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

                       SECURITIES AND EXCHANGE COMMISSION
                             Washington, D.C. 20549

                                    FORM 10-Q


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

            For the quarterly period ended July 31, 2003

                                       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, 5,976,889 shares issued and outstanding as of September
30, 2003.

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

                             SIGNATURE EYEWEAR, INC.

                               INDEX TO FORM 10-Q

PART I    FINANCIAL INFORMATION                                             PAGE
                                                                            ----
Item 1    Financial Statements                                                3

          Consolidated Balance Sheets                                         3

          Consolidated Statements of Income                                   5

          Consolidated Statements of Cash Flows                               7

          Notes to the Consolidated Financial Statements                      9

Item 2    Management's Discussion and Analysis of Financial Condition and
             Results of Operations                                           20

Item 3    Quantitative and Qualitative Disclosures about Market Risk         29

Item 4    Controls and Procedures                                            29

PART II   OTHER INFORMATION                                                  30

Item 6    Exhibits and Reports on Form 8-K                                   30













                                       2
<PAGE>

PART I.
                              FINANCIAL INFORMATION

ITEM 1. FINANCIAL STATEMENTS
                                          SIGNATURE EYEWEAR, INC. AND SUBSIDIARY
                                                     CONSOLIDATED BALANCE SHEETS
                                  JULY 31, 2003 (UNAUDITED) AND OCTOBER 31, 2002
================================================================================


                                     ASSETS



<TABLE><CAPTION>
                                                                 July 31,        October 31,
                                                                   2003             2002
                                                               ------------     ------------
                                                                (unaudited)
<S>                                                            <C>              <C>
CURRENT ASSETS
     Cash and cash equivalents, including restricted cash
          of $90,546 (unaudited) and $127,946                  $  1,091,606     $  1,077,388
     Accounts receivable - trade, net of allowance for
          doubtful accounts of $525,043 (unaudited) and
          $543,884                                                2,543,227        3,142,949
     Inventories, net of reserves for obsolete inventories
          of $2,250,628 (unaudited) and $2,799,940                4,636,579        5,514,702
     Income taxes refundable                                          2,704            2,704
     Promotion products and material                                168,826           87,912
     Prepaid expenses and other current assets                       47,446           49,862
                                                               ------------     ------------

          Total current assets                                    8,490,388        9,875,517

PROPERTY AND EQUIPMENT, net                                       1,465,248        1,825,085
TRADEMARK, net of accumulated amortization of
      $0 (unaudited) and $16,882                                         --          130,897
DEPOSITS AND OTHER ASSETS                                           115,633          112,706
                                                               ------------     ------------
                 TOTAL ASSETS                                  $ 10,071,269     $ 11,944,205
                                                               ============     ============
</TABLE>











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

                                        3
<PAGE>
                                          SIGNATURE EYEWEAR, INC. AND SUBSIDIARY
                                                     CONSOLIDATED BALANCE SHEETS
                                  JULY 31, 2003 (UNAUDITED) AND OCTOBER 31, 2002
================================================================================



                      LIABILITIES AND SHAREHOLDERS' DEFICIT



<TABLE><CAPTION>
                                                                 July 31,        October 31,
                                                                   2003             2002
                                                               ------------     ------------
                                                                (unaudited)
<S>                                                            <C>              <C>
CURRENT LIABILITIES
     Accounts payable - trade                                  $  3,988,440     $  7,108,449
     Accrued expenses and other current liabilities               1,681,166        1,980,003
     Reserve for customer returns                                 1,214,478        2,286,934
     Line of credit                                                      --        2,317,134
     Current portion of long-term debt                              537,299        5,533,149
                                                               ------------     ------------

          Total current liabilities                               7,421,383       19,225,669

LONG-TERM DEBT, net of current portion                            7,035,291        1,714,981
                                                               ------------     ------------

                 Total liabilities                               14,456,674       20,940,650
                                                               ------------     ------------

COMMITMENTS AND CONTINGENCIES

SHAREHOLDERS' DEFICIT
     Preferred stock, $0.001 par value
          5,000,000 shares authorized
          0 (unaudited) and 0 shares issued and
            outstanding                                                  --               --
          Series A 2% convertible preferred stock, $0.001
            par value
          1,360,000 shares authorized
          1,200,000 (unaudited) and 0 shares issued and
          outstanding                                                 1,200               --
     Common stock, $0.001 par value
          30,000,000 shares authorized
          5,556,889 (unaudited) and 5,556,889 shares
          issued and outstanding                                      5,557            5,557
     Additional paid-in capital                                  15,231,421       14,432,621
     Accumulated deficit                                        (19,623,583)     (23,434,623)
                                                               ------------     ------------

                 Total shareholders' deficit                     (4,385,405)      (8,996,445)
                                                               ------------     ------------

                 TOTAL LIABILITIES AND SHAREHOLDERS' DEFICIT   $ 10,071,269     $ 11,944,205
                                                               ============     ============
</TABLE>











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

                                        4
<PAGE>
                                          SIGNATURE EYEWEAR, INC. AND SUBSIDIARY
                                               CONSOLIDATED STATEMENTS OF INCOME
          FOR THE THREE AND NINE MONTHS ENDED JULY 31, 2003 AND 2002 (UNAUDITED)
================================================================================



<TABLE><CAPTION>
                                         For the Three Months Ended          For the Nine Months Ended
                                                  July 31,                            July 31,
                                       ------------------------------      ------------------------------
                                           2003              2002              2003              2002
                                       ------------      ------------      ------------      ------------
                                        (unaudited)       (unaudited)       (unaudited)       (unaudited)

<S>                                    <C>               <C>               <C>               <C>
NET SALES                              $  6,302,153      $  8,188,296      $ 19,320,848      $ 25,516,168
COST OF SALES                             2,300,725         3,665,934         7,047,360        10,937,117
                                       ------------      ------------      ------------      ------------

GROSS PROFIT                              4,001,428         4,522,362        12,273,488        14,579,051
                                       ------------      ------------      ------------      ------------

OPERATING EXPENSES
    Selling                               2,157,717         2,084,221         5,956,337         6,974,833
    General and administrative            1,989,737         2,923,541         6,602,780         8,706,662
    Depreciation and amortization            43,161           107,091           362,255           326,988
                                       ------------      ------------      ------------      ------------

Total operating expenses                  4,190,615         5,114,853        12,921,372        16,008,483
                                       ------------      ------------      ------------      ------------

LOSS FROM OPERATIONS                       (189,187)         (592,491)         (647,884)       (1,429,432)
                                       ------------      ------------      ------------      ------------

OTHER INCOME (EXPENSE)
    Sundry income (expense)                   2,333           (21,906)          204,659            31,173
    Interest expense, net                  (152,090)         (161,880)         (302,946)         (549,062)
    Gain on sale of trademark                    --                --           469,103                --
                                       ------------      ------------      ------------      ------------

Total other income (expense)               (149,757)         (183,786)          370,816          (517,889)
                                       ------------      ------------      ------------      ------------

