UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-Q

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

For the quarterly period ended ~~July~~January 31, ~~2009~~2010

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

For the transition period from __________________ to ______________________.

Commission file number 0-23001

SIGNATURE EYEWEAR, INC.

(Exact Name of Registrant as Specified in its Charter)

California

(State or Other Jurisdiction of

Incorporation or Organization)

95-3876317

(I.R.S. Employer

Identification No.)

498 North Oak Street

Inglewood, California 90302

(Address of Principal Executive Offices)

(310) 330-2700

(Registrant’s Telephone Number, Including Area Code)

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

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

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

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

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

Indicate the number of shares outstanding of each of the issuer’s classes of common stock, as of the latest practicable date: 6,955,639 shares issued and outstanding as of ~~September~~March 81, ~~2009~~2010.

SIGNATURE EYEWEAR, INC.

INDEX TO FORM 10-Q

PART I	FINANCIAL INFORMATION	Page
Item 1	Financial Statements
	Balance Sheets	3
	Statements of Income	5
	Statements of Cash Flows	6
	Notes to the Financial Statements	7
Item 2	Management’s Discussion and Analysis of Financial Condition and Results of Operations	1211
Item 3	Quantitative and Qualitative Disclosures About Market Risk	1513
Item 4	Controls and Procedures	1514
PART II	OTHER INFORMATION	1614
Item 1	Legal Proceedings	1614
Item 1A	Risk Factors	1614
Item 2	Unregistered Sales of Equity Securities and Use of Proceeds	1614
Item 3	Defaults upon Senior Securities	1614
Item 4	~~Submission~~Removed ofand ~~Matters to a Vote of Security Holders~~Reserved	1614
Item 5	Other Information	1615
Item 6	Exhibits	1615

References in this Report to the “Company,” “Signature,” “we” or “us” refer to Signature Eyewear, Inc.

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PART I.

FINANCIAL INFORMATION

Item 1. Financial Statements

SIGNATURE EYEWEAR, INC.

BALANCE SHEETS

AT ~~JULY~~JANUARY 31, ~~2009~~2010 (UNAUDITED)

~~AND~~AT OCTOBER 31, ~~2008~~2009 (AUDITED)

ASSETS

ASSETS

	January 31,		October 31,
	2010		2009
Current assets

Cash and cash equivalents	$	398,662	$	431,037
Accounts receivable - trade, net of allowance for doubtful accounts of $42,163		2,788,890		2,565,125
Inventory		3,841,218		3,843,793
Promotional products and materials		180,142		209,847
Prepaid expenses and other current assets		345,433		263,594
Deferred income taxes		376,500		376,500

Total current assets		7,930,845		7,689,896

Property and equipment, net		328,228		313,324
Deposits and other assets		104,000		250,500
Deferred income taxes		2,600,700		2,600,700

Total assets	$	10,963,773	$	10,854,420

	July 31,		October 31,
	2009		2008
Current assets
Cash and cash equivalents	$	254,924	$	305,628
Accounts receivable - trade, net of allowance for
doubtful accounts of $42,163		3,079,037		2,809,135
Inventory		4,353,653		5,607,178
Promotional products and materials		187,919		133,618
Prepaid expenses and other current assets		258,131		394,934
Deferred income taxes		376,500		376,500
Total current assets		8,510,164		9,626,993
Property and equipment, net		338,065		369,935
Deposits and other assets		240,154		107,656
Deferred income taxes		2,600,700		2,600,700
Total assets	$	11,689,083	$	12,705,284

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

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SIGNATURE EYEWEAR, INC.

BALANCE SHEETS

AT ~~JULY~~JANUARY 31, ~~2009~~2010 (UNAUDITED)

~~AND~~AT OCTOBER 31, ~~2008~~2009 (AUDITED)

LIABILITIES AND SHAREHOLDERS’ EQUITY

LIABILITIES AND SHAREHOLDERS’ EQUITY

	January 31,			October 31,
	2010			2009
Current liabilities
Accounts payable - trade	$	3,558,698		$	3,532,159
Accrued expenses and other current liabilities		1,451,173			1,538,516
Current portion of long-term debt		415,000			415,000

