**UNITED
      STATES**


**SECURITIES
      AND EXCHANGE COMMISSION**


**Washington,
      D.C. 20549**





**FORM
      10-Q**





(Mark
      one)


**[X]**
            Quarterly
                report pursuant to Section 13 or 15(d) of the Securities Exchange
                Act of
                1934****for the quarterly period ended September 30,
                2007





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: 1-14128











**EMERGING
      VISION, INC.**


(Exact
      name of registrant as specified in its charter)





**NEW
      YORK**


(State
      or
      other jurisdiction of incorporation or organization)





**11-3096941**


(I.R.S.
      Employer Identification No.)





**100
      Quentin Roosevelt Boulevard**


**Garden
      City, NY 11530**


(Address
      and zip code of principal executive offices)





**Telephone
      Number: (516) 390-2100**


(Registrant’s
      telephone number, including area code)








Indicate
      by check mark whether the Registrant (1) has filed all reports required to
      be
      filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during
      the
      preceding 12 months (or for such shorter period that the Registrant was required
      to file such reports), and (2) has been subject to such filing requirements
      for
      the past 90 days:


Yes  X
            No__





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





Large
                accelerated filer__
            Accelerated
                filer__
            Non-accelerated
                filer  X





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


Yes
                __
            No  X





As
      of
      November 14, 2007, there were 125,286,805 outstanding shares of the Issuer’s
      Common Stock, par value $0.01 per share.










**PART
      I - FINANCIAL INFORMATION**





**Item
      1.  Financial Statements**


**EMERGING
                VISION, INC. AND SUBSIDIARIES**
              **CONSOLIDATED
                CONDENSED BALANCE SHEETS**
              **(In
                Thousands, Except Share Data)**ASSETS
            
            **September
                30,**
            
            
            **December
                31,****2007**
            
            
            **2006****(unaudited)**
            
            
            **(audited)**Current
                assets:Cash
                and cash equivalents
            
            $
            1,486
            
            
            $
            1,289Restricted
                cash
            
            
            250
            
            
            
            250Franchise
                receivables, net of allowance of $149 and $110,
                respectively
            
            
            2,363
            
            
            
            1,620Settlement
                receivable
            
            
            1,062
            
            
            
            -Optical
                purchasing group receivables, net of allowance of $40
            
            
            6,228
            
            
            
            1,914Other
                receivables, net of allowance of $2
            
            
            425
            
            
            
            312Current
                portion of franchise notes receivable, net of allowance of $39 and
                $44,
                respectively
            
            
            147
            
            
            
            79Inventories,
                net
            
            
            495
            
            
            
            431Prepaid
                expenses and other current assets
            
            
            796
            
            
            
            398Deferred
                tax assets, current portion
            
            
            709
            
            
            
            600Total
                current assets
            
            
            13,961
            
            
            
            6,893Property
                and equipment, net
            
            
            1,452
            
            
            
            923Franchise
                notes receivable, net of allowance of $0 and $5,
                respectively
            
            
            78
            
            
            
            214Deferred
                tax asset, net of current portion
            
            
            1,052
            
            
            
            800Goodwill,
                net
            
            
            2,544
            
            
            
            2,745Excess
                cost over net tangible assets acquired
            
            
            3,380
            
            
            
            -Intangible
                assets, net
            
            
            814
            
            
            
            808Other
                assets
            
            
            261
            
            
            
            214Total
                assets
            
            $
            23,542
            
            
            $
            12,597LIABILITIES
                AND SHAREHOLDERS’ EQUITYCurrent
                liabilities:Accounts
                payable and accrued liabilities
            
            $
            5,917
            
            
            $
            4,632Optical
                purchasing group payables
            
            
            5,689
            
            
            
            1,760Short-term
                debt
            
            
            132
            
            
            
            396Related
                party obligations
            
            
            747
            
            
            
            778Total
                current liabilities
            
            
            12,485
            
            
            
            7,566Long-term
                debt
            
            
            4,364
            
            
            
            20Related
                party borrowings, net of current portion
            
            
            1,094
            
            
            
            1,173Franchise
                deposits and other liabilities
            
            
            438
            
            
            
            487Commitments
                and contingenciesShareholders'
                equity:Preferred
                stock, $0.01 par value per share; 5,000,000 shares
                authorized:  Senior Convertible Preferred Stock, $100,000
                liquidation preference per share; 0.74 shares issued and
                outstanding
            
            
            74
            
            
            
            74Common
                stock, $0.01 par value per share; 150,000,000 shares authorized;
                97,326,890 shares issued and 97,144,553 shares outstanding
            
            
            973
            
            
            
            705Treasury
                stock, at cost, 182,337 shares
            
            
            (204
            )
            
            
            (204
            )Additional
                paid-in capital
            
            
            126,898
            
            
            
            127,062Accumulated
                comprehensive loss
            
            
            (10
            )
            
            
            -Accumulated
                deficit
            
            
            (122,570
            )
            
            
            (124,286
            )Total
                shareholders' equity
            
            
            5,161
            
            
            
            3,351Total
                liabilities and shareholders' equity
            
            $
            23,542
            
            
            $
            12,597





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








**EMERGING
                VISION, INC. AND SUBSIDIARIES**
              **CONSOLIDATED
                CONDENSED STATEMENTS OF INCOME (UNAUDITED)**
              **(In
                Thousands, Except Per Share Data)****For
                the Three Months Ended September 30,**
            
            
            **For
                the Nine Months Ended September 30,****2007**
            
            
            **2006**
            
            
            **2007**
            
            
            **2006****Revenues**:Net
                sales
            
            $
            2,324
            
            
            $
            1,854
            
            
            $
            6,656
            
            
            $
            5,450Optical
                purchasing group sales
            
            
            11,603
            
            
            
            2,775
            
            
            
            20,525
            
            
            
            2,775Franchise
                royalties
            
            
            1,632
            
            
            
            1,797
            
            
            
            5,138
            
            
            
            5,279Other
                franchise related fees
            
            
            103
            
            
            
            38
            
            
            
            231
            
            
            
            171**Total
                revenue**
            
            
            15,662
            
            
            
            6,464
            
            
            
            32,550
            
            
            
            13,675**Costs
                and expenses:**Cost
                of sales
            
            
            11,524
            
            
            
            2,820
            
            
            
            20,509
            
            
            
            3,276Selling,
                general and administrative expenses
            
            
            4,330
            
            
            
            3,507
            
            
            
            11,783
            
            
            
            9,817**Total
                costs and expenses**
            
            
            15,854
            
            
            
            6,327
            
            
            
            32,292
            
            
            
            13,093**Operating
                (loss) income**
            
            
            (192
            )
            
            
            137
            
            
            
            258
            
            
            
            582**Other
                income (expense):**Interest
                on franchise notes receivable
            
            
            6
            
            
            
            12
            
            
            
            29
            
            
            
            34Gain
                on sale of company-owned store to franchisee
            
            
            6
            
            
            
            -
            
            
            
            11
            
            
            
            218Gain
                on settlement of litigation
            
            
            1,012
            
            
            
            -
            
            
            
            1,012
            
            
            
            -Other
                income
            
            
            188
            
            
            
            47
            
            
            
            235
            
            
            
            74Interest
                expense
            
            
            (68
            )
            
            
            (10
            )
            
            
            (177
            )
            
            
            (30
            )**Total
                other income**
            
            
            1,144
            
            
            
            49
            
            
            
            1,110
            
            
            
            296**Income
                from continuing operations before provision for (benefit from) income
                taxes**
            
            
            952
            
            
            
            186
            
            
            
            1,368
            
            
            
            878Provision
                for (benefit from) income taxes
            
            
            45
            
            
            
            64
            
            
            
            (338
            )
            
            
            (978
            )**Income
                from continuing operations**
            
            
            907
            
            
            
            122
            
            
            
            1,706
            
            
            
            1,856**(Loss)
                from discontinued operations**
            
            
            -
            
            
            
            (18
            )
            
            
            -
            
            
            
            (261
            )Income
                tax benefit
            
            
            -
            
            
            
            (7
            )
            
            
            -
            
            
            
            (105
            )**(Loss)
                from discontinued operations**
            
            
            -
            
            
            
            (11
            )
            
            
            -
            
            
            
            (156
            )**Net
                income**
            
            
            907
            
            
            
            111
            
            
            
            1,706
            
            
            
            1,700**Comprehensive
                income:**Foreign
                currency translation adjustments
            
            
            (10
            )
            
            
            -
            
            
            
            (10
            )
            
            
            -**Comprehensive
                income**
            
            $
            897
            
            
            $
            111
            
            
            $
            1,696
            
            
            $
            1,700








**Per
                share information – basic and diluted:**Income
                from continuing operations
            
            $
            0.01
            
            
            $
            0.00
            
            
            $
            0.02
            
            
            $
            0.02(Loss)
                from discontinued operations
            
            
            -
            
            
            
            (0.00
            )
            
            
            -
            
            
            
            (0.00
            )Net
                income
            
            $
            0.01
            
            
            $
            0.00
            
            
            $
            0.02
            
            
            $
            0.02**Weighted-average
                number of shares of common stock outstanding:**Basic
            
            
            72,169
            
            
            
            70,324
            
            
            
            70,946
            
            
            
            70,324Diluted
            
            
            106,546
            
            
            
            113,529
            
            
            
            102,260
            
            
            
            109,478








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





.


