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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549
   FORM 10-Q (Mark one) [X]
    
    QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
 For the Thirteen Weeks Ended September 25, 2004 OR [  ]
    
    TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
 For the transition period from ____________to____________ Commission File Number 1-9647 MAYORS JEWELERS, INC.  Delaware
    
    59-2290953(State or Other Jurisdiction of
Incorporation or Organization)
    
    (I.R.S. Employer
Identification No.)
 14051 N.W. 14th Street, Suite 200
Sunrise, Florida 33323
(Address of Principal Executive Offices) (Zip Code) (954) 846-8000
(Registrants Telephone Number, Including Area Code) Indicate by check mark whether the registrant (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange Act of
1934 during the preceding 12 months (or for such shorter period that the
registrant was required to file such reports), and (2) has been subject to such
filing requirements for the past 90 days. Yes  [X]  No  [  ] Indicate by check mark whether the registrant is an accelerated filer (as
defined in Rule 12b-2 of the Exchange Act.) Yes  
[  ]  No  [X] Indicate the number of shares outstanding of each of the issuers classes
of common stock, as of the latest practicable date. 36,961,307 SHARES OF COMMON STOCK ($.0001 PAR VALUE)
AS OF NOVEMBER 3, 2004




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Explanatory Note This
Form 10-Q reflects restatements of the following (unaudited) financial statements: consolidated
statements of operations and cash flows for the thirteen and twenty-six
weeks ended September 27, 2003. The restatement reflect changes to the accounting treatment of
certain warrants issued by the Company. For a description of the restatements, see Restatements
in Note B to the accompanying unaudited consolidated condensed financial statements. This Form
10-Q also amends Item 2 with respect to the related warrant non-cash compensation expense
discussion as it relates to the thirteen and twenty-six weeks ended
September 27,2003.




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MAYORS JEWELERS, INC. FORM 10-Q FOR THE THIRTEEN WEEKS ENDED SEPTEMBER 25, 2004 TABLE OF CONTENTS Page No.PART I: FINANCIAL INFORMATIONItem 1. Consolidated Condensed Financial Statements  UnauditedConsolidated Condensed Balance Sheets as of September 25, 2004 and March 27, 2004
    
    
    3Consolidated Condensed Statements of Operations for the thirteen weeks ended September 25, 2004 and September 27, 2003 (as Restated)
    
    
    4Consolidated Condensed Statements of Operations for the twenty-six weeks ended September 25, 2004 and September 27, 2003 (as Restated)
    
    
    5Consolidated Condensed Statements of Cash Flows for the twenty-six weeks ended September 25, 2004 and September 27, 2003 (as Restated)
    
    
    6Notes to Consolidated Condensed Financial Statements
    
    
    7-11Item 2. Managements Discussion and Analysis of Financial Condition and Results of Operations (as Restated)
    
    
    12-15Item 3. Quantitative and Qualitative Disclosures About Market Risks
    
    
    15Item 4. Controls and Procedures
    
    
    15-16PART II: OTHER INFORMATIONItem 1. Legal Proceedings
    
    
    16Item 4. Submission of Matters to a Vote of Security Holders
    
    
    17Item 6. Exhibits
    
    
    17-18Signatures
    
    
    19Revolving Credit & Security AgreementSec 302 Chief Executive Officer CertificationSec 302 Chief Financial Officer CertificationSec 906 Chief Executive Officer CertificationSec 906 Chief Financial Officer Certification
  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)
 September 25,
    
    March 27,2004
    
    2004ASSETSCurrent Assets:Cash and cash equivalents
    
    $
    1,100
    
    
    $
    1,448Accounts receivable (net of allowance for doubtful accounts of
$980 and $999, at September 25, 2004 and March 27, 2004,
respectively)
    
    
    4,987
    
    
    
    6,446Inventories
    
    
    82,832
    
    
    
    80,825Other current assets
    
    
    676
    
    
    
    1,194Total current assets
    
    
    89,595
    
    
    
    89,913Property, net
    
    
    13,515
    
    
    
    14,634Other assets
    
    
    721
    
    
    
    668Total non-current assets
    
    
    14,236
    
    
    
    15,302Total assets
    
    $
    103,831
    
    
    $
    105,215LIABILITIES AND STOCKHOLDERS EQUITYCurrent Liabilities:Accounts payable
    
    $
    14,717
    
    
    $
    13,833Accrued expenses
    
    
    6,911
    
    
    
    9,457Credit facility
    
    
    37,989
    
    
    
    33,005Total current liabilities
    
    
    59,617
    
    
    
    56,295Other long term liabilities
    
    
    2,657
    
    
    
    2,768Term loan
    
    
    12,668
    
    
    
    12,668Total long term liabilities
    
    
    15,325
    
    
    
    15,436Stockholders Equity:Series A-1 convertible preferred stock, $.001 par value, 15,050
shares authorized and issued at September 25, 2004 and March
27, 2004, liquidation value of $15,050,000
    
    
    
    
    
    
    Common stock, $.0001 par value, 50,000,000 shares authorized,
46,945,261 issued at September 25, 2004 and March 27, 2004
    
    
    5
    
    
    
    5Additional paid-in capital
    
    
    207,084
    
    
    
    206,981Accumulated deficit
    
    
    (148,800
    )
    
    
    (144,102
    )Less: 9,983,954 shares of treasury stock, at cost
    
    
    (29,400
    )
    
    
    (29,400
    )Total stockholders equity
    
    
    28,889
    
    
    
    33,484Total liabilities and stockholders equity
    
    $
    103,831
    
    
    $
    105,215
 See notes to unaudited consolidated condensed financial statements. 3




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MAYORS JEWELERS, INC. AND SUBSIDIARIES 
 CONSOLIDATED STATEMENTS OF OPERATIONS  UNAUDITED
 (Amounts shown in thousands except share and per share data)
 Thirteen
    
    ThirteenWeeks Ended
    
    Weeks EndedSeptember 25, 2004
    
    September 27, 2003(as Restated,see
Note B)Net sales
    
    $
    25,483
    
    
    $
    23,834Cost of sales
    
    
    14,881
    
    
    
    14,333Gross profit
    
    
    10,602
    
    
    
    9,501Selling, general and administrative expenses
    
    
    11,910
    
    
    
    11,874Non-cash compensation (credit) expense
    
    
    (193
    )
    
    
    775Other charges
    
    
    (790
    )
    
    
    Depreciation and amortization
    
    
    841
    
    
    
    861Total operating expenses
    
    
    11,768
    
    
    
    13,510Operating loss
    
    
    (1,166
    )
    
    
    (4,009
    )Interest and other financial costs, net
    
    
    (1,060
    )
    
