programs are designed to provide savings to individual
consumers, insurance companies and employers by reducing the cost of      
frames, eyeglass lenses, contact lenses and eye examinations.  The        
proliferation of optical chain stores and other volume eyewear dispensers 
has resulted in competitive pressures on the practices of various         
independent optometrists and dispensing opticians.  One of the goals of   
VCI was to assist such vision care professionals in maintaining or        
increasing the volume of their practices while enabling consumers to      
reduce their eye care costs.  The Company intends to continue that goal by
maintaining and attracting new Providers.                                 

  Each Provider must be a licensed practicing doctor of optometry or
ophthalmology.  Currently, there are approximately 2,800 licensed         
potential Providers in Florida, of which 2,000 are optometrists and 800   
are ophthalmologists.  The Company's process of selecting potential       
Providers includes a review of references from existing Providers and     
regulatory agencies, personal interviews and telephone calls to           
references.  The majority of Providers are optometrists who are licensed  
professionals specializing in vision examinations, but who are limited in 
 their ability to treat eye diseases.  Optometrists generally have completed
four years of post-graduate education following completion of a bachelor's
degree.  The other Providers are ophthalmologists, who are medical doctors
specializing in the care, treatment and surgery of eyes.  As of December  
31, 1996, VCI had Provider Agreements with more than 1,100 Providers.     
Those agreements were assigned by VCI to the Company in the Acquisition.  
As a result, the Company has continued services to current Sponsors and   
Participants without interruption, and on substantially the same          
contractual terms with the Providers as those reflected in the historical 
financial statements of VCI.                                              

 The Company anticipates using the same method of contracting with
Providers that VCI used.  VCI entered into a separate written agreement   
with each optometrist or ophthalmologist who became a Provider (the       
"Provider Agreement").  Under a Provider Agreement, the Provider agrees to
furnish health care services to Participants in the Plans at predetermined
fees.  The Provider Agreement requires that the Provider, among other     
things, conduct his or her professional practice in accordance with the   
prevailing practices and standards of the profession and the community.   
In addition, the Provider must maintain and retain records relating to    
Participants in such form as required by law and accepted medical         
practice.                                                                 

 Generally, the Provider Agreements assigned to the Company in the
Acquisition do not have fixed terms and are terminable by the Company upon
30 days written notice to the Provider and by the Provider upon 90 days   
written notice to the Company.  Historically, the majority of Providers   
renewed their agreements with VCI.  In order to interest a greater number 
of Sponsors, the Company believes that it must establish a larger network 
of Providers and will focus its efforts on developing such a network by   
continuing to seek highly qualified and geographically diverse Providers. 

VCI generally contracted with Providers to provide services to  
Participants simultaneously with the development of a Participant base in 
a particular geographic area, although at times VCI entered into          
agreements with Providers in advance of the development of a Participant  
base in certain areas in connection with VCI's marketing efforts.  The    
Company does not expect to alter that strategy.  The Provider generally   
decides to participate in Plans in order to supplement their practices.   
The Plans enable Providers to treat additional patients who are           
Participants without requiring them to give up any of their existing      
patients or the opportunity to obtain new patients who are                
non-Participants.  Although patients who are Participants generally pay   
fees which are less than those paid by non-Participant patients, the      
incremental revenues from Participant patients may be an additional source
of revenue to the Provider with little or no increase in overhead costs.  
There can be no assurance, however, that all of the Providers will        
continue to participate in the Plans even if their participation results  
in such an increase in volume, since that portion of their practices may  
become less profitable than other aspects of their practices.             

The Company's Strategy                                                    

   The Company believes current market conditions in vision care favor
companies which provide meaningful cost containment to the buyer.  The    
Company further believes there are significant niches within each market  
offering attractive opportunities for companies which are responsive to   
consumer demand for affordable vision care.  To take advantage of these   
market conditions, the Company's business strategy is to:                 

 *    Emphasize cost-effective access to health care.  The Company
          believes that rising vision care costs will cause buyers to seek
         cost containment.  The Company plans to focus on this demand by
providing low cost prepaid vision care programs.      

  *    Build on VCI's managed care reputation and capabilities.  The
   Company believes that VCI was a vision care leader in the
     Florida market place because of the quality of its Provider
    network, the number of its Sponsors and the development of
        flexible and cost-effective vision care services.  The Company
          intends to build on that reputation and continue to expand VCI's
range and offering of services.                       

*    Expand services.  In response to market opportunities, the 
     Company intends to continue VCI's strategy of expanding its
          product lines and services.  New delivery systems that eliminate
    the pre-certified benefit form are being positioned in the
         Provider networks for implementation as required.  In addition,
         new product lines emphasizing discount and value added benefits
        at more competitive prices are being researched and developed.
      Select Provider networks are being recruited to provide non-
standard VSP product services.                        

Marketing and Promotion                                                   

    VCI did not market its prepaid plans directly to the public, and the
Company expects to follow suit.  The Company believes that the success of 
prepaid vision care plans depends upon its ability to attract and maintain
Sponsors with a substantial number of members, clients or employees for   
enrollment in prepaid programs.  VCI's efforts were directed primarily to 
Sponsors located in Florida.  However, if the VSP License Agreement is    
terminated, the Company may seek to expand its operations to other        
geographical locations or attempt to affiliate with other providers of    
prepaid vision care service plans.  Marketing to potential Sponsors will  
continue to be conducted primarily through direct personal contact and    
solicitation by the Company's management.  The Company also intends to    
continue marketing prepaid programs through attendance at trade shows and 
by advertising in appropriate trade journals, as well as through networks 
of independent health insurance brokers.                                  

VCI marketed its prepaid plans in Puerto Rico through insurance 
agents.  Because the Puerto Rico marketplace has great potential for      
development, the Company will continue those efforts.  In order to be     
successful, the Company believes that a full-time sales representative is 
necessary to educate brokers, agents and the public on the value of the   
benefits being offered.                                                   

Competition                                                               

The Company competes in Florida with at least four other prepaid
vision plans.  The membership of one such plan (United Vision Care Plan,  
Inc.) was limited to Dade County public school employees and their        
families, generating approximately $2.1 million of revenues in 1995.  The 
Company recently secured the Dade County contract, leaving United Vision  
with limited activity in Florida.  The second company (Apollo, Inc.)      
operates primarily in southeast Florida and Puerto Rico, offering prepaid 
and discount vision care services to HMOs and group members.  Apollo's    
revenues in 1995 were approximately $.3 million.  The third company       
(Spectera Eyecare of Florida, Inc., f/k/a United Eyecare of Florida, Inc.)
received its initial licensure in Florida in July 1993.  Spectera is part 
of a larger vision health care organization that primarily provides       
services in the Northeast.  It currently has limited operations in Florida
with revenues of approximately $.3 million in 1995.  A fourth company is  
being formed by the American Academy of Ophthalmology and is contemplating
operations in 1998 or 1999.  The Provider Agreements do not prohibit      
Providers from providing services to any other prepaid vision plan.       
Furthermore, there are a sufficient number of qualified opticians,        
optometrists and ophthalmologists in Florida to establish independent     
provider networks.                                                        

In addition to Florida's other prepaid vision plans, a number of
other prepaid vision plans operate in various parts of the United States, 
many of which possess memberships and financial, marketing and other      
resources much greater than that of the Company.  The Company's primary   
bases of competition with those other prepaid vision plans are savings    
provided to Sponsors and Participants, quality of service, administration 
and management, convenience, and availability.                            

Government Regulation                                                     

    Chapter 636 of Florida Statutes, the "Prepaid Limited Health Service
Organization Act of Florida (the "Prepaid Act"), and the regulations      
promulgated thereunder, prohibit a commercial enterprise, such as the     
Company, from operating a prepaid optometric service plan without         
obtaining and maintaining a certificate of authority from the Insurance   
Department.  The Company has been issued a certificate of authority in    
accordance with the Prepaid Act.  The Prepaid Act requires, among other   
things, that the affairs, transactions, accounts, business records and    
assets of a licensed entity be examined by the Insurance Department at    
least once every three years.  In lieu of making its own financial        
examination, the Department may accept an independent certified public    
accountant's audit report prepared on a statutory accounting basis.  A    
licensed entity is also required to file with the Insurance Department    
certain annual, quarterly and miscellaneous reports, and to maintain a    
minimum surplus in an amount which is the greater of $150,000 or 10% of   
its total liabilities.  Violation of these provisions can result in the   
suspension or revocation of the entity's certificate of authority, or in  
the imposition of fines.                                                  

  VCI is licensed under the Puerto Rico Insurance Code as a life and
disability insurance company, which is the type of license necessary to   
provide prepaid vision care service plans in Puerto Rico.  VCI provided   
only reciprocal services through its Providers to participants in other   
VSP plans who reside in Puerto Rico but whose sponsors are based          
elsewhere, and the revenues from such services were immaterial.  The      
Company is in the process of having VCI's license transferred to the      
Company by the Puerto Rico Commissioner of Insurance.  Although the       
Company intends to market its prepaid plans in Puerto Rico, the Company's 
Puerto Rico operations will more than likely be minimal in nature with the
primary focus being the provision of reciprocal services.  The Company    
does not plan to underwrite life or disability insurance in Puerto Rico.  
The Commissioner of Insurance may require the Company as a licensee to    
make special reports from time to time with respect to particular losses  
  or claims, or on any other matter that he/she deems advisable.  Furthermore,
as a condition to licensing, the Company must appoint a licensed general  
agent who is a resident of Puerto Rico with the power or duty to supervise
the underwriting and policy service operations of the Company.  Once VCI's
license is transferred to the Company, violations of the Puerto Rico      
Insurance Code could result in the suspension or revocation of, or a      
refusal to renew, the Company's license, or the imposition of fines.      

