<PAGE>
=============================================================================== 
                      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, 1998

                                      OR

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

 For the transition period from __________________ to ______________________.


                        Commission file number 0-23001


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

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

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


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

     Indicate by check whether the registrant: (1) filed all reports required to
be filed by Section 13 or 15(d) of the Exchange Act during the preceding 12
months (or for such shorter period that the registrant was required to file such
reports), and (2) has been subject to such filing requirements for the past 90
days:

                             Yes  X     No 
                                 ---       ---

     State the number of shares outstanding of each of the issuer's classes of
common stock, as of the latest practicable date: Common Stock, par value $0.001
per share, 5,268,027 shares issued and outstanding as of June 12, 1998.
=============================================================================== 
<PAGE>
 
                            SIGNATURE EYEWEAR, INC.
                              INDEX TO FORM 10-Q
<TABLE>
<CAPTION>
 
 
PART I    FINANCIAL INFORMATION                                           PAGE
                                                                          ----
<C>       <S>                                                             <C>
 
Item 1.   Financial Statements:
 
          Balance Sheets as of April 30, 1998 (Unaudited) and
           October 31, 1997..........................................        3
 
          Statement of Income (Unaudited) for the Three Months
           and Six Months Ended April 30, 1998 and 1997..............        4
 
          Statement of Cash Flows (Unaudited) for the Six
           Months Ended April 30, 1998 and 1997......................        5
 
          Notes to Financial Statements..............................        7
 
Item 2.   Management's Discussion and Analysis of Financial 
           Condition and Results of Operations.......................        9
 
PART II   OTHER INFORMATION
 
Item 2.   Changes in Securities and Use of Proceeds..................       19
 
Item 6.   Exhibits and Reports on Form 8-K...........................       19
 
</TABLE>


         The accompanying notes are an integral part of this statement.

                                       2
<PAGE>
 
                                    PART I
                             FINANCIAL INFORMATION

ITEM 1.   FINANCIAL STATEMENTS

                            SIGNATURE EYEWEAR, INC.

                                BALANCE SHEETS
<TABLE>
<CAPTION>
                                                                                                           April 30,    October 31,
   Assets                                                                                                    1998          1997
                                                                                                          -----------   -----------
                                                                                                          (Unaudited)
<S>                                                                                                       <C>           <C>
Current Assets:
 Cash and cash equivalents                                                                                $ 5,770,132   $ 8,133,423
 Accounts receivable, trade                                                                                 7,526,403     4,013,518
 Inventories                                                                                                7,672,384     6,827,613
 Deferred tax asset                                                                                           253,000       221,000
 Prepaid expenses and other current assets                                                                  1,206,524       768,368
                                                                                                          -----------   -----------
                                                                                                           22,428,443    19,963,922
                                                                                                          -----------   -----------
 
Property and Equipment (net of accumulated depreciation and amortization)                                   1,087,820     1,079,536
                                                                                                          -----------   -----------
Other Assets:
 Deposits and other assets                                                                                    131,857       131,857
 Deferred tax asset                                                                                            15,000             0
                                                                                                          -----------   -----------
                                                                                                              146,857       131,857
                                                                                                          -----------   -----------
                                                                                                          $23,663,120   $21,175,315
                                                                                                          ===========   ===========
  Liabilities and Stockholders' Equity
 
Current Liabilities:
 Accounts payable, trade                                                                                  $ 3,262,154   $ 2,217,923
 Current portion of long-term debt                                                                              8,278        13,743
 Income taxes payable                                                                                         435,909       346,000
 Accrued expenses and other current liabilities                                                             1,137,648     1,281,844
                                                                                                          -----------   -----------
                                                                                                            4,843,989     3,859,510
                                                                                                          -----------   -----------
 
Long-term Debt                                                                                                      0         1,211
Deferred Tax Liability                                                                                              0         3,000
                                                                                                          -----------   -----------
                                                                                                                    0         4,211
                                                                                                          -----------   -----------
 
Stockholders' Equity:
 Preferred stock (authorized 5,000,000 shares, $.001 par value, none issued or outstanding)                         0             0
 Common stock (authorized 30,000,000 shares, $.001 par value, 5,268,027 shares issued and outstanding)          9,400         9,400
 Paid-in capital                                                                                           15,190,389    15,190,389
 Retained earnings                                                                                          3,619,342     2,111,805
                                                                                                          -----------   -----------
                                                                                                           18,819,131    17,311,594
                                                                                                          -----------   -----------
                                                                                                          $23,663,120   $21,175,315
                                                                                                          ===========   ===========
</TABLE> 

         The accompanying notes are an integral part of this statement.

                                       3
<PAGE>
 
                            SIGNATURE EYEWEAR, INC.