Total current liabilities		5,424,871			5,485,675

Long-term debt, net of current portion		3,832,500			3,805,000

Total liabilities		9,257,371			9,290,675

Commitments and contingencies

Shareholders’ equity
Preferred stock, $0.001 par value
5,000,000 shares authorized
Series A 2% convertible preferred stock, $0.001 par value; liquidation preference (approximately $919,000 and $915,000 at January 31, 2010 and October 31, 2009, respectively)
1,360,000 shares authorized
1,200,000 shares issued and outstanding		1,200			1,200
Common stock, $0.001 par value
30,000,000 shares authorized
6,955,639 shares issued and outstanding		6,956			6,956
Additional paid-in capital		15,656,812			15,656,812
Accumulated deficit		(13,958,566	)		(14,101,223	)

Total shareholders’ equity		1,706,402			1,563,745

Total liabilities and shareholders’ equity	$	10,963,773		$	10,854,420

	July 31,			October 31,
	2009			2008
Current liabilities
Accounts payable - trade	$	4,158,316		$	5,053,341
Accrued expenses and other current liabilities		1,529,865			1,853,586
Current portion of long-term debt		415,000			290,000
Total current liabilities		6,103,181			7,196,927
Long-term debt, net of current portion		4,127,500			4,620,000
Total liabilities		10,230,681			11,816,927
Commitments and contingencies
Shareholders’ equity
Preferred stock, $0.001 par value
5,000,000 shares authorized
Series A 2% convertible preferred stock, $0.001
par value; liquidation preference approximately
$910,000 at July 31, 2009 and $897,000 at October 31, 2008;
1,360,000 shares authorized,
1,200,000 shares outstanding at		1,200			1,200
July 31, 2009 and October 31, 2008
Common stock, $0.001 par value
30,000,000 shares authorized,
6,955,639 shares outstanding
at July 31, 2009 and October 31, 2008		6,956			6,956
Additional paid-in capital		15,656,812			15,656,812
Accumulated deficit		(14,206,566	)		(14,776,611	)
Total shareholders’ equity		1,458,402			888,357
Total liabilities and shareholders’ equity	$	11,689,083		$	12,705,284

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

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SIGNATURE EYEWEAR, INC.

STATEMENTS OF INCOME

FOR THE THREE MONTHS ~~AND NINE MONTHS~~ ENDED ~~JULY~~JANUARY 31, ~~2009~~2010 (UNAUDITED)

AND ~~JULY~~JANUARY 31, ~~2008~~2009 (UNAUDITED)

	For The Three Months Ended						For The Nine Months Ended
	2010			2009
	2009			2008			2009			2008
Net sales	$	5,168,880		$	5,959,355
Net sales	$	5,932,665		$	6,361,749		$	18,003,359		$	18,602,713
Cost of sales		1,920,797			2,110,716
Cost of sales		2,199,444			2,405,957			6,514,423			6,796,175
Gross profit		3,248,083			3,848,639
Gross profit		3,733,221			3,955,792			11,488,936			11,806,538
Operating expenses
Operating expenses
Selling		1,905,636			2,138,817
Selling		2,181,179			2,247,790			6,540,116			6,675,117
General and administrative		1,108,591			1,424,125
General and administrative		1,287,892			1,432,338			4,091,974			4,291,284
Depreciation and amortization		44,929			34,828
Depreciation and amortization		39,180			29,460			110,846			78,096
Total operating expenses		3,059,156			3,597,770
Total operating expenses		3,508,251			3,709,588			10,742,936			11,044,497
Income from operations		188,927			250,869
Income from operations		224,970			246,204			746,000			762,041
Interest expense		(45,835	)		(51,043	)
Interest expense/other, net		(50,831	)		(64,256	)		(154,608	)		(215,571	)
Income before taxes		143,092			199,826
Income before taxes		174,139			181,948			591,392			546,470
Income taxes		435			1,081
Income taxes		19,199			6,409			21,347			8,620
Net income		142,657			198,745
Net income		154,940			175,539			570,045			537,850
Preferred stock dividend	$	(4,554	)	$	(4,464	)
Preferred stock dividend	$	(4,509	)	$	(4,420	)	$	(13,459	)	$	(13,194	)
Net income available to common shareholders	$	138,103		$	194,281
Net income available to common shareholders	$	150,431		$	171,119		$	556,586		$	524,656
Basic earnings per share	$	0.02		$	0.03
Basic earnings per share	$	0.02		$	0.02		$	0.08		$	0.08
Diluted earnings per share	$	0.02		$	0.02
Diluted earnings per share	$	0.02		$	0.02		$	0.07		$	0.07
Weighted-average common shares
Weighted-average common shares
outstanding - Basic		6,955,639			6,955,639
outstanding - Basic		6,955,639			6,955,639			6,955,639			6,892,500
Weighted-average common shares
Weighted-average common shares
outstanding - Diluted		8,327,761			8,300,776
outstanding - Diluted		8,314,201			8,287,484			8,314,201			8,224,345