LOSS BEFORE PROVISION FOR INCOME
    TAXES AND GAIN (LOSS) ON
    EXTRAORDINARY ITEMS                    (338,944)         (776,277)         (277,068)       (1,947,321)
PROVISION FOR INCOME TAXES                    9,975               800            10,579               690
                                       ------------      ------------      ------------      ------------

LOSS BEFORE GAIN (LOSS) ON
    EXTRAORDINARY ITEMS                    (348,919)         (777,077)         (287,647)       (1,948,011)

EXTRAORDINARY ITEMS
    Gain (loss) on extinguishment
    of debt                                 (45,164)               --         4,098,687                --
                                       ------------      ------------      ------------      ------------

NET INCOME (LOSS)                      $   (394,083)     $   (777,077)     $  3,811,040      $ (1,948,011)
                                       ============      ============      ============      ============
</TABLE>




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

                                        5
<PAGE>
                                          SIGNATURE EYEWEAR, INC. AND SUBSIDIARY
                                               CONSOLIDATED STATEMENTS OF INCOME
          FOR THE THREE AND NINE MONTHS ENDED JULY 31, 2003 AND 2002 (UNAUDITED)
================================================================================



<TABLE><CAPTION>
                                         For the Three Months Ended          For the Nine Months Ended
                                                  July 31,                            July 31,
                                       ------------------------------      ------------------------------
                                           2003              2002              2003              2002
                                       ------------      ------------      ------------      ------------
                                        (unaudited)       (unaudited)       (unaudited)       (unaudited)

<S>                                    <C>               <C>               <C>               <C>
BASIC AND DILUTED EARNINGS
    (LOSS) PER SHARE
        Before extraordinary items     $      (0.06)     $      (0.14)     $      (0.05)     $      (0.36)
        Extraordinary items                   (0.01)               --              0.74                --
                                       ------------      ------------      ------------      ------------

        TOTAL BASIC AND DILUTED
         EARNINGS (LOSS) PER SHARE     $      (0.07)     $      (0.14)     $       0.69      $      (0.36)
                                       ============      ============      ============      ============

WEIGHTED-AVERAGE COMMON
     SHARES OUTSTANDING                   5,556,889         5,556,889         5,556,889         5,465,314
                                       ============      ============      ============      ============
</TABLE>















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

                                        6
<PAGE>
                                          SIGNATURE EYEWEAR, INC. AND SUBSIDIARY
                                           CONSOLIDATED STATEMENTS OF CASH FLOWS
                    FOR THE NINE MONTHS ENDED JULY 31, 2003 AND 2002 (UNAUDITED)
================================================================================



<TABLE><CAPTION>
                                                                          2003              2002
                                                                      ------------      ------------
                                                                       (unaudited)       (unaudited)
<S>                                                                   <C>               <C>
CASH FLOWS FROM OPERATING ACTIVITIES
    Net income (loss)                                                 $  3,811,040      $ (1,948,011)
    Adjustments to reconcile net income (loss) to net cash
         provided by operating activities
              Depreciation and amortization                                362,255           326,988
              Gain on sale of trademark                                   (469,103)
              Gain on extinguishment of debt                             4,098,687                --
              (Increase) decrease in
                   Accounts receivable - trade                             599,722         3,170,255
                   Inventories                                             878,123         3,228,756
                   Income taxes refundable                                      --            (2,704)
                   Promotional products and material                       (80,914)          108,461
                   Prepaid expenses and other current assets                 2,416           (79,315)
                   Deposits and other assets                                (2,927)           (1,816)
              Decrease in
                   Accounts payable - trade                             (5,418,009)       (3,576,442)
                   Accrued expenses and other current liabilities         (475,987)         (836,392)
                   Reserve for customer returns                         (1,072,456)               --
                                                                      ------------      ------------

Net cash provided by operating activities                                2,232,847           389,780
                                                                      ------------      ------------

CASH FLOWS FROM INVESTING ACTIVITIES
    Purchase of property and equipment                                      (2,418)          (48,720)
    Cash received from sale of USA Optical                                      --           500,000
    Proceeds from sale of trademark                                        600,000                --
                                                                      ------------      ------------

Net cash provided by investing activities                                  597,582           451,280
                                                                      ------------      ------------

CASH FLOWS FROM FINANCING ACTIVITIES
    Net decrease on line of credit                                      (2,787,290)         (861,297)
    Payments on long-term debt                                            (828,921)         (784,727)
    Cash received from the sale of preferred stock                         800,000                --
                                                                      ------------      ------------

Net cash used in financing activities                                   (2,816,211)       (1,646,024)
                                                                      ------------      ------------

Net increase (decrease) in cash and cash equivalents                        14,218          (804,964)

CASH AND CASH EQUIVALENTS, BEGINNING OF PERIOD                           1,077,388         1,443,496
                                                                      ------------      ------------

CASH AND CASH EQUIVALENTS, END OF PERIOD                              $  1,091,606      $    638,532
                                                                      ============      ============
</TABLE>


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

                                        7
<PAGE>
                                          SIGNATURE EYEWEAR, INC. AND SUBSIDIARY
                                           CONSOLIDATED STATEMENTS OF CASH FLOWS
                    FOR THE NINE MONTHS ENDED JULY 31, 2003 AND 2002 (UNAUDITED)
================================================================================



<TABLE><CAPTION>
                                                                          2003              2002
                                                                      ------------      ------------
                                                                       (unaudited)       (unaudited)
<S>                                                                   <C>               <C>
SUPPLEMENTAL DISCLOSURES OF CASH FLOW INFORMATION

    INTEREST PAID                                                     $    229,183      $    391,649
                                                                      ============      ============

    INCOME TAXES PAID                                                 $     58,982      $      3,394
                                                                      ============      ============
</TABLE>



SUPPLEMENTAL SCHEDULE OF NON CASH INVESTING AND FINANCING ACTIVITIES
During the nine months ended July 31, 2003,  cash from  operations and financing
activities  exclude  the effect of a gain on  extinguishment  of debt,  accounts
payable, and accrued expenses of $4,098,687.

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




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

                                        8
<PAGE>
                                                         SIGNATURE EYEWEAR, INC.
                                                   NOTES TO FINANCIAL STATEMENTS
                                  October 31, 2002 and July 31, 2003 (unaudited)
--------------------------------------------------------------------------------

NOTE 1 - ORGANIZATION AND LINE OF BUSINESS

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

         Sale of Stock by Principal Shareholder
         --------------------------------------
         In April 2003, the Weiss Family Trust, the principal shareholder of the
         Company, sold its entire shareholding in the Company of 2,075,337
         shares of common stock, representing approximately 37% of the
         outstanding common stock of the Company, for $0.012 per share.
         Dartmouth Commerce purchased 1,600,000 shares, and Michael Prince, the
         Company's Chief Executive Officer/Chief Financial Officer, purchased
         475,337 shares. Dartmouth Commerce, which is wholly owned by the
         Company's new Chairman of the Board, is now the largest shareholder of
         the Company, holding approximately 28.7% of the outstanding common
         stock of the Company as of April 2003. Dartmouth Commerce has agreed
         with Bluebird (see Note 5) that until April 2008, it will not sell or
         transfer any of these shares without Bluebird's prior consent.