                              Statement of Income

                                  (Unaudited)

<TABLE>
<CAPTION>
                                              Three Months Ended April 30,  Six Months Ended April 30,
                                                  1998           1997          1998           1997
                                              -------------   -----------   -----------   ------------
<S>                                           <C>             <C>           <C>           <C>
Net Sales                                       $12,173,163   $9,236,194    $18,895,649   $16,038,054
Cost of Sales                                     4,826,375    3,743,646      7,577,581     6,632,110
                                                -----------   ----------    -----------   -----------
Gross Profit                                      7,346,788    5,492,548     11,318,068     9,405,944
                                                -----------   ----------    -----------   -----------
Operating Expenses:
    Selling                                       3,860,087    2,680,917      5,779,647     4,700,464
    General and administrative                    1,772,974    1,444,373      3,284,391     2,807,433
                                                -----------   ----------    -----------   -----------
                                                  5,633,061    4,125,290      9,064,038     7,507,897
                                                -----------   ----------    -----------   -----------
Income from Operations                            1,713,727    1,367,258      2,254,030     1,898,047
                                                -----------   ----------    -----------   -----------
Other Income (Expense):
    Interest, net                                    79,951     (101,249)       187,914      (188,654)
    Sundry                                           23,162       (8,971)        29,501        (2,488)
                                                -----------   ----------    -----------   -----------
                                                    103,113     (110,220)       217,415      (191,142)
                                                -----------   ----------    -----------   -----------
Income before Income Taxes                        1,816,840    1,257,038      2,471,445     1,706,905
Provision for Income Taxes                          700,745            0        963,909           800
                                                -----------   ----------    -----------   -----------
Net Income                                      $ 1,116,095   $1,257,038    $ 1,507,536   $ 1,706,105
                                                ===========   ==========    ===========   ===========
Earnings Per Share, Basic and Diluted:
    Earnings per common share                   $      0.21                 $      0.29
                                                ===========                 ===========
    Weighted average number of 
      common shares outstanding                   5,268,027                   5,268,027
                                                ===========                 ===========
Pro Forma Earnings Per Share:
    Income before provision for 
      income taxes                                            $ 1,257,038                 $ 1,706,905
    Income tax provision                                          465,000                     677,000
                                                              -----------                 -----------
    Net income                                                $   792,038                 $ 1,029,905
                                                              ===========                 ===========
    Basic and diluted earnings 
      per common share                                        $      0.22                 $      0.29
                                                              ===========                 ===========
    Weighted average number of 
      common shares outstanding                                 3,600,527                   3,600,527
                                                              ===========                 ===========
</TABLE> 

         The accompanying notes are an integral part of this statement.

                                       4
<PAGE>
 
                            SIGNATURE EYEWEAR, INC.

                            Statement of Cash Flows
                                  (Unaudited)
<TABLE>
<CAPTION>
                                                                                                         Six Months Ended April 30,
                                                                                                            1998          1997
                                                                                                         -----------   -----------
<S>                                                                                                      <C>           <C> 
Cash Flows from Operating Activities:
 Net income                                                                                              $ 1,507,536   $ 1,706,105
 Adjustments to reconcile net income to net cash provided by 
   (used in) operating activities:
     Depreciation and amortization                                                                           274,014       209,560
     Provision for bad debts                                                                                 (14,684)       20,000
     Changes in assets--(increase) decrease:
       Accounts receivable, trade                                                                         (3,498,201)     (894,557)
       Inventories                                                                                          (844,771)     (702,072)
       Prepaid expenses and other assets                                                                    (485,156)     (169,934)
     Changes in liabilities--increase (decrease):
       Accounts payable, trade                                                                             1,044,231       369,958
       Income taxes payable                                                                                   89,909             0
       Accrued expenses and other current liabilities                                                       (147,195)     (187,706)
                                                                                                         -----------   -----------
 Net cash provided by (used in) operating activities                                                      (2,074,317)      351,354
                                                                                                         -----------   -----------
Cash Flows Used in Investing Activities:
  Purchases of property and equipment                                                                       (282,298)     (302,008)
                                                                                                         -----------   -----------
Cash Flows from Financing Activities:
  Net borrowings on note payable, bank                                                                             0     1,525,000
  Principal payments on long-term debt                                                                        (6,676)     (229,072)
  Proceeds from long-term debt                                                                                     0       500,000
  Dividends paid                                                                                                   0    (2,000,000)
                                                                                                         -----------   -----------
  Net cash used in financing activities                                                                       (6,676)     (204,072)
                                                                                                         -----------   -----------

Net Decrease in Cash and Cash Equivalents                                                                 (2,363,291)     (154,726)
 
Cash and Cash Equivalents, Beginning of Period                                                             8,133,423       214,399
                                                                                                         -----------   -----------
Cash and Cash Equivalents, End of Period                                                                 $ 5,770,132   $    59,673
                                                                                                         ===========   ===========
</TABLE>

         The accompanying notes are an integral part of this statement.