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

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SIGNATURE EYEWEAR, INC.

STATEMENTS OF CASH FLOWS

FOR THE ~~NINE~~THREE MONTHS ENDED ~~JULY~~JANUARY 31, ~~2009~~2010 (UNAUDITED)

AND ~~JULY~~JANUARY 31, ~~2008~~2009 (UNAUDITED)

	2009			2008
	2010			2009
Cash flows from operating activities
Net income	$	~~570~~142,~~045~~657		$	~~537~~198,~~850~~745
Adjustments to reconcile net income
Adjustments to reconcile net income to net cash used in operating activities:
to net cash provided by
Depreciation and amortization		44,929			34,828
operating activities:
Depreciation and amortization		110,846			78,096
(Increase) decrease in:
Accounts receivable - trade		(~~269~~223,~~903~~765	)		(~~219~~754,~~184~~105	)
Inventories		12,~~253,524~~575			~~(544~~344,~~179~~458	)
Promotional products and materials		~~(54~~29,~~301~~705	)		51(73,~~424~~489	)
Prepaid expenses and other current assets		~~136~~(81,~~803~~839	)		~~(26~~78,~~763~~069	)
Increase (decrease) in:
Accounts payable - trade		~~(895~~26,~~025~~539	)		~~361~~(58,~~062~~581	)
Accrued expenses and other current liabilities		(~~323~~87,~~721~~343	)		(~~156~~172,~~113~~156	)
					.
Net cash used in operating activities		(146,542	)		(402,231	)
Net cash provided by operating activities		528,268			82,193
Cash flows from investing activities
Purchase of property and equipment		(7859,~~974~~833	)		(8531,~~605~~045	)
Deposits and other assets		~~(132~~146,~~498~~500	)		(~~2,302~~145	)
Net cash used in investing activities		(211,472	)		(87,907	)
Net cash provided by (used in) investing activities		86,667			(31,190	)
Cash flows from financing activities
Payments on short-term debt		-			(75,100	)
Net increase in lines of credit		100,000			550,000
Payments on long-term debt		(367,500	)		(340,000	)
Payments on short-term debt		—			—
Proceeds from sale of common stock		-			67,000
Payments on long-term debt		(72,500	)		(72,500	)
Net cash used in financing activities		(367,500	)		(348,100	)
Borrowings on long-term debt		—			—
Net decrease in cash and cash equivalents		(50,704	)		(353,814	)
Net cash provided by financing activities		27,500			477,500
Cash and cash equivalents, beginning of period		305,628			461,080
Net (decrease) increase in cash and cash equivalents		(32,375	)		44,079
Cash and cash equivalents, end of period	$	254,924		$	107,266
Cash and cash equivalents, beginning of period		431,037			305,628
Supplemental disclosures of cash
Cash and cash equivalents, end of period	$	398,662		$	349,707
flow information
Supplemental disclosures of cash flow information
Interest paid	$	8823,~~831~~542		$	~~143~~33,~~404~~759
Income taxes paid	$	~~21,346~~435		$	81,~~620~~081

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

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NOTES TO FINANCIAL STATEMENTS

(Information as of ~~July~~January 31, ~~2009~~2010 and for the three ~~and nine~~ months ended ~~July~~January 31, ~~2009~~ 2010 and ~~2008~~ 2009 is unaudited)

Note 1.

Organization and Line of Business

Signature Eyewear, Inc. (the “Company”) designs, markets and distributes eyeglass frames throughout the United States and internationally. The Company conducts its operations primarily from its principal executive offices and a warehouse in Inglewood, California~~, and a warehouse and sales office in Belgium~~.

Note 2.