The Company provides Medicaid Plans, and its Primary Plus Plans 
include Medicare Participants.  As a result, the Company is required to   
comply with extensive federal and state regulations in order to receive   
reimbursement for Medicare and Medicaid Participants.  There can be no    
assurance that Medicare and Medicaid will not reduce their benefits in the
future or impose other regulations or requirements that may have an       
adverse effect on the Company's financial condition.                      

     The Company believes that its programs, and the relationships between
and among the Company, its Sponsors, Participants and Providers were      
designed to comply with existing laws, and that the Company's operations  
are currently in compliance therewith.  The Company fully expects to      
comply with all applicable laws and regulations.  However, there is no    
assurance that future laws and regulations will not be adopted, or        
existing laws and regulations will not be modified or interpreted in a    
manner that would materially adversely affect the Company.                

Employees                                                                 

   The Company hired all of VCI's employees after the Acquisition.  As
of March 26, 1997, the Company had 63 employees (60 of which are full     
time), including 58 administrative personnel (55 full time), and 5 sales  
personnel (all full time).  The Company is not a party to any collective  
bargaining agreement and considers its relationship with its employees to 
be good.                                                                  

ITEM 2.   DESCRIPTION OF PROPERTY                                         

    The Company assumed all of VCI's liabilities under its office leases
with independent third parties.  The Company's corporate offices consist  
of 12,675 square feet of space located at 1511 North Westshore Boulevard, 
Suite 1000, Tampa, Florida 33607.  The Company pays a monthly base rent of
$20,333 under a 62-month non-cancelable operating lease agreement which   
expires on October 31, 1999.  The monthly rent will increase $528         
beginning on September 1, 1997 and another $528 on each September 1       
thereafter, until the expiration of the lease.  The Company is also liable
for its pro rata share of any operating costs incurred annually by the    
lessee that are greater than $7.00 per square foot of total square footage
leased.  The Company has one five-year option to extend the lease at fair 
market value at the time of the exercising of such option.  In addition,  
the Company leases satellite offices in Longwood and Coral Springs,       
Florida.  In the opinion of the Company's management, each of these       
properties is adequately covered by insurance.                            

ITEM 3.   LEGAL PROCEEDINGS                                               

  The Company is not a party to any pending legal proceeding (nor is
its property the subject of any pending legal proceeding) other than      
routine claims litigation that is incidental to the Company's business.   

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

  No matter was submitted to a vote of security holders, through the
solicitation of proxies or otherwise, during the fourth quarter of the    
fiscal year covered by this Form 10-KSB.                                  

 PART II

ITEM 5.   MARKET FOR COMMON EQUITY AND RELATED STOCKHOLDER                
MATTERS                                               

  There is no trading market for the Common Stock of the Company and
one is not expected to develop in the future.                             

    As of March 26, 1997, there were approximately 207 holders of record
of the Common Stock.                                                      

    The Company has not paid cash dividends on the Common Stock and does
not anticipate doing so in the foreseeable future.  The Company intends to
retain earnings, if any, to support the Company's growth.  Subject to the 
following two sentences, any future determination as to the payment of    
dividends will be at the discretion of the Board of Directors of the      
Company and will depend upon the Company's future operating results,      
financial condition and capital requirements, general business conditions 
and such other factors as the Board of Directors deems relevant.  The     
payment of dividends will be prohibited between the date the Put Option is
exercised, if exercised, and the date such transaction closes.  See "ITEM 
12 - CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS -- Put Option."  The  
payment of dividends also will be limited by provisions of the Florida    
Insurance Code that require the Company to maintain at all times a minimum
surplus in an amount which is the greater of $150,000 or 10% of the       
Company's total liabilities.                                              

   In October 1995, the Company sold an aggregate of 126,000 shares of
Common Stock (adjusted to reflect a stock split in March 1996 of 1.75     
shares for each share of Common Stock) to its 15 founding shareholders for
an aggregate of $24,000 cash, in connection with the organization of the  
Company.  The sale was made in reliance on Section 4(2) of the Securities 
Act of 1933 as a transaction not involving a public offering.             

ITEM 6.   PLAN OF OPERATION                                               

General                                                                   

   As stated above, the Company was formed in May 1995 for the purpose
of purchasing substantially all of VCI's assets and had no revenues from  
operations prior to the Acquisition.  The Acquisition was consummated and 
became effective as of January 1, 1997.  The Company intends to continue  
managing, administering and providing its products and services in the    
same manner as VCI did in the past.  See "ITEM 1 - DESCRIPTION OF         
BUSINESS."                                                                

   VCI's revenues historically increased primarily because of the sale
of VSP and Primary Plus Plans to additional Sponsors and the growth in the
number of Participants in existing Sponsor groups.  The Company believes  
that this growth can be attributed in part to VCI's Providers and staff   
establishing relationships with the Sponsors and Participants that        
instilled confidence in the delivery of VCI's products and services.  The 
Company anticipates that the growth trend in the number of Sponsors and   
the number of Participants in existing Sponsor groups will continue.      

In an attempt to expand its Provider base and to create certain 
operating efficiencies, the Company has entered into initial negotiations 
with Columbia/HCA Healthcare Corporation ("Columbia") to establish a      
network provider agreement.  Columbia is one of the largest health care   
providers in the world, owning and/or operating hospitals, medical        
clinics, ambulatory surgicenters and other health care related facilities 
across the United States, including Florida.  To date, discussions have   
centered around the Company agreeing to (1) use Columbia's surgicenter    
exclusively (when geographically feasible) to perform ophthalmological    
surgical procedures covered under the Company's eye care plans, and (2)   
add Columbia's affiliated ophthalmologists serving as eye care providers  
in Florida to the Company's network of preferred provider                 
ophthalmologists.  The negotiations are ongoing and accordingly, there can
be no assurance that the Company and Columbia will reach an agreement.    

Liquidity and Capital Resources                                           

VCI's principal sources of cash generally were the receipt of   
premiums, reciprocal revenues and administrative fee payments, and        
investment income.  VCI's average accounts receivable turnover for the    
past three years was approximately 38 days and the turn-around time for   
claims was approximately 33 days.  VCI invested cash balances pending     
future payments of claims and other operating expenses.  In September     
1992, VCI entered into a revocable trust agreement and transferred all    
certificates of deposit and marketable securities to the trustee.  The    
trust was created to relieve VCI's management of the administrative burden
associated with investing excess funds, including reconciling numerous    
accounts, updating signatories and moving funds.  The Company does not    
anticipate any change in those patterns.                                  

Historically, VCI met its statutory surplus requirements by     
withholding a specified percentage of fees due to Providers.  VCI's       
contracts with its Providers expressly authorized VCI to withhold these   
fees as a benefit reserve without creating any obligation on the part of  
VCI to pay them to the Providers.  The Board of Directors classified      
approximately $5.1 million of the withheld amounts as a liability as of   
December 31, 1995 due to increases in VCI's net assets from income from   
operations.  VCI paid $3.1 million of the liability prior to the          
acquisition of VCI's assets by the Company.  The remaining $2.0 million of
professional fees due to Providers, which the Company assumed from VCI, is
expected to be paid, without interest, during the next 10 years, as cash  
flow permits.                                                             

  VCI's principal demands for liquidity generally were benefit costs
and administrative expenses such as salary, commissions, printing, rent,  
etc.  The Company anticipates that the cash reserves and the cash flow    
available from operations will be adequate to meet the capital and        
liquidity needs of the Company in both the short and long term.  The      
Company does not anticipate any significant capital expenditures in the   
foreseeable future.  However, in the event the Company seeks to accelerate
its growth, additional capital may be necessary.                          

Employees                                                                 

    The Company hired all of VCI's employees, effective as of January 1,
1997, representing approximately 55 administrative personnel and 5 sales  
personnel.  The Company does not anticipate any significant change in the 
number of employees in the next 12 months.                                

Inflation                                                                 

   Management does not believe that inflation had a material effect on
the results of VCI's operations.  Furthermore, during periods of          
significant inflation, the Company believes that its premium increases and
cost control measures will reduce, to a certain extent, the potential     
adverse effect of inflation on its future operations.                     

Accounting for Investments                                                

The Company will account for its investments in accordance with 
Statement of Financial Accounting Standards No. 115, Accounting for       
Certain Investments in Debt and Equity Securities.  The adoption of this  
standard will not materially affect the Company's financial position or   
its results of operations.  It is anticipated that the Company will have a
positive intent and ability to hold its marketable securities to maturity 
and will accordingly classify them as held-to-maturity securities reported
at amortized cost.                                                        

ITEM 7.   FINANCIAL STATEMENTS                                            

     Table of Contents

                                                                 Pages

   Report of Independent Accountants                             1

Financial Statements:                                       

        Balance Sheets                                           2

        Statement of Operations                                  3

        Statement of Stockholders' Equity                        4

        Statement of Cash Flows                                  5

          Notes to Financial Statements                           6-12

Report of Independent Accountants                                         

To the Board of Directors                                                 
Vision Health Care, Inc.                                                  

We have audited the accompanying balance sheets of Vision Health Care,    
Inc. (the Company), as of December 31, 1996 and 1995, and the related     
statements of operations, stockholders' equity, and cash flows for the    
year ended December 31, 1996. These financial statements are the          
responsibility of the Company's management. Our responsibility is to      
express an opinion on these financial statements based on our audits.     

We conducted our audits in accordance with 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 financial statements referred to above present fairly,
in all material respects, the financial position of Vision Health Care,   
Inc., as of December 31, 1996 and 1995, and the results of its operations 
and its cash flows for the year ended December 31, 1996, in conformity    
with generally accepted accounting principles.                            