                                       5
<PAGE>
 
                            SIGNATURE EYEWEAR, INC.

                            Statement of Cash Flows
                                  (Unaudited)
<TABLE>
<CAPTION>
 
                                                      Six Months Ended April 30,
                                                           1998       1997
                                                         --------   --------
<S>                                                      <C>        <C>
Supplementary Disclosures of Cash Flow Information:
 Cash paid during the period for:
    Interest                                             $  3,845   $179,787
                                                         ========   ========
    Income taxes                                         $923,421   $    800
                                                         ========   ========
 
</TABLE>
                                       .



         The accompanying notes are an integral part of this statement.

                                       6
<PAGE>
 
                            SIGNATURE EYEWEAR, INC.

                       Notes to the Financial Statements
                                  (Unaudited)


NOTE 1--UNAUDITED INTERIM FINANCIAL STATEMENTS
----------------------------------------------

Interim financial statements are prepared pursuant to the requirements for
reporting on Form 10-Q. Accordingly, certain disclosures accompanying annual
financial statements prepared in accordance with generally accepted accounting
principles are omitted.

In the opinion of the management of the Company, all adjustments, consisting
solely of normal recurring adjustments, necessary for the fair presentation of
the financial statements for these interim periods have been included. The
current period's results of operations are not necessarily indicative of results
which ultimately may be achieved for the year.

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

NOTE 2--BASIS OF PRESENTATION
-----------------------------

A summary of significant accounting policies is as follows:

   INCOME TAXES--The Company's effective income tax rate at April 30, 1998
   varies from the federal statutory tax rate of 34% principally due to state
   income taxes.

   PRO FORMA NET INCOME--The pro forma net income for 1997 represents the
   results of operations adjusted to reflect a provision for income tax on
   historical income before provision for income taxes, which gives effect to
   the change in the Company's income tax status to a C corporation subsequent
   to the public sale of its common stock.  The difference between the pro forma
   income tax rates utilized and federal statutory rate of 34% relates primarily
   to state income taxes (approximately 6%, net of federal tax benefit).

   PRO FORMA EARNINGS PER SHARE--Pro forma basic and diluted earnings per common
   share for 1997 has been computed by dividing pro forma net income by the
   weighted average number of shares of common stock outstanding during the
   period.  No warrants or options were outstanding at April 30, 1997.

                                       7
<PAGE>
 
NOTE 2--BASIS OF PRESENTATION, CONTINUED
----------------------------------------

   EARNINGS PER SHARE--The Company has adopted Statement of Financial Accounting
   Standards No. 128 which establishes standards for computing and presenting
   earnings per share by replacing the presentation of primary earnings per
   share with a presentation of basic earnings per share.  It also requires the
   dual presentation of basic and diluted earnings per share on the face of the
   income statement.  Earnings per share is calculated as follows:

<TABLE>
<CAPTION>
                                      For the Three Months Ended April 30, 1998
                                      -----------------------------------------
                                      Net Income        Shares        Per-Share
                                      (Numerator)    (Denominator)     Amount
                                      -----------    -------------    ---------
<S>                                   <C>            <C>              <C>
Basic and diluted EPS income                                       
  available to common              
  stockholders                        $1,116,095        5,268,027     $    0.21
                                      ==========     ============     =========
 
</TABLE>

<TABLE>
<CAPTION>
                                      For the Six Months Ended April 30, 1998
                                      ---------------------------------------
                                      Net Income       Shares       Per-Share
                                      (Numerator)   (Denominator)    Amount
                                      -----------   -------------   ---------
<S>                                   <C>           <C>             <C>
Basic and diluted EPS income 
  available to common 
  stockholders                        $1,507,536        5,268,027   $    0.29
                                      ==========    =============   =========
 
</TABLE>

   For the three and six months ended April 30, 1998, there was no difference
   between basic and diluted EPS.  Warrants and options to purchase 180,000
   shares and 447,500 shares, respectively, of common stock at $12 and $10 per
   share, respectively, were outstanding during the quarter.  They were not
   included in the computation of diluted EPS because the warrants' and options'
   exercise prices were greater than the average market price of the common
   stock during the three and  six months ended April 30, 1998.

                                       8
<PAGE>
 
ITEM 2.             MANAGEMENT'S DISCUSSION AND ANALYSIS OF
                 FINANCIAL CONDITION AND RESULTS OF OPERATIONS

     Signature Eyewear, Inc. ("Signature" or the "Company") designs, markets and
distributes prescription eyeglass frames primarily under exclusive licenses for
Laura Ashley Eyewear, Eddie Bauer Eyewear, Hart Schaffner & Marx Eyewear and
Jean Nate Eyewear, as well as its own Camelot label. The Laura Ashley Eyewear
collection is one of the leading women's brand-name collections in the United
States.

