**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 June 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
      August 14, 2007, there were 70,323,698 outstanding shares of the Issuer’s Common
      Stock, par value $0.01 per share.







**EMERGING
      VISION, INC.**




FORM
      10-Q




FOR
      THE QUARTERLY PERIOD ENDED JUNE 30,
      2007




TABLE
      OF CONTENTS




PART
      I - FINANCIAL
      INFORMATION




Item
      1. Financial
      Statements (unaudited)




Consolidated
      Condensed Balance Sheets as of June 30, 2007 and
      December 31, 2006




Consolidated
      Condensed Statements of Operations for the three months
      and six months ended June 30, 2007 and 2006




Consolidated
      Condensed Statements of Cash Flows for the six months
      ended June 30, 2007 and 2006




Notes
      to Consolidated Condensed Financial
      Statements




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




Item
      3. Quantitative
      and
      Qualitative Disclosures about Market Risk




Item
      4. Controls
      and
      Procedures




PART
      II - OTHER
      INFORMATION




Item
      1. Legal
      Proceedings




Item
      1a.Risk
      Factors




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




Item
      3. Defaults
      Upon
      Senior Securities




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




Item
      5. Other
      Information




Item
      6. Exhibits




**Signature**















**PART
        I - FINANCIAL INFORMATION**
 
 **Item
        1.  Financial Statements**
 
 **EMERGING
                  VISION, INC. AND SUBSIDIARIES**
                **CONSOLIDATED
                  CONDENSED BALANCE SHEETS**
                **(In
                  Thousands, Except Share Data)**ASSETS
              
              **June
                  30,**
              
              
              **December
                  31,****2007**
              
              
              **2006****(unaudited)**
              
              
              **(audited)**Current
                  assets:Cash
                  and cash equivalents
              
              $
              856
              
              
              $
              1,289Restricted
                  cash
              
              
              250
              
              
              
              250Franchise
                  receivables, net of allowance of $145 and $110,
                  respectively
              
              
              2,195
              
              
              
              1,620Optical
                  purchasing group receivables, net of allowance of $40
              
              
              2,850
              
              
              
              1,914Other
                  receivables, net of allowance of $2
              
              
              544
              
              
              
              312Current
                  portion of franchise notes receivable, net of allowance of $48
                  and $44,
                  respectively
              
              
              265
              
              
              
              79Inventories,
                  net
              
              
              464
              
              
              
              431Prepaid
                  expenses and other current assets
              
              
              566
              
              
              
              398Deferred
                  tax assets, current portion
              
              
              843
              
              
              
              600Total
                  current assets
              
              
              8,833
              
              
              
              6,893Property
                  and equipment, net
              
              
              1,212
              
              
              
              923Franchise
                  notes receivable, net of allowance of $2 and $5,
                  respectively
              
              
              106
              
              
              
              214Deferred
                  tax asset, net of current portion
              
              
              979
              
              
              
              800Goodwill,
                  net
              
              
              2,544
              
              
              
              2,745Intangible
                  assets, net
              
              
              757
              
              
              
              808Other
                  assets
              
              
              284
              
              
              
              214Total
                  assets
              
              $
              14,715
              
              
              $
              12,597
 
 LIABILITIES
                  AND SHAREHOLDERS’ EQUITYCurrent
                  liabilities:Accounts
                  payable and accrued liabilities
              
              $
              5,194
              
              
              $
              4,632Optical
                  purchasing group payables
              
              
              2,531
              
              
              
              1,760Short-term
                  debt
              
              
              482
              
              
              
              396Related
                  party obligations
              
              
              758
              
              
              
              778Total
                  current liabilities
              
              
              8,965
              
              
              
              7,566Long-term
                  debt
              
              
              1,128
              
              
              
              1,185Related
                  party borrowings, net of current portion
              
              
              -
              
              
              
              8Franchise
                  deposits and other liabilities
              
              
              399
              
              
              
              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;
                  70,506,035 share issued and 70,323,698 shares outstanding
              
              
              705
              
              
              
              705Treasury
                  stock, at cost, 182,337 shares
              
              
              (204
              )
              
              
              (204
              )Additional
                  paid-in capital
              
              
              127,135
              
              
              
              127,062Accumulated
                  deficit
              
              
              (123,487
              )
              
              
              (124,286
              )Total
                  shareholders' equity
              
              
              4,223
              
              
              
              3,351Total
                  liabilities and shareholders' equity
              
              $
              14,715
              
              
              $
              12,597
 
 The
        accompanying notes are an integral part of these consolidated condensed
        financial statements.












