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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 1934For the Thirteen Weeks Ended December 27, 2003ORo
    
    TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934For the transition period from ___________________ to ___________________


Commission File Number 1-9647

MAYORS JEWELERS, INC.

(Exact Name of Registrant as Specified in Its Charter)


Delaware
    
    59-2290953(State or Other Jurisdiction of
    
    (I.R.S. EmployerIncorporation or Organization)
    
    Identification No.)


14051 N.W. 14th Street
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 o

Indicate by check mark whether the registrant is an accelerated filer (as
defined in Rule 12b-2 of the Exchange Act.)

Yes o     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 ($.0001 PAR VALUE)
AS OF FEBRUARY 6, 2004



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TABLE OF CONTENTS



|                                            |                                                                                                     |                                                             |  |  |  |  |  | 
|------------------------------------------- | --------------------------------------------------------------------------------------------------- | ----------------------------------------------------------- |  |  |  |  |  | 
|PART I: FINANCIAL INFORMATION              
|                                            | Item 1.       CONSOLIDATED CONDENSED FINANCIAL STATEMENTS                                          
|                                            |                                                                                                     | CONSOLIDATED CONDENSED BALANCE SHEETS - UNAUDITED          
|                                            |                                                                                                     | CONSOLIDATED CONDENSED STATEMENTS OF OPERATIONS  UNAUDITED
|                                            |                                                                                                     | CONSOLIDATED CONDENSED STATEMENTS OF OPERATIONS  UNAUDITED
|                                            |                                                                                                     | CONSOLIDATED CONDENSED STATEMENTS OF CASH FLOWS  UNAUDITED
|                                            |                                                                                                     | NOTES TO THE CONSOLIDATED CONDENSED FINANCIAL STATEMENTS   
|                                            | Item 2.       MANAGEMENTS DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
|                                            | Item 3.       QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISKS                          
|                                            | Item 4.       CONTROLS AND PROCEDURES.                                                             
|PART II: OTHER INFORMATION                 
|                                            | Item 1.       Legal Proceedings                                                                    
|                                            | Item 6.       Exhibits and Reports on Form 8-K                                                     
|SIGNATURES                                 
|SECOND AMENDMENT TO REVOLVING CREDIT AGRMT.
|CERTIFICATION OF CEO PURSUANT SECTION 302  
|CERTIFICATION OF CFO PURSUANT SECTION 302  
|CERTIFICATION OF CEO PURSUANT SECTION 906  
|CERTIFICATION OF CFO PURSUANT SECTION 906  



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MAYORS JEWELERS, INC.

FORM 10-Q

FOR THE THIRTEEN WEEKS ENDED DECEMBER 27, 2003

TABLE OF CONTENTS

Page No.PART I: FINANCIAL INFORMATIONItem 1.
    
    Consolidated Condensed Financial Statements - UnauditedConsolidated Condensed Balance Sheets as of December 27, 2003 and
March 29, 2003 - Unaudited
    
    
    3Consolidated Condensed Statements of Operations for the thirteen weeks ended
December 27, 2003 and January 4, 2003 - Unaudited
    
    
    4Consolidated Condensed Statements of Operations for the thirty-nine weeks ended
December 27, 2003 and the forty weeks ended January 4, 2003 - Unaudited
    
    
    5Consolidated Condensed Statements of Cash Flows for the thirty-nine weeks ended
December 27, 2003 and the forty weeks ended January 4, 2003 - Unaudited
    
    
    6Notes to Consolidated Condensed Financial Statements - Unaudited
    
    
    7-12Item 2.
    
    Managements Discussion and Analysis of Financial Condition and Results of
Operations
    
    
    12-16Item 3.
    
    Quantitative and Qualitative Disclosures About Market Risks
    
    
    16-17Item 4.
    
    Controls and Procedures
    
    
    17PART II: OTHER INFORMATIONItem 1.
    
    Legal Proceedings
    
    
    17Item 6.
    
    Exhibits and Reports on Form 8-K
    
    
    17-18Signatures
    
    
    19


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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)

December 27,
    
    March 29,2003
    
    2003ASSETSCurrent Assets:Cash and cash equivalents
    
    $
    3,872
    
    
    $
    1,058Accounts receivable (net of allowance for doubtful accounts of $1,179
and $1,263, respectively)
    
    
    8,985
    
    
    
    5,777Inventories
    
    
    83,143
    
    
    
    76,753Other current assets
    
    
    1,481
    
    
    
    2,987Total current assets
    
    
    97,481
    
    
    
    86,575Property and equipment, net
    
    
    14,154
    
    
    
    15,872Other assets
    
    
    739
    
    
    
    736Total non-current assets
    
    
    14,893
    
    
    
    16,608Total assets
    
    $
    112,374
    
    
    $
    103,183LIABILITIES AND STOCKHOLDERS EQUITYCurrent Liabilities:Accounts payable
    
    $
    21,716
    
    
    $
    13,798Accrued expenses
    
    
    10,649
    
    
    
    7,434Liabilities of discontinued operations
    
    
    
    
    
    
    527Credit facility
    
    
    28,204
    
    
    
    23,283Total current liabilities
    
    
    60,569
    
    
    
    45,042Term loan
    
    
    10,668
    
    
    
    12,668Other long term liabilities
    
    
    2,879
    
    
    
    3,046Total long term liabilities
    
    
    13,547
    
    
    
    15,714Stockholders Equity:Series A convertible preferred stock, $.0001 par value, 15,050 shares
authorized, issued and outstanding; liquidation value of $15,050,000
    
    
    
    
    
    
    Common stock, $.0001 par value, 50,000,000 shares authorized,
46,945,261 and 29,592,264 shares issued, respectively
    
    
    5
    
    
    
    3Additional paid-in capital
    
    
    208,100
    
    
    
    208,102Accumulated deficit
    
    
    (140,447
    )
    
    
    (136,278
    )Less: 9,983,954 shares of treasury stock, at cost
    
    
    (29,400
    )
    
    
    (29,400
    )Total stockholders equity
    
    
    38,258
    
    
    
    42,427Total liabilities and stockholders equity
    
    $
    112,374
    
    
    $
    103,183


See notes to unaudited consolidated condensed financial statements.

