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


                       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, 2002

                                       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  [_]       No  [X]

         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, 5,976,889 shares issued and outstanding as of May 31, 2003.

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

                             SIGNATURE EYEWEAR, INC.

                               INDEX TO FORM 10-Q



PART I         FINANCIAL INFORMATION                                        PAGE

Item 1         Financial Statements

               Consolidated Balance Sheets .............................     3-4

               Consolidated Statements of Operations ...................       5

               Consolidated Statements of Cash Flows ...................     6-7

               Notes to the Consolidated Financial Statements ..........    8-23

Item 2         Management's Discussion and Analysis of Financial
                    Condition and Results of Operations ................      24

Item 3         Quantitative and Qualitative Disclosures about
                    Market Risk ........................................      33




PART II        OTHER INFORMATION

Item 1         Legal Proceedings .......................................      33

Item 3         Defaults Upon Senior Securities .........................      33

Item 6         Exhibits and Reports on Form 8-K ........................      33









                                       2
<PAGE>
PART I.
                              FINANCIAL INFORMATION


ITEM 1.  FINANCIAL STATEMENTS

                                                         SIGNATURE EYEWEAR, INC.
                                                     CONSOLIDATED BALANCE SHEETS
                                 APRIL 30, 2002 (UNAUDITED) AND OCTOBER 31, 2001
================================================================================

                                     ASSETS


<TABLE><CAPTION>
                                                                APRIL 30,       OCTOBER 31,
                                                                   2002             2001
                                                               ------------     ------------
                                                               (unaudited)
<S>                                                            <C>              <C>
CURRENT ASSETS
     Cash and cash equivalents, including restricted
         cash of $147,446 (unaudited) and $202,824             $  1,017,629     $  1,443,496
     Accounts receivable - trade, net of allowance for
         doubtful accounts of $258,910 (unaudited) and
         $574,096                                                 2,927,555        5,129,460
     Inventories, net of reserves for obsolete inventories
         of $3,005,254 (unaudited) and $2,450,000                 7,529,601       10,328,364
     Income taxes refundable                                        112,704          110,000
     Promotion products and material                                 56,087          164,548
     Prepaid expenses and other current assets                       56,790            8,952
                                                               ------------     ------------

         Total current assets                                    11,700,366       17,184,820

PROPERTY AND EQUIPMENT, net                                       1,253,360        1,456,083
TRADEMARK, net of accumulated amortization of
     $16,882 (unaudited) and $16,882                                130,897          130,897
DEPOSITS AND OTHER ASSETS                                           133,772          133,772
                                                               ------------     ------------

                TOTAL ASSETS                                   $ 13,218,395     $ 18,905,572
                                                               ============     ============
</TABLE>



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

                                        3
<PAGE>
                                                         SIGNATURE EYEWEAR, INC.
                                                     CONSOLIDATED BALANCE SHEETS
                                 APRIL 30, 2002 (UNAUDITED) AND OCTOBER 31, 2001
================================================================================


                      LIABILITIES AND SHAREHOLDERS' DEFICIT


<TABLE><CAPTION>
                                                                APRIL 30,       OCTOBER 31,
                                                                   2002             2001
                                                               ------------     ------------
                                                               (unaudited)
<S>                                                            <C>              <C>
CURRENT LIABILITIES
     Accounts payable - trade                                  $  7,293,645     $ 10,143,540
     Accrued expenses and other current liabilities               1,903,333        2,752,281
     Line of credit                                               2,867,783        3,228,358
     Current portion of long-term debt                            5,768,083        6,265,773
                                                               ------------     ------------

         Total current liabilities                               17,832,844       22,389,952

LONG-TERM DEBT, net of current portion                            1,437,321        1,461,456
                                                               ------------     ------------

         Total liabilities                                       19,270,165       23,851,408
                                                               ------------     ------------

COMMITMENTS AND CONTINGENCIES

SHAREHOLDERS' DEFICIT
     Preferred stock, $0.001 par value
         5,000,000 shares authorized
         0 (unaudited) and 0 shares issued and outstanding               --               --
     Common stock, $0.001 par value
         30,000,000 shares authorized
         5,556,889 (unaudited) and 5,056,889 shares
         issued and outstanding                                       5,557            5,057
     Additional paid-in capital                                  14,432,621       14,368,121
     Accumulated deficit                                        (20,489,948)     (19,319,014)
                                                               ------------     ------------

         Total shareholders' deficit                             (6,051,770)      (4,945,836)
                                                               ------------     ------------

         TOTAL LIABILITIES AND SHAREHOLDERS' DEFICIT           $ 13,218,395     $ 18,905,572
                                                               ============     ============
</TABLE>


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

                                        4
<PAGE>
                                                         SIGNATURE EYEWEAR, INC.
                                               CONSOLIDATED STATEMENTS OF INCOME
          FOR THE THREE AND SIX MONTHS ENDED APRIL 30, 2002 AND 2001 (UNAUDITED)
================================================================================

<TABLE><CAPTION>
                                        FOR THE THREE MONTHS ENDED           FOR THE SIX MONTHS ENDED
                                                 APRIL 30,                           APRIL 30,
                                      ------------------------------      ------------------------------
                                          2002              2001              2002              2001
                                      ------------      ------------      ------------      ------------
                                      (unaudited)       (unaudited)       (unaudited)       (unaudited)
<S>                                   <C>               <C>               <C>               <C>
NET SALES                             $  8,806,211      $ 11,470,364      $ 17,327,872      $ 22,359,408
COST OF SALES                            3,936,770         4,428,323         7,271,183         8,189,286
                                      ------------      ------------      ------------      ------------

GROSS PROFIT                             4,869,441         7,042,041        10,056,689        14,170,122
                                      ------------      ------------      ------------      ------------

OPERATING EXPENSES
    Selling                              2,499,611         3,108,350         4,890,612         6,116,487
    General and administrative           2,891,923         3,085,773         5,783,121         6,448,797
    Depreciation and amortization          110,147           294,544           219,897           595,056
                                      ------------      ------------      ------------      ------------

Total operating expenses                 5,501,681         6,488,667        10,893,630        13,160,340
                                      ------------      ------------      ------------      ------------

INCOME (LOSS) FROM OPERATIONS             (632,240)          553,374          (836,941)        1,009,782
                                      ------------      ------------      ------------      ------------

OTHER INCOME (EXPENSE)
    Sundry income                           23,212            31,254            53,079            53,232
    Interest expense, net                 (171,263)         (355,597)         (387,182)         (729,430)
                                      ------------      ------------      ------------      ------------

Total other income (expense)              (148,051)         (324,343)         (334,103)         (676,198)
                                      ------------      ------------      ------------      ------------

INCOME BEFORE PROVISION FOR
    (BENEFIT FROM) INCOME TAXES           (780,291)          229,031        (1,171,044)          333,584
PROVISION FOR (BENEFIT FROM)
    INCOME TAXES                                --                --              (110)              730
                                      ------------      ------------      ------------      ------------

NET INCOME (LOSS)                     $   (780,291)     $    229,031      $ (1,170,934)     $    332,854
                                      ============      ============      ============      ============

BASIC AND DILUTED EARNINGS
    (LOSS) PER SHARE                  $      (0.14)     $       0.04      $      (0.22)     $       0.07
                                      ============      ============      ============      ============

WEIGHTED-AVERAGE COMMON
    SHARES OUTSTANDING                   5,556,889         5,285,150         5,418,767         5,056,889
                                      ============      ============      ============      ============
</TABLE>

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

                                        5
<PAGE>
                                                         SIGNATURE EYEWEAR, INC.
                                           CONSOLIDATED STATEMENTS OF CASH FLOWS
                    FOR THE SIX MONTHS ENDED APRIL 30, 2002 AND 2001 (UNAUDITED)
================================================================================


<TABLE><CAPTION>
                                                                      2002              2001
                                                                  ------------      ------------
                                                                  (unaudited)       (unaudited)
<S>                                                               <C>               <C>
CASH FLOWS FROM OPERATING ACTIVITIES
    Net income (loss)                                             $ (1,170,934)     $    332,854
    Adjustments to reconcile net income (loss) to net cash
        provided by operating activities
           Depreciation and amortization                               219,899           595,056
           Gain on disposal of equipment                                    --            11,776
           Provision for bad debts                                          --            49,404
           (Increase) decrease in
               Accounts receivable - trade                           2,201,905          (699,257)
               Inventories, net of effect of sale of USA
                 Optical                                             2,298,763         3,952,699
               Income taxes refundable                                  (2,704)        1,251,674
               Promotional products and material                       108,461                --
               Prepaid expenses and other current assets               (47,838)          534,156
               Deposits and other assets                                    --           109,783
           Decrease in
               Accounts payable - trade                             (2,849,895)       (4,013,621)
               Accrued expenses and other current liabilities         (848,948)       (1,349,507)
                                                                  ------------      ------------

