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SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549



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Form 10-Q

QUARTERLY REPORT UNDER SECTION 13 OR 15(D)
OF THE SECURITIES EXCHANGE ACT OF 1934

For the Thirteen Weeks Ended August 3, 2002

Commission File Number 1-9647



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MAYORS JEWELERS, INC.(Exact name of registrant as specified in its charter)

|                                                                       |  |                                            
|---------------------------------------------------------------------- |  | -------------------------------------------
|Delaware(State or other jurisdiction of
incorporation or organization) |  | 59-2290953(IRS Employer
Identification No.)

14051 N.W. 14th Street
Sunrise, Florida 33323(Address of principal executive offices) (Zip Code)

(954) 846-2709(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 the number of shares outstanding of each of the issuers classes
of common stock, as of the latest practicable date.

19,569,858 SHARES ($.0001 PAR VALUE)
AS OF SEPTEMBER 13, 2002



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FORM 10-Q
QUARTERLY REPORT

THIRTEEN WEEKS ENDED AUGUST 3, 2002

TABLE OF CONTENTS

PART I: FINANCIAL INFORMATION

|        |  |   |  |                                                                                       |  |         
|------- |  | - |  | ------------------------------------------------------------------------------------- |  | --------
|        |  |   |  |                                                                                       |  | Page No.
|        |  |   |  |                                                                                       |  |         
|Item 1. |  |   |  | Consolidated Financial Statements  Unaudited                                         |  |         
|       
|        |  | A |  | Consolidated Condensed Balance Sheets                                                 |  | 3       
|       
|        |  | B |  | Consolidated Condensed Statements of Operations                                       |  | 4-5     
|       
|        |  | C |  | Consolidated Condensed Statements of Cash Flows                                       |  | 6-7     
|       
|        |  | D |  | Notes to Consolidated Condensed Financial Statements                                  |  | 8-12    
|       
|Item 2. |  |   |  | Managements Discussion and Analysis of Financial Condition and Results of
Operations |  | 13-16   
|       
|Item 3. |  |   |  | Quantitative and Qualitative Disclosures About Market Risks                           |  | 16-17   
|       
|Item 4. |  |   |  | Internal Controls                                                                     |  | 17      

PART II: OTHER INFORMATION

Items 1, 2, 3, 4, and 5 have been omitted because they are not applicable
with respect to the current reporting period

|        |  |                                  |    |  |  | 
|------- |  | -------------------------------- | -- |  |  | 
|Item 6. |  | Exhibits and Reports on Form 8-K | 17 |  |  | 

2



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PART I: FINANCIAL INFORMATION

Item 1.Consolidated Condensed Financial Statements

MAYORS JEWELERS, INC. AND SUBSIDIARIES
CONSOLIDATED CONDENSED BALANCE SHEETS  UNAUDITED
(Amounts shown in thousands except share and per share data)

|                                                                                                                    |                             |                          |                                      |        |         |           |          |             |         |  |  | 
|------------------------------------------------------------------------------------------------------------------- | --------------------------- | ------------------------ | ------------------------------------ | ------ | ------- | --------- | -------- | ----------- | ------- |  |  | 
|                                                                                                                    |                             |                          |                                      |        |         | August 3, |          | February 2,
|                                                                                                                    |                             |                          |                                      |        |         | 2002      |          | 2002       
|                                                                                                                    |                             |                          |                                      |        |         |           |          |            
|                                                                                                                    |                             |                          |                                      | ASSETS |         |           |          |             |         |  |  | 
|Current Assets:                                                                                                     |                             |                          |                                      |        |         |           |          |            
|Cash and cash equivalents                                                                                           |                             | $                        | 2,881                                |        |         | $         | 2,886    |            
|Accounts receivable (net of allowance for doubtful accounts of $1,536
and $1,487, respectively)                     |                             |                          | 19,691                               |        |         |           | 31,845   |            
|Inventories                                                                                                         |                             |                          | 69,522                               |        |         |           | 80,716   |            
|Other current assets                                                                                                |                             |                          | 2,100                                |        |         |           | 2,604    |            
|                                                                                                                    |                             |                          |                                      |        |         |           |          |            
|                                                                                                                    |                             | Total current assets     |                                      |        | 94,194  |           |          |             | 118,051 | 
|                                                                                                                    |                             |                          |                                      |        |         |           |          |            
|Property, net                                                                                                       |                             |                          | 17,430                               |        |         |           | 25,455   |            
|Other assets                                                                                                        |                             |                          | 1,889                                |        |         |           | 1,083    |            
|                                                                                                                    |                             |                          |                                      |        |         |           |          |            
|                                                                                                                    |                             | Total non-current assets |                                      |        | 19,319  |           |          |             | 26,538  | 
|                                                                                                                    |                             |                          |                                      |        |         |           |          |            
|                                                                                                                    |                             | Total assets             |                                      | $      | 113,513 |           |          | $           | 144,589 | 
|                                                                                                                    |                             |                          |                                      |        |         |           |          |            
|                                                                                                                    |                             |                          | LIABILITIES AND STOCKHOLDERS EQUITY |        |         |           |          |             |         |  | 
|Current Liabilities:                                                                                                |                             |                          |                                      |        |         |           |          |            
|Accounts payable                                                                                                    |                             | $                        | 10,400                               |        |         | $         | 10,769   |            
|Accrued expenses                                                                                                    |                             |                          | 8,128                                |        |         |           | 7,318    |            
|Accrued restructuring                                                                                               |                             |                          | 7,854                                |        |         |           | 8,574    |            
|Credit Facilities                                                                                                   |                             |                          | 42,792                               |        |         |           | 53,464   |            
|                                                                                                                    |                             |                          |                                      |        |         |           |          |            
|                                                                                                                    | Total current liabilities   |                          |                                      | 69,174 |         |           |          | 80,125      |        
|                                                                                                                    |                             |                          |                                      |        |         |           |          |            
|Other long term liabilities                                                                                         |                             |                          | 3,790                                |        |         |           | 3,357    |            
|                                                                                                                    |                             |                          |                                      |        |         |           |          |            
|                                                                                                                    | Total long term liabilities |                          |                                      | 3,790  |         |           |          | 3,357       |        
|                                                                                                                    |                             |                          |                                      |        |         |           |          |            
|Stockholders Equity:                                                                                               |                             |                          |                                      |        |         |           |          |            
|Common stock, $.0001 par value, 50,000,000 shares authorized,
29,553,812 and 29,509,703 shares issued, respectively |                             |                          | 3                                    |        |         |           | 3        |            
|Additional paid-in capital                                                                                          |                             |                          | 194,539                              |        |         |           | 194,526  |            
|Accumulated deficit                                                                                                 |                             |                          | (124,593                             | )      |         |           | (104,022 | )          
|Less: 9,983,954 shares of treasury stock, at cost                                                                   |                             |                          | (29,400                              | )      |         |           | (29,400  | )          
|                                                                                                                    |                             |                          |                                      |        |         |           |          |            
|                                                                                                                    | Total stockholders equity  |                          |                                      | 40,549 |         |           |          | 61,107      |        
|                                                                                                                    |                             |                          |                                      |        |         |           |          |            
|Total liabilities and stockholders equity                                                                          |                             | $                        | 113,513                              |        |         | $         | 144,589  |            
|                                                                                                                    |                             |                          |                                      |        |         |           |          |            