Jacksonville, Florida                                                     
March 14, 1996                                                            

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Vision Health Care, Inc.                                                  
Balance Sheets                                                            
as of December 31, 1996 and 1995                                          

   ASSETS                                         1996          1995

Current assets:                                                           
   Cash and cash equivalents                      $ 2,691,316    $  24,000
   Short-term investment                            2,500,000            -
   Interest receivable                                 5,964             -

   Receivable from affiliate                          15,407             -

                                                    ---------       ------
      Total current assets                          5,212,687       24,000

Other assets:                                                             
   Organization costs                                       -       15,134
                                                    ---------       ------

                                                  $ 5,212,687    $  39,134
                                                    =========       ======

LIABILITIES AND STOCKHOLDERS' EQUITY                                          

Current liabilities:                                                      
   Accounts payable                               $    50,513    $  15,134
   Income taxes payable                                 2,690            -
   Debt                                             2,500,000            -
                                                    ---------       ------

      Total current liabilities                     2,553,203       15,134
                                                    ---------       ------

Commitments                                                               

Stockholders' equity:                                                     
Preferred stock, $.01 par value, 1,000,000                          
shares authorized, no shares issued                           
and outstanding                                               
Common stock, $.01 par value, 10,000,000                            
shares authorized, 388,505 and 126,000                        
shares issued and outstanding at                              
December 31, 1996 and 1995,                                   
      respectively                                      3,885        1,260
   Common stock subscribed, 33,868 shares                 339            -
   Additional paid-in capital                       2,983,506       22,740
   Common stock subscription receivable              (338,680)           -

   Retained earnings                                   10,434            -

                                                    ---------       ------
      Total stockholders' equity                    2,659,484       24,000
                                                    ---------       ------
Total liabilities and stockholders'                           
        equity                                    $ 5,212,687    $  39,134
                                                    =========       ======

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

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Vision Health Care, Inc.                                                  
Statement of Operations                                                   
for the year ended December 31, 1996                                      

Revenues:                                                                 
   Interest                                                      $  14,514
                                                                   -------
      Total revenues                                                14,514

Administrative expense                                               1,390

Provision for income taxes                                           2,690
                                                                   -------

Net income                                                       $  10,434
                                                                   =======

Net income per common share                                      $     .02
                                                                   =======

Weighted average number of common shares outstanding               579,873
                                                                   =======

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

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Vision Health Care, Inc.                                                  
Statement of Stockholders' Equity                                         
for the year ended December 31, 1996 and for the period from May 9, 1995  
(inception) through December 31, 1995                                     

                                                        · Enlarge/Download Table

                                                                                  Additional                         
                                  Common Stock      Common Stock Subscriptions      Paid-In                          
                                Shares   Dollars  Shares    Dollars   Receivable    Capital    Net Income      Total 

                                                                                                                     
Issuance of common shares        72,000  $   720       -    $      -  $       -   $   23,280   $      -     $  24,000

Issuance of common shares as a                                                                                       
  result of 1.75:1 stock split   54,000      540       -           -          -         (540)         -             -

Balance at December 31, 1995    126,000    1,260       -           -          -       22,740          -        24,000
Issuance of common shares in                                                                                         
  public offering               262,505    2,625  33,868         339   (338,680)   2,960,766          -     2,625,050

Net income                           -                 -           -          -            -     10,434        10,434

Balance at December 31, 1996    388,505  $ 3,885  33,868    $    339  $(338,680)  $2,983,506   $ 10,434    $2,659,484


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

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Vision Health Care, Inc.                                                  
Statement of Cash Flows                                                   
for the year ended December 31, 1996                                      

Cash flows from operating activities:                                     
   Net income                                                    $  10,434
Adjustments to reconcile net income to cash provided by             
operating activities:                                           
Changes in assets and liabilities:                            
       Interest receivable                                           (5,964)
       Receivable from affiliate                                    (15,407)
       Accounts payable                                             (35,379)
      Income tax payable                                             2,690
                                                                  --------
-                                                                         
         Net cash provided by operating activities                  (27,132)
                                                                  --------
-                                                                         
Cash flows from investing activities:                                     
    Purchase of short-term investment                            (2,500,000)
   Reimbursement of organizational costs                            15,134
                                                                 ---------
       Net cash used in investing activities                     (2,484,866)
                                                                 ---------

Cash flows from financing activities:                                     
   Proceeds from sale of common stock by a public offering       2,625,050
   Proceeds from borrowings                                      2,500,000
                                                                 ---------
      Net cash provided by financing activities                  5,125,050
                                                                 ---------
      Net increase in cash                                       2,667,316

Cash and cash equivalents at beginning of year                      24,000
                                                                 ---------

Cash and cash equivalents at end of year                        $2,691,316
                                                                 =========

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

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Vision Health Care, Inc.                                                  
Notes to Financial Statements                                             

1. Organization and Public Offering:                                      

Vision Health Care, Inc. (the "Company"), incorporated in May 1995  
  under the laws of Florida, was organized for the purpose of purchasing
  substantially all of the operating assets of Vision Care, Inc. ("VCI")
  and continuing the management, administration and provision of prepaid
 vision care services in Florida conducted by VCI. The Company filed a
Registration Statement on Form S-1 with the Securities and Exchange 
Commission with respect to their initial public offering of common  
  shares of equity (the "Offering"), which registration statement became
effective in July 1996. The Company used the proceeds and certain   
borrowings to acquire the assets of VCI as of January 1, 1997 (the  
   "Acquisition") for $5 million. The Company qualifies as a C Corporation
  for federal income tax purposes. The Company had no operations for the
year ended December 31, 1995.                                       

The Company will account for the acquisition based upon the purchase
 method whereby the total purchase price will be allocated to tangible
  and intangible assets and liabilities based upon their respective fair
values (see Note 11).                                               

2. Summary of Significant Accounting Policies:                            

Cash and Cash Equivalents - All highly liquid investments with a    
maturity of three months or less when purchased are considered to be
 cash equivalents. The Company's cash and cash equivalents at December
31, 1996 consist primarily of short-term money market investments.  

Net Income Per Common Share - Net income per common share has been  
computed by dividing net income applicable to common stockholders by
the weighted average number of common stock and equivalents         
outstanding. Common stock equivalents that have a dilutive effect   
  represent outstanding common stock options. Common stock issued within
one year of the Offering is treated as outstanding for all of 1996. 

Income Taxes - The Company recognizes the future tax consequences of
transactions or events in the period the transactions or events are 
recognized in the financial statements. Deferred tax assets and     
  liabilities are recorded for temporary differences by applying enacted
 statutory tax rates applicable to future years to differences between
 financial statement carrying amounts and tax bases of existing assets
and liabilities.                                                    

Use of Estimates - The preparation of financial statements in       
conformity with generally accepted accounting principles requires   
 management to make estimates and assumptions that affect the reported
 amounts of assets and liabilities and disclosure of contingent assets
and liabilities at the date of the financial statements and the     
  reported amounts of revenues and expenses during the reporting period.
Actual results could differ from those estimates.                   

3. Debt:                                                                  

Debt at December 31, 1996 consists of a note payable to a financial 
  institution with an interest rate of 5.35%. The note is collateralized
   by the short-term investment discussed in Note 8 with the principal due
in a single payment on December 31, 1997. Interest accrues and is   
payable in monthly installments through December 31, 1997.          

4. Option Plan:                                                           

In 1996, the Company established a stock option plan (the "Option   
 Plan") and a total of 157,500 shares of common stock was reserved for
  issuance under the Option Plan. A committee of at least two directors,
who may or may not be employees, have the authority to determine the
 terms of awards granted under the Option Plan, including, among other
   things, the individuals who receive awards, the times when they receive
   them, vesting schedules, the number of shares subject to each award and
the exercise price and term of each option.                         

Incentive stock options may be granted only to employees and only   
within ten years from the date of adoption of the Option Plan. The  
aggregate fair market value (determined at the time the option is   
   granted) of shares with respect to which incentive stock options may be
  granted to any one individual under the Option Plan, or any other plan
of the Company or any parent or subsidiary, which stock options are 
   exercisable for the first time during any calendar year, may not exceed
$100,000. All options will become exercisable upon any event        
 constituting a change of control of the Company, which could have the
effect of deterring potential acquisitions of the Company.          

 In April 1996, the Committee granted a total of 131,906 non-qualified
options having a term of ten years and an exercise price of $.29 per
share, which, based upon an independent appraisal, the Company      
   determined represented the fair market value of the common stock on the
date of grant. These options vest as follows:                       

Number                                                            
of Options                  Vesting Terms                           

55,125      20% on grant date and 20% per year thereafter       
70,875      25% on grant date and 75% by end of 1996            
    5,906      20% on date of employment (January 1, 1997) and 20% per
-------      year for each year employed                          
131,906                                                           
=======                                                           

On December 31, 1996, the remaining 25,594 authorized options to    
 purchase common shares were granted in connection with the Put Option
  transaction described in Note 6. These options are 100% vested, have a
  term of ten years and an exercise price of $10 per share.  The Company
valued these options at the price per common share as priced in the 
Company's registration statement on Form S-1 as described in Note 1.

All options not already vested will vest upon any change of control 
over the Company. No options had been exercised as of December 31,  
1996.                                                               

   The Company accounts for stock-based compensation pursuant to Statement
   of Financial Accounting Standards No. 123, issued in October 1995. This
 pronouncement established a fair value based method of accounting for
stock based compensation plans.                                     

