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


                       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 July 31, 2006

                                       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 [ ]

     Indicate by check mark whether the registrant is a large accelerated filer,
an accelerated filer, or a non-accelerated filer. See definition of "accelerated
filer and large accelerated filer" in Rule 12b-2 of the Exchange Act. (Check
one):

Large Accelerated Filer ___   Accelerated Filer ___   Non-accelerated Filer [X]

     Indicate by check mark whether the registrant is a shell company (as
defined in Rule 12b-2 of the Exchange Act).

                                 Yes [ ] No [X]

     State the number of shares outstanding of each of the issuer's classes of
common stock, as of the latest practicable date: 6,543,139 shares issued and
outstanding as of August 31, 2006.
================================================================================
<PAGE>

                             SIGNATURE EYEWEAR, INC.

                               INDEX TO FORM 10-Q


PART I   FINANCIAL INFORMATION                                             PAGE
                                                                           ----

Item 1   Financial Statements                                                3
         Balance Sheets                                                      3
         Statements of Operations                                            5
         Statements of Cash Flows                                            6
         Notes to the Financial Statements                                   8
Item 2   Management's Discussion and Analysis of Financial
         Condition and Results of Operations                                12
Item 3   Quantitative and Qualitative Disclosures about Market Risk         16
Item 4   Controls and Procedures                                            16


PART II  OTHER INFORMATION

Item 6   Exhibits                                                           17



















                                        2
<PAGE>
                                     PART I.
                              FINANCIAL INFORMATION

ITEM 1. FINANCIAL STATEMENTS

                                                         SIGNATURE EYEWEAR, INC.
                                                                  BALANCE SHEETS
                                              OCTOBER 31, 2005 AND JULY 31, 2006
--------------------------------------------------------------------------------

                                     ASSETS
<TABLE><CAPTION>
                                                                        July 31,        October 31,
                                                                          2006             2005
                                                                     ------------      ------------
Current assets
<S>                                                                  <C>               <C>
     Cash and cash equivalents                                       $    346,561      $    735,654
     Certificate of deposit, restricted                                   250,000           250,000
     Accounts receivable - trade, net of allowance for
         doubtful accounts of $68,334 and $ 141,603                     2,835,069         3,048,381
     Inventory                                                          5,584,628         5,003,652
     Promotional products and materials                                    89,478            48,143
     Prepaid expenses and other current assets                            135,820           178,400
     Deferred income taxes                                                212,500           127,500
                                                                     ------------      ------------
             Total current assets                                       9,454,056         9,391,730

Property and equipment, net                                               534,414           644,194
Total deposits and other assets                                           106,292           128,831
Deferred income taxes                                                     418,200           178,500
                                                                     ------------      ------------
                 Total assets                                        $ 10,512,962      $ 10,343,255
                                                                     ============      ============
</TABLE>
   The accompanying notes are an integral part of these financial statements.

                                        3
<PAGE>
                                                         SIGNATURE EYEWEAR, INC.
                                                                  BALANCE SHEETS
                                  OCTOBER 31, 2005 AND JULY 31, 2006 (UNAUDITED)
--------------------------------------------------------------------------------

                      LIABILITIES AND SHAREHOLDERS' DEFICIT
<TABLE><CAPTION>
                                                                        July 31,        October 31,
                                                                          2006             2005
                                                                     ------------      ------------
<S>                                                                  <C>               <C>
Current liabilities
     Accounts payable - trade                                        $  4,976,735      $  4,671,477
     Accrued expenses and other current liabilities                     1,381,095         1,776,280
     Reserve for customer returns                                         290,810           290,810
     Current portion of long-term debt                                    687,247           661,989
                                                                     ------------      ------------
         Total current liabilities                                   $  7,335,887      $  7,400,556

Long-term debt, net of current portion                                  5,876,299         6,391,647
                                                                     ------------      ------------
             Total liabilities                                         13,212,186        13,792,203
                                                                     ------------      ------------
Commitments and contingencies

Shareholders' deficit
     Preferred stock, $0.001 par value
         5,000,000 shares authorized
             Series A 2% convertible preferred stock, $0.001
             par value;
             1,360,000 shares authorized
             1,200,000 issued and outstanding                               1,200             1,200
     Common stock, $0.001 par value
         30,000,000 shares authorized
         6,543,139 shares and 6,301,889 issued
             and outstanding                                                6,543             6,302
     Additional paid-in capital                                        15,381,476        15,287,716
     Accumulated deficit                                              (18,088,443)      (18,744,166)
                                                                     ------------      ------------
                 Total shareholders' deficit                           (2,699,224)       (3,448,948)
                                                                     ------------      ------------
                     Total liabilities and shareholders' deficit     $ 10,512,962      $ 10,343,255
                                                                     ============      ============
</TABLE>
   The accompanying notes are an integral part of these financial statements.

