================================================================================

                       SECURITIES AND EXCHANGE COMMISSION
                             Washington, D.C. 20549

                                    FORM 10-Q

    [X] QUARTERLY REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES
        EXCHANGE ACT OF 1934.

                  For the quarterly period ended April 30, 2000

                                       OR

    [ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
                              EXCHANGE ACT OF 1934.

        For the transition period from _______________ to _____________________.

                         Commission file number 0-23001

                             SIGNATURE EYEWEAR, INC.
             (Exact Name of Registrant as Specified in its Charter)

                CALIFORNIA                                      95-3876317
     (State or Other Jurisdiction of                       (I.R.S. Employer
     Incorporation or Organization)                         Identification No.)

                              498 NORTH OAK STREET
                           INGLEWOOD, CALIFORNIA 90302
                    (Address of Principal Executive Offices)

                                 (310) 330-2700
              (Registrant's Telephone Number, Including Area Code)

         Indicate by check whether the registrant: (1) filed all reports
required to be filed by Section 13 or 15(d) of the Exchange Act 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
                                    ---     ---

         State the number of shares outstanding of each of the issuer's classes
of common stock, as of the latest practicable date: Common Stock, par value
$0.001 per share, 5,056,889 shares issued and outstanding as of June 14, 2000.

================================================================================
<PAGE>


                             SIGNATURE EYEWEAR, INC.
                               INDEX TO FORM 10-Q


<TABLE>
<CAPTION>

PART I            FINANCIAL INFORMATION                                                                        PAGE
                                                                                                               ----
<S>               <C>                                                                                          <C>
Item 1.           Consolidated Financial Statements:

                  Independent Accountant's Review Report ....................................................   3

                  Consolidated Balance Sheets as of April 30, 2000 (Unaudited)
                     and October 31, 1999....................................................................   4

                  Consolidated Statement of Operations (Unaudited) for the Six Months
                      Ended April 30, 2000 and 1999..........................................................   5

                  Consolidated Statement of Cash Flows (Unaudited) for the Six Months
                      Ended April 30, 2000 and 1999..........................................................   6

                  Notes to Consolidated Financial Statements.................................................   8

Item 2.           Management's Discussion and Analysis of Financial Condition
                     and Results of Operations...............................................................  11

Item 3.           Quantitative and Qualitative Disclosures about Market Risk.................................  20

PART II           OTHER INFORMATION

Item 4.           Submission of Matters to a Vote of Security Holders........................................  22

Item 6.           Exhibits and Reports on Form 8-K...........................................................  22
</TABLE>


                                     Page 2

<PAGE>

                                    PART I.
                              FINANCIAL INFORMATION

ITEM 1.  CONSOLIDATED FINANCIAL STATEMENTS


                     INDEPENDENT ACCOUNTANT'S REVIEW REPORT




To the Board of Directors and Stockholders
Signature Eyewear, Inc.


We have reviewed the accompanying consolidated balance sheet of SIGNATURE
EYEWEAR, INC. AND SUBSIDIARIES as of April 30, 2000 and the related consolidated
statements of operations and cash flows for the three-month and six-month
periods ended April 30, 2000 and 1999. These financial statements are the
responsibility of the Company's management.

We conducted our reviews in accordance with standards established by the
American Institute of Certified Public Accountants. A review of interim
financial information consists principally of applying analytical procedures to
financial data and making inquiries of persons responsible for financial and
accounting matters. It is substantially less in scope that an audit conducted in
accordance with generally accepted auditing standards, the objective of which is
the expression of an opinion regarding the consolidated financial statements
taken as a whole. Accordingly, we do not express such an opinion.

Based on our reviews, we are not aware of any material modifications that should
be made to the accompanying consolidated financial statements for them to be in
conformity with generally accepted accounting principles.

We have previously audited, in accordance with generally accepted auditing
standards, the consolidated balance sheet of the Company as of October 31, 1999,
and the related consolidated statements of operations, shareholders' equity and
cash flows for the year then ended (not presented herein), and in our report
dated February 8, 2000, we expressed an unqualified opinion on those
consolidated financial statements. In our opinion, the information set forth in
the accompanying consolidated balance sheet as of October 31, 1999 is fairly
stated, in all material respects, in relation to the consolidated balance sheet
from which it has been derived.

/s/ Altschuler, Melvoin and Glasser LLP


Los Angeles, California
June 8, 2000


                                     Page 3
<PAGE>

                    SIGNATURE EYEWEAR, INC. AND SUBSIDIARIES

                           CONSOLIDATED BALANCE SHEETS

<TABLE>
<CAPTION>

         ASSETS                                                               April 30,              October 31,
                                                                                2000                     1999
                                                                          ------------------      -----------------
                                                                             (Unaudited)
<S>                                                                       <C>                     <C>
Current Assets:
         Cash and cash equivalents.................................       $       1,447,267       $        463,023
         Accounts receivable, trade (net of allowance for
              doubtful accounts)...................................              10,234,138              6,550,057
         Inventories...............................................              17,943,886             16,636,474
         Income taxes refundable...................................               1,744,409                999,820
         Deferred tax asset........................................                 413,392                392,000
         Prepaid expenses and other current assets.................               2,008,336              2,432,915
                                                                          ------------------      -----------------
                                                                                 33,791,428             27,474,289
                                                                          ------------------      -----------------
Property and Equipment (net of accumulated depreciation and
    amortization).............................................                    1,810,257              1,711,203
                                                                          ------------------      -----------------
Other Assets:
         Goodwill and other intangibles (net of amortization)......               5,746,924              6,035,190
         Deferred tax asset........................................                 221,795                 36,000
         Deposits and other assets.................................                 193,781                217,402
                                                                          ------------------      -----------------
                                                                                  6,162,500              6,288,592
                                                                          ------------------      -----------------
                                                                          $      41,764,185       $     35,474,084
                                                                          ==================      =================
         LIABILITIES AND STOCKHOLDERS' EQUITY

Current Liabilities:
         Accounts payable, trade...................................       $       9,364,543       $      6,285,490
         Note payable, bank........................................               5,933,000              1,750,000
         Current portion of long-term debt.........................               1,102,505                873,505
         Accrued distributor credits...............................                 672,303              1,727,970
         Accrued expenses and other current liabilities............               1,858,020              1,696,701
                                                                          ------------------      -----------------
                                                                                 18,930,371             12,333,666
                                                                          ------------------      -----------------

Long-term Debt.....................................................               7,629,857              5,137,193
                                                                          ------------------      -----------------

Stockholders' Equity:
         Preferred stock (authorized 5,000,000 shares, $.001
              par value, none outstanding)......................                          0                      0
         Common stock (authorized 30,000,000 shares, $.001 par
              value, 5,056,889 shares outstanding at April 30,
              2000 and 5,082,389 shares outstanding at October
              31, 1999).........................................                      9,188                  9,214
         Paid-in capital...........................................              14,363,990             14,441,996
         Retained earnings.........................................                 830,779              3,552,015
                                                                          ------------------      -----------------
                                                                                 15,203,957             18,003,225
                                                                          ------------------      -----------------
                                                                          $      41,764,185        $    35,474,084
                                                                          ==================      =================
</TABLE>


         The accompanying notes are an integral part of this statement.