**EMERGING
                VISION, INC. AND SUBSIDIARIES**
              **CONSOLIDATED
                CONDENSED STATEMENTS OF OPERATIONS
                (UNAUDITED)**
              **(In
                Thousands, Except Per Share Data)****For
                the Three Months Ended June 30,**
            
            
            **For
                the Six Months Ended June 30,****2007**
            
            
            **2006**
            
            
            **2007**
            
            
            **2006****Revenues**:Net
                sales
            
            $
            2,126
            
            
            $
            1,698
            
            
            $
            4,332
            
            
            $
            3,596Optical
                purchasing group sales
            
            
            4,597
            
            
            
            -
            
            
            
            8,922
            
            
            
            -Franchise
                royalties
            
            
            1,765
            
            
            
            1,729
            
            
            
            3,506
            
            
            
            3,482Other
                franchise related fees
            
            
            75
            
            
            
            48
            
            
            
            128
            
            
            
            133**Total
                revenue**
            
            
            8,563
            
            
            
            3,475
            
            
            
            16,888
            
            
            
            7,211**Costs
                and expenses:**Cost
                of sales
            
            
            4,664
            
            
            
            208
            
            
            
            8,985
            
            
            
            456Selling,
                general and administrative expenses
            
            
            3,818
            
            
            
            3,320
            
            
            
            7,453
            
            
            
            6,310**Total
                costs and expenses**
            
            
            8,482
            
            
            
            3,528
            
            
            
            16,438
            
            
            
            6,766**Operating
                income (loss)**
            
            
            81
            
            
            
            (53
            )
            
            
            450
            
            
            
            445**Other
                income (expense):**Interest
                on franchise notes receivable
            
            
            12
            
            
            
            11
            
            
            
            23
            
            
            
            22Gain
                on sale of company-owned store to franchisee
            
            
            5
            
            
            
            -
            
            
            
            5
            
            
            
            218Other
                income
            
            
            12
            
            
            
            16
            
            
            
            47
            
            
            
            27Interest
                expense
            
            
            (44
            )
            
            
            (10
            )
            
            
            (109
            )
            
            
            (20
            )**Total
                other income**
            
            
            (15
            )
            
            
            17
            
            
            
            (34
            )
            
            
            247**Income
                (loss) from continuing operations before (benefit from) provision
                for
                income taxes**
            
            
            66
            
            
            
            (36
            )
            
            
            416
            
            
            
            692(Benefit
                from) provision for income taxes
            
            
            (302
            )
            
            
            218
            
            
            
            (383
            )
            
            
            (1,042
            )**Income
                (loss) from continuing operations**
            
            
            368
            
            
            
            (254
            )
            
            
            799
            
            
            
            1,734**(Loss)
                from discontinued operations**
            
            
            -
            
            
            
            (202
            )
            
            
            -
            
            
            
            (243
            )Income
                tax benefit
            
            
            -
            
            
            
            (81
            )
            
            
            -
            
            
            
            (98
            )**(Loss)
                from discontinued operations**
            
            
            -
            
            
            
            (121
            )
            
            
            -
            
            
            
            (145
            )**Net
                income (loss)**
            
            $
            368
            
            
            $
            (375
            )
            
            $
            799
            
            
            $
            1,589








**Per
                share information – basic:**Income
                (loss) from continuing operations
            
            $
            0.01
            
            
            $
            (0.00
            )
            
            $
            0.01
            
            
            $
            0.02(Loss)
                from discontinued operations
            
            
            -
            
            
            
            (0.00
            )
            
            
            -
            
            
            
            (0.00
            )Net
                income (loss)
            
            $
            0.01
            
            
            $
            (0.00
            )
            
            $
            0.01
            
            
            $
            0.02**Per
                share information – diluted:**Income
                (loss) from continuing operations
            
            $
            0.00
            
            
            $
            (0.00
            )
            
            $
            0.01
            
            
            $
            0.02(Loss)
                from discontinued operations
            
            
            -
            
            
            
            (0.00
            )
            
            
            -
            
            
            
            (0.00
            )Net
                income (loss)
            
            $
            0.00
            
            
            $
            (0.00
            )
            
            $
            0.01
            
            
            $
            0.02**Weighted-average
                number of shares of common stock outstanding:**Basic
            
            
            70,324
            
            
            
            70,324
            
            
            
            70,324
            
            
            
            70,324Diluted
            
            
            127,006
            
            
            
            108,969
            
            
            
            123,635
            
            
            
            108,007








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 Six Months Ended June 30,****2007**
            
            
            **2006****Cash
                flows from operating activities:**Income
                from continuing operations
            
            $
            799
            
            
            $
            1,734Adjustments
                to reconcile income from continuing operations to net cash provided
                by
                operating activities:Depreciation
                and amortization
            
            
            220
            
            
            
            132Provision
                for doubtful accounts
            
            
            (1
            )
            
            
            55Deferred
                tax assets
            
            
            (422
            )
            
            
            (1,176
            )Non-cash
                compensation charges related to options and warrants
            
            
            73
            
            
            
            454Gain
                on the sale of company-owned store to franchisee
            
            
            (5
            )
            
            
            (218
            )Changes
                in operating assets and liabilities:Franchise
                and other receivables
            
            
            (827
            )
            
            
            137Optical
                purchasing group receivables
            
            
            (936
            )
            
            
            -Inventories
            
            
            (33
            )
            
            
            (17
            )Prepaid
                expenses and other current assets
            
            
            (168
            )
            
            
            (17
            )Intangible
                and other assets
            
            
            182
            
            
            
            33Accounts
                payable and accrued liabilities
            
            
            562
            
            
            
            (87
            )Optical
                purchasing group payables
            
            
            771
            
            
            
            -Franchise
                deposits and other liabilities
            
            
            (88
            )
            
            
            (121
            )Net
                cash provided by operating activities
            
            
            127
            
            
            
            909**Cash
                flows from investing activities:**Franchise
                notes receivable issued
            
            
            (131
            )
            
            
            (172
            )Proceeds
                from franchise and other notes receivable
            
            
            74
            
            
            