Net cash provided (used in) by operating activities                    (91,291)          775,017
                                                                  ------------      ------------

CASH FLOWS FROM INVESTING ACTIVITIES
    Purchase of property and equipment                                 (17,176)          (13,422)
    Cash received from sale of USA Optical                             500,000                --
                                                                  ------------      ------------

Net cash provided by (used in) investing activities                    482,824           (13,422)
                                                                  ------------      ------------

CASH FLOWS FROM FINANCING ACTIVITIES
    Net payments on line of credit                                    (295,575)          (37,975)
    Payments on long-term debt                                        (521,825)         (568,984)
                                                                  ------------      ------------

Net cash used in financing activities                                 (817,400)         (606,959)
                                                                  ------------      ------------

Net increase (decrease) in cash and cash equivalents                  (425,867)          154,636

CASH AND CASH EQUIVALENTS, BEGINNING OF PERIOD                       1,443,496         1,860,451
                                                                  ------------      ------------

CASH AND CASH EQUIVALENTS, END OF PERIOD                          $  1,017,629      $  2,015,087
                                                                  ============      ============
</TABLE>

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

                                        6
<PAGE>
                                                         SIGNATURE EYEWEAR, INC.
                                           CONSOLIDATED STATEMENTS OF CASH FLOWS
                    FOR THE SIX MONTHS ENDED APRIL 30, 2002 AND 2001 (UNAUDITED)
================================================================================


<TABLE><CAPTION>
<S>                                                               <C>               <C>
Supplemental disclosures of cash flow information

    INTEREST PAID                                                 $    229,668      $    696,729
                                                                  ============      ============

    INCOME TAXES PAID                                             $      2,594      $        730
                                                                  ============      ============
</TABLE>





SUPPLEMENTAL SCHEDULE OF NON CASH INVESTING AND FINANCING ACTIVITIES During the
six months ended April 30, 2002, the Company entered into a Stock Issuance and
Release Agreement on December 20, 2001 whereby the Company issued 500,000 shares
of common stock and paid $3,000 to Springer Capital Corporation in satisfaction
of the purchase price adjustment relating to the Great Western Optical
acquisition. The fair value of the settlement amount of $68,000 was included in
accrued expense at October 31, 2001.

During the six months ended April 30, 2001, the Company entered into an
agreement to modify an operating lease to reduce long-term debt by $674,699 by
applying prepaid expenses of $126,975 and other assets of $499,068 related to
the note holder against long-term debt and by increasing accrued expenses by
$48,656.




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

                                        7
<PAGE>
                                                         SIGNATURE EYEWEAR, INC.
                                      NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                                 OCTOBER 31, 2001 AND APRIL 30, 2002 (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.

         Business Acquisition
         --------------------
         Effective August 1999, the Company acquired 100% of the capital stock
         of Great Western Optical ("GWO"), a privately-held corporation engaged
         primarily in the distribution of the Company's products (the "GWO
         Acquisition"). The purchase price for the GWO Acquisition was
         approximately $519,500, consisting of the issuance of 50,000 shares of
         the Company's common stock and warrants to purchase 50,000 shares of
         the Company's common stock valued at $252,000, a note payable for
         $250,000, and acquisition-related expenses of $17,500.

         The GWO Acquisition provided for a purchase price adjustment if the per
         share market value of the 50,000 shares of common stock issued at the
         initial GWO Acquisition date was below $7 on July 31, 2001. On July 31,
         2001, the Company's common stock was trading at $0.45 per share. In
         lieu of the purchase price adjustment, in December 2001, the Company
         issued 500,000 shares of common stock and paid $3,000 to Springer
         Capital Corporation, the seller, in satisfaction of the purchase price
         adjustment (see Note 8).

         Sale of USA Optical
         -------------------
         In March 2002, the Company sold its USA Optical product line, including
         (i) all of the eyewear frame inventory under the brand name of Camelot
         or sold as part of the USA Optical line, (ii) all names, copyrights,
         logos, trademarks, computer software, and other intellectual property
         rights related to the trademarks or trade names Camelot or USA Optical,
         and (iii) all marketing materials, customer lists, and sales and vendor
         records to the trademarks or trade names of Camelot or USA Optical.
         Management believes the effect of the sale on its future operations
         will not be significant.

         The sales price for the USA Optical product line was $500,000, plus the
         assumption of certain obligations and liabilities related to the USA
         Optical line's outstanding purchase orders amounting to $70,000. The
         effect of the sale on the Company's operations for six months ended
         April 30, 2002 is not significant. As such a gain or loss has not been
         recorded on the accompanying consolidated statement of operations. In
         addition, the Company agreed to supply the buyer with inventory for the
         existing models of eyeglass frames sold by the Company at a discount of
         10% off the prices set forth by the buyer until the aggregate savings
         with respect to such purchases equals the total amount of Earned and
         Pending Premium Obligations, as defined.

                                        8
<PAGE>
                                                         SIGNATURE EYEWEAR, INC.
                                      NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                                 OCTOBER 31, 2001 AND APRIL 30, 2002 (UNAUDITED)
================================================================================

NOTE 1 - ORGANIZATION AND LINE OF BUSINESS (CONTINUED)

         Sale of USA Optical (Continued)
         -------------------
         In connection with the sale of the USA Optical product line, the
         Company's former Chairman of the Board/Chief Executive Officer entered
         into a three-year consulting agreement with the buyer for a monthly
         consulting fee of $4,667. The monthly consulting fee was offset against
         the former officer's salary until his resignation in April 2003 (see
         Note 9).


NOTE 2 - GOING CONCERN

         The Company has received a report from its prior independent auditors
         that includes an explanatory paragraph describing the uncertainty as to
         the Company's ability to continue as a going concern as of October 31,
         2001. These financial statements contemplate the ability to continue as
         such and do not include any adjustments that might result from this
         uncertainty.


NOTE 3 - 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,
         2001. The results of operations for the six months ended April 30, 2002
         are not necessarily indicative of the results that may be expected for
         the year ended October 31, 2002.

                                        9
<PAGE>
                                                         SIGNATURE EYEWEAR, INC.
                                      NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                                 OCTOBER 31, 2001 AND APRIL 30, 2002 (UNAUDITED)
================================================================================

NOTE 3 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)

         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
         Machinery and equipment held under
           capital lease agreements                                  5 years
         Leasehold improvements                            term of the lease


         Trademark
         ---------
         The Dakota Smith trademark is recorded at cost, less accumulated
         amortization. Amortization is provided using the straight-line method
         over the estimated useful life of the trademark of 20 years. The
         Company continually evaluates whether events or circumstances have
         occurred that indicate the remaining estimated value of the trademark
         may not be recoverable. When factors indicate that the value of the
         trademark may be impaired, the Company estimates the remaining value
         and reduces the trademark to that amount. Amortization expense was $0
         and $284,240 for the six months ended April 30, 2002 and 2001,
         respectively.

         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.

         Certain of the Company's liabilities were settled subsequent to April
         30, 2002 for less than their carrying value at that date (see Note 9).


                                       10
<PAGE>
                                                         SIGNATURE EYEWEAR, INC.
                                      NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                                 OCTOBER 31, 2001 AND APRIL 30, 2002 (UNAUDITED)
================================================================================

NOTE 3 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)

         Earnings (Loss) per Share
         -------------------------
         The Company calculates earnings (loss) per share in accordance with
         Statement of Financial Accounting Standards No. 128, "Earnings per
         Share." Basic earnings (loss) per share is computed by dividing the
         income (loss) available to common shareholders by the weighted-average
         number of common shares outstanding. Diluted earnings (loss) per share
         is computed similar to basic earnings (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
         Company did not have any dilutive shares for the six months ended April
         30, 2002 and 2001.

         The following potential common shares have been excluded from the
         computations of diluted earnings (loss) per share for the three months
         ended April 30, 2002 and 2001 because the effect would have been
         anti-dilutive:
                                                    2002           2001
                                                 ----------     ----------
                                                (unaudited)    (unaudited)
         Stock options                              413,000        494,300
         Warrants                                   230,000        230,000
                                                 ----------     ----------
             TOTAL                                  643,000        724,300
                                                 ==========     ==========

         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.

         Reclassifications
         -----------------
         Certain amounts included in the prior period financial statements have
         been reclassified to conform with the current period presentation. Such
         reclassifications did not have any effect on reported net income (loss)
         and are immaterial to the financial statements as a whole.