See notes to consolidated condensed financial statements.

3



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MAYORS JEWELERS, INC. AND SUBSIDIARIES
CONSOLIDATED CONDENSED STATEMENTS OF OPERATIONS  UNAUDITED
(Amounts shown in thousands except share and per share data)

|                                                       |  |   |                |   |                |   |            |   | 
|------------------------------------------------------ |  | - | -------------- | - | -------------- | - | ---------- | - | 
|                                                       |  |   | Thirteen       |   | Thirteen      
|                                                       |  |   | Weeks Ended    |   | Weeks Ended   
|                                                       |  |   | August 3, 2002 |   | August 4, 2001
|                                                       |  |   |                |   |               
|Net sales                                              |  | $ | 27,389         |   |                | $ | 35,229     |  
|Cost of sales                                          |  |   | 19,805         |   |                |   | 22,049     |  
|                                                       |  |   |                |   |                |   |            |  
|Gross profit                                           |  |   | 7,584          |   |                |   | 13,180     |  
|Store operating and selling expenses                   |  |   | 10,621         |   |                |   | 11,226     |  
|                                                       |  |   |                |   |                |   |            |  
|Store contribution                                     |  |   | (3,037         | ) |                |   | 1,954      |  
|General and administrative expenses                    |  |   | 4,116          |   |                |   | 4,582      |  
|Advertising and marketing expenses                     |  |   | 774            |   |                |   | 1,997      |  
|Other charges                                          |  |   | 1,319          |   |                |   | 227        |  
|Depreciation and amortization                          |  |   | 1,543          |   |                |   | 2,493      |  
|                                                       |  |   |                |   |                |   |            |  
|                                                       |  |   | 7,752          |   |                |   | 9,299      |  
|                                                       |  |   |                |   |                |   |            |  
|Operating loss                                         |  |   | (10,789        | ) |                |   | (7,345     | )
|Interest and other income                              |  |   | 947            |   |                |   |           |  
|Interest expense and debt costs                        |  |   | (1,891         | ) |                |   | (947       | )
|                                                       |  |   |                |   |                |   |            |  
|Loss before income taxes                               |  |   | (11,733        | ) |                |   | (8,292     | )
|Income taxes                                           |  |   | 450            |   |                |   |           |  
|                                                       |  |   |                |   |                |   |            |  
|Net loss                                               |  | $ | (12,183        | ) |                | $ | (8,292     | )
|                                                       |  |   |                |   |                |   |            |  
|Weighted average shares outstanding, basic and diluted |  |   | 19,542,229     |   |                |   | 19,389,718 |  
|                                                      
|Basic and diluted loss per share                       |  | $ | (0.62          | ) |                | $ | (0.43      | )

See notes to consolidated condensed financial statements.

4



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MAYORS JEWELERS, INC. AND SUBSIDIARIES
CONSOLIDATED CONDENSED STATEMENTS OF OPERATIONS  UNAUDITED
(Amounts shown in thousands except share and per share data)

|                                                       |  |   |                |   |                |   |            |   | 
|------------------------------------------------------ |  | - | -------------- | - | -------------- | - | ---------- | - | 
|                                                       |  |   | Twenty-six     |   | Twenty-six    
|                                                       |  |   | Weeks Ended    |   | Weeks Ended   
|                                                       |  |   | August 3, 2002 |   | August 4, 2001
|                                                       |  |   |                |   |               
|Net sales                                              |  | $ | 55,758         |   |                | $ | 71,440     |  
|Cost of sales                                          |  |   | 38,482         |   |                |   | 43,345     |  
|                                                       |  |   |                |   |                |   |            |  
|Gross profit                                           |  |   | 17,276         |   |                |   | 28,095     |  
|Store operating and selling expenses                   |  |   | 21,692         |   |                |   | 22,392     |  
|                                                       |  |   |                |   |                |   |            |  
|Store contribution                                     |  |   | (4,416         | ) |                |   | 5,703      |  
|General and administrative expenses                    |  |   | 6,763          |   |                |   | 9,424      |  
|Advertising and marketing expenses                     |  |   | 1,857          |   |                |   | 3,597      |  
|Other charges                                          |  |   | 2,053          |   |                |   | 1,732      |  
|Depreciation and amortization                          |  |   | 3,223          |   |                |   | 4,931      |  
|                                                       |  |   |                |   |                |   |            |  
|                                                       |  |   | 13,896         |   |                |   | 19,684     |  
|                                                       |  |   |                |   |                |   |            |  
|Operating loss                                         |  |   | (18,312        | ) |                |   | (13,981    | )
|Interest and other income                              |  |   | 992            |   |                |   | 27         |  
|Interest expense and debt costs                        |  |   | (2,802         | ) |                |   | (1,703     | )
|                                                       |  |   |                |   |                |   |            |  
|Loss before income taxes                               |  |   | (20,122        | ) |                |   | (8,292     | )
|Income taxes                                           |  |   | 448            |   |                |   |           |  
|                                                       |  |   |                |   |                |   |            |  
|Net loss                                               |  | $ | (20,570        | ) |                | $ | (15,657    | )
|                                                       |  |   |                |   |                |   |            |  
|Weighted average shares outstanding, basic and diluted |  |   | 19,533,989     |   |                |   | 19,336,720 |  
|                                                      
|Basic and diluted loss per share                       |  | $ | (1.05          | ) |                | $ | (0.81      | )

See notes to consolidated condensed financial statements.