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


NOTE 2 - RESTRUCTURING OF DEBT

         In April 2003, the Company entered into various agreements with certain
         of its creditors and commercial banks, which resulted in the
         restructuring of its capital structure. As a result, the Company
         recognized a gain on extinguishment of debt of $4,098,687, net of
         related expense of $188,685. This gain has been recorded as an
         extraordinary item in the financial statements. Income taxes are not
         allocable to this gain as the Company has net operating losses to
         offset this gain.

                                        9
<PAGE>
                                                         SIGNATURE EYEWEAR, INC.
                                                   NOTES TO FINANCIAL STATEMENTS
                                  October 31, 2002 and July 31, 2003 (unaudited)
--------------------------------------------------------------------------------

NOTE 3 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

         Basis of Presentation
         ---------------------
         The accompanying financial statements have been prepared in conformity
         with accounting principles generally accepted in the United States of
         America for interim financial information and with the instructions to
         Form 10-Q and Regulation S-X. Accordingly, they do not include all of
         the information and footnotes required by accounting principles
         generally accepted in the United States of America for complete
         financial statements. In the opinion of management, all normal,
         recurring adjustments considered necessary for a fair presentation have
         been included. These financial statements should be read in conjunction
         with the audited financial statements and notes thereto included in the
         Company's Annual Report on Form 10-K for the year ended October 31,
         2002. The results of operations for the nine months ended July 31, 2003
         are not necessarily indicative of the results that may be expected for
         the year ended October 31, 2003.

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

             Office furniture and equipment                             7 years
             Computer equipment                                         3 years
             Software                                                   3 years
             Machinery and equipment                                    5 years
             Machinery and equipment held under
               capital lease agreements                            3 to 5 years
             Leasehold improvements                           term of the lease

         Trademark
         ---------
         The Dakota Smith trademark is recorded at cost, less accumulated
         amortization. Amortization is provided using the straight-line method
         over the estimated useful life of the trademark of 20 years. The
         Company continually evaluates whether events or circumstances have
         occurred that indicate the remaining estimated value of the trademark
         may not be recoverable. When factors indicate that the value of the
         trademark may be impaired, the Company estimates the remaining value
         and reduces the trademark to that amount. The trademark was sold and
         licensed back in February 2003 (see Note 7).

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

                                        10
<PAGE>
                                                         SIGNATURE EYEWEAR, INC.
                                                   NOTES TO FINANCIAL STATEMENTS
                                  October 31, 2002 and July 31, 2003 (unaudited)
--------------------------------------------------------------------------------

NOTE 3 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued)

         Earnings per Share
         ------------------
         The Company calculates earnings per share in accordance with Statement
         of Financial Accounting Standards No. 128, "Earnings per Share." Basic
         earnings per share is computed by dividing the income available to
         common shareholders by the weighted-average number of common shares
         outstanding. Diluted earnings per share is computed similar to basic
         earnings per share except that the denominator is increased to include
         the number of additional common shares that would have been outstanding
         if the potential common shares had been issued and if the additional
         common shares were dilutive. The Company did not have any dilutive
         shares for the three or nine months ended July 31, 2003 and 2002.

         The following potential common shares have been excluded from the
         computations of diluted loss per share for the three and nine months
         ended July 31, 2003 and 2002 because the effect would have been
         anti-dilutive:

                             For the Three Months EndedFor the Nine Months Ended
                                     July 31,                  July 31,
                             ------------------------  ------------------------
                                 2003         2002         2003         2002
                             -----------  -----------  -----------  -----------
                             (unaudited)  (unaudited)  (unaudited)  (unaudited)

           Stock options         346,700      410,800      275,600      410,800
           Warrants               50,000      230,000      150,000      230,000
                             -----------  -----------  -----------  -----------

             Total               396,700      640,800      425,600      640,800
                             ===========  ===========  ===========  ===========

         Estimates
         ---------
         The preparation of financial statements requires management to make
         estimates and assumptions that affect the reported amounts of assets
         and liabilities and disclosure of contingent assets and liabilities at
         the date of the financial statements and the reported amounts of
         revenue and expenses during the reporting period. Actual results could
         differ from those estimates.

                                       11
<PAGE>
                                                         SIGNATURE EYEWEAR, INC.
                                                   NOTES TO FINANCIAL STATEMENTS
                                  October 31, 2002 and July 31, 2003 (unaudited)
--------------------------------------------------------------------------------

NOTE 4 - PROPERTY AND EQUIPMENT

         Property and equipment at October 31, 2002 and July 31, 2003  consisted
         of the following:

<TABLE><CAPTION>
                                                                         July 31,       October 31,
                                                                           2003            2002
                                                                       ------------    ------------
                                                                        (unaudited)
<S>                                                                    <C>             <C>
         Office furniture and equipment                                $    912,756    $    912,756
         Computer equipment                                               1,485,344       1,472,556
         Software                                                         1,121,288       1,121,288
         Machinery and equipment                                            430,310         440,680
         Machinery and equipment held under capital
             lease agreements                                               294,609         294,609
         Leasehold improvements                                           1,195,190       1,195,190
                                                                       ------------    ------------
                                                                          5,439,497       5,437,079
         Less accumulated depreciation and amortization (including
             accumulated depreciation and amortization of $262,492
             (unaudited) and $231,022 for equipment under capital
             lease agreement)                                             3,974,249       3,611,994
                                                                       ------------    ------------

                  Total                                                $  1,465,248    $  1,825,085
                                                                       ============    ============
</TABLE>

         Depreciation and amortization expense was $362,255 (unaudited) and
         $326,988 (unaudited) for nine months ended July 31, 2003 and 2002,
         respectively, (including depreciation and amortization expense of
         $31,470 (unaudited) and $86,790 (unaudited), respectively, on machinery
         and equipment held under capital leases).


NOTE 5 - CREDIT FACILITIES

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

                                       12
<PAGE>
                                                         SIGNATURE EYEWEAR, INC.
                                                   NOTES TO FINANCIAL STATEMENTS
                                  October 31, 2002 and July 31, 2003 (unaudited)
--------------------------------------------------------------------------------

NOTE 5 - CREDIT FACILITIES (Continued)

         Lines of Credit (Continued)
         ---------------
         The Company defaulted on the credit facility for various reasons,
         including the nonpayment of the line of credit at maturity as well as
         noncompliance with various covenants and conditions. Since September
         30, 2000, the interest rate on the credit line has been 5% per annum in
         excess of the original rate. The Company entered into a forbearance
         agreement with the Bank in December 2000, which was extended many
         times. In April 2003, the Company settled its obligations under the
         line of credit (see Note 2).

         Home Loan Investment Company Credit Facility
         --------------------------------------------
         In April 2003, the Company obtained a $3,500,000 credit facility from
         the Home Loan Investment Company ("HLIC"). The credit facility is
         secured by all of the assets of the Company and includes a $3,000,000
         term loan and a $500,000 revolving line of credit.

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

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

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

         As further consideration for the credit facility, the Company also
         granted HLIC warrants to purchase 100,000 shares of common stock. The
         warrants vest immediately, expire on July 31, 2008, and have an
         exercise price of $0.67 per share.

