PERFUMANIA COM INC, S-1/A, 1999-07-28

PERFUMANIA COM INC
S-1/A, 1999-07-28
DRUG STORES AND PROPRIETARY STORES

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<PAGE> 1

AS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION ON JULY 28, 1999

REGISTRATION NO. 333-80059

- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
---------------------

AMENDMENT NO. 1 TO FORM S-1

REGISTRATION STATEMENT UNDER
THE SECURITIES ACT OF 1933
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perfumania.com, inc.
(Exact Name of Registrant as Specified in Its Charter)
---------------------

<TABLE>
<S> <C> <C>
FLORIDA 5912 65-0884688
(State or Other Jurisdiction of (Primary Standard Industrial (IRS Employer Identification
Incorporation or Organization) Classification Code Number) Number)
</TABLE>

---------------------

11701 NW 101ST ROAD
MIAMI, FLORIDA 33178
(305) 889-1600
(Address, Including Zip Code, and Telephone Number, Including Area Code, of
Registrant's Principal Executive Offices)

---------------------

RACHMIL LEKACH, CHAIRMAN OF THE BOARD OF DIRECTORS, PRESIDENT AND CHIEF
EXECUTIVE OFFICER

perfumania.com, inc.
11701 NW 101ST ROAD
MIAMI, FLORIDA 33178
(305) 889-1600
(Name, Address, Including Zip Code, and Telephone Number, Including Area Code of
Agent For Service)

---------------------

COPIES TO:

<TABLE>
<S> <C>
JEFFREY R. HOULE, ESQ. DALE S. BERGMAN, P.A.
GREENBERG TRAURIG MICHAEL D. KARSCH, ESQ.
1750 TYSONS BOULEVARD, SUITE 1200 BROAD AND CASSEL
MCLEAN, VIRGINIA 22102 201 S. BISCAYNE BOULEVARD, SUITE 3000
(703) 749-1300 MIAMI, FLORIDA 33131
(703) 749-1301 (FAX) (305) 373-9400
(305) 373-9493 (FAX)
</TABLE>

---------------------

APPROXIMATE DATE OF COMMENCEMENT OF PROPOSED SALE TO THE PUBLIC: As soon as
practicable after the effective date of this registration statement.
If any of the securities being registered on this form are to be offered on
a delayed or continuous basis pursuant to Rule 415 under the Securities Act of
1933, check the following box. [X]
If this form is filed to register additional securities for an offering
pursuant to Rule 462(b) under the Securities Act, check the following box and
list the Securities Act registration statement number of the earlier effective
registration statement for the same offering. [ ]
If this form is a post-effective amendment filed pursuant to Rule 462(c)
under the Securities Act, check the following box and list the Securities Act
registration statement number of the earlier effective registration statement
for the same offering. [ ]
If this form is a post-effective amendment filed pursuant to Rule 462(d)
under the Securities Act, check the following box and list the Securities Act
registration statement number of the earlier effective registration statement
for the same offering. [ ]
If delivery of the prospectus is expected to be made pursuant to Rule 434,
check the following box. [X]

CALCULATION OF REGISTRATION FEE

<TABLE>
<CAPTION>
- -----------------------------------------------------------------------------------------------------------------------------
- -----------------------------------------------------------------------------------------------------------------------------
TITLE OF EACH CLASS PROPOSED MAXIMUM PROPOSED MAXIMUM
OF SECURITIES TO BE AMOUNT TO BE OFFERING PRICE PER AGGREGATE OFFERING AMOUNT OF
REGISTERED REGISTERED UNIT PRICE(1) REGISTRATION FEE
- -----------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Common stock, par value $0.01 per
share(2)............................... 4,025,000 $9.00 $36,225,000 $10,070.55
Representatives' warrants................ 350,000 $.001 $350 $ -- (3)
Common stock, par value $0.01 per share
issuable upon exercise of the
representatives' warrants(4)........... 350,000 $10.80 $3,780,000 $ 1,050.84
Total................................ $11,121.39(5)
- -----------------------------------------------------------------------------------------------------------------------------
- -----------------------------------------------------------------------------------------------------------------------------
</TABLE>

(1) Estimated solely for the purpose of calculating the registration fee
pursuant to Rule 457(o) under the Securities Act.

(2) Includes up to 525,000 shares that may be purchased by the underwriters
pursuant to the over allotment option.

(3) No fee required pursuant to Rule 457(g) under the Securities Act.
(4) Pursuant to Rule 416, includes any shares that may be issued pursuant to the
anti dilution provisions of the representatives' warrants.

(5) $7,943.85 previously paid.

THE REGISTRANT HEREBY AMENDS THIS REGISTRATION STATEMENT ON SUCH DATE OR
DATES AS MAY BE NECESSARY TO DELAY ITS EFFECTIVE DATE UNTIL THE REGISTRANT SHALL
FILE A FURTHER AMENDMENT WHICH SPECIFICALLY STATES THAT THIS REGISTRATION
STATEMENT SHALL THEREAFTER BECOME EFFECTIVE IN ACCORDANCE WITH SECTION 8(a) OF
THE SECURITIES ACT OF 1933, AS AMENDED, OR UNTIL THIS REGISTRATION STATEMENT
SHALL BECOME EFFECTIVE ON SUCH DATE AS THE COMMISSION, ACTING PURSUANT TO SUCH
SECTION 8(a), MAY DETERMINE.
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
<PAGE> 2

THE INFORMATION IN THIS PROSPECTUS IS NOT COMPLETE AND MAY BE CHANGED. WE MAY
NOT SELL THESE SECURITIES UNTIL THIS REGISTRATION STATEMENT FILED WITH THE
SECURITIES AND EXCHANGE COMMISSION IS EFFECTIVE. THIS PROSPECTUS IS NOT AN OFFER
TO SELL THESE SECURITIES AND WE ARE NOT SOLICITING AN OFFER TO BUY THESE
SECURITIES IN ANY STATE WHERE THE OFFER OR SALE IS NOT PERMITTED.

SUBJECT TO COMPLETION, DATED JULY 28, 1999

3,500,000 SHARES OF COMMON STOCK

PERFUMANIA.COM, INC. [LOGO]

-------------------------

perfumania.com operates an online store that specializes in the sale of
fragrances, fragrance related products and bath and body products on a retail
and wholesale basis.

We are offering 2,500,000 shares of our common stock and Perfumania, Inc.,
the selling shareholder, is offering up to 1,000,000 shares of our common stock
at between $7.00 and $9.00 per share.

No public market currently exists for our common stock. We have applied to
list our common stock on the American Stock Exchange under the symbol "PF".

SEE "RISK FACTORS" BEGINNING ON PAGE 5 TO READ ABOUT FACTORS YOU SHOULD
CONSIDER BEFORE BUYING SHARES OF OUR COMMON STOCK.

NEITHER THE SECURITIES AND EXCHANGE COMMISSION NOR ANY STATE SECURITIES
COMMISSION HAS APPROVED OR DISAPPROVED OF THESE SECURITIES OR PASSED UPON THE
ADEQUACY OR ACCURACY OF THIS PROSPECTUS. ANY REPRESENTATION TO THE CONTRARY IS A
CRIMINAL OFFENSE.

<TABLE>
<CAPTION>
PER SHARE TOTAL
---------- ----------
<S> <C> <C>
Public offering price....................................... $ $
Underwriting discounts and commissions...................... $ $
Proceeds to perfumania.com, inc............................. $ $
</TABLE>

We have granted the underwriters an option for 45 days to purchase up to
525,000 additional shares at the same price indicated above to cover over
allotments.

CRUTTENDEN ROTH INCORPORATED PENNSYLVANIA MERCHANT GROUP

The date of this prospectus is , 1999
<PAGE> 3

TABLE OF CONTENTS

<TABLE>
<CAPTION>
PAGE
----
<S> <C>
Prospectus Summary.................. 1
Risk Factors........................ 5
Forward Looking Statements.......... 18
Use of Proceeds..................... 19
Dividend Policy..................... 19
Capitalization...................... 20
Dilution............................ 21
Selected Financial Data............. 22
Management's Discussion and Analysis
of Financial Condition and Results
of Operations..................... 23
</TABLE>

<TABLE>
<CAPTION>
PAGE
----
<S> <C>
Business............................ 28
Management.......................... 37
Principal Shareholders.............. 43
Certain Transactions................ 44
Description of Capital Stock........ 46
Shares Eligible for Future Sale..... 48
Underwriting........................ 50
Validity of Common Stock............ 52
Experts............................. 52
Where Can You Find More
Information....................... 53
Index to Financial Statements....... F-1
</TABLE>

-------------------------

The terms "perfumania.com," "we," "our," and "us" refer to perfumania.com,
inc. unless the context suggests otherwise. The terms "you" and "your" refer to
a prospective investor. The term "common stock" means perfumania.com, inc.'s
common stock, par value $0.01 per share.

Unless otherwise stated, all information contained in this prospectus
assumes no exercise of (a) the over-allotment option to purchase up to 525,000
shares of our common stock granted to the underwriters, (b) warrants to purchase
350,000 shares of our common stock to be granted to the representatives of the
underwriters upon completion of this offering and (c) options to purchase
630,000 shares of our common stock outstanding under perfumania.com's 1999
Incentive Stock Option Plan and 370,000 shares of our common stock reserved for
further issuance under the plan.

The underwriters are offering the shares subject to various conditions and
may reject all or part of any order. The shares should be ready for delivery on
or about , 1999.

Until , 1999 (the 25th day after the date of this prospectus) all
dealers effecting transactions in the common stock, whether or not participating
in this distribution, may be required to deliver a prospectus. This is in
addition to the obligation of dealers to deliver a prospectus when acting as
underwriters and with respect to their unsold allotments or subscriptions.

YOU MAY RELY ONLY ON THE INFORMATION CONTAINED IN THIS PROSPECTUS. WE HAVE
NOT AUTHORIZED ANYONE TO PROVIDE INFORMATION DIFFERENT FROM THAT CONTAINED IN
THIS PROSPECTUS. NEITHER THE DELIVERY OF THIS PROSPECTUS NOR SALE OF COMMON
STOCK MEANS THAT INFORMATION CONTAINED IN THIS PROSPECTUS IS CORRECT AFTER THE
DATE OF THIS PROSPECTUS. THIS PROSPECTUS IS NOT AN OFFER TO SELL OR SOLICITATION
OF AN OFFER TO BUY OUR COMMON STOCK IN ANY CIRCUMSTANCES UNDER WHICH THE OFFER
OR SOLICITATION IS UNLAWFUL.
<PAGE> 4

[INSIDE LEFT FRONT COVER (IN FOLD OUT) -- AT THE TOP OF THE INSIDE FRONT COVER
IN THE FOLD OUT ARE THREE STACKED COLOR PHOTOGRAPHS OF PERFUMANIA STORES.
SUPERIMPOSED ON THE TOP PHOTOGRAPH IS THE WORD "NATIONWIDE". THE PHRASE "281
DOORS ACROSS THE COUNTRY" IS IN WHITE LETTERING AND PLACED BETWEEN THE TOP AND
MIDDLE PHOTOGRAPHS. THE PHRASE "REGIONALIZED PRICING" APPEARS, IN WHITE PRINT,
BETWEEN THE MIDDLE AND BOTTOM PHOTOGRAPH. THE BACKGROUND IS A LIGHT BLUE-GREEN
SHADE.]

