UNITED
STATES


SECURITIES
AND EXCHANGE COMMISSION


Washington,
D.C. 20549


FORM
10-Q


x
              QUARTERLY
      REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF
      1934


For the
quarterly period ended July 31, 2009
  OR


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




498
North Oak Street


Inglewood,
California 90302


(Address
of Principal Executive Offices)




(310)
330-2700


(Registrant’s
Telephone Number, Including Area Code)





(Former
name, former address and former fiscal year, if changed since last
report)





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




Indicate
by check mark whether the registrant is a large accelerated filer, an
accelerated filer, a non-accelerated filer, or a smaller reporting company. See
definition of “large accelerated filer,” “accelerated filer” and “smaller
reporting company” in Rule 12b-2 of the Exchange Act.




Large
      Accelerated Filer   o
            Accelerated
      Filer    ̈Non-accelerated
      Filer   o
              (Do
      not check if a smaller reporting company)
            Smaller
      reporting company   x







Indicate by check mark whether the
registrant is a shell company (as defined in Rule 12b-2 of the Exchange
Act).   ̈
Yes   ý No




Indicate
the number of shares outstanding of each of the issuer’s classes of common
stock, as of the latest practicable date: 6,955,639 shares issued and
outstanding as of September 8, 2009.











SIGNATURE
EYEWEAR, INC.




INDEX
TO FORM 10-Q




PART
      I
            FINANCIAL
      INFORMATION
            PageItem
      1
            Financial
      StatementsBalance
      Sheets
            3Statements
      of Income
            5Statements
      of Cash Flows
            6Notes
      to the Financial Statements
            7Item
      2
            Management’s
      Discussion and Analysis of Financial Condition and Results of
      Operations
            12Item
      3
            Quantitative
      and Qualitative Disclosures About Market Risk
            15Item
      4
            Controls
      and Procedures
            15PART
      II
            OTHER
      INFORMATION
            16Item
      1
            Legal
      Proceedings
            16Item
      1A
            Risk
      Factors
            16Item
      2
            Unregistered
      Sales of Equity Securities and Use of Proceeds
            16Item
      3
            Defaults
      upon Senior Securities
            16Item
      4
            Submission
      of Matters to a Vote of Security Holders
            16Item
      5
            Other
      Information
            16Item
      6
            Exhibits
            16








- 2
-


PART
I.




FINANCIAL
INFORMATION







Item
1.   Financial Statements





SIGNATURE
EYEWEAR, INC.


BALANCE
SHEETS


AT
JULY 31, 2009 (UNAUDITED)


AND
OCTOBER 31, 2008 (AUDITED)


ASSETS
 July
      31,
              
              
              October
      31,2009
              
              
              2008Current
      assetsCash
      and cash equivalents
              
              $
              254,924
              
              
              $
              305,628Accounts
      receivable - trade, net of allowance fordoubtful
      accounts of $42,163
              
              
              3,079,037
              
              
              
              2,809,135Inventory
              
              
              4,353,653
              
              
              
              5,607,178Promotional
      products and materials
              
              
              187,919
              
              
              
              133,618Prepaid
      expenses and other current assets
              
              
              258,131
              
              
              
              394,934Deferred
      income taxes
              
              
              376,500
              
              
              
              376,500Total
      current assets
              
              
              8,510,164
              
              
              
              9,626,993Property and equipment,
      net
              
              
              338,065
              
              
              
              369,935Deposits
      and other assets
              
              
              240,154
              
              
              
              107,656Deferred
      income taxes
              
              
              2,600,700
              
              
              
              2,600,700Total
      assets
              
              $
              11,689,083
              
              
              $
              12,705,284
   The
accompanying notes are an integral part of these financial
statements.
 - 3
-
 
 SIGNATURE
EYEWEAR, INC.
 BALANCE
SHEETS
 AT
JULY 31, 2009 (UNAUDITED)
 AND
OCTOBER 31, 2008 (AUDITED)
 LIABILITIES
AND SHAREHOLDERS’
EQUITY
  July
      31,
              
              
              October
      31,2009
              
              
              2008Current
      liabilitiesAccounts
      payable - trade
              
              $
              4,158,316
              
              
              $
              5,053,341Accrued
      expenses and other current liabilities
              
              
              1,529,865
              
              
              
              1,853,586Current
      portion of long-term debt
              
              
              415,000
              
              
              
              290,000Total
      current liabilities
              
              
              6,103,181
              
              
              
              7,196,927Long-term debt, net of
      current portion
              
              
              4,127,500
              
              
              
              4,620,000Total
      liabilities
              
              
              10,230,681
              
              
              