                                       13
<PAGE>
                                                         SIGNATURE EYEWEAR, INC.
                                                   NOTES TO FINANCIAL STATEMENTS
                                  October 31, 2002 and July 31, 2003 (unaudited)
--------------------------------------------------------------------------------

NOTE 5 - CREDIT FACILITIES (Continued)

         Bluebird Credit Facility
         ------------------------
         In April 2003, the Company obtained from Bluebird Finance Limited
         ("Bluebird") a credit facility of up to $4,150,000 secured by the
         assets of the Company. The credit facility includes a revolving credit
         line in the amount of $2,900,000 and support for the $1,250,000 letter
         of credit securing the HLIC credit facility. The loan bears interest at
         5% per annum, payable annually for the first two years, with payments
         of principal and interest on a 10-year amortization schedule commencing
         in the third year, and is due and payable in April 2015 (see Note 6).

         Bluebird's loan commitment will be reduced by $72,500 in July 2005 and
         by the same amount every three months thereafter. This loan is
         subordinate to the HLIC credit facility. The Company must comply with
         certain financial and non-financial covenants, which include that
         without the consent of Bluebird it may not make any acquisition or
         investment in excess of an aggregate of $150,000 each fiscal year
         outside the ordinary course of business or enter into any merger or
         similar reorganization.


NOTE 6 - LONG-TERM DEBT

         Long-term debt at October 31, 2002 and July 31, 2003 consisted of the
         following:
<TABLE><CAPTION>
                                                                                 July 31,    October 31,
                                                                                   2003          2002
                                                                               -----------   -----------
                                                                               (unaudited)
<S>                                                                            <C>           <C>
             Term note payable to a commercial bank in the original amount
                 of $3,500,000, secured by substantially all of the assets
                 of the Company, payable in monthly installments of
                 $72,917, plus interest at LIBOR, plus 7.5% per annum,
                 which includes the 5% default penalty since September
                 2000. In April 2003, the term note
                 payable was repaid.                                           $       --    $ 1,895,856

             Obligation to a frame vendor in the original amount of
                 $4,195,847, less an unamortized discount of $639,043,
                 unsecured, payable in monthly installments of $50,000,
                 including interest imputed at 7.37% per annum. This
                 obligation was in default at January 31, 2003. In April
                 2003, the Company paid $2,350,000 to settle this and other
                 obligations to the frame vendor
                 (see Note 7).                                                         --      3,207,291
</TABLE>
                                       14
<PAGE>
                                                         SIGNATURE EYEWEAR, INC.
                                                   NOTES TO FINANCIAL STATEMENTS
                                  October 31, 2002 and July 31, 2003 (unaudited)
--------------------------------------------------------------------------------

NOTE 6 - LONG-TERM DEBT (Continued)
<TABLE><CAPTION>
                                                                                 July 31,    October 31,
                                                                                   2003          2002
                                                                               -----------   -----------
                                                                               (unaudited)
<S>                                                                            <C>           <C>
             Note payable to lessor of the Company's principal offices and
                 warehouse in the original amount of $240,000, unsecured,
                 payable in monthly installments of $4,134, including
                 interest at 10%
                 per annum, maturing on May 1, 2005.                           $    85,323   $   112,541

             Note payable to lessor of the Company's principal offices and
                 warehouse, unsecured, payable in monthly installments of
                 $3,757, including interest
                 at 8% per annum, maturing on May 1, 2005.                          76,636        89,405

             Note payable to California Design Studio, Inc. ("CDS"),
                 unsecured, payable in monthly installments of between
                 $8,333 and $17,042, with a final payment of any principal
                 plus interest remaining in May 2007, including interest at
                 7% per annum, maturing on May 23, 2007. In February 2003,
                 the Company paid $500,000 to settle all liabilities with
                 CDS, including this note and the obligation assumed in
                 conjunction with the acquisition of CDS and
                 extension of the consulting agreement.                                --        938,258

             Obligation assumed in conjunction with acquisition of CDS and
                 extension of consulting agreement, payable in monthly
                 installments of $15,000, including interest imputed at 10%
                 per annum, maturing on July 1, 2003. This obligation was
                 settled in January 2003.                                              --        104,876

             Note payable to commercial bank, secured by certain property
                 and equipment, bearing interest at 4% per annum, payable
                 in 39 monthly installments of $13,812, commencing March
                 31, 2003, with the remaining principal and accrued
                 interest
                 due and payable in full on February 28, 2008.                     693,516       750,000
</TABLE>

                                       15
<PAGE>
                                                         SIGNATURE EYEWEAR, INC.
                                                   NOTES TO FINANCIAL STATEMENTS
                                  October 31, 2002 and July 31, 2003 (unaudited)
--------------------------------------------------------------------------------

NOTE 6 - LONG-TERM DEBT (Continued)
<TABLE><CAPTION>
                                                                                 July 31,    October 31,
                                                                                   2003          2002
                                                                               -----------   -----------
                                                                               (unaudited)
<S>                                                                            <C>           <C>
             Liability for machinery and equipment under various capital
                 lease agreements, secured by certain machinery and
                 equipment, bearing interest ranging from 8.19% to 11.4%
                 per annum, maturing through August 2004. In March and
                 April 2003, the Company paid $58,162 in full settlement of
                 $89,550 of
                 this liability.                                               $    37,115   $   149,903

             Term note payable to Home Loan credit facility in the original
                 amount of $3,000,000, secured by substantially all of the
                 assets of the Company, bearing interest at 10% per annum,
                 payable in
                 full in April 2008.                                             3,000,000           --

             Credit facility from Bluebird of up to $4,150,000, which
                 includes a $2,900,000 revolving credit line, secured by
                 all of the assets of the Company, bearing interest at 5%
                 per annum, payable annually for the first two years, with
                 payments of principal and interest of $72,500 every three
                 months on a 10-year period
                 commencing July 1, 2005.                                        2,900,000           --

             Credit facility from Home Loan, secured by substantially all
                 of the Company's assets, bearing interest at 12% per
                 annum, payable
                 in full in April 2008.                                            500,000           --

             Non-bearing-interest note payable to a licensor in the
                 original amount of $400,000, secured by the related
                 inventory, payable in 11 payments of $30,000 and one
                 payment of $70,000,
                 maturing in March 2004.                                           280,000           --
                                                                               -----------   -----------

                                                                                 7,572,590     7,248,130
             Less current portion                                                  537,299     5,533,149
                                                                               -----------   -----------

                      Long-term portion                                        $ 7,035,291   $ 1,714,981
                                                                               ===========   ===========
</TABLE>
                                       16
<PAGE>
                                                         SIGNATURE EYEWEAR, INC.
                                                   NOTES TO FINANCIAL STATEMENTS
                                  October 31, 2002 and July 31, 2003 (unaudited)
--------------------------------------------------------------------------------

NOTE 6 - LONG-TERM DEBT (Continued)

         Future maturities of long-term debt at July 31, 2003 were as follows:

                   12 Months
                      Ending
                     July 31,
                  (unaudited)

                      2004                              $    537,299
                      2005                                   418,457
                      2006                                   831,441
                      2007                                 1,019,690
                      2008                                 1,061,197
                      Thereafter                           3,704,506
                                                        ------------
                           Total                        $  7,572,590
                                                        ============