[INSIDE RIGHT FRONT COVER (IN FOLD OUT) -- THREE COLOR DEPICTIONS OF SCREEN
PAGES FROM PERFUMANIA.COM'S RETAIL WEB SITE APPEAR DIAGONALLY ACROSS THE PAGE,
DESCENDING FROM LEFT TO RIGHT. SUPERIMPOSED ON THE TOP LEFT SCREEN ARE THE WORDS
"WORLD WIDE". IN THE UPPER RIGHT HAND CORNER IS THE FOLLOWING TEXT
"PERFUMANIA.COM", "AMERICA'S FAVORITE FRAGRANCE STORE..., "BEST BRANDS AT BEST
PRICES!", "SET PRICING STANDARD," "ACCESS TO THE WORLD" AND "MAXIMUM
VISIBILITY". IN THE LOWER LEFT HAND CORNER IS A PHOTOGRAPH OF THE PERFUMANIA
WHOLESALE.COM PORTION OF THE PERFUMANIA.COM'S WEB SITE. CENTERED IN THE BOTTOM
IS THE TEXT "SHOPPING 24-7-365". THE PRESENT BACKGROUND IS A LIGHT BLUE-GREEN
SHADE.]

<PAGE> 5

PROSPECTUS SUMMARY

This summary highlights information contained elsewhere in this prospectus.
You should read this entire document carefully. You should consider the
information set forth under "Risk Factors" and our financial statements and
accompanying notes that appear elsewhere in this prospectus.

OUR BUSINESS

perfumania.com operates an online store that specializes in the sale of
fragrances, fragrance related products and bath and body products on a retail
and wholesale basis. We launched our online store in February 1999 and offer
retail customers over 1,700 products at significant price discounts, including
hard-to-find and discontinued brands. The business-to-business component of our
online store offers our products on a wholesale basis to the largely underserved
market of smaller specialty retailers.

We are a subsidiary of Perfumania, Inc., a leading discount fragrance
retailer that operates a chain of approximately 290 specialty fragrance stores.
Our relationship with our parent provides us with the following advantages:

- exclusive online use of the highly recognized Perfumania brand name;

- cross marketing our online store with Perfumania, Inc.;

- access to Perfumania, Inc.'s extensive supply relationships; and

- Perfumania, Inc.'s considerable fragrance industry experience and
expertise.

THE PERFUMANIA.COM ADVANTAGE

We believe online retailers offer significant advantages over traditional
retailers by providing substantial improvement in convenience, product selection
and price. Our competitive advantages include:

- HIGHLY RECOGNIZED BRAND NAME. Our ability to market ourselves using the
already developed Perfumania brand name gives us instant brand
recognition and product credibility.

- ESTABLISHED INDUSTRY RELATIONSHIPS. Our arrangements with our parent
give us access to their extensive network of suppliers.

- CONVENIENT SHOPPING EXPERIENCE. Our online store is available 24 hours a
day, seven days a week and may be electronically visited from any PC with
access to the Internet.

- EXTENSIVE PRODUCT SELECTION. We have virtually unlimited shelf space and
can offer consumers a wider selection of products than most traditional
brick and mortar businesses.

- COMPETITIVELY PRICED PRODUCTS. By offering our products online and at
discounted prices, we can service customers who focus intensely on price.

- SUPERIOR BUSINESS-TO-BUSINESS SERVICES. The business-to-business
component of our online store, perfumaniawholesale.com, can fulfill the
needs of underserved smaller
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<PAGE> 6

specialty retailers by offering a wide selection of products at discounted
prices and with superior customer service.

- FOCUS ON THE EXPANDING INTERNATIONAL MARKET. We believe that the global
reach of the Internet will allow us to service the expanding
international market for fragrances and fragrance related products.

OUR STRATEGY

Our objective is to become the leading destination for retail consumers and
smaller specialty retailers seeking to purchase fragrances and fragrance related
products over the Internet. Key elements of our strategy include:

- CAPITALIZING AND EXPANDING UPON THE PERFUMANIA BRAND NAME. We will
continue to employ numerous advertising and promotional methods to drive
traffic to our online store and strengthen the highly recognized
Perfumania brand name.

- ENHANCING OUR ONLINE SHOPPING EXPERIENCE. We will continue to enhance
and develop features to accommodate our customer's purchasing habits and
preferences.

- LEVERAGING OUR INDUSTRY RELATIONSHIPS. We will continue to use our
management's and our parent's extensive industry contacts and operational
experience to help us obtain products on the most favorable terms.

- ADDRESSING THE GROWING INTERNATIONAL DEMAND FOR FRAGRANCES. We intend to
address the large and expanding international fragrance market by
establishing an international franchise network.

OUR HISTORY

We have had limited revenues from operations and as of May 1, 1999 had an
accumulated deficit of approximately $1.1 million. We expect to have losses for
at least the remainder of this year.

We were incorporated in January 1999 in the State of Florida. Our principal
executive offices are located at 11701 NW 101st Road, Miami, Florida 33178 and
our phone number is (305) 889-1600. Our online store is located at
www.perfumania.com and www.perfumaniawholesale.com. Information contained on our
Web sites do not constitute part of this prospectus.

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<PAGE> 7

THE OFFERING

Common stock offered by
perfumania.com................ 2,500,000 shares

Common stock offered by
Perfumania, Inc. ............. 1,000,000 shares

Total common stock offered...... 3,500,000 shares

Common stock outstanding after
the offering.................... 7,500,000 shares

Use of proceeds................. To fund anticipated operating losses,
enhance our online store, repay an
approximate $3.0 million advance from
Perfumania, Inc., and for working capital
and other general corporate purposes. We
will not receive any proceeds from the sale
of Perfumania, Inc.'s 1,000,000 shares of
our common stock. See "Use of Proceeds."

Proposed American Stock Exchange
symbol........................ PF

Risk factors.................... Investment in our common stock involves
significant risk and you could lose your entire investment.
3
<PAGE> 8

SUMMARY FINANCIAL DATA

You should read the following summary financial data together with
"Management's Discussion and Analysis of Financial Condition and Results of
Operations" and the financial statements and notes thereto included elsewhere in
this prospectus. All per share information in this prospectus gives effect to a
5,000-for-1 stock split that was effective June 7, 1999. Our fiscal year is
comprised of 52 or 53 weeks, ending on the Saturday closest to the last day of
January.

<TABLE>
<CAPTION>
AS OF MAY 1, 1999
----------------------------
ACTUAL AS ADJUSTED(1)
----------- --------------
<S> <C> <C>
BALANCE SHEET DATA:
Cash and cash equivalents............................ $ 100,808 $16,408,476
Working capital (deficit)............................ (1,064,801) 16,860,199
Total assets......................................... 631,221 16,938,889
Due to parent........................................ 1,617,332 --
Shareholder's equity (deficit)....................... (1,038,152) 16,886,848
</TABLE>

- -------------------------

(1) Adjusted to give effect to the sale of common stock that we and Perfumania,
Inc. are offering at the assumed initial public offering price of $8.00 per
share and the application of the estimated net proceeds as discussed in "Use
of Proceeds" on page 19.

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<PAGE> 9

RISK FACTORS

You should carefully consider the risks and uncertainties described below
and the other information in this prospectus before deciding whether to invest
in shares of our common stock. Additional risks and uncertainties not presently
known to us or that we currently deem immaterial may also impair our business
operations and your investment. If any of the following risks actually occur,
our business, financial condition or operating results could be harmed. In such
case, the trading price of our common stock could decline and you may lose part
or all of your investment.

OUR LIMITED OPERATING HISTORY MAKES IT DIFFICULT OR IMPOSSIBLE FOR YOU TO
EVALUATE OUR PERFORMANCE AND MAKE PREDICTIONS ABOUT OUR FUTURE.

We launched our online store in February 1999. Accordingly, we have a
limited operating history upon which you can evaluate our performance. Before
investing in our common stock, you should consider the risks and difficulties we
may encounter as an early-stage company in the new and rapidly evolving
e-commerce market. These risks include our ability to:

- implement our business model;

- anticipate and adapt to rapid changes in our markets;

- retain existing customers, attract new customers and maintain customer
satisfaction;

- introduce new and enhanced Web sites, services, products and alliances;

- maintain our profit margins notwithstanding price competition or rising
wholesale prices;

- minimize technical difficulties, system downtime and the effect of
Internet brown-outs; and

- manage the timing of perfumania.com promotions and sales programs.

If we do not successfully manage these risks, our business will suffer. We
cannot assure you that we will successfully address these risks or that our
business strategy will be successful.

WE HAVE NO HISTORY AS AN INDEPENDENT COMPANY AND MAY BE UNABLE TO PERFORM OR
OBTAIN ESSENTIAL SERVICES NOW BEING SUPPLIED BY PERFUMANIA, INC.

We do not have an operating history as an independent company. Prior to
this offering, we have operated as a wholly-owned subsidiary of Perfumania, Inc.
We have relied on Perfumania, Inc. to provide corporate, fulfillment, inventory
supply, advertising space-sharing and other administrative services. We will
continue to receive those services pursuant to an intercompany agreement with
Perfumania, Inc. for the foreseeable future. If Perfumania, Inc. fails to
adequately provide us services or if we fail to develop management and financial
systems, our business could suffer until we develop our own sufficient
operational, administrative and other systems and infrastructure.

5
<PAGE> 10

THE ALLOCATIONS FOR EXPENSES RELATED TO SERVICES BEING PROVIDED BY PERFUMANIA,
INC. MAY NOT ACCURATELY REFLECT THE COSTS OF THESE SERVICES IN THE FUTURE.

The historical financial statements contained in this prospectus include
allocations for administrative, distribution and other expenses incurred by
Perfumania, Inc. for services rendered to us. While we believe that these
allocations are reasonable, they are not necessarily indicative of, and it is
not practical for us to estimate, the levels of expenses that would have
resulted if we were operating as a separate, stand-alone company. Allocations
for services rendered to us by Perfumania, Inc. may be less than the amount we
may have to pay for the same services provided to us by an unaffiliated third
party. We have also relied on Perfumania, Inc. to provide financing for our
operations. Therefore, investors should not rely on our cash flows to date as
indicative of the cash flows that would have resulted if we had been operating
as an independent company during the periods presented.

OUR BUSINESS MAY BE HARMED BY PERFUMANIA, INC.'S FINANCIAL CONDITION.

