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SECURITIES AND EXCHANGE COMMISSION

FORM 10-K

Commission File Number 1-9647

MAYOR’S JEWELERS, INC.

14051 N.W. 14th Street
Sunrise, Florida 33323
(Address of Principal Executive Offices) (Zip Code)

Registrant’s telephone number, including area code: (954) 846-8000

Securities registered pursuant to Section 12(b) of the Act:

Securities registered pursuant to Section 12(g) of the Act: None

      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 if disclosure of delinquent filers pursuant to Item 405 of Regulation S-K is not contained herein, and will not be contained to the best of registrant’s knowledge, in definitive proxy or information statements, incorporated by reference in Part III of this Form 10-K or any amendment to this Form 10-K.  o

      Indicate by check mark whether the registrant is an accelerated filer (as defined in the Exchange Act Rule 12b-2).   Yes o     No x

      As of October 15, 2002, the aggregate market value of the voting stock beneficially held by non-affiliates of the registrant was $6,253,227. The aggregate market value was computed with reference to the closing price on the American Stock Exchange on such date. Affiliates are considered to be executive officers and directors of the registrant and their affiliates for which beneficial ownership is not disclaimed.

      As of June 13, 2003, 19,608,310 shares of Common Stock were outstanding.

      Documents Incorporated by Reference. Parts of the definitive Proxy Statement which the Registrant will file with the Securities and Exchange Commission in connection with the Registrant’s Annual Meeting of Stockholders to be held on July 22, 2003 are incorporated by reference in Parts II and III of this Annual Report on Form 10-K.

Table of Contents

MAYOR’S JEWELERS, INC.

TABLE OF CONTENTS

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PART I

ITEM 1.     BUSINESS

      As used in this Report, unless the context requires otherwise, “we,” “us,” “our,” “Mayor’s,” or the “Company,” means Mayor’s Jewelers, Inc. and its consolidated subsidiaries.

Forward-Looking Statements

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

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

      One should carefully evaluate such statements by referring to the factors described in the Company’s filings with the Securities and Exchange Commission (“SEC”), especially on Form’s 10-K, 10-Q and 8-K. Particular review is to be made of Items 1, 2, 3, and 7 and 7a of the Form 10-K and Item 2 of the Form 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. All written or oral forward-looking statements attributable to the Company are expressly qualified in their entirety by these cautionary statements. 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.

General

      Mayor’s Jewelers, Inc. is a premier luxury jeweler of fine quality jewelry, watches and giftware founded in 1910. Mayor’s, a Delaware corporation, was incorporated in 1983 and as of March 29, 2003, operated 28 stores in South and Central Florida and metropolitan Atlanta, Georgia. Mayor’s has a long-established reputation in its core market areas as a premier luxury jeweler offering fine quality merchandise in an elegant environment conducive to the purchase of luxury items. As a premier luxury jeweler, the Company does not sell “costume” or gold filled jewelry; rather, all of its jewelry products are constructed of 18 karat gold, platinum, or sterling silver, with or without precious gemstones, with significant emphasis on quality craftsmanship and design. The average price per item of all merchandise sold in the core 28 stores in Fiscal 2002 was approximately $1,360, excluding repairs and other non-merchandise sales, an amount the Company believes is substantially higher than that of any other publicly-traded domestic jewelry retailer.

      Mayor’s distinguishes itself from most of its competitors by offering a larger selection of distinctive higher quality merchandise at many different price points, and by placing substantial emphasis on professionalism and training in its sales force. Mayor’s buyers procure distinctive merchandise directly from manufacturers, diamond cutters and other suppliers throughout the world, enabling Mayor’s to sell distinctive high quality merchandise often not available from other jewelers in its markets. Management believes it has one of the best trained staff of sales professionals in the industry as a result of Mayor’s emphasis on classroom training, in-store training and participation in industry-recognized educational programs.

      On August 20, 2002, Mayor’s closed on a gross $15.05 million equity investment transaction with Henry Birks & Sons Inc., a corporation organized under the laws of Canada (“Birks”). Birks is a premier Canadian retailer of fine jewelry, clocks, watches and gift items and has 38 stores across Canada. At the closing of the transaction with Birks, Mayor’s received $10.05 million in cash and a promissory note from Birks due and paid on September 30, 2002 for $5 million. As consideration for the $15.05 million investment, Birks received 15,050 shares of Series A Convertible Preferred Stock that is convertible into 50,166,667 shares of Common Stock, which upon conversion would give Birks approximately a 72% Common Stock interest in Mayor’s. The investment 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 the holders on the record date of such election if the holders 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. Additionally, the investment provides for warrants exercisable for 12,424,596 shares of common stock at an exercise price of $0.30 per share, warrants exercisable for 12,424,596 shares of common stock at an exercise price of $0.35 per share, and warrants exercisable for 12,424,595 shares at an exercise price of $0.45 per share which, upon exercise, would increase Birks’ interest in Mayor’s to approximately 82%. The shares of Series A Convertible Preferred Stock issued to Birks have an aggregate liquidation value of $15,050,000.

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      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 an independent committee of the Board of Directors of the Company. The Management Expense Reimbursement Agreement allows for Mayor’s to retain certain management services of Birks, at its cost, in accordance with a project schedule which is pre-approved by an independent committee of the Board of Directors. The term of these agreements is one year. Mayor’s can sell merchandise and provide management services to Birks under terms similar to those in the agreements. Mayor’s also has an exclusive sales right to a line of crystal products in Florida and Georgia from Cristalleries Royales de Champagne, a company controlled by an affiliate of the majority owner of Birks.

      Mayor’s Chief Executive Officer, Chief Financial Officer, Group VP — Finance, and Group VP — Strategy and Business Integration serve in the same capacity for Birks. In addition, Thomas A. Andruskevich, Mayor’s Chairman of the Board of Directors, 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.

      The Company filed a Form 8-K with the SEC on January 29, 2003 indicating, among other things, its change in fiscal year-end for financial reporting purposes, effective January 15, 2003, from a fiscal year ending on the Saturday closest to January 31 to the Saturday closest to March 31. Fiscal 2002, throughout this document, refers to the Company’s fiscal year ended March 29, 2003. Fiscal 2001 refers to the fiscal year ended February 2, 2002 and Fiscal 2000 refers to the fiscal year ended February 3, 2001.

      The Company’s corporate headquarters are located at 14051 N.W. 14th Street, Sunrise, Florida 33323, and the Company’s telephone number is (954) 846-8000.

      Mayor’s internet website address is www.mayors.com. The Company’s annual reports on Form 10-K, quarterly reports on Form 10-Q, current reports on Form 8-K and amendments to those reports filed or furnished pursuant to section 13(a) or 15(d) of the Securities Exchange Act of 1934, as amended, are available free of charge through our website as soon as reasonably practicable after they are electronically filed with, or furnished to, the SEC. The reference to the Company’s website address does not constitute incorporation by reference of the information contained on the website, and the information contained on the website is not part of this document.