                                       11
<PAGE>
                                                         SIGNATURE EYEWEAR, INC.
                                      NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                                 OCTOBER 31, 2001 AND APRIL 30, 2002 (UNAUDITED)
================================================================================


NOTE 3 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)

         Recently Issued Accounting Pronouncements
         -----------------------------------------
         In October 2002, the Financial Accounting Standards Board issued SFAS
         No. 147, "Acquisitions of Certain Financial Institutions." SFAS No. 147
         removes the requirement in SFAS No. 72 and Interpretation 9 thereto, to
         recognize and amortize any excess of the fair value of liabilities
         assumed over the fair value of tangible and identifiable intangible
         assets acquired as an unidentifiable intangible asset. This statement
         requires that those transactions be accounted for in accordance with
         SFAS No. 141, "Business Combinations," and SFAS No. 142, "Goodwill and
         Other Intangible Assets." In addition, this statement amends SFAS No.
         144, "Accounting for the Impairment or Disposal of Long-Lived Assets,"
         to include certain financial institution-related intangible assets.
         This statement is not applicable to the Company.

         In December 2002, the FASB issued SFAS No. 148, "Accounting for
         Stock-Based Compensation - Transition and Disclosure," an amendment of
         SFAS No. 123. SFAS No. 148 provides alternative methods of transition
         for a voluntary change to the fair value based method of accounting for
         stock-based employee compensation. In addition, SFAS No. 148 amends the
         disclosure requirements of SFAS No. 123 to require more prominent and
         more frequent disclosures in financial statements about the effects of
         stock-based compensation. This statement is effective for financial
         statements for fiscal years ending after December 15, 2002. SFAS No.
         148 will not have any impact on the Company's financial statements as
         management does not have any intention to change to the fair value
         method.

                                       12
<PAGE>
                                                         SIGNATURE EYEWEAR, INC.
                                      NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                                 OCTOBER 31, 2001 AND APRIL 30, 2002 (UNAUDITED)
================================================================================

NOTE 4 - PROPERTY AND EQUIPMENT

         Property and equipment at October 31, 2001 and April 30, 2002 consisted
         of the following:
                                                          April 30,  October 31,
                                                            2002        2001
                                                         ----------  ----------
                                                         (unaudited)

         Office furniture and equipment                  $  885,676  $  877,799
         Computer equipment                               1,298,844   1,212,065
         Software                                           821,288     821,288
         Machinery and equipment                            163,659     158,817
         Machinery and equipment held under capital
             lease agreements                               294,609     376,932
         Leasehold improvements                           1,185,190   1,185,190
                                                         ----------  ----------

                                                          4,649,266   4,632,091
         Lessaccumulated depreciation and amortization
            (including accumulated depreciation and
            amortization of $206,482 (unaudited) and
            $131,172 for equipment under capital lease
            agreement)                                    3,395,906   3,176,008
                                                         ----------  ----------
                  TOTAL                                  $1,253,360  $1,456,083
                                                         ==========  ==========

         Depreciation and amortization expense was $219,899 (unaudited) and
         $595,056 (unaudited) for six months ended April 30, 2002 and 2001,
         respectively, (including depreciation and amortization expense of
         $74,729 (unaudited) and $34,730 (unaudited), respectively, on machinery
         and equipment held under capital leases).


NOTE 5 - LINE OF CREDIT

         The Company had a credit facility with a commercial bank (the "Bank"),
         consisting of an accounts receivable and inventory revolving credit
         line and a term note payable (see Note 6), which were secured by
         substantially all of the assets of the Company. Under the credit line,
         the Company could obtain advances up to an amount equal to 60% of
         eligible accounts receivable and 30% of eligible inventories up to a
         maximum of $4,500,000. The advances on the line of credit bore interest
         at the Company's option at either the Bank's prime rate or 2.5% in
         excess of the London Inter-Bank Offering Rate ("LIBOR"). The credit
         facility matured on September 30, 2000.

                                       13
<PAGE>
                                                         SIGNATURE EYEWEAR, INC.
                                      NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                                 OCTOBER 31, 2001 AND APRIL 30, 2002 (UNAUDITED)
================================================================================

NOTE 5 - LINE OF CREDIT (CONTINUED)

         The Company defaulted on the credit facility for various reasons,
         including the nonpayment of the line of credit at maturity as well as
         noncompliance with various covenants and conditions. Since September
         30, 2000, the interest rate on the credit line has been 5% per annum in
         excess of the original rate. The Company entered into a forbearance
         agreement with the Bank in December 2000, which was extended many
         times. Amounts outstanding on the line of credit at October 31, 2001
         and April 30, 2002 were $3,228,358 and $2,867,783 (unaudited),
         respectively.

         In April 2003, the credit facility was repaid (see Note 9).


NOTE 6 - LONG-TERM DEBT

         Long-term debt at October 31, 2001 and April 30, 2002 consisted of the
         following:
<TABLE><CAPTION>
                                                                                April 30,       October 31,
                                                                                  2002             2001
                                                                              ------------     ------------
                                                                               (unaudited)
         <S>                                                                  <C>              <C>
         Term note payable to the Bank in the original amount of
             $3,500,000, secured by substantially all of the assets
             of the Company, payable in monthly installments of
             $72,917, plus interest at LIBOR, plus 7.5% per annum,
             which includes the 5% default penalty since September 2000.
             In April 2003, the term note payable was repaid
             (see Notes 5 and 9).                                             $  2,333,356     $  2,770,857

         Obligation to a frame vendor in the original amount of
             $4,195,847, less an unamortized discount of $639,043,
             unsecured, payable in monthly installments of $50,000,
             including interest imputed at 7.37% per annum. This
             obligation was in default at April 30, 2002. In April
             2003, the Company paid $2,350,000 to settle this and other
             obligations to the frame vendor  (see Note 9).                      3,207,291        3,207,291
</TABLE>

                                       14
<PAGE>
                                                         SIGNATURE EYEWEAR, INC.
                                      NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                                 OCTOBER 31, 2001 AND APRIL 30, 2002 (UNAUDITED)
================================================================================

NOTE 6 - LONG-TERM DEBT (CONTINUED)
<TABLE><CAPTION>
                                                                                April 30,       October 31,
                                                                                  2002             2001
                                                                              ------------     ------------
                                                                               (unaudited)
         <S>                                                                  <C>              <C>
         Note payable to lessor of the Company's principal offices and
             warehouse in the original amount of $240,000, unsecured,
             payable in monthly installments of $4,134, including
             interest at 10% per annum, maturing on May 1, 2005.              $    131,173     $    148,901

         Note payable to California Design Studio, Inc. ("CDS"),
             unsecured, payable in monthly installments of between
             $8,333 and $17,042, with a final payment of any principal
             plus interest remaining in May 2007, including interest at
             7% per annum, maturing on May 23, 2007. In January 2003,
             the Company paid $500,000 to settle all liabilities with
             CDS, including this note and the obligation assumed in
             conjunction with the acquisition of CDS and extension of
             the consulting agreement (see Note 9).                                956,055          972,422

         Obligation assumed in conjunction with acquisition of CDS and
             extension of consulting agreement, payable in monthly
             installments of $15,000, including interest imputed at 10%
             per annum, maturing on July 1, 2003. This obligation was
             settled in January 2003 (see Note 9).                                 154,876          154,876

         Lump sum liability for property and equipment associated with
             various operating lease agreements with Oliver Allen,
             secured by such property and equipment, payable in full in
             August 2004. The Company adjusted the liability in October
             2002 in anticipation of the lease payoff and general
             release in February 2003 (see Note 9).                                221,855          221,855
</TABLE>

                                       15
<PAGE>
                                                         SIGNATURE EYEWEAR, INC.
                                      NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                                 OCTOBER 31, 2001 AND APRIL 30, 2002 (UNAUDITED)
================================================================================

NOTE 6 - LONG-TERM DEBT (CONTINUED)
<TABLE><CAPTION>
                                                                                April 30,       October 31,
                                                                                  2002             2001
                                                                              ------------     ------------
                                                                               (unaudited)
         <S>                                                                  <C>              <C>
         Liability for machinery and equipment under various capital
             lease agreements, secured by certain machinery and
             equipment, bearing interest ranging from 8.19% to 11.4%
             per annum, maturing through August 2004. In March and
             April 2003, the Company paid $58,162 in full settlement of
             $89,550 of this liability (see Note 9).                          $    200,798     $    251,027
                                                                              ------------     ------------

                                                                                 7,205,404        7,727,229
         Less current portion                                                    5,768,083        6,265,773
                                                                              ------------     ------------
                  LONG-TERM PORTION                                           $  1,437,321     $  1,461,456
                                                                              ============     ============
</TABLE>


         Future maturities of long-term debt at April 30, 2002 were as follows:

              12 Months
               Ending
              April 30,
             -----------
             (unaudited)

                 2003                                   $ 5,768,083
                 2004                                       370,332
                 2005                                       394,865
                 2006                                       167,005
                 2007                                       174,681
                 Thereafter                                 330,438
                                                        -----------
                      TOTAL                             $ 7,205,404
                                                        ===========


                                       16
<PAGE>
                                                         SIGNATURE EYEWEAR, INC.
                                      NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                                 OCTOBER 31, 2001 AND APRIL 30, 2002 (UNAUDITED)
================================================================================

NOTE 7 - COMMITMENTS AND CONTINGENCIES

         Frame Purchase Agreement
         ------------------------
         In conjunction with the asset acquisition of CDS, the Company entered
         into a purchase agreement with one of CDS' frame vendors, whereby the
         Company agreed to purchase the following amounts of eyeglass frames
         during the periods indicated: (i) $2,400,000 from the closing of the
         acquisition through July 31, 2000; (ii) $3,000,000 during the 12 months
         ending July 31, 2001; and (iii) $3,000,000 during the 12 months ending
         July 31, 2002. The Company did not meet the minimum purchase
         requirement for the year ended July 31, 2002. In April 2003, the
         Company paid $2,350,000 to retire all obligations with this frame
         vendor and terminate this frame purchase agreement (see Note 9).