                                     Page 4
<PAGE>

                    SIGNATURE EYEWEAR, INC. AND SUBSIDIARIES

                      CONSOLIDATED STATEMENT OF OPERATIONS
                                   (UNAUDITED)

<TABLE>
<CAPTION>

                                                          Three Months Ended April 30,        Six Months Ended April 30,
                                                         ------------------------------    ------------------------------
                                                             2000              1999             2000             1999
                                                         -------------     ------------    --------------  --------------
<S>                                                      <C>               <C>             <C>             <C>
Net Sales...........................................     $  12,389,749     $ 12,177,743    $  24,393,158   $   21,034,261

Cost of Sales.......................................         5,058,436        5,299,944        9,865,884        9,516,148
                                                         -------------     ------------    -------------   --------------

Gross Profit........................................         7,331,313        6,877,799       14,527,274       11,518,113
                                                         -------------     ------------    -------------   --------------

Operating Expenses:
         Selling....................................         6,065,859        3,393,059        9,653,297        6,089,689
         General and administrative.................         4,429,321        2,131,903        7,940,627        3,904,229
         Depreciation and amortization..............           278,768          165,220          611,982          316,835
                                                         -------------     ------------    -------------   --------------
                                                            10,773,948        5,690,182       18,205,906       10,310,753
                                                         -------------     ------------    -------------   --------------
Income (Loss) from Operations.......................        (3,442,635)       1,187,617       (3,678,632)       1,207,360
                                                         -------------     ------------    -------------   --------------

Other Income (Expense):
         Interest, net..............................          (294,286)          28,604         (489,784)          66,628
         Sundry income..............................            28,930            2,120           39,996            6,212
                                                         -------------     ------------    -------------   --------------
                                                              (265,356)          30,724         (449,788)          72,840
                                                         -------------     ------------    -------------   --------------
Income (Loss) before Income Taxes...................        (3,707,991)       1,218,341       (4,128,420)       1,280,200

Provision (Benefit) for Income Taxes................        (1,239,013)         472,000       (1,407,184)         495,000
                                                         -------------     ------------    -------------   --------------

Net Income (Loss)...................................     $  (2,468,978)    $    746,341    $  (2,721,236)  $      785,200
                                                         =============     ============    =============   ==============


Earnings (Loss) Per Share, Basic and Diluted:
         Earnings (Loss) per common share...........     $       (0.49)    $       0.15    $       (0.54)  $         0.15
                                                         =============     ============    =============   ==============
         Weighted average number of common
             shares outstanding.....................         5,056,889        5,084,689        5,060,952        5,095,836
                                                         =============     ============    =============   ==============
</TABLE>


         The accompanying notes are an integral part of this statement.


                                     Page 5
<PAGE>


                    SIGNATURE EYEWEAR, INC. AND SUBSIDIARIES

                      CONSOLIDATED STATEMENT OF CASH FLOWS
                                   (UNAUDITED)

<TABLE>
<CAPTION>

                                                                    Six Months Ended April 30,
                                                                  -----------------------------
                                                                      2000             1999
                                                                  ------------     ------------
<S>                                                               <C>              <C>
Cash Flows from Operating Activities:
       Net income (loss) ....................................     $(2,721,236)     $   785,200
       Adjustments to reconcile net income (loss) to net cash
          provided by (used in) operating activities:
              Depreciation and amortization .................         611,982          316,834
              Provision for bad debts .......................          14,609             (100)
              Deferred income taxes .........................        (207,187)               0
              (Gain) Loss on sale of equipment ..............            (547)           5,842
              Changes in assets -- (increase) decrease:
                  Accounts receivable, trade ................      (3,698,690)      (1,546,239)
                  Inventories ...............................      (1,307,412)       1,639,412
                  Income taxes refundable ...................        (744,589)         186,481
                  Prepaid expenses and other assets .........         424,579          (51,090)
                  Deposits and other assets .................          23,621                0
              Changes in liabilities -- increase (decrease):
                  Accounts payable, trade ...................       3,079,053         (539,301)
                  Income taxes payable ......................               0          250,328
                  Accrued distributor credits ...............      (1,055,667)               0
                  Accrued expenses and other liabilities ....         161,319          530,519
                                                                  -----------      -----------

       Net cash provided by (used in) operating activities ..      (5,420,165)       1,577,886
                                                                  -----------      -----------

 Cash Flows from Investing Activities:
       Purchases of property and equipment ..................        (433,523)        (359,284)
       Proceeds from sale of equipment ......................          11,300           21,700
                                                                  -----------      -----------

       Net cash used in investing activities ................        (422,223)        (337,584)
                                                                  -----------      -----------

 Cash Flows from Financing Activities:
       Borrowings on notes payable, bank ....................       7,540,833                0
       Repayments on notes payable, bank ....................      (3,357,833)               0
       Borrowings on long-term debt .........................       3,500,000          500,000
       Principal payments on long-term debt .................        (746,833)               0
       Principal payments on capitalized lease obligations ..         (31,503)               0
       Repurchase of common stock ...........................         (78,032)        (154,310)
                                                                  -----------      -----------

       Net cash provided by financing activities ............       6,826,632          345,690
                                                                  -----------      -----------

 Net Increase in Cash and Cash Equivalents ..................         984,244        1,585,992
                                                                  -----------      -----------

 Cash and Cash Equivalents, Beginning of Period .............         463,023        4,256,655
                                                                  -----------      -----------

 Cash and Cash Equivalents, End of Period ...................     $ 1,447,267      $ 5,842,647
                                                                  ===========      ===========
</TABLE>


                                     Page 6
<PAGE>


                    SIGNATURE EYEWEAR, INC. AND SUBSIDIARIES

                 CONSOLIDATED STATEMENT OF CASH FLOWS, CONTINUED
                                   (UNAUDITED)

<TABLE>
<CAPTION>

                                                            Six Months Ended April 30,
                                                            --------------------------
                                                              2000              1999
                                                            --------          --------

Supplementary Disclosures of Cash Flow Information:
       Cash paid during the period for:

<S>                                                         <C>               <C>
              Interest...................................   $532,581          $23,461
                                                            ========          =======


              Income taxes...............................   $201,350          $85,452
                                                            ========          =======
</TABLE>


         The accompanying notes are an integral part of this statement.


                                     Page 7
<PAGE>


                    SIGNATURE EYEWEAR, INC. AND SUBSIDIARIES

                 NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
                                   (UNAUDITED)


NOTE 1--UNAUDITED INTERIM CONSOLIDATED FINANCIAL STATEMENTS:

The consolidated financial statements should be read in conjunction with the
financial statements in the Annual Report on Form 10-K of Signature Eyewear,
Inc. (the "Company") for the year ended October 31, 1999. Significant accounting
policies disclosed therein have not changed. Certain reclassifications of prior
period amounts have been made to conform to the current presentation.