Restructuring Plan

      During its fiscal year ended January 29, 2000 (“Fiscal 1999”), the Company embarked upon an expansion strategy that saw it open five stores in Fiscal 1999, ten stores in Fiscal 2000 and seven stores in Fiscal 2001. Merchandising and marketing issues, the poor economic climate and a capital intensive expansion strategy that the Company executed in Fiscal 1999 through Fiscal 2001 forced the Company to retrench from that strategy as part of a restructuring plan that was adopted in the fourth quarter of Fiscal 2001 (the “Restructuring Plan”), which included, among other significant initiatives, an infusion of equity, the refinancing of the Company’s bank debt, the closing of thirteen unprofitable and under-performing stores, as well as cancelling a lease for a proposed new store, the liquidation of certain non-performing assets and the reduction of various field and corporate costs. During Fiscal 2002, the Company successfully executed the Restructuring Plan and was able to achieve the initiatives previously mentioned primarily through an equity infusion via the Birks transaction described above, the refinancing of the Company’s bank debt, which increased borrowing availability, and the closing of the stores identified at terms more favorable than originally estimated. For more detail of the Restructuring Plan, please refer to Item 7 regarding “Management’s Discussion and Analysis of Financial Condition and Results of Operations.”

Products

      Mayor’s offers a large selection of distinctive high quality merchandise at many different price points. This merchandise includes designer jewelry, diamond, gemstone, and precious metal jewelry, rings, wedding bands, earrings, bracelets, necklaces, charms, and its own private label jewelry, that includes baby jewelry, and Swiss timepieces that are often not available from other jewelers in its markets. All of Mayor’s jewelry products are constructed of 18 karat gold, platinum, or sterling silver with significant emphasis on quality craftsmanship and unique design. Mayor’s carries a large selection of brand name watches, including watches made by Rolex™, Cartier™, Patek Philippe™, Baume & Mercier™, Omega™, Charriol™, Tag Heuer™, Ebel™, Breitling™, Locman™, Corum™, Rado™, Chopard™, Jaeger le Coultre™ and Raymond Weil™, designer jewelry including jewelry made by David Yurman™, Aaron Basha™, Charriol™ and DiModolo™ and a variety of high quality giftware, including giftware made by Correia™, Mont Blanc™ and Royal de Champagne™.

      During Fiscal 2002, product category sales as a percentage of net sales were as follows: watches — 39%; jewelry — 50%; other — 11%. The Rolex™ brand, which is included in watch sales, accounted for approximately 24% of Mayor’s total net sales. With the investment by Birks which was previously discussed, the relationships with the Company’s vendors, particularly Rolex™, has improved greatly since reported in Fiscal 2001’s Annual Report on Form 10-K.

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Purchasing

      Mayor’s staff of buyers procures distinctive high quality merchandise directly from manufacturers, diamond cutters, and other suppliers worldwide enabling Mayor’s to sell fine quality merchandise often not available from other jewelers in its markets. Buyers generally specialize in purchasing merchandise in categories such as diamonds, precious gemstones, pearls, watches, gold jewelry, and giftware. Buyers frequently visit both Mayor’s and competitors’ stores to compare value, selection, and service, as well as to observe client reaction to merchandise selection and determine future needs and trends.

  Watches

      Mayor’s purchases watches from a number of leading manufactures and suppliers. During Fiscal 2002, merchandise supplied by Rolex™, the Company’s largest supplier, accounted for approximately 24% of Mayor’s total net sales. Certain brand name watch manufacturers, including Rolex™, have distribution agreements with the Company that provide, among other things, for specific sales locations, yearly renewal terms, and early termination provisions at the manufacturer’s discretion.

  Diamond, Gemstone, Pearl and Precious Metal Jewelry

      During Fiscal 2002, revenues from sales of diamond and precious gemstone jewelry represented approximately 51% of Mayor’s total net sales. Whenever possible, Mayor’s purchases unset diamonds, gemstones and precious metal jewelry directly from cutters in international markets, such as Antwerp, Bangkok and Tel Aviv, gold jewelry from Italy, and pearls from Japan and Canada. These diamonds and other gemstones are frequently furnished to independent jewelers and goldsmiths for setting, polishing and finishing pursuant to Company instructions as well as to Mayor’s facilities in order to deliver a distinctive high quality finished product at the best possible value.

      In addition, Mayor’s carries an exclusive collection of high quality jewelry manufactured by Birks.

  Other Products

      In Fiscal 2002, Mayor’s purchased jewelry and giftware for sale in Mayor’s stores from over 350 suppliers, including an exclusive sales right in Florida and Georgia to a line of crystal products from Cristalleries Royales de Champagne, a company controlled by an affiliate of the majority owners of Birks. Many of these suppliers have long-standing relationships with Mayor’s.

Availability of Products

      Although purchases of several critical raw materials, notably gold and gemstones, are made from a relatively limited number of sources, the Company believes that there are numerous alternative sources for all raw materials used in the manufacture of its finished jewelry, and that the failure of any principal supplier would not have a material adverse effect on operations. Any material changes in foreign or domestic laws and policies affecting international trade may have a material adverse effect on the availability of the diamonds, other gemstones, precious metals and non-jewelry products purchased by the Company.

      The Company competes with other jewelry retailers for access to vendors that will provide it with the quality and quantity of merchandise necessary to operate its business. In Fiscal 2002, merchandise supplied by Rolex™, the Company’s largest supplier, accounted for approximately 24% of the Company’s total net sales. The Company’s relationships with its primary suppliers, including its relationship with Rolex™, are generally not pursuant to long-term agreements. Although the Company believes that alternative sources of supply are available, the abrupt loss of any of its vendors, especially Rolex™, or a decline in the quality or quantity of merchandise supplied by its vendors could cause significant disruption in its business. If Rolex™ terminated its distribution agreement with the Company, it would have a material adverse effect on the Company’s business, financial condition and operating results.

Changing Prices and Availability

      Changes in foreign or domestic laws and policies affecting international trade may also have an adverse effect on the price of diamonds, gemstones and precious metals required by the Company. Because substantially all of the Company’s purchase transactions are denominated in U.S. dollars, the Company currently does not engage in any hedging activities in foreign currencies. The Company does not speculate in gems or precious metals or engage in any hedging activity with respect to possible fluctuations in the prices of these items, since historically the Company has been able to make compensatory adjustments in its retail prices as material fluctuations in the price of supplies have occurred. If such fluctuations should be unusually large, rapid or prolonged, there is no

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assurance that the necessary adjustments could be made quickly enough to prevent the Company from being adversely affected and the Company may choose to hedge its purchase requirements to minimize the potential impact. Please refer to Item 1 regarding “Forward-Looking Statements.”