              11,816,927Commitments
      and contingenciesShareholders’
      equityPreferred
      stock, $0.001 par value5,000,000
      shares authorizedSeries
      A 2% convertible preferred stock, $0.001par
      value; liquidation preference approximately$910,000
      at July 31, 2009 and $897,000 at October 31, 2008;1,360,000
      shares authorized,1,200,000
      shares outstanding at
              
              
              1,200
              
              
              
              1,200July
      31, 2009 and October 31, 2008Common
      stock, $0.001 par value30,000,000
      shares authorized,6,955,639
      shares outstandingat
      July 31, 2009 and October 31, 2008
              
              
              6,956
              
              
              
              6,956Additional
      paid-in capital
              
              
              15,656,812
              
              
              
              15,656,812Accumulated
      deficit
              
              
              (14,206,566
              )
              
              
              (14,776,611
              )Total
      shareholders’ equity
              
              
              1,458,402
              
              
              
              888,357Total
      liabilities and shareholders’ equity
              
              $
              11,689,083
              
              
              $
              12,705,284
  The
accompanying notes are an integral part of these financial
statements.








- 4
-


SIGNATURE
EYEWEAR, INC.


STATEMENTS
OF INCOME


FOR
THE THREE MONTHS AND NINE MONTHS ENDED JULY 31, 2009 (UNAUDITED)


AND
JULY 31, 2008 (UNAUDITED)








For The Three Months Ended
              
              
              For The Nine Months Ended2009
              
              
              2008
              
              
              2009
              
              
              2008Net
      sales
              
              $
              5,932,665
              
              
              $
              6,361,749
              
              
              $
              18,003,359
              
              
              $
              18,602,713Cost
      of sales
              
              
              2,199,444
              
              
              
              2,405,957
              
              
              
              6,514,423
              
              
              
              6,796,175Gross
      profit
              
              
              3,733,221
              
              
              
              3,955,792
              
              
              
              11,488,936
              
              
              
              11,806,538Operating
      expensesSelling
              
              
              2,181,179
              
              
              
              2,247,790
              
              
              
              6,540,116
              
              
              
              6,675,117General
      and administrative
              
              
              1,287,892
              
              
              
              1,432,338
              
              
              
              4,091,974
              
              
              
              4,291,284Depreciation
      and amortization
              
              
              39,180
              
              
              
              29,460
              
              
              
              110,846
              
              
              
              78,096Total
      operating expenses
              
              
              3,508,251
              
              
              
              3,709,588
              
              
              
              10,742,936
              
              
              
              11,044,497Income
      from operations
              
              
              224,970
              
              
              
              246,204
              
              
              
              746,000
              
              
              
              762,041Interest
      expense/other, net
              
              
              (50,831
              )
              
              
              (64,256
              )
              
              
              (154,608
              )
              
              
              (215,571
              )Income
      before taxes
              
              
              174,139
              
              
              
              181,948
              
              
              
              591,392
              
              
              
              546,470Income
      taxes
              
              
              19,199
              
              
              
              6,409
              
              
              
              21,347
              
              
              
              8,620Net
      income
              
              
              154,940
              
              
              
              175,539
              
              
              
              570,045
              
              
              
              537,850Preferred
      stock dividend
              
              $
              (4,509
              )
              
              $
              (4,420
              )
              
              $
              (13,459
              )
              
              $
              (13,194
              )Net
      income available to common shareholders
              
              $
              150,431
              
              
              $
              171,119
              
              
              $
              556,586
              
              
              $
              524,656Basic
      earnings per share
              
              $
              0.02
              
              
              $
              0.02
              
              
              $
              0.08
              
              
              $
              0.08Diluted
      earnings per share
              
              $
              0.02
              
              
              $
              0.02
              
              
              $
              0.07
              
              
              $
              0.07Weighted-average
      common sharesoutstanding
      - Basic
              
              
              6,955,639
              
              
              
              6,955,639
              
              
              
              6,955,639
              
              
              
              6,892,500Weighted-average
      common sharesoutstanding
      - Diluted
              
              
              8,314,201
              
              
              
              8,287,484
              
              
              
              8,314,201
              
              
              
              8,224,345
  The
accompanying notes are an integral part of these financial
statements.








- 5
-


SIGNATURE
EYEWEAR, INC.