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

EFFECT OF CHANGE IN FORM FROM AN S CORPORATION TO A C CORPORATION

     In September 1997, the Company completed its initial public offering (the
"Offering"). As part of the Offering, the Company was required to change in form
from an S corporation to a C corporation, which has increased the level of
federal and state income taxes. As such, the change in form has affected the net
income and the cash flows of the Company.

     As an S corporation, the Company's income, whether or not distributed, was
taxed at the shareholder level for federal and state income tax purposes. In
addition, for California franchise tax purposes, S corporations were taxed at
2.5% of taxable income through 1993 and 1.5% of taxable income in 1994, 1995,
1996, and 1997, less income tax credits under the Los Angeles Revitalization
Zone Act. Currently, the highest tax rates applicable to Signature are 34% for
federal and 8.84% for California. The pro forma provision for income taxes in
the statement of income shows results as if the Company had always been a C
corporation and had adopted Statement of Financial Accounting Standards No. 109
"Accounting for Income Taxes."

RESULTS OF OPERATIONS

     The following table sets forth, for the indicated periods, selected
statement of income data shown as a percentage of net sales. Pro forma operating
results for the three months ended April 30, 1997 (the "1997 second quarter")
and the six months ended April 30, 1997 (the "1997 period") reflect adjustments
to the historical operating results for federal and state income taxes as if the
Company had been taxed as a C corporation rather than an S corporation.

                                       9
<PAGE>
 
<TABLE>
<CAPTION>
                                           THREE MONTHS ENDED   SIX MONTHS ENDED
                                                APRIL 30,           APRIL 30,
                                              1997    1998        1997    1998
                                              -----   -----       -----   -----
<S>                                           <C>     <C>         <C>     <C> 
Net sales.................................    100.0%  100.0%      100.0%  100.0%
Cost of sales.............................     40.5    39.6        41.4    40.1
                                              -----   -----       -----   -----
Gross profit..............................     59.5    60.4        58.6    59.9
                                              -----   -----       -----   -----
Operating expenses:                                            
  Selling.................................     29.0    31.7        29.3    30.6
                                              -----   -----       -----   -----
  General and administrative..............     15.6    14.6        17.5    17.4
                                              -----   -----       -----   -----
    Total operating expenses..............     44.7    46.3        46.8    48.0
                                              -----   -----       -----   -----
Income from operations....................     14.8    14.1        11.8    11.9
                                              -----   -----       -----   -----
Other income (expense), net...............     (1.2)     .8        (1.2)    1.1
                                              -----   -----       -----   -----
Income before provision for income taxes..     13.6    14.9        10.6    13.1
                                              -----   -----       -----   -----
Provision for income taxes*...............      5.0     5.8         4.2     5.1
                                              -----   -----       -----   -----
Net income*...............................      8.6%    9.2%        6.4%    8.0%
                                              =====   =====       =====   =====
</TABLE>

*Pro forma for the three months and six months ended April 30, 1997.

     Net Sales. Net sales were $12,173,000 for the quarter ended April 30, 1998
(the "1998 second quarter"), an increase of 31.8% compared to net sales of
$9,236,000 for the 1997 second quarter. Net sales for the six months ended April
30, 1998 (the "1998 period") were $18,895,000, an increase of 17.8% compared to
net sales of $16,038,000 for the 1997 period. The increases in net sales for the
1998 second quarter and the 1998 period were due principally to net sales of
$2,757,000 and $2,770,000, respectively, of Eddie Bauer Eyewear, which the
Company launched in March 1998. In February 1998, the Company began signing up
optical retailers for the 1998 Eddie Bauer Eyewear Loyal Partners program, under
which participants agreed to purchase a specified number of each new Eddie Bauer
Eyewear style released during 1998. As of April 30, 1998, the Company had over
3,770 Eddie Bauer Eyewear Loyal Partners.

     Sales of Laura Ashley Eyewear decreased by 1.1% from $7,098,000 for the
1997 second quarter to $7,021,000 for the 1998 second quarter, and by 4.3% from
$12,144,000 for the 1997 period to $11,623,000 for the 1998 period. Combined net
sales of Hart Schaffner & Marx Eyewear, Jean Nate Eyewear, USA Optical and
Optical Surplus increased by 9.1% to $2,160,000 for the 1998 quarter from
$1,980,000 for the 1997 quarter, and by 14.5% to $4,170,000 for the 1998 period
from $3,643,000 for the 1997 period.

     Gross Profit. Gross profit increased from $5,493,000 in the 1997 second
quarter to $7,347,000 for the 1998 second quarter, and from $9,406,000 in the
1997 period to $11,318,000 for the 1998 period. This increase was due
principally to the increase in net sales, and also to the improvement in the
gross profit margin from 59.5% in the 1997 second quarter to 60.4% for the 1998
second quarter, and from 58.6% in the 1997 period to 59.9% for the 1998 period.
The improvement in the gross profit margin was due to higher average selling
prices for frames, lower average frame costs due to favorable currency
fluctuations and vendor cash discounts, and reductions in import duties and
tariffs.