The report of Perfumania, Inc.'s independent certified public accountants
as of January 30, 1999 expressed substantial doubt about Perfumania, Inc.'s
ability to continue as a going concern. We have not included the accountants'
report relating to Perfumania, Inc. as part of this prospectus. The concern
stemmed from Perfumania, Inc.'s recurring net losses, its $3.8 million working
capital deficit, and its default in its bank line of credit agreement as a
result of its violation of certain debt covenants. Because we are dependent on
Perfumania, Inc. for many services, our business would suffer if Perfumania,
Inc. is unable to successfully remedy its problems.

Perfumania, Inc.'s $35.0 million line of credit agreement requires
Perfumania, Inc. to maintain a minimum tangible net worth of $15.0 million, a
minimum net income level and comply with other operating covenants that limit
the number of new stores that Perfumania, Inc. may open. The lender notified
Perfumania, Inc. that it was in default for failing to maintain the minimum net
worth and net income levels established by the financial covenants and exceeding
the limit on new store openings.

Perfumania, Inc. reported in recent filings with the SEC that it intends to
remedy this situation by obtaining a waiver for the debt covenant violations,
limiting new store openings, closing non-profitable stores, improving the
effectiveness of its sales promotions and reducing operating expenses. On July
14, 1999, Perfumania, Inc. obtained a waiver of default from the bank as of and
for the year ended January 30, 1999 and through September 30, 1999. Future
outstanding borrowings will bear interest at the prime rate plus four percent.
The bank agreed to less restrictive covenants provided that certain events
commence prior to September 30, 1999. One such event includes that
perfumania.com is to receive at least $10 million from the offering proceeds, of
which at least $2 million is to be repaid to Perfumania, Inc.

As a result of the factors described above and other factors related to our
business, the report of our independent certified public accountants also
contains an explanatory paragraph regarding our ability to continue as a going
concern.

As of June 1, 1999, we have received from Perfumania, Inc. advances
totaling approximately $2.0 million which have been used to finance our start-up
costs. Perfumania, Inc. has indicated its intent to continue to advance funds to
us as may be needed to continue our business and complete the offering. All
amounts advanced to us will be repaid

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from the proceeds of the offering. If Perfumania, Inc. cannot continue as a
going concern or continue to advance funds to us until the offering is
completed, we may have inadequate capital to continue operation. We also depend
on Perfumania, Inc. to provide numerous services to us, to supply merchandise to
us, and to license to us its brand name. If Perfumania, Inc. cannot continue its
operations, we may be unable to find substitute services or merchandise and may
lose the right to use the Perfumania brand name.

OUR BUSINESS MAY SUFFER IF PERFUMANIA, INC. CEASES TO OWN OUR STOCK.

We face additional risks as a result of Perfumania, Inc.'s majority
ownership of our common stock. All assets of Perfumania, Inc., including our
common stock, have been pledged to secure its line of credit. If Perfumania,
Inc.'s lender were to foreclose on the common stock, it would become the
majority shareholder of our company and might control perfumania.com in a manner
that is detrimental to its public shareholders. Moreover, if Perfumania, Inc.
sells its stock for any reason, a successor to Perfumania, Inc. may also control
perfumania.com in a manner that is detrimental to our public shareholders.

WE EXPECT TO INCUR SUBSTANTIAL NET LOSSES AND NEGATIVE CASH FLOW FOR THE
FORESEEABLE FUTURE SO THAT YOUR INVESTMENT MAY NOT BE VALUED BASED ON OUR
EARNINGS.

Since inception, perfumania.com has been operating at a loss. Our net
losses of $764,657 for the three months ended May 1, 1999 primarily relate to
start-up costs. We expect that operating losses and negative cash flow will
continue for the foreseeable future as we must invest in marketing and
promotional activities, technology and operating systems. We cannot be certain
when and if we will achieve sufficient revenues in relation to expenses to
become profitable. We believe that increasing our revenues will depend in large
part on our ability to:

- increase consumer awareness of our online store and develop effective
marketing and other promotional activities to drive traffic to our Web
site;

- enhance our online store, transaction-processing systems and network
infrastructure to support increased traffic;

- provide our customers with superior e-commerce experiences; and

- develop strategic relationships.

Our future profitability depends on generating and sustaining high revenue
growth while maintaining reasonable expense levels. Slower revenue growth than
we anticipate or operating expenses that exceed our expectations would harm our
business. If we achieve profitability, we cannot be certain that we would be
able to sustain or increase profitability in the future.

WE MAY NEED TO RAISE ADDITIONAL CAPITAL TO CONTINUE OUR BUSINESS ON TERMS
UNFAVORABLE TO INVESTORS IN THIS OFFERING IF WE DO NOT GENERATE ENOUGH REVENUE.

We require substantial working capital to fund our business and may need
more in the future. We will likely experience negative cash flow from operations
for the foreseeable future. The net proceeds from this offering, together with
our available funds, should be sufficient to meet our needs for working capital
and capital expenditures needs for the next

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<PAGE> 12

12 months. If, however, we need to raise additional funds through the issuance
of equity, equity-related or debt securities, your rights may be subordinate to
other investors and your stock ownership percentage may be diluted. We cannot be
certain that additional financing will be available to us.

OUR MANAGEMENT'S EXPERIENCE IN THE E-COMMERCE INDUSTRY IS LIMITED AND WE MAY
FAIL TO HIRE, RETAIN AND INTEGRATE KEY PERSONNEL WHO ARE EXPERIENCED IN E-
COMMERCE.

Our success depends on the expertise of our key technical, sales and senior
management personnel. perfumania.com's senior management has limited experience
operating and managing an online store engaged in the sale of fragrances and
fragrance related products.

We depend heavily on the continuing service of our management and on their
ability to quickly develop an expertise in the e-commerce aspects of our
business. Loss of the services of Rachmil Lekach, our chairman, president and
chief executive officer, Michael Amideo, our chief financial officer and chief
operating officer, and Richard Veliz, our chief technology officer, or other key
employees would hurt our business.

We anticipate hiring additional persons to serve on our management team.
Our success depends on our ability to continue to attract, retain and motivate
skilled employees who can effectively manage an online fragrance business.
Competition for qualified e-commerce employees is intense. We may be unable to
retain our present key employees or to attract, assimilate or retain other
qualified employees in the future. We may experience difficulty in hiring and
retaining skilled employees with appropriate qualifications. Our business will
be harmed if we fail to attract and retain key employees.

OUR OPERATING RESULTS ARE SUBJECT TO SEASONALITY, WHICH COULD CAUSE OUR STOCK
PRICE TO FLUCTUATE.

Our revenues and operating results may vary significantly from quarter to
quarter due to a number of factors. Many of these factors are outside our
control and include:

- seasonal fluctuations in consumer purchasing patterns and advertising
spending on fragrances and fragrance related products;

- changes in the growth rate of Internet usage and online user traffic
levels;

- actions of our competitors;

- the timing and amount of costs relating to the expansion of our
operations and acquisitions of technology or businesses; and

- general economic and market conditions.

Because we have a limited operating history, our future revenues are
difficult to forecast. A shortfall in revenues will damage our business and
would likely affect the market price of our common stock. Our limited operating
history and the new and rapidly evolving Internet market make it difficult to
ascertain the effects of seasonality on our business. If seasonal and cyclical
patterns emerge in Internet purchasing, our results of operations from quarter
to quarter may vary greatly and may cause our business to suffer.

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Fragrance sales are generally lower in the first half of each year and
increase substantially during the Christmas purchasing season and near other
holidays. We expect to experience similar seasonality in our business. You
should not rely on quarter-to-quarter comparisons of our results of operations
to gauge our future performance. It is possible that in some future periods our
results of operations may be below the expectations of public market analysts
and investors. In this event, our stock price may fall.

WE MAY NOT BE ABLE TO SUCCESSFULLY COMPETE AS WE FACE INTENSE COMPETITION FROM
INTERNET-BASED AND RETAIL-BASED BUSINESSES.

We cannot assure you that we will be able to compete successfully or that
competitive pressures will not damage our business. Our competition includes:

- traditional department stores and stand-alone perfume retailers such as
Macy's, and Bloomingdale's;

- nationally known discount perfume retailers such as Perfumania, Inc. and
The Cosmetic Center;

- competition from other retailers who seek to purchase high demand or
limited supply products;

- Web sites maintained by online retailers of fragrances and fragrance
products, such as fragrancenet.com and fragrancecounter.com;

- catalog retailers of fragrance and fragrance related products; and

- Internet portals and online service providers that feature shopping
services, such as America Online, Yahoo!, Excite and Lycos.

We believe that our ability to compete depends upon many factors,
including:

- the market acceptance of our Web sites and online services;

- the success of our sales and marketing efforts;

- the performance and reliability of our services;

- the price of our products; and

- the effectiveness of our customer service and support efforts.

Our competitors may be larger than us and may have substantially greater
financial and marketing resources. In addition, our competitors may be able to
secure products from vendors on more favorable terms, fulfill customer orders
more efficiently and adopt more aggressive pricing or inventory availability
policies than we can. Traditional store-based retailers also enable customers to
see, feel, and smell products in a manner that is not possible over the
Internet. Some online competitors may be able to use the Internet as a marketing
medium to reach significant numbers of potential customers more effectively than
we can.

Our wholesale competitors will likely have more established distribution
channels than us and may have entered into exclusive supply arrangements with
retailers who constitute part of our potential wholesale market. These factors
may preclude us from competing effectively in the wholesale fragrance
distribution market.

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<PAGE> 14

WE MAY BE UNABLE TO SUPPORT INCREASED VOLUME ON OUR WEB SITE.

A key element of our strategy is to generate a high volume of traffic on
our Web site. However, growth in the number of users of our online store may
strain or exceed the capacity of our computer systems and lead to declines in
performance or systems failure.

We believe that our present systems will not be adequate to accommodate
rapid growth in user demand. We believe that we will therefore need to add
additional hardware and software and to continually improve and enhance the
functionality and performance of our e-commerce, customer tracking and other
technical systems. We intend to upgrade our existing systems and implement new
systems as we anticipate new demand. Failure to implement these systems
effectively or within a reasonable period of time would cause decreased levels
of customer service and satisfaction.

We must also introduce additional or enhanced features and services to
retain current users and attract new users to our online store. If a new service
is not favorably received, our current customers may visit our online store less
frequently. These new services or features may not function well and we may need
to significantly modify the design of these services to correct errors. If users
encounter difficulty with or do not accept our services or features, our
business would be damaged.

WE FACE GREY MARKET RISKS.

perfumania.com purchases its products from domestic and foreign
manufacturers and secondary sources such as distributors, wholesalers, importers
and retailers. Our purchases include trademarked and copyrighted products
manufactured in foreign countries. Our merchandise may be manufactured by
entities, particularly foreign licensees, who are not the owners of the
trademarks or copyrights for the merchandise. We may also purchase "grey market"
goods from wholesalers who we mistakenly believe to be selling authorized
licensed, or authentic merchandise. The term "grey market" refers to the
situation where foreign manufactured goods, bearing a valid United States
trademark, are imported into the United States without the consent of the U.S.
trademark holder. A person who sells or resells "grey market" goods may be
exposed to liability to the holder of the trademark for infringement claims. If
we are called upon or challenged by the owner of a particular trademark or
copyright to demonstrate that specific merchandise was produced and sold with
the proper authority and cannot do so, perfumania.com may be restricted from
reselling the particular merchandise or be subjected to other liabilities.