**EMERGING
                VISION, INC. AND SUBSIDIARIES**
              **CONSOLIDATED
                CONDENSED STATEMENTS OF CASH FLOWS (UNAUDITED)**
              **(Dollars
                in Thousands)****For
                the Nine Months Ended September 30,****2007**
            
            
            **2006****Cash
                flows from operating activities:**Income
                from continuing operations
            
            $
            1,706
            
            
            $
            1,856Adjustments
                to reconcile income from continuing operations to net cash provided
                by
                operating activities:Depreciation
                and amortization
            
            
            345
            
            
            
            196Provision
                for doubtful accounts
            
            
            51
            
            
            
            169Deferred
                tax assets
            
            
            (361
            )
            
            
            (1,113
            )Non-cash
                compensation charges related to options and warrants
            
            
            104
            
            
            
            494Gain
                on the sale of company-owned store to franchisee
            
            
            (11
            )
            
            
            (218
            )Changes
                in operating assets and liabilities:Franchise
                and other receivables
            
            
            (959
            )
            
            
            231Settlement
                receivable
            
            
            (1,062
            )
            
            
            -Optical
                purchasing group receivables
            
            
            (493
            )
            
            
            -Inventories
            
            
            (64
            )
            
            
            (55
            )Prepaid
                expenses and other current assets
            
            
            (398
            )
            
            
            (61
            )Intangible
                and other assets
            
            
            148
            
            
            
            9Accounts
                payable and accrued liabilities
            
            
            1,285
            
            
            
            198Optical
                purchasing group payables
            
            
            245
            
            
            
            -Franchise
                deposits and other liabilities
            
            
            (49
            )
            
            
            (152
            )Net
                cash provided by operating activities
            
            
            487
            
            
            
            1,554**Cash
                flows from investing activities:**Franchise
                notes receivable issued
            
            
            (131
            )
            
            
            (228
            )Proceeds
                from franchise and other notes receivable
            
            
            251
            
            
            
            249Proceeds
                from the sale of company-owned store to franchisee
            
            
            -
            
            
            
            200Purchases
                of property and equipment
            
            
            (863
            )
            
            
            (267
            )Acquisition
                of 1725758 Ontario Inc.
            
            
            (3,517
            )
            
            
            (700
            )Net
                cash used in investing activities
            
            
            (4,260
            )
            
            
            (746
            )**Cash
                flows from financing activities:**Borrowings
                under credit facility
            
            
            4,359
            
            
            
            -Payments
                on long-term debt
            
            
            (389
            )
            
            
            (32
            )Net
                cash provided by (used in) financing activities
            
            
            3,970
            
            
            
            (32
            )**Net
                cash provided by continuing operations**
            
            
            197
            
            
            
            776**Net
                cash provided by discontinued operations**
            
            
            -
            
            
            
            65**Net  increase
                in cash and cash equivalents**
            
            
            197
            
            
            
            841**Cash
                and cash equivalents – beginning of period**
            
            
            1,289
            
            
            
            816**Cash
                and cash equivalents – end of period**
            
            $
            1,486
            
            
            $
            1,657**Supplemental
                disclosures of cash flow information:**Cash
                paid during the period for:Interest
            
            $
            43
            
            
            $
            6Taxes
            
            $
            34
            
            
            $
            34Non-cash
                investing and financing activities:Accounts
                receivable and excess costs of net tangible assets acquired in connection
                with the Combine Optical Management Corp.
            
            $
            -
            
            
            $
            1,773


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





**EMERGING
      VISION, INC. AND SUBSIDIARIES**


**NOTES
      TO CONSOLIDATED CONDENSED FINANCIAL STATEMENTS**


**(UNAUDITED)**





**NOTE
      1 – BASIS OF PRESENTATION:**





The
      accompanying Consolidated Condensed Financial Statements of Emerging Vision,
      Inc. and subsidiaries (collectively, the “Company”) have been prepared in
      accordance with accounting principles generally accepted for interim financial
      statement presentation and in accordance with the instructions to Form 10-Q
      and
      Article 10 of Regulation S-X.  Accordingly, they do not include all of
      the information and footnotes required by accounting principles generally
      accepted for complete financial statement presentation.  In the
      opinion of management, all adjustments for a fair statement of the results
      of
      operations and financial position for the interim periods presented have been
      included.  All such adjustments are of a normal recurring
      nature.  This financial information should be read in conjunction with
      the Consolidated Financial Statements and Notes thereto included in the
      Company’s Annual Report on Form 10-K for the year ended December 31, 2006 and
      its Quarterly Reports on Form 10-Q for the quarterly periods ended March 31,
      2007 and June 30, 2007.  There have been no changes in significant
      accounting policies since December 31, 2006.








**NOTE
      2 – SIGNIFICANT ACCOUNTING POLICIES:**





**Stock-Based
      Compensation**





The
      Company accounts for stock-based compensation in accordance with the provisions
      of Financial Accounting Standards Board’s (“FASB”) Statement of Financial
      Accounting Standards (“SFAS”) No. 123, “Accounting for Stock-Based
      Compensation,” which provides guidance for the recognition of compensation
      expense as it related to the issuance of stock options and
      warrants.  The Company also adopted the provisions of SFAS No. 148,
“Accounting for Stock-Based Compensation – Transition and Disclosure – an
      amendment of SFAS No. 123.”  SFAS No. 148 amended SFAS No. 123 to
      provide alternative methods of transition for a voluntary change to the fair
      value based method of accounting for stock-based employee compensation provided
      by SFAS No. 123.  As permitted by SFAS No. 148, the Company has
      adopted the fair value method recommended by SFAS No. 123 to effect a change
      in
      accounting for stock-based employee compensation.  In addition, the
      Company adopted the provisions of SFAS No. 123R, “Share-Based Payment,” which
      revised SFAS No. 123 to require all share-based payments to employees, including
      grants of employee stock options, to be recognized based on their fair
      values.





Stock-based
      compensation expense of approximately $31,000 and $40,000 is reflected in
      selling, general and administrative expenses on the accompanying Consolidated
      Condensed Statements of Income for the three months ended September 30, 2007
      and
      2006, respectively, and $105,000 and $494,000 for the nine months ended
      September 30, 2007 and 2006, respectively.  The Company determined the
      fair value of options and warrants issued using the Black-Scholes option pricing
      model with the following assumptions:  1 to 2 year expected lives;
      10-year expiration period; risk-free interest rate ranging from 3.00% to 4.98%;
      stock price volatility ranging from 48.00% to 98.22%; with no dividends over
      the
      expected life.





**Revenue
      Recognition**





The
      Company recognizes revenues in accordance with SEC Staff Accounting Bulletin
      (“SAB”) No. 104, “Revenue Recognition.”  Accordingly, revenues are
      recorded when persuasive evidence of an arrangement exists, delivery has
      occurred or services have been rendered, the Company’s prices to buyers are
      fixed or determinable, and collectibility is reasonably assured.





The
      Company derives its revenues from the following four principal
      sources:





*Net
      sales*– Represents sales from eye care products and related
      services;





*Optical
      purchasing group sales*– Represents product pricing extended
      to the Company's optical purchasing group members associated with the sale
      of vendor’s eye care products to such members;





*Franchise
      royalties*– Represents continuing franchise royalty fees based upon a
      percentage of the gross revenues generated by each franchised
      location;





*Other
      franchise related fees*– Represents certain franchise fees collected by the
      Company under the terms of franchise agreements (including, but not limited
      to,
      initial franchise fees, transfer fees and renewal fees).





Continuing
      franchise royalties are based upon a percentage of the gross revenues generated
      by each franchised location.  To the extent that collectibility of
      royalties is not reasonably assured, the Company recognizes such revenue when
      the cash is received.  Initial franchise fees, which are
      non-refundable, are recognized when the related franchise agreement is
      signed.  Membership fees generated by VisionCare of California, Inc.
      (“VCC”), a wholly owned subsidiary of the Company, are for optometric services
      provided to individual patients (members).   A portion of
      membership fee revenues is deferred when billed and recognized ratably over
      the
      one-year term of the membership agreement.





The
      Company also follows the provisions of Emerging Issue Task Force (“EITF”) Issue
      01-09, “Accounting for Consideration Given by a Vendor to a Customer (Including
      a Reseller of the Vendor’s Products),” and accordingly, accounts for discounts,
      coupons and promotions (that are offered to its customers) as a direct reduction
      of sales.