            97Proceeds
                from the sale of company-owned store to franchisee
            
            
            -
            
            
            
            200Purchases
                of property and equipment
            
            
            (504
            )
            
            
            (230
            )Net
                cash used in investing activities
            
            
            (561
            )
            
            
            (105
            )**Cash
                flows from financing activities:**Borrowings
                under credit facility
            
            
            350
            
            
            
            -Payments
                on long-term debt
            
            
            (349
            )
            
            
            (21
            )Net
                cash provided by (used in) financing activities
            
            
            1
            
            
            
            (21
            )**Net
                cash (used in) provided by continuing operations**
            
            
            (433
            )
            
            
            783**Net
                cash provided by discontinued operations**
            
            
            -
            
            
            
            66**Net
                (decrease) increase in cash and cash equivalents**
            
            
            (433
            )
            
            
            849**Cash
                and cash equivalents – beginning of period**
            
            
            1,289
            
            
            
            816**Cash
                and cash equivalents – end of period**
            
            $
            856
            
            
            $
            1,665**Supplemental
                disclosures of cash flow information:**Cash
                paid during the period for:Interest
            
            $
            25
            
            
            $
            5Taxes
            
            $
            29
            
            
            $
            25


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.  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 $69,000 and $413,000 is reflected in
      selling, general and administrative expenses on the accompanying Consolidated
      Condensed Statements of Operations for the three months ended June 30, 2007
      and
      2006, respectively, and $73,000 and $454,000 for the six months ended June
      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.





During
      the second quarter of 2007, the Company issued 600,000 warrants to two separate
      investor relation consultants, 300,000 at $0.21 and 300,000 at $0.30.  The
      warrants vest in twelve (12) equal monthly installments of 50,000.  As of
      June 30, 2007, 125,000 warrants had vested.  During the three and six
      months ended June 30, 2007, the Company incurred a non-cash charge to earnings
      of approximately $3,000, which is reflected in selling, general and
      administrative expenses on the accompanying Consolidated Condensed Statements
      of
      Operations representing the fair value of the warrants.




On
      May
      16, 2007, the Company’s Compensation Committee granted an aggregate of 125,000
      stock options to certain of the Company’s employees and 75,000 stock options to
      certain independent contractors, all at an exercise price of $0.21, which was
      the closing price on the date of grant.  The stock options vest
      according to the following schedule:  (1) 66,666 vested immediately;
      (2) 66,667 vest on May 21, 2008; and (3) 66,667 vest on May 21,
      2009.  During the three and six months ended June 30, 2007, the
      Company incurred a non-cash charge to earnings of approximately $3,000, which
      is
      reflected in selling, general and administrative expenses on the accompanying
      Consolidated Condensed Statements of Operations representing the fair value
      of
      the options.  All of these options expire 10 years from the date of
      grant.





On
      June
      11, 2007, the Company’s Compensation Committee granted an aggregate of 375,000
      stock options to certain of the Company’s independent, non-employee directors,
      all at an exercise price of $0.47, which was the closing price on the date
      of
      grant.  The stock options vested immediately.  During the
      three and six months ended June 30, 2007, the Company incurred a non-cash charge
      to earnings of approximately $46,000, reflected in selling, general and
      administrative expenses on the accompanying Consolidated Condensed Statements
      of
      Operations representing the fair value of the options.  All of these
      options expire 10 years from the date of grant.





**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 Combine Buying Group, Inc. (“Combine”) members associated with the sale
      of vendor’s eye care products to such Combine 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.





**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 June 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 six months ended June
      30, 2006, the Company incurred losses, net of taxes, related to the discontinued
      operations of approximately $121,000 and $145,000,
      respectively.  There were no such losses incurred during the three and
      six months ended June 30, 2007.  As of June 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 – PER SHARE INFORMATION:**





In
      accordance with SFAS No. 128, “Earnings Per Share”, basic earnings per share 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 share 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 Operations.  Common stock equivalents totaling
      2,030,464 and 2,280,464 were excluded from the computation of Diluted EPS for
      the three and six months ended June 30, 2007, respectively, and 17,496,019
      for
      the three and six months ended June 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 June 30,**
            
            
            **For
                the Six Months Ended June 30,****2007**
            
            
            **2006**
            
            
            **2007**
            
            
            **2006****Numerator**:Income
                (loss) from continuing operations
            
            $
            368
            
            
            $
            (254
            )
            
            $
            799
            
            
            $
            1,734(Loss)
                from discontinued operations
            
            
            -
            
            
            
            (121
            )
            
            
            -
            
            
            
            (145
            )Net
                income (loss)
            
            $
            368
            
            
            $
            (375
            )
            
            $
            799
            
            
            $
            1,589**Denominator**:Weighted-average
                of shares of common stock outstanding
            
            
            70,324
            
            
            
            70,324
            
            
            
            70,324
            
            
            
            70,324Dilutive
                effect of stock options, warrants and restricted stock
            
            
            56,682
            
            
            
            38,645
            
            
            
            53,311
            
            
            
            37,683Weighted-average
                shares of common stock outstanding, assuming dilution
            
            
            127,006
            
            
            
            108,969
            
            
            
            123,635
            
            
            
            108,007**Per
                share information – basic:**Income
                (loss) from continuing operations
            
            $
            0.01
            
            
            $
            (0.00
            )
            