    
    (1,166
    )Loss from operations before income taxes
    
    
    (2,226
    )
    
    
    (5,175
    )Income tax
    
    
    
    
    
    
    Net loss
    
    
    (2,226
    )
    
    
    (5,175
    )Preferred stock cumulative dividend
    
    
    
    
    
    
    (357
    )Net loss attributable to common stockholders
    
    $
    (2,226
    )
    
    $
    (5,532
    )Weighted average shares outstanding, basic and diluted
    
    
    36,961,307
    
    
    
    19,608,310Loss per share, basic and diluted
    
    $
    (0.06
    )
    
    $
    (0.28
    )
 See notes to unaudited consolidated condensed financial statements. 4




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MAYORS JEWELERS, INC. AND SUBSIDIARIES 
 CONSOLIDATED STATEMENTS OF OPERATIONS  UNAUDITED
 (Amounts shown in thousands except share and per share data)
 Twenty-six
    
    Twenty-sixWeeks Ended
    
    Weeks EndedSeptember 25, 2004
    
    September 27, 2003(as Restated,see
Note B)Net sales
    
    $
    54,622
    
    
    $
    48,339Cost of sales
    
    
    31,867
    
    
    
    28,934Gross profit
    
    
    22,755
    
    
    
    19,405Selling, general and administrative expenses
    
    
    24,294
    
    
    
    23,672Non-cash compensation expense
    
    
    103
    
    
    
    775Other charges
    
    
    (790
    )
    
    
    Depreciation and amortization
    
    
    1,674
    
    
    
    1,712Total operating expenses
    
    
    25,281
    
    
    
    26,159Operating loss
    
    
    (2,526
    )
    
    
    (6,754
    )Interest and other financial costs, net
    
    
    (2,172
    )
    
    
    (2,209
    )Loss from operations before income taxes
    
    
    (4,698
    )
    
    
    (8,963
    )Income tax
    
    
    
    
    
    
    Net loss
    
    
    (4,698
    )
    
    
    (8,963
    )Preferred stock cumulative dividend
    
    
    
    
    
    
    (715
    )Net loss attributable to common stockholders
    
    $
    (4,698
    )
    
    $
    (9,678
    )Weighted average shares outstanding, basic and diluted
    
    
    36,961,307
    
    
    
    19,608,310Loss per share, basic and diluted
    
    $
    (0.13
    )
    
    $
    (0.49
    )
 See notes to unaudited consolidated condensed financial statements. 5




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MAYORS JEWELERS, INC. AND SUBSIDIARIES 
 CONSOLIDATED STATEMENTS OF CASH FLOWS  UNAUDITED
 (Amounts shown in thousands)
 Twenty-six
    
    Twenty-sixWeeks Ended
    
    Weeks EndedSeptember 25, 2004
    
    September 27, 2003(as Restated,see
Note B)Cash flows from operating activities:Net loss
    
    $
    (4,698
    )
    
    $
    (8,963
    )Adjustments to reconcile net loss to net cash used in
operating activities:Depreciation and amortization
    
    
    1,674
    
    
    
    1,712Amortization of debt costs
    
    
    299
    
    
    
    172Provision for doubtful accounts
    
    
    163
    
    
    
    120Non-cash compensation expense related to warrants and
Birks sale of stock
    
    
    103
    
    
    
    775Gain on sale of fixed assets
    
    
    (18
    )
    
    
    (17
    )Decrease (increase) in assets:Accounts receivable
    
    
    1,293
    
    
    
    343Inventories
    
    
    (2,007
    )
    
    
    (10,633
    )Other assets
    
    
    524
    
    
    
    1,214(Decrease) increase in liabilities:Accounts payable
    
    
    884
    
    
    
    5,922Accrued expenses and other long term liabilities
    
    
    (2,657
    )
    
    
    1,807Net cash used in continuing operations
    
    
    (4,440
    )
    
    
    (7,548
    )Net cash used in discontinued operations
    
    
    
    
    
    
    (527
    )Net cash used in operating activities
    
    
    (4,440
    )
    
    
    (8,075
    )Cash flows from investing activities:Capital expenditures
    
    
    (555
    )
    
    
    (544
    )Proceeds from sale of fixed assets
    
    
    18
    
    
    
    17Net cash used in investing activities
    
    
    (537
    )
    
    
    (527
    )Cash flows from financing activities:Borrowings under line of credit
    
    
    61,421
    
    
    
    62,780Line of credit repayments
    
    
    (56,434
    )
    
    
    (53,879
    )Payment of commitment fee related to line of credit
    
    
    (358
    )
    
    
    (281
    )Net cash provided by financing activities
    
    
    4,629
    
    
    
    8,620Net (decrease) increase in cash and cash equivalents
    
    
    (348
    )
    
    
    18Cash and cash equivalents at beginning of year
    
    
    1,448
    
    
    
    1,058Cash and
cash equivalents at end of period
    
    $
    1,100
    
    
    $
    1,076Supplemental cash flow information:Interest paid
    
    $
    2,179
    
    
    $
    2,189Non-cash investing and financing activities:Property acquired with debt
    