                                        4
<PAGE>
                                                         SIGNATURE EYEWEAR, INC.
                                                         STATEMENT OF OPERATIONS
   FOR THE THREE MONTHS AND NINE MONTHS ENDED JULY 31, 2006 AND 2005 (UNAUDITED)
--------------------------------------------------------------------------------
<TABLE><CAPTION>
                                               For The Three Months Ended          For The Nine Months Ended
                                             ------------------------------      ------------------------------
                                               July 31,          July 31,          July 31,          July 31,
                                                 2006              2005              2006              2005
                                             ------------      ------------      ------------      ------------
<S>                                          <C>               <C>               <C>               <C>
Net sales                                    $  5,690,177      $  6,277,520      $ 17,136,485      $ 19,068,703
Cost of sales                                   1,875,156         2,240,311         5,743,337         6,651,755
                                             ------------      ------------      ------------      ------------
Gross profit                                    3,815,021         4,037,209        11,393,148        12,416,948
                                             ------------      ------------      ------------      ------------

Operating expenses
     Selling                                    2,125,329         1,635,361         6,242,782         5,878,635
     General and administrative                 1,394,368         1,469,375         4,240,634         4,680,775
     Depreciation and amortization                 52,463            96,262           150,437           279,192
                                             ------------      ------------      ------------      ------------
         Total operating expenses               3,572,160         3,200,998        10,633,853        10,838,602
                                             ------------      ------------      ------------      ------------

Income from operations                            242,861           836,211           759,295         1,578,346
                                             ------------      ------------      ------------      ------------

Other income (expense)
     Sundry income (expense)                         --                --                --              22,223
     Interest expense                            (140,068)         (141,566)         (420,974)         (420,703)
                                             ------------      ------------      ------------      ------------
         Total other income (expense)            (140,068)         (141,566)         (420,974)         (398,480)
                                             ------------      ------------      ------------      ------------

Income before provision for
      income taxes                                102,793           694,645           338,321         1,179,866
Provision for(benefit from) income taxes         (126,737)         (151,445)         (317,400)         (143,505)
                                             ------------      ------------      ------------      ------------
Income                                            229,530           846,090           655,721         1,323,371
                                             ------------      ------------      ------------      ------------

Net income available to
     common stock shareholders               $    229,530      $    846,090      $    655,721      $  1,323,371
                                             ============      ============      ============      ============
Diluted earnings per share                   $       0.04      $       0.13      $       0.10      $       0.21
                                             ============      ============      ============      ============
Basic earnings per share                     $       0.04      $       0.13      $       0.10      $       0.21
                                             ============      ============      ============      ============
Weighted-average common shares
     outstanding - Diluted                      6,530,163         6,301,889         6,530,163         6,259,032
                                             ============      ============      ============      ============
Weighted-average common shares
     outstanding - Basic                        6,381,677         6,370,310         6,381,677         6,377,214
                                             ============      ============      ============      ============
</TABLE>
   The accompanying notes are an integral part of these financial statements.

                                        5
<PAGE>
                                                         SIGNATURE EYEWEAR, INC.
                                                         STATEMENT OF CASH FLOWS
                    FOR THE NINE MONTHS ENDED JULY 31, 2006 AND 2005 (UNAUDITED)
--------------------------------------------------------------------------------
<TABLE><CAPTION>
                                                                 2006              2005
                                                             ------------      ------------
<S>                                                          <C>               <C>
Cash flows from operating activities
    Net income                                               $    655,721      $  1,323,371
    Adjustments to reconcile net income
      to net cash provided by (used in)
      operating activities:
        Deferred tax asset                                       (324,700)         (153,000)
        Depreciation and amortization                             150,436           279,192
        Provision for bad debts                                   (73,269)          (83,762)
        (Increase) decrease in:
          Accounts receivable - trade                             286,580          (496,756)
          Inventories                                            (580,976)         (157,329)
          Promotional products and materials                      (41,335)          (32,572)
          Prepaid expenses and other current assets                42,580           (55,800)
        Increase (decrease) in:
          Accounts payable - trade                                305,258          (113,945)
          Accrued expenses and other current liabilities         (395,185)         (377,965)
                                                             ------------      ------------
Net cash provided by operating activities                          25,110           131,434
                                                             ------------      ------------
Cash flows from investing activities
    Purchase of property and equipment                            (40,654)          (83,150)
    Deposits and other assets                                      22,539             1,270
                                                             ------------      ------------
Net cash (used in) investing activities                           (18,115)          (81,880)
                                                             ------------      ------------
</TABLE>

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

                                        6
<PAGE>
                                                         SIGNATURE EYEWEAR, INC.
                                                         STATEMENT OF CASH FLOWS
                    FOR THE NINE MONTHS ENDED JULY 31, 2006 AND 2005 (UNAUDITED)
--------------------------------------------------------------------------------
<TABLE><CAPTION>
                                                                 2006              2005
                                                             ------------      ------------
<S>                                                          <C>               <C>
Cash flows from financing activities
    Net increase in lines of credit                               205,000              --
    Proceeds from short-term debt                                    --             350,000
    Payments on short-term debt                                  (100,000)         (457,832)
    Borrowings on long-term debt                                     --             406,000
    Payments on long-term debt                                   (595,089)         (280,252)
    Proceeds from sale of common stock                             94,001            12,000
                                                             ------------      ------------
Net cash (used in) provided by financing activities              (396,088)           29,916
                                                             ------------      ------------
Net (decrease) increase in cash and cash equivalents             (389,093)           79,470