            $
            0.01
            
            
            $
            0.02(Loss)
                from discontinued operations
            
            
            -
            
            
            
            (0.00
            )
            
            
            -
            
            
            
            (0.00
            )Net
                income (loss)
            
            $
            0.01
            
            
            $
            (0.00
            )
            
            $
            0.01
            
            
            $
            0.02**Per
                share information – diluted:**Income
                (loss) from continuing operations
            
            $
            0.00
            
            
            $
            (0.00
            )
            
            $
            0.01
            
            
            $
            0.02(Loss)
                from discontinued operations
            
            
            -
            
            
            
            (0.00
            )
            
            
            -
            
            
            
            (0.00
            )Net
                income (loss)
            
            $
            0.00
            
            
            $
            (0.00
            )
            
            $
            0.01
            
            
            $
            0.02








**NOTE
      4 – CREDIT FACILITY:**





On
      August
      8, 2007, the Company entered into a Revolving Line of Credit Note and Credit
      Agreement (the “Credit Agreement”) with Manufacturers and Traders Trust
      Corporation (“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 replaces 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 actually drawn by the Company
      payable on August 1, 2009.  The Credit Facility includes various
      financial covenants including minimum net worth, maximum funded debt and debt
      service ratio requirements.




As of June 30, 2007, the Company had borrowed $350,000
      under
      the Credit Facility and was in compliance with all of the financial
      covenants.




On
      August
      10, 2007, the Company borrowed an additional $400,000 for general working
      capital requirements and $3,609,423, which was drawn to fund the purchase price
      payable in connection with the acquisition, by OG Acquisition, Inc., the
      Company’s wholly-owned subsidiary, of (i) all of the equity ownership interests
      in 1725758 Ontario Inc., d/b/a The Optical Group (“OG”), and (ii) substantially
      all of the tangible and intangible assets of Corowl Optical Credit Services,
      Inc. (“COC”).  As of August 13, 2007, there remained $1,640,577
      available under the Credit Facility for future borrowings.








**NOTE
      5 – 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 acquired substantially all of the assets of Combine
      Optical Management Corp. (“COMC”), which created two operating segments: Retail
      Optical Stores and Optical Group Purchasing Business.





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 members associated with the sale of
      vendor’s eye care products to such Combine members.








Certain
      business segment information for continuing operations is as
      follows:





**For
                the Three Months Ended June 30,**
            
            
            **For
                the Six Months Ended June 30,****2007**
            
            
            **2006**
            
            
            **2007**
            
            
            **2006****Business
                Segment Net Revenues**:Retail
                Optical Stores
            
            $
            3,966
            
            
            $
            3,475
            
            
            $
            7,966
            
            
            $
            7,211Optical
                Group Purchasing Business
            
            
            4,597
            
            
            
            -
            
            
            
            8,922
            
            
            
            -Net
                revenues
            
            $
            8,563
            
            
            $
            3,475
            
            
            $
            16,888
            
            
            $
            7,211**Business
                Segment Net Income (Loss)**Retail
                Optical Stores
            
            $
            303
            
            
            $
            (375
            )
            
            $
            613
            
            
            $
            1,589Optical
                Group Purchasing Business
            
            
            65
            
            
            
            -
            
            
            
            186
            
            
            
            -Net
                income (loss)
            
            $
            368
            
            
            $
            (375
            )
            
            $
            799
            
            
            $
            1,589**Business
                Segment Net Income (Loss) per Share – Basic**Retail
                Optical Stores
            
            $
            0.01
            
            
            $
            (0.00
            )
            
            $
            0.01
            
            
            $
            0.02Optical
                Group Purchasing Business
            
            
            0.00
            
            
            
            -
            
            
            
            0.00
            
            
            
            -Net
                income (loss) per share – Basic
            
            $
            0.01
            
            
            $
            (0.00
            )
            
            $
            0.01
            
            
            $
            0.02**Business
                Segment Net Income (Loss) per Share – Diluted**Retail
                Optical Stores
            
            $
            0.00
            
            
            $
            (0.00
            )
            
            $
            0.01
            
            
            $
            0.02Optical
                Group Purchasing Business
            
            
            0.00
            
            
            
            -
            
            
            
            0.00
            
            
            
            -Net
                income (loss) per share – Diluted
            
            $
            0.00
            
            
            $
            (0.00
            )
            
            $
            0.01
            
            
            $
            0.02**Weighted-Average
                Number of Shares of Common stock
                Outstanding:**Basic
            
            
            70,324
            
            
            
            70,324
            
            
            
            70,324
            
            
            
            70,324Diluted
            
            
            127,006
            
            
            
            108,969
            
            
            
            123,635
            
            
            
            108,007








There
      was
      no activity for the Optical Group Purchasing Business segment during the three
      and six months ended June 30, 2006, as the business segment was established
      in
      connection with the acquisition of COMC in September 2006.





Net
      income included a (benefit from) provision for income taxes of ($302,000) and
      $218,000 for the three months ended June 30, 2007 and 2006, respectively, and
      included an income tax benefit of ($383,000) and ($1,042,000) for the six months
      ended June 30, 2007, respectively.