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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
    
    ThirteenWeeks Ended
    
    Weeks EndedDecember 27, 2003
    
    January 4, 2003Net sales
    
    $
    50,318
    
    
    $
    43,610Cost of sales
    
    
    29,070
    
    
    
    26,011Gross profit
    
    
    21,248
    
    
    
    17,599Selling, general and administrative expenses
    
    
    15,234
    
    
    
    13,935Other charges
    
    
    
    
    
    
    (1,057
    )Depreciation and amortization
    
    
    813
    
    
    
    94316,047
    
    
    
    13,821Operating income
    
    
    5,201
    
    
    
    3,778Interest and other income
    
    
    2
    
    
    
    Interest and other financial costs
    
    
    (1,183
    )
    
    
    (934
    )Income before income taxes and discontinued operations
    
    
    4,020
    
    
    
    2,844Income taxes
    
    
    
    
    
    
    (54
    )Income from continuing operations
    
    
    4,020
    
    
    
    2,898Loss from discontinued operations
    
    
    
    
    
    
    (43
    )Net income
    
    
    4,020
    
    
    
    2,855Preferred stock cumulative dividend
    
    
    (357
    )
    
    
    (357
    )Net income attributable to common stockholders
    
    $
    3,663
    
    
    $
    2,498Weighted average shares outstandingBasic
    
    
    29,333,616
    
    
    
    19,571,548Diluted
    
    
    85,925,547
    
    
    
    82,469,489Income per share, basic:Continuing operations
    
    $
    0.12
    
    
    $
    0.13Discontinued operations
    
    
    
    
    
    
    $
    0.12
    
    
    $
    0.13Income per share, diluted:Continuing operations
    
    $
    0.04
    
    
    $
    0.03Discontinued operations
    
    
    
    
    
    
    $
    0.04
    
    
    $
    0.03


See notes to unaudited consolidated condensed financial statements.

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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)

Thirty-nine
    
    FortyWeeks Ended
    
    Weeks EndedDecember 27, 2003
    
    January 4, 2003Net sales
    
    $
    98,657
    
    
    $
    98,430Cost of sales
    
    
    58,003
    
    
    
    64,375Gross profit
    
    
    40,654
    
    
    
    34,055Selling, general and administrative expenses
    
    
    38,907
    
    
    
    43,833Other charges
    
    
    
    
    
    
    1,765Depreciation and amortization
    
    
    2,525
    
    
    
    3,73941,432
    
    
    
    49,337Operating loss
    
    
    (778
    )
    
    
    (15,282
    )Interest and other income
    
    
    65
    
    
    
    1,276Interest and other financial costs
    
    
    (3,456
    )
    
    
    (5,872
    )Loss before income taxes and discontinued operations
    
    
    (4,169
    )
    
    
    (19,878
    )Income taxes
    
    
    
    
    
    
    416Loss from continuing operations
    
    
    (4,169
    )
    
    
    (20,294
    )Loss from discontinued operations
    
    
    
    
    
    
    (292
    )Net loss
    
    
    (4,169
    )
    
    
    (20,586
    )Preferred stock cumulative dividend
    
    
    (1,072
    )
    
    
    (476
    )Net loss attributable to common stockholders
    
    $
    (5,241
    )
    
    $
    (21,062
    )Weighted average shares outstanding, basic and diluted
    
    
    22,850,079
    
    
    
    19,555,914Loss per share, basic and diluted:Continuing operations
    
    $
    (0.23
    )
    
    $
    (1.06
    )Discontinued operations
    
    
    
    
    
    
    (0.02
    )$
    (0.23
    )
    
    $
    (1.08
    )


See notes to unaudited consolidated condensed financial statements.

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

Thirty-nine
    
    FortyWeeks Ended
    
    Weeks EndedDecember 27, 2003
    
    January 4, 2003Cash flows from operating activities:Net loss
    
    $
    (4,169
    )
    
    $
    (20,586
    )Deduct loss from discontinued operations
    
    
    
    
    
    
    292Loss from continuing operations
    
    
    (4,169
    )
    
    
    (20,294
    )Adjustments to reconcile net loss to net cash provided by (used in)
operating activities:Depreciation and amortization
    
    
    2,525
    
    
    
    3,739Amortization of debt costs
    
    
    297
    
    
    
    393Provision for doubtful accounts
    
    
    244
    
    
    
    2,279Write-off of deferred financing costs
    
    
    
    
    
    
    2,055(Increase) decrease in assets:Accounts receivable
    
    
    (3,452
    )
    
    
    2,733Inventories
    
    
    (6,390
    )
    
    
    282Other assets
    
    
    1,488
    
    
    
    1,458Increase (decrease) in liabilities:Accounts payable
    
    
    7,918
    
    
    
    9,538Accrued expenses and other long term liabilities
    
    
    3,047
    
    
    
    1,943Accrued restructuring
    
    
    
    
    
    
    (6,932
    )Net cash provided by (used in) continuing operations
    
    
    1,508
    
    
    
    (2,806
    )Net cash used in discontinued operations
    
    
    (527
    )
    