Cash and cash equivalents, beginning of year                      735,654           522,370
                                                             ------------      ------------
Cash and cash equivalents, end of period                     $    346,561      $    601,840
                                                             ============      ============

Supplemental disclosures of cash
    flow information

      Interest paid                                          $    256,597      $    297,794
                                                             ============      ============
      Income taxes paid                                      $      7,250      $      9,495
                                                             ============      ============
</TABLE>

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

                                        7
<PAGE>

                    NOTES TO FINANCIAL STATEMENTS (UNAUDITED)

NOTE 1. ORGANIZATION AND LINE OF BUSINESS

     Signature Eyewear, Inc. (the "Company") designs, markets and distributes
eyeglass frames throughout the United States and internationally. Primary
operations are conducted from leased premises in Inglewood, California, with a
warehouse and sales office in Belgium.

NOTE 2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

Basis of Presentation
---------------------

     The accompanying financial statements have been prepared in conformity with
accounting principles generally accepted in the United States of America for
interim financial information and with the instructions to Form 10-Q and
Regulation S-X. Accordingly, they do not include all of the information and
footnotes required by accounting principles generally accepted in the United
States of America for complete financial statements. In the opinion of
management, all normal, recurring adjustments considered necessary for a fair
presentation have been included. These financial statements should be read in
conjunction with the audited financial statements and notes thereto included in
the Company's Annual Report on Form 10-K for the year ended October 31, 2005.
The results of operations for the nine months ended July 31, 2006 are not
necessarily indicative of the results that may be expected for the year ended
October 31, 2006.

Inventories
-----------

     Inventories are stated at the lower of cost (first-in first-out method) or
market.

Property and Equipment
----------------------

     Property and equipment are recorded at cost. Depreciation and amortization
are provided using the straight-line method over the estimated useful lives of
the assets as follows:

     Office furniture and equipment                    7 years
     Computer equipment                                3 years
     Software                                          3 years
     Machinery and equipment                           5 years
     Leasehold improvements                            term of the lease

Fair Value of Financial Instruments
-----------------------------------

     For certain of the Company's financial instruments, including cash and cash
equivalents, accounts receivable, accounts payable - trade, and line of credit,
the carrying amounts approximate fair value due to their short maturities. The
amounts shown for long-term debt also approximate fair value because current
interest rates offered to the Company for debt of similar maturities are
substantially the same.

Income (Loss) per Share
-----------------------

     The Company calculates income (loss) per share in accordance with SFAS No.
128, "Earnings per Share." Basic income (loss) per share is computed by dividing
the income (loss) available to common shareholders by the weighted-average
number of common shares outstanding. Diluted income (loss) per share is computed
similar to basic income (loss) per share except that the denominator is
increased to include the number of additional common shares that would have been
outstanding if the potential common shares had been issued and if the additional
common shares were dilutive. The following data show the amounts used in
computing earnings per share and the effect on the weighted average number of
shares of dilutive potential common stock:

                                        8
<PAGE>

                                                             NINE MONTHS ENDED
                                                               JULY 31, 2006
                                                             -----------------

     Net income available to common stock shareholders          $  655,721
                                                                ==========
     Weighted average number of common shares used
       in basic EPS                                              6,381,677
     Effect of dilutive stock options                              148,486
                                                                ----------
     Weighted average number of common shares and dilutive
       potential common shares used in dilutive EPS              6,530,163
                                                                ==========

     The Company had dilutive shares for the nine months ended July 31, 2006,
but did not have dilutive shares for the nine months ended July 31, 2005.

     The following potential common shares have been excluded from the
computations of diluted income (loss) per share for the three and nine months
ended July 31, 2006 and 2005 because the exercise price was above the average
market price for all periods presented:

                                        2006            2005
                                     ---------       ---------

     Stock options                      97,500         107,100
     Warrants                          100,000         100,000
                                     ---------       ---------
        TOTAL                          197,500         207,100
                                     =========       =========

Foreign Currency Translation
----------------------------

     The Company's Belgium branch's functional currency is the Euro. Assets and
liabilities are translated at exchange rates in effect at the balance sheet
date. Income and expense accounts are translated at average rates. In addition,
some of the Company's liabilities are denominated in foreign currencies. Such
liabilities are converted into U.S. Dollars at the exchange rate prevailing at
the balance sheet date. The resulting gains or losses were immaterial for the
periods ended July 31, 2006 and 2005.

Estimates
---------

     The preparation of financial statements 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 revenue and expenses during
the reporting period. Actual results could differ from those estimates.