         License Agreement
         -----------------
         The Company had a license agreement with Coach, a division of Sara Lee
         Corporation, which granted the Company certain rights to use the
         "Coach" and related trademarks in connection with the distribution,
         marketing, and sale of Coach eyewear products. In December 2000, Coach
         terminated the license agreement due to alleged breaches of the
         agreement by the Company and filed an action seeking recovery for
         unpaid royalties and advertising costs pursuant to the license
         agreement. On March 7, 2002, the Company entered into a settlement
         agreement with Coach, in which Coach agreed to release the Company from
         all actions and debts for $250,000 payable over the 90-day period
         following the date of the settlement agreement. Subsequent to April 30,
         2002, the Company had paid this settlement in full.

         Litigation
         ----------
         In December 2000, Coach terminated the eyewear license agreement with
         the Company due to alleged breaches of the agreement by the Company and
         filed an action seeking recovery for unpaid royalties and advertising
         costs pursuant to the license agreement. In March 2002, the Company
         entered into a settlement agreement with Coach, whereby Coach agreed to
         release the Company from all actions and debts for $250,000, payable
         over the 90-day period following the date of the settlement agreement.
         Subsequent to April 30, 2002, the Company paid this settlement in full.


NOTE 8 - SHAREHOLDERS' DEFICIT

         Common Stock
         ------------
         In December 2001, the Company issued 500,000 shares of its common stock
         and paid $3,000 to Springer Capital Corporation in satisfaction of the
         purchase price adjustment relating to the GWO Acquisition. The fair
         value of the settlement amount, $68,000, had been accrued as a
         liability at October 31, 2001.


                                       17
<PAGE>
                                                         SIGNATURE EYEWEAR, INC.
                                      NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                                 OCTOBER 31, 2001 AND APRIL 30, 2002 (UNAUDITED)
================================================================================

NOTE 8 - SHAREHOLDERS' DEFICIT (CONTINUED)

         Warrants
         --------
         In January 2002, warrants to purchase 100,000 shares of the Company's
         common stock held by Coach, a division of Sara Lee Corporation, were
         canceled 30 days following the termination of the Company's eyewear
         license with Coach.


NOTE 9 - SUBSEQUENT EVENTS

         License Agreements
         ------------------
         In July 2002, the Company extended its license agreement with Eddie
         Bauer, Inc. through December 31, 2005. The license can be renewed for a
         two-year term provided that specified minimum sales are achieved and
         the Company is not in material default under the license agreement.

         In December 2002, the Company extended its license agreement with Hart
         Schaffner & Marx for a period of three years until December 31, 2005.
         The license agreement requires specified minimum net sales and
         royalties per annum.

         In December 2002, the Company extended its license agreement with
         Nicole Miller until March 31, 2006. Under the terms of the extension
         agreement, the Company will have the option to renew the license
         agreement for an additional term of three years, if and only if (i) the
         Company is in compliance with the terms and conditions of the license
         agreement at the time of this extension and on March 31, 2006 and (ii)
         the Company pays the guaranteed minimum royalty for each of the three
         years ended March 31, 2006.

         Note Payable to Lessor of the Company's Principal Offices and Warehouse
         -----------------------------------------------------------------------
         In November 2002, the Company executed an unsecured promissory note for
         $89,405 with the lessor of the Company's principal offices and
         warehouse. This amount consisted of amounts related to the base rent
         and common area operating expenses payable per the operating lease due
         October 1, 2002 and the October payment of principal and interest with
         respect to the $240,000 unsecured promissory note dated June 23, 1998.
         Late charges and other penalties totaling $12,761 owed by the Company
         with respect to the October rent were forgiven. The promissory note
         bears interest at 8% per annum and is repayable in 26 equal monthly
         installments of $3,757 each beginning April 1, 2003 and ending May 1,
         2005.

                                       18
<PAGE>
                                                         SIGNATURE EYEWEAR, INC.
                                      NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                                 OCTOBER 31, 2001 AND APRIL 30, 2002 (UNAUDITED)
================================================================================

NOTE 9 - SUBSEQUENT EVENTS (CONTINUED)

         Settlement Agreement and General Release with CDS
         -------------------------------------------------
         In January 2003, the Company entered into a settlement agreement with
         CDS and the sole shareholder of CDS, settling all remaining obligations
         between the parties emanating from the Company's purchase of all of the
         assets of CDS in 1999. The remaining obligations included those under a
         consulting agreement with the sole shareholder of CDS for $154,876
         (unaudited) at April 30, 2002 (see Note 6) and the promissory note
         given as part of the purchase price for $956,055 (unaudited) at April
         30, 2002 (see Note 6). In the settlement, the Company paid $500,000 to
         CDS and the sole shareholder of CDS, and the parties executed a mutual
         general release.

         Sale and License Back of Dakota Smith Trademark and Inventory
         -------------------------------------------------------------
         In February 2003, the Company sold all of its rights to its Dakota
         Smith eyewear trademark for $600,000 and the related inventory for
         $400,000. Concurrently, the Company entered into a three-year exclusive
         license agreement, with a two-year renewal option, with the purchaser
         to use the trademark for eyeglass frames sold and distributed in the
         United States and certain other countries. The license agreement
         specifies certain guaranteed minimum royalties per annum. The Company
         also repurchased the Dakota Smith inventory for a non-interest-bearing
         note in the amount of $400,000. The note is secured by the inventory
         and payable in monthly installments through March 2004.

         Oliver Allen Lease Payoff
         -------------------------
         In February 2003, the Company entered into an agreement with Oliver
         Allen to purchase certain property and equipment rented under various
         operating leases for $750,000. These leases were entered into during
         the period from March 1, 1999 through July 1, 2000 and expire from
         September 1, 2002 through January 1, 2004.

         To fund this lease payoff, the Company obtained a $750,000 loan from a
         commercial bank. The loan bears interest at 4% per annum, is repayable
         in 59 monthly installments of $13,812 commencing March 31, 2003, with
         the remaining principal and accrued interest being due and payable in
         full on February 28, 2008, and is secured by the property and equipment
         purchased. The Company has the option to pay down the principal balance
         at any time during the course of the agreement.

         Credit Facilities
         -----------------

         HLIC CREDIT FACILITY
         In April 2003, the Company obtained a $3,500,000 credit facility from
         HLIC. The credit facility is secured by all of the assets of the
         Company and includes a $3,000,000 term loan and a $500,000 revolving
         line of credit.

                                       19
<PAGE>
                                                         SIGNATURE EYEWEAR, INC.
                                      NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                                 OCTOBER 31, 2001 AND APRIL 30, 2002 (UNAUDITED)
================================================================================

NOTE 9 - SUBSEQUENT EVENTS (CONTINUED)

         Credit Facilities (Continued)
         -----------------

         HLIC CREDIT FACILITY (Continued)
         The term loan bears interest at 10% per annum, is payable interest only
         for the first year of payments, with payments of principal and interest
         on a 10-year amortization commencing in the second year, and is due and
         payable in April 2008. The revolving credit facility bears interest at
         a rate of 1% per month, payable monthly, with all advances subject to
         approval of HLIC, and is due and payable in April 2008. The Company may
         prepay the credit facility without premium or penalty at any time.

         As additional security for the credit facility, an irrevocable letter
         of credit must be issued in favor of HLIC by a commercial bank in the
         amount of $1,250,000, subject to reduction if the credit facility is
         less than $1,250,000. The letter of credit delivered to obtain the
         credit facility was secured by a related party. Furthermore, the
         Company purchased a $250,000 debenture from HLIC as additional
         security. This debenture will earn interest at 3% per annum, adjusted
         annually to the one-year debenture rate offered by HLIC, and will
         remain as collateral until the credit facility is paid in full.