    $
    231
    
    
    $
    130
 See notes to unaudited consolidated condensed financial statements. 6




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MAYORS JEWELERS, INC. AND SUBSIDIARIES 
 NOTES TO THE CONSOLIDATED CONDENSED FINANCIAL
 STATEMENTS
(Unaudited)
 A. Nature of Business Mayors Jewelers, Inc. and its subsidiaries (the Company or Mayors)
consolidated condensed financial statements as of September 25, 2004 and March
27, 2004, and for the thirteen and twenty-six week periods ended September 25,
2004 and September 27, 2003 have not been audited by a Registered Public Accounting Firm, but in the opinion of the management of the Company reflect all
adjustments (which include only normal recurring accruals) necessary to present
fairly the financial position, results of operations and cash flows for those
periods. In accordance with the rules of the Securities and Exchange
Commission, these consolidated condensed financial statements do not contain
all disclosures required by accounting principles generally accepted in the
United States of America. Results of the thirteen and twenty-six week periods
ended September 25, 2004 and September 27, 2003 are not necessarily indicative
of annual results because of the seasonality of the Companys business. The
information included in this Form 10-Q should be read in conjunction with the
financial statements and notes thereto, together with Managements Discussion
and Analysis of Financial Condition and Results of Operations contained in the
Companys Annual Report on Form 10-K for the year ended March 27, 2004. Certain
reclassifications were made to the prior periods consolidated condensed
balance sheet to conform to the current period presentation. Mayors is primarily engaged in the sale of fine quality jewelry,
timepieces and giftware. The Company operates 28 locations in South and
Central Florida and metropolitan Atlanta, Georgia. Management believes that barring a significant external event that
materially adversely affects the Companys current business or the current
industry trends as a whole, the Companys borrowing capacity under the credit
facility, projected cash flows from operations and other short term borrowings
will be sufficient to support the Companys working capital needs, capital
expenditures, any dividend payments on its preferred stock and debt service for
at least the next twelve months. B. Restatements The accompanying consolidated financial statements for the thirteen and twenty-six weeks
ended September 27, 2003 have been restated to properly account
for and/or disclose the following:  
    As more fully discussed in Note F, Henry Birks & Sons Inc. (Birks), the
Companys majority stockholder, granted rights to receive warrants to purchase the
Companys common stock to certain current or former employees of Birks or its
affiliates, who were, or later became employees of or provided services to the Company.
The rights to receive these warrants are contingent upon fulfillment of certain time
based employment vesting requirements. The granted warrants are subject to variable
accounting rules due to their cashless exercise feature which requires compensation
expense (credit) calculated as the increase or decrease in intrinsic value of the
vested warrants, based on the change in market value of the underlying stock. Non-cash
compensation expense for the thirteen and twenty-six weeks ended September 27, 2003
related to these warrants was approximately $775,000. Previously to
this restatement, the Company had not properly identified the
granting of these rights to receive warrants by Birks as a
transaction effecting the Companys consolidated financial
statements and accordingly had not recognized compensation expense
for these warrants.  
    The Company corrected the fair value of
common stock warrants issued to approximately $3.8 million from $1.0 million and
recognized a beneficial conversion feature for the Series A Preferred Stock as a result
of the valuation of the warrants. The beneficial conversion resulted in a non-cash
dividend to Birks at the time of the investment since the Series A Preferred Stock were
convertible immediately.  
    The Company restated its
proforma information for the thirteen and twenty-six weeks ended
September 27, 2003 to reflect the expense of the previously
mentioned warrants as calculated using the fair value method as
prescribed in SFAS No. 123. See Note C. The following information presents the impact of the non-cash compensation expense
discussed above on the Companys financial information as originally reported for the
thirteen and twenty-six weeks ended September 27, 2003: Thirteen Weeks EndedSeptember 27, 2003(as Previously
    
    
    (as Restated)Reported)Non-cash compensation expense
    
    
    
    
    
    
    775Operating loss
    
    
    (3,259
    )
    
    
    (4,034
    )Interest and other income
    
    
    4
    
    
    
    4Interest and other financial costs
    
    
    (1,145
    )
    
    
    (1,145
    )Loss before income taxes
    
    
    (4,400
    )
    
    
    (5,175
    )Income taxesLoss from continuing operations
    
    
    (4,400
    )
    
    
    (5,175
    )Loss from discontinued operationsNet loss
    
    
    (4,400
    )
    
    
    (5,175
    )Preferred stock cumulative dividend
    
    
    (357
    )
    
    
    (357
    )Net loss attributable to common stockholders
    
    $
    (4,757
    )
    
    $
    (5,532
    )Loss per share, basic and diluted:Continuing operations
    
    $
    (0.24
    )
    
    $
    (0.28
    )Discontinued operations
    
    
    (0.00
    )
    
    
    (0.00
    )$
    (0.24
    )
    
    $
    (0.28
    )
 Twenty-six Weeks EndedSeptember 27, 2003(as Previously
    
    
    (as Restated)Reported)Non-cash compensation expense
    
    
    
    
    
    
    775Operating loss
    
    
    (5,979
    )
    
    
    (6,754
    )Interest and other income
    
    
    64
    
    
    
    64Interest and other financial costs
    
    
    (2,273
    )
    
    
    (2,273
    )Loss before income taxes
    
    
    (8,188
    )
    
    
    (8,963
    )Income taxesLoss from continuing operations
    
    
    (8,188
    )
    
    
    (8,963
    )Loss from discontinued operationsNet loss
    
    
    (8,188
    )
    
    
    (8,963
    )Preferred stock cumulative dividend
    
    
    (715
    )
    
    
    (715
    )Net loss attributable to common stockholders
    
    $
    (8,903
    )
    
    $
    (9,678
    )Loss per share, basic and diluted:Continuing operations
    
    $
    (0.45
    )
    
    $
    (0.49
    )Discontinued operations
    
    
    (0.00
    )
    
    
    (0.00
    )$
    (0.45
    )
    
    $
    (0.49
    )
 C. Accounting for Stock-Based Compensation The Company applies Accounting Principles Board Opinion No. 25,
Accounting for Stock Issued to Employees, and related interpretations in
accounting for its stock-based compensation plans. No stock-based compensation
cost has been recognized for such plans in the accompanying consolidated
condensed statements of operations as all options granted had an exercise price
equal to the market value of the underlying common stock on the grant date. As
required by Statement of Financial Accounting Standards (SFAS) No. 148,
Accounting for Stock-Based Compensation-Transition and Disclosure, which
amends SFAS No. 123, Accounting for Stock-Based Compensation, the following
tables estimate the pro-forma effect on net loss and loss per share had the
Company applied the fair value recognition provision of SFAS No. 123 to
stock-based employee compensation (amount shown in thousands except for per
share data): Thirteen
    
    ThirteenWeeks Ended
    
    Weeks EndedSeptember 25, 2004
    
    September 27, 2003(as Restated,see
Note B)(In thousands, except
for per share amounts)Net loss attributable to common stockholders as reported
    
    $
    (2,226
    )
    
    $
    (5,532
    )(Add back)
deduct non-cash compensation (credit) expense for warrants
recorded pursuant to APB 25
    
    
    (193
    )
    
    
    775Adjusted net loss
    
    
    (2,419
    )
    
    
    (4,757
    )Stock-based employee compensation expense determined
under fair-value-based method for all awards, net of tax
    
    
    (91
    )
    
    
    (381
    )Pro-forma net loss
    
    $
    (2,510
    )
    
    $
    (5,138
    )Loss per shareAs reported basic and diluted:
    
    $
    (0.06
    )
    
    $
    (0.28
    )Pro-forma basic and diluted:
    
    $
    (0.07
    )
    
    $
    (0.26
    )
 7




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Twenty-six
    
    Twenty-sixWeeks Ended
    
    Weeks EndedSeptember 25, 2004
    
    September 27, 2003(as Restated,see
Note B)(In thousands, except
for per share amounts)Net loss attributable to common stockholders as reported
    
    $
    (4,698
    )
    
    $
    (9,678
    )(Deduct) add
back non-cash compensation (credit) expense for warrants
recorded pursuant to APB 25
    
    
    (32
    )
    
    
    775Adjusted net loss
    
    
    (4,730
    )
    
    
    (8,903
    )Stock-based employee compensation expense determined
under fair-value-based method for all awards, net of tax
    