The interim financial information in this report has not been audited. In the
opinion of management, all adjustments necessary for a fair presentation of the
consolidated financial position and the consolidated results of operations for
the interim periods have been made. All adjustments made were of a normal,
recurring nature. Results of operations reported for interim periods are not
necessarily indicative of results for the entire year.

In preparing financial statements in conformity with generally accepted
accounting principles, management makes estimates and assumptions that affect
the reported amounts of assets and liabilities and reported amounts of revenue
and expenses during the reporting period. Actual results could differ from those
estimates.

NOTE 2--BASIS OF PRESENTATION:

A summary of significant accounting policies is as follows:

Income Taxes--The Company's effective income tax rate at April 30, 2000 and 1999
varies from the federal statutory tax rate of 34% principally due to state
income taxes.

Earnings Per Share--Financial Accounting Standards No. 128 establishes standards
for computing and presenting earnings per share. It also requires the dual
presentation of basic and diluted earnings per share on the face of the income
statement. Earnings per share is calculated as follows:

<TABLE>
<CAPTION>

                                                           FOR THE THREE MONTHS ENDED APRIL 30, 2000
                                                 --------------------------------------------------------------
                                                     Net Loss               Shares               Per-Share
                                                   (Numerator)           (Denominator)             Amount
                                                 -----------------    --------------------    -----------------
<S>                                              <C>                       <C>                <C>
Basic and diluted EPS loss available
to common stockholders........................   $   (2,468,978)           5,056,889          $        (0.49)
                                                 =================    ====================    =================

                                                            FOR THE SIX MONTHS ENDED APRIL 30, 2000
                                                 --------------------------------------------------------------
                                                     Net Loss               Shares               Per-Share
                                                   (Numerator)           (Denominator)             Amount
                                                 -----------------    --------------------    -----------------

Basic and diluted EPS loss available
to common stockholders........................   $   (2,721,236)           5,060,952          $        (0.54)
                                                 =================    ====================    =================
</TABLE>


                                     Page 8
<PAGE>

                    SIGNATURE EYEWEAR, INC. AND SUBSIDIARIES

                 NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
                                   (UNAUDITED)


For the three and six months ended April 30, 2000, there was no difference
between basic and diluted EPS. The outstanding warrants and options were not
included in the computation of diluted EPS because the Company sustained a loss
and their inclusion would be antidilutive. The following is a summary of the
outstanding warrants and options:

                                     SHARES         EXERCISE PRICE
                                     ------         --------------

         Warrants                   180,000           $    12.00
         Warrants                    50,000                 7.50
         Options                    208,500                 4.00
         Options                    438,500                10.00

NOTE 3--BANK LOANS:

In December 1999, the Company entered into an amendment to the Credit Agreement
with its commercial bank that provided, among other provisions, for a new term
loan of $3,500,000. The term loan bears interest at the fixed rate of 8.52% per
annum until December 31, 2001 and thereafter at the LIBOR base rate plus 2 1/2%
per annum, adjusted on a quarterly basis. The term loan is to be repaid in 48
consecutive monthly principal payments of $72,917, commencing January 15, 2001
and continuing until December 15, 2004. The term loan is secured by
substantially all of the assets of the Company.

In March 2000, the Company executed a further amendment to the Credit Agreement
with its commercial bank that included, among other provisions, for a letter of
credit facility that provides for letters of credit that will not exceed the
lesser of (a) $500,000, or (b) the bank's revolving credit commitment less
revolving credit loans outstanding on the date of the request.

     In March 2000, the Company obtained a short-term secured loan from its
commercial bank in the amount of $1,100,000. The loan bears interest at 8.75%
per annum and was due on June 15, 2000. The Company currently is seeking an
extension of the loan from its bank. The loan is personally guaranteed by
certain stockholders.

The amendments to the Credit Agreement include revised covenants requiring the
Company to maintain a minimum amount of tangible net worth, as defined, minimum
net income and certain other financial and debt service coverage ratios. The
Company was not in compliance with certain of these loan covenants as of April
30, 2000, but received a waiver of these covenant violations.

NOTE 4--DEFERRED COMPENSATION PLAN:

Effective November 1999, the Company established the Signature Eyewear Key
Employee Deferred Compensation Plan (the "Plan"), whereby eligible employees may
defer up to 90% of their annual salary. The Company provides a 50% matching
contribution on deferrals up to 6% of the employees' total annual cash
compensation.


                                     Page 9
<PAGE>

                    SIGNATURE EYEWEAR, INC. AND SUBSIDIARIES

                 NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
                                   (UNAUDITED)

NOTE 5--OPERATING LEASE:

Effective February 1, 2000, the Company expanded its business premises by
amending its current operating lease. The terms of the amended lease require the
Company to make additional monthly lease payments of $15,000 increasing to
$36,500 over a 64-month period.

NOTE 6--INCOME TAXES:

The income tax benefits for the six months ended and three months ended April
30, 2000 consists primarily of a refundable net operating loss carryback.




                                     Page 10
<PAGE>

ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
        OF OPERATIONS

         The following discussion and analysis, which should be read in
connection with the Company's Financial Statements and accompanying footnotes,
contain forward-looking statements that involve risks and uncertainties.
Important factors that could cause actual results to differ materially from the
Company's expectations are set forth in "Factors That May Affect Future Results"
below as well as those discussed elsewhere in this Form 10-Q. All subsequent
written or oral forward-looking statements attributable to the Company or
persons acting on its behalf are expressly qualified in their entirety by
"Factors That May Affect Future Results."

OVERVIEW

         The Company derives revenues primarily through the sale of eyeglass
frames under brand names pursuant to exclusive licenses (including Laura Ashley
Eyewear, Eddie Bauer Eyewear, Hart Schaffner & Marx Eyewear, Nicole Miller
Eyewear, Coach Eyewear) and which the Company owns, including Dakota Smith
Eyewear.

         The Company's best-selling product lines are Laura Ashley Eyewear and
Eddie Bauer Eyewear. Net sales of Laura Ashley Eyewear and Eddie Bauer Eyewear
together accounted for 61% and 82% of the Company's net sales in the quarter
ended April 30, 2000 (the "2000 second quarter") and the quarter ended April 30,
1999 (the "1999 second quarter"), respectively. Although the Company expects the
Laura Ashley Eyewear and Eddie Bauer lines to continue to be the Company's
leading sources of revenue for the near future, the Company expects to reduce
its dependence on these two lines through sales of an expanding product line,
including eyewear under brand-name licenses for COACH Eyewear, Eddie Bauer
Performance Sunwear featuring Oakley's patented lens technology, and bebe eyes,
and the Company's house brands.

         The Company's cost of sales consists primarily of payments to foreign
contract manufacturers that produce frames to the Company's specifications. The
complete development cycle for a new frame design typically takes approximately
twelve months from the initial design concept to the release. Generally, at
least six months are required to complete the initial manufacturing process.