                                       10
<PAGE>
 
     Operating Expenses. Operating expenses increased from $4,125,000 in the
1997 second quarter to $5,633,000 in the 1998 second quarter, and from
$7,508,000 in the 1997 period to $9,064,000 in the 1998 period. Operating
expenses for the 1998 second quarter and the 1998 period included an increase of
$1,179,000 and $1,079,000, respectively, in selling expenses and an increase of
$329,000 and $477,000, respectively in general and administrative expenses.
General and administrative expenses for the 1998 second quarter and the 1998
period increased principally as a result of higher executive officer salaries
and an increase in the number of managers. Selling expenses increased from 29.0%
and 29.3% of net sales for the 1997 second quarter and 1997 period,
respectively, to 31.7% and 30.6% of net sales for the 1998 second quarter and
1998 period, respectively. Those increases were due primarily to $600,000 in
marketing costs associated with the launch of Eddie Bauer Eyewear in March 1998,
and to increased Laura Ashley Eyewear merchandising costs of $340,000 and
$428,000 from the 1997 second quarter and 1997 period, respectively, to the
corresponding periods in fiscal 1998. The increases in Laura Ashley Eyewear
merchandising costs were due to the Company's 1998 Laura Ashley Eyewear Loyal
Partners Program, pursuant to which a majority of the 1998 program's point-of-
purchase merchandise was shipped during the first two quarters of fiscal 1998,
although the majority of frame releases are planned to occur during the
Company's third and fourth fiscal quarters.

     Net Other Income. Net other income in the 1998 second quarter and the 1998
period were $103,000 and $217,000, respectively, as compared to net other
expense in the 1997 second quarter and the 1997 period of $110,000 and $191,000,
respectively. These differences were a result of the Company repaying its bank
financing in the fourth quarter of fiscal 1997 with the net proceeds of the
Offering, and of the interest income resulting from the Company investing a
portion of those proceeds.

     Pro Forma Provision for Income Taxes; Provision for Income Taxes.  On a pro
forma basis, income taxes would have been $465,000 for the 1997 second quarter
and $677,000 for the 1997 second period.  For the 1998 second quarter and the
1998 period, the Company's income tax provisions were $701,000 and $964,000,
respectively.

     Pro Forma Net Income; Net Income.  Pro forma net income was $792,000 and
$1,030,000 in the 1997 second quarter and the 1997 period, respectively, and net
income was $1,116,000 and $1,508,000 in the 1998 second quarter and the 1998
period, respectively, due to the factors set forth above.


LIQUIDITY AND CAPITAL RESOURCES.

     At April 30, 1998, the Company had $5,770,132 in cash and cash equivalents
which was invested in money market funds bearing interest at 4.9% and commercial
paper bearing interest at 5.53%

     The Company entered into a credit agreement with its commercial bank (the
"Credit Agreement") in October 1997.  Under the Credit Agreement, the bank has
agreed to provide to the Company an unsecured revolving line of credit up to an
aggregate of $5,000,000. At the Company's option, interest may be based on the
London Interbank Offered Rate plus 2%, or at the bank's prime rate. At April 30,
1998, no amounts were due to the bank under the Credit Agreement.

     As a result of the Company's treatment as an S corporation for federal and
state income tax purposes, the Company historically provided its shareholders,
through dividends, with funds for the payment of income taxes on the earnings of
the Company which were included in the taxable income of 

                                       11
<PAGE>
 
the shareholders. In addition, the Company paid dividends to shareholders to
provide them with a return on their investment. The Company paid dividends of
$1,250,000 and $2,000,000 for the 1997 second quarter and the 1997 period,
respectively, and paid no dividends in either the 1998 second quarter or the
1998 period. The Company does not currently intend to pay dividends on its
Common Stock and plans to follow a policy of retaining earnings to finance the
growth of its business.

     Of the Company's accounts payable at April 30, 1998, $1,438,607 were
payable in foreign currency. To monitor risks associated with currency
fluctuations, the Company on a weekly basis assesses the volatility of certain
foreign currencies and reviews the amounts and expected payment dates of its
orders and accounts payable in those currencies. Based on those factors, the
Company may from time to time mitigate some portion of that risk by purchasing
forward commitments to deliver foreign currency to the Company. The Company held
no forward foreign currency commitments at April 30, 1998.


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.