    
    (292
    )Net cash provided by (used in) operating activities
    
    
    981
    
    
    
    (3,098
    )Cash flows from investing activities:Capital expenditures
    
    
    (842
    )
    
    
    (1,365
    )Proceeds from sale of fixed assets
    
    
    35
    
    
    
    4,601Net cash (used in) provided by investing activities
    
    
    (807
    )
    
    
    3,236Cash flows from financing activities:Proceeds from issuance of preferred convertible stock and
warrants, net
    
    
    
    
    
    
    13,553Proceeds from sale of private label credit card
receivable, net
    
    
    
    
    
    
    12,147Proceeds from stock issuance from employee stock plans
    
    
    
    
    
    
    13Borrowings under term loan and line of credit
    
    
    102,804
    
    
    
    123,923Term loan and line of credit repayments
    
    
    (99,883
    )
    
    
    (149,228
    )Payment of commitment fee related to line of credit
    
    
    (281
    )
    
    
    (2,170
    )Net cash provided by (used in) financing activities
    
    
    2,640
    
    
    
    (1,762
    )Net increase (decrease) in cash and cash equivalents
    
    
    2,814
    
    
    
    (1,624
    )Cash and cash equivalents at beginning of period
    
    
    1,058
    
    
    
    2,762Cash and cash equivalents at end of period
    
    $
    3,872
    
    
    $
    1,138Supplemental cash flow information:Interest paid
    
    $
    3,412
    
    
    $
    5,872Non-cash investing and financing activities:Property acquired with debt
    
    $
    130
    
    
    $
    Common stock issued pursuant to cashless exercise of warrants
    
    $
    2
    
    
    $
    


See notes to unaudited consolidated condensed financial statements.

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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 December 27, 2003 and March
29, 2003, and for the thirteen and thirty-nine week periods ended December 27,
2003 and thirteen and forty week periods ended January 4, 2003 have not been
audited by certified public accountants, 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
thirty-nine week periods ended December 27, 2003 and thirteen and forty week
periods ended January 4, 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 29, 2003. Certain
reclassifications were made to the prior periods consolidated condensed
balance sheet.

The Company is primarily engaged in the sale of fine 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. |  | Newly Issued Accounting Standards
|-- |  | ---------------------------------

In April 2002, the Financial Accounting Standards Board (FASB) issued
Statement of Financial Accounting Standard (SFAS) No. 145, Rescission of
FASB Statement Nos. 4, 44, and 64, Amendment of SFAS No. 13, and Technical
Corrections, which amends certain existing authoritative pronouncements to
make various technical corrections, clarify meanings, or describe their
applicability under changed conditions. Additionally, SFAS No. 145 provides
that gains and losses from debt extinguishment are not automatically shown as
an extraordinary item on a companys statement of operations. The provisions of
SFAS No. 145 are effective for fiscal years beginning after May 15, 2002. The
adoption of SFAS No. 145 did not have a material impact on the Companys
financial position or results of operations.

In March 2003, the FASBs Emerging Issues Task Force (EITF) finalized
Issue No. 02-16, Accounting by a Customer (Including a Reseller) for Cash
Consideration Received from a Vendor. EITF 02-16 addresses the accounting
treatment for vendor allowances and provides that cash consideration received
from a vendor should be presumed to be a reduction of the prices of the
vendors product and should therefore be shown as a reduction in the purchase
price of the merchandise. Further, these allowances should be recognized as a
reduction in cost of sales when the related product is sold. To the extent that
the cash consideration represents a reimbursement of a specific, incremental
and identifiable cost, then those vendor allowances should be used to offset
such costs. The adoption of EITF 02-16 did not have a material impact on the
Companys financial position or results of operations.

In April 2003, the FASB issued SFAS No. 149, Amendment of Statement 133
on Derivative Instruments and Hedging Activities. SFAS No. 149 amends and
clarifies financial accounting and reporting for derivative instruments,
including certain derivative instruments embedded in other contracts and for
hedging activities under SFAS No. 133, Accounting for Derivative Instruments
and Hedging Activities. Generally, SFAS No. 149 is effective for contracts
entered into or modified after June 30, 2003 and for hedging relationships
designated after
June 30, 2003. The adoption of SFAS No. 149 did not have a material
impact on the Companys financial position or results of operations.

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|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 SFAS No. 148, Accounting for Stock-Based Compensation-Transition
and Disclosure, which amends SFAS No. 123, Accounting for Stock-Based
Compensation, the following table estimates the pro forma effect on net income
(loss) and income (loss) per share had the Company applied the fair value
recognition provision of SFAS No. 123 to stock-based employee compensation:

Thirteen
    
    ThirteenWeeks Ended
    
    Weeks EndedDecember 27, 2003
    
    January 4, 2003(In thousands except per share data)Net income attributable to common stockholders:As reported:Continuing operations
    
    $
    3,663
    
    
    $
    2,498Discontinued operations
    
    
    
    
    
    
    (43
    )$
    3,663
    
    
    $
    2,455Proforma:Continuing operations
    
    $
    3,343
    
    
    $
    2,079Discontinued operations
    
    
    
    
    
    
    (43
    )$
    3,343
    
    
    $
    2,036Income per shareAs reported basic:Continuing operations
    
    $
    0.12
    
    
    $
    0.13Discontinued operations
    
    
    
    
    
    
    $
    0.12
    
    
    $
    0.13Proforma basic:Continuing operations
    
    $
    0.11
    
    
    $
    0.11Discontinued operations
    
    
    
    
    