We cannot always know or demonstrate that the manufacturer of specific
merchandise had proper authority from the trademark or copyright owner to
produce the merchandise or permit it to be resold in the United States.
perfumania.com's suppliers generally will not disclose the identity of their
suppliers, which they consider to be proprietary trade information. As a result,
we cannot determine specifically what portion of our merchandise purchased from
grey market sources may not have been manufactured with a proper trademark or
copyright. Future judicial, legislative or administrative agency action,
including possible import, export, tariff or other trade restrictions, may limit
or eliminate some of the secondary sources of supply used by us or our business
activities. In addition, our business activities may become the subject of legal
or administrative actions brought by manufacturers, distributors or others. No
patent or trademark infringement suits have been threatened or are pending
against us.

10
<PAGE> 15

WE WILL INCUR ADDITIONAL MARKETING EXPENSES AS WE INCREASINGLY RELY UPON ONLINE
AND TRADITIONAL ADVERTISING TO GENERATE SALES.

Our traditional advertising efforts to date have consisted primarily of
advertising in Perfumania, Inc.'s stores, print and other media materials such
as the Wall Street Journal, USA Today and Chicago Tribune. We intend to commit
substantial resources to promoting our online store and enhancing our brand name
through online advertising, advertising in Perfumania, Inc.'s stores and other
advertising materials. Our online advertising may include strategic
relationships that require large, long-term commitments. We cannot assure that
this advertising will effectively attract users to our online store or lead to a
substantial amount of sales. Our inability to develop and maintain effective
advertising campaigns may harm our business.

WE NEED TO EFFECTIVELY MANAGE GROWTH OF OUR OPERATIONS TO ASSURE THAT WE
MAINTAIN ADEQUATE INVENTORY AND MANAGEMENT RESOURCES SO AS TO AVOID UNNECESSARY
EXPENSES OR PRODUCT SHORTAGES.

perfumania.com's success depends upon effective planning and growth
management. Excluding part-time employees, at May 31, 1999 we had a total of
five employees and two independent consultants. We intend to continue to
increase the scope of our operations and the number of our employees.
perfumania.com also faces challenges associated with upgrading and maintaining
our information systems and internal controls, particularly those related to our
purchase and receipt of inventory. If we do not successfully implement and
integrate these new systems or fail to scale these systems with our growth, we
may not have adequate, accurate and timely forecasting and financial
information.

OUR FAILURE TO RESPOND TO CHANGES IN CONSUMER TRENDS MAY HINDER OUR BUSINESS.

The market for fragrances and fragrance related products largely depends on
trends in consumer tastes, the fashion and accessory industry and advertising
efforts. Our success depends on accurately predicting and responding to these
trends by being able to obtain popular products and delivering them on a timely
basis.

WE DEPEND ON THIRD PARTY SHIPPERS, COMMUNICATIONS PROVIDERS AND VENDORS TO
OPERATE OUR BUSINESS.

perfumania.com is wholly reliant upon a number of third parties to deliver
goods and services to it and its customers. Unlike many other e-commerce retail
and wholesale businesses, we have no ability or resources to obtain or deliver
merchandise on our own. We cannot operate our business unless carriers such as
the United States Postal Service, United Parcel Service and Federal Express
deliver inventory to us and ship our merchandise to our customers. Strikes or
other service interruptions will affect us more severely than an e-commerce
business with internal delivery capabilities. Those events would impair our
ability to deliver merchandise on a timely basis and may result in lost revenue.

We also depend on communications providers to provide our Internet users
with access to our online store. Our online store could experience disruptions
or interruptions in service due to failures by these providers. Our users
similarly depend on Internet service providers and Web site operators for access
to our online store. Each of these groups has experienced significant outages in
the past and could experience outages, delays and other

11
<PAGE> 16

difficulties due to system failures unrelated to our systems, which could cause
our Web site to become inoperative . These types of occurrences could cause
users to perceive our online store as not functioning properly and therefore
cause them to stop using our services. These risk pose a greater threat to us
than to traditional "bricks and mortar" fragrance sellers whose operations can
continue despite a communications systems failure. Unlike those competitors we
are virtually certain to lose sales as a result of systems failure.

Our business depends on the ability of third-party vendors, including
Perfumania, Inc., to provide to us and Perfumania, Inc. with popular, high
demand fragrances at competitive prices and in sufficient quantities. We have
purchased more than 98% of our merchandise from Perfumania, Inc. since our
inception. Many of the smaller suppliers used by us and Perfumania, Inc. have
limited resources, production capacities and operating histories. Our success
depends on our ability to obtain products to satisfy customer demand and could
be harmed if either our or Perfumania, Inc.'s ability to procure products were
limited.

PROTECTION OF OUR DOMAIN NAME IS VITAL TO OUR SUCCESS.

Perfumania, Inc. holds various Internet domain names relating to our brand,
including "perfumania.com" and "perfumaniawholesale.com". We have obtained the
exclusive right to use these domain names online under a technology transfer and
licensing agreement with Perfumania, Inc. The acquisition and maintenance of
domain names currently is regulated by governmental agencies and their
designees. perfumania.com may not license acquire or maintain adequate domain
names and intellectual property; therefore we may be unable to prevent third
parties from acquiring domain names that damage our trademarks, proprietary
rights licensed from Perfumania, Inc. or our business.

WE MAY BECOME SUBJECT TO SALES AND OTHER TAXES WHICH WILL REDUCE OUR ABILITY TO
OPERATE PROFITABLY IF WE CANNOT PASS THESE COSTS TO CUSTOMERS.

perfumania.com does not currently collect sales or other similar taxes for
physical shipments of goods into states other than Florida. One or more local,
state or foreign jurisdictions may seek to impose sales tax collection
obligations on us. In addition, any new operation in states outside Florida
could subject our shipments in such states to state sales taxes under current or
future laws. If one or more states or any foreign country successfully asserts
that we should collect sales or other taxes on the sale of our products the
resulting tax liability could impair our business.

AS AN E-COMMERCE COMPANY, RISKS ASSOCIATED WITH YEAR 2000 COMPLIANCE MAY AFFECT
OUR BUSINESS MORE THAN OTHER BUSINESSES THAT DO NOT RELY AS HEAVILY ON THE
INTERNET AND OTHER TECHNOLOGY FUNCTIONING PROPERLY AS A MEANS OF GENERATING
REVENUE.

Many existing computer programs and systems use only two digits to identify
a year in the date field. These programs and systems were designed and developed
without considering the impact of the upcoming turn of the century. If not
corrected, these computer applications could fail or create erroneous results in
the Year 2000.

The failure of any of our software or systems to be Year 2000 compliant
could inhibit users from accessing our online store and prevent us from being
able to process or fulfill orders from our customers. Our financial and
management controls and reporting systems may also be damaged. Any failure, if
not quickly remedied, would hurt our business,

12
<PAGE> 17

results of operations and financial condition. Any extended failure of our
systems and software to be Year 2000 compliant could result in the failure of
our entire business if we cannot fix our systems or if we must incur costs and
expenses substantially exceeding our sales revenue. We have not completed tests
on all of our material operating software and systems to assess and ensure Year
2000 compliance. We cannot assure you that all of perfumania.com's material
operating software and systems will be Year 2000 compliant.

In addition to the systems and software that we use directly, our
operations also depend on the performance of software and systems of our third
party service providers. These include providers of financial,
telecommunications and parcel delivery services. We also cannot assure you that
our service providers have, or will have, operating software and systems that
are Year 2000 compliant. We have limited or no control over the Year 2000
compliance efforts of our providers. Since all purchases at our online store
will be made with a credit card, our business and financial condition may be
damaged if our customers cannot use their credit cards due to Year 2000 issues.

THERE ARE RISKS RELATED TO OUR RELATIONSHIP WITH PERFUMANIA, INC.

WE DEPEND ON PERFUMANIA, INC.'S BRAND NAME, MERCHANDISE AND SERVICES. We
have entered into a technology transfer and license agreement and an
intercompany service agreement with Perfumania, Inc. We depend on Perfumania,
Inc. to provide us with trademark rights, domain names, merchandise, corporate
and administrative services and cross marketing efforts that are key to our
success. The termination of these agreements, the failure of Perfumania, Inc. to
satisfactorily perform its obligations under these agreements or an adverse
change in the terms of agreement would damage our business.

PERFUMANIA, ITS MANAGEMENT AND ITS PRINCIPAL SHAREHOLDERS MAY EXERT CONTROL
OVER OUR BUSINESS. After this offering, Perfumania, Inc. will own and control
the voting power of approximately 53.3% of our common stock. As a result of its
share ownership and the other rights described in this prospectus, Perfumania,
Inc. will be able to elect a majority of the members of our board of directors
and make other decisions that significantly affect our business. This
concentration of ownership and other rights could also delay or prevent a change
of control. If Perfumania, Inc. sells all or some of its investment in our stock
to a third party, other people or companies may control perfumania.com. Such a
sale may reduce the market price of our common stock and may harm
perfumania.com's business. In addition, Mr. Ilia Lekach, who is a member of our
board of directors, also serves Perfumania, Inc. as its chairman and chief
executive officer. This dual service could create or appear to create potential
conflicts of interest if faced with decisions that have different implications
for each company.

WE DEPEND ON TRADEMARKS AND OTHER ONLINE CONTENT LICENSED FROM PERFUMANIA,
INC. Pursuant to the technology transfer and license agreement, we license the
logo, name, domain names, other valuable trademarks and some online content from
Perfumania, Inc. and its other subsidiaries on an exclusive basis for Internet
use. If our technology transfer and license agreement with Perfumania, Inc. were
terminated, we would need to change the domain names of our Web pages and devote
substantial resources towards building new brand names. Perfumania, Inc. may
terminate the technology transfer and license agreement if any person other than
Perfumania, Inc., its affiliates or strategic partners acquires 75% or more of
the voting power of perfumania.com and under other limited circumstances. The
technology transfer and license agreement also may be terminated by

13
<PAGE> 18

either party to the agreement if the other party to the agreement, after
receiving notice of breach, does not cure the breach within 30 days of receipt
of the notice of breach.

The technology transfer and license agreement contains restrictions that
may prevent us from marketing our products and services in the same way we would
if we owned these trademarks. These restrictions could damage our marketing
efforts.

The agreement obligates our parent to protect and defend its marks and
domain names. Our parent's actions to protect its proprietary rights may not be
adequate. Third parties may infringe or misappropriate its intellectual
property, and we or our parent may be able to detect unauthorized use and take
appropriate steps to enforce our rights. Our parent's inability to protect its
marks adequately could have a material adverse effect on the acceptance of the
Perfumania brand and on our business, financial condition and operating results.