5. Capital Stock:                                                         

   The Board of Directors is authorized to provide for the issuance of ten
 million shares of the common stock, par value $.01 per share, and one
   million shares of preferred stock, par value $.01 per share ("Preferred
   Stock"). As of December 31, 1996, no shares of Preferred Stock had been
issued.                                                             

6. Put Option:                                                            

 At the closing of the Company's Offering on December 31, 1996, Dental
  Network, Inc., a Florida corporation ("DNI"), purchased 100,000 shares
   of common stock at $10 per share (the "DNI Shares").  As a condition to
such purchase, certain shareholders in the Company (the "Put        
   Shareholders") gave DNI an option (the "Put Option") to sell all of the
  DNI Shares to the Put Shareholders individually for an amount equal to
   the initial price paid by DNI for the DNI Shares ($1,000,000), plus 12%
per annum.  The Put Option is exercisable at any time beginning on  
   April 30, 1997 and ending on July 31, 1998, but becomes void if (i) the
   Company merges with, is acquired by, or comes under common control with
DNI or (ii) there is a change of control of the Company which a     
majority of the directors nominated by DNI approve.                 

The Put Option is secured by each Put Shareholder's pledge of the   
   shares of common stock now and hereafter owned by such Put Shareholder,
   together with his options or rights therein to acquire common stock (to
the extent assignable) and the shares of common stock issuable upon 
 exercise of such options (all of the common stock and options pledged
by all of the Put Shareholders collectively are referred to as the  
  "Collateral"). In the event that DNI exercises the Put Option, the Put
  Shareholders will have approximately 75 days to either purchase all of
the DNI Shares in exchange for $1,000,000, plus 12% per annum, or   
  deliver the Collateral to DNI which will result in DNI owning both the
DNI Shares and the shares constituting the Collateral.              

The options for 25,594 shares (see Note 4) granted to the Put       
Shareholders are included in the Collateral securing the Put Option.
  The total number of these options is approximately equal to the number
of shares of common stock that remained available for issuance under
the Company's Option Plan.                                          

7. Related Party:                                                         

The Company has certain board members and stockholders, who are also
board members of VCI.                                               

   Pursuant to the VCI asset purchase agreement, $300,000 of the Company's
  expenses related to the Offering and the purchase of VCI's assets were
paid by VCI.                                                        

8. Concentration of Credit Risk:                                          

   The Company places cash deposits, which included short-term investments
used to purchase a certificate of deposit on January 2, 1997 which  
matures December 31, 1997 and accrues interest monthly at an annual 
rate of 4.5%, at a major bank. At December 31, 1996, bank account   
  balances exceeded Federal Depository Insurance limits by approximately
 $5 million. Management believes credit risk related to these deposits
is minimal.                                                         

9. Commitments:                                                           

The Company conducts its operations in leased facilities under a    
noncancelable operating lease expiring on October 31, 1999 which the
Company assumed in the purchase of VCI's assets. Base rent is not   
subject to any adjustment based on a percentage increase in the     
Consumer Price Index or any other similar type index.               

The Company is also liable for its pro rata share of any excess     
operating costs based on operating costs incurred annually that are 
  greater than $7.00 per square foot of total square footage leased. The
   Company has one 5-year option to extend the lease at a base rent of the
fair market value at the time of the exercising of such option.     

 Minimum lease payments plus applicable state sales tax required under
the lease agreements are as follows:                                

1997                    $  270,029        
1998                       270,115        
1999                       228,862        
                   -------
                $  769,006
                   =======

10. Recently Issued Accounting Pronouncements:                            

  SFAS No. 128 "Earnings Per Share," revised the disclosure requirements
 and increases the comparability of EPS data on an international basis
   by simplifying the existing computational guidelines in APB Opinion No.
15. The pronouncement will require dual presentation of basic and   
 diluted EPS on the Company's statement of operations and is effective
for the Company's fiscal year ending December 31, 1997. The Company 
   believes that adoption will not have a material impact on its financial
statements.                                                         

SFAS No. 129, "Disclosures of Information About Capital Structure," 
establishes standards for disclosing information about an entity's  
capital structure. The new accounting principle is effective for the
Company's fiscal year ending December 31, 1997. The Company believes
that adoption will not have a material impact on its current        
disclosures.                                                        

11. Pro Forma Information (Unaudited):                                    

 The following unaudited pro forma balance sheet reflects the purchase
   of VCI's assets by the Company, as described in Note 1, as if the asset
  purchase had occurred on December 31, 1996. Such pro forma information
  is based upon the historical balance sheets of the Company and VCI, as
 of that date, giving effect to the acquisition and the application of
the proceeds of the Offering.                                       

  The following pro forma balance sheet is not necessarily indicative of
what the actual financial position of the Company would have been at
December 31, 1996, nor does it purport to represent the future      
financial position of the Company.                                  

                 ASSETS                                           (in 000's)

Current assets:                                                     
     Cash and short-term investments                            $  2,034
     Certificates of deposit and marketable securities             6,058
     Accounts receivable                                           3,052
     Other                                                           258
                                                                  ------

        Total current assets                                      11,402

  Other assets, including goodwill of $92                            471
                                                                  ------

        Total assets                                            $ 11,873
                                                                  ======

LIABILITIES AND STOCKHOLDERS' EQUITY      

Current liabilities:                                                
     Professional fees refundable                               $  2,786
     Liability for outstanding claims                              2,920

     Debt                                                          2,500
     Accounts payable and accrued expenses                           551
                                                                  ------

        Total current liabilities                                  8,757
                                                                  ------

Stockholders' equity:                                               
     Common stock                                                    422
     Additional paid in capital                                    2,694
                                                                  ------

        Total stockholders' equity                                 3,116
                                                                  ------

        Total liabilities and stockholders' equity              $ 11,873
                                                                  ======

  The following unaudited pro forma statement of operations for the year
   ended December 31, 1996 is presented as if the purchase of VCI's assets
and the consummation of the Offering and the application of net     
proceeds therefrom had occurred on January 1, 1996.                 

  The pro forma statement of operations does not purport to present what
  actual results of operations would have been if the acquisition of VCI
and the consummation of the Offering had occurred on such date or to
project results for any future period.                              

                                                                 (in 000's
                                                              except for per
                                                               share data)

Revenues:                                                           
     Prepaid programs                                           $ 15,772
     Managed care                                                  2,183
     Administrative service and reciprocal programs and other        545
     Investment income                                               587
                                                                 -------

        Total revenues                                            19,087
                                                                 -------

Costs and expenses:                                                 

     Costs of benefits provided                                   14,243
     General and administrative expenses                           5,312
     Retirement plan contributions                                    80
     Depreciation and amortization                                   120
                                                                 -------

        Total costs and expenses                                  19,755
                                                                 -------

   Pro forma net loss                                            $   (668)
                                                                 =======

  Weighted average number of common shares outstanding           579,873
                                                                 =======

   Pro forma loss per share                                      $  (1.15)

                                                                 =======

   Note to pro forma statement of operations - Pro forma amounts are based
 upon the historical results of the Company and VCI for the year ended
 December 31, 1996 adjusted for the amortization of goodwill of $6,100
  (calculated as the excess of the purchase price of $5,000,000 less the
net book value of the net operating assets purchased of $4,908,453  
divided by the useful life of 15 years).                            

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

    On January 4, 1997, the Company replaced Dwight Darby & Company with
Coopers & Lybrand L.L.P. as its new independent accountant.  No report on 
the Company's financial statements prepared by Dwight Darby & Company     
contained an adverse opinion or disclaimer of opinion, or was modified as 
to uncertainty, audit scope, or accounting principles.  In addition, there
were no disagreements with Dwight Darby & Company on any matter of        
accounting principles or practices, financial statement disclosure or     
auditing scope or procedure, which, if not resolved to Dwight Darby &     
Company's satisfaction, would have caused it to make reference to the     
subject matter of the disagreement(s) in connection with its report.  The 
decision to change accountants was approved by the Company's Board of     
Directors.                                                                

PART III

ITEM 9.   DIRECTORS, EXECUTIVE OFFICERS, PROMOTERS AND CONTROL PERSONS;   
COMPLIANCE WITH SECTION 16(a) OF THE EXCHANGE ACT     

 The following table sets forth certain information concerning the
executive officers and directors of the Company:                          

 Name                  Age        Position

Howard J. Braverman, O.D.(1)(5)*  .   50    Chairman of the Board of    
                             Directors
Peter D. Liane, O.D.(1)*  . . . . .   41    Chief Executive Officer,    
                                          President and Director
James W. Andrews, O.D.(2)*  . . . .   44    Vice President and Director 
Alan P. Fisher, O.D.(3)*  . . . . .   46    Secretary and Director      
Terrance W. Naberhaus, O.D.(2)* . .   40    Treasurer and Director      
James R. Brauss, O.D.(1)  . . . . .   49    Director                    
Stanley D. Braverman, M.D.(3)(5)  .   46    Director                    
Allen L. Garrett(3) . . . . . . . .   57    Director                    
Scott F. Hilinski(4)  . . . . . . .   28    Director                    
Landrum R. Landreth(1)  . . . . . .   72    Director                    
Howard Levine, D.D.S(4).  . . . . .   60    Director                    
Jeffery C. Locke, O.D.(3) . . . . .   36    Director                    
Raymond M. Neff(2)  . . . . . . . .   55    Director                    
Stanley Shapiro, D.D.S.(4)  . . . .   52    Director                    
Henry C. Tie Shue(4)  . . . . . . .   54    Director                    
John M. Renaldo, O.D.(2)  . . . . .   53    Director                    
Luis M. Perna, M.S.M. . . . . . . .   46    President of VSP Division   
Roy L. Burgess, C.P.A., M.S.M   . .   43    President of Primary Plus   

Eugene T. Pizzo, Jr., M.S.M . . . .   54    Division                    
Ronald R. Barnette. . . . . . . . .   47    Controller                  
                                        Vice President-Sales and
                                         Marketing of VSP Division
_______________                                                           
*     Member of the Executive Committee.                                  
(1)   Class 1 director whose term will expire at the 1997 annual meeting  
of shareholders.                                              
(2)   Class 2 director whose term will expire at the 1998 annual meeting  
of shareholders.                                              
(3)   Class 3 director whose term will expire at the 1999 annual meeting  
of shareholders.                                              
(4)   Pursuant to the terms of the Put Option (see "ITEM 12 - CERTAIN     
      RELATIONSHIPS AND RELATED TRANSACTIONS - Put Option"), Mr. Hilinski,
       Dr. Levine, Dr. Shapiro and Mr. Tie Shue were elected in January 1997
  to fill four vacancies on the Company's Board of Directors.  All
      four directors must stand for re-election at the 1997 annual meeting
of shareholders.                                              
(5)   Dr. Howard J. Braverman and Dr. Stanley D. Braverman are brothers.  