    
    (0.01
    )$
    0.11
    
    
    $
    0.10Income per shareAs reported diluted:Continuing operations
    
    $
    0.04
    
    
    $
    0.03Discontinued operations
    
    
    
    
    
    
    $
    0.04
    
    
    $
    0.03Proforma diluted:Continuing operations
    
    $
    0.04
    
    
    $
    0.03Discontinued operations
    
    
    
    
    
    
    (0.01
    )$
    0.04
    
    
    $
    0.02


Thirty-nine
    
    FortyWeeks Ended
    
    Weeks EndedDecember 27, 2003
    
    January 4, 2003(In thousands except per share data)Net loss attributable to common stockholders:As reported:Continuing operations
    
    $
    (5,241
    )
    
    $
    (20,770
    )Discontinued operations
    
    
    
    
    
    
    (292
    )$
    (5,241
    )
    
    $
    (21,062
    )Proforma:Continuing operations
    
    $
    (6,235
    )
    
    $
    (22,080
    )Discontinued operations
    
    
    
    
    
    
    (292
    )$
    (6,235
    )
    
    $
    (22,372
    )Loss per shareAs reported basic and diluted:Continuing operations
    
    $
    (0.23
    )
    
    $
    (1.06
    )Discontinued operations
    
    
    
    
    
    
    (0.02
    )$
    (0.23
    )
    
    $
    (1.08
    )Proforma basic and diluted:Continuing operations
    
    $
    (0.27
    )
    
    $
    (1.12
    )Discontinued operations
    
    
    
    
    
    
    (0.02
    )$
    (0.27
    )
    
    $
    (1.14
    )


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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 thirty-nine weeks
ended December 27, 2003 and the thirteen and forty week periods ended January
4, 2003: expected volatility of 96% and 81%, respectively, risk-free interest
rate of 3.15% and 2.80%, respectively, expected lives of approximately five
years and a dividend yield of zero for the periods presented. There were 50,000
and 90,000 options granted during the thirteen and thirty-nine weeks ended
December 27, 2003, respectively and 125,000 and 2,355,000 options granted
during the thirteen and forty weeks ended January 4, 2003, respectively.



|D. |  | Term Loan and Credit Facility
|-- |  | -----------------------------

As of December 27, 2003, the Company had a $58 million working capital
credit facility with Fleet Retail Finance and GMAC and a $10.7 million junior
secured term loan with Back Bay Capital. Both of the debt facilities have a
maturity date of August 20, 2005 and are collateralized by substantially all of
the Companys assets. Availability under the working capital facility is
determined based upon a percentage formula applied to certain inventory and has
certain restrictions regarding borrowing availability. The interest rate under
the working capital facility as of December 27, 2003 was 5.25% (prime plus
1.25%). The working capital facility currently contains certain financial
covenants that limit capital expenditures. The interest rate for the credit
facility was adjusted in November 2003 to reduce the rate from prime plus 1.5%
to prime plus 1.25%, based on the excess borrowing capacity of the Companys
availability as allowed in the borrowing agreement. The junior secured term
loan currently bears an effective interest rate of 14% and is subject to
similar restrictions and covenants as the working capital facility as well as
certain prepayment penalties. On November 21, 2003, the junior secured term
loan with Back Bay Capital was amended to include the reduction of the
effective interest rate from 18.25% to 14% and allowed a prepayment of
principal of $2 million. The current terms of the banking facilities may be
amended pending the proposed dividend payment discussed in Note H herein.

As of December 27, 2003, after accounting for the foregoing borrowing
restrictions, the Company had approximately $62.5 million of borrowing capacity
under its facility and term loan and, after netting the outstanding borrowings
of $38.9 million and letter of credit commitments of $600,000, the Company had
excess borrowing capacity of approximately $23.0 million.



|E. |  | Discontinued Operations
|-- |  | -----------------------

The Company closed its store at Tysons Galleria in McLean, Virginia in
March 2003 in order to concentrate its merchandising and marketing efforts in
its core Florida and Georgia marketplace. In accordance with SFAS No. 144, the
closing of the store is classified as a discontinued operation and as a result,
the Consolidated Condensed Statements of Operations for the thirteen and forty
week periods ended January 4, 2003 have been reclassified to reflect the store
as a discontinued operation. Sales related to this store for the thirteen and
forty week periods ended January 4, 2003 were $478,000 and $1,404,000,
respectively. The net loss related to this store for the thirteen and forty
week periods ended January 4, 2003 was $43,000 and $292,000, respectively.



|F. |  | Other Charges
|-- |  | -------------

Other charges for the thirteen and forty weeks ended January 4, 2003
consist of one time charges for professional fees related to the liquidation of
inventory in under-performing and unprofitable stores that were being closed as
part of a restructuring plan, charges related to the sale of certain of the
Companys accounts receivable portfolio and severance costs related to the
departure of a former Chief Executive Officer net of a reversal to income of
reserves related to the exit of leases for closed stores, which was recorded in
the thirteen weeks ended January 4, 2003.

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|G. |  | Inventories
|-- |  | -----------



| |  | Inventories are summarized as follows:
| |  | --------------------------------------

(amounts shown in thousands)December 27, 2003
    
    March 29, 2003Company
    
    Held on
    
    Company
    
    Held onOwned
    
    Consignment
    
    Owned
    
    ConsignmentRaw materials
    
    $
    2,018
    
    
    
    
    
    
    $
    1,138Finished goods
    
    
    81,125
    
    
    $
    13,331
    
    
    
    75,615
    
    
    $
    6,172$
    83,143
    
    
    $
    13,331
    
    
    $
    76,753
    
    
    $
    6,172




|H. |  | 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 has been netted against the proceeds in stockholders equity. As
consideration for the investment, Birks received 15,050 shares of Series A
Convertible Preferred Stock, a newly formed class of stock that is convertible
into 50,166,667 shares of common stock. 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, 12,424,595 shares of
common stock at $0.40 per share. Of the net proceeds raised of $13.55 million,
a fair value of $1.0 million has been allocated to the warrants. Upon
conversion of the preferred shares, Birks will own approximately 77.5% of the
outstanding capital stock in Mayors.