NOTE 7 - COMMITMENTS AND CONTINGENCIES

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

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

                                       17
<PAGE>
                                                         SIGNATURE EYEWEAR, INC.
                                                   NOTES TO FINANCIAL STATEMENTS
                                  October 31, 2002 and July 31, 2003 (unaudited)
--------------------------------------------------------------------------------

NOTE 7 - COMMITMENTS AND CONTINGENCIES (Continued)

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

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

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

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

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

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

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

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

                                       18
<PAGE>
                                                         SIGNATURE EYEWEAR, INC.
                                                   NOTES TO FINANCIAL STATEMENTS
                                  October 31, 2002 and July 31, 2003 (unaudited)
--------------------------------------------------------------------------------

NOTE 7 - COMMITMENTS AND CONTINGENCIES (Continued)

         Employment Agreement (Continued)
         --------------------

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

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

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

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


NOTE 8 - SERIES A 2% CONVERTIBLE PREFERRED STOCK

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

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

         The holders of the Series A Preferred do not have voting rights, except
         as required by law, provided, however, that at any time two dividend
         payments are not paid in full, the Board of Directors will be increased
         by two and the holders of the Series A Preferred, voting as a single
         class, will be entitled to elect the additional directors. Bluebird
         received demand and piggyback registration rights for the shares of
         common stock into which Series A Preferred may be converted. At July
         31, 2003, dividends in arrears were approximately $4,000 (unaudited).

                                       19
<PAGE>

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

            The following discussion and analysis, which should be read in
connection with the Company's Consolidated Financial Statements and accompanying
footnotes, contain forward-looking statements that involve risks and
uncertainties. Important factors that could cause actual results to differ
materially from the Company's expectations are set forth in "Factors That May
Affect Future Results" in this Item 2 of this Form 10-Q, as well as those
discussed elsewhere in this Form 10-Q. All subsequent written and oral
forward-looking statements attributable to the Company or persons acting on its
behalf are expressly qualified in their entirety by "Factors That May Affect
Future Results." Those forward-looking statements relate to, among other things,
the Company's plans and strategies, new product lines, and relationships with
licensors, distributors and customers, distribution strategies and the business
environment in which the Company operates.

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

RECENT RECAPITALIZATION

            In April 2003 the Company completed a recapitalization which
materially impacted its financial condition. The key elements of the
recapitalization and certain other material transactions to date in fiscal 2003:

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

            Issuance of Preferred Stock. The Company created a new series of
preferred stock, designated "Series A 2% Convertible Preferred Stock" (the
"Series A Preferred"), and issued 1,200,000 shares to Bluebird Finance Limited,
a British Virgin Islands corporation ("Bluebird"), for $800,000, or $0.67 per
share. The Series A Preferred provides for cumulative dividends at the rate of
2% per annum payable in cash or additional shares of Series A Preferred and has
a liquidation preference equal to its original purchase price plus accrued and
unpaid dividends. The Company has the right to redeem the Series A Preferred
commencing April 2005 at the liquidation preference plus accrued and unpaid
dividends plus a premium of $450,000. The Company must redeem the Series A
Preferred upon certain changes of control to the extent the Company has the
funds legally available therefor, at the same redemption price, unless the
change of control occurs before April 2005, in which event the premium is 10% of
either the consideration received by the Company's shareholders or the market
price, as applicable. The Series A Preferred is convertible into Common Stock on
a share-for-share basis (subject to adjustment for stock splits, stock dividends
and similar events) at any time commencing May 2005. The holders of the Series A
Preferred have no voting rights except as required by law, provided, however,
that at any time two dividend payments are not paid in full, the Board of
Directors will be increased by two and the holders of the Series A Preferred,
voting as a single class, will be

                                       20
<PAGE>

entitled to elect the additional directors. Bluebird received demand and
piggyback registration rights for the shares of Common Stock into which Series A
Preferred may be converted.

            Bluebird Credit Facility. The Company obtained from Bluebird a
credit facility of up to $4,150,000 secured by the assets of the Company. The
credit facility includes a revolving credit line in the amount of $2,900,000 and
support for the $1,250,000 letter of credit securing the HLIC credit facility.
The loan bears interest at the rate of 5% per annum, payable annually for the
first two years, with payments of principal and interest on a 10-year
amortization schedule commencing in the third year, and is due and payable in
April 2015. Bluebird's loan commitment will be reduced by $72,500 in July 2005
and by the same amount every three months thereafter. This loan is subordinate
to the HLIC credit facility. The Company must comply with certain covenants
including among others that without the consent of Bluebird it may not make any
acquisition or investment in excess of an aggregate of $150,000 each fiscal year
outside the ordinary course of business, or enter into any merger or similar
reorganization.

            Retirement of Bank Credit Facility. The Company retired its bank
credit facility with City National Bank which had been in default since
September 30, 2000.

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

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

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

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

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

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

                                       21
<PAGE>

and the parties executed a mutual general release. The Company recognized a gain
of approximately $600,000 in connection with this settlement.

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

OVERVIEW

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

            The Company's best-selling product lines are Laura Ashley Eyewear
and Eddie Bauer Eyewear. Net sales of Laura Ashley Eyewear and Eddie Bauer
Eyewear together accounted for 61% and 64% of the Company's net sales in fiscal
2001 and fiscal 2002, respectively.

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

            Following many years of profitability, the Company incurred
operating losses in each of its last four fiscal years. and for the nine months
ended July 31, 2003. The principal reason for these losses was the change in
October 1999 by the Company in its method of distributing its products to
independent optical retailers in the United States from distributors to a direct
sales force. In addition, in fiscal 2001 and the first quarter of fiscal 2002,
the Company's revenues were adversely affected by a general downturn in the
optical frame business, the aftermath of the September 11th World Trade Center
tragedy, the reluctance of retailers to purchase large inventories of the
Company's products due to concerns about the Company's viability and the
discontinuation of certain product lines. The aftermath of the September 11
tragedy included reduced sales orders resulting in inventory build-up, slowed
collection of accounts receivable and higher return rates due to the uncertain
future retail environment.