5



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MAYORS JEWELERS, INC. AND SUBSIDIARIES
CONSOLIDATED CONDENSED STATEMENTS OF CASH FLOWS  UNAUDITED
(Amounts shown in thousands)

|                                                     |                                                     |   |                |         |                |   |         |         |  
|---------------------------------------------------- | --------------------------------------------------- | - | -------------- | ------- | -------------- | - | ------- | ------- | -
|                                                     |                                                     |   | Twenty-six     |         | Twenty-six    
|                                                     |                                                     |   | Weeks Ended    |         | Weeks Ended   
|                                                     |                                                     |   | August 3, 2002 |         | August 4, 2001
|                                                     |                                                     |   |                |         |               
|Cash flows from operating activities:                |                                                     |   |                |         |                |   |         |        
|                                                     | Cash received from customers                        |   | $              | 67,912  |                |   | $       | 76,605  |  
|                                                     | Cash paid to suppliers and employees                |   |                | (59,005 | )              |   |         | (83,262 | )
|                                                     | Interest and other income received                  |   |                | 992     |                |   |         | 27      |  
|                                                     | Interest paid                                       |   |                | (2,802  | )              |   |         | (1,703  | )
|                                                     | Income taxes paid                                   |   |                | (448    | )              |   |         |        |  
|                                                     |                                                     |   |                |         |                |   |         |        
|Net cash provided by (used in) continuing operations |                                                     |   | 6,649          |         |                |   | (8,333  | )      
|Net cash used in discontinued operations             |                                                     |   |               |         |                |   | (4,707  | )      
|                                                     |                                                     |   |                |         |                |   |         |        
|Net cash provided by (used in) operating activities  |                                                     |   | 6,649          |         |                |   | (13,040 | )      
|                                                     |                                                     |   |                |         |                |   |         |        
|Cash flows from investing activities:                |                                                     |   |                |         |                |   |         |        
|                                                     | Capital expenditures, net                           |   |                | (353    | )              |   |         | (6,105  | )
|                                                     | Proceeds from sale of fixed assets                  |   |                | 5,154   |                |   |         | 13      |  
|                                                     |                                                     |   |                |         |                |   |         |        
|Net cash provided by (used in) investing activities  |                                                     |   | 4,801          |         |                |   | (6,092  | )      
|                                                     |                                                     |   |                |         |                |   |         |        
|Cash flows from financing activities:                |                                                     |   |                |         |                |   |         |        
|                                                     | Proceeds from sale of employee stock plans          |   |                |        |                |   |         | 620     |  
|                                                     | Borrowings under line of credit                     |   |                | 68,585  |                |   |         | 102,051 |  
|                                                     | Line of credit repayments                           |   |                | (79,257 | )              |   |         | (83,764 | )
|                                                     | Payment of commitment fee related to line of credit |   |                | (1,229  | )              |   |         | (317    | )
|                                                     | Other                                               |   |                | 446     |                |   |         | 1,527   |  
|                                                     |                                                     |   |                |         |                |   |         |        
|Net cash (used in) provided by financing activities  |                                                     |   | (11,455        | )       |                |   | 20,117  |        
|                                                     |                                                     |   |                |         |                |   |         |        
|Net (decrease) increase in cash and cash equivalents |                                                     |   | (5             | )       |                |   | 985     |        
|Cash and cash equivalents at beginning of period     |                                                     |   | 2,886          |         |                |   | 1,363   |        
|                                                     |                                                     |   |                |         |                |   |         |        
|Cash and cash equivalents at end of period           |                                                     | $ | 2,881          |         |                | $ | 2,348   |        
|                                                     |                                                     |   |                |         |                |   |         |        

(continued)

6



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MAYORS JEWELERS, INC. AND SUBSIDIARIES
CONSOLIDATED CONDENSED STATEMENTS OF CASH FLOWS  UNAUDITED(Continued)
(Amounts shown in thousands)

|                                                                                   |                                     |                          |         |                |        |                |         |       |        |  
|---------------------------------------------------------------------------------- | ----------------------------------- | ------------------------ | ------- | -------------- | ------ | -------------- | ------- | ----- | ------ | -
|                                                                                   |                                     |                          |         | Twenty-six     |        | Twenty-six    
|                                                                                   |                                     |                          |         | Weeks Ended    |        | Weeks Ended   
|                                                                                   |                                     |                          |         | August 3, 2002 |        | August 4, 2001
|                                                                                   |                                     |                          |         |                |        |               
|Reconciliation of Net Loss to Net Cash provided by (used in)
operating activities: |                                     |                          |         |                |        |                |         |      
|Net loss                                                                           |                                     | $                        | (20,570 | )              |        | $              | (15,657 | )    
|Adjustments to reconcile net loss to net cash used in operating
activities:        |                                     |                          |         |                |        |                |         |      
|                                                                                   | Depreciation and amortization       |                          |         | 3,223          |        |                |         | 4,931 |       
|                                                                                   | Provision for doubtful accounts     |                          |         | 1,756          |        |                |         | 1,138 |       
|                                                                                   | (Increase) decrease in assets:      |                          |         |                |        |                |         |       |       
|                                                                                   |                                     | Accounts receivable, net |         |                | 10,397 |                |         |       | 4,028  |  
|                                                                                   |                                     | Inventories              |         |                | 11,194 |                |         |       | (1,601 | )
|                                                                                   |                                     | Other                    |         |                | 928    |                |         |       | 282    |  
|                                                                                   | Increase (decrease) in liabilities: |                          |         |                |        |                |         |       |       
|                                                                                   |                                     | Accounts payable         |         |                | (369   | )              |         |       | (817   | )
|                                                                                   |                                     | Accrued expenses         |         |                | 810    |                |         |       | (637   | )
|                                                                                   |                                     | Accrued restructuring    |         |                | (720   | )              |         |       |       |  
|                                                                                   |                                     |                          |         |                |        |                |         |      
|Net cash provided by (used in) continuing operations                               |                                     |                          | 6,649   |                |        |                | (8,333  | )    
|Net cash used in discontinued operations                                           |                                     |                          |        |                |        |                | (4,707  | )    
|                                                                                   |                                     |                          |         |                |        |                |         |      
|Net cash provided by (used in) operating activities                                |                                     | $                        | 6,649   |                |        | $              | (13,040 | )    
|                                                                                   |                                     |                          |         |                |        |                |         |      

See notes to consolidated condensed financial statements.