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.
Following the exercise of the warrants, there were 4,750,000 warrants that
remained outstanding which were previously assigned to certain current and
former members of management of Birks.

Mayors Chief Executive Officer, Chief Financial Officer, Group
VP-Finance, Group VP-Marketing, Group VP-Supply Chain Operations, Group
VP-Strategy and Business Integration, Group Creative Director and other members
of Mayors senior management serve in similar capacities for Birks. 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.

As part of Birks investment in 2002, the Company entered into a
Manufacturing & Sale Agreement and a Management Expense Reimbursement Agreement
with Birks effective August 20, 2002. The Manufacturing & Sale Agreement allows
for the purchase of merchandise from Birks at market prices in accordance with
a purchase plan, which is pre-approved by the Corporate Governance Committee of
the Board of Directors of the Company. The Management Expense Reimbursement
Agreement allows for the Company to acquire certain management services from
Birks, at its cost, in accordance with a project schedule, which is
pre-approved by the Corporate Governance Committee of the Board of Directors.
The terms of these agreements are one year, however can be terminated at any
time by the Corporate Governance Committee. The Company can sell merchandise
and provide management services to Birks under terms similar to those in the
agreements.

During the thirteen and thirty-nine weeks ended December 27, 2003, Mayors
incurred approximately $25,000 and $83,000, respectively, of costs from Birks
related to advisory, management and corporate services pursuant to the
Management Expense Reimbursement Agreement which was net of expenses charged to
Birks from Mayors for similar services. Also, during the thirteen and
thirty-nine weeks ended December 27, 2003, Mayors purchased approximately
$214,000 and $472,000, respectively, of merchandise from Birks pursuant to a
Manufacturing and Sale Agreement. As of December 27, 2003, the Company owed
Birks $403,000 related to
purchases of inventory, advisory, management and corporate services and
for expenses paid by Birks on behalf of Mayors. Included in General and
Administrative Expenses are $390,000 of amounts paid to Birks during the forty
weeks ended January 4, 2003 for merchandising and other consulting services
prior to the equity investment transaction. Mayors also purchased $27,000 and
$32,000, respectively, of merchandise from Cristalleries Royales de Champagne,
a company controlled by the majority owners of Birks, during the thirteen and
thirty-nine weeks ended December 27, 2003.

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The Companys Certificate of Designation (the Certificate) for the
Series A Convertible Preferred Stock provides that the holders of the preferred
stock shall be entitled to receive dividends on each share of preferred stock
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. The Certificate
calls for the dividends to remain unpaid until January 15, 2005 for dividends
cumulated through October 14, 2004; thereafter, all dividends, including
cumulative but unpaid, are to be payable quarterly in arrears on each January
15, April 15, July 15 and October 15 of each year, commencing on January 15,
2005 if declared by the Board of Directors. As of December 27, 2003 there was
$1.9 million of dividends accumulated (of which $357,000 and $1,072,000 is for
the thirteen and thirty-nine weeks ended December 27, 2003, respectively);
however, no dividends have been declared by the Board of Directors. The
declaration of any current or future dividends is subject to certain provisions
of the Companys banking facility. The Certificate further provides that the
Series A Convertible Preferred Stock has a liquidation value of $1,000 per
share.

The Certificate also provides Birks with the right to elect a percentage
of the total authorized Directors of the Company, rounded to the next highest
whole number, corresponding to the percentage of common stock that would be
held by Birks on the record date of such election if Birks had converted all of
the Series A Convertible Preferred Stock then outstanding into common stock.
Currently, Birks has the right to elect seven of the nine members of the
Companys Board of Directors.

In January 2004, Birks, the controlling shareholder of Mayors, asked the
Company to consider paying in February 2004, the cumulative dividends earned by
Birks on the Series A Convertible Preferred Stock, which approximate $2.1
million as of February 10, 2004. As an inducement to pay the dividends early,
Birks has proposed that it absorb certain incremental costs related to the
early dividend payment, including, payment of the lender commitment fees and a
reduction in the amount of any future dividend payments to Birks by the amount
of interest incurred by the Company as a result of any amounts the Company will
have to borrow to fund the payment. In addition, Birks has also proposed that
the dividend rate on the Series A Convertible Preferred Stock be lowered for
all future dividend payments from $95 per share to $80 per share per annum,
resulting in a savings in cumulative dividends of approximately $225,750
annually. In order to effectuate the payment of an early dividend, the Company
is considering issuing a new series of preferred stock to Birks in exchange for
its shares of Series A Convertible Preferred Stock on substantially identical terms to the
Series A Convertible Preferred Stock, with the exceptions of certain changes primarily to
the provisions regarding the payment of dividends and future dividend rates.

The Company has been asked by Birks to consider the payment of these
dividends in order to assist Birks in the renewal of its current bank facility,
which is due for renewal in July 2004, and for other general financing needs.
Birks has informed Mayors that it is
currently in the process of developing the final terms for its bank facility
and the controlling shareholder group has informed Mayors that it is highly
confident that it will satisfactorily conclude them in the near future. The
Companys banks have proposed modifying the calculation of the credit
facilities borrowing formula so as to fully permit the payment of the dividend
without negatively impacting the availability of borrowings under the Companys
credit facility or otherwise create a material adverse effect on the Companys
liquidity. In addition, in conjunction with the renewal of the Birks
facility, it has been proposed to increase the Companys
facility up to $3 million and to provide for the inclusion of
the accounts receivable in the borrowing base.