    
    (227
    )
    
    
    (778
    )Pro-forma net loss
    
    $
    (4,957
    )
    
    $
    (9,681
    )Loss per shareAs reported basic and diluted:
    
    $
    (0.13
    )
    
    $
    (0.49
    )Pro-forma basic and diluted:
    
    $
    (0.13
    )
    
    $
    (0.49
    )
 The fair value of each option grant was estimated as of the date of grant
using the Black-Scholes option-pricing model with the following weighted
average assumptions used for grants during the thirteen and twenty-six weeks
ended September 27, 2003: expected volatility of 96%, risk-free interest rate
of 3.09%, expected lives of approximately five years and a dividend yield of
zero for the periods presented. There were no options granted during the
thirteen and twenty-six weeks ended September 25, 2004. There were 40,000
options granted during the thirteen and twenty-six weeks ended September 27,
2003. The fair value of each warrant grant was estimated as of the date of
grant using the Black-Scholes option-pricing model with the following weighted
average assumptions used for grants: expected volatility of 49.2%, risk-free
interest rate of 4.48%, expected lives of approximately twenty years and a
dividend yield of zero. The weighted average fair value of warrants granted
during Fiscal 2002 was $0.26.  D.
    
    Term Loan and Credit Facility As of September 25, 2004, the Company had a $58 million working capital
credit facility with Bank of America (formerly known as Fleet) and GMAC and a
$12.7 million junior secured term loan with Back Bay Capital. On September 7,
2004, the Company entered into a Fourth Amendment to the working capital
facility and the junior secured term loan (the Amended Credit Agreement). The
Amended Credit Agreement provides for, among other things, an extended maturity
date to August 20, 2006, a 1.25% reduction of interest on the junior secured
term loan, an interest reduction on the Bank of America-GMAC portion of the
credit facility, the elimination of a financial covenant and the increase in
the capital expenditures allowed pursuant to the sole remaining financial
covenant. Availability under the working capital facility is determined based
upon a percentage formula applied to certain inventory and accounts receivable
as amended on February 20, 2004, and has certain restrictions regarding
borrowing availability. The interest rate under the credit facility as of
September 25, 2004 was 5.25% (prime plus 0.5%). The junior secured term loan
currently bears an effective interest rate of 12.75% and is subject to similar
restrictions and covenants as the working capital facility as well as certain
prepayment penalties. After accounting for the borrowing restrictions described above, the
Company had approximately $56.5 million of borrowing capacity under its
facility and, after netting the outstanding borrowings of $38.0 million and
letter of credit commitments of $550,000, the Company had excess borrowing
capacity of approximately $18.0 million.  E.
    
    Inventories Inventories are summarized as follows: (amounts shown in thousands)September 25,
    
    March 27,2004
    
    2004Raw materials
    
    $
    1,141
    
    
    $
    1,413Finished
goods
    
    
    81,691
    
    
    
    79,410$
    82,832
    
    
    $
    80,825
 In addition, the Company held
inventory on consignment at September 25, 2004 and
March 27, 2004 with a cost of approximately $11,804,000 and
$11,460,000, respectively. 8




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F.
    
    Related Party Transactions On August 20, 2002, the Company closed on a $15.05 million gross equity
investment transaction with Henry Birks & Sons Inc. (Birks). The Company
incurred expenses related to the raising of the capital of approximately $1.5
million which was netted against the proceeds in stockholders equity. As
consideration for the investment, Birks received 15,050 shares of Series A
Convertible Preferred Stock (Series A Preferred), a newly formed class of
stock that was originally convertible into 50,166,667 shares of common stock.
The conversion ratio of the Series A Preferred is subject to certain
anti-dilution provisions. Birks also received warrants that were exercisable
for 12,424,596 shares of common stock at $0.30 per share, 12,424,596 shares of
common stock at $0.35 per share and 12,424,595 shares of common stock at $0.40
per share. The warrants also contain certain anti-dilution provisions which upon the
occurrence of certain events can increase the number of warrants and
decrease the exercise price. Of the
net proceeds raised of $13.55 million, a fair value of $3.8 million has been
allocated to the warrants. The preferred stock and warrants were issued by the
Company without being registered, relying on an exemption under Section 4(2) of
the Securities Act of 1933, as amended. Birks had entered into a Registration
Rights Agreement with the Company, whereby Birks has the right to require the
Company to register all of the shares underlying the above-described securities
issued to Birks. On November 1, 2002 and March 14, 2003 Birks granted rights to receive
4,250,000 and 500,000, respectively, of its warrants to certain current or
former employees of Birks or its affiliates, who were or later became employees
of or provided services to the Company. The rights to receive these warrants
are contingent upon fulfillment of certain time based employment vesting
requirements. The exercise price of the granted warrants was $0.29 per share,
after certain anti-dilution adjustments. The granted warrants are subject to
variable accounting rules due to their cashless exercise feature which requires
compensation expense (credit) calculated as the increase or decrease in intrinsic
value of the vested warrants which is based on the change in market value of
the underlying stock. Non-cash compensation credit for the thirteen and
twenty-six weeks ended September 25, 2004 related to these warrants was
$193,000 and $32,000, respectively. As of September 25, 2004, the number of
warrants increased to 4,771,572, of which 4,518,889 were vested, and the
exercise price was $0.29 as a result of the anti-dilution provisions as of
September 25, 2004. On November 6, 2003, Birks exercised 32,523,787 of the warrants on a
cashless basis based on an average market price of $0.766, as defined in the
warrant agreements. The cashless feature of exercise resulted in the issuance
of 17,352,997 shares of common stock and the forfeiture of 15,170,790 warrants.
Birks had 288,195, 305,976 and 305,976 warrants exercisable at $0.29, $0.34
and $0.39, respectively, including adjustments for the anti-dilution provisions
as of September 25, 2004. On June 15, 2004, Birks sold 500,000 and 250,000 shares of Mayors common
stock to one of the Companys Directors and a consultant to Birks,
respectively, for $0.50 per share in a private placement sale. The sale of the
750,000 shares of common stock resulted in compensation expense of $135,000
recorded by Mayors which represented the difference between the market value
of the stock and the selling price at the date of the sale, which is included
in non-cash compensation expense in the unaudited Consolidated Condensed
Statement of Operations for the twenty-six weeks ended September 25, 2004. The Series A Preferred provided that the holders of the Series A Preferred
were entitled to receive dividends on each share of Series A Preferred at a
rate per annum of $95 per share which equates to approximately $1.4 million
annually, a 9.5% yield on the $15,050,000 investment. During the thirteen and
twenty-six weeks ended September 27, 2003, approximately $357,000 and $715,000,
respectively, of dividends were cumulated and reflected in the unaudited
Consolidated Condensed Statement of Operations for that period. On February 20, 2004, the Company issued a newly created Series A-1
Convertible Preferred Stock (Series A-1 Preferred) to Birks in exchange for
its shares of Series A Preferred whereby each share of Series A Preferred was
exchanged for one share of Series A-1 Preferred. This exchange took place in
order to effectuate the early payment of dividends already earned by Birks.
The Series A-1 Preferred is substantially identical to the Series A Preferred,
with the exception of certain changes primarily to the provisions regarding the
payment of dividends, future dividend rates, and the conversion rate. Birks
entered into an Amendment to the Registration Rights Agreement with the
Company, whereby Birks has the right to require the Company to register all of
the shares underlying the above described securities issued to Birks. As of
September 25, 2004, the Series A-1 Preferred were convertible into 51,442,085
shares of common stock of the Company which includes an adjustment under the
anti-dilution provision of the Series A-1 Preferred. Upon conversion of the
Series A Preferred, Birks would own approximately 75.8% of the then outstanding
common stock in Mayors. In connection with the exchange of Series A Preferred, Birks agreed to (a)
reimburse the Company in full for all transaction expenses, (b) reduce the
dividend rate from $95 per share to $80 per share per annum on the Series A-1
Preferred, 9