         Before October 1, 1999, the Company distributed its products to
independent optical retailers in the United States primarily through exclusive
distributors. During the nine months ended July 31, 1999, sales through United
States distributors accounted for approximately 37% of the Company's total net
sales. Effective as of October 1, 1999, the Company terminated all but two of
its 24 United States distributors and hired its own national direct sales force,
which numbered 88 sales representatives at April 30, 2000 (with a target of 130
sales representatives by the end of fiscal 2000). The Company made this
conversion to stimulate sales growth by enabling the Company to work more
closely with the sales representatives selling its products, who are dedicated
to selling only the Company's products, and to require its sales representatives
to implement the Company's marketing plans.

     The Company's conversion to a direct sales force in the United States has
resulted in both an increase in the sales price the Company receives for
products previously sold through distributors and a substantial increase in the
selling expenses associated with the sale of these products. Unit sales prices
to optical retailers are typically 60% to 70% greater than sales prices to
distributors. In addition, selling expenses per unit sold are greater primarily
as a result of commissions payable to sales representatives.


                                    Page 11
<PAGE>


RESULTS OF OPERATIONS

         The following table sets forth, for the indicated periods, selected
statement of income data shown as a percentage of net sales.

<TABLE>
<CAPTION>

                                                                    THREE MONTHS             SIX MONTHS
                                                                   ENDED APRIL 30,        ENDED APRIL 30,
                                                                ---------------------- -----------------------
                                                                  2000        1999       2000        1999
                                                                ----------  ---------- ---------- ------------
<S>                                                                 <C>         <C>        <C>          <C>
Net Sales.....................................................      100.0%      100.0%     100.0 %      100.0%
Cost of sales.................................................       40.8        43.5       40.4         45.2
                                                                ----------  ---------- ---------- ------------
Gross profit..................................................       59.2        56.5       59.6         54.8
                                                                ----------  ---------- ---------- ------------
Operating expenses:
    Selling...................................................       48.9        27.8       39.6         29.0
    General and administrative................................       35.8        17.5       32.6         18.5
    Depreciation and amortization.............................        2.3         1.4        2.5          1.5
                                                                ----------  ---------- ---------- ------------
         Total operating expenses.............................       87.0        46.7       74.7         49.0
                                                                ----------  ---------- ---------- ------------
 Income (loss) from operations................................      (27.8)        9.8      (15.1)         5.8
                                                                ----------  ---------- ---------- ------------
 Other income (expense), net..................................       (2.1)        0.2       (1.8)         0.3
                                                                ----------  ---------- ---------- ------------
 Income (loss) before provision (benefit) for income taxes....      (29.9)       10.0      (16.9)         6.1
                                                                ----------  ---------- ---------- ------------
 Provision (benefit) for income taxes.........................      (10.0)        3.9       (5.8)         2.4
                                                                ----------  ---------- ---------- ------------
 Net income (loss)............................................      (19.9)%       6.1 %     (11.1)%        3.7%
                                                                ==========  ========== ========== ============
</TABLE>

         NET SALES. The following table sets forth, for the indicated periods,
selected net sales data in thousands, as a percentage of net sales and as a
percentage change in net sales from the 1999 first quarter to the 2000 first
quarter:

<TABLE>
<CAPTION>

                                  THREE MONTHS ENDED APRIL 30,                      SIX MONTHS ENDED APRIL 30,
                          ---------------------------------------------   ---------------------------------------------
                               2000              1999         CHANGE             2000             1999         CHANGE
                               ----              ----         ------             ----             ----         ------

<S>                       <C>       <C>    <C>        <C>       <C>        <C>       <C>    <C>        <C>       <C>
Laura Ashley Eyewear      $  4,320   34.9% $  6,013    49.4%    (28.2)%    $  8,821   36.2% $ 10,511    50.0%    (16.1)%
Eddie Bauer Eyewear          3,216   26.0%    3,962    32.5%    (18.8)%       6,876   28.2%    6,725    32.0%      2.2 %
Other Sales (1)              4,854   39.1%    2,203    18.1%    120.3 %       8,696   35.6%    3,798    18.0%    129.0 %
                          --------  ------ ---------  ------               --------  ------ ---------  ------
Total                     $ 12,390  100.0% $ 12,178   100.0%      1.7 %    $ 24,393  100.0% $ 21,034   100.0%     16.0 %
</TABLE>

---------------
(1)  Includes net sales of other designer eyewear (COACH Eyewear, Hart Schaffner
     & Marx, Jean Nate, Dakota Smith and Nicole Miller), private label frames,
     USA Optical and Optical Surplus, and other miscellaneous products.

         Net sales were $212,000 greater in the 2000 second quarter compared to
the 1999 second quarter and $3.3 million greater in the 2000 six months compared
to the 1999 six months. These sales increases were primarily the result of an
increase in per unit sales price due to the change in distribution strategy from
distributors to direct sales and to sales of Dakota Smith Eyewear, Nicole Miller
Eyewear and accessories (which the Company commenced selling in June 1999
following the acquisition of substantially all the assets of California Design
Studio, Inc. (the "CDS Acquisition")). Direct sales and domestic distributor
sales constituted 49.8% and 1%, respectively, of net sales in the 2000 second
quarter as compared to 7.6% and 40.3%, respectively, in the 1999 second quarter,
and 46.0% and 2.0%, respectively, of net sales in the 2000 six months as
compared to 7.3% and 39.8%, respectively, in the 1999 six months.

         International sales increased to 14.3% and 12.2% of net sales in the
three and six months ended April 30, 2000 as compared to 6.7% and 9.3% of net
sales in the comparable periods of 1999. This was due primarily to the sales
office and warehouse the Company acquired in the CDS Acquisition.


                                     Page 12
<PAGE>

         Domestic unit sales were materially lower in the 2000 periods compared
to the 1999 periods. This was due primarily to a decrease in unit sales to
independent optical retailers, as the Company's direct sales force has not
generated sales comparable to those previously generated by its distributors.
The Company's direct sales have also been adversely affected by logistical
problems in its warehouse and continuing problems with its new computer systems.

         GROSS PROFIT. Gross profit increased from $6,878,000 in the 1999 second
quarter to $7,331,000 for the 2000 second quarter and from $11,518,000 in the
1999 six months to $14,527,000 for the 2000 six months. These increases were due
principally to the increase in net sales and higher profit margins associated
with direct sales.

         OPERATING EXPENSES. Operating expenses increased from $5,690,000 in the
1999 second quarter to $10,774,000 in the 2000 second quarter due to an increase
of $2,673,000 in selling expenses, and an increase of $2,297,000 in general and
administrative expenses and an increase of $114,000 in depreciation and
amortization expenses. Selling expenses increased due to commissions paid in
connection with direct sales and additional convention expenses incurred in
connection with the launch of new licenses. General and administrative expenses
for the 2000 second quarter increased primarily as a result of $1,425,000 in
additional compensation and other expenses related to the Company hiring
additional mid-level managers and other personnel to prepare for the Company's
planned expansion and $256,000 due to the upgrade of the Company's warehouse and
operating systems. The increase in depreciation and amortization was due
primarily to amortization of goodwill and the covenant not to compete recorded
in the CDS Acquisition.