The Company has formed a committee of independent directors of its Board
to evaluate Birks request and has retained an investment banking firm to
perform an analysis of the structure of the proposed transaction. The Committee
of Independent Directors is expected to finish its consideration of Birks
request during the month of February 2004.

The payment of dividends would not affect the statement of operations or
earnings (loss) per share as it would be recorded directly as a reduction of
stockholders equity. The earnings (loss) per share amounts
attributable to common stockholders are adjusted for the dividends as they
are earned rather than when declared or paid.

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|I. |  | 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

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 March 29, 2003 and other reports filed with the Securities and
Exchange Commission.

Overview

Mayors currently operates 28 luxury jewelry stores in Florida and
Georgia. During the forty week period ended January 4, 2003, the Company
operated between 29 and 40 stores located in its core market of Florida and
Georgia as well as stores in non-core areas of California, Texas, Michigan,
Illinois, Virginia and Arizona. The reduction in the number of stores was a
result of the execution of the restructuring plan during the last fiscal year
that included closing under-performing stores outside of the Companys core
market of Florida and 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 brands business comprise 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 sell certain watches, it could have a material adverse
effect on the Companys business, financial condition and operating results.
Please refer to Item 2 Forward Looking Statements.

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 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 could have an adverse effect on the Companys net sales
and profitability.

The Companys strategy is to continue to attempt to increase gross profit
and gross margin over the next several years. The Companys strategy for gross
profit and gross margin improvement includes continuing to execute strategies
to reduce the cost of merchandise purchased through leveraging the Companys
purchasing power and increasing sales of exclusive and brand merchandise, and
to move the mix of sales towards higher margin jewelry items. In addition, by
leveraging the relationship with Henry Birks & Sons, Inc. (Birks), 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 as well as producing savings as a result of integrating mutual
efforts with Birks.

The retail jewelry business is seasonal in nature with a higher proportion
of sales and a significant portion of earnings generated during the third
fiscal quarter holiday selling season, which encompassed the thirteen weeks
ended December 27, 2003 for the current fiscal year and the thirteen weeks
ended January 4, 2003 in the prior fiscal year.

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Thirteen and thirty-nine weeks ended December 27, 2003 compared to the thirteen and forty weeks ended January 4, 2003

The Companys net sales for the thirteen and thirty-nine weeks ended
December 27, 2003 were $50.3 million and $98.7 million, respectively, compared
to $43.6 million and $98.4 million, respectively, for the thirteen and forty
weeks ended January 4, 2003. The increase in revenues for the thirteen weeks
ended December 27, 2003 is primarily due to an effective branding and marketing
initiative that included a mix of exclusive new merchandise in all stores, a
redesigned Mayors holiday catalog and a new prestige catalog, emphasis on new
and longtime clients, store events and launching Mayors new television
advertising campaign. For the thirty-nine weeks ended December 27, 2003, the
increase in sales compared to the prior year was the result of an effective mix
of merchandising, due in part to the improved financial position of the
Company, and marketing offset by there being less stores in operations during
the current year as well as one less week of sales included in the current year
as compared to the prior year.

Comparable store sales (sales in stores open in both thirteen and
thirty-nine week periods), increased 14.2% and 12.4%, respectively, over the
similar thirteen and thirty-nine week periods in the prior fiscal year.

Gross margin (gross profit as a percentage of sales) was 42.2% and 41.2%
for the thirteen and thirty-nine weeks ended December 27, 2003, respectively,
compared to 40.4% and 34.6% for the thirteen and forty weeks ended January 4,
2003, respectively. The increase in gross margin for the thirteen weeks ended
December 27, 2003 primarily resulted from the ability of Mayors to increase
its offering and sales of higher margin exclusive products and substantially
reduced promotional activity as compared to last year. For the thirty-nine
weeks ended December 27, 2003 versus the forty weeks ended January 4, 2003, the
gross margin increased due to the factors previously mentioned for the current
third fiscal quarter as well as the negative impact on the prior year gross
margin that discounting had in connection with the liquidation of inventory in
the closing of stores.

Selling, general and administrative expenses were $15.2 million or 30.3%
of net sales and $38.9 million or 39.4% of net sales for the thirteen and
thirty-nine weeks ended December 27, 2003, respectively, compared to $13.9
million or 32.0% of net sales and $43.8 million or 44.5% of net sales for the
thirteen and forty weeks ended January 4, 2003, respectively. The increase in
selling, general and administrative expenses for the thirteen weeks ended
December 27, 2003 is primarily a result of the increase in marketing and
variable expenses due to the sales increase. The decrease in selling, general
and administrative expenses for the thirty-nine weeks ended December 27, 2003
is primarily a result of the operation of 12 less stores in those fiscal
periods as compared to the prior year fiscal periods, reduction of controllable
expenses, as well as one less week during the first quarter of this year. The
decrease in selling, general and administrative expenses as a percentage of
sales is due to the positive impact of the increase in comparable stores sales
which were able to better absorb the fixed costs compared to the prior year
fiscal periods.