     Substantial Dependence Upon Laura Ashley License. Net sales of Laura Ashley
Eyewear accounted for 77.8%, 74.6%, 72.5% and 60.0% of the Company's net sales
in fiscal 1995, fiscal 1996, fiscal 1997, and the 1998 period, respectively. The
Company manufactures Laura Ashley Eyewear through an exclusive license with
Laura Ashley entered into in 1991. The Laura Ashley license terminates in 2001,
but may be renewed by the Company at least through January 2006 so long as the
Company is not in breach of the license agreement and meets certain minimum net
sales requirements. Laura Ashley may terminate the license before its term
expires if (i) the Company commits a material breach of the license agreement
and fails to cure that breach within 30 days after notice is given, (ii) the
management or control of the Company passes from Bernard Weiss and Julie Heldman
to other parties whom Laura Ashley may reasonably regard as unsuitable, (iii)
the Company fails to propose a selection of styles of eyewear which Laura Ashley
in exercising good faith is willing to approve for manufacture and distribution,
(iv) the Company fails to have net sales of Laura Ashley Eyewear sufficient to
generate minimum royalties in each of any two years, (v) the Company is unable
to pay its debts in the ordinary course of business or enters into liquidation,
becomes bankrupt or insolvent, or is placed in the control of a receiver or
trustee, or (vi) the Company in any year fails to spend a specified percentage
of net sales of Laura Ashley Eyewear on advertising and promotion. For purposes
of renewal and early termination of the license agreement, the Company must
generate total Laura Ashley Eyewear minimum net sales of $9,000,000, $10,000,000
and $11,000,000 for the contract years ending January 31, 1998, 1999 and 2000,
respectively. The Company has substantially exceeded its minimum net sales
requirements each year under the license agreement. The termination of the Laura
Ashley Eyewear license would have a material adverse effect on the Company's
business, operating results and financial condition.

     Approval Requirements of Brand-Name Licensors.  The Company's business is
predominantly based on its brand-name licensing relationships. In addition to
its licensing relationship with Laura Ashley, the Company licenses the right to
use proprietary marks from Hart Schaffner & Marx, Revlon for its Jean Nate brand
name, and Eddie Bauer.  Each of the Laura Ashley, Hart Schaffner & Marx, Jean
Nate and Eddie Bauer licenses requires mutual agreement of the parties for
significant matters.  

                                       12
<PAGE>
 
Each of these licensors has final approval over all eyeglass frames and other
products bearing the licensor's proprietary marks, and the frames must meet the
licensor's general design specifications and quality standards. Consequently,
each licensor may, in the exercise of its approval rights, delay the
distribution of eyeglass frames bearing its proprietary marks. The Company
expects that each future license it obtains will contain similar approval
provisions. Accordingly, there can be no assurance that the Company will be able
to continue to maintain good relationships with each licensor, or that the
Company will not be subject to delays resulting from disagreements with, or an
inability to obtain approvals from, its licensors. These delays could materially
and adversely affect the Company's business, operating results and financial
condition.

     Limitations on Ability to Distribute Other Brand-Name Eyeglass Frames. Each
of the Company's licenses limits the Company's right to market and sell products
with competing brand names. The Laura Ashley license prohibits the Company from
selling any range of designer eyewear that is similar to Laura Ashley Eyewear in
price and any of style, market position and market segment. The 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 Jean Nate license prohibits the Company from manufacturing
and selling eyeglass frames under any brand name primarily known as a cosmetic,
toiletry, fragrance or haircare trademark or brand name. The Eddie Bauer license
prohibits the Company from entering into license agreements with companies which
Eddie Bauer believes are its direct competitors. 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 Japan, Hong
Kong/China, France 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.

     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 

                                       13
<PAGE>
 
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 1996, fiscal 1997, and the 1998 period, approximately 39.9%,
45.8%, and 33.1%, respectively, of the Company's eyeglass frames were
manufactured by companies in Japan, and approximately 40.0%, 36.6%, and 39.4%,
respectively, of the Company's eyeglass frames were manufactured by companies
headquartered in Hong Kong that have manufacturing facilities in China. Recent
economic developments have resulted in a stronger U.S. dollar and instability in
the Asian-Pacific economies and financial markets. These economic developments
have resulted in improved profit margins for the Company, as its cost of goods
has decreased for frames purchased in foreign currencies. There can be no
assurance, however, that the Asian-Pacific economic instability will not result
in an adverse future impact on the business operations of some of the Company's
contract manufacturers, which could force the Company to move the manufacture of
some styles to other factories. The resulting disruption to the Company's
business could have a material adverse effect on the Company's business,
operating results and financial condition.