     Howard J. Braverman, O.D., Chairman of the Board of the
Company, has been a practicing O.D. with Braverman Eye Center since 1981. 
Dr. Braverman was also associated with Eye Care of Florida from April 1994
to December 1994.  Dr. Braverman has been a board member of FOA Charities,
Inc. (formerly Vision Care, Inc.) since January 1994 and of the Company   
since its inception in 1995.                                              

          Peter D. Liane, O.D., Chief Executive Officer, President and
director of the Company, has practiced as an optometric physician with    
Drs. Barrack and Liane, P.A. since 1979.  Dr. Liane is the Immediate Past 
President of the Florida Optometric Association and served as a board     
member of VCI from January 1995 until February 1997.  Dr. Liane has been a
board member of the Company since its inception in 1995.                  

        James W. Andrews, O.D., Vice President and director of the
Company, has been a sole practitioner since March of 1994.  Dr. Andrews   
was a partner with Dr. Cravey, O.D. from January 1982 until March 1994.   
Dr. Andrews has been a board member of FOA Charities, Inc. since January  
1991 and of the Company since its inception in 1995.                      

          Alan P. Fisher, O.D., Secretary and director of the Company,
has been an O.D. in private practice for more than the preceding five     
years.  Dr. Fisher has been a board member of FOA Charities, Inc.         
since January 1991 and of the Company since its inception in 1995.        

        Terrance W. Naberhaus, O.D., Treasurer and director of the
Company, has been an O.D. with Brevard Optometry Associates since April   
1990.  Dr. Naberhaus served as a board member of VCI from January 1992    
until February 1997.  Dr. Naberhaus has been a board member of the Company
since its inception in 1995.                                              

           Raymond M. Neff, director of the Company, is President, Chief
Executive Officer, and director of FCCI Mutual Insurance Company.  From   
 1987 to 1994, he was an administrator for FCCI Self Insurance Fund.  During
 that same period, Mr. Neff served as President, Chief Executive Officer and
director of Florida Employees Life Insurance Company and Florida Employees
Insurance Service Corporation.  Mr. Neff is a director of Barnett Bank of 
Southeast Florida and served as a board member of VCI from January 1992   
 until February 1997.  Mr. Neff has been a board member of the Company since
its inception in 1995.                                                    

        James R. Brauss, O.D., director of the Company, has been a
practicing O.D. with the firm of James R. Brauss, O.D., P.A. since 1988.  
Dr. Brauss is on the Board of Directors of the Broward County Branch of   
the American Lung Association and the Broward County Optometry Association
and was a board member of VCI from January 1990 to December 1995.  Dr.    
Brauss has been a board member of the Company since its inception in 1995.

      John M. Renaldo, O.D., director of the Company, has been
operating as an independent contractor with Dr. Salvatore M. DeCanio, Jr. 
since February 1996.  Prior to working with Dr. Gary Enker at the Enker   
Eye Center from October 1994 to February 1996, Dr. Renaldo practiced as   
Dr. John M. Renaldo, P.A.  Dr. Renaldo served as a board member of VCI    
from January 1990 until February 1997.  Dr. Renaldo has been a board      
member of the Company since its inception in 1995.                        

    Landrum R. Landreth, director of the Company, has been
retired for more than the preceding five years.  Mr. Landreth served as a 
board member of VCI from January 1993 until February 1997.  Mr. Landreth  
has been a board member of the Company since its inception in 1995.       

           Stanley D. Braverman, M.D.. director of the Company, has been
a practicing medical doctor, specializing in ophthalmology, since February
1981.  Dr. Braverman became the Medical Director for VCI's Primary Plus   
Division in October 1993 and now serves in the same capacity for the      
Company.  Dr. Braverman also is a clinical instructor in ophthalmology    
at the University of Miami School of Medicine.  Dr. Braverman has been a  
board member of the Company since its inception in 1995.                  

       Jeffery C. Locke, O.D., director of the Company, has been
practicing as Jeffery C. Locke, O.D., P.A. since 1990.  In addition, Dr.  
Locke became the Director of Quality Assessment of VCI in January 1994 and
Optometric Director of VCI in August 1995 and now holds these positions   
with the Company.  Dr. Locke has been a board member of the Company since 
its inception in 1995.                                                    

          Allen L. Garrett, C.L.U., director of the Company, helped to
form VCI's first panel of doctors in 1969 and 1970 and served as President
and Chief Executive Officer of VCI from January 1980 to January 1996.  Mr.
Garrett is the past Chairman of the Council of Growing Companies.  Mr.    
Garrett has been a board member of the Company since its inception in     
1995.                                                                     

           Scott F. Hilinski, director of the Company, is a partner with
Fleet Equity Partners, which is located in Providence, Rhode Island, where
he started as an associate in October 1995.  From May 1993 to October     
1995, Mr. Hilinski was an associate with TA Associates in Boston,         
Massachusetts, and from August 1990 to May 1993 he was an associate with  
Deloitte & Touche in Boston.  Mr. Hilinski has been a board member of the 
Company since January 1997.                                               

           Howard Levine, D.D.S., director of the Company, has served as
the Chief Operating Officer of OHS, Inc. (f/k/a Dental Network, Inc.) and 
its subsidiaries (OHS of Georgia, Inc., Dental Administrators, Inc., and  
OHS of Alabama, Inc., f/k/a Dental Benefits Management, Inc.) since 1996. 
From 1964 until joining OHS, Inc., Dr. Levine was a practicing dentist in 
private practice.  Dr. Levine has been a board member of the Company since
January 1997.                                                             

          Stanley Shapiro, D.D.S., director of the Company, has served
as the President and Chief Development Officer of OHS, Inc. (f/k/a Dental 
Network, Inc.) and its subsidiaries (OHS of Georgia, Inc., Dental         
Administrators, Inc., and OHS of Alabama, Inc., f/k/a Dental Benefits     
Management, Inc.) since 1996.  From 1970 until joining OHS, Inc., Dr.     
 Shapiro was a practicing dentist in private practice.  Dr. Shapiro has been
a board member of the Company since January 1997.                         

           Henry C. Tie Shue, director of the Company, has been involved
in the day to day management of Oral Health Services, Inc. and its        
affiliates for more than the preceding five years.  Mr. Tie Shue has been 
a board member of the Company since January 1997.                         

     Luis M. Perna, M.S.M. is President of the Company's VSP
Division.  Prior to assuming this position with VCI in January 1996,      
Mr. Perna served as Vice President of VCI's Operations from 1990 to 1995. 
From 1973 to 1990, Mr. Perna was employed by Crown Life Insurance Company 
of Canada in both U.S. group insurance sales and administrative           
capacities.  His final position there was Regional Manager, Group         
Administration.  Mr. Perna received his B.A. in Political Science from the
University of Florida in 1973 and his M.S. in Management from Florida     
International University in 1976.                                         

    Roy L. Burgess, C.P.A., M.S.M. is the President of the
Company's Primary Plus Division where he is responsible for product       
design, marketing, claims adjudication, underwriting, contract            
preparation, customer service, provider relations and quality improvement.
Prior to joining VCI in July 1995, Mr. Burgess worked at Prudential Health
Care System for 10 years as Director of Operations for its multiple       
managed care plans in Tampa and Orlando, Florida.  Mr. Burgess received   
his B.A. in Business Administration from the University of Florida in 1975
and his M.S. in Management from Rollins College in 1979.                  

    Eugene T. Pizzo, Jr., M.S.M., is the Controller of the
Company.  From 1982 until his promotion to Controller of VCI in 1990, Mr. 
Pizzo served as VCI's office manager.  Prior to joining VCI, Mr. Pizzo was
a career officer in the United States Air Force for 20 years during which 
time he received his M.S. in Management from Troy State University.       

   Ronald R. Barnette is the Company's Vice President of
Marketing.  Mr. Barnette joined VCI in 1989 and was appointed Vice        
President of Marketing in February 1990.  Prior to joining VCI, Mr.       
Barnette served as an account executive with Vision Service Plan from 1984
to 1988, a marketing representative with 3M Company from 1979 to 1984, and
a marketing representative with General Motors Corp. from 1971 to 1979.   
Mr. Barnette received his B.S. in Marketing from Virginia Polytechnic     
Institute in 1971.                                                        

Compliance with Section 16(a) of the Securities Exchange Act of 1934      

        The Company does not have a class of securities registered
pursuant to Section 12 of the Securities Exchange Act of 1934 (the "1934  
Act") and therefore is not subject to the reporting requirements of       
Section 16 of the 1934 Act.                                               

ITEM 10.    EXECUTIVE COMPENSATION                                        

Directors' Compensation                                                   

     Board members receive $350 for the first day of a board
meeting, $250 for each subsequent day, and reimbursement for any          
reasonable out-of-pocket expenses.  In addition, the Chairman of the Board
and the President each receive $9,600 per year, and the Vice President,   
Secretary and Treasurer each receive $2,400 per year.                     