In addition, although we believe that our parent's proprietary rights and
our use of our license, use of its marks and domain names do not infringe on the
intellectual property rights of others, we cannot guarantee that other parties
will not assert infringement claims against our parent or us.

WE DEPEND ON PERFUMANIA, INC. FOR CROSS MARKETING EFFORTS. Pursuant to the
intercompany services agreement, Perfumania, Inc. has agreed to provide us with
advertising and promotional space in its retail stores and in its traditional
advertising. Perfumania, Inc. may control the timing and placement of these
advertisements and promotions. Perfumania, Inc. also does not guarantee to us
the demographic composition of the target audience. Advertising and promotion
are important elements of our strategy to further enhance awareness of the
Perfumania brand name. If we were not able to advertise in Perfumania, Inc.'s
retail stores, we would make substantially fewer sales on our Web sites. The
advertising obligations can be terminated by Perfumania, Inc. under the same
circumstances as the technology transfer and license agreement.

WE NEED PERFUMANIA, INC. TO PROVIDE SERVICES THAT WE CANNOT
PERFORM. Pursuant to the intercompany services agreement, Perfumania, Inc. will
provide us with services, such as merchandising, inventory management,
marketing, human resources, and other administrative services. If Perfumania,
Inc. fails to provide these services satisfactorily, we would be required to
perform these services or obtain these services from another provider. We may
incur additional costs in order to obtain these services and we may be unable to
obtain these services on commercially reasonable terms. If we choose to perform
these services, we may not be able to perform them adequately, and may lose
customers.

The service obligations can be terminated by Perfumania, Inc. under limited
circumstances. Substantially all of our sales orders are currently processed and
fulfilled through Perfumania, Inc.'s systems. As a result, our future revenue
depends on Perfumania, Inc.'s ability to fulfill our e-commerce sales in an
accurate and timely manner.

PERFUMANIA, INC. DOES NOT HAVE LONG TERM SUPPLIER AGREEMENTS. Pursuant to
the intercompany services agreement, perfumania.com purchases products from
Perfumania, Inc. for resale on our online store. We anticipate that a
significant portion of our revenue for the foreseeable future will be derived
from the online sale of merchandise obtained primarily from Perfumania, Inc.
Accordingly, our future revenues and business success partly depend on
Perfumania, Inc.'s ability to maintain and renew relationships with its existing
vendors and to establish relationships with additional vendors.

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<PAGE> 19

Perfumania, Inc. does not have long-term contracts with any of its
suppliers. In addition, many of the smaller vendors used by Perfumania, Inc.
have limited resources, production capacities and operating histories. The
supply obligations can be terminated by Perfumania, Inc. or may remain
unsatisfied. Our ability to obtain merchandise in a timely manner is critical to
our success.

WE ARE SUBJECT TO RISKS RELATED TO THE E-COMMERCE INDUSTRY.

WE DEPEND ON CONTINUED GROWTH IN USE OF THE INTERNET AND E-COMMERCE. Our
pricing strategy is premised on high volume, low margin sales. Our customer base
consists exclusively of Internet users so the successful growth of our business
depends on the growth in use of the Internet and growth in online purchases of
fragrances and fragrance related products. If Internet use declines or remains
constant, we may be unable to achieve the sales volume or revenue that our
business needs to survive. Rapid growth in the use of the Web and commercial
online services is a recent phenomenon. We cannot assure you that a large base
of consumers will adopt and continue to use the Web for retail or wholesale
commerce. Demand for recently introduced services and products over the Web and
online services is subject to a high level of uncertainty. The successful
development of the Web and online services is subject to a number of factors,
including:

- continued growth in the number of users of such services;

- concerns about transaction security;

- continued development of the necessary technological infrastructure; and

- the development of complementary services and products.

The following factors may inhibit growth in Web usage:

- inadequate Internet infrastructure;

- security and privacy concerns;

- inconsistent quality of service; and

- unavailability of cost-effective and high-speed service.

WE DEPEND ON THE STORAGE OF PERSONAL INFORMATION ABOUT OUR USERS. Web
sites typically place identifying data, or cookies, on a user's hard drive
without the user's knowledge or consent. Perfumania.com and other Web sites use
cookies for a variety of reasons, including the collection of data derived from
users' Internet activity. Our ability to use this technology is especially
important as we need personal information about our customers to implement our
direct and personalized marketing strategy. Any reduction or limitation in the
use of cookies could limit the effectiveness of our sales and marketing efforts.
Most currently available Web browsers allow users to remove cookies at any time
or to prevent cookies from being stored on their hard drive. In addition, some
commentators, privacy advocates and governmental bodies have suggested limiting
or eliminating the use of cookies. Currently pending before Congress is a bill
entitled the "Internet Growth and Development Act of 1999" which proposes to
restrict development of electronic mail advertisements and authorizes the
Federal Trade Commission to prescribe rules to protect users of commercial
Internet Web sites. Presently, the Federal Trade Commission recommends self
regulation as the preferred approach to regulation of privacy concerns. The
European Union recently adopted a directive addressing

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<PAGE> 20

data privacy that may limit the collection and use of information regarding
Internet users. This directive may limit our ability to target advertising or
collect and use information in European countries.

OUR BUSINESS WILL SUFFER IF WE EXPERIENCE BREACHES OF ONLINE
SECURITY. Consumer concerns over the security of transactions conducted on the
Internet or the privacy of users may inhibit the growth of the Internet and
online commerce. We rely on encryption and authentication technology licensed
from third parties to securely transmit confidential information, such as
customer orders, customer credit card numbers and other demographic information
about our customers. We believe that our ability to obtain this information
gives us a competitive advantage over traditional brick and mortar retailers and
other Internet retailers who do not use this technology. A compromise or breach
of our technology used to protect customer transaction data may occur.
Furthermore, our servers may be vulnerable to computer viruses, physical or
electronic break-ins and similar disruptions.

perfumania.com may need to expend significant additional capital and other
resources to protect against a security breach or to alleviate problems caused
by any breaches. Our business and your investment may be harmed if security
measures do not prevent security breaches. We cannot assure prevention against
all security breaches. This is a risk in e-commerce. Under current credit card
practices, a merchant is liable for fraudulent credit card transactions where,
as is our case, merchant does not obtain a cardholder's signature. A failure to
adequately control fraudulent credit card transactions would injure our
business.

THERE ARE RISKS RELATED TO THIS OFFERING.

OUR STOCK PRICE COULD BE EXTREMELY VOLATILE, AS IS TYPICAL OF
INTERNET-RELATED COMPANIES. You may not be able to resell your shares of common
stock at or above the initial public offering price due to the possible
volatility of our common stock after this offering. The stock market has
experienced significant price and volume fluctuations, and the market prices of
securities of technology companies, particularly Internet-related companies,
have been highly volatile.

The market price for perfumania.com's common stock is likely to be highly
volatile and subject to wide fluctuations in response to the following factors:

- actual or anticipated variations in our quarterly operating results;

- announcements of technological innovations or new products or services by
us or our competitors;

- changes in financial estimates by securities analysts;

- conditions or trends in e-commerce;

- changes in the economic performance or market valuations of other
Internet, e-commerce or retail companies;

- announcements by us or our competitors of significant acquisitions,
strategic partnerships, joint ventures or capital commitments;

- additions or departures of key personnel;

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<PAGE> 21

- release of lock-up or other transfer restrictions on our outstanding
shares of common stock or sales of additional shares of common stock; and

- potential litigation.

In the past, following periods of volatility in the market price of a
company's securities, securities class action litigation has often been
instituted against such a company. The institution of such litigation against us
could result in substantial costs to us and a diversion of our management's
attention and resources.

YOU ARE UNLIKELY TO RECEIVE DIVIDENDS FOR THE FORESEEABLE FUTURE. We have
never declared or paid cash dividends on our common stock. We currently intend
to retain all available funds and any future earnings for use in the operation
and expansion of our business and do not anticipate paying any cash dividends in
the foreseeable future.

It is unlikely that an investor in our stock will derive current income
from dividends resulting from ownership of our stock. This means that your
potential for economic gain from ownership of our stock depends on an
appreciation in the value of our stock and will only be realized upon a sale of
the stock at a price higher than your purchase price.

THERE HAS BEEN NO PRIOR PUBLIC MARKET FOR OUR COMMON STOCK. There has been
no public market for perfumania.com common stock. We will apply to have our
common stock listed on the American Stock Exchange but cannot assure you that an
active public market will develop. The initial public offering price will be
negotiated between the representatives of the underwriters and perfumania.com.
Among the factors considered in determining the initial public offering price
will be our future prospects, our industry in general, sales, earnings, and
certain other financial and operating information, and the market prices of
securities and certain financial and other operating information of companies
engaged in activities similar to ours. The initial public offering price may not
be indicative of the market price for the common stock after the offering, which
price may decline below the initial public offering price.

YOUR PROPORTIONATE OWNERSHIP INTEREST IN PERFUMANIA.COM MAY BE DILUTED
BECAUSE PERFUMANIA, INC. PAID LESS THAN THE PUBLIC OFFERING PRICE FOR ITS
SHARES. Based upon the estimated initial public offering price of $8.00 per
share, purchasers of the common stock in this offering will experience an
immediate and substantial dilution in net tangible book value of $5.75 per share
of common stock purchased. To the extent outstanding options to purchase common
stock are exercised, there may be further dilution. Dilution will reduce the per
share value of our stock and reduce the proportionate ownership interest in our
business.

CERTAIN PROVISIONS IN OUR CHARTER DOCUMENTS AND FLORIDA LAW MAY HAVE
ANTI-TAKEOVER EFFECTS. Certain provisions of our articles of incorporation, our
bylaws and Florida law could make it more difficult for a third party to acquire
us, even if a change in control would be beneficial to our shareholders. For
more information, see "Description of Capital Stock-Anti-takeover Effects of Our
Articles of Incorporation and Bylaws" and "-- Anti-takeover Effects of Florida
Law."

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<PAGE> 22

FORWARD-LOOKING STATEMENTS

This prospectus contains certain forward-looking statements that involve
risks and uncertainties. These statements refer to our future plans, objectives,
expectations and intentions. These statements may be identified by the use of
words such as "believes", "may", "will", "expects", "anticipates", "intends",
"plans" and similar expressions. Our actual results could differ materially from
those anticipated in such forward-looking statements. Factors that could
contribute to these differences include, but are not limited to, those discussed
in "Risk Factors" and elsewhere in this prospectus.

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<PAGE> 23

USE OF PROCEEDS

The net proceeds from the sale of the 2,500,000 shares offered by
perfumania.com at an assumed initial public offering price of $8.00 per share
are estimated to be approximately $17.8 million after deducting underwriting
discounts and estimated expenses. If the underwriters fully exercise the over
allotment option, the net proceeds to us from this offering will be
approximately $20.7 million. We will not receive any of the proceeds resulting
from the sale of Perfumania, Inc.'s 1,000,000 shares of our common stock.