RESULTS OF OPERATIONS

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



                                       22
<PAGE>

<TABLE><CAPTION>
                                                             THREE MONTHS ENDED    NINE MONTHS ENDED
                                                                   JULY 31               JULY 31
                                                               ---------------       ---------------
                                                               2003       2002       2003       2002
                                                               ----       ----       ----       ----
<S>                                                           <C>        <C>        <C>        <C>
Net sales ................................................    100.0%     100.0%     100.0%     100.0%
Cost of sales ............................................     36.5       44.8       36.5       42.9
                                                              -----      -----      -----      -----
Gross profit .............................................     63.5       55.2       63.5       57.1
                                                              -----      -----      -----      -----
Operating expenses:
     Selling .............................................     34.2       25.5       30.8       27.3
     General and administrative ..........................     31.6       35.7       34.2       34.1
     Depreciation and amortization .......................      0.7        1.3        1.9        1.3
                                                              -----      -----      -----      -----
             Total operating expenses ....................     66.5       62.5       66.9       62.7
                                                              -----      -----      -----      -----
 Income (loss) from operations ...........................     (3.0)      (7.2)      (3.4)      (5.6)
                                                              -----      -----      -----      -----
 Other income (expense), net .............................     (2.4)      (2.2)       1.9       (2.0)
                                                              -----      -----      -----      -----
 Income (loss) before provision for income taxes .........     (5.4)      (9.5)      (1.4)      (7.6)
                                                              -----      -----      -----      -----
 Provision (benefit) for income taxes ....................     (0.2)      --         (0.1)      --
 Gain on extinguishment of debt ..........................     (0.7)      --         21.2       --
                                                              =====      =====      =====      =====
 Net income (loss) .......................................     (6.3)%     (9.5)%     19.7%      (7.6)%
                                                              =====      =====      =====      =====
</TABLE>

            NET SALES. Net sales decreased by $1.8 million or 23.0% from the
quarter ended July 31, 2002 (the "2002 Quarter") to the quarter ended July 31,
2003 (the "2003 Quarter") and $6.2 million or 24.3% from the nine months ended
July 31, 2002 (the "2002 Nine Months") to the nine months ended July 31, 2003
(the "2003 Nine Months"). The following table shows certain information
regarding net sales for the periods indicated:

<TABLE><CAPTION>
                                THREE MONTHS ENDED JULY 31                         NINE MONTHS ENDED JULY 31
                        ----------------------------------------            ----------------------------------------
                                2003                2002           CHANGE          2003                 2002            CHANGE
                        -------------------  -------------------            -------------------  -------------------
<S>                     <C>           <C>    <C>           <C>     <C>      <C>           <C>    <C>           <C>      <C>
Laura Ashley Eyewear    $ 1,807       28.7%  $ 2,965       36.2%   (39.1)%  $ 6,115       31.6%  $ 8,765       34.4%    (30.2)%
Eddie Bauer Eyewear       1,625       25.8     2,302       28.1    (29.4)%    4,886       25.3     6,960       27.3     (29.8)%
Nicole Miller ......        882       14.0     1,120       13.7    (21.3)%    2,831       14.7     3,605       14.1     (21.5)%
Other Sales (1) ....      1,988       31.5     1,801       22.0     10.4 %    5,489       28.4     6,186       24.2     (11.3)%
                        -------     -------  -------     -------            -------     -------  -------    --------
Total ..............    $ 6,302      100.0%  $ 8,188      100.0%   (23.0)%  $19,321      100.0%  $25,516      100.0%    (24.3)%
                        =======     =======  =======     =======            =======     =======  =======    ========
</TABLE>

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

            Net sales in the 2003 Nine Months were adversely affected by a
continued general downturn in the optical frame business and the reluctance of
retailers to purchase large inventories of the Company's products due to
concerns about the Company's viability.

            Net sales reflect gross sales less a reserve for product returns
established by the Company. The Company has a product return policy, which it
believes is standard in the optical industry. Under that policy, the Company
generally accepts returns of non-discontinued product for credit, upon
presentment and without charge. The Company's product returns for the 2002 Nine
Months and the 2003 Nine Months amounted to 22% and 21% of gross sales,
respectively. Historically, returns have been higher from independent optical
retailers in the United States and lower from optical retail chains and
international customers.

            GROSS PROFIT AND GROSS MARGIN. Gross profit decreased $0.5 million
or 11.5% from the 2002 Quarter to the 2003 Quarter and $2.3 million or 15.9%
from the 2002 Nine Months to the 2003 Nine Months due to lower unit sales and
write-down of obsolete inventory. The gross margin increased from 57.1% in the
2002 Nine Months to 63.5% in the 2003 Nine Months due principally to adjustments
to the reserve for obsolete inventory.

            SELLING EXPENSES. Selling expenses increased 3.5% from the 2002
Quarter to the 2003 Quarter and decreased $1.0 million or 14.62% from the 2002
Nine Months to the 2003 Nine Months. The increase in the quarter was due
primarily to small increases in advertising, freight, convention and promotion
expenses offset in part by a small decrease in salaries. The decrease in the
nine

                                       23
<PAGE>

months was due primarily to decreases in salaries of $0.8 million, point of
purchase expenses of $0.2 million and premium expenses of $0.5 million offset in
part by increases of $0.3 million in promotions expense and $0.2 in royalties.

            GENERAL AND ADMINISTRATIVE EXPENSES. General and administrative
expenses decreased $0.9 million or 31.9% from the 2002 Quarter to the 2003
Quarter and $2.1 million or 24.2% from the 2002 Nine Months to the 2003 Nine
Months. The change in the quarter was due primarily to decreases in salaries of
$0.4 million, operating lease expenses of $0.3 million and bad debt of $0.1
million. The change in the nine months was due primarily to decreases in
salaries of $1.0 million, operating lease expenses of $0.7 million and bank
charges of $0.2 million. The operating lease expense decreases were due to the
purchase of equipment and property, including the Company's computer system,
which previously was leased, which purchase also had the effect of increasing
depreciation and amortization expense.

            DEPRECIATION AND AMORTIZATION. Depreciation and amortization expense
decreased in the 2003 Quarter because of sale of the Dakota Smith trademark in
February 2003.

            OTHER INCOME (EXPENSE), NET. The Company's sundry income increased
$173,000 in the 2003 Quarter due to negotiated discounts of trade payables
principally during the quarter ended April 30, 2003. Interest expense decreased
in these periods due to declining market interest rates, principal pay-downs and
cessation of interest on an obligation to a frame vender following a standstill
agreement with the vendor. The Company recognized a gain of $0.5 million in
quarter ended April 30, 2003 from the sale of the Dakota Smith trademark.

            EXTRAORDINARY ITEM. During the quarter ended April 30, 2003, the
Company recognized a gain on the settlement of debt of $4.1 million in
connection with its recapitalization.

            PROVISION (BENEFIT) FOR INCOME TAXES. The Company did not incur
income tax expense with respect to its net income in the 2003 Nine Months
because of its net operating loss carryforwards.

FINANCIAL CONDITION, LIQUIDITY AND CAPITAL RESOURCES

            The Company's accounts receivable (net of allowance for doubtful
accounts) decreased from $3.1 million at October 31, 2002 to $2.5 million at
July 31, 2003 primarily due to lower sales.

            The Company's inventories (net of obsolescence reserve) decreased
from $5.5 million at October 31, 2002 to $4.6 million at July 31, 2003 as a
result of sell-off of obsolete inventories and the need for lower inventories as
sales declined, and occurred notwithstanding a decrease of $0.7 million in the
reserve for obsolescent inventory as a result of inventory reductions.

            The Company retired most of its long-term debt as part of its
recapitalization. At July 31, 2003, the Company's long-term debt included
primarily: (i) a $3.5 million credit facility from HLIC; (ii) a $2.9 million
credit facility from Bluebird; (iii) a $0.7 million note payable to a commercial
bank secured by certain equipment, including the Company's computer system; and
(iv) a note with a remaining principal balance of $280,000 delivered in
connection with the repurchase of the Dakota Smith inventory sold to the
purchaser of the Dakota Smith trademark. See Notes 5 and 6 of Notes to
Consolidated Financial Statements and "Recent Recapitalization."