      Directors also are eligible to receive options under the
Stock Option Plan described below.  See "ITEM 12 - CERTAIN RELATIONSHIPS  
AND RELATED TRANSACTIONS - Option Plan."                                  

Executive Compensation                                                    

        Because the Company had no operating history, compensation
information for executive officers is not available for the fiscal year   
ended December 31, 1996.  The following table summarizes the compensation 
received by the Company's Chief Executive Officer and each of its most    
highly compensated executive officers other than the Chief Executive      
Officer whose total annual base salary and bonus exceeded $100,000 (the   
"Named Executives") in their capacity as executive officers of VCI during 
1996.  The Company does not anticipate any change in such compensation,   
except for annual increases in the ordinary course of business and        
consistent with past practice.                                            

 1996 Annual Compensation from VCI

Name and                                    Other Annual    All Other   
Principal          Year    Salary   Bonus   Compensation  Compensation  
Position                                         (1)           (2)      

Peter D. Liane,    1996     -0-      -0-         -0-            -0-     
O.D., Chief                                                             
Executive Officer                                                       
and President(3)                                                        

Luis M. Perna,     1996   $105,115  $21,500      -0-          $6,325    
M.S.M., President                                                       
of VSP Division                                                         

Roy L. Burgess,    1996   $129,942  $19,471      -0-          $7,819    
C.P.A., M.S.M.,                                                         
President of                                                            
Primary Plus                                                            
Division                                                                

Ronald R.          1996   $ 68,615  $45,052      -0-          $4,129    
Barnette, Vice                                                          
President of                                                            
Marketing                                                               
_______________                                                           

(1)   Excludes certain personal benefits such as health insurance, the    
     total value of which did not exceed the lesser of $50,000 or 10% of
the total annual salary and bonus for the Named Executive.    
(2)   Consists of contributions to VCI's profit-sharing plan.             
(3)   Dr. Liane currently serves as the Chief Executive Officer and       
   President of the Company, but, other than any applicable director
  fees, Dr. Liane is not compensated for serving in such capacity.

Information with respect to fiscal years 1994 and 1995 is not reported    
because the Company was not a reporting company pursuant to Section 13(a) 
or 15(d) of the Exchange Act at any time during those years.              

The following table sets forth information with respect to grants of      
options to purchase shares of Common Stock during 1996 to the Named       
Executives.                                                               

 Stock Option Grants in 1996

                         % of                 Market
                         Total               Price per
                        Options               Share of
           Number of     Granted              Underlying
         Securities        to                 Security
      Underlying    Employees   Exercise      on
                       Options     in Fiscal   Price per  Date of   Expiration
      Name       Granted(1)       1996       Share     Grant      Date

 Peter D. Liane,     15,750(2)      12.77%    $ 0.29     $ 0.29     04/09/06
 O.D.                 3,488(3)       2.83%    $10.00     $10.00     12/19/06

 Luis M. Perna,       7,875(4)       6.34%    $ 0.29     $ 0.29     04/09/06
M.S.M.                                                                    

 Roy L. Burgess,      7,875(4)       6.34%    $ 0.29     $ 0.29     04/09/06
 C.P.A., M.S.M.       2,327(3)       1.89%    $10.00     $10.00     12/19/06

Ronald R. Barnette      -0-          -0-       -0-        -0-         -0- 

_________________                                                         

(1)    The options shown on this table have a term of 10 years.           
(2)    7,875 of the options vested 20% on grant and vest an additional 20%
at the end of each full year thereafter.                    
    The remaining 7,875 options were fully vested as of December 31,
1996.                                                       
(3)    The options were immediately exercisable on the date of grant.     
(4)    The options vested 20% on grant and vest an additional 20% at the  
end of each full year thereafter.                           

No options were exercised during 1996.                                    

Employment Agreements                                                     

  The Company has entered into two year employment agreements with Luis M.
Perna, President of the Company's VSP Division, and Roy L. Burgess,       
 President of the Company's Primary Plus Division, and a one year employment
agreement with Ron Barnette, Vice President of Marketing.  Mr. Perna's    
agreement provides for an annual base salary of $110,000, a discretionary 
annual bonus, and participation in certain incentive compensation plans.  
Mr. Burgess' agreement provides for an annual base salary of $133,500 and 
an annual bonus of at least $12,000.  Mr. Barnette's agreement provides   
for an annual base salary of $72,000 and incentive payments tied to the   
annualized volume of VSP contracts and the sale of Primary Plus contracts.
Messrs. Perna's and Burgess' agreements will be renewed automatically for 
an additional year on each anniversary date thereof, unless any party     
gives written notice of nonrenewal.  During their employment with the     
Company, and for a period of two years thereafter in the case of Messrs.  
Perna and Burgess and one year in the case of Mr. Barnette, the           
individuals are prohibited from competing with the Company directly or    
indirectly in any business involving the soliciting or administering of   
eye care within a state in which the Company offers such coverage or      
services and actually writes business.                                    

ITEM 11.    SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT

The following table sets forth, as of March 26, 1997, certain         
information regarding the beneficial ownership of Common Stock by each    
person known by the Company to be the beneficial owner of more than 5% of 
the Company's outstanding Common Stock, by each director of the Company,  
by each director nominee, by each Named Executive, and by all directors   
and executive officers of the Company as a group.  Each person named in   
the table has sole voting and investment power with respect to all Common 
Stock shown as beneficially owned by such person.                         

               Shares of
                Common Stock
Name and Address of                   Beneficially  Percentage of       
Beneficial Owner                        Owned        Ownership          

Dental Network, Inc.(1)                 100,000       23.68%            
James W. Andrews, O.D.(2)(3)             23,638        5.41             
Ronald R. Barnette(4)                     2,500        0.59             
James R. Brauss, O.D.(5)                  8,932        2.11             
Howard J. Braverman, O.D.(6)(7)          26,053        5.95             
Stanley D. Braverman, M.D.(7)             7,500        1.78             
Roy L. Burgess, C.P.A.,                  20,852        4.87             
M.S.M.(4)(8)                                                        
Alan P. Fisher, O.D.(2)(9)               22,388        5.12             
Allen L. Garrett(10)                      7,875        1.86             
Scott F. Hilinski(11)                         0        0.00             
Landrum R. Landreth(12)                  10,375        2.46             
Howard Levine, D.D.S.(1)                      0        0.00             
Peter D. Liane, O.D.(2)(13)              24,888        5.70             
Jeffery C. Locke, O.D.(14)(15)           10,240        2.42             
John W. McClane, III, O.D.(16)            5,750        1.36             
Terrance W. Naberhaus, O.D.(2)(15)       22,388        5.12             
Raymond M. Neff(14)(17)                   9,040        2.13             
Luis M. Perna, M.S.M.(4)(18)             13,525        3.18             
John M. Renaldo, O.D.(14)(19)             9,040        2.13             
Stanley Shapiro, D.D.S.(1)                    0        0.00             
Henry C. Tie Shue(1)                          0        0.00             
All directors and executive             219,234       51.91%            
officers as a group (18 persons)                                        

(1)    The business address of Dental Network, Inc., Dr. Levine, Dr.      
      Shapiro and Mr. Tie Shue is 5775 Blue Lagoon Drive, Miami, Florida
33126.                                                      
(2)    The number of shares beneficially owned includes 14,513 shares that
   are subject to currently exercisable options and excludes 4,725
shares that are subject to options that are not currently   
exercisable.                                                
(3)    The business address of Dr. Andrews is 5062 Mobile Highway,        
Pensacola, Florida 32506.                                   
(4)    The business address of Mr. Barnette, Mr. Burgess and Mr. Perna is 
     1511 North Westshore Boulevard, Suite 1000, Tampa, Florida 33630.
(5)    The business address of Dr. Brauss is 520 N.E. 30th Street, Wilton 
Manors, Florida 33334.                                      
(6)    The number of shares beneficially owned includes 15,678 shares that
   are subject to currently exercisable options and excludes 4,725
shares that are subject to options that are not currently   
exercisable.                                                
(7)    The business address of Dr. Howard J. Braverman and Dr. Stanley D. 
   Braverman is 1935 E. Hallandale Beach Boulevard, Hallandale, FL
33009.                                                      
(8)    The number of shares beneficially owned includes 5,477 shares that 
   are subject to currently exercisable options and excludes 4,725
shares that are subject to options that are not currently   
exercisable.                                                
(9)    The business address of Dr. Fisher is 2025 East Edgewood Drive,    
Lakeland, Florida 33803.                                    
  (10)   Mr. Garrett's address is 4522 Culbreath Avenue, Tampa, Florida 33607.
(11)   The business address of Mr. Hilinski is Mail Stop: R1 MO F12C, 50  
Kennedy Plaza, Providence, Rhode Island 02903.              
(12)   Mr. Landreth's address is 2303 Bourgogne Drive, Tallahassee,       
Florida 32308.                                              
(13)   The business address of Dr. Liane is 100 West Bay Street,          
Jacksonville, Florida 32202.                                
(14)   The number of shares beneficially owned includes 1,165 shares that 
are subject to currently exercisable options.               
(15)   The business address of Dr. Locke and Dr. Naberhaus is 2420 South  
Babcock Street, Melbourne, Florida 32901.                   
(16)   The business address of Dr. McClane is 113 City Smitty Drive, St.  
Marys, Georgia 31558.                                       
(17)   The business address of Mr. Neff is 2601 Cattlemen Road, Sarasota, 
Florida 34232.                                              
(18)   The number of shares beneficially owned includes 3,150 shares that 
   are subject to currently exercisable options and excludes 4,725
shares that are subject to options that are not currently   
exercisable.                                                
(19)   The business address of Dr. Renaldo is 4400 North Federal Highway, 
Suite 134, Boca Raton, Florida 33431.                       