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





**Retail
                Optical Stores**
            
            
            **Optical
                Group Purchasing Business**
            
            
            **Total**Total
                Assets
            
            $
            9,068
            
            
            $
            5,647
            
            
            $
            14,715Depreciation
                and Amortization
            
            
            143
            
            
            
            77
            
            
            
            220Capital
                Expenditures
            
            
            433
            
            
            
            71
            
            
            
            504Interest
                Expense
            
            
            22
            
            
            
            87
            
            
            
            109





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








**For
                the Three Months Ended June 30,**
            
            
            **For
                the Six Months Ended June 30,****2007**
            
            
            **2006**
            
            
            **2007**
            
            
            **2006****Business
                Segment Net Revenues**:Retail
                Optical Stores
            
            $
            3,966
            
            
            $
            3,475
            
            
            $
            7,966
            
            
            $
            7,211Optical
                Group Purchasing Business
            
            
            4,597
            
            
            
            4,441
            
            
            
            8,922
            
            
            
            8,063Net
                revenues
            
            $
            8,563
            
            
            $
            7,916
            
            
            $
            16,888
            
            
            $
            15,274**Business
                Segment Net Income (Loss)**Retail
                Optical Stores
            
            $
            303
            
            
            $
            (375
            )
            
            $
            613
            
            
            $
            1,589Optical
                Group Purchasing Business
            
            
            65
            
            
            
            137
            
            
            
            186
            
            
            
            273Net
                income (loss)
            
            $
            368
            
            
            $
            (238
            )
            
            $
            799
            
            
            $
            1,862**Business
                Segment Net Income (Loss) per Share – Basic**Retail
                Optical Stores
            
            $
            0.01
            
            
            $
            (0.00
            )
            
            $
            0.01
            
            
            $
            0.02Optical
                Group Purchasing Business
            
            
            0.00
            
            
            
            0.00
            
            
            
            0.00
            
            
            
            0.00Net
                income (loss) per share – Basic
            
            $
            0.01
            
            
            $
            (0.00
            )
            
            $
            0.01
            
            
            $
            0.02**Business
                Segment Net Income (Loss) per Share – Diluted**Retail
                Optical Stores
            
            $
            0.00
            
            
            $
            (0.00
            )
            
            $
            0.01
            
            
            $
            0.02Optical
                Group Purchasing Business
            
            
            0.00
            
            
            
            0.00
            
            
            
            0.00
            
            
            
            0.00Net
                income (loss) per share – Diluted
            
            $
            0.00
            
            
            $
            (0.00
            )
            
            $
            0.01
            
            
            $
            0.02**Weighted-Average
                Number of Shares of Common stock Outstanding:**Basic
            
            
            70,324
            
            
            
            70,324
            
            
            
            70,324
            
            
            
            70,324Diluted
            
            
            127,006
            
            
            
            108,969
            
            
            
            123,635
            
            
            
            108,007








**NOTE
      6 – 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
      August
      2006, Amy Platt, a former employee of the Company, commenced an action against
      the Company, in the United States District Court, Eastern District of New York,
      alleging, among other things, that the Company violated Title VII of the Civil
      Rights Act of 1964, as amended, 42 U.S.C. 2000e, *et seq*, the Pregnancy
      Discrimination Act of 1978, and the New York Executive Law, Human Rights Law,
      Section 290 *et seq*.  In July 2007, this action was settled,
      and was discontinued, with prejudice.





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.  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
      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.  The defendant’s time to answer
      the complaint has not expired as of the date hereof.  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 issued 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.  The Company believes that
      it has a meritorious defense to this action.  As of the date hereof,
      the Company’s time to reply to Horizon’s action has not yet expired.  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 plaintiff's
      claims





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
      June 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
      $3,066,000.  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 June 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 was included in Prepaid Expenses and Other
      Current Assets 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 year ended December 31, 2006, a bonus of
      approximately $21,000 was achieved, which was paid in April
      2007.  During the six months ended June 30, 2007, a bonus of
      approximately $35,000 was accrued for and reflected in accounts payable and
      accrued expenses on the accompanying Consolidated Condensed Balance Sheet as
      of
      June 30, 2007.








**NOTE
      7 – INCOME TAXES:**





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





**For
                the Three Months Ended June 30,**
            
            
            **For
                the Six Months Ended June 30,****2007**
            
            
            **2006**
            
            
            **2007**
            
            
            **2006**Current
            
            $
            5
            
            
            $
            13
            
            
            $
            58
            
            
            $
            36Deferred
            
            
            (307
            )
            
            
            205
            
            
            
            (441
            )
            
            
            (1,078
            )Total
                income tax (benefit) provision
            
            $
            (302
            )
            
            $
            218
            
            
            $
            (383
            )
            
            $
            (1,042
            )





The
      deferred tax benefit on the accompanying Consolidated Condensed Statements
      of
      Operations for the three and six months ended June 30, 2007 is a result of
      the
      reduction in the valuation allowance of $425,000 and $712,000 less deferred
      tax
      expense of $118,000 and $278,000, respectively.  For the three and six
      months ended June 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 $205,000 and $522,000, 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 June 30, 2009.  The Company has a remaining valuation
      allowance of approximately $13,530,000 as of June 30, 2007.  As of
      June 30, 2007, the Company had federal net operating loss carry forwards of
      approximately $44,000,000.








**NOTE
      8 – SUBSEQUENT EVENTS:**




**Credit
      Facility**


On
      August
      8, 2007, the Company entered into a Credit Agreement with M&T, establishing
      a revolving 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 replaces 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 actually drawn by the Company payable on August 1,
      2009.  The Credit Facility includes various financial covenants
      including minimum net worth, maximum funded debt and debt service ratio
      requirements.