Summary of Significant Accounting Policies

Basis of Presentation

The accompanying financial statements have been prepared in conformity with accounting principles generally accepted in the United States of America for interim financial information and with the instructions to Form 10-Q and Regulation S-X. Accordingly, they do not include all of the information and footnotes required by accounting principles generally accepted in the United States of America for complete financial statements. In the opinion of management, all normal, recurring adjustments considered necessary for a fair presentation have been included. These financial statements should be read in conjunction with the audited financial statements and notes thereto included in the Company’s Annual Report on Form 10-K for the year ended October 31, ~~2008~~2009. The results of operations for the ~~nine~~three months ended ~~July~~ January 31, ~~2009~~2010 are not necessarily indicative of the results ~~that~~ that may be expected for the year ending October 31, ~~2009~~2010.

Inventory

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

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

Property and Equipment

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

Office furniture and equipment	7 years
Computer equipment	3 years
Software	3 years
Machinery and equipment	5 years
Leasehold improvements	Term of the lease or the estimated life of the related improvements, whichever is shorter

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

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Fair Value of Financial Instruments

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

Income per Share

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

Three months ended July 31, 2009

Income (Numerator)

Shares (Denominator)

Per Share Amount

Three months ended January 31, 2010

Income (Numerator)

Shares (Denominator)

Per Share Amount

Basic earnings per share

~~150~~138,~~431~~103

6,955,639

0.02

Conversion of preferred stock

4,~~509~~554

1,~~358~~372,~~562~~122

0.00

Diluted earnings per share

~~154~~142,~~940~~657

8,~~314~~327,~~201~~761

0.02

Three months ended July 31, 2008

Income (Numerator)

Shares (Denominator)

Per Share Amount

Three months ended January 31, 2009

Income (Numerator)

Shares (Denominator)

Per Share Amount

Basic earnings per share

~~171~~194,~~119~~281

6,955,639

0.0203

Conversion of preferred stock

4,~~420~~464

1,~~331~~345,~~845~~137

0.00

Diluted earnings per share

~~175~~198,~~539~~745

8,~~287~~300,~~484~~776

0.02

-The following 8potential common shares have been excluded from the computations of diluted income per share for the three months ended January 31, 2010 and 2009 because the effect would have been anti-dilutive:

Nine months ended July 31, 2009	Income (Numerator)		Shares (Denominator)		Per Share Amount
	2010		2009
Basic earnings per share	$	556,586		6,955,639	$	0.08
Stock options		—		34,300
Conversion of preferred stock		13,459		1,358,562		0.01
Warrants		300,000		300,000
Diluted earnings per share	$	570,045		8,314,201	$	0.07
Total		300,000		334,300

Nine months ended July 31, 2008	Income (Numerator)		Shares (Denominator)		Per Share Amount
Basic earnings per share	$	524,656		6,892,500	$	0.08
Conversion of preferred stock		13,194		1,331,845		0.01
Diluted earnings per share	$	537,850		8,224,345	$	0.07

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

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

Foreign Currency Translation

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

The Company’s Belgium branch’s functional currency is the euro. Assets and liabilities are translated at exchange rates in effect at the balance sheet date. Income and expense accounts

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are translated at average rates. In addition, some of the Company’s liabilities are denominated in foreign currencies. Such liabilities are converted into U.S. dollars at the exchange rate prevailing at the balance sheet date. The resulting gains or losses were not material for the three months ended January 31, 2010 and 2009.

Estimates

The preparation of financial statements in conformity with accounting principles generally accepted in the United States of America requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenue and expenses during the reporting period. Actual results could differ from those estimates.