STATEMENTS
OF CASH FLOWS


FOR
THE NINE MONTHS ENDED JULY 31, 2009 (UNAUDITED)


AND
JULY 31, 2008 (UNAUDITED)








2009
                
                
                2008Cash
      flows from operating activitiesNet
      income
                
                $
                570,045
                
                
                $
                537,850Adjustments
      to reconcile net incometo
      net cash provided byoperating
      activities:Depreciation
      and amortization
                
                
                110,846
                
                
                
                78,096(Increase)
      decrease in:Accounts
      receivable - trade
                
                
                (269,903
                )
                
                
                (219,184
                )Inventories
                
                
                1,253,524
                
                
                
                (544,179
                )Promotional
      products and materials
                
                
                (54,301
                )
                
                
                51,424Prepaid
      expenses and other current assets
                
                
                136,803
                
                
                
                (26,763
                )Increase
      (decrease) in:Accounts
      payable - trade
                
                
                (895,025
                )
                
                
                361,062Accrued
      expenses and other current liabilities
                
                
                (323,721
                )
                
                
                (156,113
                ).Net
      cash provided by operating activities
                
                
                528,268
                
                
                
                82,193Cash
      flows from investing activitiesPurchase
      of property and equipment
                
                
                (78,974
                )
                
                
                (85,605
                )Deposits
      and other assets
                
                
                (132,498
                )
                
                
                (2,302
                )Net
      cash used in investing activities
                
                
                (211,472
                )
                
                
                (87,907
                )Cash
      flows from financing activitiesPayments
      on short-term debt
                
                
                -
                
                
                
                (75,100
                )Payments
      on long-term debt
                
                
                (367,500
                )
                
                
                (340,000
                )Proceeds
      from sale of common stock
                
                
                -
                
                
                
                67,000Net
      cash used in financing activities
                
                
                (367,500
                )
                
                
                (348,100
                )Net
      decrease in cash and cash equivalents
                
                
                (50,704
                )
                
                
                (353,814
                )Cash
      and cash equivalents, beginning of period
                
                
                305,628
                
                
                
                461,080Cash
      and cash equivalents, end of period
                
                $
                254,924
                
                
                $
                107,266Supplemental
      disclosures of cashflow
      informationInterest
      paid
                
                $
                88,831
                
                
                $
                143,404Income
      taxes paid
                
                $
                21,346
                
                
                $
                8,620


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


- 6
-


NOTES
TO FINANCIAL STATEMENTS




(Information
as of July 31, 2009 and for the three and nine months ended July 31, 2009
and 2008 is 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.  The Company
conducts its operations primarily from its principal executive offices and
warehouse in Inglewood, California, and a warehouse and sales office in
Belgium.




Note
      2.
            Summary
      of Significant Accounting Policies




Basis of
Presentation




The
accompanying financial statements have been prepared in conformity with
accounting principles generally accepted in the United States of America for
interim financial information and with the instructions to Form 10-Q and
Regulation S-X.  Accordingly, they do not include all of the
information and footnotes required by accounting principles generally accepted
in the United States of America for complete financial statements.  In
the opinion of management, all normal, recurring adjustments considered
necessary for a fair presentation have been included.  These financial
statements should be read in conjunction with the audited financial statements
and notes thereto included in the Company’s Annual Report on Form 10-K for the
year ended October 31, 2008.  The results of operations for the nine
months ended July 31, 2009 are not necessarily indicative of the results
that may be expected for the year ending October 31, 2009.




Inventory




Inventory
consists of finished goods, which are valued at the lower of cost or
market.  Cost is computed using the weighted-average cost, which
approximates actual cost on a first-in, first-out basis.




The
Company regularly and periodically evaluates its inventory to ensure that it is
valued at the lower of cost or market based on current market trends, product
history and turnover.




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
      yearsComputer
      equipment
            3
      yearsSoftware
            3
      yearsMachinery
      and equipment
            5
      yearsLeasehold
      improvements
            Term
      of the lease or the estimated life of the related improvements, whichever
      is shorter





Expenditures
for major renewals and betterments that extend the useful lives of property and
equipment are capitalized.







- 7
-


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-term
maturities.  The amounts shown for long-term debt also approximate
fair value because current interest rates offered to the Company for debt of
similar maturities are substantially the same.




Income per
Share




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




Three
      months ended July 31, 2009
                
                Income
                  (Numerator)
                
                
                Shares
                  (Denominator)
                
                
                Per
      Share
                  AmountBasic
      earnings per share
                
                $
                150,431
                
                
                
                6,955,639
                
                
                $
                0.02Conversion
      of preferred stock
                
                
                4,509
                
                
                
                1,358,562
                
                
                
                0.00Diluted
      earnings per share
                
                $
                154,940
                
                
                
                8,314,201
                
                
                $
                0.02
  Three
      months ended July 31, 2008
                  
                  Income
                    (Numerator)
                  
                  
                  Shares
                    (Denominator)
                  
                  
                  Per
      Share
                    AmountBasic
      earnings per share
                  
                  $
                  171,119
                  
                  
                  