ITEM 12.    CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS                

All of the executive officers, directors, nominees for election as a  
director and 5% shareholders of the Company, except for four, are or have 
been within the past two years, members and officers or directors of VCI. 
The following table indicates the positions with VCI and the Company of   
each executive officer, director and 5% shareholder of the Company:       

          Positions with VCI
                              (n/k/a FOA Charities,   Positions with
Name                            Inc.)                   Company         

  James W. Andrews, O.D.          Board Member            Vice President and
                                                  Director
James R. Brauss, O.D.(1)        Former Board Member     Director        
Howard J. Braverman, O.D.(2)    Board Member            Chairman of the 
                                                            Board of Directors
Stanley D. Braverman, M.D.      Medical Director        Medical Director
                                                      and Director
Roy L. Burgess, C.P.A., M.S.M.  President of Primary    President of    
                              Plus Division           Primary Plus
                                                  Division
Alan P. Fisher, O.D.            Board Member            Secretary and   
                                                  Director
Allen L. Garrett                Former President and    Director        
         Chief Executive
 Officer
Scott F. Hilinski               None                    Director        
Landrum R. Landreth             Former Board Member     Director        
Howard Levine, D.D.S.           None                    Director        
Peter D. Liane, O.D.            Former Board Member     Chief Executive 
                                                            Officer, President
                                                      and Director
Jeffery C. Locke, O.D.          Director of Quality     Director of     
                                    Assessment and          Quality Assessment
                                Optometric Director     and Optometric
                                                      Director and
                                                  Director
John W. McClane, III, O.D.      Board Member            Nominee for     
                                                  Director
Terrance W. Naberhaus, O.D.     Former Board Member     Treasurer and   
                                                  Director
Raymond M. Neff                 Former Board Member     Director        
Luis M. Perna, M.S.M.           President of VSP        President of VSP
                          Division                Division
John M. Renaldo, O.D.           Former Board Member     Director        
Stanley Shapiro, D.D.S.         None                    Director        
Henry C. Tie Shue               None                    Director        
_______________                                                           

(1)   Dr. Brauss served as a board member of VCI from January 1990 to     
December 1995.                                                
(2)   Dr. Braverman owns more than 5% of the Company's outstanding Common 
 Stock.  See "ITEM 11 - SECURITY OWNERSHIP OF CERTAIN BENEFICIAL
OWNERS AND MANAGEMENT."                                       
(3)   Mr. Garrett was President and Chief Executive Officer of VCI until  
January 1996.                                                 

The Acquisition                                                           

  The Asset Purchase Agreement provided that the purchase price of
VCI's assets would be the fair market value of the assets as of December  
31, 1995, as established by the appraisal of an independent business      
appraisal firm retained by VCI, and for the price to be adjusted by an    
amount equal to any increase or decrease n the net book value of VCI from 
December 31, 1995 to the end of the last calendar month preceding the date
of closing.  The appraisal firm determined that the fair market value of  
VCI's assets was $5 million as of December 31, 1995.  As of December 31,  
1996, there was no increase or decrease in VCI's book value,  resulting in
a purchase price of $5 million.                                           

The Asset Purchase Agreement required the Company to assume   
substantially all of the liabilities of VCI, including a liability of $2.0
million (after giving effect to a $3.1 million payment to Providers that  
took place prior to closing), representing professional fees previously   
withheld by VCI as reserves, and obligations incurred in the ordinary     
course under agreements with Sponsors, Providers and Participants.  The   
Asset Purchase Agreement contained standard representations and warranties
and indemnities requiring VCI to indemnify the Company for such matters as
litigation arising from the conduct of VCI's business prior to the        
Acquisition, breaches by VCI of the contracts transferred to the Company, 
and violations of law by VCI prior to the Acquisition.  Management of the 
Company is not aware of the existence of any such potential or threatened 
litigation, breaches or violations.                                       

  VCI reimbursed the Company for $300,000 in actual and reasonable
transaction expenses incurred by the Company in connection with the       
Acquisition and the Company's initial public offering, as well as paid    
VCI's own legal and accounting expenses and the cost of the appraisal.    

      VCI appointed a special committee in connection with the negotiation
and execution of the Asset Purchase Agreement, consisting of a VCI        
director and two VCI members, none of whom is an officer or director of   
the Company.  The special committee was advised by its own counsel in     
connection with the transaction, and the special committee retained the   
independent appraisal firm that determined the fair market value of VCI's 
assets.  Consummation of the Acquisition was subject to the affirmative   
vote by VCI's members which was obtained at an annual meeting of members  
held in May 1996.                                                         

Option Plan                                                               

     The Company has established a stock option plan (the "Option Plan")
for the purpose of attracting and retaining the Company's executive       
officers and other key employees, directors, and key non-employee advisors
in a manner that will align their interests with those of the Company's   
shareholders.  A total of 157,500 shares of Common Stock have been        
reserved for issuance under the Option Plan.  A committee of at least two 
directors, who may or may not be employees (the "Committee"), have the    
authority to determine the terms of awards granted under the Option Plan, 
including, among other things, the individuals who receive awards, the    
times when they receive them, vesting schedules, performance goals        
triggering the exercisability of options, whether an option is an         
incentive or non-qualified option and the number of shares to be subject  
to each award.  Currently, the Committee members are Howard J. Braverman, 
O.D., Alan P. Fisher, O.D., and Terrance W. Naberhaus, O.D.               

 The exercise price and term of each option will be fixed by the
Committee, except that the exercise price for each stock option which is  
intended to qualify as an incentive stock option must be at least equal to
the fair market value of the stock on the date of grant and the term of   
the option cannot exceed 10 years.  In the case of an incentive stock     
option granted to an individual who owns (or is deemed to own) at least   
10% of the total combined voting power of all classes of stock of the     
Company, the exercise price must be at least 110% of the fair market value
on the date of grant and the term cannot exceed five years.  Incentive    
stock options may be granted only to employees and only within 10 years   
from the date of adoption of the Option Plan.  The aggregate fair market  
value (determined at the time the option is granted) of shares with       
respect to which incentive stock options may be granted to any one        
individual under the Option Plan, or any other plan of the Company or any 
parent or subsidiary, which stock options are exercisable for the first   
time during any calendar year, may not exceed $100,000.  An optionee may, 
with the consent of the Committee, elect to pay for the shares to be      
received upon exercise of his options in cash or shares of Common Stock or
any combination thereof.  All options will become exercisable upon any    
event constituting a change of control of the Company, which could have   
the effect of deterring potential acquisitions of the Company.            

In April 1996, the Committee granted a total of 131,906 non-  
qualified options as follows:  (i) 55,125 to executive officers, directors
and/or shareholders of the Company who spent considerable time and effort 
in connection with organizing the Company and furthering the Acquisition  
(the "Organizing Group"); (ii) 70,875 to those, including key non-employee
advisors and executive officers of the Company, who played a key role in  
encouraging continued Provider and Sponsor participation in the Plans that
the Company assumed from VCI (the "Network Development Group") and (iii)  
5,906 to Messrs. Pizzo and Barnette who became officers of the Company    
upon completion of the Acquisition.  Each of the following individuals, as
members of both the Organizing Group and the Network Development Group,   
received 15,750 options each:  Howard J. Braverman, Chairman of the Board;
Peter D. Liane, Chief Executive Officer and President; James W. Andrews,  
Vice President; Alan P. Fisher, Secretary; and Terrance W. Naberhaus,     
Treasurer.  In addition, the Committee awarded 7,875 options each to      
Messrs. Perna and Burgess, both of whom are shareholders of the Company   
and were executive officers of VCI and became executive officers of the   
Company following the Acquisition, in connection with the time they       
devoted outside normal working hours as members of the Organizing Group.  

   The options have a term of 10 years and an exercise price of $.29
per share, which the Company determined represented the fair market value 
of the Common Stock on the date of grant.  All options granted to the     
Organizing Group vested 20% on grant and vest an additional 20% at the end
of each full year after grant, assuming the holders remain in their       
capacities of officers or directors of the Company.  The options granted  
to each member of the Network Development Group vested 25% upon acceptance
by that member of the responsibility of promoting Provider and Sponsor    
participation and 75% at the end of 1996 as to each member of that group  
who fulfilled his or her responsibilities in the opinion of the Committee.
The options of Messrs. Pizzo and Barnette vested 20% upon the commencement
of their employment with the Company and the balance at 20% per year for  
each year during which they remain employed by the Company.  All options  
not already vested will vest upon any change of control of the Company.   

Put Option                                                                

     At the closing of the Company's initial public offering on December
31, 1996, Dental Network, Inc., a Florida corporation ("DNI"), purchased  
100,000 shares of Common Stock at $10 per share (the "DNI Shares").  In   
negotiating its purchase of shares, DNI requested that the Company give   
DNI the ability to liquidate its investment (in the form of a put option) 
because DNI did not want to remain a 25% investor indefinitely.  However, 
under generally accepted accounting principles, a put to the Company would
adversely affect the Company's shareholders' equity.  Accordingly, the    
Company approached its principal shareholders about the possibility of    
granting the put.                                                         

    James W. Andrews, O.D., Howard J. Braverman, O.D., Roy L. Burgess,
C.P.A., M.S.M., Alan P. Fisher, O.D., Mitchell W. Legler, Peter D. Liane, 
O.D., Jeffrey C. Locke, O.D., Terrance W. Naberhaus, O.D., Raymond M. Neff
and John M. Renaldo, O.D. (the "Put Shareholders") gave DNI an option (the
"Put Option") to sell all of the DNI Shares to the Put Shareholders       
individually for the Put Price (as defined below).  The Put Option is     
exercisable at any time beginning on April 30, 1997, and ending on July   
31, 1998, but becomes void if (i) the Company merges with, is acquired by,
or comes under common control with DNI or (ii) there is a change of       
control of the Company which a majority of the directors nominated by DNI 
approve.  The Put Price is an amount equal to the initial price paid by   
DNI for the DNI Shares ($1,000,000), plus 12% per annum.                  