NOTE 3. PROPERTY AND EQUIPMENT

     Property and equipment at the dates indicated consisted of the following:

                                        9
<PAGE>
                                                         JULY 31,    OCTOBER 31,
                                                           2006         2005
                                                        ----------   ----------

     Computer equipment                                 $1,613,531   $1,577,915
     Leasehold improvements                              1,200,590    1,200,590
     Software                                            1,137,624    1,132,660
     Office furniture and equipment                        912,756      912,756
     Machinery and equipment                               709,370      709,295
                                                        ----------   ----------
                                                        $5,573,871   $5,533,216

     Less accumulated depreciation and
       amortization                                      5,039,459    4,889,022
                                                        ----------   ----------
          TOTAL                                         $  534,412   $  644,194
                                                        ==========   ==========

     Depreciation and amortization expense was $150,437 and $279,192 for the
nine months ended July 31, 2006 and 2005, respectively, and $52,463 and $96,262
for the three months ended July 31, 2006 and 2005, respectively.

NOTE 4. SHORT-TERM AND LONG-TERM DEBT

     Short-term and long-term debt at the dates indicated consisted of the
following:

                                                         JULY 31,    OCTOBER 31,
                                                           2006         2005
                                                        ----------   ----------

Term note payable to Home Loan Investment
     Corporation ("HLIC") in the original amount
     of $3,000,000, bearing interest at 10% per
     annum, secured by the assets of the Company,
     a letter of credit in the amount of
     $1,250,000 and a $250,000 certificate of
     deposit issued by HLIC; payments of interest
     only through March 2004 and thereafter
     monthly installments of principal and
     interest ($39,777) with a payment of
     $2,044,206 in April 2008                           $2,587,252   $2,744,575

Revolving line of credit from HLIC in the amount
     of $500,000, secured by the collateral
     securing the HLIC term note, bearing interest
     at 12% per annum on the outstanding balance,
     due in April 2008                                     500,000      295,000

Term note payable to HLIC in the original amount
     of $655,693, secured by the collateral
     securing the HLIC note, bearing interest at
     12% per annum and due and payable on July 31,
     2007                                                  655,693      655,693

Term note payable to Bluebird Finance Limited in
     the original amount of $2,900,000, secured by
     the assets of the Company (subordinated to
     the HLIC credit facility), bearing interest
     at 5% per annum, and payable in quarterly
     installments of $72,500, commencing in July
     2005                                                2,537,500    2,863,901

Note payable to a commercial bank in the original
     amount of $750,000, secured by certain
     property and equipment, bearing interest at
     4% per annum, payable in 39 monthly
     installments of $13,812, commencing March 31,
     2003, with the remaining principal and
     accrued interest due and payable in full on
     February 28, 2008                                     283,101      394,467

Term note payable to Eagle Star Finance in the
     original amount of $350,000, unsecured,
     bearing interest at 3% per annum payable in
     monthly installments of $50,000 commencing in
     May, 2005, with the remaining principal and
     interest due on November 27, 2005                         --       100,000
                                                        ----------   ----------
                                                        $6,563,546   $7,053,636
Less current portion                                       687,247      661,989
                                                        ----------   ----------
     LONG-TERM PORTION                                  $5,876,299   $6,391,647
                                                        ==========   ==========

                                       10
<PAGE>

NOTE 5. INCOME TAXES

            The benefit for income taxes for the three and nine months ended
July 31, 2006 includes decreases of $129,200 and $324,700, respectively, in the
valuation allowance for deferred tax assets. The decrease in the valuation
allowance is primarily due to the Company's determination that the future tax
benefits of the net operating loss carryforwards may be realized.

NOTE 6. CHANGE IN ACCOUNTING PRINCIPLES

Share-Based Compensation
------------------------

     The Company was required to adopt the provisions of FASB Statement No.
123R, "Share-Based Payment" ("SFAS 123R"), effective November 1, 2005. Prior to
November 1, 2005, the Company used the fair value method permitted by FASB
Statement No. 123, "Accounting for Stock-Based Compensation" ("SFAS 123"), to
account for stock options granted to employees. The Company had elected the
disclosure-only provisions of SFAS 123 and, accordingly, did not recognize
compensation expense for stock option grants.

     The provisions of SFAS 123R are applicable to stock options awarded by the
Company beginning November 1, 2005. Under SFAS No. 123R, the Company is required
to recognize compensation expense for options granted after November 1, 2005.
The Company used the modified prospective application transition method in
adoption of SFAS No. 123R. Under this transition method, the Company was also
required to recognize compensation expense for the portion of awards granted
before November 1, 2005 for which the requisite service had not been rendered.
Provisions of SFAS No. 123R preclude the Company from changing the grant date
fair value of awards granted before November 1, 2005. Using the
Black-Scholes-Merton option pricing model, management has determined that the
result of recognizing compensation expense for options granted before October
31, 2005 would have an insignificant effect on income and cash flows for the
period ended July 31, 2006. Furthermore, no options were granted since October
31, 2005.

NOTE 7. RECENT ACCOUNTING PRONOUNCEMENTS

     In December 2004, the Financial Accounting Standards Board ("FASB") issued
SFAS 153, "Exchanges of Nonmonetary Assets, an amendment of APB Opinion No. 29,
Accounting for Nonmonetary Transactions" ("SFAS No. 153"). The amendments made
by SFAS No. 153 are based on the principle that the exchange of nonmonetary
assets should be measured using the estimated fair market value of the assets
exchanged. SFAS No. 153 eliminates the narrow exception for nonmonetary
exchanges of similar productive assets, and replaces it with a broader exception
for exchanges of nonmonetary assets that do not have commercial substance. A
nonmonetary exchange has "commercial substance" if the future cash flows of the
entity are expected to change significantly as a result of the transaction. This
pronouncement is effective for monetary exchanges in fiscal periods beginning
after June 15, 2005. The initial adoption of SFAS No. 153 did not have an impact
on the Company's financial statements.