7



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MAYORS JEWELERS, INC. AND SUBSIDIARIES
NOTES TO THE CONSOLIDATED CONDENSED FINANCIAL STATEMENTS
(Unaudited)

A. Basis of Presentation

The Companys
consolidated condensed financial statements as of August 3,
2002 and February 2, 2002, and for the thirteen and twenty-six week periods
ended August 3, 2002 and August 4, 2001 have not been audited by certified
public accountants, but in the opinion of the management of Mayors Jewelers,
Inc. and its subsidiaries (the Company or Mayors) reflect all adjustments
(which include normal recurring accruals) necessary to present fairly the
financial position, results of operations and cash flows for those periods.
Results of the thirteen and twenty-six week periods ended August 3, 2002 and
August 4, 2001 are not necessarily indicative of annual results because of the
seasonality of the Companys business.

The accompanying
consolidated condensed financial statements have been prepared on a
going concern basis, which contemplates the realization of assets and the
satisfaction of liabilities in the normal course of business. The Company has
incurred recurring losses from continuing operations and certain vendors had
expressed concerns about the Companys financial condition. These factors and
the need to obtain additional financing indicate that the Company may not have
been able to continue as a going concern for a reasonable period of time. As a
result thereof, on August 20, 2002, the Company closed on a gross $15 million
equity investment transaction (see Note H herein) with Henry Birks & Sons Inc.
(Birks) as well as restructured its credit facility to sustain its operations
and to execute its restructuring plan (the Restructuring Plan) adopted in the
fourth quarter of 2001.

The consolidated
condensed financial statements do not include any adjustments
relating to the recoverability and classification of recorded asset amounts or
the amounts and classifications of liabilities that might be necessary should
the Company be unable to continue as a going concern. While there can be no
assurance thereof, management of the Company believes that the new relationship
with Birks will alleviate this situation.

B. Restructuring and Other Charges

The multi-faceted Restructuring Plan adopted during the fourth quarter of
fiscal 2001 included, among other significant initiatives, an infusion of
equity, the refinancing of the Companys bank debt, the closing of thirteen
unprofitable and under-performing stores, the liquidation of certain
non-performing assets and the reduction of various field and corporate costs.

The stores to be closed as part of the plan included eleven properties
outside of the Companys core Florida and Georgia marketplace, as well as two
stores in Florida. Through August 31, 2002, twelve locations were closed with one
additional store to close as soon as practicable. The closing of these stores
marks a significant retrenchment of the Companys recent expansion strategy
into states where Mayors does not enjoy the brand loyalty that it has enjoyed
in Florida and Georgia.

Assets earmarked for liquidation included certain unproductive
inventories, a significant portion of which were liquidated during the second
quarter, the Companys headquarters building and associated real estate in
Sunrise, Florida, which were sold on July 12, 2002, fixed assets in the closed
stores and certain other assets.

Additionally, on August 20, 2002, Mayors closed on a gross $15 million
equity investment transaction with Birks. At the closing, Mayors received $10
million in cash and a promissory note from Birks due on September 30, 2002 for
$5 million (See Note H herein). As consideration for the $15 million investment, Birks received
shares of Series A Convertible Preferred Stock that upon conversion into common
stock would give Birks approximately a 72% interest in Mayors. The investment also
provides Birks with the right to appoint the majority of Directors
and provides warrants to acquire additional shares which, upon exercise, would increase
Birks interest in Mayors to approximately 82%.

8



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MAYORS JEWELERS, INC. AND SUBSIDIARIES
NOTES TO THE CONSOLIDATED CONDENSED FINANCIAL STATEMENTS(Continued)
(Unaudited)

On May 30, 2002, the Company executed a credit agreement with Fleet Retail
Finance and Back Bay Capital for a three year $55 million revolving facility
and a $12.5 million junior secured term loan. This credit agreement was
replaced on August 20, 2002 with a new facility which included GMAC as part of
the lending group. The new facility increased the revolving facility to $58
million and improved the loan availability and interest rates (see Note H 
Subsequent Events). The financing contains certain conditions,
including, but
not limited, to inventory and capital expenditure financial covenants.

The Restructuring Plan, originally expected to be completed during the end
of the second quarter of 2002, is now expected to be essentially completed by
the end of the third quarter of 2002. The Restructuring Plan includes the
elimination of approximately 207 positions in the field as well as Mayors
former chief executive officer and the closing of 13 stores as previously
discussed.

During the twenty-six
weeks ended August 3, 2002, approximately $720,000
of the accrued restructuring costs were paid primarily for severance costs and
costs associated with exiting the stores. As of August 3, 2002, the accrued
restructuring balance was approximately $7,854,000 and related primarily to
lease terminations and associated costs.

Other charges for the thirteen and twenty-six weeks ended August 3, 2002
consist of one time charges for professional fees related to the Restructuring
Plan, severance costs and fees related to costs associated with the exit from
the non profitable stores. Other charges for the thirteen and twenty-six weeks
ended August 4, 2001 consist of one time charges for strategic cost reduction
projects, non-recurring legal fees associated with shareholder related matters
and severance costs.