         Operating expenses increased from $10,311,000 in the 1999 six months to
$18,206,000 in the 2000 six months due to an increase of $3,564,000 in selling
expenses, and an increase of $4,036,000 in general and administrative expenses
and $295,000 in depreciation and amortization expenses. Selling expenses
increased due to commissions paid in connection with direct sales and additional
convention expenses incurred in connection with the launch of new licenses.
General and administrative expenses for the 2000 six months increased primarily
as a result of $2,353,000 in additional compensation and other expenses related
to the Company hiring additional mid-level managers and other personnel to
prepare for the Company's planned expansion and $619,000 due to the upgrade of
the Company's warehouse and operating systems. The increase in depreciation and
amortization was due primarily to amortization of goodwill and the covenant not
to compete recorded in the CDS Acquisition.

         NET OTHER INCOME (EXPENSE). Net other expense in the 2000 second
quarter and the 2000 six months of $265,000 and $450,000, respectively, was due
principally to interest expense resulting from higher levels of borrowing. Net
other income in the 1999 second quarter and the 1999 six months of $31,000 and
$73,000, respectively, relates primarily to interest income.

         PROVISION (BENEFIT) FOR INCOME TAXES. The Company's income tax benefit
was $1,239,000 and $1,407,000, for the 2000 second quarter and 2000 six months,
respectively, compared with a tax provision of $472,000 and $495,000 for the
1999 second quarter and 1999 six months, respectively. The changes in income
taxes reflect the changes in pretax income (loss).

         NET INCOME (LOSS). Net income was $746,000 in the 1999 second quarter
and net loss was $2,469,000 in the 2000 second quarter. Net income was $785,000
in the 1999 six months and net loss was $2,721,000 in the 2000 six months.

LIQUIDITY AND CAPITAL RESOURCES

         The Company entered into a credit agreement with its commercial bank
(the "Credit Agreement") in October 1997. Under the Credit Agreement, the bank
has agreed to provide to the Company a secured revolving line of credit up to an
aggregate of $5,000,000. At the Company's option, interest may be based on the
London Interbank Offered Rate plus 2%, or at the bank's


                                     Page 13
<PAGE>

         prime rate. At April 30, 2000, $4,833,000 was due to the bank under the
Credit Agreement, as compared to $1,500,000 at October 31, 1999. In December
1999, the Company entered into an agreement with its commercial bank to provide
the Company with a secured term loan of $3,500,000, with interest accruing at a
fixed rate of 8.52% per annum until December 31, 2001 and thereafter at the
LIBOR Base Rate plus 2.5% per annum. Principal payments are payable in 48
installments commencing on April 15, 2001 through December 15, 2004, when the
loan matures. At April 30, 2000, $3,500,000 was owed to the bank under the term
loan. In March 2000, the Company entered into an agreement with its commercial
bank to provide the company with a secured short-term loan of $1,100,000, with
interest accruing at the bank's prime rate. At April 30, 2000, $1,100,000 was
due to the bank under the loan. The loan matured on June 15, 2000, and the
Company currently is seeking an extension of the loan from its bank.

         Of the Company's accounts payable at April 30, 2000, $1,841,000 were
payable in foreign currency. To monitor risks associated with currency
fluctuations, the Company on a weekly basis assesses the volatility of certain
foreign currencies and reviews the amounts and expected payment dates of its
orders and accounts payable in those currencies. Based on those factors, the
Company may from time to time mitigate some portion of that risk by purchasing
forward commitments to deliver foreign currency to the Company. The Company held
$1,129,000 in foreign currency forward commitments at April 30, 2000.

         The Company believes that cash generated from operations, borrowings
from its commercial bank, credit from its suppliers and income tax refunds
(anticipated to be approximately $1.2 million) will be sufficient to fund its
working capital requirements in the short term. The Company's cash requirements
will depend on, among other things, its sales levels and corresponding increase
or reduction in accounts receivable and inventories. If the Company determines
that cash from operations will not be sufficient to fund its operations, it will
seek additional financing from its commercial bank and other sources. The
Company has substantially utilized its existing credit facility with its
commercial bank, and is presently in discussions to increase the facility. No
assurance can be given that its commercial bank will increase the facility. The
Company may also determine it would be necessary to implement cost-cutting
measures.

YEAR 2000

         The Company has not experienced any difficulties resulting from the
Year 2000 problem, which is the processing of date-sensitive information by the
information technology systems used by the Company and its key customers and
vendors. The Year 2000 problem is the result of computer programs being written
using two digits to define the applicable year, which could result in computer
programs recognizing a date using "00" as the year 1900 rather than 2000,
thereby causing miscalculations or system failures. The Company does not
currently anticipate any future Year 2000 problems.

FACTORS THAT MAY AFFECT FUTURE RESULTS

         The following is a discussion of certain factors that may affect the
Company's financial condition and results of operations.

         CONVERSION TO DIRECT SALES FORCE

         Historically, the Company has distributed its eyeglass frames to
independent optical retailers in the United States (other than California and
Arizona) through distributors. Sales through domestic distributors accounted for
approximately 37% of the Company's total net sales during the nine months ended
July 31, 1999. Effective October 1, 1999, the Company replaced all but two of
its 24 domestic distributors with its own direct national sales force of
approximately 88 sales representatives. The Company's conversion to a direct
sales force results in both an increase in the sales price the Company receives
for products previously sold through distributors and an increase in the selling
expenses associated with the sale of these products. Unit sales prices to
optical


                                     Page 14
<PAGE>

retailers are 60% to 70% greater than sales prices to distributors. In addition,
based on the same number of unit sales as in prior periods, the Company
anticipates that its selling expenses will increase as a percentage of net
sales, primarily as a result of commissions payable to sales representatives.
The Company believes it must expand its domestic direct sales force to
approximately 130 sales representatives to generate unit sales volumes
commensurate with unit sales volumes through its prior distributor network and
the increased volume due to the introduction of new product lines in fiscal
2000. While the Company is aggressively seeking qualified sales representatives,
no assurance can be given as to when, if ever, the Company will be able to
employ those additional representatives or that that number of representatives
will generate the unit sales volumes which could have been generated through its
distributor network.

         There can be no assurance that the Company will be successful in making
the transition to a national direct sales force. Failure to do so could have a
material adverse impact on the Company's business, operating results and
financial condition.