     Effective July 1, 1997, the exercise of sovereignty over the British Crown
Colony of Hong Kong was transferred from the United Kingdom to China pursuant to
a treaty between the two countries, and Hong Kong became a part of China. Any
political or economic disruptions in Hong Kong or China may force the Company to
manufacture its eyeglass frames in other countries which could increase frame
costs. The Company is uncertain as to the impact that the new government will
have on the Company's business operations in Hong Kong. Further, China currently
enjoys Most Favored Nation trading status with the United States. Under the
Trade Act of 1974, the President of the United States is authorized, upon making
specific findings, to waive certain restrictions that would render China
ineligible for Most Favored Nation treatment. The President has waived these
provisions every year since 1979. China's Most Favored Nation status presently
extends until July 1998. No assurance can be given that China will continue to
enjoy Most Favored Nation status in the future. Any legislation or
administrative action by the United States government that revokes or places
further conditions on China's Most Favored Nation status, or otherwise limits
imports of Chinese eyeglass frames into the United States, could, if enacted,
have a material adverse effect on the Company's business, operating results and
financial condition.

     Relationships With Domestic Distributors.  The Company distributes its
eyeglass frames to independent optical retailers in the United States (other
than California and Arizona) largely through distributors who sell competing
lines of eyeglass frames. Although the Company believes that its distributors
currently devote a great deal of time and resources to promoting the Company's
products, there can be no assurance that these distributors will continue to do
so. The Company does not have written agreements with its domestic distributors
except for written understandings not to resell or divert Laura Ashley Eyewear
through unauthorized channels of distribution, and not to expand the territories
in which they sell the Company's products without the Company's prior consent.
Accordingly, the Company's domestic distributors may spend an increased amount
of effort and resources marketing competing products, and may terminate their
relationships with the Company at any time without penalty. There can be no
assurance that the informal nature of the Company's relationships with its
domestic distributors will not lead to disagreements between the Company and its
distributors or between the distributors themselves, which could have a material
adverse impact on the Company's
                                       14
<PAGE>
 
business, operating results and financial condition.

     International Sales. International sales accounted for approximately 9.0%,
8.8%, 7.7% and 8.9% of the Company's net sales in fiscal 1995, fiscal 1996,
fiscal 1997, and the 1998 period, respectively. These sales were primarily in
England, Canada, Australia, New Zealand, France and the Netherlands. 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.

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

     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.  According to the 1996 U.S. Optical Industry Handbook, the
existence of this policy in the optical business has led to some companies
having return rates as high as 20%.  While the Company's product returns for
fiscal 1995, fiscal 1996, fiscal 1997, and the 1998 period amounted to 11.6%,
12.1%, 12.5%, and 12.5% of gross sales (sales before returns), respectively,
and the Company maintains reserves for product returns which it considers
adequate. The possibility nonetheless exists that the Company could experience
returns at a rate significantly exceeding its historical levels, which could
have a material adverse impact on the Company's business, operating results and
financial condition.

     Availability of Vision Correction Alternatives. The Company's future
success could depend to a significant extent on the availability and acceptance
by the market of vision correction alternatives to prescription eyeglasses, such
as contact lenses and refractive (optical) surgery. 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.

                                       15
<PAGE>
 
     Acceptance of Eyeglass Frames; Unpredictability of Discretionary Consumer
Spending.  The Company's success will depend to a significant extent on the
market's acceptance of the Company's brand-name eyeglass frames.  If the Company
is unable to develop new, commercially successful styles to replace revenues
from older styles in the later stages of their life cycles, the Company's
business, operating results and financial condition could be materially and
adversely affected.  The Company's future growth will depend in part upon the
effectiveness of the Company's marketing and sales efforts as well as the
availability and acceptance of other competing eyeglass frames released into the
market place at or near the same time, the availability of vision correction
alternatives, general economic conditions and other tangible and intangible
factors, all of which can change and cannot be predicted.

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

     Competition. The markets for prescription eyewear are intensely
competitive. There are thousands of styles, including hundreds with brand names.
At retail, the Company's eyewear styles compete with styles that do and do not
have brand names, styles in the same price range, and styles with similar design
concepts. To obtain board space at an optical retailer, the Company competes
against many companies, both foreign and domestic, including Luxottica Group
S.p.A. (operating in the United States through a number of its subsidiaries),
Safilo Group S.p.A. (operating in the United States through a number of its
subsidiaries) and Marchon Eyewear, Inc. 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 distributor level, sales representatives often carry
many lines of eyewear, and the Company must vie for their attention. 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.

     Dependence on Key Personnel. The Company's success has and will continue to
depend to a significant extent upon its executive officers, including Bernard
Weiss (Chief Executive Officer), Julie Heldman (President), Michael Prince
(Chief Financial Officer), Robert Fried (Senior Vice President of Marketing) and
Robert Zeichick (Vice President of Advertising and Sales Promotion). The loss of
the 

                                       16
<PAGE>
 
services of one or more of these key employees could have a material adverse
effect on the Company. The Company has entered into employment agreements with
each of Ms. Heldman and Messrs. Weiss, Prince, Fried and Zeichick pursuant to
which they have agreed to render services to the Company until October 31, 2000.
The Company maintains and is the sole beneficiary of "key person" life insurance
on Ms. Heldman and Messrs. Weiss, Prince, Fried and Zeichick in the amount of
$1,500,000 each. In the event of the death of an executive officer, a portion of
the proceeds of the applicable policy would be used to pay the Company's
obligation under the officer's employment agreement. There can be no assurance
that the remaining proceeds of these policies will be sufficient to offset the
loss to the Company due to the death of that executive officer. In addition, the
Company's future success will depend in large part upon its ability to attract,
retain and motivate personnel with a variety of creative, technical and
managerial skills. There can be no assurance that the Company will be able to
retain and motivate its personnel or attract additional qualified members to its
management staff. The inability to attract and retain the necessary managerial
personnel could have a material adverse effect on the Company's business,
operating results and financial condition.