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resulting in a savings in cumulative dividends of approximately $225,750
annually; and (c) waive the dividend for one year on the Series A-1 Preferred.
Therefore, there are no cumulative dividends affecting net loss attributable to
common stockholders for the thirteen and twenty-six weeks ended September 25,
2004. Mayors Chief Executive Officer, Chief Financial Officer, Group
VP-Finance, Group VP-Supply Chain Operations, Group VP-Strategy and Business
Integration, Group Creative Director and other members of Mayors management
serve in similar capacities for Birks. As of July 2004, the VP-Retail began
serving in a similar capacity for Birks as for Mayors and the Group
VP-Category Management began assisting Birks in the category management of
Birks branded watch business. In addition, Thomas A. Andruskevich, Chairman of
the Mayors Board of Directors, and its President and Chief Executive Officer,
and Filippo Recami, a Director of Mayors, serve as Directors of Birks.
Lorenzo Rossi di Montelera, a Director of Mayors, serves as the Chairman of
the Board of Directors of Birks. Mayors incurred a receivable of approximately $30,000 and $22,000,
respectively, during the thirteen and twenty-six weeks ended September 25,
2004, and a payable of $40,000 and $57,000, respectively, during the thirteen
and twenty-six weeks ended September 27, 2003, of net costs from Birks related
to advisory, management and corporate services pursuant to a Management Expense
Reimbursement Agreement which was net of expenses charged to Birks from Mayors
for similar services. Also, during the thirteen and twenty-six weeks ended
September 25, 2004, Mayors purchased approximately $386,000 and $714,000,
respectively, and $230,000 and $258,000, respectively, during the thirteen and
twenty-six weeks ended September 27, 2003, of merchandise from Birks pursuant
to a Manufacturing & Sale Agreement. As of September 25, 2004, the Company owed
Birks $488,000 related to purchases of inventory, advisory, management and
corporate services and for expenses paid by Birks on behalf of Mayors. On April 22, 2004, the Company entered into a Management Consulting
Services Agreement (the Management Agreement) with Regaluxe Investment Sarl
(Regaluxe), a company incorporated under the laws of Luxembourg, which became
effective on May 1, 2004. Under the Management Agreement, Regaluxe provides
advisory, management and corporate services to the Company. During the
thirteen and twenty-six weeks ended September 25, 2004, the Company incurred
costs of $125,000 and $250,000 related to such services. Regaluxe is the controlling shareholder of Henry Birks & Sons Holdings
Inc. which is the controlling shareholder of Birks. Two of the Companys
directors, Filippo Recami and Dr. Lorenzo Rossi di Montelera, are affiliated
with Regaluxe. Mr. Recami is the Chief Executive Officer and managing director
of Regaluxe and Dr. Rossi is a member of the Board of Directors of Regaluxe.
Furthermore, Dr. Rossi shares joint voting control over the shares of
Iniziativa S.A., which owns 100% of the outstanding stock of Regaluxe. The
Board of Directors of the Company waived the provisions of the Companys Code
of Conduct relating to related party transactions when the Board of Directors
approved the Company entering into the Management Agreement with Regaluxe. On July 29, 2004, Birks, the controlling stockholder of Mayors, notified
the Board of Directors of Mayors that Birks was interested in combining the
Mayors and Birks companies. The Board of Directors of Mayors has formed a
special committee composed only of independent board members in order to
consider the Birks proposal. There can be no assurance that any discussions
between Birks and Mayors will result in the parties entering into a definitive
agreement regarding any such corporate reorganization.  G.
    
    Legal Proceedings The Company is from time to time involved in litigation incident to the
conduct of its business. In these pending matters, the Company believes that
the resolution of 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. 
 Item 2. MANAGEMENTS DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS(as Restated, see Explanatory Note on
page 1) 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 March 27, 2004 and other reports filed with the Securities and
Exchange Commission. 10