         NEED FOR ADDITIONAL FINANCING

         The Company believes that cash generated from operations, borrowings
from its commercial bank, credit from its suppliers and income tax refunds
(anticipated to be approximately $1.2 million) will be sufficient to fund its
working capital requirements in the short term. The Company's cash requirements
will depend on, among other things, its sales levels and corresponding increase
or reduction in accounts receivable and inventories. If the Company determines
that cash from operations will not be sufficient to fund its operations, it will
seek additional financing from its commercial bank and other sources. The
Company has substantially utilized its existing credit facility with its
commercial bank, and is presently in discussions to increase the facility. No
assurance can be given that its commercial bank will increase the facility. The
Company cannot be certain that additional financing will be available at the
time it needs additional funds or that, if available, it can be obtained on
terms favorable to the Company and its stockholders. If necessary funds are not
available, the Company may be required to implement cost-cutting measures, which
could have a material adverse effect on its business. Additionally, the Company
stockholders may be diluted if it raises additional funds through the sale of
its stock.

         SUBSTANTIAL DEPENDENCE UPON LAURA ASHLEY AND EDDIE BAUER LICENSES

         Net sales of Laura Ashley Eyewear and Eddie Bauer Eyewear accounted for
77%, 75% and 61% of the Company's net sales in fiscal 1998, fiscal 1999 and the
2000 second quarter, respectively. While the Company intends to continue
reducing its dependence on the Laura Ashley Eyewear and Eddie Bauer Eyewear
lines through the development and promotion of COACH Eyewear, Nicole Miller
Eyewear, Dakota Smith Eyewear and bebe eyes, as well as its own house brands,
the Company expects the Laura Ashley and Eddie Bauer Eyewear lines to continue
to be the Company's leading sources of revenue for the near future. The Company
markets Laura Ashley Eyewear through an exclusive license which terminates in
2001, but may be renewed by the Company at least through April 2006 so long as
the Company is not in breach of the license agreement and meets certain minimum
net sales requirements. The Company markets Eddie Bauer Eyewear through an
exclusive license which terminates in December 2002, but may be renewed by the
Company at least through 2008 so long as the Company is not in material default
and meets certain minimum net sales and royalty requirements. Each of Laura
Ashley and Eddie Bauer may terminate its respective license before its term
expires under certain circumstances, including a material default by the Company
or certain defined changes in control of the Company.

         MANAGEMENT OF GROWTH

         The Company has grown rapidly in recent years, with net sales
increasing from $20 million in fiscal 1994 to $44 million in fiscal 1999, and
the number of employees increasing from approximately 50 at October 31, 1994 to
239 at October 31, 1999. During fiscal 1999, the Company entered into license
agreements for COACH Eyewear, Eddie Bauer Performance Sunwear (with Oakley's
patented XYZ lens technology), and bebe eyes, and acquired the license for
Nicole Miller Eyewear and the brand name Dakota Smith, thereby making possible
growth in the Company's net sales. Further, in fiscal 1999 the Company added a
new national direct sales force, which it continues to expand, and upgraded its
management information systems, as well as its warehouse and other operations.
The Company's ability to manage its growth effectively and address its recent
operational difficulties will require it to continue to improve its operational,
financial and management information systems and controls and to train, motivate
and manage a larger number of employees. There can be no assurance that the
Company will be able to sustain its historic rate of revenue growth or manage
future growth successfully.


                                     Page 15
<PAGE>

         APPROVAL REQUIREMENTS OF BRAND-NAME LICENSORS

         The Company's business is predominantly based on its brand-name
licensing relationships. Each of the Company's licenses requires mutual
agreement of the parties for significant matters. Each of these licensors has
final approval over all eyeglass frames and other products bearing the
licensor's proprietary marks, and the frames must meet the licensor's general
design specifications and quality standards. Consequently, each licensor may, in
the exercise of its approval rights, delay the distribution of eyeglass frames
bearing its proprietary marks. The Company expects that each future license it
obtains will contain similar approval provisions. Accordingly, there can be no
assurance that the Company will be able to continue to maintain good
relationships with each licensor, or that the Company will not be subject to
delays resulting from disagreements with, or an inability to obtain approvals
from, its licensors. These delays could materially and adversely affect the
Company's business, operating results and financial condition.

         LIMITATIONS ON ABILITY TO DISTRIBUTE OTHER BRAND-NAME EYEGLASS FRAMES

         Each of the Company's licenses limits the Company's right to market and
sell products with competing brand names. The Laura Ashley license prohibits the
Company from selling any range of designer eyewear that is similar to Laura
Ashley Eyewear in price and any of style, market position and market segment.
The Eddie Bauer license, the COACH license and the bebe license prohibit the
Company from entering into license agreements with companies which Eddie Bauer,
COACH and bebe, respectively, believe are its direct competitors. The Hart
Schaffner & Marx license prohibits the Company from marketing and selling
another men's brand of eyeglass frames under a well-known fashion name with a
wholesale price in excess of $40. The Company expects that each future license
it obtains will contain some limitations on competition within market segments.
The Company's growth, therefore, will be limited to capitalizing on its existing
licenses in the prescription eyeglass market, introducing eyeglass frames in
other segments of the prescription eyeglass market, and manufacturing and
distributing products other than prescription eyeglass frames such as
sunglasses. In addition, there can be no assurance that disagreements will not
arise between the Company and its licensors regarding whether certain brand-name
lines would be prohibited by their respective license agreements. Disagreements
with licensors could adversely affect sales of the Company's existing eyeglass
frames or prevent the Company from introducing new eyewear products in market
segments the Company believes are not being served by its existing products.

         DEPENDENCE UPON CONTRACT MANUFACTURERS; FOREIGN TRADE REGULATION

         The Company's frames are manufactured to its specifications by a number
of contract manufacturers located outside the United States, principally in Hong
Kong/China, Japan, Italy and France. The manufacture of high quality metal
frames is a labor-intensive process which can require over 200 production steps
(including a large number of quality-control procedures) and from 90 to 180 days
of production time. These long lead times increase the risk of overstocking, if
the Company overestimates the demand for a new style, or understocking, which
can result in lost sales if the Company underestimates demand for a new style.
While a number of contract manufacturers exist throughout the world, there can
be no assurance that an interruption in the manufacture of the Company's
eyeglass frames will not occur. An interruption occurring at one manufacturing
site that requires the Company to change to a different manufacturer could cause
significant delays in the distribution of the styles affected. This could cause
the Company to miss delivery schedules for these styles, which could materially
and adversely affect the Company's business, operating results and financial
condition.


                                     Page 16
<PAGE>

         In addition, the purchase of goods manufactured in foreign countries is
subject to a number of risks, including foreign exchange rate fluctuations,
economic disruptions, transportation delays and interruptions, increases in
tariffs and duties, changes in import and export controls and other changes in
governmental policies. For frames purchased other than from Hong Kong/China
manufacturers, the Company pays for its frames in the currency of the country in
which the manufacturer is located and thus the costs (in United States dollars)
of the frames vary based upon currency fluctuations. Increases and decreases in
costs (in United States dollars) resulting from currency fluctuations generally
do not affect the price at which the Company sells its frames, and thus currency
fluctuations can impact the Company's gross margin and results of operations. In
fiscal 1999, Signature used manufacturers principally in Japan, Hong Kong/China,
Italy and France, which accounted for 37.3%, 35.2%, 11.8% and 3.5%,
respectively, (in cost) of the frames purchased by the Company.