~~Significant~~Recently ~~Recent Accounting~~Issued Accounting Pronouncements

InThe ~~April~~FASB ~~2009,~~recently ~~the~~amended ~~Financial~~its ~~Accounting~~guidance ~~Standards~~surrounding ~~Board~~an ~~(“FASB”)~~entity’s ~~issued~~analysis ~~FASB~~to ~~Staff~~determine ~~Position~~whether ~~(“FSP”)~~any ~~FAS~~of ~~107-1/APB~~its ~~28-1~~variable ~~(“FSP~~interests ~~107-1”),~~constitute ~~Interim~~controlling ~~Disclosures~~financial ~~about~~interests in ~~Fair~~a ~~Value of~~variable ~~Financial~~interest ~~Instruments~~entity. This ~~pronouncement~~analysis ~~amended~~identifies ~~SFAS~~the ~~No.~~primary ~~107,~~beneficiary ~~Disclosures~~of ~~about~~a ~~Fair Value~~variable interest entity as the enterprise that has both of ~~Financial~~the following ~~Instruments,~~characteristics: (a) the power to ~~require~~direct ~~disclosure~~the activities of a variable interest entity that most significantly impact the ~~carrying~~entity’s economic ~~amount~~performance; and (b) the ~~fair~~obligation ~~value~~to ofabsorb ~~all~~losses ~~financial~~of ~~instruments~~the ~~for~~entity ~~interim~~that ~~reporting~~could ~~periods~~potentially ~~and~~be ~~annual~~significant ~~financial~~to ~~statements~~the ofvariable ~~publicly~~interest ~~traded~~entity ~~companies~~or ~~(even~~the ifright to receive benefits from the ~~financial~~entity ~~instrument~~that iscould ~~not~~potentially ~~recognized~~be insignificant to the variable ~~balance~~interest ~~sheet)~~entity. Additionally, ~~including~~an ~~the~~enterprise is required to ~~methods~~assess ~~and~~whether ~~significant~~it ~~assumptions~~has ~~used~~an implicit financial responsibility to ~~estimate~~ensure that a variable interest entity operates as designed when determining whether it has the ~~fair~~power ~~values~~to ~~and~~direct ~~any~~the activities of the variable interest entity that most ~~changes~~significantly inimpact ~~such~~the ~~methods~~entity’s ~~and~~economic ~~assumptions~~performance. ~~FSP 107-1~~The amended guidance also requires ongoing reassessments of whether an enterprise is the primary beneficiary of a variable interest entity. The amended ~~APB~~guidance ~~Opinion~~is Noeffective for the first annual reporting period that begins after November 15, 2009, which for the Company is the fiscal year ending October 31, 2011. The 28Company does not expect the adoption of this guidance to have a material impact on its financial statements for the fiscal year ending October 31, 2010.

-The recent 9accounting pronouncements discussed in the notes to the Company’s audited financial statements for the year ended October 31, 2009 included in the Annual Report on Form 10-K for the year ended October 31, 2009 that were required to be adopted during the year ended October 31, 2009 did not have and are not expected to have a significant impact on the Company’s financial statements for the year ending October 31, 2010.

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

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

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

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

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

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

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

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

Note 3.

Long-Term Debt

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

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

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	January 31, 2010			October 31, 2009
Revolving line of credit from Comerica Bank	$	2,600,000		$	2,500,000
Revolving line of credit from Bluebird Finance Limited		1,522,500			1,595,000
Term note payable to Ashford Capital, LLC.		125,000			125,000
		4,247,500			4,220,000

Less current portion		(415,000	)		(415,000	)
Long-term portion	$	3,832,500		$	3,805,000

Note 4.

Income Taxes

As of ~~October~~January 31, ~~2008~~2010, the Company had net operating loss carry-forwards for federal and state income tax purposes of approximately $15,~~156~~374,000 and $4,~~271~~458,000, respectively, which expire at various times from 2021 through ~~2027~~2028.

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

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

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Item 2.

Management’s Discussion and Analysis of Financial Condition and Results of Operations

The following discussion and analysis, which should be read in connection with our financial statements and accompanying footnotes, contains forward-looking statements that involve risks and uncertainties. Important factors that could cause actual results to differ materially from our expectations are set forth in Item 1 – Business – Factors That May Affect Our Future Operating Results,” in our Form 10-K for the year ended October 31, ~~2008~~2009 as well as those discussed elsewhere in this Form 10-Q. Those forward-looking statements may relate to, among other things, our plans and strategies, new product lines, and relationships with licensors, distributors and customers, distribution strategies and the business environment in which we operate.

References to “we” or “us” refers to Signature Eyewear, Inc.