Seasonality

      The Company’s jewelry business is highly seasonal, with the third fiscal quarter (which includes the holiday shopping season) historically contributing significantly higher sales than any other quarter during the year. Approximately 37% of the Company’s Fiscal 2002 net sales were made during the third fiscal quarter.

Manufacturing

      In addition to Mayor’s purchasing finished jewelry and the subcontracting of certain fabrication activities to others, Mayor’s also has a jewelry design studio and manufacturing and repair facility located in its corporate head office facility. In keeping with Mayor’s identity as a full-service premier luxury jeweler, this studio and workshop offers custom designed jewelry in response to customers’ special requests and manufactures jewelry for retail sale when it is economical to do so. Mayor’s also provides jewelry and watch refurbishment and repair services, which are performed in stores or at the Mayor’s centralized repair facility at its corporate head office. In addition to repair work, jewelers will perform other work, including ring sizing on new purchases and repairs covered under warranty.

Retail Operations, Merchandising and Marketing

  General

      The Company distinguishes itself from most of its competitors by offering a selection of distinctive higher quality merchandise at a wide range of price points. Mayor’s keeps substantially all of its inventory on display in its stores rather than at its distribution facility. Although each store stocks a representative array of jewelry, watches, giftware and other accessories, certain inventory is tailored to meet local tastes and historical merchandise sales patterns of the individual store.

      The Company believes that the elegant ambiance of its stores and distinctive high quality merchandise displays play an important role in providing an atmosphere for encouraging sales. The Company pays careful attention to detail in the design and layout of each of its stores, particularly lighting, colors, choice of materials and placement of display cases. The Company also places substantial emphasis on its window displays as a means of attracting walk-in traffic and reinforcing its distinctive image. The Company’s visual display department designs and creates window and store merchandise case displays for all of its stores. Window displays are frequently changed to provide variety and to reflect seasonal events such as Christmas, Valentine’s Day and Mother’s Day.

  Personnel and Training

      Mayor’s places substantial emphasis on the professionalism of its sales force to maintain its position as a leading luxury jeweler. Mayor’s strives to hire only highly motivated, professional and customer-oriented individuals. All new sales professionals attend a course where they are trained in technical areas of the jewelry business, specific service techniques and Mayor’s commitment to client service. In general, Mayor’s trains its sales personnel to establish a personal rapport with each client, to identify client preferences with respect to both product and price range, and to successfully establish a relationship and ultimately conclude a sale and acquire a client for life. Management believes that attentive personal service and knowledgeable sales professionals are key components of Mayor’s success.

      As part of Mayor’s commitment to training, the Company established “Mayor’s University,” a formalized system of in-house training with a primary focus on client service that involves extensive classroom training, the use of detailed operational manuals, in-store mentorship programs and product knowledge testing. In order to retain their employment with the Company, all attendees must perform satisfactorily on written tests and quizzes that are administered during the training program and perform to a high level of standards. To help ensure successful skill transference from the classroom training environment to the sales floor, a manager works with each new sales professional on a one-to-one basis in the store for a structured 90 day period and then a bi-weekly coaching session on an ongoing basis. Each new sales professional is partnered with a mentor in the store who trains the new associate on basic operational procedures. In addition, the Company conducts in-house training seminars on a periodic basis and administers training modules with audits to (i) enhance the quality and professionalism of all sales professionals, (ii) measure the level of knowledge of each sales professional, and (iii) identify needs for additional training. The Company also provides store management with more extensive management and client service training that emphasizes leadership skills, general management skills, “on-the-job” coaching and training instruction techniques.

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  Advertising and Promotion

      Mayor’s marketing intent is to build on its well-established reputation in its core markets as a premier luxury jeweler offering high quality merchandise in an elegant, sophisticated environment conducive to the purchase of luxury items. Mayor’s stresses its role as a fashion leader that aims to deliver a total shopping experience that is as memorable as its merchandise. Mayor’s marketing efforts, which consist of advertising, direct mailings, special events, distinctive store design and elegant displays, are shaped in large part by Mayor’s brand positioning strategy as well as demographic and consumer trends affecting both the jewelry industry generally and Mayor’s specifically.

      Mayor’s advertisements are designed to communicate the Company’s image as a full-service premier luxury jewelry brand, including its unique and exclusive product design, product selection, its customer service excellence and the total Mayor’s brand experience. In addition, advertisements frequently associate Mayor’s with internationally recognized brand names such as Rolex™, Patek Philippe™ and Cartier™. Advertising and promotions for all stores are developed by the Company’s personnel at its headquarters in conjunction with outside creative resources.

  Credit Operations

      On October 1, 2002, the Company sold $13.1 million of its $18.5 million private label credit card portfolio to Wells Fargo & Company (“Wells Fargo”) on a non-recourse basis. The Company retained gross receivables of its private label credit card accounts of $5.4 million representing customers with balances greater than an agreed upon amount and certain accounts that Wells Fargo did not wish to purchase. The Company will continue to provide Wells Fargo the opportunity to purchase accounts receivable on a non-recourse and discount basis going forward.

      Sales under the Mayor’s proprietary credit card administered by Wells Fargo and the private label credit card administered internally, accounted for approximately 26% of the Company’s net sales during Fiscal 2002. Mayor’s credit programs are intended to complement its overall merchandising and sales strategy by encouraging larger and more frequent sales to a loyal customer base.

      Mayor’s extends credit solely to qualified Mayor’s customers under its own private label credit card program. Qualified clients currently may select from three financing plans: the 10 Month Interest Free Plan, the 5 Month Interest Free Plan or the Revolving Plan with interest. Finance charges, which are subject to a rate ceiling imposed by state law, are currently assessed on the average daily balance method at a rate of 1.5% per month, unless otherwise controlled by state law.

      Mayor’s credit operations are located at the Company’s corporate office. The credit staff makes all credit decisions; sales personnel or store managers are not authorized to grant credit. Mayor’s has developed a detailed creditworthiness analysis on which it bases its credit decisions. Mayor’s custom-designed, computerized accounts receivable systems provide credit personnel with on-line decision making information, including new account processing, credit authorizations and client inquiries.

      Mayor’s has an Accounts Receivable Management Department, which manages collections from current accounts and also manages delinquent accounts. Representatives are trained on advanced account management techniques and programs, which have been developed in-house by the credit organization. Early stage delinquencies are handled with an approach to client goodwill. If an account continues to progress in delinquency, more assertive action is taken. Ultimately, if a delinquent account cannot be collected in-house, outside legal action is undertaken. During Fiscal 2002, Mayor’s net bad debt expense as a percentage of credit sales was approximately 7.4%, which management believes is in line with industry averages.

      All clients may also take advantage of Mayor’s layaway plan, which allows them to set aside and pay for items over a limited period of time with no interest charges.