     In March 2005, the FASB issued FASB Interpretation No. 47, "Accounting for
Conditional Asset Retirement Obligations" ("FIN No. 47"). FIN No. 47 clarifies
that an entity must record a liability for a "conditional" asset retirement
obligation if the fair value of the obligation can be reasonably estimated. The
types of asset retirement obligations that are covered by the Interpretation are
those for which an entity has a legal obligation to perform an asset retirement
activity; however, the timing and/or method of settling the obligation are
conditional on a future event that may or may not be within the control of the
entity. FIN No. 47 also clarifies when an entity would have sufficient
information to reasonably estimate the fair value of an asset retirement
obligation. FIN No. 47 is effective no later than the end of fiscal years ending
after December 15, 2005. The initial adoption of FIN No. 47 did not have an
impact on the Company's financial statements.

                                       11
<PAGE>

     In May 2005, the FASB issued SFAS No. 154, "Accounting Changes and Error
Corrections" ("SFAS No. 154"). SFAS No. 154 supersedes APB Opinion No. 20,
"Accounting Changes," and SFAS No. 3, "Reporting Accounting Changes in Interim
Financial Statements." SFAS No. 154 requires all voluntary changes in accounting
principles because of preferability or any change resulting from the issuance of
an accounting pronouncement that does not include detailed transition
instructions to be handled by retrospective application, unless it is
impracticable to determine the effect on prior period financial statements. SFAS
No. 154 is effective for fiscal years beginning after December 15, 2005. The
adoption of SFAS No. 154 is not expected to have a material impact on the
Company's financial statements.

     On September 15, 2005, the Emerging Issues Task Force ("EITF") of the FASB
reached a consensus on Issue 04-13, "Accounting for Purchases and Sales of
Inventory with the Same Counterparty." EITF 04-13 describes the circumstances
under which two or more inventory transactions with the same counterparty should
be viewed as a single nonmonetary transaction, and describes the circumstances
under which nonmonetary exchanges of inventory within the same line of business
should be recognized at fair value. EITF 04-13 will be effective for
transactions completed in reporting periods beginning after March 15, 2006. The
Company is currently evaluating the applicability of EITF 04-13 to the Company's
inventory transactions.

     In February 2006, the FASB issued SFAS No. 155, "Accounting for Certain
Hybrid Financial Instruments" ("SFAS No. 155"). This standard amends the
guidance in SFAS No. 133, "Accounting for Derivative Instruments and Hedging
Activities," and SFAS No. 140, "Accounting for Transfers and Servicing of
Financial Assets and Extinguishments of Liabilities." SFAS No. 155 allows
financial instruments that have been embedded derivatives to be accounted for as
whole (eliminating the need to bifurcate the derivative from its host) if the
holder elects to account for the whole instrument on a fair value basis. The
provisions of SFAS No. 155 nullify or amend certain Derivatives Implementation
Group Issues. SFAS No. 155 is effective for all financial instruments acquired
or issued after the beginning of an entity's first fiscal year that begins after
September 14, 2006. The Company does not expect the adoption of this Statement
to have any material effect on its financial statements.

     In March 2006, the FASB issued SFAS No. 156, "Accounting for Servicing of
Financial Assets - an amendment of FASB Statement No. 140" (SFAS No. 156"). This
standard amends the guidance in SFAS No. 140, "Accounting for Transfers and
Servicing of Financial Assets and Extinguishment of Liabilities." Among other
requirements, SFAS No. 156 requires an entity to recognize a servicing asset or
servicing liability each time it undertakes an obligation to service a financial
asset by entering into a servicing contract in any of the following situations:
(a) a transfer of the servicer's financial assets that meets the requirements
for sale accounting; (b) a transfer of the servicer's financial assets to a
qualifying special-purpose entity in a guaranteed mortgage securitization in
which the transferor retains all of the resulting securities and classifies them
as either available-for-sale securities or trading securities in accordance with
SFAS No. 115, "Accounting for Certain Investments in Debt and Equity
Securities"; or (c) an acquisition or assumption of an obligation to service a
financial asset that does not relate to financial assets of the servicer or its
consolidated affiliates. SFAS No. 156 is effective as of the beginning of an
entity's fiscal year that begins after September 15, 2006, with earlier adoption
permitted. The Company does not expect the adoption of this Statement to have
any material effect on its financial statements.

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" in the
Company's Annual Report on Form 10-K for the year ended October 31, 2005. All
subsequent written and 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." Those forward-looking
statements relate to, among other things, the Company's plans and strategies,
new product lines, and relationships with licensors, distributors and customers,
distribution strategies and the business environment in which the Company
operates.