Overview

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

We reported net income of $~~155~~143,000 on net sales of $5.92 million for the three months ended ~~July~~ January 31, ~~2009~~2010 (the “~~2009~~2010 Quarter”) compared to net income of $~~176~~199,000 on net sales of $6.40 million for the three months ended ~~July~~ January 31, ~~2008~~2009 (the “~~2008~~2009 Quarter”). WeThe ~~reported~~decrease in net ~~income~~sales was due primarily to the general slowdown in the domestic economy and the optical frame market, which adversely affected sales of our higher priced lines. The decrease in net income was due primarily to lower sales and lower gross margin, which was offset somewhat by a decrease in selling, general and administrative expenses. Selling, general and administrative expenses declined $~~570~~549,000 from the 2009 Quarter to the 2010 Quarter, representing 58.2% of net sales in the 2010 Quarter as compared to 59.8% of net sales in the 2009 Quarter.

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

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

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

Results of Operations

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

	Three Months Ended						~~Nine Months Ended~~
	July 31,						July 31,
	January 31,
	2009			2008			2009			2008
	2010			2009
Net sales		100.0	%		100.0	%		~~100.0~~	%		~~100.0~~	%
Cost of sales		37.12			3735.84			~~36.2~~			~~36.5~~
Gross profit		62.98			6264.26			~~63.8~~			~~63.5~~
Operating expenses:
Selling		36.78			35.39			~~36.3~~			~~35.9~~
General and administrative		21.74			2223.59			~~22.7~~			~~23.1~~
Depreciation and amortization		0.79			0.56			~~0.6~~			~~0.4~~
Total operating expenses		59.1			5860.34			~~59.6~~			~~59.4~~
Income from operations		3.87			34.92			~~4.2~~			~~4.1~~
Interest expense/other, net		(0.9	)		(1.0	)		(0.9	)		(1.2	)
Interest expense		0.9			0.9
Income before taxes		2.98			23.93			~~3.3~~			~~2.9~~
Income taxes		0.30			0.10			~~0.1~~			~~0.0~~
Net income		2.68	%		23.83	%		~~3.2~~	%		~~2.9~~	%

Net Sales. Net sales decreased by 613.73% or $~~429~~790,000 from the ~~2008~~2009 Quarter to the ~~2009 Quarter~~2010 ~~and by 3~~Quarter.2% The ordecrease ~~$599,000~~in ~~from~~net ~~the~~sales ~~2008~~was ~~Nine~~due ~~Months~~primarily to the ~~2009 Nine~~general ~~Months. Unit~~slowdown ~~frame sales decreased~~ in the ~~fiscal~~domestic ~~2009~~economy ~~periods,~~and as the ~~global~~ ~~recession continues to affect the~~ optical frame ~~industry. However~~ market, ~~the~~which ~~average~~adversely affected sales ~~price~~ of our ~~frames~~higher ~~increased due~~priced tolines. Net ~~fewer close out~~ sales ~~and~~of ~~fewer~~Nicole ~~international sales, which are generally~~Miller ~~sold~~Eyewear atand ~~lower prices. Sales of our largest line,~~ bebe eyewear, ~~and Dakota~~decreased ~~Smith~~$810,000 ~~increased~~to in$3.2 ~~both~~million from the 2009 Quarter ~~and~~to the ~~2009~~2010 ~~Nine months~~Quarter. Net sales inof the ~~fiscal~~Company’s ~~2009~~three ~~periods were also positively~~largest ~~impacted~~lines, bybebe ~~the~~eyewear, ~~introduction~~Nicole ofMiller ~~Michael Stars~~ Eyewear inand ~~the~~Laura ~~winter~~Ashley ofEyewear, ~~2009~~amounted ~~and~~to in74.3% ~~the~~of ~~2009~~our ~~Nine~~net ~~Months~~sales byin the ~~introduction~~2010 ofQuarter ~~Carmen~~compared ~~Marc~~to ~~Valvo~~78.5% in the 2009 Quarter.

-Direct sales 13to independent optical retailers and distributors decreased $457,000 in -the 2010 Quarter. Sales to optical and retail chains decreased $246,000 in the 2010 Quarter. International sales decreased $77,000 in the 2010 Quarter due primarily to the weak global optical market.

inNet sales ~~2008~~reflect gross sales less a reserve for product returns established by us based on products that we are aware will be returned as of that date. InWe had ~~addition~~$760,000 ~~net~~and ~~sales~~$765,000 ~~increased~~ in ~~the~~product ~~Signature~~returns ~~Collection with~~for the ~~introduction~~2010 ofQuarter ~~the~~and ~~Caligraphy~~2009 Quarter, ~~Collection~~respectively, resulting in ~~2009~~a product returns percentage of 12.8% and 13.8%, respectively.