Financial Information

      Mayor’s business is not divided into operating segments and Mayor’s does not have any significant revenues derived from operations outside of the United States or any significant assets located outside the United States. For detailed financial information relating to Mayor’s business, please refer to Item 7 regarding “Management’s Discussion and Analysis of Financial Condition and Results of Operations” and the financial statements beginning on page 20 of this Annual Report on Form 10-K.

Distribution

      The Company’s retail locations receive the majority of their merchandise directly from the Company’s distribution warehouse located in Sunrise, Florida. Merchandise is shipped from the distribution warehouse utilizing various air and ground carriers. Presently, a small portion of merchandise is delivered directly to the retail locations from suppliers. The Company transfers merchandise between retail locations to balance inventory levels and to fulfill customer requests.

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Competition

      The retailing industry is highly competitive and particularly subject to the level of discretionary consumer income and the subsequent impact on the type and value of goods purchased. The Company’s competitors include foreign and domestic guild and premier luxury jewelers, specialty stores, national and regional jewelry chains, department stores and, to a lesser extent, catalog showrooms, discounters, direct mail suppliers, televised home shopping networks, and jewelry retailers who make sales through internet sites, some of whom have greater financial resources than the Company. The Company believes that competition in its markets is based primarily on trust, quality craftmanship, product design and exclusivity, product selection, service excellence and, to a certain extent, price. With the consolidation of the retail industry that is occurring, the Company believes that competition with other general and specialty retailers and discounters will continue to increase. The success of the Company will depend on various factors, including general economic and business conditions affecting consumer spending, the performance of the Company’s retail operations, the acceptance by consumers of the Company’s merchandising and marketing programs, store locations and the ability of the Company to properly staff and manage its stores. Please refer to Item 7 regarding “Management’s Discussion and Analysis of Financial Condition and Results of Operations” for additional discussion.

Regulation

      The Company generally utilizes the services of independent customs agents to comply with U.S. customs laws in connection with its purchases of gold, diamond and other jewelry merchandise from foreign sources.

      The Company’s operations are affected by numerous federal and state laws that impose disclosure and other requirements upon the origination, servicing and enforcement of credit accounts and limitations on the maximum amount of finance charges that may be charged by a credit provider. In addition to the Company’s proprietary private label credit cards, credit to the Company’s customers is primarily through bank cards such as American Express®, Visa®, Mastercard® and Discover®, without recourse to the Company based upon a customer’s failure to pay. Any change in the regulation of credit that would materially limit the availability of credit to the Company’s traditional customer base could adversely affect the Company’s results of operations or financial condition. Please refer to Item 1 regarding “Forward-Looking Statements.”

Trademarks

      The designations Mayor’s and the Mayor’s Jewelers logo are the principal trademarks of the Company. The Company maintains a program to protect its trademarks and will institute legal action where necessary to prevent others either from registering or using marks which are considered to create a likelihood of confusion with the Company.

Employees

      As of May 15, 2003, the Company employed approximately 379 persons on a full-time basis, including approximately 267 in regional and local sales in the Mayor’s stores, 10 in inventory and distribution and 102 in administrative and support functions. None of its employees are governed by a collective bargaining agreement. The Company believes that its relations with its employees are good, and the Company intends to continue to place an emphasis on employee communication and involvement.

Related Party Agreements

      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 an independent committee of the Board of Directors of the Company. The Management Expense Reimbursement Agreement allows for Mayor’s to retain certain management services of Birks, at its cost, in accordance with a project schedule which is pre-approved by an independent committee of the Board of Directors. The term of these agreements is one year. Mayor’s can sell merchandise and provide management services to Birks under terms similar to those in the agreements. Mayor’s also has an exclusive sales right to a line of crystal products in Florida and Georgia from Cristalleries Royales de Champagne, a company owned by an affiliate of the majority owner of Birks.

      Mayor’s Chief Executive Officer, Chief Financial Officer, Group VP of Finance, and Group VP Strategy and Business Integration serve in the same capacity for Birks. In addition, Thomas A. Andruskevich, Mayor’s Chairman of the Board of Directors, 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.

ITEM 2.     PROPERTIES

      The Company’s corporate headquarters is currently leased through January 31, 2005 and is located in Sunrise, Florida.

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      As of May 15, 2003, Mayor’s had a total of 28 leased stores, all of which are currently operating, with rent being a fixed minimum base plus a percentage of the store’s sales volume (subject to certain adjustments) over a specified threshold. Mayor’s lease terms are generally ten years from inception. Lease rental payments are also subject to annual increases for tax and maintenance. The following table summarizes all operating store leases:

ITEM 3.     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 3. 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 4.     SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS

      The Company did not submit any matters to a vote of stockholders in the fourth quarter of the fiscal year ended March 29, 2003.

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PART II

ITEM 5.     MARKET FOR REGISTRANT’S COMMON EQUITY AND RELATED STOCKHOLDER MATTERS

      The Company’s Common Stock has been listed on the American Stock Exchange since the Company’s initial public offering in August 1987 and is under the symbol “MYR”. The following table sets forth for the periods indicated, the range of sales prices per share on the American Stock Exchange Composite Tape as furnished by the National Quotation Bureau, Inc.

      The last reported sales price of the Common Stock on the American Stock Exchange Composite Tape on June 5, 2003 was $0.33. On June 5, 2003, the Company had 685 stockholders of record.

      The Company has never paid a cash dividend on its Common Stock. The Company currently anticipates that any earnings will be retained for use in the operation and stabilization of its business and does not intend to pay any cash dividends on its Common Stock in the foreseeable future. Any future determination as to cash dividends on its Common Stock will depend upon the earnings, capital requirements and financial condition of the Company at that time, applicable legal restrictions and such other factors as the Board of Directors may deem appropriate. Currently, the Company’s working capital facility allows dividend payments under certain conditions.

      On August 20, 2002, relying on an exemption from registration under 4(2) of the Securities Act of 1933, as amended, the Company issued to Birks in exchange for $10.05 million in cash and a promissory note from Birks due and paid on September 30, 2002 for $5 million, (i) 15,050 shares of the Company’s Series A Convertible Preferred Stock, convertible into 50,166,667 shares of the Company’s Common Stock; (ii) warrants exercisable for 12,424,596 shares of the Company’s Common Stock at an exercise price of $0.30 per share; (iii) warrants exercisable for 12,424,596 shares of the Company’s Common Stock at an exercise price of $0.35 per share ; and (iv) warrants exercisable for 12,424,595 shares of the Company’s Common Stock at an exercise price of $0.40 per share, which would give Birks approximately an 82% interest in Mayor’s if the preferred stock were fully converted and all of the warrants were exercised. The shares carry a cummulative annual dividend yield of $1,429,750. Birks has entered into an Amended and Restated 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.