     The following discussion and analysis should be read in connection with the
Company's financial statements and related notes and other financial information
included elsewhere in this Form 10-Q.

                                       12
<PAGE>

OVERVIEW

     The Company derives revenues through the sale of eyeglass frames under
licensed brand names, including Laura Ashley Eyewear, bebe eyes, Nicole Miller
Eyewear, Hart Schaffner Marx Eyewear, Hummer Eyegear, Dakota Smith Eyewear, and
its proprietary Signature brand. The Company intends to launch its Cutter & Buck
Eyewear line in the fall of 2006. The Company's cost of sales consists primarily
of purchases from foreign contract manufacturers that produce frames and cases
to the Company's specifications.

     The Company reported net income of $229,000 and $656,000 for the three
months and nine months ended July 31, 2006 (the "2006 Quarter" and the "2006
Nine Months," respectively) compared to net income of $846,000 and $1,323,000
for the three months and nine months ended July 31, 2005 (the "2005 Quarter" and
"2005 Nine Months," respectively). This decrease in net income was due primarily
to 5.5% and 8.2% decreases in net sales for the three and nine-month periods
ending July 31, 2006, respectively, as compared to the prior year. The Company
continues to experience delivery delays from its frame manufactures resulting in
increased back orders. The Company anticipates that it will continue to
experience longer factory delivery times at least through the end of the fiscal
year. In the 2005 Quarter, the Company recognized a one-time reduction in
accrued minimum royalties on Eddie Bauer Eyewear of $552,000, which reduced
selling expenses during the 2005 Quarter. The Company recognized income tax
benefits of $129,000 and $325,000 in the 2006 Quarter and 2006 Nine Months,
respectively, resulting from a decrease in the valuation allowance on its
deferred tax asset relating primarily to its net operating loss carryforwards.

     The Company reduced long-term debt (including current portion) from $7.1
million at October 31, 2005 to $6.6 million at July 31, 2006 due to scheduled
pay-offs. As a result of its net income and the sale of $93,000 of common stock
under its 1997 Stock Plan, the Company's stockholders' deficit decreased from
$3.4 million at October 31, 2005 to $2.7 million at July 31, 2006.

RESULTS OF OPERATIONS

     The following table sets forth for the periods indicated selected
statements of operations data shown as a percentage of net sales.
<TABLE><CAPTION>

                                                     THREE MONTHS ENDED      NINE MONTHS ENDED
                                                          JULY 31,                JULY 31,
                                                     ------------------      -----------------
                                                      2006        2005        2006        2005
                                                     -----       -----       -----       -----
<S>                                                  <C>         <C>         <C>         <C>
     Net sales                                       100.0%      100.0%      100.0%      100.0%
     Cost of sales                                    33.0        35.7        33.5        34.9
                                                     -----       -----       -----       -----
     Gross profit                                     67.0        64.3        66.5        65.1
                                                     -----       -----       -----       -----
     Operating expenses:
          Selling                                     37.4        26.1        36.4        30.8
          General and administrative                  24.5        23.4        24.7        24.5
          Depreciation and amortization                0.9         1.5         0.9         1.5
                                                     -----       -----       -----       -----
                  Total operating expenses            62.8        51.0        62.0        56.8
                                                     -----       -----       -----       -----
      Income from operations                           4.2        13.3         4.5         8.3
                                                     -----       -----       -----       -----
      Other income (expense), net                     (2.5)       (2.3)       (2.5)       (2.1)
                                                     -----       -----       -----       -----
      Income before provision for income taxes         1.7        11.0         2.0         6.2
                                                     -----       -----       -----       -----
      Provision (benefit) for income taxes            (2.2)       (2.4)       (1.8)       (0.8)
                                                     -----       -----       -----       -----
      Net income                                       3.9%       13.4%        3.8%        7.0%
                                                     =====       =====       =====       =====
</TABLE>

     NET SALES. Net sales decreased by 9.4% or $588,000 from the 2005 Quarter to
the 2006 Quarter and 10.1% or $1,933,000 from the 2005 Nine Months to the 2006
Nine Months. The following table contains information regarding net sales for
the periods indicated:

                                       13
<PAGE>
<TABLE><CAPTION>
                                   THREE MONTHS ENDED JULY 31,                      NINE MONTHS ENDED JULY 31,
                                ---------------------------------             -----------------------------------
     Dollars in thousands             2006              2005         CHANGE          2006               2005         CHANGE
                                ---------------   ---------------   -------   ----------------   ----------------   -------
<S>                             <C>       <C>     <C>       <C>       <C>     <C>        <C>      <C>       <C>        <C>
     bebe eyes                  $1,755    30.8%   $1,522    24.2%     15.3%   $ 4,670    27.2%    $4,327    22.7%      7.9%
     Nicole Miller Eyewear       1,223    21.5     1,136    18.1       7.7%     3,563    20.8      3,488    18.3       2.2%
     Laura Ashley Eyewear          938    16.5     1,465    23.3    (36.0)%     3,202    18.7      4,453    23.4    (28.1)%
     Other                       1,774    31.2     2,155    34.4    (17.7)%     5,701    33.3      6,801    35.6    (16.2)%
                                ------   ------   ------   ------   -------   -------   ------   -------   ------   -------
     Total                      $5,690   100.0%   $6,278   100.0%    (9.4)%   $17,136   100.0%   $19,069   100.0%   (10.1)%
                                ======   ======   ======   ======   =======   =======   ======   =======   ======   =======
</TABLE>