                  6,955,639
                  
                  
                  $
                  0.02Conversion
      of preferred stock
                  
                  
                  4,420
                  
                  
                  
                  1,331,845
                  
                  
                  
                  0.00Diluted
      earnings per share
                  
                  $
                  175,539
                  
                  
                  
                  8,287,484
                  
                  
                  $
                  0.02
 - 8
-
 
 Nine
      months ended July 31, 2009
                    
                    Income
                      (Numerator)
                    
                    
                    Shares
                      (Denominator)
                    
                    
                    Per
      Share
                      AmountBasic
      earnings per share
                    
                    $
                    556,586
                    
                    
                    
                    6,955,639
                    
                    
                    $
                    0.08Conversion
      of preferred stock
                    
                    
                    13,459
                    
                    
                    
                    1,358,562
                    
                    
                    
                    0.01Diluted
      earnings per share
                    
                    $
                    570,045
                    
                    
                    
                    8,314,201
                    
                    
                    $
                    0.07
  Nine
      months ended July 31, 2008
                    
                    Income
                      (Numerator)
                    
                    
                    Shares
                      (Denominator)
                    
                    
                    Per
      Share
                      AmountBasic
      earnings per share
                    
                    $
                    524,656
                    
                    
                    
                    6,892,500
                    
                    
                    $
                    0.08Conversion
      of preferred stock
                    
                    
                    13,194
                    
                    
                    
                    1,331,845
                    
                    
                    
                    0.01Diluted
      earnings per share
                    
                    $
                    537,850
                    
                    
                    
                    8,224,345
                    
                    
                    $
                    0.07


The
following potential common shares have been excluded from the computations of
diluted income per share for the nine months ended July 31, 2009 and 2008
because the effect would have been anti-dilutive:




2009
            
            
            2008Stock
      options
            
            
            32,900
            
            
            
            34,300Warrants
            
            
            300,000
            
            
            
            300,000Total
            
            
            332,900
            
            
            
            334,300





Foreign Currency
Translation




The
Company’s Belgium branch’s functional currency is the euro.  Assets
and liabilities are translated at exchange rates in effect at the balance sheet
date.  Income and expense accounts are translated at average
rates.  In addition, some of the Company’s liabilities are denominated
in foreign currencies.  Such liabilities are converted into U.S.
dollars at the exchange rate prevailing at the balance sheet
date.  The resulting gains or losses were not material for the periods
ended July 31, 2009 and 2008.




Estimates




The
preparation of financial statements in conformity with accounting principles
generally accepted in the United States of America 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.




Significant Recent
Accounting Pronouncements




In April
2009, the Financial Accounting Standards Board (“FASB”) issued FASB Staff
Position (“FSP”) FAS 107-1/APB 28-1 (“FSP 107-1”), Interim Disclosures about Fair Value
of Financial Instruments.  This pronouncement amended SFAS No.
107, Disclosures about Fair
Value of Financial Instruments, to require disclosure of the carrying
amount and the fair value of all financial instruments for interim reporting
periods and annual financial statements of publicly traded companies (even if
the financial instrument is not recognized in the balance sheet), including the
methods and significant assumptions used to estimate the fair values and any
changes in such methods and assumptions.  FSP 107-1 also amended
APB Opinion No. 28,




- 9
-


Interim Financial Reporting,
to require disclosures in summarized financial information at interim reporting
periods.  FSP 107-1 is effective for interim reporting periods ending
after June 15, 2009, with early adoption permitted for periods ended after March
15, 2009 if a company also elects to early adopt FSP SFAS 157-4
(“FSP 157-4”), Determining Fair Value When the
Volume and Level of Activity for the Asset or Liability Have Significantly
Decreased and Identifying Transactions That Are Not Orderly, and FSP SFAS
115-2/SFAS 124-2, Recognition
and Presentation of Other-Than-Temporary Impairments, which was also
issued by the FASB in April 2009.





FSP 157-4
generally applies to all assets and liabilities within the scope of any
accounting pronouncements that require or permit fair value
measurements.  This pronouncement, which does not change SFAS No.
157’s guidance regarding Level 1 inputs, requires the entity to (i) evaluate
certain factors to determine whether there has been a significant decrease in
the volume and level of activity for the asset or liability when compared with
normal market activity, (ii) consider whether the preceding indicates that
transactions or quoted prices are not determinative of fair value and, if so,
whether a significant adjustment thereof is necessary to estimate fair value in
accordance with SFAS No. 157, and (iii) ignore the intent to hold the asset
or liability when estimating fair value.  FSP 157-4 also provides
guidance to consider in determining whether a transaction is orderly (or not
orderly) when there has been a significant decrease in the volume and level of
activity for the asset or liability, based on the weight of available
evidence.  This pronouncement is effective for interim and annual
reporting periods ending after June 15, 2009, and shall be applied
prospectively.  Early adoption of FSP 157-4 also requires early
adoption of the pronouncement described in the following
paragraph.  However, early adoption for periods ended before March 15,
2009 is not permitted.