On
        August
        10, 2007, the Company withdrew funds from its Credit Facility with M&T,
        including $400,000 for general working capital requirements and $3,609,423
        to
        fund the purchase price payable in connection with the acquisition of TOG
        and
        COC.


**Acquisition
      of The Optical Group**


On
      August
      10, 2007, effective July 1, 2007, the Company, through its wholly-owned
      subsidiary OG, acquired all of the outstanding equity interests of TOG and
      substantially all of the assets of COC for an aggregate purchase price of cash
      consideration of $3,800,000 CAD (approximately $3,600,000 USD).  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 will be accounted for as a business purchase and will be recorded
      at
      the estimated fair value (based on an independent expert’s valuation) of the
      assets acquired, as follows:





Working
                capital
            
            $
            1,000Property
                and equipment
            
            
            41,000Intangible
                assets
            
            
            1,979,000Excess
                cost over net tangible assets acquired
            
            
            1,579,000Net
                assets acquired
            
            $
            3,600,000





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.











**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 Six Months Ended June 30, 2007, as Compared to the Comparable
      Period in 2006**





Total
      revenues for the Company increased approximately $5,088,000, or 146.4%, to
      $8,563,000 for the three months ended June 30, 2007, as compared to $3,475,000
      for the three months ended June 30, 2006, and increased approximately
      $9,677,000, or 134.2%, to $16,888,000 for the six months ended June 30, 2007,
      as
      compared to $7,211,000 for the six months ended June 30, 2006.  These
      increases were mainly a result of the acquisition ($4,597,000 and $8,922,000
      for
      the three and six months ended June 30, 2007, respectively), 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 also due to the
      increased number of Company-owned stores in operation as of June 30,
      2007.





Total
      costs, and selling, general and administrative expenses for the Company
      increased approximately $4,954,000, or 140.4%, to $8,482,000 for the three
      months ended June 30, 2007, as compared to $3,528,000 for the three months
      ended
      June 30, 2006, and increased approximately $9,672,000, or 143.0%, to $16,438,000
      for the six months ended June 30, 2007, as compared to $6,766,000 for the six
      months ended June 30, 2006.  These increases were mainly a result of
      the acquisition of substantially all of the assets of COMC ($4,473,000 and
      $8,655,000 for the three and six months ended June 30, 2007, respectively)
      and
      also due to the increased number of Company-owned stores in operation as of
      June
      30, 2007.





**Retail
      Optical Store Segment**





Net
      sales
      for Company-owned stores increased approximately $428,000, or 25.2%, to
      $2,126,000 for the three months ended June 30, 2007, as compared to $1,698,000
      for the three months ended June 30, 2006, and increased approximately $736,000,
      or 20.5%, to $4,332,000 for the six months ended June 30, 2007, as compared
      to
      $3,596,000 for the six months ended June 30, 2006.  These increases
      were mainly attributable to more Company-owned store locations open during
      the
      comparable periods.  As of June 30, 2007, there were 11 Company-owned
      stores, as compared to 7 Company-owned stores as of June 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 six months
      ended June 30, 2007 and 2006), comparative net sales increased approximately
      $115,000, or 15.9%, to $835,000 for the three months ended June 30, 2007, as
      compared to $720,000 for the three months ended June 30, 2006, and increased
      approximately $56,000, or 3.4%, to $1,697,000 for the six months ended June
      30,
      2007, as compared to $1,641,000 for the six months ended June 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 operational systems, 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
      $30,000, or 3.5%, to $878,000 for the three months ended June 30, 2007, as
      compared to $848,000 for the three months ended June 30, 2006, and increased
      approximately $50,000, or 2.9%, to $1,727,000 for the six months ended June
      30,
      2007, as compared to $1,677,000 for the six months ended June 30,
      2006.  These increases were primarily due to an increase in membership
      fees generated by VCC during the first and second quarters of 2007.





Franchise
      royalties increased approximately $36,000, or 2.1%, to $1,765,000 for the three
      months ended June 30, 2007, as compared to $1,729,000 for the three months
      ended
      June 30, 2006, and increased approximately $24,000, or 0.7%, to $3,506,000
      for
      the six months ended June 30, 2007, as compared to $3,482,000 for the six months
      ended June 30, 2006.****Management believes these increases
      were a result of increased levels of field support to franchisees, the success
      of the Company’s audits of franchised locations, which generated additional
      royalties, and an increase in franchise sales for the stores that were in
      operation during both of the comparable periods, offset by a lower average
      number of stores in operation during the same comparable periods.  As
      of June 30, 2007 and 2006, there were 147 franchised stores in
      operation.





Including
      revenues and the related of cost of revenues solely generated by the
      Company-owned stores, the Company’s gross profit margin decreased by 4.7%, to
      67.1%, for the three months ended June 30, 2007, as compared to 71.8% for the
      three months ended June 30, 2006, and 2.2%, to 70.3%, for the six months ended
      June 30, 2007, as compared to 72.5% for the six months ended June 30,
      2006.  In the future, the Company’s gross profit margin may fluctuate
      depending upon the extent and timing of changes in the product mix in
      Company-owned stores, competitive pricing, and promotional incentives, amongst
      other things.