**Comprehensive
      Income**





The
      Company follows the provisions of SFAS No. 130, “Reporting Comprehensive
      Income,” which establishes rules for the reporting of comprehensive income and
      its components.  Comprehensive income is defined as the change in
      equity from transactions and other events and circumstances other than those
      resulting from investments by owners and distributions to owners.  The
      Company’s comprehensive income is comprised of the cumulative translation
      adjustment arising from the conversion of foreign currency.





**Foreign
      Currency Translation**





The
      financial position and results of operations of the Company’s wholly-owned
      subsidiary, OG Acquisition, Inc. (“OG”) were measured using OG’s local currency
      (Canadian Dollars) as the functional currency.  Balance sheet accounts
      are translated from the foreign currency into U.S. Dollars at the period-end
      rate of exchange.  Income and expenses are translated at the weighted
      average rates of exchange for the period.  The resulting translation
      loss from the conversion of foreign currency to U.S. Dollars is included as
      a
      component of comprehensive income for the quarter ended September 30, 2007
      and
      is recorded directly to accumulated comprehensive loss within the Consolidated
      Condensed Balance Sheet as of September 30, 2007.





**Income
      Taxes**





Effective
      January 1, 2007, the Company adopted the provisions of FASB’s Interpretation
      (“FIN”) No. 48, “Accounting for Uncertainty in Income Taxes – an interpretation
      of FASB No. 109.”  FIN 48 prescribes a recognition threshold and
      measurement attribute for how a company should recognize, measure, present,
      and
      disclose in its financial statements uncertain tax positions that the company
      has taken or expects to take on a tax return.  FIN 48 requires that
      the financial statements reflect expected future tax consequences of such
      positions presuming the taxing authorities’ full knowledge of the position and
      all relevant facts, but without considering time values.  The Company
      recognizes accrued interest and penalties related to unrecognized tax benefits
      as income tax expense.  No such amounts were accrued for at January 1,
      2007.  Additionally, no amounts were accrued for as of September 30,
      2007.  Management is currently unaware of any issues under review that
      could result in significant payments, accruals or material deviations from
      its
      position.





**Discontinued
      Operations**





In
      February 2006, the Company discontinued all of its retail operations then being
      conducted in the state of Arizona and have applied the provision of FASB SFAS
      No. 144, “Accounting for the Impairment or Disposal of Long-Lived
      Assets.”  As a result, the Company determined that substantially all
      of the net assets of the Company-owned stores located in Arizona as of December
      31, 2005 were impaired.  During the three and nine months ended
      September 30, 2006, the Company incurred losses, net of taxes, related to the
      discontinued operations of approximately $11,000 and $156,000,
      respectively.  There were no such losses incurred during the three and
      nine months ended September 30, 2007.  As of September 30, 2007, there
      were no assets remaining associated with the Company’s discontinued
      operations.





**Reclassification**





Certain
      reclassifications have been made to prior year’s consolidated condensed
      financial statements to conform to the current year presentation.








**NOTE
      3 – ACQUISITION OF THE OPTICAL GROUP**





On
      August
      10, 2007, effective August 1, 2007, the Company, through its wholly-owned
      subsidiary OG, acquired all of the outstanding equity interests of 1725758
      Ontario Inc., d/b/a The Optical Group ("TOG") and substantially all of the
      assets of Corowl Optical Credit Services, Inc. ("COC") for an aggregate purchase
      price of cash consideration of $3,800,000 CAD (approximately $3,600,000
      USD).  The Company withdrew funds from its Credit Facility with
      Manufacturers and Traders Trust Corporation (“M&T”), including $3,609,423 to
      fund the purchase price payable in connection with the acquisitions of TOG
      and
      COC, and $50,000 for general working capital requirements.  TOG is
      based in Ontario, Canada and operates an optical group purchasing business
      in
      Canada.  COC is based in Ontario, Canada and operates a credit
      reference business within the optical industry in Canada.  TOG has
      approximately 525 active members in its optical group purchasing
      business.





The
      acquisition was accounted for as a business purchase and recorded at the
      estimated fair value (based on an independent expert’s valuation) of the assets
      acquired and liabilities assumed, as follows:





Working
                capital
            
            $
            1,000Accounts
                receivable
            
            
            3,841,000Property
                and equipment
            
            
            41,000Intangible
                assets
            
            
            1,979,000Excess
                cost over net tangible assets acquired
            
            
            1,446,000Accounts
                payable
            
            
            (3,699,000
            )Net
                assets acquired
            
            $
            3,609,000





Property
      and equipment will be depreciated on a straight-line basis over the estimated
      useful lives of the respective classes of assets.  The intangible
      assets consist of a covenant not-to-compete agreement with a five year useful
      life, customer-related intangibles with a ten year useful life, and a trade
      name
      with an indefinite life.








**NOTE
      4 – PER SHARE INFORMATION:**





In
      accordance with SFAS No. 128, “Earnings Per Share”, basic earnings per shares of
      common stock (“Basic EPS”) is computed by dividing the net income by the
      weighted-average number of shares of common stock
      outstanding.  Diluted earnings per shares of common stock (“Diluted
      EPS”) is computed by dividing the net income by the weighted-average number of
      shares of common stock and dilutive common stock equivalents and convertible
      securities then outstanding.  SFAS No. 128 requires the presentation
      of both Basic EPS and Diluted EPS on the face of the Company’s Consolidated
      Condensed Statements of Income.  Common stock equivalents totaling
      1,777,687 and 2,177,687 were excluded from the computation of Diluted EPS for
      the three and nine months ended September 30, 2007, respectively, and 21,011,644
      for the three and nine months ended September 30 2006, as their effect on the
      computation of Diluted EPS would have been anti-dilutive.





The
      following table sets forth the computation of basic and diluted per share
      information:





**For
                the Three Months Ended September 30,**
            
            
            **For
                the Nine Months Ended September 30,****2007**
            
            
            **2006**
            
            
            **2007**
            
            
            **2006****Numerator**:Income
                from continuing operations
            
            $
            907
            
            
            $
            122
            
            
            $
            1,706
            
            
            $
            1,856(Loss)
                from discontinued operations
            
            
            -
            
            
            
            (11
            )
            
            
            -
            
            
            
            (156
            )Net
                income
            
            $
            907
            
            
            $
            111
            
            
            $
            1,706
            
            
            $
            1,700**Denominator**:Weighted-average
                shares of common stock outstanding
            
            
            72,169
            
            
            
            70,324
            
            
            
            70,946
            
            
            
            70,324Dilutive
                effect of stock options, warrants and restricted stock
            
            
            34,377
            
            
            
            43,205
            
            
            
            31,314
            
            
            
            39,154Weighted-average
                shares of common stock outstanding, assuming dilution
            
            
            106,546
            
            
            
            113,529
            
            
            
            102,260
            
            
            
            109,478**Per
                share information – basic and diluted:**Income
                from continuing operations
            
            $
            0.01
            
            
            $
            0.00
            
            
            $
            0.02
            
            
            $
            0.02(Loss)
                from discontinued operations
            
            
            -
            
            
            
            (0.00
            )
            
            
            -
            
            
            
            (0.00
            )Net
                income
            
            $
            0.01
            
            
            $
            0.00
            
            
            $
            0.02
            
            
            $
            0.02








**NOTE
      5 – SHAREHOLDERS' EQUITY:**





On
      September 24, 2007, Horizons Investors Corp. ("Horizons"), in connection with
      certain rescission transactions consummated by the Company on December 31,
      2003,
      performed a "cashless exercise" of all of its 31,067,776 warrants, with the
      exercise price paid by surrendering to the Company 4,367,764 of the warrants
      held by Horizons, having an approximate aggregate value of $1,485,040, or $0.34
      per share of Common Stock surrendered.





As
      a
      result of this transaction, the Company's Common Stock increased $267,000,
      which
      was offset by a charge to Accumulated Paid-in Capital to account for the
      "cashless exercise" feature of the transaction.








**NOTE
      6 – CREDIT FACILITY:**





On
      August
      8, 2007, the Company entered into a Revolving Line of Credit Note and Credit
      Agreement (the “Credit Agreement”) with M&T, establishing a revolving credit
      facility (the “Credit Facility”), for aggregate borrowings of up to $6,000,000,
      to be used for general working capital needs and certain permitted
      acquisitions.  This Credit Facility replaced the Company’s previous
      revolving line of credit facility with M&T, established in August
      2005.  The initial term of the Credit Facility expires in August
      2009.  All sums drawn by the Company under the Credit Facility are
      repayable, interest only, on a monthly basis, commencing on the first day of
      each month during the term of the Credit Facility, calculated at the variable
      rate of two hundred seventy five (275) basis points in excess of LIBOR, and
      all
      principal drawn by the Company is payable on August 1, 2009.