            Of the Company's accounts payable at July 31, 2003, $0.7 million
were payable in foreign currency. To monitor risks associated with currency
fluctuations, the Company on a weekly basis assesses the volatility of certain
foreign currencies and reviews the amounts and expected payment dates of its
purchase orders and accounts payable in those currencies. Based on those
factors, the Company may from time to time mitigate some portion of that risk by
purchasing forward commitments to deliver foreign currency to the Company. The
Company held no forward commitments for foreign currencies at July 31, 2003.

            The Company's bad debt write-offs and recoveries were $28,601 and
($2,916) during the 2003 Nine Months and 2002 Nine Months, respectively. As part
of the Company's management of its working capital, the Company performs most
customer credit functions internally, including extensions of credit and
collections.

                                       24
<PAGE>

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

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

INFLATION

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

FACTORS THAT MAY AFFECT FUTURE RESULTS

            The following is a discussion of certain factors that may affect the
Company's financial condition and results of operations, and takes into account
the recapitalization described under "Subsequent Events".

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

            The Company suffered material operating losses in its last four
fiscal years, causing a significant deterioration in its financial condition.
While the recapitalization significantly reduced the Company's shareholders'
deficit, the Company continues to have a shareholders' deficit, which was $4.4
million at July 31, 2003. The Company's long-term viability will depend on its
ability to return to profitability on a consistent basis.

            The ability of the Company to return to profitability will depend
primarily on its ability to increase its revenues. The Company's revenues during
the past several years have been adversely affected by the significant downturn
in the optical frame industry and its inability to hire a direct sales force
sufficient to replace its distributor network following its conversion to direct
sales in 2000. This problem has been exacerbated by the Company's impaired
financial condition which in the Company's opinion resulted in retailers being
reluctant to purchase large inventories of the Company's products due to
concerns about the Company's viability. In addition, the Company's revenues were
adversely impacted for some time following the September 11, 2001 tragedy. While
the Company is hopeful that the recapitalization will generate greater customer
confidence and increase its ability to hire qualified sales personnel, no
assurance can be given that this will occur or that the Company will be able to
generate materially greater revenues or to return to consistent profitability.

            SUBSTANTIAL DEPENDENCE UPON LAURA ASHLEY AND EDDIE BAUER LICENSES

            Net sales of Laura Ashley Eyewear and Eddie Bauer Eyewear accounted
for 60% and 62% of the Company's net sales in fiscal years 2001 and 2002,
respectively. While the Company intends to continue reducing its dependence on
the Laura Ashley Eyewear and Eddie Bauer Eyewear lines through the development
and promotion of Nicole Miller Eyewear, Dakota Smith Eyewear, bebe eyes and its
Signature line, the Company expects the Laura Ashley and Eddie Bauer Eyewear
lines to continue to be the Company's leading sources of revenue for the near
future. The Laura Ashley license is automatically renewed through January 2008
so long as the Company is not in breach of the license agreement and the royalty
payment for the prior two contract years exceeds the minimum royalty for those
years. Laura Ashley may also terminate the license agreement if minimum sales
requirements are not met in any two years. The Company did not meet the

                                       25
<PAGE>

minimum sales requirement for the license year ended January 2003, but Laura
Ashley waived noncompliance. The Company markets Eddie Bauer Eyewear through an
exclusive license which terminates in December 2005, but may be renewed by the
Company at least through 2007 so long as the Company is not in material default
and meets certain minimum royalty requirements. Each of Laura Ashley and Eddie
Bauer may terminate its respective license before its term expires under certain
circumstances, including a material default by the Company or certain defined
changes in control of the Company.

            BANKRUPTCY OF EDDIE BAUER

            Eddie Bauer Diversified Sales LLC, the licensor on the Eddie Bauer
Eyewear license, and its parent Speigel, Inc and other affiliates, have filed
voluntary petitions for reorganization under Chapter 11 of the U.S. Bankruptcy
Code. As a result, the licensor has the rights of a debtor under the Bankruptcy
Code with respect to executory contracts such as the Eddie Bauer Eyewear
license, including the right to assume or reject the license. The rejection of
the license would have a material adverse affect on the Company. The Company has
received no indication or notice from the licensor regarding the licensor's
intentions with respect to the license agreement.

            DEPENDENCE UPON SALES TO RETAIL OPTICAL CHAINS

            Net sales to major optical retail chains amounted to 29% and 35% of
net sales in fiscal years 2001 and 2002, respectively. Net sales to Eyecare
Centers of America in fiscal 2002 amounted to 12% and 13% of the Company's net
sales for such fiscal years. The loss of one or more major optical retail chains
as a customer would have a material adverse affect on the Company's business.

            APPROVAL REQUIREMENTS OF BRAND-NAME LICENSORS

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

            LIMITATIONS ON ABILITY TO DISTRIBUTE OTHER BRAND-NAME EYEGLASS
FRAMES

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

                                       26
<PAGE>

            DEPENDENCE UPON CONTRACT MANUFACTURERS; FOREIGN TRADE REGULATION

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

            In addition, the purchase of goods manufactured in foreign countries
is subject to a number of risks, including foreign exchange rate fluctuations,
economic disruptions, transportation delays and interruptions, increases in
tariffs and duties, changes in import and export controls and other changes in
governmental policies. For frames purchased other than from Hong Kong/China
manufacturers, the Company pays for its frames in the currency of the country in
which the manufacturer is located and thus the costs (in United States dollars)
of the frames vary based upon currency fluctuations. Increases and decreases in
costs (in United States dollars) resulting from currency fluctuations generally
do not affect the price at which the Company sells its frames, and thus currency
fluctuations can impact the Company's gross margin and results of operations. In
fiscal 2002, Signature used manufacturers principally in Hong Kong/China, Japan
and Italy.

            INTERNATIONAL SALES

            International sales accounted for approximately 11.3% and 10.5% of
the Company's net sales in fiscal years 2001 and 2002, respectively. These sales
were primarily in England, Canada Australia, New Zealand, Holland and Belgium.
The Company's international business is subject to numerous risks, including the
need to comply with export and import laws, changes in export or import
controls, tariffs and other regulatory requirements, the imposition of
governmental controls, political and economic instability, trade restrictions,
the greater difficulty of administering business overseas and general economic
conditions. Although the Company's international sales are principally in United
States dollars, sales to international customers may also be affected by changes
in demand resulting from fluctuations in interest and currency exchange rates.
There can be no assurance that these factors will not have a material adverse
effect on the Company's business, operating results and financial condition.

            PRODUCT RETURNS

            The Company has a product return policy which it believes is
standard in the optical industry. Under that policy, the Company generally
accepts returns of non-discontinued product for credit, upon presentment and
without charge. The Company's product returns for fiscal years 2001 and 2002
amounted to 23% and 22% of gross sales (sales before returns), respectively. The
Company anticipates that product returns may increase as a result of the
downturn in the optical frame industry and general economic conditions. The
Company maintains reserves for product returns which it considers adequate;
however, an increase in returns that significantly exceeds the amount of those
reserves would have a material adverse impact on the Company's business,
operating results and financial condition.