~~Direct sales~~Gross toProfit ~~independent optical retailers~~ and ~~distributors~~Gross Margin. Gross profit decreased $~~340~~601,000 in from the 2009 Quarter to ~~and~~the ~~decreased~~2010 ~~$180,000~~Quarter indue ~~the~~to ~~2009~~decreased ~~Nine Months~~sales. ~~Sales~~Gross margin decreased slightly to ~~optical~~62.8% ~~and~~in ~~retail~~the ~~chains~~2010 ~~increased~~Quarter ~~$263,000~~from 64.6% in the 2009 Quarter ~~and~~due ~~increased~~to competitive ~~$409,000~~pricing inand ~~the~~market ~~2009 Nine Months~~conditions.

~~Domestic~~Selling ~~sales~~Expenses. Selling expenses decreased $91233,000 infrom the 2009 Quarter ~~and~~to ~~$151,000~~the in2010 ~~the~~Quarter ~~2009~~primarily ~~Nine Months. International~~due ~~sales~~to ~~decreased~~decreases of $~~338~~112,000 in ~~the 2009 Quarter~~ ~~and~~compensation ~~decreased~~expense, $~~750~~90,000 in ~~the~~travel ~~2009~~expense ~~Nine Months due primarily to the weak global optical market~~ and ~~our~~$88,000 ~~scheduled closing of the Belgium office~~ in ~~September~~advertising and ~~2009~~promotional expense.

~~Net~~- ~~sales~~12 reflect gross sales less a reserve for product returns established by us based on products that we are aware will be returned as of the end of the period. These reserves were $476,000 and $443,000 at July 31, 2009 and October 31, 2008, respectively.-

WeGeneral ~~had~~and Administrative ~~$875,000~~Expenses. General and ~~$990,000~~administrative inexpenses ~~product~~for ~~returns~~the ~~for~~2010 Quarter decreased $316,000 from the 2009 Quarter ~~and~~primarily ~~2008~~due ~~Quarter,~~to decreases of ~~respectively~~$106,000 ~~resulting~~ in ainternational ~~product~~general ~~returns~~and ~~percentage~~administration ofexpense ~~14.7%~~resulting ~~and 15.6%,~~from ~~respectively. We~~closing ~~had~~our ~~$2.6~~Belgium ~~million~~sales office in ~~product~~September ~~returns~~2009, ~~for~~$61,000 ~~the~~in ~~2009 Nine~~legal, ~~Months~~ accounting and ~~2008~~consulting ~~Nine~~expenses, ~~Months~~$56,000 ~~resulting~~ in acompensation ~~product~~expense ~~returns~~and ~~percentage~~$55,000 ofin ~~14.7%~~telephone ~~and 13~~expense.~~8%, respectively.~~

~~Gross~~Interest ~~Profit and Gross Margin~~Expense. ~~Gross~~ ~~profit decreased $223,000 from the 2008 Quarter~~Interest toexpense ~~the~~consists ~~2009~~of ~~Quarter~~interest ~~and~~expense ~~$318,000~~offset ~~from~~by ~~the~~other ~~2008 Nine Months to the 2009 Nine Months due to decreased sales~~income. ~~Gross margin increased to 62.9% in the~~Interest ~~2009~~expense ~~Quarter~~decreased ~~from~~$5,000 ~~62.2%~~ in the ~~2008~~2010 Quarter, ~~and~~primarily ~~increased~~due to ~~63.8%~~reduction in the ~~2009~~ ~~Nine~~weighted ~~Months from~~average ~~63.5%~~rate inon ~~the~~our ~~2008 Nine Months~~borrowings.