On
      August
      10, 2007, the Company borrowed $3,609,423 to fund the purchase price payable
      in
      connection with the acquisitions of TOG and COC, and borrowed $400,000 for
      general working capital requirements.  The Credit Facility includes various
      financial covenants including minimum net worth, maximum funded debt and debt
      service ratio requirements. As of September 30, 2007, the Company had
      outstanding borrowings of $4,359,423 under the Credit Facility, which amount
      was
      included in Long-term Debt on the accompanying Consolidated Condensed Balance
      Sheet, was in compliance with the various financial covenants, and had
      $1,640,577 available under the Credit Facility for future
      borrowings.








**NOTE
      7 – SEGMENT REPORTING**





The
      Company follows the provisions of FASB Statement 131, “Disclosures about
      Segments of a Business Enterprise and Related Information.”  During
      September 2006, the Company, through its wholly-owned subsidiary COM
      Acquisition, Inc. (“Combine”), acquired substantially all of the assets of
      Combine Optical Management Corp. (“COMC”), which created a new operating
      segment, the Optical Group Purchasing Business.  This segment along
      with the existing operating segment, Retail Optical Stores, constitutes the
      Company’s two reporting segments.





The
      Retail Optical Store segment consists of Company-owned and franchise retail
      optical stores that offer eye care products and services such as prescription
      and non-prescription eyeglasses, eyeglass frames, ophthalmic lenses, contact
      lenses, sunglasses and a broad range of ancillary
      items.  Additionally, the segment also consists of optometric services
      provided by VCC to patients (members) of certain of those franchise retail
      optical stores.





The
      Optical Group Purchasing Business segment represents product
      pricing extended to Combine and OG members associated with the sale of
      vendor’s eye care products to such members.





Certain
      business segment information for continuing operations is as
      follows:





**For
                the Three Months Ended September 30,**
            
            
            **For
                the Nine Months Ended September 30,****2007**
            
            
            **2006**
            
            
            **2007**
            
            
            **2006****Business
                Segment Net Revenues**:Retail
                Optical Stores
            
            $
            4,059
            
            
            $
            3,689
            
            
            $
            12,025
            
            
            $
            10,900Optical
                Group Purchasing Business
            
            
            11,603
            
            
            
            2,775
            
            
            
            20,525
            
            
            
            2,775Net
                revenues
            
            $
            15,662
            
            
            $
            6,464
            
            
            $
            32,550
            
            
            $
            13,675**Business
                Segment Net Income**Retail
                Optical Stores
            
            $
            663
            
            
            $
            70
            
            
            $
            1,276
            
            
            $
            1,804Optical
                Group Purchasing Business
            
            
            244
            
            
            
            52
            
            
            
            430
            
            
            
            52Net
                income
            
            $
            907
            
            
            $
            122
            
            
            $
            1,706
            
            
            $
            1,856**Business
                Segment Net Income per Share – Basic and Diluted**Retail
                Optical Stores
            
            $
            0.01
            
            
            $
            0.00
            
            
            $
            0.02
            
            
            $
            0.02Optical
                Group Purchasing Business
            
            
            0.00
            
            
            
            -
            
            
            
            0.00
            
            
            
            -Net
                income per share – Basic
            
            $
            0.01
            
            
            $
            0.00
            
            
            $
            0.02
            
            
            $
            0.02**Weighted-Average
                Number of Shares of common stock Outstanding:**Basic
            
            
            72,169
            
            
            
            70,324
            
            
            
            70,946
            
            
            
            70,324Diluted
            
            
            106,546
            
            
            
            113,529
            
            
            
            102,260
            
            
            
            109,478








The
      Optical Group Purchasing Business segment includes Combine's business activity
      from August 1, 2006, the effective date of the acquisition of COMC, and includes
      OG's business activity from August 1, 2007 through September 30,
      2007.





Net
      income includes a provision for income taxes of $45,000 and $64,000 for the
      three months ended September 30, 2007 and 2006, respectively, and includes
      an
      income tax benefit of $338,000 and $978,000 for the nine months ended September
      30, 2007 and 2006, respectively.





Additional
      business segment information is summarized as follows for the nine months ended
      September 30, 2007 (in thousands):





**Retail
                Optical Stores**
            
            
            **Optical
                Group Purchasing Business**
            
            
            **Total**Total
                Assets
            
            $
            10,409
            
            
            $
            13,133
            
            
            $
            23,542Depreciation
                and Amortization
            
            
            229
            
            
            
            116
            
            
            
            345Capital
                Expenditures
            
            
            750
            
            
            
            113
            
            
            
            863Interest
                Expense
            
            
            40
            
            
            
            137
            
            
            
            177





The
      following table shows certain unaudited pro forma results of the Company,
      assuming the Company had acquired COMC and TOG at the beginning of the three
      and
      nine months ended September 30, 2007 and 2006 (excluding discontinued
      operations):








**For
                the Three Months Ended September 30,**
            
            
            **For
                the Nine Months Ended September 30,****2007**
            
            
            **2006**
            
            
            **2007**
            
            
            **2006****Business
                Segment Net Revenues**:Retail
                Optical Stores
            
            $
            4,059
            
            
            $
            3,689
            
            
            $
            12,025
            
            
            $
            10,900Optical
                Group Purchasing Business
            
            
            15,444
            
            
            
            13,383
            
            
            
            44,066
            
            
            
            37,730Net
                revenues
            
            $
            19,503
            
            
            $
            17,072
            
            
            $
            56,091
            
            
            $
            48,630**Business
                Segment Net Income**Retail
                Optical Stores
            
            $
            663
            
            
            $
            70
            
            
            $
            1,276
            
            
            $
            1,804Optical
                Group Purchasing Business
            
            
            382
            
            
            
            264
            
            
            
            1,120
            
            
            
            930Net
                income
            
            $
            1,045
            
            
            $
            334
            
            
            $
            2,396
            
            
            $
            2,734**Business
                Segment Net Income per Share – Basic**Retail
                Optical Stores
            
            $
            0.01
            
            
            $
            0.00
            
            
            $
            0.02
            
            
            $
            0.03Optical
                Group Purchasing Business
            
            
            0.00
            
            
            
            0.00
            
            
            
            0.01
            
            
            
            0.01Net
                income per share
            
            $
            0.01
            
            
            $
            0.00
            
            
            $
            0.03
            
            
            $
            0.04**Business
                Segment Net Income per Share – Diluted**Retail
                Optical Stores
            
            $
            0.01
            
            
            $
            0.00
            
            
            $
            0.01
            
            
            $
            0.02Optical
                Group Purchasing Business
            
            
            0.00
            
            
            
            0.00
            
            
            
            0.01
            
            
            
            0.01Net
                income per share
            
            $
            0.01
            
            
            $
            0.00
            
            
            $
            0.02
            
            
            $
            0.03**Weighted-Average
                Number of Shares of common stock Outstanding:**Basic
            
            
            72,169
            
            
            
            70,324
            
            
            
            70,946
            
            
            
            70,324Diluted
            
            
            106,546
            
            
            
            113,529
            
            
            
            102,260
            
            
            
            109,478








**NOTE
      8 - COMMITMENTS AND CONTINGENCIES:**





**Litigation**





In
      1999,
      Berenter Greenhouse and Webster, an advertising agency previously utilized
      by
      the Company, commenced an action, against the Company, in the New York State
      Supreme Court, New York County, for amounts alleged to be due for advertising
      and related fees.  The amounts claimed by the plaintiff are in excess
      of $200,000.  In response to this action, the Company filed
      counterclaims of approximately $500,000, based upon estimated overpayments
      allegedly made by the Company pursuant to the agreement previously entered
      into
      between the parties.  As of the date hereof, these proceedings were
      still in the discovery stage.  The Company has not recorded an accrual
      for a loss in this action, as the Company does not believe it is probable that
      the Company will be held liable in respect of plaintiff’s claims.





In
      July
      2001, the Company commenced an arbitration proceeding, in the Ontario Superior
      Court of Justice, against Eye-Site, Inc. and Eye Site (Ontario), Ltd., as the
      makers of two promissory notes (in the aggregate original principal amount
      of
      $600,000) made by one or more of the makers in favor of the Company, as well
      as
      against Mohammed Ali, as the guarantor of the obligations of each maker under
      each note.  The notes were issued, by the makers, in connection with
      the makers’ acquisition of a Master Franchise Agreement for the Province of
      Ontario, Canada, as well as their purchase of the assets of, and a Sterling
      Optical Center Franchise for, four of the Company’s retail optical stores then
      located in Ontario, Canada.  In response, the defendants
      counterclaimed for damages, in the amount of $1,500,000, based upon, among
      other
      items, alleged misrepresentations made by representatives of the Company in
      connection with these transactions.  The Company believes that it has
      a meritorious defense to each counterclaim.  As of the date hereof,
      these proceedings were in the discovery stage.  The Company has not
      recorded an accrual for a loss and does not believe it is probable that the
      Company shall be held liable in respect of defendant’s
      counterclaims.