            AVAILABILITY OF VISION CORRECTION ALTERNATIVES

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

                                       27
<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
marketplace at or near the same time, the availability of vision correction
alternatives, general economic conditions and other tangible and intangible
factors, all of which can change and cannot be predicted. The Company's success
also will depend to a significant extent upon a number of factors relating to
discretionary consumer spending, including the trend in managed health care to
allocate fewer dollars to the purchase of eyeglass frames, and general economic
conditions affecting disposable consumer income, such as employment business
conditions, interest rates and taxation. Any significant adverse change in
general economic conditions or uncertainties regarding future economic prospects
that adversely affect discretionary consumer spending generally, and purchasers
of prescription eyeglass frames specifically, could have a material adverse
effect on the Company's business, operating results and financial condition.

            COMPETITION

            The markets for prescription eyewear are intensely competitive.
There are thousands of frame 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, Safilo Group S.p.A., Marchon Eyewear, Inc., Marcolin S.p.A. and De Rigo
S.p.A. Signature's largest competitors have significantly greater financial,
technical, sales, manufacturing and other resources than the Company. They also
employ direct sales forces that have existed far longer, and are significantly
larger than the Company's. 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. De
Rigo S.p.A. is also vertically integrated, in that it manufactures frames,
distributes them throughout the world, and owns Dollond & Atchitson, one of the
largest retail optical chains in the world.

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

            CONTROL BY DIRECTORS AND EXECUTIVE OFFICERS

            As of September 30, 2003, the directors and executive officers of
the Company owned beneficially approximately 51% of the Company's outstanding
shares of Common Stock. As a result, the directors and executive officers
control the Company and its operations, including the approval of significant
corporate transactions and the election of at least a majority of the Company's
Board of Directors and thus the policies of the Company. The voting power of the
directors and executive officers could also serve to discourage potential
acquirors from seeking to acquire control of the Company through the purchase of
the Common Stock, which might depress the price of the Common Stock.

            NO DIVIDENDS ALLOWED

            As a California corporation, under the California General
Corporation Law, generally the Company may not pay dividends in cash or property
except (i) out of positive retained earnings or (ii) if, after giving effect to
the distribution, the Company's assets would be at least 1.25 times its
liabilities and its current assets would exceed its current liabilities
(determined on a consolidated basis under generally accepted accounting
principles). At July 31, 2003, the Company had an accumulated deficit of $19.1
million. As a result, the Company will not be able to pay dividends for the
foreseeable future. In addition, the payment of dividends is prohibited under
its credit facilities.

                                       28
<PAGE>

            POSSIBLE ANTI-TAKEOVER EFFECTS

            The Company's Board of Directors has the authority to issue up to
5,000,000 shares of Preferred Stock and to determine the price, rights,
preferences, privileges and restrictions, including voting rights, of those
shares without any further vote or action by the shareholders. The Preferred
Stock could be issued with voting, liquidation, dividend and other rights
superior to those of the Common Stock. The Company issued 1,200,000 shares of
Series A Preferred in the recapitalization, and has no present intention to
issue any other series of Preferred Stock. However, the rights of the holders of
Common Stock will be subject to, and may be adversely affected by, the rights of
the holders of any Preferred Stock that may be issued in the future. The
issuance of Preferred Stock, while providing desirable flexibility in connection
with possible acquisitions and other corporate purposes, could have the effect
of making it more difficult for a third party to acquire a majority of the
outstanding voting stock of the Company, which may depress the market value of
the Common Stock. In addition, each of the Laura Ashley, Hart Schaffner & Marx,
Eddie Bauer and bebe licenses allows the licensor to terminate its license upon
certain events which under the license are deemed to result in a change in
control of the Company unless the change of control is approved by the licensor.
The licensors' rights to terminate their licenses upon a change in control of
the Company could have the effect of discouraging a third party from acquiring
or attempting to acquire a controlling portion of the outstanding voting stock
of the Company and could thereby depress the market value of the Common Stock.

ITEM 3--QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

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

            FOREIGN CURRENCY RISKS. At any month-end during the quarter ended
July 31, 2003, a maximum of $0.7 million were payable in foreign currency. These
foreign currencies included Japanese yen. Any significant change in foreign
currency exchange rates could therefore materially affect the Company's
business, operating results and financial condition. To monitor risks associated
with currency fluctuations, the Company on a weekly basis assesses the
volatility of certain foreign currencies and reviews the amounts and expected
payment dates of its purchase orders and accounts payable in those currencies.
Based on those factors, the Company may from time to time mitigate some portion
of that risk by purchasing forward commitments to deliver foreign currency to
the Company. The Company held no forward commitments for foreign currencies at
July 31, 2003.

            International sales accounted for approximately 14% of the Company's
net sales in the nine months ended July 31, 2003. Although the Company's
international sales are principally in United States dollars, sales to
international customers may also be affected by changes in demand resulting from
fluctuations in interest and currency exchange rates. There can be no assurance
that these factors will not have a material adverse effect on the Company's
business, operating results and financial condition. For frames purchased other
than from Hong Kong/China manufacturers, the Company pays for its frames in the
currency of the country in which the manufacturer is located and thus the costs
(in United States dollars) of the frames vary based upon currency fluctuations.
Increases and decreases in costs (In United States dollars) resulting from
currency fluctuations generally do not affect the price at which the Company
sells its frames, and thus currency fluctuation can impact the Company's gross
margin.

            INTEREST RATE RISK. The Company's credit facilities existing at July
31, 2003 had fixed interest rates. See "Subsequent Events." Accordingly, the
Company does not believe it is subject to material interest rate risk.

            In addition, the Company has fixed income investments consisting of
cash equivalents, which are also affected by changes in market interest rates.
The Company does not use derivative financial instruments in its investment
portfolio. The Company places its cash equivalents with high-quality financial
institutions, limits the amount of credit exposure to any one institution and
has established investment guidelines relative to diversification and maturities
designed to maintain safety and liquidity.

ITEM 4--CONTROLS AND PROCEDURES

            The Company's management, with the participation of the Chief
Executive Officer and Chief Financial Officer, has conducted an evaluation of
the effectiveness of the Company's disclosure controls and procedures pursuant
to Rule 13a-14 under the Securities Exchange Act of 1934, as amended, as of the
end of the period covered by this report. Based on that

                                       29
<PAGE>

evaluation, the Chief Executive Officer and the Chief Financial Officer believe
that the Company's disclosure controls and procedures reasonably ensure that
information required to be disclosed by the Company in this quarterly report has
been made known to them in a timely manner.

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

                                    PART II.
                                OTHER INFORMATION

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

            See Exhibit Index Attached

            Reports on Form 8-K

                         None



























                                       30
<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: October 5, 2003                     SIGNATURE EYEWEAR, INC.


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






































                                       31
<PAGE>

                                  EXHIBIT INDEX

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

31.1                Certification Pursuant to SEC Rule 13a-14(a)/15d-14(a)

32.1                Certification Pursuant to 18 U.S.C. Section 1350



































                                       32