The net proceeds from the offering will be used for the following purposes:

- to fund anticipated operating losses, including sales and marketing
expenses and payments due under strategic relationships and intercompany
agreements with Perfumania, Inc.;

- to enhance our online store;

- to repay an approximately $3.0 million advance from Perfumania, Inc.; and

- for working capital and other general corporate purposes.

As of June 1, 1999, Perfumania, Inc. has advanced to us approximately $2.0
million and we expect to borrow an additional $1.0 million prior to the
completion of this offering.

perfumania.com reserves the right to vary the use of proceeds among the
categories listed above because our ability to use the proceeds is dependent on
a number of factors, including the degree of market acceptance of our online
store, unexpected expenditures for further technical development, sales and
marketing efforts and the effects of competition.

Until perfumania.com uses the net proceeds of the offering, perfumania.com
will invest the funds in investment grade, interest-bearing securities.

From time to time, we also expect to evaluate possible acquisitions of or
investments in businesses and technologies that are complementary to our
business and technologies, and may use net proceeds from the offering for such
purposes. While from time to time we consider potential investments or
acquisitions, perfumania.com has no firm plans, commitments or agreements with
respect to any such investments or acquisitions.

DIVIDEND POLICY

perfumania.com has not declared or paid any cash dividends on its capital
stock since our inception. We do not expect to pay any cash dividends for the
foreseeable future. We currently intend to retain future earnings, if any, to
finance the expansion of our business.

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<PAGE> 24

CAPITALIZATION

The following table sets forth, the actual capitalization of perfumania.com
as of May 1, 1999 giving effect to the 5,000-for-1 stock split which was
effective June 7, 1999, and adjusted for the issuance and sale of common stock
in this offering at an assumed initial public offering price of $8.00 per share.
See "Use of Proceeds." This table should be read in conjunction with the
financial statements and the notes thereto and the other financial information
included elsewhere in this prospectus.

<TABLE>
<CAPTION>
AS OF MAY 1, 1999
--------------------------
ACTUAL AS ADJUSTED
----------- -----------
<S> <C> <C>
Due to parent....................................... $ 1,617,332 $ --
----------- -----------
Shareholder's equity (deficit)
Preferred stock, $0.01 par value, 5,000,000 shares
authorized, no shares issued and outstanding
actual and as adjusted......................... -- --
Common stock, $0.01 par value, 20,000,000
authorized, 5,000,000 shares issued and
outstanding actual; 7,500,000 shares issued and
outstanding as adjusted........................ 50,000 75,000
Additional paid-in capital........................ -- 17,900,000
Accumulated deficit............................... (1,088,152) (1,088,152)
----------- -----------
Total shareholder's equity (deficit)........... (1,038,152) 16,886,848
----------- -----------
Total capitalization........................... $ 579,180 $16,886,848
=========== ===========
</TABLE>

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<PAGE> 25

DILUTION

Our net tangible deficiency as of May 1, 1999 was approximately $(1.0
million) or $(0.21) per share of common stock. Net tangible deficiency per share
represents the amount of total tangible assets less total liabilities, divided
by the number of shares of common stock outstanding.

After giving effect to the sale of shares of common stock that we are
offering at an assumed initial public offering price of $8.00 per share, and the
receipt of the estimated net proceeds by us, our net tangible book value as of
May 1, 1999 would have been approximately $16.9 million or $2.25 per share. This
represents an immediate increase in net tangible book value of $2.46 per share
to existing shareholders and an immediate dilution of $5.75 per share to new
shareholders purchasing common stock in this offering. The following table
illustrates this dilution:

<TABLE>
<S> <C> <C>
Assumed initial public offering price per share............. $8.00
Net tangible deficiency per share prior to this offering.... $(0.21)
Increase per share attributable to new shareholders......... 2.46
------
Net tangible book value per share after this offering....... 2.25
-----
Total tangible book value dilution per share to new
shareholders.............................................. $5.75
=====
</TABLE>

The following table shows the difference between existing shareholders and
new investors with respect to the number of shares purchased in this offering,
the total consideration paid and the price paid per share. The table assumes
that the public offering price will be $8.00 per share.

<TABLE>
<CAPTION>
SHARES PURCHASED TOTAL CONSIDERATION PRICE
-------------------- ---------------------- PER
NUMBER PERCENT AMOUNT PERCENT SHARE
--------- ------- ----------- ------- -----
<S> <C> <C> <C> <C> <C>
Existing shareholder....... 4,000,000 53.3% $ 10 0.0% $0.00
New investors.............. 3,500,000 46.7 28,000,000 100.0 $8.00
--------- ----- ----------- -----
Total................. 7,500,000 100.0% $28,000,010 100.0%
========= ===== =========== =====
</TABLE>

21
<PAGE> 26

SELECTED FINANCIAL DATA

The selected financial data set forth below should be read in conjunction
with "Management's Discussion and Analysis of Financial Condition and Results of
Operations" and the financial statements and notes thereto appearing elsewhere
in this prospectus. The selected statement of operations data for the period
from January 7, 1999 (date of inception) through January 30, 1999 and the
three-month period ended May 1, 1999, and balance sheet data as of January 30,
1999 and May 1, 1999, have been derived from our financial statements, which
have been audited by PricewaterhouseCoopers LLP, independent certified public
accountants, and are included elsewhere in this prospectus.

<TABLE>
<CAPTION>
FOR THE PERIOD FOR THE
FROM JANUARY 7, 1999 THREE-MONTH
(DATE OF INCEPTION) PERIOD ENDED
THROUGH JANUARY 30, 1999 MAY 1, 1999
------------------------ ------------
<S> <C> <C>
STATEMENT OF OPERATIONS DATA:
Net sales................................... $ -- $ 161,972
Cost of goods sold.......................... -- 110,666
---------- ----------
Gross profit.............................. -- 51,306
---------- ----------
Operating expenses:
General and administrative................ 60,245 213,698
Management fee to Parent.................. 29,644 93,001
Marketing and sales expenses.............. 32,852 347,272
Web site development expenses............. 18,146 87,633
Consulting expenses....................... 130,019 42,324
---------- ----------
Total operating expenses.................. 270,906 783,928
---------- ----------
Loss from operations........................ (270,906) (732,622)
Interest expense to Parent.................. (2,599) (32,035)
---------- ----------
Net loss.................................... $ (273,505) $ (764,657)
========== ==========
Basic and diluted loss per share............ $ (0.05) $ (0.15)
========== ==========
Weighted average number of common shares
outstanding............................... 5,000,000 5,000,000
========== ==========
</TABLE>

<TABLE>
<CAPTION>
AS OF
-------------------------------
JANUARY 30, 1999 MAY 1, 1999
---------------- -----------
<S> <C> <C>
BALANCE SHEET DATA:
Cash and cash equivalents......................... $ 100,000 $ 100,808
Working capital deficit........................... (287,708) (1,064,801)
Total assets...................................... 323,868 631,221
Due to parent..................................... 531,326 1,617,332
Shareholder's deficit............................. (273,495) (1,038,152)
</TABLE>

22
<PAGE> 27

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

The following discussion should be read in conjunction with the financial
statements and related notes included elsewhere in this prospectus. This
discussion contains forward-looking statements that reflect our plans,
estimates, and beliefs and that involve risks and uncertainties. Our actual
results may differ materially from those anticipated in these forward-looking
statements.

OVERVIEW

Perfumania, Inc. has financed our operations since our inception on January
7, 1999. These cash flows are not indicative of the cash flows that would have
resulted had perfumania.com been operating as a separate stand-alone company
during the periods presented. Since our incorporation, we have incurred
significant net losses as a result of our start up costs and for the three-month
period ended May 1, 1999, we had incurred net losses of $764,657.

We intend to enhance the features of our online store. We believe that our
operating expenses will significantly increase as a result of the financial
commitments related to the development of marketing channels, future strategic
relationships and enhancements to our online stores and other capital
expenditures. We expect to incur losses and generate negative cash flow from
operations for the foreseeable future. Our profitability primarily depends upon
our ability to generate traffic and revenues on our online store and
substantially increase net sales. In view of the rapidly changing nature of our
business and our limited operating history, we believe that our historical
operating results are not necessarily meaningful and should not be relied upon
as an indication of future performance.

RESULTS OF OPERATIONS

NET SALES. Net sales include the sale of our fragrances and fragrance
related products, net of returns and outbound shipping charges. Net sales
totaled $161,972 for the three-month period ended May 1, 1999. There were no
sales in the month of January as we launched our online store in February 1999.

COST OF GOODS SOLD. Cost of goods sold consists primarily of the cost of
merchandise sold and outbound and inbound shipping costs. Cost of goods sold
totaled $110,666 for the three-month period ended May 1, 1999. There was no cost
of goods sold in the month of January as all shipping and sales activity began
in February 1999.

GROSS PROFIT. For the three-month period ended May 1, 1999, perfumania.com
had a gross profit of $51,306 or 32%. In the future, we may expand or increase
the discounts offered to customers as well as expand product offerings to areas
that may have lower gross margins than our existing business.

GENERAL AND ADMINISTRATIVE EXPENSES. General and administrative expenses
consist of payroll and related expenses for executive, accounting and
administrative personnel,

23
<PAGE> 28

recruiting, professional fees, and other general corporate expenses. General and
administrative expenses totaled $213,698 for the three-month period ended May 1,
1999. For the period from January 7, 1999 to January 30, 1999 general and
administrative expenses totaled $60,245. General and administrative expenses
will continue to increase as our staff expands and incurs additional costs to
support the growth of the business.

MANAGEMENT FEES. Management fees consist primarily of expenses, which have
been allocated to perfumania.com by Perfumania, Inc. for costs associated with
resources it shares. These fees consist primarily of the prorata cost of rent,
utilities and facilities maintenance. Management fees totaled $93,001 for the
three-month period ended May 1, 1999. For the period from January 7, 1999 to
January 30, 1999, management fees totaled $29,644. Effective May 1, 1999,
perfumania.com and Perfumania, Inc. entered into an intercompany services
agreement covering these services. See "Certain Transactions" and note 2 of
notes to financial statements.

MARKETING AND SALES EXPENSES. Marketing and sales expenses consist of
expenditures related to advertising and promotion. Marketing and sales expenses
totaled $347,272 for the three-month period ended May 1, 1999. During February
1999, perfumania.com began a cross-marketing campaign with Perfumania, Inc. that
it intends to continue. For the period from January 7, 1999 to January 30, 1999,
marketing and sales expenses totaled $32,852. After the offering, we expect to
expand our marketing efforts and, as a result our marketing expenses will
significantly increase.

WEB SITE DEVELOPMENT EXPENSES. Web site development expenses consist
principally of expenses for development of our Web site, network operations and
systems and telecommunications infrastructure. Web site development expenses
totaled $87,633 for the three-month period ended May 1, 1999. This amount
reflects the staffing and associated costs related to building and enhancing our
online store and transaction-processing systems, as well as our investment in
systems and telecommunications infrastructure. For the period from January 7,
1999 to January 30, 1999, web site development expenses totaled $18,146. Web
site development expenses are expected to increase as we continue to enhance our
online store and expand our staff.