In April
2009, the FASB issued FSP FAS 115-2 and 124-2
(“FSP 115-2/124-2”), which amends the other-than-temporary impairment
(“OTTI”) recognition guidance in certain existing U.S. GAAP (including SFAS No.
115 and 130, FSP FAS 115-1/FAS 124-1, and EITF Issue 99-20) for debt
securities classified as available-for-sale and
held-to-maturity.  FSP 115-2/124-2 requires the entity to
consider (i) whether the entire amortized cost basis of the security will be
recovered (based on the present value of expected cash flows), and (ii) its
intent to sell the security.  Based on the factors described in the
preceding sentence, this pronouncement also explains the process for determining
the OTTI to be recognized in “other comprehensive income” (generally, the
impairment charge for other than a credit loss) and in
earnings.  FSP 115-2/124-2 does not change existing recognition
or measurement guidance related to OTTI of equity securities.  This
pronouncement is effective as described in the preceding
paragraph.  Certain transition rules apply to debt securities held at
the beginning of the interim period of adoption when an OTTI was previously
recognized.  If an entity early adopts either FSP 107-1 or
FSP 157-4, the entity is also required to early adopt this
pronouncement.  In addition, if an entity early adopts
FSP 115-2/124-2, it is also required to early adopt
FSP 157-4.





In May
2009, the FASB issued SFAS No. 165, Subsequent
Events.  The objective of this Statement is to establish
general standards of accounting for and disclosure of events that occur after
the balance sheet date but before financial statements are issued or are
available to be issued.  In particular, SFAS No. 165 sets forth the
period after the balance sheet date during which management of a reporting
entity should evaluate events or transactions that may occur for potential
recognition or disclosure in the financial statements, the circumstances under
which an entity should recognize events or transactions occurring after the
balance sheet date in its financial statements, and the disclosures that an
entity should make about events or transactions that occurred after the balance




- 10
-


sheet
date.  SFAS No. 165 is effective for financial statements issued for
interim and annual periods ending after June 15, 2009.  SFAS No. 165
did not have any impact on the Company’s financial statements for the periods
ended July 31, 2009.  The Company evaluated subsequent events through
the filing date of this Quarterly Report on Form 10-Q on September 8,
2009.




In June
2009, the FASB issued SFAS No. 168, The FASB Accounting Standards
Codification and the Hierarchy of Generally Accepted Accounting
Principles, which replaced SFAS No. 162.  The Codification will
become the source of authoritative GAAP recognized by the FASB to be applied by
nongovernmental entities.  Rules and interpretive releases of the
Securities and Exchange Commission (the “SEC”) under authority of federal
securities laws are also sources of authoritative GAAP for SEC
registrants.  On the effective date of SFAS No. 168, the Codification
will supersede all then-existing non-SEC accounting and reporting
standards.  All other non-grandfathered non-SEC accounting literature
not included in the Codification will become non-authoritative.  SFAS
No. 168 is effective for financial statements issued for interim and annual
periods ending after September 15, 2009.  SFAS No. 168 is not
expected to have a material impact on the Company’s 2009 financial
statements.





In June
2008, the FASB ratified the consensus reached on the Emerging Issues Task Force
(“EITF”) Issue No. 07-5 Determining Whether an Instrument
(or an Embedded Feature) is Indexed to an Entity’s Own Stock(“EITF
07-5”).  EITF 07-5 provides guidance for determining whether an
equity-linked financial instrument (or embedded feature) is indexed to an
entity’s own stock.  EITF 07-5 applies to any freestanding financial
instrument or embedded feature that has all the characteristics of a derivative
under paragraph 6-9 of SFAS No.133, Accounting for Derivative
Instruments and Hedging Activities, for purposes of determining whether
that instrument or embedded feature qualifies for the first part of the scope
exception under paragraph 11(a) of SFAS No. 133 and for purposes of
determining whether that instrument is within the scope of EITF
Issue 00-19, Accounting
for Derivative Financial Instruments Indexed to, and Potentially Settled in, a
Company’s Own Stock(“EITF 00-19”), which provides accounting guidance
for instruments that are indexed to, and potentially settled in, the issuer’s
own stock.  EITF 07-5 is effective for fiscal years beginning
after December 15, 2008, which for the Company is fiscal year 2010, and early
adoption is not permitted.  The Company is currently evaluating the
impact of this pronouncement on its financial statements.