     Net sales of bebe eyes and Nicole Miller Eyewear continued to increase.
This increase was offset by the discontinuation of Eddie Bauer Eyewear and the
decline in Laura Ashley Eyewear while the sales of other eyewear lines remained
relatively constant. The Company elected not to exercise the renewal option on
its Eddie Bauer Eyewear license, which terminated as of December 31, 2005. The
Company may sell off its existing inventory through December 31, 2006. However,
net sales of Eddie Bauer Eyewear were $667,000 and $1,906,000 lower in the 2006
Quarter and the 2006 Nine Months compared to the comparable periods in 2005.

     Direct sales to independent optical retailers increased $992,000 from the
2005 Quarter to the 2006 Quarter and $872,000 from the 2005 Nine Months to the
2006 Nine Months. Sales to national optical retail chains decreased $345,000
from the 2005 Quarter to the 2006 Quarter and $1,417,000 from the 2005 Nine
Months to the 2006 Nine Months due to the consolidation of national chains.
International sales decreased $368,000 in the 2006 Quarter from the 2005 Quarter
and $544,000 in the 2006 Nine Months from the 2005 Nine Months.

     Net sales reflect gross sales less a reserve for product returns
established by the Company based on products that the Company is aware will be
returned as of that date. The Company's reserve was $535,000 at July 31, 2006.
The Company had $928,000 and $994,000 in returns in the 2006 Quarter and 2005
Quarter, respectively, but due to the lower sales in 2006, the product returns
as a percentage of gross sales was 14.5% for the 2006 Quarter as compared to
14.0% in the 2005 Quarter.

     The Company also maintains an additional allowance for product returns.
Changes in the allowance in any period will have a corresponding impact on net
sales during the period. The Company's allowance for product returns did not
change in the 2006 Quarter.

     GROSS PROFIT AND GROSS MARGIN. Gross profit decreased $222,000 or 5.5% from
the 2005 Quarter to the 2006 Quarter and $1,024,000 or 8.2% from the 2005 Nine
Months to the 2006 Nine Months due to lower net sales. The gross margin was 67%
and 66.5% in the 2006 Quarter and 2006 Nine Months, respectively, compared to
64.3% and 65.1% in the 2005 Quarter and 2005 Nine Months, respectively, because
of sales of higher margin frames and price increases on selected frame styles.

     SELLING EXPENSES. Selling expenses for the 2006 Quarter increased $490,000
from the 2005 Quarter primarily due to an increase of $454,000 in royalty
expense. This increase was due to a one-time reduction in the 2005 Quarter of
$552,000 in accrued minimum royalties on Eddie Bauer Eyewear. Selling expense
increased $364,000 or 6.2% from the 2005 Nine Months to the 2006 Nine Months due
primarily to a $197,000 increase in promotion expense, the change in payroll tax
allocation described below, and the increase in royalty expense as described
above. Advertising expense and salaries and commission expense decreased by
$154,000 and $128,000, respectively, from the 2005 Nine Months to the 2006 Nine
Months.

     Until fiscal 2006, the Company included all payroll taxes in general and
administrative expense. Commencing in fiscal 2006, the Company has included
payroll taxes for sales personnel in selling expense. This change resulted in
$46,000 and $177,000 of payroll taxes in the 2006 Quarter and 2006 Nine Months,
respectively, being included in selling expense and not general and
administrative expense.

     GENERAL AND ADMINISTRATIVE EXPENSES. As described above, until fiscal 2006,
the Company included all payroll taxes in general and administrative expense.
Commencing in fiscal 2006, the Company has included payroll taxes for sales

                                       14
<PAGE>

personnel in selling expense. This change resulted in $46,000 and $177,000 of
payroll taxes in the 2006 Quarter and 2006 Nine Months, respectively, being
included in selling expense and not general and administrative expense.

     General and administrative expenses for the 2006 Quarter decreased $75,000
from the 2005 Quarter primarily due to a $43,000 decrease in professional fees,
a decrease of $46,000 in insurance, and the change in payroll tax allocation
described above. General and administrative expense decreased by $440,000 or
9.4% from the 2005 Nine Months to the 2006 Nine Months due primarily to a
$98,000 decrease in insurance expense, an $89,000 decrease in professional fees,
and the change in payroll tax allocation described above.

     OTHER INCOME (EXPENSE), NET. Other expense included primarily interest
expense.

     PROVISION (BENEFIT) FOR INCOME TAXES. As a result of the Company's net loss
carry-forward, the Company had no income tax expense other than franchise taxes
in various states. The Company recognized an income tax benefit of $44,000 in
the 2006 Quarter and a $111,000 benefit in the 2006 Nine Months, resulting from
a decrease in the valuation allowance on its deferred tax asset relating
primarily to its net operating loss carryforwards. These compare to income tax
benefits of $53,000 and $50,000 in the 2005 Quarter and 2005 Nine Months,
respectively.