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Executive Overview Mayors currently operates 28 luxury jewelry stores in South and Central
Florida and metropolitan Atlanta, Georgia. The retail jewelry market is
particularly subject to the level of consumer discretionary income and the
subsequent impact on the type and value of goods purchased. With the
consolidation of the retail industry, the Company believes that competition and
consolidation both within the luxury goods retail industry and with other
competing general and specialty retailers and discounters will continue to
increase. The luxury watch brand business comprises a significant portion of
the Companys business, which management believes is a result of the Companys
ability to effectively market high-end watches. If, for any reason, the Company
is unable to obtain or sell certain watches, it could have a material adverse
effect on the Companys business, financial condition and operating results. The success of the Companys operations depends to a certain extent on the
ability of mall anchor tenants and other attractions to generate customer
traffic in the vicinity of the Mayors stores. The negative performance of a
mall could have an adverse effect on Mayors operations, caused by events such
as the loss of mall anchor tenants in the regional malls where the Mayors
stores are located, the opening of competing regional malls or stores and other
economic downturns affecting customer mall traffic. In addition, other factors
outside of the Companys control may negatively impact the Companys
operations, including, but not limited to, hurricanes. The Companys operations
were negatively impacted by three hurricanes in the second fiscal quarter ended
September 25, 2004 which caused the closure of 24 stores at various dates
resulting in lost revenues. One of the Companys core strategies is to continue to increase gross
profit and gross margin (gross profit as a percentage of sales) over the next
several years. The Companys strategy for gross profit and gross margin
improvement is to reduce the cost of merchandise purchased through leveraging
the Companys purchasing power, manufacturing more fine jewelry items in-house,
increasing sales of exclusive and brand merchandise, and to move the mix of
sales towards higher margin jewelry items, including a renewed focus on the
bridal business. In addition, the Company expects to refine the allocation and
management of inventory in its stores, and as a result, other direct costs such
as the cost of financing inventory and inventory markdowns are expected to
decrease. However, there can be no assurance that the Companys strategy to
increase gross profit and gross margin will be successful. In addition, the
Company is focusing on controlling and decreasing, where appropriate, operating
costs which include the sharing of services of certain officers and other
members of senior management with Birks. The relationship with Birks has
brought synergies to both companies in several areas, including the production
of holiday catalogs, television campaigns and other marketing efforts; the
attainment of favorable terms on its banking facilities; and the ability to
strengthen and/or consolidate supplier relationships with improved terms as a
result of leveraging the credibility and stronger purchasing power of the
combined companies. The retail jewelry business is seasonal in nature with a higher proportion
of sales and a significant portion of the Companys earnings generated during
the third fiscal quarter holiday selling season and, therefore, the results of
the Companys operations for the thirteen and twenty-six weeks ended September
25, 2004 and September 27, 2003 are not necessarily indicative of the results
of the entire fiscal year. Results of Operations Critical Accounting Policies and Estimates The preparation of financial statements in conformity with accounting
principles generally accepted in the United State 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. The Company has identified certain critical accounting policies below. Reserve for inventory shrink and slow moving inventory.The reserve for
inventory shrink is estimated for the period from the last physical inventory
date to the end of the reporting period on a store by store basis and at the
Companys distribution center. Such estimates are based on experience and the
shrinkage results from the last physical inventory. The shrinkage rate from the
most recent physical inventory, in combination with historical experience, is
the basis for providing a shrink reserve. 11




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The Company writes down its inventory for estimated slow moving inventory
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. Long-lived Assets.Long-lived assets held and used by the Company are
reviewed for impairment whenever events or changes in circumstances indicate
that the carrying amount of the asset may not be recoverable. Measurement of an
impairment loss for such long-lived assets would be based on the fair value of
the asset. Long-lived assets to be disposed of are reported at the lower of the
carrying amount or fair value less cost to sell. Thirteen and Twenty-six Weeks Ended September 25, 2004 compared to the Thirteen
and Twenty-six Weeks Ended September 27, 2003(as Restated,
see Explanatory Note, page 1) The Companys net sales for the thirteen and twenty-six weeks ended
September 25, 2004 were $25.5 million and $54.6 million, respectively, compared
to $23.8 million and $48.3 million, respectively, for the thirteen and
twenty-six weeks ended September 27, 2003. The increase in revenues for the
thirteen and twenty-six weeks ended September 25, 2004 is primarily due to the
result of an effective mix of merchandising and an increase of the units of
inventory in stores, due in part to the improved financial position of the
Company, enhanced marketing and customer events, and increased consumer
confidence and spending compared to the same period last year. Comparable
store sales (sales in stores open in both thirteen and twenty-six week
periods), increased 5.3% and 12.0%, respectively, as compared to the thirteen
and twenty-six week periods ended September 27, 2003. This increase in net
sales was achieved despite the closure of stores due to Hurricanes Charley,
Frances and Jeanne in the thirteen weeks ended September 25, 2004, which
amounted to an equivalent of 6 business days per store, for approximately 24
stores. These store closures occurred primarily on weekends, including the
Labor Day holiday weekend. Comparable store sales adjusted for the days stores
were closed due to the hurricanes increased by 11.5% and 15.1% for the thirteen
and twenty-six week period ended September 25, 2004, respectively, as compared
to the thirteen and twenty-six weeks ended September 27, 2003. Gross profit was $10.6 million, or 41.6% of sales and $22.8 million, or
41.7% of sales, respectively, for the thirteen and twenty-six weeks ended
September 25, 2004 compared to $9.5 million, or 39.9% of sales and $19.4
million, or 40.1% of sales, respectively, for the thirteen and twenty-six weeks
ended September 27, 2003. The Company believes the increase in gross profit and
gross margin is primarily due to the continued successful execution of
merchandising strategies which began to be implemented last fiscal year. Selling, general and administrative expenses were $11.9 million, or 46.7%
of net sales and $24.3 million, or 44.5% of net sales, respectively, for the
thirteen and twenty-six weeks ended September 25, 2004 compared to $11.9
million, or 49.8% of net sales and $23.7 million, or 49.0% of net sales,
respectively, for the thirteen and twenty-six weeks ended September 27, 2003.
The increase in selling, general and administrative expenses for the twenty-six
weeks ended September 25, 2004 is primarily a result of the increase in
variable costs related to the increase in sales and expanded marketing efforts.
The decrease in selling, general and administrative expenses as a percentage
of sales for the thirteen and twenty-six weeks ended September 25, 2004 is due
to the positive impact of leveraging the incremental sales against that portion
of the operating expenses which are fixed. Non-cash compensation (credit) expense was ($193,000) and $103,000 for the
thirteen and twenty-six weeks ended September 25, 2004, respectively. Non-cash
compensation credit for the thirteen week period ended September 25, 2004
resulted from the decrease in the intrinsic value of vested warrants assigned
by Birks to purchase the Companys common stock to certain current or former
employees of Birks or its affiliates, who were or later became employees of or
provided services to the Company based on the market value of the underlying
stock. Non-cash compensation expense for the twenty-six weeks also includes the
private sale of the Companys stock owned by Birks which resulted in non-cash
compensation expense of $135,000 recorded by the Company, which represented the
difference between the market value of the stock and the selling price at the
date of the sale. Non-cash compensation expense was $775,000 for the
thirteen and twenty-six weeks ended September 27, 2003. Other charges for the thirteen and twenty-six weeks ended September 25,
2004 was $0.8 of income as a result of the settlement of a sales tax audit for
less than the amount accrued as well as the adjustment of other sales tax
contingency estimates. 12