The
recent accounting pronouncements discussed in the notes to the Company’s audited
financial statements for the year ended October 31, 2008 included in the
Company’s Annual Report on Form 10-K that were required to be adopted during the
fiscal year ended October 31, 2008 did not have and are not expected to
have a significant impact on the Company’s 2009 financial
statements.





Note
      3.
            Long-Term
      Debt




Long-term
debt (excluding accrued and unpaid interest) consisted of the following at the
dates indicated:




July
      31,
              2009
            
            
            October
      31,
              2008Revolving
      line of credit from Comerica Bank
            
            $
            2,750,000
            
            
            $
            2,900,000Revolving
      line of credit from Bluebird Finance Limited
            
            
            1,667,500
            
            
            
            1,885,000Term
      note payable to Ashford Capital, LLC.
            
            
            125,000
            
            
            
            125,0004,542,500
            
            
            
            4,910,000Less
      current portion
            
            
            (415,000
            )
            
            
            (290,000
            )Long-term
      portion
            
            $
            4,127,500
            
            
            $
            4,620,000





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-




Note
      4.
            Income
      Taxes




As of
October 31, 2008, the Company had net operating loss carry-forwards for federal
and state income tax purposes of approximately $15,156,000 and $4,271,000,
respectively, which expire at various times from 2021 through 2027.




The
Company has recorded a partial benefit for income taxes based on these net
operating loss carryforwards.  Deferred tax assets are reduced by a
valuation allowance when, in the opinion of management, it is more likely than
not a portion of deferred tax assets will not be realized.




Realization
of this deferred tax asset is dependent on the Company’s ability to generate
future taxable income.  Management believes that it is more likely
than not that the Company will generate taxable income to utilize some of the
tax carry-forwards before their expiration.  However, there can be no
assurance that the Company will meet its expectation of future
income.  As a result, the amount of the deferred tax asset considered
realizable could be reduced in the near term if estimates of future taxable
income are reduced.  Such occurrence could materially adversely affect
the Company’s results of operations and financial condition.




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 our
financial statements and accompanying footnotes, contains forward-looking
statements that involve risks and uncertainties.  Important factors
that could cause actual results to differ materially from our expectations are
set forth in Item 1 – Business – Factors That May Affect Our Future Operating
Results, in our Form 10-K for the year ended October 31, 2008 as well as those
discussed elsewhere in this Form 10-Q.  Those forward-looking
statements may relate to, among other things, our plans and strategies, new
product lines, and relationships with licensors, distributors and customers,
distribution strategies and the business environment in which we
operate.




“ ” “ ”




Overview




We
generate revenues through the sale of prescription eyeglass frames and sunwear
under licensed brand names, including bebe, Carmen Marc Valvo, Cutter &
Buck, Dakota Smith, Hart Schaffner Marx, Hummer, Laura Ashley, Michael Stars and
Nicole Miller, and under our proprietary Signature brand.  Our cost of
sales consists primarily of purchases from foreign contract manufacturers that
produce frames and cases to our specifications.




We
reported net income of $155,000 on net sales of $5.9 million for the three
months ended July 31, 2009 (the “2009 Quarter”) compared to net income of
$176,000 on net sales of $6.4 million for the three months ended July 31,
2008 (the “2008 Quarter”).  We reported net income of
$570,000




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-


on net
sales of $18.0 million for the nine months ended July 31, 2009 (the “2009
Nine Months”) compared to net income of $538,000 on net sales of $18.6 million
for the nine months ended July 31, 2008 (the “2008 Nine
Months”).




We have
been able to maintain net income at close to 2008 levels despite declining net
sales through continued cost-cutting measures and lower interest
expense.  Net sales have declined due to the deepening global
recession, which has materially impacted our international
sales.  Domestic sales have remained relatively level primarily
through the growing popularity of our largest line, bebe eyewear, and our Dakota
Smith Eyewear line, and the addition of Carmen Marc Valvo Eyewear and Michael
Stars Eyewear.




We have
continued our efforts to improve our balance sheet during this recessionary
period.  We have reduced inventory from $5.6 million at October 31,
2008 to $4.4 million at July 31, 2009 while reducing our accounts payable and
accrued expenses by $1.2million.  We
have been able to reduce our total debt by $367,000 in fiscal 2009, from
$4.9 million at October 31, 2008 to $4.5 million at July 31,
2009.