         The terms of the agreement include certain financial and non-financial
         covenants, which include that the Company must maintain inventories,
         accounts receivable, and cash of not less than $7,000,000; and that the
         Company cannot incur any additional debt, engage in any merger or
         acquisition, or pay any dividends or make any distributions to
         shareholders other than stock dividends without the consent of HLIC.

         As further consideration for the credit facility, the Company also
         granted HLIC warrants to purchase 100,000 shares of common stock. The
         warrants vest immediately, expire on April 30, 2008, and have an
         exercise price of $0.67 per share.

         BLUEBIRD CREDIT FACILITY
         In April 2003, the Company obtained from Bluebird Finance Limited
         ("Bluebird") a credit facility of up to $4,150,000 secured by the
         assets of the Company. The credit facility includes a revolving credit
         line in the amount of $2,900,000 and support for the $1,250,000 letter
         of credit securing the HLIC credit facility. The loan bears interest at
         5% per annum, payable annually for the first two years, with payments
         of principal and interest on a 10-year amortization schedule commencing
         in the third year, and is due and payable in April 2013.

         Bluebird's loan commitment will be reduced by $72,000 in July 2005 and
         by the same amount every three months thereafter. This loan is
         subordinate to the HLIC credit facility. The Company must comply with
         certain financial and non-financial covenants, which include that
         without the consent of Bluebird it may not make any acquisition or
         investment in excess of an aggregate of $150,000 each fiscal year
         outside the ordinary course of business or enter into any merger or
         similar reorganization.

                                       20
<PAGE>
                                                         SIGNATURE EYEWEAR, INC.
                                      NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                                 OCTOBER 31, 2001 AND APRIL 30, 2002 (UNAUDITED)
================================================================================

NOTE 9 - SUBSEQUENT EVENTS (CONTINUED)

         Designation and Issuance of Series A 2% Convertible Preferred Stock
         -------------------------------------------------------------------
         In April 2003, the Company designated a new series of preferred stock,
         designated "Series A 2% Convertible Preferred Stock" (the "Series A
         Preferred"), authorizing 1,360,000 shares. In addition, in April 2003,
         the Company issued 1,200,000 shares to Bluebird for $800,000, or
         $0.6667 per share. The Series A Preferred provides for cumulative
         dividends at the rate of 2% per annum payable in cash or additional
         shares of Series A Preferred and has a liquidation preference equal to
         its original purchase price plus accrued and unpaid dividends. The
         Company has the right to redeem the Series A Preferred, commencing
         April 2005 at the liquidation preference, plus accrued and unpaid
         dividends, plus a premium of $450,000.

         The Company must redeem the Series A Preferred upon certain changes of
         control, as defined in the agreement, to the extent the Company has the
         funds legally available at the same redemption price, unless the change
         of control occurs before April 2005, in which event the premium is 10%
         of either the consideration received by the Company's shareholders or
         the market price, as applicable. The Series A Preferred is convertible
         into common stock on a share-for-share basis, subject to adjustments
         for stock splits, stock dividends, and similar events, at any time
         commencing May 2005.

         The holders of the Series A Preferred do not have voting rights, except
         as required by law, provided, however, that at any time two dividend
         payments are not paid in full, the Board of Directors will be increased
         by two and the holders of the Series A Preferred, voting as a single
         class, will be entitled to elect the additional directors. Bluebird
         received demand and piggyback registration rights for the shares of
         common stock into which Series A Preferred may be converted.

         Retirement of Bank Credit Facility
         ----------------------------------
         In April 2003, the Company utilized the proceeds from the Home Loan
         Investment Company ("HLIC") credit facility to retire its bank credit
         facility, which consisted of a line of credit and term note payable
         that had been in default, for a payment of $3,125,000. This transaction
         will result in the Company recording a gain of approximately $700,000
         in the statement of operations for the year ended October 31, 2003.

         Retirement of Obligations to Frame Vendor
         -----------------------------------------
         In April 2003, the Company used a portion of the proceeds from the
         Bluebird credit facility to retire its obligations to a frame vendor in
         the aggregate amount of approximately $5,800,000 for a payment of
         $2,475,000 to Dartmouth Commerce of Manhattan, Inc. ("Dartmouth
         Commerce"), a related party. Dartmouth Commerce had purchased this
         obligation from the frame vendor for $2,350,000. The payment also
         terminated the purchase agreement (see Note 7).

                                       21
<PAGE>
                                                         SIGNATURE EYEWEAR, INC.
                                      NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                                 OCTOBER 31, 2001 AND APRIL 30, 2002 (UNAUDITED)
================================================================================

NOTE 9 - SUBSEQUENT EVENTS (CONTINUED)

         Reduction in Trade Payables
         ---------------------------
         In April 2003, the Company used a portion of the proceeds from the
         Bluebird credit facility to retire approximately $775,000 of trade
         payables for an aggregate payment of approximately $327,000.

         Reduction in Capital Lease Obligations
         --------------------------------------
         In April 2003, the Company used a portion of the proceeds from the
         Bluebird credit facility to settle $89,550 of a liability for machinery
         and equipment under various capital leases for a payment of $58,162.

         Sale of Stock by Principal Shareholder
         --------------------------------------
         In April 2003, the Weiss Family Trust, the principal shareholder of the
         Company, sold its entire shareholding in the Company of 2,075,337
         shares of common stock, representing approximately 37% of the
         outstanding common stock of the Company, for $0.012 per share.
         Dartmouth Commerce purchased 1,600,000 shares, and Michael Prince, the
         Company's Chief Executive Officer/Chief Financial Officer, purchased
         475,337 shares. Dartmouth Commerce, which is wholly owned by the
         Company's new Chairman of the Board, is now the largest shareholder of
         the Company, holding approximately 28.7% of the outstanding common
         stock of the Company as of April 2003. Dartmouth Commerce has agreed
         with Bluebird that until April 2008, it will not sell or transfer any
         of these shares without Bluebird's prior consent.

         Consulting Agreements
         ---------------------
         In April 2003, the Company entered into a three-year consulting
         agreement with Dartmouth Commerce, a related party wholly owned by the
         Company's new Chairman of the Board, Richard M. Torre, for compensation
         of $55,000 per year.

         In April 2003, the Company entered into an 18-month consulting
         agreement with the former Chairman of the Board/Chief Executive Officer
         for total compensation of $20,000.

         Changes in Management
         ---------------------
         In April 2003, Bernard L. Weiss resigned as Chairman of the Board,
         Chief Executive Officer, and Director, positions he held since founding
         the Company in 1983, and Seth Weiss resigned as an Executive Vice
         President. Richard M. Torre was appointed as Chairman of the Board and
         Director, and Ted Pasternack, Edward Meltzer, and Drew Miller were
         appointed as Directors. In addition, Michael Prince was named Chief
         Executive Officer and President. Michael Prince will continue to occupy
         the position of Chief Financial Officer until a replacement is hired.

                                       22
<PAGE>
                                                         SIGNATURE EYEWEAR, INC.
                                      NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                                 OCTOBER 31, 2001 AND APRIL 30, 2002 (UNAUDITED)
================================================================================

NOTE 9 - SUBSEQUENT EVENTS (CONTINUED)

         Employment Agreement
         --------------------
         In April 2003, the Company entered into a new five-year employment
         agreement with Michael Prince, the Company's President/Chief Executive
         Officer/Chief Financial Officer, which superseded his existing
         employment agreement. Under the new employment agreement, he receives a
         salary of $240,000 per year, subject to annual review for increase. He
         also received 420,000 shares of common stock, which he must forfeit if
         certain conditions are not met as follows:

         (i)   210,000 shares must be forfeited if the Company has not achieved
               positive net income from ordinary operations in at least one
               fiscal year in the period 2003 to 2006 and

         (ii)  210,000 shares must be forfeited if the Company does not have net
               income from ordinary operations of at least $250,000 in at least
               one of the three fiscal years following the fiscal year it
               achieves positive net income.

         If prior to March 31, 2008, Mr. Prince's employment is terminated
         without cause or he terminates his employment for "good reason":

         (i)   he will be entitled to a lump sum payment of all salary to which
               he would have been entitled under the employment agreement from
               the date of termination through March 31, 2008 and

         (ii)  any of the 420,000 shares which have not vested will vest and be
               free of the risk of forfeiture.





                                       23
<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 Consolidated 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 this Item 2 of this Form 10-Q, as well as those
discussed elsewhere in this Form 10-Q. 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 Consolidated Financial Statements and related notes and other
financial information included elsewhere in this Form 10-Q.