Other charges for the thirteen and forty weeks ended January 4, 2003 were
income of $1.1 million and expense of $1.8 million, respectively. The income
recorded in the thirteen weeks ended January 4, 2003 resulted from the
reversal of reserves relating to the termination of leases as part of a
restructuring plan for under-performing and unprofitable stores, which were
negotiated at more favorable terms than expected. The restructuring plan was
adopted in Fiscal 2001 due to capital constraints caused by merchandising and
marketing issues and the poor economic climate, which in part, led to an
unsuccessful capital intensive expansion strategy. The net charges for the
forty week period ended January 4, 2003, consist of one time charges for
professional fees related to the liquidation of inventory in stores that were
being closed as part of a restructuring plan, charges related to the sale of
certain of the Companys accounts receivable, severance costs related to the
departure of a former Chief
Executive Officer and the reversal of reserves relating to the termination of
leases for closed stores as previously noted above.

Depreciation and amortization expenses were $0.8 million and $2.5 million
for the thirteen and thirty-nine weeks ended December 27, 2003, respectively,
compared to $0.9 million and $3.7 million for the thirteen and forty weeks
ended January 4, 2003, respectively. The decrease in depreciation and
amortization expenses for the thirteen and thirty-nine weeks ended December 27,
2003 was primarily due to the lack of depreciation in those fiscal periods
related to the disposal of fixed assets in the stores that were closed in the
previous year and the corporate headquarters, which was sold in July 2002,
slightly offset by the addition of fixed assets for the Companys two new
stores and other fixed asset additions since the prior year fiscal period.

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Interest and other income was $2,000 and $65,000 for the thirteen and
thirty-nine weeks ended December 27, 2003, respectively, compared to $1.3
million for the forty weeks ended January 4, 2003, which included a release of
funds held in escrow resulting in a gain of $1.4 million in connection with a
settlement with former Mayors stockholders. Interest and other financial costs
were $1.2 million and $3.5 million for the thirteen and thirty-nine weeks ended
December 27, 2003, respectively, and $0.9 million and $5.9 million for the
thirteen and forty weeks ended January 4, 2003, respectively. The interest and
other financial costs for the forty weeks ended January 4, 2003, includes
approximately $2.1 million related to the write-off of deferred financing costs
as a result of the Company entering into new bank loans.

The Company received an income tax benefit of $54,000 for the thirteen
weeks ended January 4, 2003 due to a tax refund and incurred an income tax
expense of $416,000 for the forty weeks ended January 4, 2003, due primarily
to the write-off of an income tax receivable for an inactive Israeli
subsidiary.

FINANCIAL CONDITION

Liquidity and Capital Resources

As of December 27, 2003, the Company had a $58 million working capital
credit facility with Fleet Retail Finance and GMAC and a $10.7 million junior
secured term loan with Back Bay Capital. Both of the debt facilities have a
maturity date of August 20, 2005 and are collateralized by substantially all of
the Companys assets. Borrowing availability under the working capital
facility is determined based upon a percentage formula applied to certain
inventory. The interest rate under the working capital facility as of December
27, 2003, was 5.25% (prime plus 1.25%). The working capital facility currently
contains certain financial covenants that limit the Companys capital
expenditures. The interest rate for the credit facility was adjusted in
November 2003 from prime plus 1.5% to prime plus 1.25%, based on the excess
borrowing capacity of the Companys availability as allowed in the borrowing
agreement. The junior secured term loan currently bears an effective interest
rate of 14% and is subject to similar restrictions and covenants as the working
capital facility as well as certain prepayment penalties. On November 21, 2003,
the junior secured term loan with Back Bay Capital was amended to include the
reduction of the effective interest rate from 18.25% to 14% and allowed a
prepayment of principal of $2 million.

As of December 27, 2003, after accounting for the foregoing borrowing
restrictions, the Company had approximately $62.5 million of borrowing capacity
under its facility and term loan and, after netting the outstanding borrowings
of $38.9 million and letter of credit commitments of $600,000, the Company had
excess borrowing capacity of approximately $23.0 million.

In January 2004, Birks, the controlling stockholder of Mayors, asked the
Company to consider paying in February 2004, the cumulative dividends earned by
Birks on the Series A Convertible Preferred Stock, which approximate $2.1
million as of February 10, 2004. These dividends are on the 15,050 shares of
the Companys Series A Convertible Preferred Stock issued to Birks as part of
its investment in 2002 and were originally anticipated to be paid in January
2005 (see Note H to the Unaudited Condensed Consolidated Financial Statements).
As an inducement to pay the dividends early, Birks has proposed that it
absorb certain incremental costs related to the early dividend payment,
including, payment of the lender commitment fees and a reduction in the amount
of future dividend payments to Birks by the amount of interest incurred by the
Company as a result of any amounts the Company will have to borrow to fund the
payment. In addition, Birks has proposed that the dividend rate on the Series
A Convertible Preferred Stock be lowered for all future dividend payments from
$95 per share to $80 per share per annum, resulting in a savings in cumulative
dividends of approximately $225,750 annually. The payment of dividends would
not affect the statement of operations or earnings (loss) per share as it would
be recorded directly as a reduction of stockholders equity. The earnings
(loss) per share amounts attributable to common stockholders are adjusted for
the dividends as they are earned rather than when declared or paid.

The Company has been asked by Birks to consider the payment of these
dividends in order to assist Birks in the renewal of its current bank facility,
which is due for renewal in July 2004, and for other general financing needs.
Birks has informed Mayors that it is currently in the process of developing
the final terms for its bank facility and the controlling shareholder group has
informed Mayors that it is highly confident that it will satisfactorily
conclude them in the near future. The Companys banks have proposed modifying
the calculation of the credit facilities borrowing formula so as to fully
permit the payment of the dividend without negatively impacting the
availability of borrowings under the Companys credit facility or otherwise
create a material adverse effect on the Companys liquidity. In addition, in
conjunction with the renewal of the Birks facility, it has been proposed to
increase the Companys facility up to $3 million and to provide for the
inclusion of the accounts receivable in the borrowing base.