C. Credit Facilities

Prior to May 30, 2002, the Company had an $80 million working capital
credit facility in place with a bank group led by Citicorp. The Company was
operating under an amendment that required a restructuring or refinancing of
the facility by May 30, 2002. Accordingly, the Company executed on May 30, 2002
a $55 million working capital credit facility with Fleet Retail Finance and a
$12.5 million junior secured term loan with Back Bay Capital. Both of the debt
facilities had an expiration of May 30, 2005 and were collateralized by
substantially all of the Companys assets. Availability under the working
capital facility was determined based upon a percentage formula applied to
inventory and accounts receivable. The interest rate under this facility was
Prime plus 2.75%.

Further, as conditions for the financing, the Company agreed to
restrictions regarding borrowing availability, which included requiring the
Company to decrease the lesser of collateral availability or the $55 million
cap provided for by the facility by $8 million. Based on this, the Company had
a $46.6 million borrowing capacity at August 3, 2002. At August 3, 2002, the
Company had approximately $42.8 million outstanding under its facility and had
$0.9 million in letters of credit outstanding.

9



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##### 



MAYORS JEWELERS, INC. AND SUBSIDIARIES
NOTES TO THE CONSOLIDATED CONDENSED FINANCIAL STATEMENTS(Continued)
(Unaudited)

The junior secured term loan bears interest and fees at an effective rate
of 19.5% and is subject to similar restrictions as the working capital
facility. Both facilities have covenants restricting capital expenditures and
investment in inventory.

In connection with the equity investment by Birks, this facility was
amended on August 20, 2002 to include GMAC in the lending group. Please refer
to Note H  Subsequent Events.

D. Newly Issued Accounting Standards

In July 2001, the Financial Accounting Standards Board (FASB) issued
Statement of Financial Accounting Standards (SFAS) No. 141, Business
Combinations, and SFAS No. 142, Goodwill and Other Intangible Assets. These
standards establish accounting and reporting for business combinations. SFAS
No. 141 requires all business combinations entered into subsequent to June 30,
2001 to be accounted for using the purchase method of accounting. SFAS No. 142
provides that goodwill and other intangible assets with indefinite lives will
not be amortized, but will be tested for impairment on an annual basis. Mayors
adopted SFAS No. 142 in the first quarter of 2002. The adoption has not had a
material effect on Mayors financial statements.

In August 2001, the FASB issued SFAS No. 144, Accounting for the
Impairment or Disposal of Long-Lived Assets, which is effective for fiscal
years beginning after December 15, 2001. This Statement addresses financial
accounting and reporting for the impairment or disposal of long-lived assets
and supercedes SFAS No. 121, Accounting for the Impairment of Long-Lived
Assets and for Long-Lived Assets to Be Disposed Of, and accounting and
reporting provisions of Accounting Principles Board Opinion No. 30, Reporting
the Results of Operations  Reporting the Effects of Disposal of a Segment of a
Business, and Extraordinary, Unusual and Infrequently Occurring Events and
Transactions, for the disposal of a segment of a business (as previously
defined in that opinion). This statement also amends Accounting Research
Bulletin No. 51, Consolidated Financial Statements, to eliminate the
exception to consolidation for subsidiaries for which control is likely to be
temporary. Mayors adopted SFAS No. 144 in the first quarter of 2002. The
adoption has not had a material effect on Mayors financial statements.

In April 2002, the FASB issued SFAS 145, Rescission of FASB Statements
No. 4, 44, and 64, Amendment of FASB Statement No. 13, and Technical
Correction. This Statement eliminates extraordinary accounting treatment of
reporting gain or loss on debt extinguishment, and amends other existing
authoritative pronouncements to make various technical corrections, clarifies
meanings, or describes their applicability under changed conditions. The
provisions of this Statement are effective for the Company with the beginning
of fiscal year 2003; however, early application of the Statement is encouraged.
Debt extinguishments reported as extraordinary items prior to scheduled or
early adoption of this Statement would be reclassified in most cases following
adoption. The Company does not anticipate a significant impact on its results
of operations from adopting this Statement.

In June 2002, the
FASB issued SFAS 146, Accounting for Costs Associated
with Exit or Disposal Activities. This Statement requires recording costs
associated with exit or disposal activities at their fair values when a
liability has been incurred. Under previous guidance, certain exit costs were
accrued upon managements commitment to an exit plan. Adoption of this
Statement is required with the beginning of fiscal year 2003. The Company does
not anticipate a significant impact on its results of operations from adopting
this Statement.

10



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MAYORS JEWELERS, INC. AND SUBSIDIARIES
NOTES TO THE CONSOLIDATED CONDENSED FINANCIAL STATEMENTS(Continued)
(Unaudited)

E. Inventories

Inventories are summarized as follows:

|               |  |                              |        |                  |  |   |        | 
|-------------- |  | ---------------------------- | ------ | ---------------- |  | - | ------ | 
|               |  | August 3, 2002               |        | February 2, 2002
|               |  |                              |        |                 
|               |  | (amounts shown in thousands)
|Raw materials  |  | $                            | 2,094  |                  |  | $ | 656    | 
|Finished goods |  |                              | 67,428 |                  |  |   | 80,060 | 
|               |  |                              |        |                  |  |   |        | 
|               |  | $                            | 69,522 |                  |  | $ | 80,716 | 
|               |  |                              |        |                  |  |   |        | 

F. Income Taxes

The Company has federal net operating loss carryforwards from fiscal years
ending February 2, 2002 and earlier of approximately $33.0 million and state
NOL carryforwards of approximately $21.6 million. The amount of Mayors
subsidiary NOL included in the $33.0 million is approximately $1.4 million
which is subject to limitations of Section 382 of the U.S. Internal Revenue
Code of 1986, as amended. The federal net operating loss carryforwards expire
in years beginning in 2010 through to 2020 and the state net operating loss
carryforwards expire in years beginning in 2005 through to 2020. The change of
control referred to in the subsequent event note (Note H) will limit the
availability of the carryforward of these NOLs. The Company also has an
alternative minimum tax credit carryforward of approximately $1.8 million to
offset future federal income taxes. The valuation allowance has been recorded
for $1.8 million and the net deferred tax asset is nil.

The Mayors subsidiarys 1994, 1995 and 1996 federal income tax returns
are currently under examination by the IRS. The impact of the IRS examination
on the Companys financial condition, results of operation, and cash flow
cannot be ascertained at this time.