     Management of Growth. The Company has grown rapidly in recent years, with
net sales increasing from $9.2 million in fiscal 1992 to $33.2 million in fiscal
1997, and to $18.9 million for the 1998 period, and the number of employees
increasing from 41 at November 1, 1992 to 112 at April 30, 1998. The Company's
growth has placed substantial burdens on its management resources, and as a
result of its growth, the Company has made additions to its management team.
Additionally, the Company plans to continue to expand its operations as a result
of the introduction of Eddie Bauer Eyewear. The Company's ability to manage its
growth effectively will require it to continue to improve its operational,
financial and management information systems and controls and to train, motivate
and manage a larger number of employees. There can be no assurance that the
Company will be able to sustain its historic rate of revenue growth, continue
its profitable operations or manage future growth successfully.

     Control by Directors and Executive Officers.  The directors and executive
officers of the Company own approximately 54.8% of the Company's outstanding
shares.  As a result, the directors and executive officers control the Company
and its operations, including the approval of significant corporate transactions
and the election of at least a majority of the Company's Board of Directors and
thus the policies of the Company.  The voting power of the directors and
executive officers could also serve to discourage potential 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 Anticipated.  The Company does not currently intend to declare
or pay any cash dividends and intends to retain earnings, if any, for the future
operation and expansion of the Company's business.

     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.  Following the Offering, no shares
of Preferred Stock of the Company will be outstanding, and the Company has no
present intention to issue any shares of Preferred Stock.  However, the rights
of the holders of Common Stock will be subject to, and may be adversely affected
by, the rights of the holders of any Preferred Stock that may be issued in the
future.  The issuance of Preferred Stock, while providing desirable flexibility
in connection with possible 

                                       17
<PAGE>
 
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, Jean Nate and Eddie
Bauer 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. See "--Substantial Dependence Upon Laura Ashley License." 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.

                                       18
<PAGE>
 
                                    PART II

                               OTHER INFORMATION

ITEM 2.   CHANGES IN SECURITIES AND USE OF PROCEEDS

     The Company's Registration Statement on Form S-1 (File No. 333-30017)
relating to the public offering (the "Offering") of an aggregate of 2,070,000
shares (the "Shares") of Common Stock, par value $0.001 per share (the "Common
Stock"), of the Company was declared effective by the Securities and Exchange
Commission on September 11, 1997. Of the Shares, the Company offered 1,667,500
shares and 402,500 shares were offered by certain shareholders of the Company
(the "Selling Shareholders"). All of the Shares were offered and sold for $10.00
per share, for an aggregate offering price of $16,675,000 for the shares offered
by the Company and $4,025,000 for the shares offered by the Selling
Shareholders.

     The Company's expenses in connection with the Offering included
underwriting discounts of $1,167,000, expense reimbursement to the underwriters
of $143,000 and other expenses of $586,000, for total expenses of $1,896,000,
resulting in net proceeds ("Net Proceeds") to the Company of $14,779,000.

     As of April 30, 1998, the Company had applied all of the Net Proceeds, as
follows: $5,623,000 was used to pay all borrowings previously owed to its
commercial bank, $6,656,000 was used for working capital, and $2,500,000 was
used to launch the Eddie Bauer Eyewear collection. Of the amount used for Eddie
Bauer Eyewear, $600,000 was attributable to marketing costs and the remainder to
purchase inventory. The amount of Net Proceeds used to repay bank debt was less
than the amount originally anticipated, primarily because the Company had
expected that shareholders would cash an aggregate of $1.3 million in S
corporation distribution checks before the Offering. Those checks, although
issued before the Offering, were not in fact cashed until after the Offering,
and thus were not paid through bank borrowings.


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

   (a)  Exhibits:

     Exhibit 27.1  Financial Data Schedule

   (b)  Reports on Form 8-K.

     No reports on Form 8-K were filed during the period covered by this
     quarterly report.

                                       19
<PAGE>
 
                                  SIGNATURES

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


Date: June 15, 1998                      SIGNATURE EYEWEAR, INC.


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



                                          /s/ Michael Prince
                                         ----------------------------
                                              Michael Prince
                                              Chief Financial Officer

                                       20