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Depreciation and amortization expenses were $0.8 million and $1.7 million,
respectively, for the thirteen and twenty-six weeks ended September 25, 2004
compared to $0.9 million and $1.7 million, respectively, for the thirteen and
twenty-six weeks ended September 27, 2003. Interest and other financial costs, net were $1.1 million and $2.2
million, respectively, for the thirteen and twenty-six weeks ended September
25, 2004 compared to $1.2 million and $2.2 million, respectively, for the
thirteen and twenty-six weeks ended September 27, 2003. Liquidity and Capital Resources As of September 25, 2004, the Company had a $58 million working capital
credit facility with Bank of America (formerly known as Fleet) and GMAC and a
$12.7 million junior secured term loan with Back Bay Capital. On September 7,
2004, the Company entered into a Fourth Amendment to the working capital
facility and the junior secured term loan (the Amended Credit Agreement). The
Amended Credit Agreement provides for, among other things, an extended maturity
date to August 20, 2006, a 1.25% reduction of interest on the Tranche B Loan,
an interest reduction on the Bank of America-GMAC portion of the credit
facility, the elimination of a financial covenant and the increase in the
capital expenditures allowed pursuant to the sole remaining financial covenant.
Availability under the working capital facility is determined based upon a
percentage formula applied to certain inventory and accounts receivable as
amended on February 20, 2004, and has certain restrictions regarding borrowing
availability. The interest rate under the credit facility as of September 25,
2004 was 5.25% (prime plus 0.5%). The junior secured term loan currently bears
an effective interest rate of 12.75% and is subject to similar restrictions and
covenants as the working capital facility as well as certain prepayment
penalties. After accounting for the foregoing borrowing restrictions, the Company had
approximately $56.5 million of borrowing capacity under its facility and, after
netting the outstanding borrowings of $38.0 million and letter of credit
commitments of $550,000, the Company had excess borrowing capacity of
approximately $18.0 million. The Company relies on its short term borrowings
under the credit facility to finance its operations on a day to day basis.
Substantially all of the assets of the Company have been pledged under the
facility and term loan. During the twenty-six weeks ended September 25, 2004, cash flows from
continuing operating activities used $4.4 million in cash. The use of cash for
operating activities was primarily the result of the working capital needs due
to the net loss for the twenty-six weeks ended September 25, 2004, the decrease
in accrued expenses and the increase in inventories to prepare for the upcoming
holiday selling season offset by the decrease in accounts receivable and the
increase in accounts payable primarily related to the purchase of inventories.
During the twenty-six weeks ended September 27, 2003, cash flows from
continuing operating activities used $7.5 million in cash. Cash flows for
discontinued operations used $0.5 million in cash. The use of cash for
operating activities was primarily the result of the working capital needs due
to the net loss for the twenty-six weeks ended September 27, 2003, the increase
in inventories, offset by the increase in accounts payable and accrued
expenses. Net cash used in investing activities was $0.5 million during both the
twenty-six weeks ended September 25, 2004 and September 27, 2003 and were
primarily related to capital expenditures. Net cash provided by financing activities of $4.6 million and $8.6 million
during the twenty-six weeks ended September 25, 2004 and September 27, 2003,
respectively, related to net borrowings under the credit facility driven by the
improved cash flows from the results of operations. Management believes that barring a significant external event that
materially adversely affects Mayors current business or the current industry
trends as a whole, Mayors borrowing capacity under the credit facility,
projected cash flows from operations and other short term borrowings will be
sufficient to support the Companys working capital needs, capital expenditures
and debt service for at least the next twelve months. 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. These include statements
regarding the Companys expectation for no 13




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aberrations in earnings results, strong sales, margin and earning results for
the remainder of the fiscal year, success of the Companys marketing and
business strategies, and future growth and profitability. No forward-looking statement is guaranteed and actual results may vary
materially. Such statements are made as of date provided, and the Company
assumes no obligation to update any forward-looking statements to reflect
future developments or circumstances. 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. These risks and
uncertainties include the possibility of additional hurricanes or other natural
disasters, the Companys ability to maintain strong sales, margins and earnings
throughout the remainder of the fiscal year, the ability of the Company to
maintain strong growth and profitability, and the Companys ability to compete
with other jewelers. In addition, one should carefully evaluate such statements by referring to
the factors described in the Companys filings with the Securities and Exchange
Commission, especially on Forms 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 Part I, 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. The Company notes these factors for investors as permitted
by the Private Securities Litigation Act of 1995. 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. 
 Item 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISKS Interest Rate Risks The Companys credit facility accrues interest at floating rates,
currently based upon prime plus .5%. The Company manages its borrowings under
this credit facility each day in order to minimize interest expense. The impact
on the Companys earnings per share of a one-percentage point interest rate
change on the outstanding balance as of September 25, 2004 would increase or
decrease earnings per share by approximately $380,000 or $.01 per share. The Company extends credit to its Mayors customers under its own
revolving charge plan with up to three-year payment terms. Finance charges,
when applicable, are generally currently assessed on customers balances at a
rate of 1.5% per month. Since the interest rate is fixed at the time of sale,
market interest rate changes would not impact the Companys finance charge
income. 
 Item 4. CONTROLS AND PROCEDURES. (a) Evaluation of Disclosure Controls and Procedures. As of the last day of the period
covered by this report, the Company carried out an evaluation, under the supervision and with the
participation of management, including the Chief Executive Officer and Chief Financial Officer of
the Company, of the effectiveness of the design and operation of the Companys disclosure controls
and procedures. Based upon that evaluation, the Chief Executive Officer and Chief Financial Officer
concluded that its disclosure controls and procedures were effective as of the date of their
evaluation in timely alerting them to material information relating to the Company (including the
Companys consolidated subsidiaries) required to be included in reports the Company files or
submits under the Securities Exchange Act of 1934. (b) Changes in Internal Controls.On November 9, 2004 and December 1, 2004, the Company
released its preliminary conclusions regarding an expected restatement of its financial statements
for the fiscal quarters ended November 2, 2002, September 27, 2003, December 27, 2003, and June 26,
2004, the fiscal years ended March 29, 2003 and March 27, 2004, and the selected quarterly
financial data for the fiscal quarter ended March 27, 2004. During the financial reporting process associated with the Companys third quarter of fiscal
2004 financial results, the Company determined that certain errors had occurred in the Companys
accounting treatment of certain warrants that were issued by the Company to Henry Birks & Sons Inc.
(Birks), the Companys majority stockholder, in connection with Birks August 20, 2002 equity
investment of $15.05 million in the Company, and later assigned in part to certain individuals
affiliated with Birks, and the Company also determined that it should reconsider certain
conclusions regarding the allocation of the fair value of the equity investment between the Series
A Convertible Preferred Stock (the Preferred Stock) and the warrants issued to Birks in
connection with the transaction. The Company has determined that as a result of the assignment of the warrants to those
recipients, the Company should have reflected a non-cash compensation adjustment relating to the
increase or decrease in the intrinsic value of the warrants that could be attributed to the
services provided by the recipients to the Company based on the vesting schedule of the warrants.
The increase or decrease in value of these warrants is required to be reflected in the Companys
financial statements as calculated at the end of each reporting period. The Company also concluded
that a fair value of approximately $3.8 million should have been allocated to the warrants rather
than the original allocation of approximately $1 million, and the Company recognized a beneficial conversion feature for the Preferred Stock as a result of the valuation of the warrants. After becoming aware of the accounting issues, the Audit Committee of the Board of
Directors initiated a review with the assistance of
independent legal counsel of the circumstances surrounding the assignment of the warrants. The Companys senior management team (Management) conducted a thorough review of the
accounting treatment of the warrants and the allocation of the fair value of the equity investment
by Birks. As a result of this review, the Audit Committee has recommended to Management that the
following corrective actions be taken:  
    Establish a formal review procedure for all contracts, legal agreements and significant
transactions;
    Establish a procedure to confirm that all of the appropriate documents and information
have been properly considered in connection with the preparation, completeness and accuracy
of the Companys consolidated financial statements;
    Develop a procedure through which an appropriate person in the Companys Accounting and
Reporting Division is apprised on a timely basis of all significant capital transactions,
compensation transactions, and significant related party transactions, of the Company and
Birks, so that they can make decisions and determinations regarding the accounting and
disclosure requirements for the Company, if any, that surround such transactions; and
    Require that an appropriate person in the Companys Accounting and Reporting Division
issue a formal report each quarter to the Companys Audit Committee on the accounting and
reporting matters surrounding all major transactions or legal agreements that the Company
entered into since the previous Audit Committee meeting. Additionally,
as previously announced, on December 16, 2004, the Board of Directors of the
Company appointed Lawrence R. Litowitz to serve as Interim Chief Financial Officer and the
Principal Accounting Officer of the Company, and reassigned the current officer performing such
duties. The appointment of Mr. Litowitz is considered interim until a permanent Chief Financial
Officer is selected. The Company is also undertaking a thorough review of its internal controls as a part of the
Companys preparation for compliance with the requirements of Section 404 of the Sarbanes-Oxley Act
of 2002. Section 404 requires the Companys management to report on, and the auditors to attest to,
the effectiveness of the Companys internal control structure and procedures for financial
reporting. Other than the changes identified above, there have been no changes to the Companys
internal control over financial reporting that occurred since the beginning of the Companys third
fiscal 2004 quarter that have materially affected, or are reasonably likely to materially affect,
the Companys internal control over financial reporting. 
 PART II: OTHER INFORMATION 
 Item 1. Legal Proceedings The Company is from time to time involved in litigation incident to the
conduct of its business. There are no pending legal proceedings at this time
reportable pursuant to this Item 1. Although certain litigation of the Company
is routine and incidental, and such litigation can result in large monetary
awards for compensatory or punitive damages, the Company believes that no
litigation that is currently pending involving the Company will have a material
adverse effect on the Companys financial condition. 14