SUBSEQUENT EVENTS

         This Form 10-Q has been filed after a recapitalization completed by the
Company in April 2003 which materially impacted its financial condition. The key
elements of the recapitalization and certain other material transactions
subsequent to the period covered by this Form 10-Q were:

         Credit Facility with Home Loan and Investment Company. As part of the
recapitalization in April 2003, the Company obtained a $3.5 million credit
facility from Home Loan and Investment Company ("HLIC"). The credit facility
includes a $3,000,000 term loan and a $500,000 revolving line of credit and is
secured by all of the assets of the Company. The term loan bears interest at a
rate of 10% per annum, is payable interest only for the first year with payments
of principal and interest on a 10-year amortization schedule commencing the
second year, and is due and payable in April 2008. The revolving credit facility
bears interest at a rate of 1% per month, payable monthly, with all advances
subject to approval of HLIC, and is due and payable in April 2008. The Company
must maintain inventory, accounts receivable and cash of not less than
$7,000,000. In addition, the Company must comply with certain other covenants,
including that it may not, without the consent of HLIC, incur any additional
debt, engage in any merger or acquisition, or pay any dividends or make any
distributions to shareholders other than stock dividends. The Company may prepay
the credit facility without premium or penalty. The Company also purchased a
$250,000 debenture issued by HLIC which is additional collateral for the credit
facility. The debenture bears interest at 3% per annum, adjusted annually to the
one-year debenture rate offered by HLIC. Additional credit enhancement for the
credit facility is a $1,250,000 letter of credit issued in favor of HLIC by a
commercial bank. As further consideration for the credit facility, the Company
issued to HLIC five-year warrants to purchase 100,000 shares of Common Stock for
$0.67 per share.

         Issuance of Preferred Stock. As part of the recapitalization in April
2003, the Company created a new series of preferred stock, designated "Series A
2% Convertible Preferred Stock" (the "Series A Preferred"), and issued 1,200,000
shares to Bluebird Finance Limited, a British Virgin Islands corporation
("Bluebird"), for $800,000, or $0.67 per share. The Series A Preferred provides
for cumulative dividends at the rate of 2% per annum payable in cash or
additional shares of Series A Preferred and has a liquidation preference equal
to its original purchase price plus accrued and unpaid dividends. The Company
has the right to redeem the Series A Preferred commencing April 2005 at the
liquidation preference plus accrued and unpaid dividends plus a premium of
$450,000. The Company must redeem the Series A Preferred upon certain changes of
control to the extent the Company has the funds legally available therefor, at
the same redemption price, unless the change of control occurs before April
2005, in which event the premium is 10% of either the consideration received by
the Company's shareholders or the market price, as applicable. The Series A
Preferred is convertible into Common Stock on a share-for-share basis (subject
to adjustment for stock splits, stock dividends and similar events) at any time
commencing May

                                       24
<PAGE>
2005. The holders of the Series A Preferred have no voting rights except as
required by law, provided, however, that at any time two dividend payments are
not paid in full, the Board of Directors will be increased by two and the
holders of the Series A Preferred, voting as a single class, will be entitled to
elect the additional directors. Bluebird received demand and piggyback
registration rights for the shares of Common Stock into which Series A Preferred
may be converted.

         Bluebird Credit Facility. As part of the recapitalization in April
2003, the Company obtained from Bluebird a credit facility of up to $4,150,000
secured by the assets of the Company. The credit facility includes a revolving
credit line in the amount of $2,900,000 and support for the $1,250,000 letter of
credit securing the HLIC credit facility. The loan bears interest at the rate of
5% per annum, payable annually for the first two years, with payments of
principal and interest on a 10-year amortization schedule commencing in the
third year, and is due and payable in April 2013. Bluebird's loan commitment
will be reduced by $72,000 in July 2005 and by the same amount every three
months thereafter. This loan is subordinate to the HLIC credit facility. The
Company must comply with certain covenants including among others that without
the consent of Bluebird it may not make any acquisition or investment in excess
of an aggregate of $150,000 each fiscal year outside the ordinary course of
business, or enter into any merger or similar reorganization.

         Retirement of Bank Credit Facility. As part of the recapitalization in
April 2003, the Company retired its bank credit facility with City National Bank
which had been in default since September 30, 2000.

         Retirement of Obligations to Frame Vendor. As part of the
recapitalization in April 2003, the Company retired its obligations to a frame
vendor in the aggregate amount of approximately $5.8 million (some of which were
assumed in connection with the Company's acquisition of California Design
Studio, Inc. ("CDS") in 1999) for a payment of $2,475,000 to Dartmouth Commerce
of Manhattan, Inc. ("Dartmouth"). Dartmouth had purchased this obligation from
the frame vendor for $2,350,000. The Company recognized a net gain of
approximately $3.3 million in connection with this transaction.

         Reduction in Trade Payables and Restructuring of Equipment Lease. As
part of the recapitalization in April 2003, the Company retired $775,000 of
trade payables for approximately $372,000, resulting in a gain of approximately
$400,000. In addition, the Company purchased certain leased property and
equipment, including its computer system, for $750,000, thereby terminating the
lease with aggregate future obligations of approximately $1.7 million. To fund
this payment, the Company obtained a $750,000 loan from a commercial bank
secured by the purchased assets and bearing interest at 4% per annum payable in
monthly installments of approximately $14,000 with the balance due in February
2008.

         Sale of Stock by Weiss Family Trust. As part of the recapitalization in
April 2003, the Weiss Family Trust, the principal shareholder of the Company,
sold all of the shares of the Common Stock of the Company which it held
(2,075,337 shares, representing approximately 37% of the outstanding Common
Stock of the Company) for $0.012 per share. Dartmouth purchased 1,600,000 shares
and Michael Prince purchased 475,337 shares. Dartmouth, which is wholly owned by
Richard M. Torre, is now the largest shareholder of the Company holding
approximately 28.7% of the outstanding Common Stock of the Company. Dartmouth
has agreed with Bluebird that until April 2008 it will not sell or transfer any
of these shares without the prior consent of Bluebird.

         Management and Board Changes. As part of the recapitalization in April
2003, Bernard L. Weiss resigned as Chairman of the Board, Director and Chief
Executive Officer, positions he held since founding the Company in 1983. Richard
M. Torre was appointed as Director and Chairman of the Board and Ted Pasternack,
Edward Meltzer and Drew Miller were appointed as Directors. In addition, Michael
Prince was named Chief Executive Officer and President. The Company has also
entered into a three-year consulting agreement with Dartmouth for compensation
of $55,000 per year.

         In April 2003 the Company entered into a new five-year employment
agreement with Mr. Prince which superseded his existing employment agreement.
Under the new employment agreement, he receives salary of $240,000 per year,
subject to annual review for increase. He also received 420,000 shares of Common
Stock, which he must forfeit if certain conditions are not met, as follows: (i)
210,000 shares must be forfeited if Signature has not achieved positive net
income from ordinary operations in at least one fiscal year in the period 2003
to 2006, and (ii) 210,000 shares must be forfeited if Signature does not have
net income from ordinary operations of at least $250,000 in at least one of the
three fiscal years following the fiscal year it achieves positive net income. If
prior to March 31, 2008 Mr. Prince's employment is terminated without cause or
he terminates his employment for "good reason": (i) he will be entitled to a
lump sum payment of all salary to which he would have been entitled under the
employment agreement from the date of termination through March 31, 2008; and
(ii) any of the 420,000 shares which have not vested will vest and be free of
the risk of forfeiture.

                                       25
<PAGE>
         Sale/License Back of Dakota Smith Trademark. In February 2003, the
Company completed a "sale/license back" of its "Dakota Smith" trademark. In the
transaction, the Company sold to an unaffiliated entity all of its rights to the
"Dakota Smith" trademark and its Dakota Smith Eyewear inventory for $1,000,000.
Concurrently, the Company entered into a three-year exclusive license agreement,
with a two-year renewal option, to use the trademark for eyeglass frames sold
and distributed in the United States and certain other countries. Signature also
repurchased the Dakota Smith inventory for a non-interest bearing promissory
note in the amount of $400,000 payable in monthly installments though March 2004
and secured by the Company's Dakota Smith inventory.

         Settlement with CDS. In February 2003, the Company entered into a
settlement agreement with CDS and CDS's sole shareholder of all remaining
obligations between the parties emanating from the Company's purchase in 1999 of
all the assets of CDS. The remaining obligations included obligations under a
consulting agreement with the CDS shareholder and the promissory note given as
part of the purchase price. The Company's net book value for these obligations
was approximately $1.1 million as of the closing. In the settlement, the Company
paid $500,000 to CDS and the CDS shareholder and the parties executed a mutual
general release. The Company recognized a gain of approximately $600,000 in
connection with this settlement.

         The recapitalization significantly improved the Company's financial
condition and liquidity through decreasing the shareholders deficit by
approximately $5.7 million, increasing capital, reducing liabilities and
replacing current obligations with long-term obligations. Although following the
recapitalization the Company continues to have a stockholders' deficit, the
Company believes that for at least the following 12 months, assuming there are
no unanticipated material adverse developments, no material decrease in revenues
and continued compliance with its credit facilities, it will be able pay its
debts and obligations as they mature. However, the Company's long-term viability
will depend on its ability to return to profitability on a consistent basis,
which will depend in part on its ability to increase revenues.