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Mayors has various relationships with Birks and the two companies have
the same controlling shareholder group (See Note H to the Unaudited
Consolidated Condensed Financial Statements). In addition to the sharing of the
services of certain officers and other members of senior management pursuant to
the Management Expense Reimbursement Agreement and from the ability to purchase
exclusive merchandise from Birks pursuant to the Manufacturing and Sale
Agreement, the relationship with Birks has brought synergies to both companies
in a number of ways such as the integration of efforts in 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 supplier relationships and improve terms as a result of leveraging
the credibility and stronger purchasing power of the combined companies. If the
relationship between Birks and Mayors were to cease, it could potentially
negatively impact each company for a period of time.

The Company has formed a committee of independent directors of its Board
to evaluate Birks request of the dividend payment and has retained an investment banking firm to
perform an analysis of the structure of the proposed transaction. The Committee
of Independent Directors is expected to finish its consideration of Birks
request during the month of February 2004.

During the thirty-nine weeks ended December 27, 2003, cash flows from
continuing operating activities provided $1.5 million in cash. Cash flows from
discontinued operations used $0.5 million in cash to settle final obligations
related to the closing of a store. The cash provided by operating activities
was primarily the result of cash generated from the holiday season in the third
fiscal quarter due to the large volume of sales, the increase in accounts
payable, directly related to the increase in inventories, and accrued expenses
offset by the Companys net loss, and an increase in inventories and accounts
receivable. During the forty weeks ended January 4, 2003, cash flows from
continuing operating activities used $2.8 million in cash, as a result of the
net loss for the period and the use of cash to satisfy restructuring
liabilities reduced by the effect of non-cash expenses and the decrease in
assets as stores were closed.

Net cash used in investing activities was $0.8 million during the
thirty-nine weeks ended December 27, 2003, and was primarily related to capital
expenditures for leasehold improvements for the corporate headquarters and
information systems. Net cash provided by investing activities was $3.2 million
during the forty weeks ended January 4, 2003, due to the sale of the Companys
corporate headquarters, and offset by capital expenditures for leasehold
improvements for the two new stores.

Net cash provided by financing activities was $2.6 million during the
thirty-nine weeks ended December 27, 2003, and was primarily related to net
borrowings under the credit facility. Net cash used in financing activities
was $1.8 million during the forty weeks ended January 4, 2003, primarily due to
repayments on the line of credit and commitment fees paid for a line of credit
offset by proceeds from the issuance of preferred convertible stock, and
warrants and proceeds from the sale of the Companys private label credit card
receivable.

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, any dividend payments on its preferred stock 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.

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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 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 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.

CRITICAL ACCOUNTING POLICIES AND ESTIMATES

The preparation of financial statements and related disclosures 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. Estimates are
used in accounting for among other things, inventory reserves, depreciation,
allowance for doubtful accounts and contingencies. Estimates and assumptions
are reviewed periodically and the effects of revisions are reflected in the
consolidated financial statements in the period in which they are determined to
be necessary. 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 as noted
below.

Reserve for inventory shrink and slow moving inventory.The reserve for
inventory shrink is estimated for the period from the last 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.

The Company writes down its inventory for estimated unmarketable 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 generally at the
lower of the carrying amount or fair value less cost to sell.




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 1.25%. 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 December 27, 2003 would increase or
decrease earnings per share by approximately $282,000 or $.01 per share per
annum.

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The Company extends credit to its 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 end of the period covered by this Quarterly Report, the Company
carried out an evaluation, under the supervision and with the participation of
its management, including its Chief Executive Officer and Chief Financial
Officer, of the effectiveness of the design and operation of our disclosure
controls and procedures. Based upon that evaluation, the Chief Executive
Officer and Chief Financial Officer concluded that the Companys disclosure
controls and procedures were effective as of the end of the period covered by
this Quarterly Report in timely alerting them to material information relating
to the Company (including the consolidated subsidiaries) required to be
included in reports the Company files or submits under the Exchange Act.

(b)   Changes in Internal Controls

There have not been any changes in the Companys internal control over
financial reporting during the period covered by this Report 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.




Item 6.       Exhibits and Reports on Form 8-K



|(a) |  | 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, 1995.3.3
    
    Second Amendment to Revolving Credit, Tranche B Loan and Security
Agreement dated November 21, 2003.31.1
    
    Certification Chief Executive Officer pursuant to Section 302 of the
Sarbanes-Oxley Act of 2002, dated February 10, 2004.31.2
    
    Certification Chief Financial Officer pursuant to Section 302 of the
Sarbanes-Oxley Act of 2002, dated February 10, 2004.32.1
    
    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, dated February 10, 2004.32.2
    
    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, dated February 10, 2004.




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

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On October 31, 2003, the Company filed a Report on Form 8-K reporting 1)
financial results for the second fiscal quarter and twenty-six week period
ended September 27, 2003; and 2) that its controlling shareholder, Henry Birks
and Sons Inc. had informed the Company of its intent to exercise warrants to
purchase up to 32,523,787 shares of the Companys common stock which were
granted as part of Birks investment in 2002.

On November 13, 2003 and December 2, 2003, the Company filed a Report on
Form 8-K and a Report on Form 8-K/A reporting 1) the dismissal of Deloitte &
Touche LLP as its principal accountant on November 6, 2003, and 2) effective
November 6, 2003, the Company engaged KPMG LLP as its principal accountant.

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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. AndruskevichChairman of the Board, President and Chief
Executive OfficerDate: February 10, 2004


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