         INTERNATIONAL SALES

         International sales accounted for approximately 8.4%, 8.7% and 14.3% of
the Company's net sales in fiscal 1998, fiscal 1999 and the 2000 second quarter,
respectively. These sales were primarily in England, Canada, Australia, New
Zealand, Holland and Belgium. The Company's international business is subject to
numerous risks, including the need to comply with export and import laws,
changes in export or import controls, tariffs and other regulatory requirements,
the imposition of governmental controls, political and economic instability,
trade restrictions, the greater difficulty of administering business overseas
and general economic conditions. Although the Company's international sales are
principally in United States dollars, sales to international customers may also
be affected by changes in demand resulting from fluctuations in interest and
currency exchange rates. There can be no assurance that these factors will not
have a material adverse effect on the Company's business, operating results and
financial condition.

         PRODUCT RETURNS

         The Company has a product return policy which it believes is standard
in the optical industry. Under that policy, the Company generally accepts
returns of non-discontinued product for credit, upon presentment and without
charge. The Company's product returns for fiscal 1998, fiscal 1999 and the 2000
second quarter amounted to 14%, 19% and 23% of gross sales (sales before
returns), excluding distributor returns of $4.4 million in fiscal 1999 in
connection with the Company's decision to terminate its relationship with
domestic distributors, respectively. The Company anticipates that it will likely
experience returns at a rate significantly exceeding its historical levels, due
to the Company's decision to sell directly to United States independent optical
retailers, rather than through distributors. The Company maintains reserves for
product returns which it considers adequate; however, an increase in returns
that significantly exceeds the amount of those reserves could have a material
adverse impact on the Company's business, operating results and financial
condition.

         AVAILABILITY OF VISION CORRECTION ALTERNATIVES

         The Company's future success could depend to a significant extent on
the availability and acceptance by the market of vision correction alternatives
to prescription eyeglasses, such as contact lenses and refractive (optical)
surgery, including a procedure named LASIK. While the Company does not believe
that contact lenses, refractive surgery or other vision correction alternatives
materially and adversely impact its business at present, there can be no
assurance that technological advances in, or reductions in the cost of, vision
correction alternatives will not occur in the future, resulting in their more
widespread use. Increased use of vision correction alternatives could result in


                                     Page 17
<PAGE>

decreased use of the Company's eyewear products, which would have a material
adverse impact on the Company's business, operating results and financial
condition.

         ACCEPTANCE OF EYEGLASS FRAMES; UNPREDICTABILITY OF DISCRETIONARY
         CONSUMER SPENDING

         The Company's success will depend to a significant extent on the
market's acceptance of the Company's brand-name eyeglass frames. If the Company
is unable to develop new, commercially successful styles to replace revenues
from older styles in the later stages of their life cycles, the Company's
business, operating results and financial condition could be materially and
adversely affected. The Company's future growth will depend in part upon the
effectiveness of the Company's marketing and sales efforts as well as the
availability and acceptance of other competing eyeglass frames released into the
market place at or near the same time, the availability of vision correction
alternatives, general economic conditions and other tangible and intangible
factors, all of which can change and cannot be predicted.

         The Company's success also will depend to a significant extent upon a
number of factors relating to discretionary consumer spending, including the
trend in managed health care to allocate fewer dollars to the purchase of
eyeglass frames, and general economic conditions affecting disposable consumer
income, such as employment business conditions, interest rates and taxation. Any
significant adverse change in general economic conditions or uncertainties
regarding future economic prospects that adversely affect discretionary consumer
spending generally, and purchasers of prescription eyeglass frames specifically,
could have a material adverse effect on the Company's business, operating
results and financial condition.

         COMPETITION

         The markets for prescription eyewear are intensely competitive. There
are thousands of styles, including hundreds with brand names. At retail, the
Company's eyewear styles compete with styles that do and do not have brand
names, styles in the same price range, and styles with similar design concepts.
To obtain board space at an optical retailer, the Company competes against many
companies, both foreign and domestic, including Luxottica Group S.p.A.
(operating in the United States through a number of its subsidiaries), Safilo
Group S.p.A. (operating in the United States through a number of its
subsidiaries) and Marchon Eyewear, Inc., as well as Signature's former
distributors. Signature's largest competitors have significantly greater
financial, technical, sales, manufacturing and other resources than the Company.
They also employ direct sales forces that are significantly larger than the
Company's, and are thus able to realize a higher gross profit margin. At the
major retail chains, the Company competes not only against other eyewear
suppliers, but also against the chains themselves, which license some of their
own brand names for design, manufacture and sale in their own stores. Luxottica,
one of the largest eyewear companies in the world, is vertically integrated in
that it manufactures frames, distributes them through direct sales forces in the
United States and throughout the world, and owns LensCrafters, one of the
largest United States retail optical chains.

         The Company competes in its target markets through the quality of the
brand names it licenses, its marketing, merchandising and sales promotion
programs, the popularity of its frame designs, the reputation of its styles for
quality, and its pricing policies. There can be no assurance that the Company
will be able to compete successfully against current or future competitors or
that competitive pressures faced by the Company will not materially and
adversely affect its business, operating results and financial condition.


                                     Page 18
<PAGE>

         DEPENDENCE ON KEY PERSONNEL

         The Company's success has and will continue to depend to a significant
extent upon its executive officers, including Bernard Weiss (Chief Executive
Officer and President), Michael Prince (Chief Financial Officer), Robert Fried
(Senior Vice President of Marketing) and Robert Zeichick (Vice President of
Advertising and Sales Promotion). The loss of the services of one or more of
these key employees could have a material adverse effect on the Company. The
Company has entered into employment agreements with each of Messrs. Weiss,
Prince, Fried and Zeichick, pursuant to which they have agreed to render
services to the Company until October 31, 2000. The Company maintains and is the
sole beneficiary of "key person" life insurance on Messrs. Weiss, Prince, Fried
and Zeichick in the amount of $1,500,000 each. In the event of the death of an
executive officer, a portion of the proceeds of the applicable policy would be
used to pay the Company's obligation under the officer's employment agreement.
There can be no assurance that the remaining proceeds of these policies will be
sufficient to offset the loss to the Company due to the death of that executive
officer. In addition, the Company's future success will depend in large part
upon its ability to attract, retain and motivate personnel with a variety of
creative, technical and managerial skills. There can be no assurance that the
Company will be able to retain and motivate its personnel or attract additional
qualified members to its management staff. The inability to attract and retain
the necessary managerial personnel could have a material adverse effect on the
Company's business, operating results and financial condition.

         CONTROL BY DIRECTORS AND EXECUTIVE OFFICERS

         The directors and executive officers of the Company own approximately
56.8% of the Company's outstanding shares. As a result, the directors and
executive officers control the Company and its operations, including the
approval of significant corporate transactions and the election of at least a
majority of the Company's Board of Directors and thus the policies of the
Company. The voting power of the directors and executive officers could also
serve to discourage potential acquirers from seeking to acquire control of the
Company through the purchase of the Common Stock, which might depress the price
of the Common Stock.