G. Commitments and Contingencies

The Company is involved in litigation arising from the normal course of
business. In these pending matters, the Company believes the facts and the law
support its positions and these matters should not materially affect the
Companys financial position; however, there can be no assurance as to the
final result of these legal matters.

Pending and potential litigation arising from the Companys planned exit
of 13 unprofitable stores has been eliminated with the lease termination
settlements of all but one of the closing locations.

In July 2002, the Company settled with former Mayors shareholders
related to the Mayors acquisition and received $0.9 million above what was
recorded in Due from Escrow in the Other Assets section of the Consolidated
Balance Sheet. The $0.9 million gain is included in Interest and Other Income
on the Consolidated Statement of Operations, as all goodwill related to the
transaction was previously written off.

The Company had $6.2 million in consignment inventory as of August 3, 2002
and $7.9 million as of February 2, 2002.

11



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MAYORS JEWELERS, INC. AND SUBSIDIARIES
NOTES TO THE CONSOLIDATED CONDENSED FINANCIAL STATEMENTS(Continued)
(Unaudited)

H. Subsequent Events

On August 20, 2002, Mayors closed on a gross $15 million equity
investment transaction with Birks, before consideration of transaction costs.
At the closing, Mayors received $10 million in cash and a promissory note from
Birks due on September 30, 2002 for the additional $5 million. As
consideration for the $15 million investment, Birks received shares of
Preferred Convertible Stock that upon exercise into common stock
would give Birks
approximately a 72% interest in Mayors. The investment also provides Birks with the right to
appoint the majority of Directors and provides warrants to acquire additional
shares which, upon exercise, would increase Birks interest to
approximately 82% of Mayors.

In connection with the equity investment, the credit facilities were
replaced on August 20, 2002, with a new facility with GMAC as a member of the
lending group joining the revolving facility group. The revolving facility
line increased from $55 million to $58 million. Inventory loan availability
was increased and the effective interest rate decreased from prime plus 2.75%
to prime plus 1.50%. There is an unused facility fee of 0.25%. The $8 million
availability block was reduced to $7 million for the July to
December periods and
to $6 million for the January to June periods. The $12.5 million junior secured
term loan with Back Bay Capital remains, but with the effective interest rate
decreasing from 19.5% to 18.25%.

Essentially all the assets of the Company have been pledged as security
for these facilities. The credit agreements include certain covenants related
to inventory and capital expenditures.

As part of its Restructuring Plan, the Company planned to close 13 of its
unprofitable stores and 1 lease for a store yet to be built, including 11
locations outside of the Companys core Florida and Georgia marketplace as well
as two stores in Florida. As of August 3, 2002, the Company had closed 3 of
these locations and had terminated 1 lease for a store yet to be built. Nine
additional stores were closed subsequent to August 3, 2002. The remaining
store will be closed as soon as practicable.

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ITEM 2

MANAGEMENTS DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS

Results of Operations

The discussion and analysis below contains trend analysis and other
forward-looking statements within the meaning of Section 27A of the Securities
Act of 1933 and Section 21E of the Securities Exchange Act of 1934. The
Companys actual results could differ materially from those anticipated in any
forward-looking statements as a result of certain factors set forth below and
elsewhere in this report and in the Companys annual report on Form 10-K for
the year ended February 2, 2002 and other reports filed with the Securities and
Exchange Commission.

As of September 13, 2002, Mayors operated 29 luxury jewelry stores in
four states. Twelve under performing stores were closed through the end of
August 2002, with an additional location scheduled to be closed as soon as
practicable.

The multi-faceted Restructuring Plan adopted during the fourth quarter of
fiscal 2001 included, among other significant initiatives, an infusion of
equity, the refinancing of the Companys bank debt, the closing of thirteen
unprofitable and under-performing stores, the liquidation of certain
non-performing assets and the reduction of various field and corporate costs.

The stores to be closed as part of the plan included eleven properties
outside of the Companys core Florida and Georgia marketplace, as well as two
stores in Florida. Through August 31, 2002, twelve store locations were closed and
one lease commitment for a location yet to be built was terminated, with one
additional store to close as soon as practicable. The closing of these stores
marks a significant retrenchment of the Companys recent expansion strategy
into states where Mayors does not enjoy the brand loyalty that it has enjoyed
in Florida and Georgia.

Assets earmarked for liquidation included certain unproductive
inventories, a significant portion of which were liquidated during the second
quarter, the Companys headquarters building and associated real estate in
Sunrise, Florida, which were sold on July 12, 2002, fixed assets in the closed
stores and certain other assets.

Additionally, on August 20, 2002, Mayors closed on a gross $15 million
equity investment transaction with Birks. At the closing Mayors received $10
million in cash and a promissory note from Birks due on September 30, 2002 for
$5 million. As consideration for the $15 million investment, Birks received
shares of Series A Convertible Preferred Stock that upon conversion into common
stock would give Birks approximately a 72% interest in Mayors. The investment also
provides Birks with the right to appoint the majority of Directors and provides
warrants to acquire additional shares which, upon exercise, would increase
Birks interest in Mayors to approximately 82%. A significant condition to the
investment by Birks was the negotiated closing of 13 unprofitable stores and
the termination of one lease commitment for a store that was not built. The
Company will open two new stores in Florida during the fourth quarter of 2002
that the Company believes will enhance its core market. There can be no
assurance, however, that the new stores will enhance its core markets.

On May 30, 2002, the Company executed a credit agreement with Fleet Retail Finance and Back
Bay Capital for a three year $55 million revolving facility and a $12.5 million
junior secured term loan which was amended on August 20, 2002 to add GMAC to
the lending group and to increase the revolving facility to $58 million. The
financing contains certain conditions, including but not limited to inventory
and capital expenditure financial covenants.

The Company believes short-term growth will come from rebuilding the
Companys presence within existing markets where Mayors has enjoyed strong
brand recognition.

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As the Company refocuses on its core business, it plans to execute a
productive merchandising strategy in its remaining 29 stores. The Company
believes that with the additional capital resources that the above mentioned
equity infusion will provide, combined with the somewhat improved
availability under its loan facilities, as well as the direction and support of
Birks, it will be able to execute initiatives that will drive the business
toward positive comparable store sales results; there can be no
assurance, however, that such results will occur.