Selling,
      general and administrative expenses increased approximately $325,000, or 9.8%,
      to $3,645,000 for the three months ended June 30, 2007, as compared to
      $3,220,000 for the three months ended June 30, 2006, and $791,000, or 12.5%,
      to
      $7,101,000 for the six months ended June 30, 2007, as compared to $6,310,000
      for
      the six months ended June 30, 2006.  These increases were partially a
      result of increases to advertising expenses of $34,000 and $114,000 due to
      the
      promotion of a new marketing campaign around the new product mix in our
      Company-owned stores, payroll and related expenses of $569,000 and $914,000
      due
      to three additional Company-owned stores in operation and their related payroll
      expense, 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 those three additional Company-owned stores during the three and
      six
      months ended June 30, 2007, respectively.  These expenses were offset,
      in part, by a decrease in equity compensation charges of $344,000 and $380,000
      and bad debt recoveries of $100,000 during the three and six months ended June
      30, 2007, respectively.





Gain
      on
      sale of Company-owned stores to franchisees related to the sale, in
      2006, of an existing Company-owned store in upstate New York 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 six months ended June 30,
      2007.





Other
      income increased approximately $52,000, or 325.0%, to $68,000 for the three
      months ended June 30, 2007, as compared to $16,000 for the three months ended
      June 30, 2006, and increased $88,000, or 325.9%, to $115,000 for the six months
      ended June 30, 2007, as compared to $27,000 for the six months ended June 30,
      2006.  These increases were mainly a result of the Company accruing
      for a business interruption insurance claim submitted as a result of fire damage
      shutting down one of the Company-owned stores for 4 months.





**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 for the six months ended June 30,
      2007 has been included in the Company’s results of operations as of and for the
      three and six months ended June 30, 2007.





Net
      revenues for Combine were $4,597,000 and $8,922,000 for the three and six months
      ended June 30, 2007, respectively, which represented 53.7% and 52.8%,
      respectively, of the total revenue of the Company.





Costs
      of
      sales for Combine were $4,301,000 and $8,303,000 for the three and six months
      ended June 30, 2007, respectively, which represented 92.2% and 92.4%,
      respectively, of the total costs of sales of the Company.





Selling,
      general and administrative expenses for Combine were $172,000 and $352,000
      for
      the three and six months ended June 30, 2007, respectively, which represented
      4.5% and 4.7%, respectively, of the total selling, general and administrative
      expenses of the Company.  These expenses included payroll and related
      benefits of $79,000 and $145,000, depreciation and amortization of $39,000
      and
      $77,000, and bank and credit card fees of $22,000 and $44,000 for the three
      and
      six months ended June 30, 2007, respectively.





Interest
      expense for Combine was $31,000 and $87,000 for the three and six months ended
      June 30, 2007.  Interest expense related to the debt financing with
      COMC in connection with the acquisition of substantially all of the assets
      of
      COMC.





There
      are
      no comparatives provided for Combine as the acquisition of COMC was consummated
      during the 3rd
      quarter of 2006.





**Liquidity
      and Capital Resources**





As
      of
      June 30, 2007, the Company had a working capital deficit of $132,000 and cash
      on
      hand of $856,000.  During the six months ended June 30, 2007, cash
      flows provided by its operating activities were $127,000.  This was
      principally due to net income of $799,000 and an increase in optical purchasing
      group payables of $771,000, offset, in part, by non-cash items of $208,000,
      an
      increase in franchise and other receivables of $827,000 and the increase in
      optical purchasing group receivables of $936,000.  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, the growth of the Company's optical purchasing group
      business segment, and new marketing strategies and increased gross margins,
      among other things, for its Company-owned stores.





For
      the
      six months ended June 30, 2007, cash flows used in investing activities were
      $561,000 due, in part, to capital expenditures (which included the remodeling
      of
      one of the Company-owned stores and the Corporate offices) and the issuance
      of franchise promissory notes , offset by proceeds received on certain franchise
      promissory notes.





For
      the
      six months ended June 30, 2007, cash flows provided by financing activities
      were $1,000 due to the Company borrowing $350,000 in April 2007 under the
      Company’s Credit Facility with M&T Bank, offset by the repayment of the
      Company’s related party borrowings, the promissory note payments made to COMC,
      and the repayment of an existing promissory note as described below in
      section (a) of Contractual Obligations.





**Credit
      Facility**





On
      August
      8, 2007, the Company entered into a Revolving Line of Credit Note and Credit
      Agreement (the “Credit Agreement”) with Manufacturers and Traders Trust
      Corporation (“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 replaces 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 actually drawn by the Company payable
      on
      August 1, 2009.  The Credit Facility includes various financial
      covenants including minimum net worth, maximum funded debt and debt service
      ratio requirements.




As
      of
      June 30, 2007, the Company had borrowed $350,000 under the Credit Facility
      and
      was in compliance with all of the financial covenants.





On
      August
      10, 2007, the Company borrowed an additional $400,000 for general working
      capital requirements and $3,609,423, which was drawn to fund the purchase price
      payable in connection with the acquisition, by OG Acquisition, Inc., the
      Company’s wholly-owned subsidiary, of (i) all of the equity ownership interests
      in 1725758 Ontario Inc., d/b/a The Optical Group (“OG”), and (ii) substantially
      all of the tangible and intangible assets of Corowl Optical Credit Services,
      Inc. (“COC”).  As of August 13, 2007, there remained $1,640,577
      available under the Credit Facility for future borrowings.