OVERVIEW

         The Company derives revenues primarily through the sale of eyeglass
frames under licensed brand names, including Laura Ashley Eyewear, Eddie Bauer
Eyewear, Hart Schaffner & Marx Eyewear, bebe eyes, Nicole Miller Eyewear, Dakota
Smith Eyewear and under its proprietary brands Signature.

         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 64% of the Company's net sales in fiscal 2001 and
fiscal 2002, respectively.

         The Company's cost of sales consists primarily of payments to foreign
contract manufacturers that produce frames and cases 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.

         Following many years of profitability, the Company incurred operating
losses in each of its last three fiscal years. and for the six months ended
April 30, 2002. The principal reason for these losses was the change in October
1999 by the Company in its method of distributing its products to independent
optical retailers in the United States from distributors to a direct sales
force. In addition, in fiscal 2001 and the first quarter of fiscal 2002, the
Company's revenues were adversely affected by a general downturn in the optical
frame business, the aftermath of the September 11th World Trade Center tragedy,
the reluctance of retailers to purchase large inventories of the Company's
products due to concerns about the Company's viability and the discontinuation
of certain product lines. The aftermath of the September 11 tragedy included
reduced sales orders resulting in inventory build-up, slowed collection of
accounts receivable and higher return rates due to the uncertain future retail
environment.

RESULTS OF OPERATIONS

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

                                       26
<PAGE>
<TABLE><CAPTION>
                                                                                           SIX MONTHS ENDED
                                                        THREE MONTHS ENDED APRIL 30             APRIL 30
                                                          -----------------------       -----------------------
                                                            2002           2001           2002           2001
                                                          --------       --------       --------       --------
<S>                                                       <C>            <C>            <C>            <C>
Net sales ...........................................        100.0%         100.0%         100.0%         100.0%
Cost of sales .......................................         44.7           38.6           42.0           36.6
                                                          --------       --------       --------       --------
Gross profit ........................................         55.3           61.4           58.0           63.4
                                                          --------       --------       --------       --------
Operating expenses:
    Selling .........................................         28.4           27.1           28.2           27.4
    General and administrative ......................         32.8           26.9           33.4           28.8
    Depreciation and amortization ...................          1.3            2.6            1.3            2.7
                                                          --------       --------       --------       --------
         Total operating expenses ...................         62.5           56.6           62.9           58.9
                                                          --------       --------       --------       --------
 Income (loss) from operations ......................         (7.2)           4.8           (4.8)           4.5
                                                          --------       --------       --------       --------
 Other income (expense), net ........................         (1.7)          (2.8)          (1.9)          (3.0)
                                                          --------       --------       --------       --------
 Income (loss) before provision for income taxes ....         (8.9)           2.0           (6.8)           1.5
                                                          --------       --------       --------       --------
 Provision (benefit) for income taxes ...............            0              0              0              0
                                                          --------       --------       --------       --------
 Net income (loss) ..................................         (8.9)%          2.0%          (6.8)%          1.5%
                                                          ========       ========       ========       ========
</TABLE>

         NET SALES. Net sales decreased by $2.6 million or 23.2% from the
quarter ended April 30, 2001 (the "2001 Quarter") to the quarter ended April 30,
2002 (the "2002 Quarter") and $5.0 million or 22.5% from the six months ended
April 30, 2001 (the "2001 Six Month") to the six months ended April 30, 2002
(the "2002 Six Months"). The following table shows certain information regarding
net sales for the periods indicated:

<TABLE><CAPTION>
                                THREE MONTHS ENDED APRIL 30                         SIX MONTHS ENDED APRIL 30
                           ---------------------------------------            ---------------------------------------
                                  2002                2001          CHANGE           2002                2001           CHANGE
                           ------------------- ------------------- ---------- ------------------- ------------------- ----------
<S>                           <C>      <C>        <C>      <C>       <C>          <C>      <C>        <C>      <C>       <C>
Laura Ashley Eyewear.....     $2,560   29.1%      $3,580   31.3%     (28.5)%      $5,800   33.5%      $7,044   31.5%     (17.7)%
Eddie Bauer Eyewear......      2,159   24.5        2,758   24.0      (21.7)%       4,658   26.9        6,291   28.1      (26.0)%
Other Sales (1)..........      4,087   46.4        5,132   44.7      (20.4)%       6,870   39.6        9,023   40.4      (23.9)%
                           ------------------- -------------------            ------------------- -------------------
Total....................     $8,806  100.0%     $11,470  100.0%     (23.2)%     $17,328  100.0%     $22,358  100.0%     (22.5)%
                           =================== ===================            =================== ===================
</TABLE>
_______________

(1) Includes net sales of other designer eyewear and private label frames.

         Net sales in the 2002 Six Months were adversely affected by a general
downturn in the optical frame business, the aftermath of the September 11th
World Trade Center tragedy, and the reluctance of retailers to purchase large
inventories of the Company's products due to concerns about the Company's
viability.

         GROSS PROFIT AND GROSS MARGIN. Gross profit decreased $2.2 million or
30.9% from the 2001 Quarter to the 2002 Quarter and $4.1 million or 29.0% from
the 2001 Six Months to the 2002 Six Months due to lower unit sales and
write-down of obsolete inventory. The gross margin declined from 63.4% in the
2001 Six Months to 58.0% in the 2002 Six Months due to write downs of obsolete
inventory and close out sales representing a higher percentage of net sales.

         SELLING EXPENSES. Selling expenses decreased $0.6 million or 19.6% from
the 2001 Quarter to the 2002 Quarter and $1.2 million or 20.0% from the 2001 Six
Months to the 2002 Six Months due to lower net sales and decreases of $0.4
million and $0.6 in point of purchase materials and $0.2 and $0.5 million in
salaries in the respective three and six month periods.

         GENERAL AND ADMINISTRATIVE EXPENSES. General and administrative
expenses decreased $0.2 million or 6.3% from the 2001 Quarter to the 2002
Quarter and $0.7 million or 10.3% from the 2001 Six Months to the 2002 Six
Months due primarily to decreases in salaries, equipment leasing costs, legal
and professional fees, and temporary help costs. General and administrative
expenses did not decrease as rapidly as decreases in net sales because many of
the cost cutting measures implemented by the Company were effected prior to and
at the beginning of fiscal 2001.

                                       27
<PAGE>
         DEPRECIATION AND AMORTIZATION. Depreciation and amortization expense
decreased in the 2002 Six Months because at the end of fiscal 2001 the Company
wrote down the remaining goodwill relating to two acquisitions.

         OTHER INCOME (EXPENSE), NET. Other expenses included primarily interest
expense, which decreased due to declining market interest rates, principal
paydowns and cessation of interest due on an obligation to a frame vender
following a standstill agreement with the vendor.

         PROVISION (BENEFIT) FOR INCOME TAXES. As a result of the Company's net
loss in the 2002 Quarter, it had no income tax expense.

FINANCIAL CONDITION , LIQUIDITY AND CAPITAL RESOURCES

         The Company's accounts receivable (net of allowance for doubtful
accounts) decreased from $5.1 million at October 31, 2001 to $2.9 million at
April 30, 2002 due to the increase in the reserve for returns and the reduction
in net sales.

         The Company's inventories (net of obsolescence reserve) decreased from
$10.3 million at October 31, 2001 to $7.5 million at April 30, 2002 as part of
implementation of the Company's turnaround strategy to reduce inventory and
improve inventory turnover by better matching frame purchases with customer
orders, an increase of $0.6 million in the reserve for obsolescent inventory and
sale of the USA Optical product line.

         The Company had a credit facility with a commercial bank consisting of
an accounts receivable and inventory revolving credit line and a term loan which
were secured by substantially all of the assets of the Company. The credit
facility matured on September 30, 2000, and the Company defaulted under its bank
credit facility for various events of default including non-payment at maturity
as well as other non-compliance with various covenants and conditions. This
credit facility was repaid in April 2003.

         In addition to the term loan included as part of its bank credit
facility, long-term debt (including the current portion) at April 30, 2002
included principally a $1.0 million note payable to CDS in connection with the
CDS Acquisition and an obligation to a frame vendor (present value of $3.2
million at April 30, 2002) assumed in connection with the CDS Acquisition. As
discussed above, the Company settled its obligation to CDS in February 2003 and
with the frame vendor in April 2003. See Notes 6 and 9 of Notes to Consolidated
Financial Statements.

         Of the Company's accounts payable at April 30, 2002, $1.2 million 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 April 30, 2002.