      Within 120 days after the close of Fiscal 2002, the Company intends to file with the SEC a definitive proxy statement pursuant to Registration 14A, which will include a proposal to amend the employee stock purchase plan. The information required in this Item 5 regarding the Company’s employee stock purchase plan is incorporated herein by reference to such statement; provided however that all other items of such statement that are not required to be incorporated herein are not incorporated by reference into this Form 10-K or any other filing with the SEC.

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ITEM 6.     SELECTED FINANCIAL DATA

      The following selected financial data should be read in conjunction with the Consolidated Financial Statements and Related Notes thereto appearing elsewhere in this Form 10-K and “Item 7 — Management’s Discussion and Analysis of Financial Condition and Results of Operations.”

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ITEM 7.     MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

General

      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 other reports filed with the Securities and Exchange Commission.

      The Company filed a Form 8-K with the SEC on January 29, 2003 indicating, among other things, its change in fiscal year-end for financial reporting purposes, effective January 15, 2003, from a fiscal year ended on the Saturday closest to January 31 to the Saturday closest to March 31.

      The years ended March 29, 2003, February 2, 2002 and February 3, 2001 are referred to herein as Fiscal 2002, Fiscal 2001 and Fiscal 2000, respectively.

      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 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.

Restructuring Plan

      During its fiscal year ended January 29, 2000 (“Fiscal 1999”), the Company embarked upon an expansion strategy that included opening five stores in Fiscal 1999, ten stores in Fiscal 2000 and seven stores in Fiscal 2001. Merchandising and marketing issues, the poor economic climate and a capital intensive expansion strategy that the Company executed in Fiscal 1999 through Fiscal 2001 served to force the Company to retrench from that strategy as part of a restructuring plan that was adopted in the fourth fiscal quarter of Fiscal 2001 (the “Restructuring Plan”) which included, among other significant initiatives, an infusion of equity, the refinancing of the Company’s bank debt, the closing of thirteen unprofitable and under-performing stores, the liquidation of certain non-performing assets and the reduction of various field and corporate costs. During Fiscal 2002, the Company successfully executed the Restructuring Plan and was able to achieve the initiatives previously mentioned, at terms more favorable than originally estimated primarily through an equity infusion via the Birks transaction described above, the refinancing of the Company’s bank debt, which increased borrowing availability and the closing of certain stores at more favorable terms than originally expected.

      The following table sets forth, for the periods indicated, the amount and the percentage of net sales for certain items in the Company’s Consolidated Statements of Operations, as it relates to continuing operations, and other information:

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Sales

      The Company’s net sales from continuing operations for Fiscal 2002 were $118.4 million compared to $160.7 million and $179.6 million for Fiscal 2001 and Fiscal 2000, respectively. Comparative store net sales for Fiscal 2002, which includes all stores that were open during the year, decreased 20.8% compared to Fiscal 2001. The decrease in net sales for Fiscal 2002 compared to Fiscal 2001 is primarily due to merchandising and marketing issues related to the Company’s significant reduction in available capital, the continued slowdown of the economy, the impact of decreased tourism and the fifteen store closures during Fiscal 2002 (thirteen stores identified as part of the Restructuring Plan and two other underperforming stores identified in Fiscal 2002, one of which is accounted for as a discontinued operation in accordance with new accounting rules). Sales from these closed stores were $13.7 million in Fiscal 2002 versus $23.7 million in Fiscal 2001. In addition, sales earlier in the fiscal year were negatively affected by certain suppliers withholding shipments, principally Rolex™, due to concerns regarding the Company’s liquidity. Subsequent to the equity investment on August 20, 2002 by Birks, these suppliers resumed normal shipments and the Company’s relationship with these suppliers has greatly improved. The decrease in net sales for Fiscal 2001 compared to Fiscal 2000 is due to merchandising and marketing issues coupled with the slowdown of the economy and the effects that the tragic events of September 11th had on the Company’s retail environment. Comparative store net sales for Fiscal 2001 decreased 17.1% compared to Fiscal 2000.

      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 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 comprises a significant portion of Mayor’s business, which is a result of the Company’s ability to effectively market high-end watches. During Fiscal 2002, watch sales constituted approximately 39% of the Company’s total net sales with Rolex™ sales alone comprising 24% of total net sales in Fiscal 2002.

Cost of Sales and Gross Profit

      Gross profit as a percentage of net sales (“gross margin”) in Fiscal 2002 was 33.5% compared to 37.1% and 43.5% in Fiscal 2001 and Fiscal 2000, respectively. The decrease in gross profit as a percentage of net sales for Fiscal 2002 is primarily due to low margin sales in connection with the liquidation of certain merchandise in the stores that were closed during Fiscal 2002 as well as heavy discounting to generate cash flow prior to the Birks equity investment. The decrease in gross profit as a percentage of net sales for Fiscal 2001 is primarily due to the liquidation of slow moving and discontinued inventory through caravan events that traveled through various stores.

      The Company’s strategy is to increase gross margin and gross profit over the next several years. Areas for gross margin improvement include strategies to reduce the cost of merchandise purchased through leveraging the Company’s purchasing power and increasing sales of Mayor’s brand merchandise, and to move the mix of sales towards higher margin jewelry items. In addition, by leveraging the relationship with Birks and the new management at Mayor’s, the Company expects to refine the allocation and management of inventory in its stores, and as a result, other direct costs such as slow moving inventory reserves are expected to decrease. However, there can be no assurance that the Company’s strategy to increase gross margin and gross profit will be successful.

Selling, General and Administrative Expenses

      Selling, general and administrative expenses were $53.7 million for Fiscal 2002 compared to $76.2 million and $69.4 million for Fiscal 2001 and Fiscal 2000, respectively. The decrease in selling, general and administrative expenses in Fiscal 2002 compared to Fiscal 2001 is primarily a result of the closing of 15 stores (13 stores closed as part of the Restructuring Plan as well as two additional stores closed not identified in the Restructuring Plan, one of which is classified as a discontinued operation in accordance with new accounting rules) as well as decreased advertising and marketing expenses due to capital constraints during the year and operating in fewer geographical markets due to the closing of stores outside the core Florida and Georgia marketplace. The increase in Fiscal 2001 is primarily a result of a full year’s operations for stores opened in Fiscal 2000 and the stores opened in Fiscal 2001.

Restructuring, Asset Impairments and Other Charges

      Other charges recorded in Fiscal 2002 consist of one time charges primarily for professional fees related to the execution of the Restructuring Plan of approximately $1.9 million, reserves related to sales tax liabilities of approximately $1.9 million, severance costs related to the departure of the former Chief Executive Officer of approximately $0.5 million and charges related to the sale of certain of the Company’s accounts receivable of approximately $0.4 million. Additionally, approximately $1.9 million of reserves recorded in Fiscal 2001 related to the exit of leases for closed stores were reversed to income due to the fact that the leases were terminated at costs more favorable than originally estimated.