In
      February 2002, Kaye Scholer, LLP, the law firm previously retained by the
      Company as its outside counsel, commenced an action in the New York State
      Supreme Court seeking unpaid legal fees of approximately
      $122,000.  The Company answered the complaint in such action, and has
      heard nothing since.  The Company believes that it has a meritorious
      defense to such action.  The Company has not recorded an accrual for a
      loss in this action, as the Company does not believe it is probable that the
      Company will be held liable in respect of plaintiff’s claims.





On
      May
      20, 2003, Irondequoit Mall, LLC commenced an action against the Company and
      Sterling Vision of Irondequoit, Inc. (“SVI”) alleging, among other things, that
      the Company had breached its obligations under its guaranty of the lease for
      the
      former Sterling Optical store located in Rochester, New York.  The
      Company and SVI believe that they have a meritorious defense to such
      action.  As of the date hereof, these proceedings were in the
      discovery stage.  Although the Company has recorded an accrual for
      probable losses in the event that the Company shall be held liable in respect
      of
      plaintiff’s claims, the Company does not believe that any such loss is
      reasonably possible, or, if there is a loss, the Company does not believe that
      it is reasonably possible that such loss would exceed the amount
      recorded.





In
      May
      2006, the Company commenced an action against I and A Optical, Inc., Mark Shuff
      and Felicia Shuff, in the Supreme Court of the State of New York, County of
      Nassau, seeking, among other things, monetary damages as a result of the
      defendants' alleged breach of the terms of the Sterling Optical Center Franchise
      Agreement (and related documents) with the Company to which they are
      parties.  The defendants then asserted counterclaims against the
      Company, seeking, among other things, money damages arising under the Franchise
      Agreement with the Company as a result of the Company's alleged violation of
      such Franchise Agreement.  The Company believes that it has a
      meritorious defense to such action.  As of the date hereof, these
      proceedings were in the discovery stage.  The Company has not recorded
      an accrual for a loss and does not believe it is probable that the Company
      shall
      be held liable in respect of defendant’s counterclaims.





In
      January 2007, PR Prince Georges Plaza, LLC commenced an action against the
      Company, in the Circuit Court of the State of Maryland, Prince George’s County,
      alleging, among other things, that the Company had breached its obligations
      under its guaranty of the lease for the former Sterling Optical store located
      at
      The Mall at Prince Georges, 3500 East West Highway, Hyattsville, Prince George’s
      County, Maryland.  In November 2007, this action was settled, the
      terms of which included, among other things, the Company’s payment to the
      plaintiff of approximately $22,000.





In
      January 2007, Laurelrising as Owner, LLC commenced an action against the
      Company, in the Circuit Court of the State of Maryland, Prince Georges County,
      alleging, among other things, that the Company had breached its obligations
      under its lease for the former Sterling Optical store located at Laurel Centre
      Mall, Laurel, Maryland.  The Company believes that it has a
      meritorious defense to this action.  As of the date hereof, these
      proceedings were in the discovery stage.  Although the Company has
      recorded an accrual for probable losses in the event that the Company shall
      be
      held liable in respect of plaintiff’s claims, the Company does not believe that
      any such loss is reasonably possible, or, if there is a loss, the Company does
      not believe that it is reasonably possible that such loss would exceed the
      amount recorded.





In
      July
      2007, Horizons Investors Corp. (“Horizons”) commenced an action against the
      Company, in the Supreme Court of the State of New York, Nassau County, alleging,
      among other things, a default in the performance of the Company’s obligations
      under a promissory note issues to Horizons by the Company as a result of the
      Company’s alleged failure to pay the correct interest rate on the then
      outstanding principal amount of such note.  On October 31, the Court
      granted the Company’s request for summary judgment, dismissing Horizons’ claims
      in their entirety.





Although
      the Company, where indicated herein, believes that it has a meritorious defense
      to the claims asserted against it (and its affiliates), given the uncertain
      outcomes generally associated with litigation, there can be no assurance that
      the Company’s (and its affiliates’) defense of such claims will be
      successful.





In
      addition to the foregoing, in the ordinary course of business, the Company
      is a
      defendant in certain lawsuits alleging various claims incurred, certain of
      which
      claims are covered by various insurance policies, subject to certain deductible
      amounts and maximum policy limits.  In the opinion of management, the
      resolution of these claims should not have a material adverse effect,
      individually or in the aggregate, upon the Company’s business or financial
      condition.  Other than as set forth above, management believes that
      there are no other legal proceedings, pending or threatened, to which the
      Company is, or may be, a party, or to which any of its properties are or may
      be
      subject to, which, in the opinion of management, will have a material adverse
      effect on the Company.





**Guarantees**





As
      of
      September 30, 2007, the Company was a guarantor of certain leases of retail
      optical stores franchised and subleased to its franchisees.  In the
      event that all of such franchisees defaulted on their respective subleases,
      the
      Company would be obligated for aggregate lease obligations of approximately
      $3,190,000.  The Company continually evaluates the credit-worthiness
      of its franchisees in order to determine their ability to continue to perform
      under their respective subleases.  Additionally, in the event that a
      franchisee defaults under its sublease, the Company has the right to take over
      operation of the respective location.





**Letter
      of Credit**





Combine
      holds a letter of credit with a financial institution in favor of one of its
      key
      vendors to ensure payment of any outstanding invoices not paid by
      Combine.  The letter of credit has a one-year term that expires in
      December 2007.  As of September 30, 2007, the letter of credit totaled
      $250,000, and was secured by a certificate of deposit (totaling $250,000) at
      the
      same financial institution, which is included in Restricted Cash on the
      accompanying Consolidated Condensed Balance Sheets.





**Employment
      Agreements**





The
      Company has an Employment Agreement (“Agreement No. 1”) with its Chief Executive
      Officer, which extends through November 2009.  Agreement No. 1
      provides for an annual salary of $275,000, certain other benefits, and the
      potential for an annual bonus to be determined by the Company’s Board of
      Directors based on the Company’s previous calendar’s year
      performance.





Additionally,
      in connection with the acquisition of COMC, the Company entered into a five-year
      Employment Agreement (“Agreement No. 2”) with the existing President of
      COMC.  Agreement No. 2 provides for an annual salary of $210,000,
      certain other benefits, and an annual bonus based upon certain financial targets
      for Combine.   During the nine months ended September 30, 2007, a
      bonus of approximately $54,000 was accrued for and reflected in accounts payable
      and accrued expenses on the accompanying Consolidated Condensed Balance Sheet
      as
      of September 30, 2007.








**NOTE
      9 – INCOME TAXES:**





The
      provision for (benefit from) income taxes from continuing operations consists
      of
      the following (in thousands):





**For
                the Three Months Ended September 30,**
            
            
            **For
                the Nine Months Ended September 30,****2007**
            
            
            **2006**
            
            
            **2007**
            
            
            **2006**Current
            
            $
            (16
            )
            
            $
            (6
            )
            
            $
            67
            
            
            $
            30Deferred
            
            
            61
            
            
            
            70
            
            
            
            (405
            )
            
            
            (1,008
            )Total
                provision for (benefit from) income taxes
            
            $
            45
            
            
            $
            64
            
            
            $
            (338
            )
            
            $
            (978
            )





The
      deferred tax benefit on the accompanying Consolidated Condensed Statements
      of
      Income for the three and nine months ended September 30, 2007 is a result of
      the
      reduction in the valuation allowance of $215,000 and $934,000 less deferred
      tax
      expense of $251,000 and $529,000, respectively.  For the three and
      nine months ended September 30, 2006, the deferred tax benefit is a result
      of
      the reduction in the valuation allowance of $0 and $1,600,000 less deferred
      tax
      expense of $70,000 and $592,000, respectively.  Management, based on
      current operations and future projections, estimates that deferred tax benefits,
      arising principally from net operating loss carry forwards, will be realized
      through September 30, 2009.  The Company has a remaining valuation
      allowance of approximately $12,800,000 as of September 30, 2007.  As
      of September 30, 2007, the Company had federal net operating loss carry forwards
      of approximately $44,000,000.








**NOTE
      10 – SUBSEQUENT EVENTS:**





On
      October 2, 2007, in connection with certain rescission transactions consummated
      by the Company on December 31, 2003, certain of the Company's shareholders
      exercised all of their 28,142,252 warrants, with the total exercise price of
      $1,344,835 being paid to the Company in cash.  In addition, on October
      31, 2007, the Company repaid promissory notes due to such shareholders together
      with principal and interest totaling $319,000.





On
      November 5, 2007, the Company settled an adversary proceeding (the “Adversary
      Proceeding”) against BAL Global Finance, LLC, formerly known as Sanwa Business
      Credit Corporation that had been pending in the United States Bankruptcy Court
      for the Southern District of New York since 1995.  The material terms
      of the settlement of the Adversary Proceeding include a cash payment to the
      Company, in the amount of $1,270,000 (less certain costs and expenses incurred
      in the litigation, including attorney fees of $258,000), and the mutual release
      of all claims between the parties.  Such payment was received by the
      Company in November 2007.