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Item 4. Submission of Matters to a Vote of Security Holders On July 27, 2004, the Company held its 2004 Annual Meeting of Stockholders
in New York, New York. Only holders of record of Common Stock and Preferred
Stock on June 18, 2004 (the Record Date) were entitled to vote at the Annual
Meeting. Each holder of record of Common Stock at the close of business on the
Record Date was entitled to one vote per share on each matter voted upon by the
stockholders at the Annual Meeting. Each holder of record of Preferred Stock
at the close of business on the Record Date was entitled to vote the number of
votes equal to the number of votes such holder could cast if such holder
converted all of its shares of Preferred Stock into shares of Common Stock on
each matter submitted to stockholders for approval at the Annual Meeting,
except the election of the Directors of the Company. As of the Record Date,
there were 36,961,307 shares of Common Stock outstanding and 15,050 shares of
Series A-1 Preferred Stock outstanding which were convertible into an aggregate
50,166,667 shares of Common Stock. The following matters were submitted for a vote by security holders: Proposal 1: The stockholders of the Company elected as director Judith R.
MacDonald to serve a term expiring in 2007. The election of the director by
the stockholders was by the following votes: Director
    
    For
    
    WithheldJudith R. MacDonald
    
    
    34,568,774
    
    
    
    10,138
 In addition to the above persons, the following are directors whose term
of office continued after the Annual Meeting: Thomas A. Andruskevich, Dr.
Lorenzo Rossi di Montelera, Filippo Recami, Elizabeth M. Eveillard, Emily
Berlin, Massimo Ferragamo, Stephen M. Knopik and Ann Spector Lieff. There were
no broker non-votes with respect to this proposal. Proposal 2: The stockholders approved the Companys 2004 Long-Term
Incentive Plan for its employees, officers and directors by a vote of
69,157,461 shares in favor, 1,673,345 shares against, 8,677 shares abstaining
and 15,043,860 broker non-votes. Proposal 3: The stockholders ratified KPMG LLP as independent auditors of
the Company for the fiscal year ending March 26, 2005 by a vote of 85,871,576
shares in favor, 5,588 shares against and 6,179 shares abstaining. There were
no broker non-votes with respect to this proposal. 
 Item 6. Exhibits List of Exhibits:  3.1
    
    Certificate of Incorporation. Incorporated by reference from Exhibit
3(i) of Mayors Form 8-K filed on July 14, 2000.3.2
    
    Bylaws. Incorporated by reference from Exhibit 3.2 of Mayors Form
10-K filed on May 15, 1995.10.1
    
    Fourth Amendment to Revolving Credit, Tranche B Loan and Security
Agreement, Limited Waiver and Consent, dated as of September 7, 2004,
by and among Fleet Retail Group Inc., GMAC Commercial Finance, LLC,
Back Bay Capital Funding LLC, and the Domestic Subsidiaries of the
Company and the Company. Incorporated by reference to the Form 8-K
filed on September 13, 2004.10.2
    
    Second Amendment to Revolving Credit, Tranche B Loan and
Security Agreement, Limited Waiver and Consent, dated as of
June 6, 2003, by and among Fleet Retail Group Inc., GMAC
Commercial Finance, LLC, Back Bay
Capital Funding LLC, and the Domestic Subsidiaries of the Company and
the Company.31.1
    
    Certification by Thomas A. Andruskevich, Chairman of the Board,
President and Chief Executive Officer, pursuant to Exchange Act Rules
13a-14(a) and 15d-14(a).31.2
    
    Certification by Lawrence R. Litowitz, Interim Chief Financial Officer, pursuant to Exchange Act Rules 13a-14(a) and
15d-14(a). 15




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32.1
    
    Certification of Chief Executive Officer pursuant to 18 U.S.C.
Section 1350, as adopted pursuant to Section 906 of the
Sarbanes-Oxley Act of 2002.32.2
    
    Certification of Chief Financial Officer pursuant to 18 U.S.C.
Section 1350, as adopted pursuant to Section 906 of the
Sarbanes-Oxley Act of 2002. 16




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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/ Thomas A. Andruskevich
Chairman of the Board, President andChief Executive Officer
 Date: January 7, 2005 17