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      Restructuring, Asset Impairments and Other Charges for Fiscal 2001 were $28.2 million. This includes consulting fees related to a strategic cost reduction project, non-recurring legal fees associated with shareholder related matters, a write-down of the corporate headquarters building which the Company placed on the market for sale, the write-down of the fixed assets for the stores that were included in the Restructuring Plan, and a reserve for early termination of the leases for the stores that were included in the Restructuring Plan.

Depreciation and Amortization

      Depreciation and amortization expenses were $4.2 million for Fiscal 2002, compared to $9.6 million and $7.9 million for Fiscal 2001 and Fiscal 2000, respectively. The decrease in depreciation expense for Fiscal 2002 compared to Fiscal 2001 was primarily due to the disposal of fixed assets previously located at the corporate headquarters, which were sold on July 12, 2002, and no depreciation and amortization for Fiscal 2002 related to the assets and goodwill written off in Fiscal 2001. The increase in depreciation expense for Fiscal 2001 was the result of the capital expenditures associated with the construction of new and remodeled stores.

Goodwill Impairment Writedown

      The goodwill impairment income of $0.6 million for Fiscal 2002 relates to the reversal of excess tax reserves due to a settlement with the Internal Revenue Service for less than the amount reserved. The tax matters existed prior to the acquisition of Mayor’s Jewelers, Inc. in 1998 and would have been reversed against goodwill; however, due to the fact that the goodwill was written off in Fiscal 2001 the reversal is classified in the same line item as the impairment.

      Goodwill impairment writedown for Fiscal 2001 was $22.3 million. Management determined that the long term future cash flows did not support the carrying value and recorded an impairment charge to take the goodwill to zero.

Interest and Other Income and Interest and Other Financial Costs

      Interest and other income was $1.4 million in Fiscal 2002, $174,000 in Fiscal 2001 and $213,000 in Fiscal 2000, respectively. Other income for Fiscal 2002 includes a payment of $1.4 million received in connection with a settlement with former Mayor’s stockholders. Interest and other financial costs were $6.8 million for Fiscal 2002, compared to $3.8 million and $3.5 million for Fiscal 2001 and Fiscal 2000, respectively. The increase in interest and other financial costs for Fiscal 2002 is primarily attributable to the write-off of financing costs for the former working capital facilities when the new credit facility and term loan were executed. The increase in interest and other financial costs for Fiscal 2001 is primarily attributable to the increase in the outstanding balance of the credit facility due to the build out of new stores and the incremental inventory needed to stock these stores.

Income Taxes

      The benefit in income taxes for Fiscal 2002 of $547,000 is primarily a result of a refund claim to recover previously paid alternative minimum tax as a result of a change in tax law offset by a provision recorded for a settlement related to one of the Company’s subsidiaries. The provision of $3.4 million for Fiscal 2001 is primarily the result of an increase in a valuation allowance to fully reserve the Company’s net deferred tax assets.

(Loss) Gain from Discontinued Operations

      The loss from discontinued operations for Fiscal 2002 is made up of approximately $0.4 million loss from operations and a $1.2 million loss related to the closing of a store that was outside of Mayor’s core marketplace, and as such was classified as a discontinued operation. The loss from discontinued operations for Fiscal 2001 is related to the required reclassification of the store’s net loss from operations to discontinued operations due to its classification in Fiscal 2002.

      The net gain from discontinued operations in Fiscal 2000 is related to a $13.5 million gain from the disposal of a division of the Company.

Liquidity and Capital Resources

      As of March 29, 2003, the Company had a $58 million working capital credit facility with Fleet Retail Finance and GMAC and a $12.5 million junior secured term loan with Back Bay Capital. Both of the debt facilities have an expiration 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 is prime plus 1.5%,which was 5.75% as of March 29, 2003.

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      As of March 29, 2003, after accounting for the foregoing borrowing restrictions, the Company had approximately $54.7 million of borrowing capacity and, after netting the outstanding borrowings of $36.0 million and letter of credit commitments of $750,000, the Company had excess borrowing capacity of approximately $18.0 million.

      The working capital facility currently contains certain financial covenants that limit capital expenditures.

      The junior secured term loan currently bears an effective interest rate of 18.25% and is subject to similar restrictions and covenants as the working capital facility.

      During Fiscal 2002, cash flows from continuing operating activities used $18.7 million in cash. Cash flows for discontinued operations used $0.1 million in cash. The use of cash for operating activities was primarily the result of the net loss for the year, the increase in inventories and other assets and the payout of restructuring costs offset by the reduction of accounts receivable and increase in accounts payable. During Fiscal 2001, cash flows from continuing operating activities provided $5.2 million in cash.

      Net cash provided by investing activities was $3.5 million in Fiscal 2002, primarily related to the proceeds from the sale of the Company’s corporate headquarters, net of capital expenditures for the opening of two new stores. Fiscal 2002 capital expenditures also include back office computer software and hardware. Net cash used in investing activities was $6.4 million in Fiscal 2001 due to capital expenditures.

      Net cash provided by financing activities of $12.8 million is primarily related to the net proceeds from the Birks equity investment of $13.6 million and net proceeds from the sale of a majority of the credit card portfolio of $12.1 million offset by the reduction of net borrowings under the credit facility of $13.3 million. Net cash provided by financing activities was $7.6 million in Fiscal 2001 primarily due to net borrowings on the line of credit and tenant incentives from the opening of new stores.

      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.

Effects of Inflation

      Gold prices are affected by political, industrial and economic factors and by changing perceptions of the value of gold relative to currencies. Investors commonly purchase gold and other precious metals perceived to be rising in value as a hedge against a perceived increase in inflation, thereby bidding up the price of such metals. The Company’s sales volume and net operations are potentially affected by the fluctuations in prices of gold, diamonds and other precious or semi-precious gemstones as well as watches and other accessories. The Company currently does not hedge its gold inventories. Hedging is not available with respect to possible fluctuations in the price of precious and semi-precious gemstones, watches or other accessories.

      The Company’s selling, general and administrative expenses are directly affected by inflation resulting in an increased cost of doing business. Although inflation has not had and the Company does not expect it to have a material effect on operating results, there is no assurance that the Company’s business will not be affected by inflation in the future.

Interest Rate Risk

      The Company’s credit facility accrues interest at floating rates, currently based upon prime plus 1.50%. 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 March 29, 2003 would increase or decrease earnings per share by approximately $.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 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.

Critical Accounting Policies and Estimates

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

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      The Company’s accounting policies are more fully discussed in Note B to the financial statements. The Company has identified certain critical accounting policies below.

      Allowance for slow moving and obsolete inventory. The Company writes down its inventory for estimated unmarketable inventory or slow moving inventory equal to the difference between the cost of inventory and the estimated market value below cost 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.