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





This
      Report contains certain forward-looking statements and information relating
      to
      the Company that is based on the beliefs of the Company’s management, as well as
      assumptions made by, and information currently available to, the Company’s
      management.  When used in this Report, the words “anticipate”,
“believe”, “estimate”, “expect”, “there can be no assurance”, “may”, “could”,
“would”, “might”, “intends” and similar expressions and their negatives, as they
      relate to the Company or the Company’s management, are intended to identify
      forward-looking statements.  Such statements reflect the view of the
      Company at the date they are made with respect to future events, are not
      guarantees of future performance and are subject to various risks and
      uncertainties as identified in the Company’s Annual Report on Form 10-K for the
      year ended December 31, 2006 and those described from time to time in previous
      and future reports filed with the Securities and Exchange
      Commission.  Should one or more of these risks or uncertainties
      materialize, or should underlying assumptions prove incorrect, actual results
      may vary materially from those described herein with the forward-looking
      statements referred to above and as set forth in the Form 10-Q.  The
      Company does not intend to update these forward-looking statements for new
      information, or otherwise, for the occurrence of future events.





**Results
      of Operations**





**For
      the Three and Nine Months Ended September 30, 2007, as Compared to the
      Comparable Period in 2006**





Total
      revenues for the Company increased approximately $9,198,000, or 142.3%, to
      $15,662,000 for the three months ended September 30, 2007, as compared to
      $6,464,000 for the three months ended September 30, 2006, and increased
      approximately $18,875,000, or 138.0%, to $32,550,000 for the nine months ended
      September 30, 2007, as compared to $13,675,000 for the nine months ended
      September 30, 2006.  These increases were mainly a result of the
      acquisition, on September 29, 2006, having an effective date of August 1, 2006,
      of substantially all of the assets of Combine Optical Management Corporation
      (“COMC”) through the Company’s wholly-owned subsidiary, COM Acquisition, Inc.
      (“Combine”), and of the acquisition, on August 10, 2007, having an effective
      date of August 1, 2007, of all of the equity ownership interests in 1725758
      Ontario Inc., d/b/a The Optical Group (“TOG”) through the Company’s wholly-owned
      subsidiary, OG Acquisition, Inc. (“OG”).  Additionally, the number of
      Company-owned stores in operation increased from 8 as of September 30, 2006
      to
      13 as of September 30, 2007.





Total
      costs, and selling, general and administrative expenses for the Company
      increased approximately $9,527,000, or 150.6%, to $15,854,000 for the three
      months ended September 30, 2007, as compared to $6,327,000 for the three months
      ended September 30, 2006, and increased approximately $19,199,000, or 146.6%,
      to
      $32,292,000 for the nine months ended September 30, 2007, as compared to
      $13,093,000 for the nine months ended September 30, 2006.  These
      increases were mainly a result of the acquisitions of COMC and TOG, and also
      due
      to the increased number of Company-owned stores in operation as of September
      30,
      2007.





**Retail
      Optical Store Segment**





Net
      sales
      for Company-owned stores increased approximately $436,000, or 43.6%, to
      $1,435,000 for the three months ended September 30, 2007, as compared to
      $999,000 for the three months ended September 30, 2006, and increased
      approximately $1,122,000, or 38.5%, to $4,040,000 for the nine months ended
      September 30, 2007, as compared to $2,918,000 for the nine months ended
      September 30, 2006.  These increases were mainly attributable to more
      Company-owned store locations open during the comparable periods.  As
      of September 30, 2007, there were 13 Company-owned stores (1 of which was being
      managed for the Company by a franchisee), as compared to 8 Company-owned stores
      as of September 30, 2006.   On a same store basis (for stores
      that operated as a Company-owned store during the entirety of both of the three
      and nine months ended September 30, 2007 and 2006), comparative net sales
      increased approximately $55,000, or 7.0%, to $836,000 for the three months
      ended
      September 30, 2007, as compared to $781,000 for the three months ended September
      30, 2006, and increased approximately $111,000, or 4.6%, to $2,533,000 for
      the
      nine months ended September 30, 2007, as compared to $2,422,000 for the nine
      months ended September 30, 2006.  Management believes that these
      increases were a direct result of changes to key personnel during the first
      quarter of 2007 (including many of the Company-store managers), which helped
      improve store operations.  Additionally, the Company added new
      training procedures and continued to implement a new point-of-sale system,
      all
      of which lead to increased Company-store sales.





Revenues
      generated by the Company’s wholly-owned subsidiary, VisionCare of California,
      Inc. (“VCC”), a specialized health care maintenance organization licensed by the
      State of California Department of Managed Health Care, increased approximately
      $34,000, or 4.0%, to $889,000 for the three months ended September 30, 2007,
      as
      compared to $855,000 for the three months ended September 30, 2006, and
      increased approximately $84,000, or 3.3%, to $2,616,000 for the nine months
      ended September 30, 2007, as compared to $2,532,000 for the nine months ended
      September 30, 2006.  These increases were primarily due to an increase
      in membership fees generated by VCC during the first and second quarters of
      2007
      in addition to an increase in the membership fee charged, which went into effect
      July 2007.





Franchise
      royalties decreased approximately $165,000, or 9.2%, to $1,632,000 for the
      three
      months ended September 30, 2007, as compared to $1,797,000 for the three months
      ended September 30, 2006, and decreased approximately $141,000, or 2.7%, to
      $5,138,000 for the nine months ended September 30, 2007, as compared to
      $5,279,000 for the nine months ended September 30,
      2006.****These decreases included $428,000 of additional
      royalties generated from a larger number of audit discrepancies uncovered during
      the nine months ended September 30, 2006 as compared to $176,000 during the
      nine
      months ended September 30, 2007.  These results were factored over an
      equivalent sample size of franchise locations audited for each
      year.  This decrease was offset by a 4.3% increase in franchise sales
      for the stores that were in operation during both of the comparable
      periods.





Including
      revenues and the related of cost of revenues solely generated by the
      Company-owned stores, the Company’s gross profit margin decreased by 10.1%, to
      65.1%, for the three months ended September 30, 2007, as compared to 75.2%
      for
      the three months ended September 30, 2006, and 4.9%, to 68.5%, for the nine
      months ended September 30, 2007, as compared to 73.4% for the nine months ended
      September 30, 2006.  The Company has identified the major contributing
      factors that led to the decrease in the Company’s gross profit
      margin.  Management is addressing these issues through increased
      training at the Company-store level, amongst other things, and anticipates
      these
      changes will result in increases in the Company’s gross profit margin in the
      future.  Additionally, the Company’s gross margin may fluctuate
      depending upon the extent and timing of changes in the product mix in the
      Company-owned stores, competitive pricing, and promotional
      incentives.





Selling,
      general and administrative expenses increased approximately $715,000, or 21.1%,
      to $4,102,000 for the three months ended September 30, 2007, as compared to
      $3,387,000 for the three months ended September 30, 2006, and $1,506,000, or
      15.5%, to $11,203,000 for the nine months ended September 30, 2007, as compared
      to $9,697,000 for the nine months ended September 30, 2006.  These
      increases were partially a result of increases to advertising expenses of
      $54,000 and $168,000 due to the promotion of a new marketing campaign around
      the
      new product mix in our Company-owned stores, payroll and related expenses of
      $641,000 and $1,576,000 due, in part, to the addition of certain key employees
      hired to enhance Company store operations and expand the franchise chain during
      the third and fourth quarters of 2006, and additional charges, including rent
      and overhead expenses, related to an average of three more Company-owned stores
      in operation during the three and nine months ended September 30, 2007,
      respectively.  In addition to these items, the Company incurred
      certain costs associated with the development of two new business lines, costs
      associated with the implementation of Sarbanes-Oxley compliance including hiring
      additional personnel, overhead and redirecting resources of existing employees,
      and the cost to implement the recent acquisitions of the
      Company.  These expenses were offset, in part, by a decrease in equity
      compensation charges of $389,000 during the nine months ended September 30,
      2007
      and to a bad debt recovery of $100,000 in March 2007.





Gain
      on
      sale of company-owned stores to franchisees related to the sale of a
      Company-owned store in upstate New York in February 2006 for a purchase price
      of
      $225,000, which included the net fixed assets of such store (such assets having
      a net book value of $7,000).  There were no such sales of
      Company-owned stores during the three and nine months ended September 30,
      2007.





Gain
      on
      settlement of litigation relates to the settlement of an adversary proceeding
      between the Company and BAL Global Finance, LLC, formerly known as Sanwa
      Business Credit Corporation that had been pending in the United States
      Bankruptcy Court for the Southern District of New York since
      1995.  The material terms of the settlement generated other income of
      $1,270,000 less certain costs and expenses incurred in the litigation (including
      attorney fees) of $258,000.





**Optical
      Purchasing Group Business Segment**





On
      September 29, 2006, having an effective date of August 1, 2006, the Company,
      through its wholly-owned subsidiary Combine, acquired substantially all of
      the
      assets of COMC.  Combine activity, beginning August 1, 2006, has been
      included in the Company’s results of operations as of and for the three and nine
      months ended September 30, 2007 and 2006, respectively.