The Companys net sales for the thirteen and twenty-six weeks ended August
3, 2002 were $27.4 million and $55.8 million, respectively, compared to $35.2
million and $71.4 million, respectively, for the thirteen and twenty-six weeks
ended August 4, 2001. The decrease in revenues for the thirteen and twenty-six
weeks ended August 3, 2002 is primarily due to merchandising and marketing
issues related to the Companys significant reduction in
available capital,
coupled with the continued slowdown of the economy. In addition, sales were
negatively impacted by certain suppliers withholding shipments, principally
Rolex. Subsequent to the equity investment on August 20, 2002, these suppliers
have now resumed normal shipments. Comparable store sales decreased 28.4% and
27.3% for the thirteen and twenty-six weeks ended August 3, 2002, respectively.

The retail jewelry market is particularly subject to the impact of the
level of consumer confidence and discretionary income on the type and value of
goods purchased. With the consolidation of the retail industry, the Company
believes that competition both within the luxury goods retail industry and with
other competing general and specialty retailers and discounters will continue
to increase. The luxury watch brands business comprise a significant portion of
Mayors business, which is a result of the Companys ability to effectively
market high-end watches. If, for any reason, the Company were unable to sell
certain brands of watches, it could have a material adverse effect on the
Companys business, financial condition and operating results.
Please refer below to
Item 3 Forward Looking Statements.

Gross profit was 27.7% and 31.0% for the thirteen and twenty-six weeks
ended August 3, 2002, respectively, compared to 37.4% and 39.3% for the
thirteen and twenty-six weeks ended August 4, 2001, respectively. The decrease
in gross profit as a percentage of net sales for the thirteen and twenty-six
weeks ended August 3, 2002 is primarily due to the liquidation of slow moving
and discontinued inventory, primarily in the non-core market stores being
closed.

The Company believes that the opportunity exists to increase gross profit
over the next couple of years. Areas for gross margin improvement include
strategies to lower the cost of merchandise purchased, to increase the sales of
merchandise exclusive to the Company and to move the mix of sales towards
higher margin jewelry items. In addition, the Company expects to refine the
allocation, replenishment and management of inventory in its stores. As the
slow moving and discontinued inventory is liquidated, other direct costs such
as slow moving inventory reserves are expected to decrease. There of
course can be no
assurance that the Company will be able to increase gross profit.

Store operating and selling expenses were $10.6 million or 38.8% of net
sales and $21.7 million or 38.9% of net sales for the thirteen and twenty-six
weeks ended August 3, 2002, respectively, compared to $11.2 million or 31.9% of
net sales and $22.4 million or 31.3% of net sales for the thirteen and
twenty-six weeks ended August 4, 2001, respectively. The increase in store
operating and selling expenses as a percentage of net sales for the thirteen
and twenty-six weeks ended August 3, 2002 is mainly attributable to a decline
in comparable store sales and the liquidation of inventory at reduced margin in
the new stores. The Company does not believe there is significant opportunity
to reduce these expenses other than the decrease that will occur as a result of
the 13 store closings discussed above.

General and administrative expenses were $4.1 million or 15.0% of net
sales and $6.8 million or 12.1% of net sales for the thirteen and twenty-six
weeks ended August 3, 2002, respectively, compared to $4.6 million or 13.0% of
net sales and $9.4 million or 13.2% of net sales for the thirteen and
twenty-six weeks ended August 4, 2001, respectively. The decrease in general
and administrative expenses for the thirteen and twenty-six weeks ended August
3, 2002 is primarily a result of a corporate restructuring, net of increases in
liability insurance. Included in general and administrative expenses are
$390,000 of fees paid to Birks in the second quarter of
fiscal year 2002 for merchandising and other consulting services.

14



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Advertising and marketing expenses were $0.8 million and $1.9 million for
the thirteen and twenty-six weeks ended August 3, 2002, respectively, compared
to $2.0 million and $3.6 million for the thirteen and twenty-six weeks ended
August 4, 2001, respectively. The decreases in advertising and marketing
expenses are primarily attributable to capital constraints.

Other charges for the thirteen and twenty-six weeks ended August 3, 2002
were $1.3 million and $2.1 million, respectively. These charges consist of one
time charges for professional fees related to the execution of the
Restructuring Plan and fees related to costs associated with the exit of the
non profitable stores. Other charges for the thirteen and twenty-six weeks
ended August 4, 2001 were $0.2 million and $1.7 million, respectively. These
charges consist of one time charges for strategic cost reduction projects,
non-recurring legal fees associated with shareholder related matters and
severance costs.

Depreciation and amortization expenses were $1.5 million and $3.2 million
for the thirteen and twenty-six weeks ended August 3, 2002, respectively,
compared to $2.5 million and $4.9 million for the thirteen and twenty-six weeks
ended August 4, 2001. The decrease in depreciation and amortization expenses
for the thirteen and twenty-six weeks ended August 3, 2002 is a result of the
goodwill impairment writedown at the end of Fiscal 2001, and the disposal of
fixed assets for the corporate headquarters, which was sold on July 12, 2002,
and the closed stores.

Interest and other income was $0.9 million and $1.0 million for the
thirteen and twenty-six weeks ended August 3, 2002, respectively, compared to
$27,000 for the twenty-six weeks ended August 4, 2001. Interest expense related
to the Companys working capital facility was $1.9 million and $2.8 million for
the thirteen and twenty-six weeks ended August 3, 2002, respectively, compared
to $0.9 million and $1.7 million for the thirteen and twenty-six weeks ended
August 4, 2001, respectively.

Liquidity and Capital Resources

As of August 3, 2002, the Company had a $55 million working capital
facility with Fleet Retail Finance and a $12.5 million junior secured term loan
with Back Bay Capital. As a result of the equity infusion from Birks, that
facility was replaced on August 20, 2002 with a new facility which included
GMAC in the lending group and increased the working capital facility to $58
million. Both of the debt facilities had an expiration of May 30, 2005 and were
collateralized by substantially all of the Companys assets. Availability
under the working capital facility is determined based upon a percentage
formula applied to inventory and accounts receivable. The interest rate under
this current facility is Prime plus 1.5%. The rate on the facility as of
September 13, 2002 was 6.25%.