         QUARTERLY AND SEASONAL FLUCTUATIONS

         The Company's results of operations have fluctuated from quarter to
quarter and the Company expects these fluctuations to continue in the future.
Historically, the Company's net sales in the quarter ending January 31 (its
first quarter) have been lower than net sales in other fiscal quarters. The
Company attributes lower net sales in the first fiscal quarter in part to low
consumer demand for prescription eyeglasses during the holiday season and
year-end inventory adjustments by distributors and independent optical
retailers. A factor which may significantly influence results of operations in a
particular quarter is the introduction of a brand-name collection, which results
in disproportionate levels of selling expenses due to additional advertising,
promotions, catalogs and in-store displays. Introduction of a new brand may also
generate a temporary increase in sales due to initial stocking by retailers.
Other factors which can influence the Company's results of operations include
customer demand, the mix of distribution channels through which the eyeglass
frames are sold, the mix of eyeglass frames sold, product returns, delays in
shipment and general economic conditions.

         NO DIVIDENDS ANTICIPATED

         The Company does not currently intend to declare or pay any cash
dividends and intends to retain earnings, if any, for the future operation and
expansion of the Company's business.


                                     Page 19
<PAGE>

         POSSIBLE ANTI-TAKEOVER EFFECTS

         The Company's Board of Directors has the authority to issue up to
5,000,000 shares of Preferred Stock and to determine the price, rights,
preferences, privileges and restrictions, including voting rights, of those
shares without any further vote or action by the shareholders. The Preferred
Stock could be issued with voting, liquidation, dividend and other rights
superior to those of the Common Stock. The Company has no present intention to
issue any shares of Preferred Stock. However, the rights of the holders of
Common Stock will be subject to, and may be adversely affected by, the rights of
the holders of any Preferred Stock that may be issued in the future. The
issuance of Preferred Stock, while providing desirable flexibility in connection
with possible acquisitions and other corporate purposes, could have the effect
of making it more difficult for a third party to acquire a majority of the
outstanding voting stock of the Company, which may depress the market value of
the Common Stock. In addition, each of the Laura Ashley, Hart Schaffner & Marx,
Eddie Bauer, COACH and bebe licenses allows the licensor to terminate its
license upon certain events which under the license are deemed to result in a
change in control of the Company. The licensors' rights to terminate their
licenses upon a change in control of the Company could have the effect of
discouraging a third party from acquiring or attempting to acquire a controlling
portion of the outstanding voting stock of the Company and could thereby depress
the market value of the Common Stock.

ITEM 3.  QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

         The Company is exposed to market risks, which include foreign exchange
rates and changes in U.S. interest rates. The Company does not engage in
financial transactions for trading or speculative purposes.

         FOREIGN CURRENCY RISKS. During fiscal 1999, a maximum of $2,700,000 and
a minimum of $469,000 of the Company's accounts payable were payable in foreign
currency. During the 2000 second quarter, a maximum of $1,841,000 and a minimum
of $638,000 of the Company's accounts payable were payable in foreign currency.
These foreign currencies included Japanese Yen, Italian Lire and French Francs.
Any significant change in foreign currency exchange rates could therefore
materially affect the Company's business, operating results and financial
condition. To monitor risks associated with currency fluctuations, the Company
on a weekly basis assesses the volatility of certain foreign currencies and
reviews the amounts and expected payment dates of its purchase orders and
accounts payable in those currencies. Based on those factors, the Company may
from time to time mitigate some portion of that risk by purchasing forward
commitments to deliver foreign currency to the Company. The Company held forward
commitments for foreign currencies in the amount of $56,000 at October 31, 1999
and $1,129,000 at April 30, 2000. International sales accounted for
approximately 8.7% and 14.3% of the Company's net sales in fiscal 1999 and the
2000 second quarter, respectively. Although the Company's international sales
are principally in United States dollars, sales to international customers may
also be affected by changes in demand resulting from fluctuations in interest
and currency exchange rates. There can be no assurance that these factors will
not have a material adverse effect on the Company's business, operating results
and financial condition. For frames purchased other than from Hong Kong/China
manufacturers, the Company pays for its frames in the currency of the country in
which the manufacturer is located and thus the costs (in United States dollars)
of the frames vary based upon currency fluctuations. Increases and decreases in
costs (in United States dollars) resulting from currency fluctuations generally
do not affect the price at which the Company sells its frames, and thus currency
fluctuation can impact the Company's gross margin.


                                     Page 20
<PAGE>

         INTEREST RATE RISK. Under the Company's Credit Agreement, its bank has
agreed to provide the Company an unsecured revolving line of credit up to an
aggregate of $5,000,000. At the Company's option, interest may be based on the
London Interbank Offered Rate ("LIBOR") plus 2%, or at the bank's prime rate. At
April 30, 2000, $4,833,000 was due to the bank under the bank line of credit.
Any interest which may in the future become payable on the Company's bank line
of credit will be based on variable interest rates and will therefore be
affected by changes in market interest rates. The Company's $3,500,000 term loan
with its bank has a fixed interest rate until December 31, 2001, after which
time the rate becomes LIBOR plus 2.5%. Amounts due under the term loan after
December 31, 2001 will also be affected by changes in market interest rates. In
addition, the Company has fixed income investments consisting of cash
equivalents, which are also affected by changes in market interest rates. The
Company does not use derivative financial instruments in its investment
portfolio. The Company places its cash equivalents with high-quality financial
institutions, limits the amount of credit exposure to any one institution and
has established investment guidelines relative to diversification and maturities
designed to maintain safety and liquidity.


                                     Page 21
<PAGE>

                                    PART II.
                                OTHER INFORMATION

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

         At the Company's 2000 Annual Meeting of Shareholders held on April 28,
2000 (the "Annual Meeting"), the Company's shareholders elected Bernard Weiss,
Julie Heldman, Michael Prince, Daniel Warren, Maurice Buchsbaum and Joel Johnson
to serve as directors of the Company until the next annual meeting and until
their respective successors have been elected. Each of the directors were
elected by a vote of 4,416,890 shares in favor of, and 1,250 shares against, the
director. There were no broker non-votes at the Annual Meeting.

ITEM 6.  EXHIBITS AND REPORTS ON FORM 8-K.

      (a)      Exhibits:

               Exhibit 15    Letter Regarding Unaudited Interim Financial
                             Information.

               Exhibit 27    Financial Data Schedule.

      (b)      Reports on Form 8-K.

               None.


                                     Page 22
<PAGE>


                                   SIGNATURES

         Pursuant to the requirements 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: June 15, 2000                            SIGNATURE EYEWEAR, INC.


                                                By:  /S/ Michael Prince
                                                     -------------------------
                                                     Michael Prince
                                                     Chief Financial Officer


                                                     /S/ Michael Prince
                                                     -------------------------
                                                     Michael Prince
                                                     Chief Financial Officer
                                                     (Principal Financial and
                                                     Accounting Officer)


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