On
      August
      10, 2007, having an effective date of August 1, 2007, the Company, through
      its
      wholly-owned subsidiary OG, acquired all of the equity ownership interest in
      TOG.  OG activity, beginning August 1, 2007, has been included in the
      Company’s results of operations as of and for the three and nine months ended
      September 30, 2007.





Net
      revenues for the optical purchasing group segment were $11,603,000 and
      $20,525,000 for the three and nine months ended September 30, 2007,
      respectively, which represented 74.1% and 63.1%, respectively, of the total
      revenue of the Company.





Costs
      of
      sales for the optical purchasing group segment were $11,087,000 and $19,390,000
      for the three and nine months ended September 30, 2007, respectively, which
      represented 96.2% and 94.5%, respectively, of the total costs of sales of the
      Company.





Selling,
      general and administrative expenses for the optical purchasing group segment
      were $227,000 and $579,000 for the three and nine months ended September 30,
      2007, respectively, which represented 5.3% and 4.9%, respectively, of the total
      selling, general and administrative expenses of the Company.  These
      expenses included payroll and related benefits of $90,000 and $235,000,
      depreciation and amortization of $39,000 and $116,000, and bank and credit
      card
      fees of $40,000 and $84,000 for the three and nine months ended September 30,
      2007, respectively.





Interest
      expense for the optical purchasing group segment was $50,000 and $137,000 for
      the three and nine months ended September 30, 2007.  Interest expense
      related to the debt financing with COMC in connection with the acquisition
      of
      substantially all of the assets of COMC, and to the borrowings under the
      Company’s Credit Facility with Manufacturers and Traders Trust Corporation
      (“M&T”) to fund the acquisitions of TOG and COC.





There
      are
      no comparatives provided for the optical purchasing group segment as the
      acquisition of COMC was consummated during the 3rd quarter
      of 2006,
      and the acquisitions of TOG and COC was consummated during the 3rd quarter
      of
      2007.





**Liquidity
      and Capital Resources**





As
      of
      September 30, 2007, the Company generated $1,476,000 of working capital and
      had
      cash on hand of $1,486,000.  During the nine months ended September
      30, 2007, cash flows provided by its operating activities were
      $487,000.  This was principally due to net income of $1,706,000 and an
      increase in accounts payables and accrued liabilities of $1,285,000, offset,
      in
      part, by the settlement receivable of $1,062,000, an increase in franchise
      and
      other receivables of $959,000, and the increase in optical purchasing group
      receivables of $493,000.  The Company believes it will continue to
      improve its operating cash flows through franchisee audits, the addition of
      new
      franchise and company store locations, its current and future acquisitions,
      and
      new marketing strategies and increased gross margins, among other things, for
      its Company-owned stores.





For
      the
      nine months ended September 30, 2007, cash flows used in investing activities
      were $4,260,000 mainly due to the acquisition of TOG and COC, as well as capital
      expenditures (which included the remodeling of one of the Company-owned stores
      and the Corporate offices, and the purchase of a customized exhibiting booth
      for
      the Company’s trade shows) made by the Company.





For
      the
      nine months ended September 30, 2007, cash flows provided by financing
      activities were $3,970,000 mainly due to the Company borrowing $3,609,000 in
      August 2007 under the Company’s Credit Facility with M&T to fund the
      acquisitions of TOG and COC.  Additionally, the Company borrowed
      another $750,000 throughout the year for general working capital requirements,
      offset by the repayment of the Company’s related party borrowings, the
      promissory note payments made to COMC, and the payment of one of the promissory
      notes in connection with certain Rescission Transactions consummated by the
      Company on December 31, 2003.





**Credit
      Facility**





On
      August
      8, 2007, the Company entered into a Revolving Line of Credit Note and Credit
      Agreement (the “Credit Agreement”) with M&T, establishing a revolving credit
      facility (the “Credit Facility”), for aggregate borrowings of up to $6,000,000,
      to be used for general working capital needs and certain permitted
      acquisitions.  This Credit Facility replaced the Company’s previous
      revolving line of credit facility with M&T, established in August
      2005.  The initial term of the Credit Facility expires in August
      2009.  All sums drawn by the Company under the Credit Facility are
      repayable, interest only, on a monthly basis, commencing on the first day of
      each month during the term of the Credit Facility, calculated at the variable
      rate of two hundred seventy five (275) basis points in excess of LIBOR, and
      all
      principal drawn by the Company is payable on August 1, 2009.





On
      August
      10, 2007, the Company borrowed $3,609,423 to fund the purchase price payable
      in
      connection with the acquisitions of TOG and COC, and borrowed $400,000 for
      general working capital requirements.  The Credit Facility includes
      various financial covenants including minimum net worth, maximum funded debt
      and
      debt service ratio requirements.  As of September 30, 2007, the
      Company had outstanding borrowings of $4,359,423 under the Credit Facility,
      which amount was included in Long-term Debt on the accompanying Consolidated
      Condensed Balance Sheet, was in compliance with the various financial covenants,
      and had $1,640,577 available under the Credit Facility for future
      borrowings.





**Contractual
      Obligations**





Payments
      due under contractual obligations as of September 30, 2007 were as follows
      (in
      thousands):





**Total**
            
            
            **Less
                than 1 year**
            
            
            **1-3
                years**
            
            
            **3-5
                years**
            
            
            **More
                than 5 years**Long-term
                debt obligations (a) (b) (c)
            
            $
            6,337
            
            
            $
            879
            
            
            $
            5,118
            
            
            $
            340
            
            
            $
            -Interest
                on long-term debt obligations (a) (b) (c)
            
            
            916
            
            
            
            482
            
            
            
            430
            
            
            
            4
            
            
            
            -Operating
                leases
            
            
            12.618
            
            
            
            3,846
            
            
            
            3,466
            
            
            
            2,029
            
            
            
            3,277$
            19,871
            
            
            $
            5,207
            
            
            $
            9,014
            
            
            $
            2,373
            
            
            $
            3,277








(a)
            Effective
                April 14, 2003, in connection with certain Rescission Transactions
                consummated by the Company on December 31, 2003, the Company signed
                numerous promissory notes with certain of its shareholders, two of
                whom
                are also directors of the Company.  The notes, which aggregated
                $520,000, accrued interest at a rate of 6% per annum.  All sums
                (principal and interest) under the notes were due and payable in
                April
                2007.  On April 24, 2007, the Company repaid one of such notes
                together with principal and interest totaling
                $338,000.   Each of the other shareholders agreed to extend
                the terms of such notes for an additional 12 months at an interest
                rate of
                9%, due in April 2008.  Such notes were repaid in October
                2007.





(b)
            In
                connection with the acquisition of substantially all of the assets
                of
                COMC, the Company entered into two promissory notes with
                COMC.  The first note provides for four annual installments
                commencing October 1, 2007, totaling $1,273,000 (without
                interest).  On October 1, 2007, the Company paid the first
                installment of $498,000.  The second note provides for sixty
                monthly installments commencing October 1, 2006, totaling $500,000
                at 7%
                interest per annum.





(c)
            The
                Company had outstanding borrowings of $4,359,423 under the Credit
                Facility, which borrowings are payable (interest only) monthly and
                bear
                interest at a rate of LIBOR plus 2.75%.  The principal and any
                accrued interest are due and payable at the end August
                2009.





**Off-Balance
      Sheet Arrangements**





An
      off-balance sheet arrangement is any contractual arrangement involving an
      unconsolidated entity under which a company has (a) made guarantees,
      (b) a retained or a contingent interest in transferred assets, (c) any
      obligation under certain derivative instruments or (d) any obligation under
      a material variable interest in an unconsolidated entity that provides
      financing, liquidity, market risk, or credit risk support to the company, or
      engages in leasing, hedging, or research and development services within the
      company.





The
      Company does not have any off-balance sheet financing or unconsolidated variable
      interest entities, with the exception of certain guarantees on
      leases.  We refer the reader to the Notes to the Consolidated
      Condensed Financial Statements included in Item 1 of this Quarterly Report
      for
      information regarding the Company’s lease guarantees.





**Management’s
      Discussion of Critical Accounting Policies and Estimates**





High-quality
      financial statements require rigorous application of high-quality accounting
      policies.  Management believes that its policies related to revenue
      recognition, deferred tax assets, legal contingencies and allowances on
      franchise, notes and other receivables are critical to an understanding of
      the
      Company’s Consolidated Condensed Financial Statements because their application
      places the most significant demands on management’s judgment, with financial
      reporting results relying on estimation about the effect of matters that are
      inherently uncertain.





Management’s
      estimate of the allowances on receivables is based on historical sales,
      historical loss levels, and an analysis of the collectibility of individual
      accounts.  To the extent that actual bad debts differed from management's
      estimates by 10 percent, consolidated net income would be an estimated $5,000
      and $15,000 higher/lower for the three and nine months ended September 30,
      2007,
      respectively, depending upon whether the actual write-offs are greater or
      less than estimated.