Risk Factors

1.

THE COMPANY IS CONTROLLED BY A SINGLE STOCKHOLDER.

Birks, in connection with its investment in the Company, was issued 15,050 shares of Series A Convertible Preferred Stock that upon conversion into Common Stock would give Birks approximately a 72% interest in the Company. Birks, as the holder of such Series A Convertible Preferred Stock, is entitled to vote the number of votes equal to the number of votes it could cast if it converted all its shares of the Series A Convertible Preferred Stock into Common Stock. Additionally, Birks, as the sole owner of such Preferred Stock, has 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 the holders on the record date of such election if the holders converted. Currently, Birks has the right to elect seven of the nine members of the Board of Directors. Birks was also issued, in connection with its investment in the Company, warrants to acquire additional shares of Common Stock, which, upon exercise, would increase Birks’ interest in the Company to approximately 82%. Accordingly, Birks can control the outcome of certain stockholder votes, including votes concerning the approval of mergers and other significant corporate transactions. This level of concentrated ownership by one entity may have the effect of delaying or preventing a change in the management or voting control of the Company.

2.

THE COMPANY’S STOCK PRICE COULD BE ADVERSELY AFFECTED IF A LARGE NUMBER OF SHARES OF THE COMPANY’S COMMON STOCK WERE TO BE REGISTERED AND SOLD.

In connection with Birks investment in the Company, the Company has granted certain registration rights to Birks, which entitles Birks to cause the Company to effect an unlimited number of registrations under the Securities Act of 1933 of sales of up to an aggregate of 87,440,454 shares of the Company’s Common Stock that could be acquired by Birks upon exercise or conversion of the securities it currently holds. By exercising these registration rights Birks could cause a large number of shares to be registered and become freely tradable without restrictions under the Securities Act (except for those purchased in the offering by the Company’s affiliates) immediately upon the effectiveness of such registration. Such sales may have an adverse effect on the market price of the Common Stock and could impair the Company’s ability to raise additional capital.

3.

THE COMPANY’S BUSINESS COULD BE ADVERSELY AFFECTED IF ITS RELATIONSHIPS WITH ANY OF ITS PRIMARY VENDORS ARE TERMINATED.

The Company’s merchandising strategy depends upon its ability to maintain good relations with a few choice vendors. Certain brand name watch manufacturers, including Rolex™, have distribution agreements with the Company that among other matters provide for specific sales locations, yearly renewal terms, and early termination provisions at the manufacturer’s discretion. The Company competes with other jewelry retailers for access to vendors that will provide it with the quality and quantity of merchandise necessary to operate its business. In Fiscal 2002, merchandise supplied by Rolex™, the Company’s largest supplier, accounted for approximately 24% of the Company’s total net sales. The Company’s relationships with its primary suppliers are generally not pursuant to long-term agreements, including its relationship with Rolex™. Although the Company believes that alternative sources of supply are available, the abrupt loss of any of its vendors, especially Rolex™, or a decline in the quality or quantity of merchandise supplied by its vendors could cause significant disruption in its business. If Rolex™ terminated its distribution agreement with the Company, it would have a material adverse effect on the Company’s business, financial condition and operating results.

4.

FLUCTUATIONS IN THE AVAILABILITY AND PRICES OF THE COMPANY’S MERCHANDISE MAY AFFECT ITS RESULTS OF OPERATIONS.

The Company offers a large selection of distinctive high quality merchandise, including diamond, gemstone and precious metal jewelry, rings, wedding bands, earrings, bracelets, necklaces, charms, and its own private label jewelry. Accordingly, significant changes in prices of diamonds, gemstones, and precious metals required by the Company could adversely affect the Company’s earnings. Further, both the supply and price of diamonds are significantly influenced by a single entity, Diamond Trading Corporation. The Company does not maintain long-term inventories or otherwise currently hedge against fluctuations in the cost of these materials. A significant increase in the price of these materials could adversely affect the Company’s sales and gross margins.

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A substantial portion of the merchandise the Company sells is carried on a consignment basis prior to sale or is otherwise financed by vendors, thereby reducing the Company’s direct capital investment in inventory. The willingness of vendors to enter into such arrangements may vary substantially from time to time based on a number of factors, including the merchandise involved, the financial resources of vendors, interest rates, availability of financing, fluctuations in gem and gold prices, inflation, the Company’s financial condition and number of economic or competitive conditions in the jewelry business or the economy. Any significant change in these relationships could have a material adverse effect on the Company’s results of operations or financial condition.

5.

THE COMPANY’S INDUSTRY IS HIGHLY COMPETITIVE.

The retail jewelry business is mature and highly competitive. The Company’s jewelry business competes with foreign and domestic guild and premier luxury jewelers, specialty stores, national and regional jewelry chains, department stores, and to a lesser extent, catalog showrooms, discounters, direct mail suppliers, television home shopping networks and jewelry retailers who make sales through internet sites. The Company’s credit operations compete with credit card companies and other providers of consumer credit. The Company believes that competition in its markets is based primarily on trust, quality craftsmanship, product design and exclusivity, product selection, service excellence, and to a certain extent, price. Many competitors are substantially larger than the Company is and have greater financial resources than the Company. The Company may not be able to compete successfully with such competitors. Competition could cause the Company to lose customers, increase expenditures or reduce pricing, any of which could have a material adverse effect on the Company’s earnings and stock price.

6.

THE COMPANY’S QUARTERLY OPERATING RESULTS WILL FLUCTUATE DUE TO SEASONALITY AND OTHER FACTORS, AND VARIATION IN QUARTERLY RESULTS COULD CAUSE THE PRICE OF THE COMPANY’S COMMON STOCK TO DECLINE.

The Company’s business is highly seasonal, with a significant portion of the Company’s sales and most of its sales generated during the third fiscal quarter, which includes the holiday shopping season. Sales in the third quarter of Fiscal 2002 accounted for 37% of annual net sales for such fiscal year. The Company has historically experienced lower net sales in the other fiscal quarters, and the Company expects this trend to continue for the foreseeable future. A significant shortfall in results for the third quarter of any fiscal year could have a material adverse effect on the Company’s annual results of operations. The Company’s quarterly results of operations also may fluctuate significantly as a result of a variety of factors, including the timing of new store openings, net sales contributed by new stores, increases or decreases in comparable store sales, timing of certain holidays, changes in merchandise, general economic conditions, industry and weather conditions that affect consumer spending, and actions of competitors.

7.

THE COMPANY’S BUSINESS IS PARTICULARLY SUSCEPTIBLE TO ADVERSE ECONOMIC CONDITIONS.