CONSULTING FEES. Consulting fees consist primarily of amounts paid to
various technical and managerial consultants for services provided in the
development of perfumania.com. Consulting fees totaled $42,324 for the
three-month period ended May 1, 1999. For the period from January 7, 1999 to
January 30, 1999, consulting fees totaled $130,019. See "Certain Transactions"
and note 4 of notes to financial statements.

INCOME TAXES. perfumania.com was incorporated in January 1999 and has not
yet filed a federal income tax return or a State of Florida income tax return.
perfumania.com's 1999 fiscal year will end on January 31, 2000. perfumania.com
expects to have operating losses for the foreseeable future and does not expect
to have any federal or state income tax liability until it is profitable and
uses its operating loss carry forwards.

NET LOSS. As a result of the factors discussed above, primarily relating
to the significant initial investments made in establishing and developing our
Web site, the net loss totaled $764,657 for the three-month period ended May 1,
1999. For the period from January 7, 1999 to January 30, 1999, the net loss fees
totaled $273,505. We expect to incur net losses for the foreseeable future.

24
<PAGE> 29

LIQUIDITY AND CAPITAL RESOURCES

Our principal capital requirements are to acquire merchandise, maintain and
improve our online store and engage in advertising and promotional activities.
Effective April 15, 1999, we entered into a 36 month service agreement with a
software and network developer providing web hosting services and make 36 equal
monthly payments of $14,200. Under the term of the service agreement, in return
for displaying the network developer's corporate logo on our web page, we shall
receive a marketing credit of $1,700 per month, resulting in a net marketing fee
of $12,500 per month. We are subject to an early termination fee of $201,165 if
cancelled within the first 12 months and $100,583 if cancelled after 24 months
of service. Since our inception through May 1, 1999, we have primarily financed
these requirements through $1.6 million of advances from Perfumania, Inc. and
cash flows from operations. The loan accrues interest at 12.5% per annum and all
amounts are due on demand. This loan will be repaid with a portion of the net
proceeds of this offering.

At May 1, 1999, we had a working capital deficit of approximately
$1,065,000 and incurred losses since inception of approximately $1,038,000. We
are significantly dependent on Perfumania, Inc. for the conduct of our
operations.

We used $787,794 in our operating activities for the three-month period
ended May 1, 1999. This was the results of a loss of $764,657, offset slightly
by an increase in credit card receivable and prepaid expenses and a decrease in
accounts payable and accrued expenses. We used $13,404 in investing activities
for the three-month period ended May 1, 1999. This expenditure primarily related
to the purchase of computer hardware and software. Our financing activities for
the three-month period ended May 1, 1999, related to $802,006 relating to the
net borrowings from Perfumania, Inc.

We used $196,338 in our operating activities for the period from January 7,
1999 (date of inception) through January 30, 1999. This was the result of a loss
of $273,505, primarily offset by an increase in accounts payable of $66,037. We
used $14,308 in investing activities for the period from January 7, 1999 through
January 30, 1999. This expenditure primarily related to the purchase of computer
hardware and software. Cash used in financing activities for the period from
January 7, 1999, (date of inception) through January 30, 1999, was $310,646,
relating to the net borrowings under the loan from Perfumania, Inc.

The report of Perfumania, Inc.'s independent certified public accountants
that accompanied Perfumania, Inc.'s, audited financial statements as of January
30, 1999 expressed substantial doubt about Perfumania, Inc.'s ability to
continue as a going concern. We have not included the certified public
accountants' report related to Perfumania, Inc. as part of this prospectus. The
concern stemmed from Perfumania, Inc.'s recurring net losses, its $3.8 million
working capital deficit, and the fact that Perfumania, Inc. at the time of the
report was in default on a line of credit agreement. perfumania.com's business
may suffer if Perfumania, Inc. cannot remedy this situation and continue as a
going concern. We depend on Perfumania, Inc. to provide numerous services to us,
to supply merchandise to us, and to license to us its brand name.

Perfumania, Inc.'s line of credit agreement requires it to comply with
various financial covenants, minimum tangible net worth, book value and achieve
specified levels of quarterly results of operations. Perfumania, Inc. violated
several covenants and, as a result of these violations, Perfumania, Inc. is in
default.

25
<PAGE> 30

A waiver has been obtained for all covenant violations. On July 14, 1999,
the bank waived defaults as of and for the period ended January 30, 1999 through
September 30, 1999. Future outstanding borrowings will bear interest at the
prime rate plus four percent. The bank agreed to less restrictive covenants
concerning net losses and store openings provided that we receive at least $10
million from the offering, at least $2 million of which is to be repaid to
Perfumania, Inc.

As a result of the factors described above, the report of our independent
certified public accountants contains an explanatory paragraph regarding our
ability to continue as a going concern.

We believe that funds generated from operations and the net proceeds of
this offering will be sufficient to finance our current and anticipated
operations for at least 12 months after this offering. Our long-term capital
requirements beyond this period will depend on numerous factors, including, but
not limited to, the following:

- The rate of market acceptance of the online store;

- The ability to expand our customer base;

- The cost of upgrades to our online store; and

- The level of expenditures for sales and marketing and other factors.

If the funds from this offering and our revenues are insufficient to fund
the activities in the short or long term, we would need to raise additional
funds by incurring debt or through public or private offerings of our stock. We
may not be able to do either on terms favorable to us, if at all.

YEAR 2000 READINESS

The Year 2000 issue results from computer systems using two digits rather
than four to represent the year so that a date using "00" is recognized as the
year 1900 rather than the year 2000. This situation may disrupt the smooth
operation of both our and third party's computer systems.

We have preliminarily assessed our Year 2000 exposure and believe that we
can achieve Year 2000 readiness by the fourth quarter of 1999. We are developing
a plan of communication with significant business partners to obtain appropriate
assurances that their Year 2000 issues are resolved in a timely manner. Our
remediation costs to date have not been material and we do not anticipate that
our future remediation costs will have a material effect on our business.

In estimating our Year 2000 related costs, we have assumed the continued
availability of certain resources, the ability to acquire accurate information
regarding third parties, and the ability to correct all relevant applications.
Our actual costs could differ materially from our estimates.

Our critical application systems are merchandising, inventory management
and distribution, our computer systems, human resources and finance and
accounting. These areas will be the focus of our remediation efforts. The
merchandising, finance and accounting, and inventory management and distribution
systems are currently being installed utilizing vendor software believed to be
Year 2000 ready. Our human resources systems will be upgraded in the third
quarter of 1999. Our hardware and communications

26
<PAGE> 31

network is outsourced to Perfumania, Inc. and is currently being tested by
Perfumania, Inc. and remedied, where needed. In addition, a significant portion
of the purchases from our online store are made with credit cards. We will
continue to take steps to ensure Year 2000 readiness; however we cannot assure
that such efforts will be successful and may be harmed if, as a result of Year
2000 problems, customers cannot use credit cards to make purchases.

We have engaged US internetworking and Digital Pulp to design, develop and
test our Web site and utilize other third party equipment and software. If their
equipment or software fails, we may incur expenses to remedy problems that could
harm our business. We initiated formal communications with our significant
suppliers and service providers to determine their Year 2000 readiness. We will
track the Year 2000 compliance status of our material vendors and suppliers via
our own internal vendor compliance effort. We cannot guarantee that the systems
of suppliers or other companies on which we rely will be Year 2000 compliant.

We are preparing our contingency plans, which will include the
identification of worst case scenarios. Currently, the likely sources of risk to
us include:

- the disruption of or Perfumania, Inc.'s internal inventory management
system;

- the inability of principal suppliers or third party providers to be Year
2000 ready;

- failure of hardware and software utilized by our vendors;

- disruption of our Web pages; and

- disruption of communications links affecting our online store.

We cannot conclusively determine at this time whether Year 2000 failures
will harm us. We believe that our compliance efforts have and will reduce the
impact on us of any such failures.

27
<PAGE> 32

BUSINESS

OUR BUSINESS

- exclusive online use of the highly recognized Perfumania brand name;

- cross marketing our online store with Perfumania, Inc.;

- access to Perfumania, Inc.'s extensive supply relationships; and

- Perfumania, Inc.'s considerable fragrance industry experience and
expertise.

INDUSTRY BACKGROUND

GROWTH OF THE INTERNET AND E-COMMERCE. The Internet has emerged as a
global medium, enabling millions of people to share information, communicate and
conduct business electronically. International Data Corporation estimates that
the number of worldwide Web users will grow to approximately 320 million by the
end of 2002. This rapid growth represents a significant opportunity for
businesses to advertise and sell products online to both consumers and
businesses.

Business-to-consumer online transactions were approximately $8.0 billion in
1998 and it is anticipated that online consumer transactions will increase to
approximately $60.2 billion by 2003. Forrester Research estimates that
businesses bought and sold approximately $43.0 billion in goods over the
Internet last year and predicts that business-to-business e-commerce will grow
to approximately $327.0 billion by 2002 representing more than 90% of the total
projected e-commerce market.

THE FRAGRANCE INDUSTRY. Industry research indicates that United States
sales of fragrances exceeded $6.0 billion in 1998. The United States market for
fragrances and fragrance related products continues to grow moderately. We also
believe that there is a large and growing international demand for these
products due to increasing product availability and access to emerging markets.

The traditional retail fragrance industry is fragmented with different
competitive strategies used throughout. The industry includes upscale department
stores which compete based on advertising and promotions not on price, specialty
retailers which compete based on pricing, and mass-market retailers and drug
stores which emphasize convenience purchasing.

28
<PAGE> 33

We believe that traditional fragrance retailers face a number of challenges
in providing a satisfying shopping experience for consumers:

- The number of SKUs and the amount of product inventory that a traditional
retailer can carry in a store is constrained by the store's physical
space, thereby limiting selection.

- Limited shelf space and store layout constraints limit the merchandising
flexibility of traditional retailers.

- Due to the significant costs of carrying inventory in multiple store
locations, traditional retailers focus their product selection on the
most popular products that produce the highest inventory turns, thereby
further limiting consumer selection.

In addition, we believe that many consumers find the fragrance shopping
experience, especially at large department stores, to be time-consuming,
inconvenient and unpleasant due to factors such as location, product selection,
and high pressure sales tactics.

At the wholesale level, manufacturers of designer fragrances have
restricted their direct sales primarily to upscale department stores and larger
specialty stores. Smaller specialty retailers have traditionally obtained high
demand fragrance products from secondary sources and direct distributors who
principally resell products purchased directly from fragrance manufacturers and
foreign sources.