    Each Put Shareholder is severally, but not jointly, liable for the
following approximate percentage of the Put Option:  Andrews (13.63%),    
Braverman (18.18%), Burgess (9.09%), Fisher (13.63%), Legler (4.55%),     
Liane (13.63%), Locke (4.55%), Naberhaus (13.63%), Neff (4.55%), and      
Renaldo (4.55%).  The obligations of each Put Shareholder under the Put   
Option are secured by such Put Shareholder's pledge of the shares of      
Common Stock now and hereafter owned by such Put Shareholder, together    
with his options or rights therein to acquire Common Stock (to the extent 
assignable) and the shares of Common Stock issuable upon exercise of such 
options (all of the Common Stock and options pledged by all of the Put    
Shareholders collectively are referred to as the "Collateral").  In the   
event that DNI exercises the Put Option, the Put Shareholders will have   
approximately 75 days to (1) purchase all of the DNI Shares in exchange   
for the Put Price or (2) deliver the Collateral to DNI in termination of  
the Put Option.  If any Put Shareholder is unable or unwilling to purchase
his pro rata portion of the DNI Shares, the other Put Shareholders have   
the right to buy his shares and post his share of the funds, but if they  
do not do so, the entire Put Option will be satisfied by the delivery of  
the Collateral, in which event DNI will own both the DNI Shares and the   
shares constituting the Collateral.                                       

 In exchange for granting the Put Option, the Company's Board of
Directors granted each Put Shareholder options to purchase a pro rata     
portion of 25,594 shares of Common Stock (collectively, the "Guaranty     
Options") equal to the percentage of the Put Option that he granted.  The 
options, which are 100% vested, have a term of 10 years and an exercise   
price of $10.00 per share, and are included in the Collateral securing the
Put Option.  The total number of Guaranty Options is approximately equal  
to the number of shares of Common Stock that remained available for       
issuance under the Company's stock Option Plan.                           

ITEM 13.    EXHIBITS AND REPORTS ON FORM 8-K                              

(a)   Exhibits                                                            

   2.1     The Asset Purchase Agreement dated March 21, 1996, by and
between the Registrant and Vision Care, Inc., was attached as an Exhibit  
to the Registrant's S-1 Registration Statement No. 333-3530 filed April   
12, 1996, and is incorporated herein by reference.                        

    2.2     First Amendment to Asset Purchase Agreement dated December
30, 1996, by and between the Registrant and Vision Care, Inc.             

    2.3     Put and Security Agreement dated December 19, 1996, by and
among the Registrant, Dental Network, Inc., and certain of the Company's  
shareholders.                                                             

   2.4     Promissory Note in the amount of $2.5 million dated as of
December 31, 1996, in favor of SunTrust Bank, Tampa Bay.                  

 2.5     Assignment of Deposit Account, dated as of December 31,
1996, in favor of SunTrust Bank, Tampa Bay.                               

   2.6     Assignment of Certificate of Deposit, dated as of January
2, 1997, in favor of SunTrust Bank, Tampa Bay.                            

3.1     The Registrant's Amended and Restated Articles of     
Incorporation were attached as an Exhibit to the Registrant's S-1         
Registration Statement No. 333-3530 filed April 12, 1996, and are         
incorporated herein by reference.                                         

    3.2     The Registrant's Amended and Restated Bylaws were attached
as an Exhibit to the Registrant's S-1 Registration Statement No. 333-3530 
filed April 12, 1996, and are incorporated herein by reference.           

10.1  Stock Option Plan was attached as an Exhibit to the     
Registrant's S-1 Registration Statement No. 333-3530 filed April 12, 1996,
and are incorporated herein by reference.                                 

    10.2  Form of Stock Option Agreement was attached as an Exhibit to
the Registrant's S-1 Registration Statement No. 333-3530 filed April 12,  
1996, and are incorporated herein by reference.                           

16.     Letter on Change in Certifying Accountant.            

27.     Financial Data Schedule.                              

(b)   Reports on Form 8-K                                                 

None                                                          

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SIGNATURES

   In accordance with 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.                 

Date:  March 31, 1997.                                                    

            VISION HEALTH CARE, INC.

        By:  /s/ Peter Liane
                              Peter Liane, President and Chief
               Executive Officer

    In accordance with the Exchange Act, this report has been signed
below by the following persons on behalf of the registrant and in the     
capacities and on the dates indicated.                                    

Date:  March 31, 1997        /s/ Howard Braverman                         
                   Howard Braverman, Chairman of the Board

Date:  March 31, 1997        /s/ Peter Liane                              
                           Peter Liane, President, Chief Executive Officer
  and Director

Date:  March 28, 1997        /s/ James W. Andrews                         
                         James W. Andrews, Vice President and Director

Date:  March 31, 1997        /s/ Alan P. Fisher                           
                  Alan P. Fisher, Secretary and Director

Date:  March 31, 1997        /s/ Terrance W. Naberhaus                    
            Terrance W. Naberhaus, Treasurer
                      (Principal Financial Officer and
                                Principal Accounting Officer) and Director

Date:  March __, 1997      _______________________________________________
     James R. Brauss, Director

Date:  March __, 1997        /s/ Stanley Braverman                        
       Stanley Braverman, Director

Date:  March 28, 1997        /s/ Allen L. Garrett                         
      Allen L. Garrett, Director

Date:  March __, 1997      ______________________________________________ 
       Scott F. Hilinski, Director

Date:  March 27, 1997        /s/ Landrum R. Landreth                      
         Landrum R. Landreth, Director

Date:  March __, 1997      ______________________________________________ 
   Howard Levine, Director

Date:  March 27, 1997        /s/ Jeffrey C. Locke                         
      Jeffrey C. Locke, Director

Date:  March 31, 1997        /s/ Ray Neff                                 
Ray Neff, Director  

Date:  March 28, 1997        /s/ John M. Renaldo                          
     John M. Renaldo, Director

Date:  March __, 1997      ______________________________________________ 
     Stanley Shapiro, Director

Date:  March __, 1997      ______________________________________________ 
       Henry C. Tie Shue, Director

 SUPPLEMENTAL INFORMATION TO BE FURNISHED WITH REPORTS
FILED PURSUANT TO SECTION 15(d) OF THE EXCHANGE ACT 
BY NON-REPORTING ISSUERS

    At the time of filing of this Form 10-KSB, no annual report covering the
Registrant's last fiscal year, nor any proxy material with respect to any 
annual meeting or other meeting of the Registrant's security holders, has 
been sent to the Registrant's security holders.  Accordingly, the         
Registrant hereby undertakes to furnish the Commission four copies of     
(1) any annual report to security holders covering the Registrant's last  
fiscal year, and (2) every proxy statement, form of proxy or other proxy  
soliciting material sent to more than 10 of the Registrant's security     
holders with respect to the 1997 annual meeting of security holders.      

 EXHIBIT INDEX

2.1  The Asset Purchase Agreement dated March 21, 1996, by and between
the Registrant and Vision Care, Inc., was attached as an Exhibit to the   
Registrant's S-1 Registration Statement No. 333-3530 filed April 12, 1996,
and is incorporated herein by reference.                                  

2.2  First Amendment to Asset Purchase Agreement dated December 30,   
1996, by and between the Registrant and Vision Care, Inc.                 

2.3  Put and Security Agreement dated December 19, 1996, by and among 
the Registrant, Dental Network, Inc., and certain of the Company's        
shareholders.                                                             

 2.4  Promissory Note in the amount of $2.5 million dated as of December
31, 1996, in favor of SunTrust Bank, Tampa Bay.                           

2.5  Assignment of Deposit Account, dated as of December 31, 1996, in 
favor of SunTrust Bank, Tampa Bay.                                        

 2.6  Assignment of Certificate of Deposit, dated as of January 2, 1997,
in favor of SunTrust Bank, Tampa Bay.                                     

3.1  The Registrant's Amended and Restated Articles of Incorporation  
were attached as an Exhibit to the Registrant's S-1 Registration Statement
No. 333-3530 filed April 12, 1996, and are incorporated herein by         
reference.                                                                

3.2  The Registrant's Amended and Restated Bylaws were attached as an 
Exhibit to the Registrant's S-1 Registration Statement No. 333-3530 filed 
April 12, 1996, and are incorporated herein by reference.                 

  10.1 Stock Option Plan was attached as an Exhibit to the Registrant's S-
1 Registration Statement No. 333-3530 filed April 12, 1996, and are       
incorporated herein by reference.                                         

10.2 Form of Stock Option Agreement was attached as an Exhibit to the 
Registrant's S-1 Registration Statement No. 333-3530 filed April 12, 1996,
and are incorporated herein by reference.                                 

16.  Letter on Change in Certifying Accountant.                       

27.  Financial Data Schedule.                                         

Dates Referenced Herein   and   Documents Incorporated By Reference

				Referenced-On Page
This 10KSB Filing		Date		First		Last			Other Filings
		5/9/95		4
		12/31/95		1		6
		1/1/96		6
		3/14/96		1
		3/21/96		6		7
		4/12/96		6		7
		12/19/96		6		7
		12/30/96		6		7
For The Period Ended		12/31/96		1		7
		1/1/97		1		6
		1/2/97		6		7
		1/4/97		6
		3/26/97		1		6
		3/27/97		7
		3/28/97		7
Filed On / Filed As Of		3/31/97		7
		4/30/97		6
		9/1/97		1
		12/31/97		1		6
		7/31/98		6
		10/31/99		1		6
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