Results
of Operations




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




Three
      Months Ended
            
            
            Nine
      Months EndedJuly
      31,
            
            
            July
      31,2009
            
            
            2008
            
            
            2009
            
            
            2008Net
      sales
            
            
            100.0
            %
            
            
            100.0
            %
            
            
            100.0
            %
            
            
            100.0
            %Cost
      of sales
            
            
            37.1
            
            
            
            37.8
            
            
            
            36.2
            
            
            
            36.5Gross
      profit
            
            
            62.9
            
            
            
            62.2
            
            
            
            63.8
            
            
            
            63.5Operating
      expenses:Selling
            
            
            36.7
            
            
            
            35.3
            
            
            
            36.3
            
            
            
            35.9General
      and administrative
            
            
            21.7
            
            
            
            22.5
            
            
            
            22.7
            
            
            
            23.1Depreciation
      and amortization
            
            
            0.7
            
            
            
            0.5
            
            
            
            0.6
            
            
            
            0.4Total
      operating expenses
            
            
            59.1
            
            
            
            58.3
            
            
            
            59.6
            
            
            
            59.4Income
      from operations
            
            
            3.8
            
            
            
            3.9
            
            
            
            4.2
            
            
            
            4.1Interest
      expense/other, net
            
            
            (0.9
            )
            
            
            (1.0
            )
            
            
            (0.9
            )
            
            
            (1.2
            )Income
      before taxes
            
            
            2.9
            
            
            
            2.9
            
            
            
            3.3
            
            
            
            2.9Income
      taxes
            
            
            0.3
            
            
            
            0.1
            
            
            
            0.1
            
            
            
            0.0Net
      income
            
            
            2.6
            %
            
            
            2.8
            %
            
            
            3.2
            %
            
            
            2.9
            %




Net Sales.  Net
sales decreased by 6.7% or $429,000 from the 2008 Quarter to the 2009 Quarter
and by 3.2% or $599,000 from the 2008 Nine Months to the 2009 Nine
Months.  Unit frame sales decreased in the fiscal 2009 periods, as the
global recession continues to affect the optical frame
industry.  However, the average sales price of our frames increased
due to fewer close out sales and fewer international sales, which are generally
sold at lower prices.  Sales of our largest line, bebe eyewear, and
Dakota Smith, increased in both the 2009 Quarter and the 2009 Nine
months.  Net sales in the fiscal 2009 periods were also positively
impacted by the introduction of Michael Stars Eyewear in the winter of 2009 and
in the 2009 Nine Months by the introduction of Carmen Marc Valvo




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-


in
2008.  In addition, net sales increased in the Signature Collection
with the introduction of the Caligraphy Collection in 2009.




Direct
sales to independent optical retailers and distributors decreased $340,000 in
the 2009 Quarter and decreased $180,000 in the 2009 Nine
Months.  Sales to optical and retail chains increased $263,000 in the
2009 Quarter and increased $409,000 in the 2009 Nine Months.




Domestic
sales decreased $91,000 in the 2009 Quarter and $151,000 in the 2009 Nine
Months.  International sales decreased $338,000 in the 2009 Quarter
and decreased $750,000 in the 2009 Nine Months due primarily to the weak global
optical market and our scheduled closing of the Belgium office in September
2009.




Net sales
reflect gross sales less a reserve for product returns established by us based
on products that we are aware will be returned as of the end of the
period.  These reserves were $476,000 and $443,000 at July 31,
2009 and October 31, 2008, respectively.




We had
$875,000 and $990,000 in product returns for the 2009 Quarter and 2008 Quarter,
respectively, resulting in a product returns percentage of 14.7% and 15.6%,
respectively.  We had $2.6 million in product returns for the 2009
Nine Months and 2008 Nine Months, resulting in a product returns percentage of
14.7% and 13.8%, respectively.




Gross Profit and Gross
Margin.  Gross profit decreased $223,000 from the 2008 Quarter
to the 2009 Quarter and $318,000 from the 2008 Nine Months to the 2009 Nine
Months due to decreased sales.  Gross margin increased to 62.9% in the
2009 Quarter from 62.2% in the 2008 Quarter, and increased to 63.8% in the 2009
Nine Months from 63.5% in the 2008 Nine Months.




Selling
Expenses.  Selling expenses decreased $67,000 from the 2008
Quarter to the 2009 Quarter primarily due to decreases of $93,000 in
compensation expense and $74,000 in convention expense partially offset by an
increase of $89,000 in royalty expense.  Selling expenses decreased
$135,000 from the 2008 Nine Months to the 2009 Nine Months primarily due to
decreases of $139,000 in convention expense and $60,000 Belgium selling expense
partially offset by $84,000 increase in royalty expense.




General and Administrative
Expenses.  General and administrative expenses for the 2009
Quarter and 2009 Nine Months decreased $144,000 and $199,000, respectively, from
the 2008 Quarter and 2009 Nine Months primarily due to a reduction in staff and
overhead in our Belgium office.