Management’s
      estimate of the valuation allowance on deferred tax assets is based on whether
      it is more likely than not that the Company’s net operating loss carry-forwards
      will be utilized.  Factors that could impact estimated utilization of the
      Company's net operating loss carry-forwards are the success of its stores and
      franchisees, the Company's operating efficiencies and the effects of Section
      382
      of the Internal Revenue Code of 1986, as amended, based on certain changes
      in
      ownership that have occurred, or could occur in the future.  To the extent
      that management altered its valuation allowance on deferred tax assets by 10
      percent, consolidated net income would be an estimated $1,280,000 higher/lower
      for the three and nine months ended September 30, 2007,
      respectively.





The
      Company recognizes revenues in accordance with SEC Staff Accounting Bulletin
      (“SAB”) No. 104, “Revenue Recognition.”  Accordingly, revenues are
      recorded when persuasive evidence of an arrangement exists, delivery has
      occurred or services have been rendered, the Company’s price to the buyer is
      fixed or determinable, and collectibility is reasonably assured.  To
      the extent that collectibility of royalties is not reasonably assured, the
      Company recognizes such revenues when the cash is received.  To the
      extent that royalties that were recognized on a cash basis were recognized
      on an
      accrual basis, consolidated net income would be an estimated $21,000 and
      $132,000 higher/lower for the three and nine months ended September 30, 2007,
      respectively.








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





The
      Company presently has outstanding certain equity instruments with beneficial
      conversion terms.  Accordingly, the Company, in the future, could
      incur non-cash charges to equity (as a result of the exercise of such beneficial
      conversion terms), which would have a negative impact on future per share
      calculations.





The
      Company believes that the level of risk related to its cash equivalents is
      not
      material to the Company’s financial condition or results of
      operations.





The
      Company is exposed to interest rate risk under its Credit Facility with
      M&T.  As of September 30, 2007, the Company had outstanding
      borrowings of $4,359,423 under its Credit Facility.  Any increase in
      the LIBOR rate would lead to higher interest expense.





**Item
      4.  Controls and Procedures**





(a)Evaluation
                of Disclosure Controls and
                Procedures





Based
      on
      their evaluation of the Company’s disclosure controls and procedures as of the
      end of the period covered by this Quarterly Report on Form 10-Q, the Company’s
      Chief Executive Officer (“CEO”) and Chief Financial Officer (“CFO”) have
      concluded that the Company’s disclosure controls and procedures are effective to
      ensure that information required to be disclosed by the Company in reports
      that
      it files or submits under the Exchange Act is recorded, processed, summarized
      and reported within the time periods specified in Securities and Exchange
      Commission rules and forms, and include controls and procedures designed to
      ensure that information required to be disclosed by the Company in such reports
      is accumulated and communicated to the Company’s management, including the CEO
      and CFO, as appropriate to allow timely decisions regarding required
      disclosure.  The Company’s management is currently assessing the
      effectiveness of internal controls over financial reporting required by Section
      404 of the Sarbanes-Oxley Act.





(b)Changes
                in Internal Controls





There
      were no changes that occurred during the fiscal quarter covered by this
      Quarterly Report on Form 10-Q that have materially affected, or are reasonably
      likely to materially affect, the Company’s internal controls over financial
      reporting.








**PART
      II - OTHER INFORMATION**








**Item
      1.  Legal Proceedings**





In
      January 2007, PR Prince Georges Plaza, LLC commenced an action against the
      Company, in the Circuit Court of the State of Maryland, Prince George’s County,
      alleging, among other things, that the Company had breached its obligations
      under its guaranty of the lease for the former Sterling Optical store located
      at
      The Mall at Prince Georges, 3500 East West Highway, Hyattsville, Prince George’s
      County, Maryland.  In November 2007, this action was settled, the
      terms of which included, among other things, the Company’s payment to the
      plaintiff of approximately $22,000.





In
      July
      2007, Horizons Investors Corp. (“Horizons”) commenced an action against the
      Company, in the Supreme Court of the State of New York, Nassau County, alleging,
      among other things, a default in the performance of the Company’s obligations
      under a promissory note issues to Horizons by the Company as a result of the
      Company’s alleged failure to pay the correct interest rate on the then
      outstanding principal amount of such note.  On October 31, the Court
      granted the Company’s request for summary judgment, dismissing Horizons’ claims
      in their entirety.





**Item
      1a. Risk Factors**





There
      have been no material changes to the disclosure related to risk factors made
      in
      our Annual Report on Form 10-K for the year ended December 31,
      2006.





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





In
      connection with certain Rescission Transactions consummated by the Company
      on
      December 31, 2003, the Company granted 31,067,776 warrants to Horizon Investors
      Corp. (“Horizons”) to purchase shares of the Company’s Common
      Stock.  The warrants had an exercise price of $0.0478, were not
      exercisable until April 15, 2006 and were to expire on April 14,
      2008.  On September 24, 2007, Horizons performed a “cashless exercise”
of such warrants, thus exercising all of its 31,067,776 warrants, with the
      exercise price paid by surrendering to the Company 4,367,764 of the warrants,
      having an approximately aggregate value of $1,485,040, or $0.34 per share of
      Common Stock surrendered.  Horizons ended up receiving 26,700,012
      shares of Common Stock.  Horizons Common Stock was issued pursuant to
      the exemption from registration under the Securities Act of 1933, as amended
      (the “Act”), provided by Section 4 (2) of the Act.





**Item
      3. Defaults upon Senior Securities**





None.





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





None.





**Item
      5. Other Information**





None.





**Item
      6. Exhibits**





10.1
            TOG
                Business Purchase Agreement (incorporated by reference to Exhibit
                10.1 the
                Company’s Current Report on Form 8-K, dated July 5,
                2007)





10.2
            Revolving
                Line of Credit Note and Credit Agreement (incorporated by reference
                to
                Exhibit 10.1 of the Company’s Current Report on Form 8-K, dated August 14,
                2007)





10.3
            Absolute
                Assignment of Franchise Notes and Proceeds Due (incorporated by reference
                to Exhibit 10.2 of the Company’s Current Report on Form 8-K, dated August
                14, 2007)





10.4
            General
                Security Agreement – Emerging Vision, Inc. (incorporated by reference to
                Exhibit 10.3 of the Company’s Current Report on Form 8-K, dated August 14,
                2007)





10.5
            General
                Security Agreement – Combine Buying Group, Inc. (incorporated by reference
                to Exhibit 10.4 of the Company’s Current Report on Form 8-K, dated August
                14, 2007)





10.6
            General
                Security Agreement – OG Acquisition, Inc. (incorporated by reference to
                Exhibit 10.5 of the Company’s Current Report on Form 8-K, dated August 14,
                2007)





10.7
            General
                Security Agreement – 1725758 Ontario Inc. d/b/a The Optical Group
                (incorporated by reference to Exhibit 10.6 of the Company’s Current Report
                on Form 8-K, dated August 14, 2007)





10.8
            Continuing
                Guaranty – Combine Buying Group, Inc. (incorporated by reference to
                Exhibit 10.7 of the Company’s Current Report on Form 8-K, dated August 14,
                2007)





10.9
            Continuing
                Guaranty – OG Acquisition, Inc. (incorporated by reference to Exhibit 10.8
                of the Company’s Current Report on Form 8-K, dated August 14,
                2007)





10.10
            Continuing
                Guaranty – 1725758 Ontario Inc. d/b/a The Optical Group (incorporated by
                reference to Exhibit 10.9 of the Company’s Current Report on Form 8-K,
                dated August 14, 2007)





10.11
            Pledge
                Agreement and Assignment (incorporated by reference to Exhibit 10.10
                of
                the Company’s Current Report on Form 8-K, dated August 14,
                2007)





10.12
            United
                States Collateral Assignment and Security Agreement by Emerging Vision,
                Inc. (incorporated by reference to Exhibit 10.11 of the Company’s Current
                Report on Form 8-K, dated August 14,
                2007)





31.1
            Certification
                of Chief Executive Officer pursuant to Rules 13a-14 and 15d-14(a)
                of the
                Securities Exchange Act





31.2
            Certification
                of Chief Financial Officer pursuant to Rules 13a-14 and 15d-14(a)
                of the
                Securities Exchange Act





32.1
            Certification
                of Chief Executive Officer and Chief Financial Officer pursuant to
                18
                U.S.C. Section 1350, as adopted pursuant to Section 906 of the
                Sarbanes-Oxley Act of 2002








**SIGNATURES**








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








EMERGING
      VISION, INC.


(Registrant)











BY:


/s/  Christopher
      G.
      Payan


Christopher
      G. Payan


Chief
      Executive Officer


(Principal
      Executive Officer)








BY:


/s/  Brian
      P.
      Alessi


Brian
      P. Alessi


Chief
      Financial Officer


(Principal
      Financial and Accounting
      Officer)














Dated:
      November 14, 2007