~~Selling Expenses~~Income Taxes. ~~Selling~~As ~~expenses decreased $67,000 from the 2008~~a ~~Quarter~~result toof ~~the~~our ~~2009~~net ~~Quarter~~loss ~~primarily due to decreases of $93~~carry-forward,~~000~~ ~~in compensation~~we ~~expense~~had ~~and~~no ~~$74,000~~income intax ~~convention~~ expense ~~partially~~other ~~offset by an~~than ~~increase~~franchise oftaxes ~~$89,000~~ in ~~royalty~~various ~~expense. Selling~~states ~~expenses~~in ~~decreased $135,000 from~~ the ~~2008~~2010 ~~Nine~~Quarter ~~Months~~or to the 2009 ~~Nine Months primarily due to~~ ~~decreases of $139,000 in convention expense and $60,000 Belgium selling expense partially offset by $84,000 increase in royalty expense~~Quarter.

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

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

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

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Financial Condition, Liquidity and Capital Resources

Our accounts receivable (net of allowance for doubtful accounts) were $32.18 million at ~~July~~ January 31, ~~2009~~2010 compared to $2.86 million at October 31, ~~2008 due primarily to extended payment terms offered to customers and slower payments due to the economy~~2009.

Our inventories (at lower of cost or market) were $43.48 million at ~~July~~ both January 31, ~~2009~~ ~~compared~~2010 toand ~~$5.6 million at~~ October 31, ~~2008~~2009. ~~The decrease was due to our continuing efforts to reduce our inventory levels taking into account current economic conditions.~~

~~Our~~Current ~~accounts~~liabilities ~~payable~~were ~~decreased~~ $~~895,000 from $~~5.1 4 million at ~~October~~January 31, ~~2008~~ 2010 as compared to $45.2 5 million at October ~~July~~ 31, 2009 ~~due primarily to our reduced inventory purchases~~.

Our long-term debt (including current portion) ~~decreased~~was $~~367,000 in fiscal 2009, from $~~4.92 million at October 31, ~~2008~~2009 and ~~to $4.5 million~~ at ~~July~~ January 31, ~~2009~~ 2010. See Note 3 of Notes to Financial Statements for further information regarding our long-term debt. At ~~July~~ January 31, ~~2009~~ 2010, the interest rate on our Comerica Bank revolving line of credit was 34.550% ~~for our~~ ~~Libor portion of the revolving line of credit and 3.75%~~ per annum ~~for~~and ~~our~~we ~~prime rate portion of our line of credit. We~~ had ~~approximately~~ $1.5 4 million of additional borrowing capacity available under ~~this~~that line ~~of credit as of July 31, 2009~~.

Of ~~our~~the Company’s accounts payable at ~~July~~January 31, ~~2009~~2010, approximately $~~190~~158,000 were payable in foreign currency. To monitor risks associated with ~~currency~~ currency fluctuations, wethe Company periodically ~~assess~~assesses the volatility of certain foreign currencies and ~~review~~reviews the amounts and expected payment dates of its ~~our~~ purchase orders and accounts payable in those currencies.

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

Inflation

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

Item 3.

Quantitative and Qualitative Disclosures About Market Risk

Not applicable.

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Item 4.

Controls and Procedures

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

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

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

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

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

PART II.

OTHER INFORMATION

Item 1.

Legal Proceedings

Nothing to report.

Item 1A.

Risk Factors

Not applicable.

Item 2.

Unregistered Sales of Equity Securities and Use of Proceeds

Nothing to report.

Item 3.

Defaults upon Senior Securities

Nothing to report.

Item 4. ~~Submission~~ ofRemoved ~~Matters~~and ~~to a Vote of Security Holders~~Reserved

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

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

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Item 5.

Other Information

Nothing to report.

Item 6.

Exhibits

See Exhibit Index Attached

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SIGNATURES

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

Date: ~~September~~March 95, ~~2009~~2010 SIGNATURE EYEWEAR, INC. By: /s/ Michael Prince Michael Prince Chief Executive Officer Chief Financial Officer

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EXHIBIT INDEX

Exhibit Number	Exhibit Description
10.1	Amendment No. 1 dated December 15, 2009 to Loan and Security Agreement between Signature Eyewear, Inc. and Comerica Bank.
10.2	License Agreement dated January 19, 2010 between Signature Eyewear, Inc. and Laura Ashley, Inc. [Portions of this Exhibit have been deleted and filed separately with the Commission pursuant to a request for Confidential Treatment.]
31.1	Certification Pursuant to SEC Rule 13a-14(a)/15d-14(a)
32.1	Certification Pursuant to 18 U.S.C. § 1350

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Filing Compare · SIGNATURE EYEWEAR INC