Interest Expense/Other, Net.Interest expense, net, consists of interest expense offset by other
income.  Interest expense, net, decreased $13,000 in the 2009 Quarter
and $61,000 in the 2009 Nine Months primarily due to lower outstanding
borrowings and reductions in the interest rate on our revolving line of
credit.




Income Taxes.  As a
result of our net loss carry-forward, we recorded no income tax expense other
than franchise taxes in various states in the 2009 Quarter or the 2008
Quarter.




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-


Financial
Condition, Liquidity and Capital Resources




Our
accounts receivable (net of allowance for doubtful accounts)were $3.1 million at
July 31, 2009 compared to $2.8 million at October 31, 2008 due primarily to
extended payment terms offered to customers and slower payments due to the
economy.




Our
inventories (at lower of cost or market) were $4.4 million at July 31, 2009
compared to $5.6 million at October 31, 2008.  The decrease was due to
our continuing efforts to reduce our inventory levels taking into account
current economic conditions.




Our
accounts payable decreased $895,000 from $5.1 million at October 31, 2008
to $4.2 million at July 31, 2009 due primarily to our reduced inventory
purchases.




Our
long-term debt (including current portion) decreased $367,000 in fiscal 2009,
from $4.9 million at October 31, 2008 to $4.5 million at July 31,
2009.  See Note 3 of Notes to Financial Statements for further
information regarding our long-term debt.  At July 31, 2009, the
interest rate on our Comerica Bank revolving line of credit was 3.55% for our
Libor portion of the revolving line of credit and 3.75% per annum for our prime
rate portion of our line of credit.  We had approximately
$1.5 million of additional borrowing capacity under this line of credit as
of July 31, 2009.




Of our
accounts payable at July 31, 2009, approximately $190,000 were payable in
foreign currency.  To monitor risks associated with currency
fluctuations, we periodically assess the volatility of certain foreign
currencies and review the amounts and expected payment dates of our purchase
orders and accounts payable in those currencies.




We
believe that, at least for the next four fiscal quarters, assuming that there
are no unanticipated material adverse developments, we continue to be in
compliance with our credit facilities and we maintain current sales levels, our
cash flows from operations and through credit facilities will be sufficient to
enable us to pay our debts and obligations as they mature.




Inflation




We do not
believe our business and operations have been materially affected by
inflation.




Item
      3.
            Quantitative
      and Qualitative Disclosures About Market
Risk




Not
applicable.




Item
      4.
            Controls
      and Procedures




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




In
designing and evaluating the disclosure controls and procedures, management
recognizes that any controls and procedures, no matter how well designed and
operated, can provide reasonable




- 15
-


assurance
only of achieving the desired control objectives, and management necessarily is
required to apply its judgment in weighing the costs and benefits of possible
new or different controls and procedures.  Limitations are inherent in
all control systems, so no evaluation of controls can provide absolute assurance
that all control issues and any fraud within the company have been
detected.




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




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




PART
II.




OTHER
INFORMATION




Item
1.  Legal Proceedings




Nothing
to report.




Item
1A.  Risk Factors




Not
applicable.




Item
2.  Unregistered Sales of Equity Securities and Use of
Proceeds




Nothing
to report.




Item
3.  Defaults upon Senior Securities




Nothing
to report.




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




We held
our 2009 Annual Meeting of Shareholders on May 6, 2009.  The only
matter submitted to the shareholders at the Annual Meeting was the election of
directors.  All of the nominees of the Board of Directors were
re-elected, as follows:




Name
      of Director
            Votes
      For
            Votes
      WithheldEdward
      Meltzer
            6,332,235
            53,031Drew
      Miller
            6,332,235
            53,031Ted
      Pasternack
            6,332,235
            53,031Michael
      Prince
            6,331,145
            54,121Richard
      M. Torre
            6,332,235
            53,031







Item
5.  Other Information




Nothing
to report.




Item
6.  Exhibits




See
Exhibit Index Attached




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-


SIGNATURES




Pursuant
to the requirements of the Securities Exchange Act of 1934, the Registrant has
duly caused this report to be signed on its behalf by the undersigned thereunto
duly authorized.




Date:   September
      9, 2009
            SIGNATURE
      EYEWEAR, INC.
              
              
              By:
      /s/ Michael Prince
              
              Michael
      Prince
              Chief
      Executive Officer
              Chief
      Financial Officer

















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-


EXHIBIT
INDEX




Exhibit
              Number
            Exhibit Description31.1
            Certification
      Pursuant to SEC Rule 13a-14(a)/15d-14(a)32.1
            Certification
      Pursuant to 18 U.S.C. § 1350






















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