         The Company's bad debt write-offs (net of recoveries) were immaterial
during the 2001 Six Months and 2002 Six Months. As part of the Company's
management of its working capital, the Company performs most customer credit
functions internally, including extensions of credit and collections

         In March 2002 the Company sold its USA Optical product line, including
the trademark Camelot and related inventory, for $500,000 plus the assumption of
certain obligations and liabilities amounting to approximately $70,000. The
effect of this sale was not significant for fiscal 2002, and no material gain or
loss was recorded by the Company.

         As part of the Company's recapitalization in April 2003, the Company
obtained two long-term credit facilities. See "Subsequent Events."

         Historically, the Company has generated cash primarily through product
sales in the ordinary course of business, its bank credit facility and sales of
equity securities. Following the default on its bank credit facility in
September 2000, and as
                                       28
<PAGE>
a condition to numerous forbearances extended by its bank, the Company had to
regularly reduce its aggregate borrowings under its bank credit facility, from
$6.0 million at October 31, 2001 to $3.1 million when the facility was repaid in
April 2003. This, coupled with declining sales and corresponding inability to
raise equity capital, materially adversely affected the Company's liquidity and
working capital. To address this problem, the Company reduced operating expenses
through reduction in personnel and subletting office space, negotiated vendor
discounts and deferred payments of trade payables, sold obsolete inventory at a
deep discount, sold its USA Optical product line and completed a sale/license
back of its Dakota Smith trademark and inventory.

         The recapitalization materially improved the Company's liquidity by
replacing current obligations to its bank and a frame vendor with long-term
indebtedness and through discounted payoffs of trade payables. The Company
believes that for at least the next twelve months, assuming there are no
unanticipated material adverse developments, no material decrease in revenues
and continued compliance with its credit facilities it will be able pay its
debts and obligations as they mature. However, the Company's current sources of
funds are not sufficient to provide the working capital for material growth, and
it would be required to obtain additional debt or equity financing to support
such growth.

INFLATION

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

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, and takes into account
the recapitalization described under "Subsequent Events".

         NEED TO INCREASE REVENUES AND TO RETURN TO PROFITABILITY; GOING CONCERN
         QUALIFICATION

         The Company suffered material operating losses in its last three fiscal
years, causing a significant deterioration in its financial condition. At April
30, 2002, the Company's stockholders' deficit was $6.1 million. The report of
the independent auditors of the Company's financial statements for fiscal year
2001 contained an explanatory paragraph describing the uncertainty of the
Company's ability to continue as a going concern as of October 31, 2001. The
Company's recapitalization in April 2003 significantly improved the Company's
financial condition and liquidity through increasing capital, reducing
liabilities and replacing current obligations and debts with long-term
obligations. However, following the recapitalization the Company continues to
have a stockholders' deficit, and the Company's long-term viability will depend
on its ability to return to profitability on a consistent basis.

         During the past several years, the Company has significantly reduced
its general, administrative and other expenses to the extent that it does not
believe further material reductions are possible short of further downsizing in
the Company through termination of one or more product lines. Accordingly, the
ability of the Company to return to profitability will depend most significantly
on its ability to increase its revenues. The Company's revenues during the past
several years have been adversely affected by the significant downturn in the
optical frame industry and its inability to hire a direct sales force sufficient
to replace its distributor network following its conversion to direct sales in
2000. This problem has been exacerbated by the Company's impaired financial
condition. In addition, since the fourth quarter of fiscal year 2001, the
Company's revenues were adversely impacted by the September 11, 2001 tragedy and
the reluctance of retailers to purchase large inventories of the Company's
products due to concerns about the Company's viability. While the Company is
hopeful that the recapitalization will generate greater customer confidence and
increase its ability to hire qualified sales personnel, no assurance can be
given that this will occur or that the Company will be able to generate
materially greater revenues or to return to consistent profitability.

         SUBSTANTIAL DEPENDENCE UPON LAURA ASHLEY AND EDDIE BAUER LICENSES

         Net sales of Laura Ashley Eyewear and Eddie Bauer Eyewear accounted for
64% of the Company's net sales in each of fiscal years 2000 and 2001. 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 Nicole
Miller Eyewear, Dakota Smith Eyewear, bebe eyes and its Signature line, 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 Laura Ashley


                                       29
<PAGE>
license is automatically renewed through January 2008 so long as the Company is
not in breach of the license agreement and the royalty payment for the prior two
contract years exceeds the minimum royalty for those years. The Company markets
Eddie Bauer Eyewear through an exclusive license which terminates in December
2005, but may be renewed by the Company at least through 2007 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.

         DEPENDENCE UPON SALES TO RETAIL OPTICAL CHAINS

         Net sales to major optical retail chains, including Eyecare Centers of
America, Cole Vision Corp. and its subsidiary, LensCrafters, and U.S. Vision,
amounted to 33% and 29% of net sales in fiscal years 2000 and 2001,
respectively. Net sales to Eyecare Centers of America in fiscal year 2001
amounted to 12% of the Company's net sales for such fiscal year. The loss of one
or more retail chains as a customer would have a material adverse affect on the
Company's business.

         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 style, market position and market segment. The Eddie
Bauer license and the bebe license prohibit the Company from entering into
license agreements with companies which Eddie Bauer 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 and Italy. 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.

                                       30
<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 year 2001, Signature used manufacturers principally in Hong Kong/China,
Japan and Italy.

         INTERNATIONAL SALES

         International sales accounted for approximately 12.8% and 11.3% of the
Company's net sales in fiscal year 2000 and fiscal year 2001, 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 year 2000 and fiscal year 2001
amounted to 22% and 23% of gross sales (sales before returns). The Company
anticipates that product returns may increase as a result of the downturn in the
optical frame industry and general economic conditions. The Company maintains
reserves for product returns which it considers adequate; however, an increase
in returns that significantly exceeds the amount of those reserves would 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. 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 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
marketplace 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.

                                       31
<PAGE>
         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. 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.

         CONTROL BY DIRECTORS AND EXECUTIVE OFFICERS

         As of June 15, 2003, the directors and executive officers of the
Company owned beneficially approximately 51% of the Company's outstanding shares
of Common Stock. 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
acquirors from seeking to acquire control of the Company through the purchase of
the Common Stock, which might depress the price of the Common Stock.

         NO DIVIDENDS ALLOWED

         In light of the Company's current financial condition, it may not pay
dividends under the California General Corporation Law. In addition, payments of
dividends are restricted under the Company's credit facilities.

         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 issued 1,200,000 shares of
Series A Preferred in the recapitalization, and has no present intention to
issue any other 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 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 unless the change of control is approved by the licensor.
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.

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<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 April
30, 2002, a maximum of $1.5 million was payable in foreign currency. These
foreign currencies included Japanese yen. 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
April 30, 2002.

         International sales accounted for approximately 10% of the Company's
net sales in the six months ended April 30, 2002. 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.

         INTEREST RATE RISK. The Company's credit facilities existing at April
30, 2003 had fixed interest rates. See "Subsequent Events." 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.

                                    PART II.
                                OTHER INFORMATION

ITEM 1--LEGAL PROCEEDINGS

In March 2002, the Company settled the lawsuit filed by Coach, Inc in February
2001 in which Coach sought damages of approximately $900,000 primarily for
advertising costs Coach alleged were owed by the Company (the non-payment of
which was the basis of Coach's termination of the eyewear license). In the
settlement, Coach released the Company from all actions and debts for $250,000
payable over the 90-day period following the date of the settlement. The Company
has paid the $250,000.

ITEM 3.  DEFAULTS UPON SENIOR SECURITIES.

The Company was in default under its bank credit facility during the quarter
ended April 30, 2002. This credit facility was paid off in April 2003 and, as of
April 30, 2003, the Company was not in default under any credit facility.

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

         Reports on Form 8-K

                   None

                                       33
<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 24, 2003                     SIGNATURE EYEWEAR, INC.


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


























                                       34
<PAGE>


                          CERTIFICATIONS FOR FORM 10-Q

         I, Michael Prince, certify that:

         1. I have reviewed this quarterly report on Form 10-Q for the quarter
ended April 30, 2002 of Signature Eyewear, Inc.;

         2. Based on my knowledge, this quarterly report does not contain any
untrue statement of a material fact or omit to state a material fact necessary
to make the statements made, in light of the circumstances under which such
statements were made, not misleading with respect to the period covered by this
quarterly report; and

         3. Based on my knowledge, the financial statements, and other financial
information included in this quarterly report, fairly present in all material
respects the financial condition, results of operations and cash flows of the
registrant as of, and for, the periods presented in this quarterly report.





Date: June 24, 2003                         /s/ Michael Prince
                                            ------------------------------------
                                            Name: Michael Prince
                                            Title: Chief Executive Officer and
                                                   Chief Financial Officer



















                                       35
<PAGE>


                                  EXHIBIT INDEX

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

    99.1        Certification Pursuant to Section 906 of the Sarbanes-Oxley Act
                of 2002




































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