FINANCIAL CONDITION, LIQUIDITY AND CAPITAL RESOURCES

     The Company's accounts receivable (net of allowance for doubtful accounts)
decreased from $3.0 million at October 31, 2005 to $2.8 million at July 31, 2006
due primarily to lower net sales for the quarter ended July 31, 2006 as compared
to the quarter ended October 31, 2005. The allowance for doubtful accounts
decreased $73,000 from October 31, 2005 to July 31, 2006.

     The Company's inventories increased $581,000 to $5.6 million at July 31,
2006 from $5.0 million at October 31, 2005, primarily due to the Company's
decision to maintain higher inventories to help offset longer delivery times
from vendors. The Eddie Bauer frame inventory decreased by $210,000 or 21.1%
since October 31, 2005 as the Company sells off its remaining inventory
following termination of its Eddie Bauer license.

     The Company reduced long-term debt (including current portion) from $7.1
million at October 31, 2005 to $6.6 million at July 31, 2006 due to scheduled
pay-offs. The Company's long-term debt at July 31, 2006 included principally:
(i) $3.7 million under three credit facilities with Home Loan Investment
Corporation and its subsidiary Home Loan Industrial Bank; (ii) $2.5 million
under a credit facility with Bluebird Finance Limited; and (iii) $283,000 under
a commercial bank loan the proceeds of which were used to purchase its computer
system and related equipment. At July 31, 2006, the Company had fully utilized
its borrowing capacity under its existing credit facilities. See Note 4 of Notes
to Financial Statements.

     Of the Company's accounts payable at July 31, 2006, $346,000 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 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 no
forward commitments for foreign currencies at July 31, 2006.

     The Company believes that at least through the third fiscal quarter of
2007, assuming there are no unanticipated material adverse developments, no
material decrease in revenues and continued compliance with its credit
facilities, and the ability to extend or refinance the term note due HLIC in
July 2007 (outstanding balance of $656,000 at July 31, 2006), its cash flows
from operations and through credit facilities will be sufficient to enable the
Company to pay its debts and obligations as they mature. To support growth, the
Company may be required to obtain the working capital through additional debt or
equity financing.

INFLATION

     The Company does not believe its business and operations have been
materially affected by inflation.

                                       15
<PAGE>

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. At any month-end during the quarter ended July 31,
2006, a maximum of approximately $346,000 was payable in foreign currency. These
foreign currencies included Japanese yen and Euros. 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 no forward commitments for foreign currencies at
July 31, 2006.

     International sales accounted for approximately 11% of the Company's net
sales for the three months and nine months ended July 31, 2006. 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 generally 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.

     INTEREST RATE RISK. The Company's credit facilities existing at July 31,
2006 had fixed interest rates. Accordingly, the Company does not believe it is
subject to material interest rate risk.

     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.

ITEM 4. CONTROLS AND PROCEDURES

     The Company maintains disclosure controls and procedures (as defined in
Exchange Act Rule 13a-15(e)) that are designed to assure that information
required to be disclosed in its Exchange Act reports is recorded, processed,
summarized and reported within the time periods specified in the Securities and
Exchange Commission's rules and forms, and that such information is accumulated
and communicated to management, including the Chief Executive Officer and Chief
Financial Officer, as appropriate, to allow timely decisions regarding required
disclosures.

     In designing and evaluating the disclosure controls and procedures,
management recognizes that any controls and procedures, no matter how well
designed and operated, can only provide reasonable assurance of achieving the
desired control objectives, and management necessarily is required to apply its
judgment in weighting the costs and benefits of possible new or different
controls and procedures. Limitations are inherent in all control systems, so no
evaluation of controls can provide absolute assurance that all control issues
and any fraud within the Company have been detected.

     As required by Exchange Act Rule 13a-15(b), as of the end of the period
covered by this report, management, under the supervision and with the
participation of its Chief Executive Officer and Chief Financial Officer (the
same person has both titles), evaluated the effectiveness of the Company's
disclosure controls and procedures. Based on this evaluation, management
concluded that the Company's disclosure controls and procedures were effective
as of that date.

     There was no change in the Company's internal control over financial
reporting during the Company's most recently completed fiscal quarter that has
materially affected, or is reasonably likely to materially affect, the Company's
internal control over financial reporting.

                                       16
<PAGE>

                                    PART II.
                                OTHER INFORMATION

ITEM 6. EXHIBITS.

     See Exhibit Index attached


































                                       17
<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: September 11, 2006                           SIGNATURE EYEWEAR, INC.


                                                   By: /s/ Michael Prince
                                                       -------------------------
                                                       Michael Prince
                                                       Chief Executive Officer
                                                       Chief Financial Officer





















                                       18
<PAGE>

                                  EXHIBIT INDEX

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

 31.1         Certification Pursuant to SEC Rule 13a-14(a)/15d-14(a)
 32.1         Certification Pursuant to 18 U.S.C. ss. 1350

































                                       19