Jewelry purchases are discretionary for consumers and may be particularly affected by adverse trends in the general economy. The success of the Company’s operations depends to a significant extent upon a number of factors relating to discretionary consumer spending, including economic conditions (and perceptions of such conditions) affecting disposable consumer income such as employment wages and salaries, business conditions, interest rates, availability, and cost of credit and taxation, for the economy as a whole and in regional and local markets where the Company operates. In addition, the Company is dependent upon the continued popularity of malls as a shopping destination and the ability of malls or tenants and other attractions to generate customer traffic for the Company’s stores. There can be no assurance that consumer spending will not be adversely affected by general economic conditions or a decrease in mall traffic, thereby negatively impacting the Company’s results of operations or financial condition.

A majority of the Company’s customers use credit (either from the Company’s proprietary credit cards or another consumer credit source) to purchase jewelry from the Company. When there are adverse trends in the general economy or increases in interest rates, fewer people use credit. General economic trends also affect the Company’s credit operations. The downturn in the general economy and the economic conditions in the markets in which the Company operates could affect the Company’s ability to collect outstanding credit accounts receivable, which could have a material adverse affect on the Company’s financial condition.

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8.

THE COMPANY’S CURRENT LEVELS OF DEBT COULD IMPACT ITS OPERATIONS IN THE FUTURE.

The Company’s debt as of March 29, 2003 was approximately $36.0 million. The Company’s debt levels fluctuate from time to time based on seasonal working capital needs.

The degree to which the Company is leveraged could impair the Company’s ability to obtain additional financing for working capital, capital expenditures, acquisitions or other general corporate purposes. In addition, the Company’s credit facility includes negative covenants and financial covenants which could restrict or limit its operations.

A substantial portion of the Company’s indebtedness bears interest at fluctuating rates, and changes in interest rates could adversely affect the Company’s results of operations or financial condition.

9.

THE COMPANY’S CREDIT BUSINESS MAY BE ADVERSELY AFFECTED BY CHANGES IN LAWS AND REGULATIONS GOVERNING ITS BUSINESS.

The operation of the Company’s credit business subjects it to substantial regulation relating to disclosure and other requirements upon origination, servicing, debt collection and particularly upon the amount of finance charges it can impose. Any adverse change in the regulation of consumer credit could adversely affect the Company’s earnings. For example, new laws or regulations could limit the amount of interest or fees the Company could charge on consumer loan accounts, or restrict the Company’s ability to collect on account balances, which could have a material adverse effect on the Company’s earnings.

Compliance with existing and future laws or regulations could require material expenditures or otherwise adversely affect the Company’s business or financial results. Failure to comply with these laws or regulations, even if inadvertent, could result in negative publicity, and fines, either of which could have a material adverse effect on the Company’s results of operations.

10.

THE TRADING PRICE OF THE COMPANY’S COMMON STOCK MAY BE VOLATILE.

The stock market, including the American Stock Exchange on which the shares of the Company’s Common Stock are listed, has from time to time experienced significant price and volume fluctuations that may be unrelated to the operating performance of particular companies. In addition, the market price of the Company’s Common Stock, like the stock prices of many publicly traded companies in the retail industry, has been and may continue to be highly volatile.

11.

THE COMPANY MAY NOT BE ABLE TO RETAIN KEY PERSONNEL OR REPLACE THEM IF THEY LEAVE.

Our success is largely dependent on the personal efforts of Thomas Andruskevich, the Company’s Chief Executive Officer, and certain other key members of the senior management team. Although the Company has entered into employment agreements with Mr. Andruskevich, and certain other key members of the senior management team, the loss of any of their services could cause the Company’s business to suffer. The Company’s success is also dependent upon its ability to hire and retain qualified operations, development and other personnel. Competition for qualified personnel in the retail industry is intense, and the Company cannot assure that we will be able to hire or retain the personnel necessary for its planned operations.

12.

THE COMPANY’S BUSINESS COULD BE ADVERSELY AFFECTED IF IT IS UNABLE TO SUCCESSFULLY NEGOTIATE FAVORABLE LEASE TERMS.

All of the Company’s stores are leased. As of May 15, 2003, the Company had a total of 28 leased stores. The Company’s store leases are generally for a term of ten years, with rent being a fixed minimum base plus a percentage of the store’s sale volume (subject to certain adjustments) over a specified threshold. The Company has generally been successful in negotiating leases for new stores and lease renewals as its current leases near expiration. However, the Company’s business, financial condition, and operating results could be adversely affected if the Company is unable to continue to negotiate profitable lease and renewal terms.

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ITEM 7A.     QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

      As discussed in more detail in Item 7, the Company’s exposure to market risk is limited primarily to fluctuating interest rates associated with variable rate indebtedness that is subject to interest rate changes in the United States. The Company does not use, nor has it historically used, derivative financial instruments to manage or reduce market risk.

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ITEM 8.     FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA

INDEX

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INDEPENDENT AUDITORS’ REPORT

Board of Directors and Stockholders
Mayor’s Jewelers, Inc.
Sunrise, Florida

We have audited the accompanying consolidated balance sheets of Mayor’s Jewelers, Inc. and Subsidiaries (the “Company”) as of March 29, 2003 and February 2, 2002, and the related consolidated statements of operations, stockholders’ equity, and cash flows for the fiscal year ended March 29, 2003, for the eight-week transition period ended March 30, 2002 and for each of the two fiscal years in the period ended February 2, 2002. Our audits also included the financial statement schedule listed at Item 14(a)(2). These financial statements and financial statement schedule are the responsibility of the Company’s management. Our responsibility is to express an opinion on these financial statements and financial statement schedule based on our audits.

We conducted our audits in accordance with auditing standards generally accepted in the United States of America. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing the accounting principles used and significant estimates made by management as well as evaluating the overall financial statement presentation. We believe that our audits provide a reasonable basis for our opinion.

In our opinion, such consolidated financial statements present fairly, in all material respects, the financial position of Mayor’s Jewelers, Inc. and Subsidiaries as of March 29, 2003 and February 2, 2002 and the results of their operations and their cash flows for the fiscal year ended March 29, 2003, for the eight-week transition period ended March 30, 2002 and for each of the two fiscal years in the period ended February 2, 2002 in conformity with accounting principles generally accepted in the United States of America. Also, in our opinion, such financial statement schedule, when considered in relation to the basic consolidated financial statements taken as a whole, presents fairly in all material respects the information set forth therein.

/s/ DELOITTE & TOUCHE LLP
Certified Public Accountants

Miami, Florida
June 6, 2003

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MAYOR’S JEWELERS, INC. AND SUBSIDIARIES

CONSOLIDATED BALANCE SHEETS
(Amounts shown in thousands except share and per share data)

See notes to consolidated financial statements.

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MAYOR’S JEWELERS, INC. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF OPERATIONS
(Amounts shown in thousands except share and per share data)

See notes to consolidated financial statements.

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MAYOR’S JEWELERS, INC. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF STOCKHOLDERS’ EQUITY
(Amounts in thousands except share data)