The May 30, 2002 credit facilities had restrictions regarding borrowing
availability. The Company was required to decrease the lesser of collateral
availability or the $55 million cap provided by the facility by
$8 million;
with the amendment on August 20, 2002 the availability block was reduced to $7
million for the July to December periods and $6 million for the
January to June periods.

As of August 3, 2002, after accounting for the foregoing borrowing
restrictions, the Company had approximately $46.6 million of borrowing capacity
and, after netting the outstanding borrowings of $42.8 million and letter of
credit commitments of $919,000, the Company had a net borrowing availability of
approximately $2.9 million. Subsequent to the equity investment by Birks and
the amendment of the credit facilities, the Companys borrowing capacity net of
outstanding borrowings was increased. As of September 13, 2002, the excess
borrowing capacity net of outstanding borrowings was approximately $21 million.

The working capital facility currently contains financial covenants that
limit capital expenditures and require certain levels of inventory investment.
There can be no assurance that the Companys future operating results will be
sufficient to meet the requirements of the foregoing covenants.

15



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The junior secured term loan currently bears an effective interest rate of
18.25% and is subject to similar restrictions as the working capital facility.
The term loan also has covenants regarding limitations on capital expenditures
and requires certain levels of investment in inventory.

During the twenty-six weeks ended August 3, 2002, cash flows from
operating activities provided $6.6 million in cash. The Companys business is
highly seasonal. Consequently, seasonal working capital needs peak in October
and November, before the holiday shopping season.

Net cash provided by investing activities was $4.8 million during the
twenty-six weeks ended August 3, 2002, primarily from the sale of the corporate
headquarters building.

The Company plans to sell the majority of its private label credit
receivables to an outside company in the second half of 2002. This transaction
will result in additional liquidity, although there can be no assurance that
such a transaction will occur.

The accompanying
consolidated condensed financial statements have been prepared on a
going concern basis, which contemplates the realization of assets and the
satisfaction of liabilities in the normal course of business. The Company has
incurred recurring losses from continuing operations and certain vendors had
expressed concerns about the Companys financial condition.

The consolidated
condensed financial statements do not include any adjustments
relating to the recoverability and classification of recorded asset amounts or
the amounts and classifications of liabilities that might be necessary should
the Company be unable to continue as a going concern. While there can be no
assurance thereof, management of the Company believes that the new relationship
with Birks will alleviate this situation.

Item 3.Quantitative and Qualitative Disclosures about Market Risks

Interest Rate Risks

The disclosure in the Annual Report on Form 10-K filed May 20, 2002 is
incorporated by reference herein. The Company does not believe that the risk
related to interest rate changes is materially different than it was at the
date of the referenced report.

Forward-Looking Statements

This report and other written reports and releases and oral statements
made from time to time by the Company contain forward-looking statements which
can be identified by their use of words like plans, expects, believes,
will, anticipates, intends, projects, estimates, could, would,
may, planned, goal, and other words of similar meaning. All statements
that address expectations, possibilities or projections about the future,
including without limitation statements about the Companys strategies for
growth, expansion plans, sources or adequacy of capital, expenditures and
financial results are forward-looking statements.

One must carefully consider such statements and understand that many
factors could cause actual results to differ from the forward-looking
statements, such as inaccurate assumptions and other risks and uncertainties,
some known and some unknown. No forward-looking statement is guaranteed and
actual results may vary materially. Such statements are made as of the date
provided, and the Company assumes no obligation to update any forward-looking
statements to reflect future developments or circumstances.

One should carefully evaluate such statements by referring to the factors
described in the Companys filings with the SEC, especially on Forms 10-K,
10-Q and 8-K. Particular review is to be made of Items 1, 2, 3 and 7 of the
Form 10-K and Item 2 of the Forms 10-Q where the Company discusses in more
detail various important risks and uncertainties that could cause actual
results to differ from expected or historical results. Since it is not possible to predict or identify all such factors, the
identified items are not a complete statement of all risks or uncertainties.

Critical Accounting Policies and Estimates

The preparation of
financial statements in conformity with accounting principles generally
accepted in the United States of America requires the Company to make estimates and
assumptions about future events and their impact on amounts reported in the
financial statements and related notes. Since future events and their impact
cannot be determined with certainty, the actual results may differ from those
estimates. These estimates and assumptions are evaluated on an on-going basis
and are based on historical experience and on various factors that are believed
to be reasonable.

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The Company has identified certain critical accounting policies below.

Allowance for slow moving and obsolete inventory.The Company writes down
its inventory for estimated unmarketable inventory or obsolescence equal to the
difference between the cost of inventory and the estimated market value based
on assumptions about future demand and market conditions. If actual market
conditions are less favorable than those projected by management, additional
inventory write-downs may be required.

Allowance for doubtful accounts. The Company maintains allowances for
doubtful accounts for estimated losses resulting from the inability of its
customers to make required payments. If the financial condition of Mayors
customers were to deteriorate, resulting in an impairment of their ability to
make payments, additional allowances may be required.

Item 4.Internal Controls

Not applicable.

PART II: OTHER INFORMATION

Item 6.Exhibits and Reports on Form 8-K



| | (a) |  | The following list of schedules and exhibits are incorporated by reference
as indicated in this Form 10-Q:
| | --- |  | ----------------------------------------------------------------------------------------------------------

|     |  |                                                                                                                        
|---- |  | -----------------------------------------------------------------------------------------------------------------------
|99.1 |  | Certification of Chief Operating Officer and Chief Financial Officer
pursuant to Section 906 of the Sarbanes-Oxley Act.



| | (b) |  | Reports on Form 8-K:
| | --- |  | --------------------

None.

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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.

| |  |                        
| |  | -----------------------
| |  | MAYORS JEWELERS, INC. 
| |  |                        
| |  | (Registrant)           
|
| |  | By: /s/ Marc Weinstein 
| |  |                        
| |  | Chief Operating Officer
|
| |  | By: /s/ John Ball      
| |  |                        
| |  | Chief Financial Officer

Date: September 17, 2002

18