**Contractual
      Obligations**





Payments
      due under contractual obligations as of June 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)
            
            $
            2,368
            
            
            $
            1,240
            
            
            $
            764
            
            
            $
            364
            
            
            $
            -Interest
                on long-term debt obligations (a) (b) (c)
            
            
            318
            
            
            
            122
            
            
            
            134
            
            
            
            62
            
            
            
            -Operating
                leases
            
            
            12,940
            
            
            
            3,649
            
            
            
            3,677
            
            
            
            2,102
            
            
            
            3,512$
            15,626
            
            
            $
            5,011
            
            
            $
            4,575
            
            
            $
            2,528
            
            
            $
            3,512








(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.





(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).  The second note provides for sixty monthly
                installments commencing October 1, 2006, totaling $500,000 at 7%
                interest
                per annum.





(c)
            On
                April 12, 2007, the Company borrowed $350,000 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
                2007.





**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 $24,000
      higher/lower for the six months ended June 30, 2007, 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 lowered its valuation allowance on deferred tax assets by 10
      percent, consolidated net income would be an estimated $1,4000,000 higher/lower
      for the six months ended June 30, 2007.





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 $171,000
      higher/lower for the six months ended June 30, 2007.








**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
      Bank.  In April 2007, the Company borrowed $350,000 under its Credit
      Facility and in August 2007, the Company borrowed an additional
      $4,009,422.  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 has not yet completed, and is
      not yet required to have completed, the assessment about 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
      August
      2006, Amy Platt, a former employee of the Company, commenced an action against
      the Company, in the United States District Court, Eastern District of New York,
      alleging, among other things, that the Company violated Title VII of the Civil
      Rights Act of 1964, as amended, 42 U.S.C. 2000e, *et seq*, the Pregnancy
      Discrimination Act of 1978, and the New York Executive Law, Human Rights Law,
      Section 290 *et seq*.  In July 2007, this action was
      settled, and was discontinued, with prejudice.





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 issued 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.  The Company believes that
      it has a meritorious defense to this action.  As of the date hereof,
      the Company’s time to reply to Horizon’s action has not yet expired.  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 plaintiff's
      claims.





**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**


Pursuant
      to a Letter of Engagement, dated May 7, 2007 (the“LOE”),  between the
      Company and R.D. Stout, Inc. (“RD”), RD agreed to provide to the Company
      assistance with investor relations, broker relations and the planning and
      execution of assorted activities relating to these tasks.  The LOE
      expires on May 6, 2008, but may be terminated by the Company at any time upon
      the giving of written notice.  In consideration for these services,
      the Company (a) agreed to issue to RD on a monthly basis a number of shares
      of restricted common stock of the Company (the “RD Shares”) equal to (i)
      $8,333.33, divided by (ii) the closing price per share of the Company’s common
      stock on the applicable issuance date, as reported on the Over-the-Counter
      Bulletin Board, and (b) issued to RD a warrant (the “RD Warrant”) to purchase up
      to an aggregate of 300,000 shares of the common stock of the Company at an
      exercise price of $0.21 per share,  which vested to the extent of
      25,000 shares upon issuance, and the remaining balance of which vests in equal
      monthly tranches of 25,000 shares each over the term of the LOE; however, the
      Company may terminate the RD Warrant in the event RD’s retention by the Company
      is terminated, in which event, the RD Warrant is deemed to be void to the extent
      of any unvested shares as of the termination. The term of the RD Warrant, to
      the
      extent of any vested shares, is  3 years from the date of issuance.
      The RD Warrant provides for dilution in certain events.  The RD Shares
      and RD Warrant were 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.


Pursuant
        to a Letter Agreement, dated April 11, 2007 (the “LA”), between the Company and
        DuBois Consulting Group, Inc. (“DuBois”), DuBois agreed to provide to the
        Company assistance with investor relations, broker relations, and the planning
        and execution of assorted activities relating to these tasks.  The LE
        expires on April 10, 2008, but may be terminated by the Company at any time
        upon
        the giving of written notice.  In consideration for these services,
        the Company agreed to pay Dubois certain cash consideration provided for
        in the
        LA and issued to DuBois a warrant (the “DuBois Warrant”) to purchase up to an
        aggregate of  300,000 shares of common stock of the Company at an
        exercise price of $0.30 per share, which vests in equal monthly tranches
        of
        25,000  shares each over the term of the LA; however, the Company may
        terminate the Dubois Warrant in the event Dubois’ retention by the Company is
        terminated, in which event, the Dubois Warrant is deemed to be void to the
        extent of any unvested shares as of the termination.  The term of the
        Dubois Warrant, to the extent of any vested shares, is  3 years from
        the date of issuance.  The Dubois Warrant provides for dilution in
        certain events.  The DuBois Shares and DuBois Warrant were issued
        pursuant to the exemption from registration under 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**





2.4
            Letter
                of Intent, dated as of May 23, 2007, by and among OG Acquisition,
                Inc.,
                757979 Ontario Inc. (d/b/a The Optical Group), Corowl Optical Credit
                Services, Inc. and Grant Osborne (Incorporated by reference to Exhibit
                2.4
                to the Company’s Current Report on Form 8-K dated May 31,
                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:
      August 14, 2007