The unique characteristics of the Internet provide a number of advantages
for retail and wholesale fragrance sellers. Online sellers are able to display a
larger number of products than traditional store-based or catalog sellers at a
lower cost. In addition, online sellers are able to frequently adjust their
featured selections, editorial content and pricing, providing significant
merchandising flexibility. Online sellers also benefit from the minimal cost to
publish on the Web, the ability to reach a large group of customers from a
central location, and the potential for low-cost customer interaction. Unlike
traditional channels, online sellers do not have the burdensome costs of
managing and maintaining a retail store infrastructure or the significant
printing and mailing costs of catalogs. Online sellers can also easily obtain
demographic and behavioral data about customers, increasing opportunities for
direct marketing and personalized services. Because brand loyalty is a primary
factor influencing a fragrance purchase, a customer's presence at the
point-of-sale and ability to physically sense the fragrance product are not
critical to the purchasing decision.

THE PERFUMANIA.COM ADVANTAGE

We are well-positioned to capitalize on what we believe to be increasing
demand and future growth prospects for the online sales of fragrances and
fragrance related products. We believe that our competitive advantages are:

- highly recognized brand name;

- established industry relationships;

- convenient shopping experience;

- extensive product selection;

- competitively priced products;

- superior business to business services; and

- focus on expanding the international market.

29
<PAGE> 34

HIGHLY RECOGNIZED BRAND NAME. Our ability to market ourselves using the
Perfumania brand name gives us instant brand recognition and product credibility
in the fragmented retail fragrance industry. Unlike other online retailers who
are not associated with a nationally known specialty fragrance retailer, we can
focus our efforts on enhancing the visibility of Perfumania as an online brand
rather than on creating name recognition with consumers.

ESTABLISHED INDUSTRY RELATIONSHIPS. Strong supply relationships are
crucial to the ability of online retailers to service their customers. Our
arrangement with our parent gives us access to their extensive network of
suppliers. We also believe that our ability to use the highly recognized
Perfumania brand name provides us with an immediate competitive advantage in
attracting Internet users who are interested in making online fragrance
purchases.

CONVENIENT SHOPPING EXPERIENCE. Our online store provides customers with a
user friendly Web site. It is available 24 hours per day, seven days a week and
may be electronically visited from any PC with access to the Internet. We also
make the shopping experience convenient by organizing our products in easy to
use categories and providing our customers with personalized search
capabilities.

EXTENSIVE PRODUCT SELECTION. Online sellers have virtually unlimited shelf
space and can offer consumers a wide selection of products at competitive
prices. Unlike a traditional retailer, an online retailer can offer these
products without the expense generally incurred by brick and mortar retailers.
This is particularly valuable in the fragrance industry because consumer
preference and brand loyalty create varied demand and require a seller to carry
many different fragrance choices.

COMPETITIVELY PRICED PRODUCTS. We believe that the retail fragrance
industry has experienced a shift in the purchasing habits of consumers towards
greater cost-consciousness. The advent of the Internet as an alternative sales
venue and its operating effectiveness are likely to further accelerate this
change in buying habits. Online retailers can offer a wider variety of products
without the traditional expenses of brick and mortar retailers. By offering our
products online at discounted prices, we are able to service the growing base of
price-conscious consumers.

SUPERIOR BUSINESS-TO-BUSINESS SERVICES. Smaller specialty retailers
constitute a significant portion of the retail fragrance market. These retailers
have historically experienced difficulty in obtaining popular products at
competitive prices from manufacturers and distributors. We believe that
perfumaniawholesale.com can fulfill the needs of this underserved market by
offering a wide selection of products at discounted prices and with superior
customer service.

FOCUS ON THE EXPANDING INTERNATIONAL MARKET. We believe that the
international market for fragrances and fragrance related products is large and
expanding. The global reach of the Internet allows us to address this demand.

30
<PAGE> 35

OUR STRATEGY

- capitalizing and expanding upon the Perfumania brand name;

- enhancing our online shopping experience;

- leveraging our industry relationships; and

- addressing the growing international demand for fragrances.

CAPITALIZING AND EXPANDING UPON THE PERFUMANIA BRAND NAME. We will
continue to employ numerous advertising and promotional methods to drive traffic
to our online store and strengthen the highly recognized Perfumania brand name.
We will promote our online store in Perfumania, Inc.'s retail stores and
advertising materials.

We also intend to further enhance and expand the Perfumania brand name in
e-commerce through our own independent advertising and promotional efforts. We
believe that as more mainstream consumers come online to make fragrance
purchases, they will recognize the Perfumania brand name and feel comfortable
purchasing products from a seller with a proven track record and an excellent
reputation in the industry.

We will undertake efforts that will maximize repeat purchases such as
offering frequent purchaser discounts. Our online store allows us to create a
database of our online purchasers whom we intend to target through personalized
e-mails and promotions. We will also use other Internet technologies to tailor
our promotional banners to each customer's preferences and purchasing history.
We have entered into and continue to seek strategic marketing alliances with
leading high-traffic Web sites such as Yahoo!, DOUBLECLICK/AltaVista, Lycos,
Microsoft Sidewalk, and Modern Bride.

ENHANCING OUR ONLINE SHOPPING EXPERIENCE. We intend to continue to enhance
our users' browsing and shopping experience. We have engaged USinternetworking,
Inc. and Digital Pulp to design, develop and host our online store emphasizing
customer friendliness and convenience features.

We intend to tailor our online store to the preferences and buying habits
of each individual user by displaying promotional banners tailored to each
customer's interests and providing informational commentary on our fragrance
products. Our Perfumer Recommends feature recommends certain products to
customers for different seasons, moods, occasions, and activities and
preferences. Our online store has a fragrance genealogy feature that directs
purchasers to currently offered fragrances that are comparable to other
fragrance brands. We intend to continue to invest in similar technologies.

LEVERAGING OUR INDUSTRY RELATIONSHIPS. We use our parent's extensive
industry contacts and our management's substantial experience in the fragrance
industry to help us purchase merchandise based on the most favorable combination
of price, quality, quantity and selection.

ADDRESSING THE GROWING INTERNATIONAL DEMAND FOR FRAGRANCES. We intend to
address the large and expanding international fragrance market by establishing
an international franchise network. These franchisees will be licensed to
operate local online stores in their native language and will fill international
orders using local distribution facilities and local currency. We anticipate
receiving royalties from each franchisee. We currently fill international orders
through our U.S. online store.

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<PAGE> 36

SHOPPING AT OUR ONLINE STORE

Our online store provides our retail and wholesale customers with superior
features, pricing, and convenience.

BROWSING. Our online store offers visitors several special features
arranged in simple, easy-to-use formats intended to enhance product search,
selection and discovery. By clicking on the permanently displayed products and
product categories, our users can move directly to the Web page that contains
details about the particular products. Users can quickly browse promotions, such
as our perfume of the month, and other featured products. In addition, customers
can browse our online store by linking to specially designed pages dedicated to
products from well known national and specialty brands. Customers can also link
to pages based on product category, such as women's brand name perfumes, men's
brand name colognes, children's fragrances, gift set specials and bath and body
products.

LARGE PRODUCT OFFERINGS. Our online store offers customers a choice of
over 1,700 designer and private label fragrances, fragrance related products and
bath and body products for men and women at discounted prices. Our products are
sold for between $5 and $100 and include:

<TABLE>
<CAPTION>
FRAGRANCES FRAGRANCE RELATED PRODUCTS BATH AND BODY PRODUCTS
---------- -------------------------- ----------------------
<S> <C> <C>
Designer Fragrances Deodorants Aromatherapy Products
(Giorgio Armani(R), Shaving Creams Scented Soaps
Cartier(R), Fendi(R), Moisturizers Scented Candles
Tommy Hilfiger(R) and Balms Body Washes
other leading brands) Powders Massage Products
Private Label Fragrances Body Splashes
Body Lotions
</TABLE>

Giorgio Armani(R), Cartier(R), Fendi(R), and Tommy Hilfiger(R) are
registered trademarks of Giorgio Armani S.p.A., Cartier, Inc., Fendi Paola &
S.LLE S.A.S., and Tommy Hilfiger, Inc., respectively.

SEARCHING. The most prominent feature of our online store is the
interactive, searchable catalog of our extensive line of products. Our search
capabilities allow users to search for a product by name or category. Our
Perfumer Recommends feature recommends fragrances for different seasons, social
occasions, moods, activities and customers' preferences. In addition, for those
customers who wish to try new products, our online store offers several
alternative fragrances similar to a customer's favorite brand or to high demand
brands.

SELECTING PRODUCTS AND CHECKING OUT. To purchase products, customers
simply click on a button to add products to their virtual shopping cart.
Customers can add and subtract products from their shopping cart as they browse
around our store prior to making a final purchase decision, just as in a
physical store. To execute orders, customers click on the checkout button and,
depending upon whether the customer has previously shopped with us, are prompted
to supply shipping details online. We also offer customers a variety of gift
wrapping and shipping options during the checkout process. Prior to finalizing
an order by clicking the submit order button, customers are shown their total
charges along with the various options chosen, such as shipping method, at which
point customers still have the ability to change their order or cancel it
entirely.

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<PAGE> 37

PAYING. To pay for orders, a customer must use a credit card, which is
authorized during the checkout process, but which is charged when we ship the
customer's items. Our online store uses a security technology that works with
the most common Internet browsers and makes it virtually impossible for
unauthorized parties to read information sent by our customers. Our system
automatically confirms receipt of each order via e-mail within minutes and
notifies the customer when we ship the order, which is typically within one to
two business days for in-stock items.

CUSTOMER SERVICE FEATURES. We believe that high levels of customer service
and support are critical to retain and expand our customer base. We monitor
orders from the time they are placed through delivery by providing numerous
points of electronic, telephonic and personal communication to customers. We
confirm all orders and shipments by e-mail. Our customer service representatives
are readily available during regular business hours by telephone.

USAGE. Our average daily page views, which represent the number of times
per day our server delivers a page to a user, has grown consistently increasing
from 5,013 hits per day during February 1999 to 14,080 hits per day during May
1999. User sessions per day have grown from 769 shortly after launch of our
online store to 2,007 as of May 31, 1999. On average, users spend approximately
nine minutes per visit at our online store.

MARKETING AND ADVERTISING

ONLINE MARKETING AND ADVERTISING

We have entered into a variety of relationships with several Internet sites
to build traffic and attract customers.

YAHOO! We have entered into an agreement with Yahoo! to promote and
advertise our online store. We have delivered to Yahoo! content about our online
store that Yahoo! has agreed to insert onto its banners and on its search
results page. In addition, Yahoo! will include a link to our online store as a
clue for their Treasure Hunt game. Yahoo! will also give perfumania.com coupons
to members of the Yahoo! Birthday Club. Under the agreement, we will pay
$117,500 and receive 7.2 million page views.

LYCOS. Our advertising agreement with Lycos obligates Lycos to place
perfumania.com banners on its online store. We have also purchased key search
words, which when entered by a user, display our online store as a search
result. Under this agreement Lycos will provide over 9.3 million page views of
our banner advertisement for $192,000. The agreement terminates on December 31,
1999.

DOUBLE CLICK/ALTAVISTA. Our agreement obligates Double Click to advertise
our online store on AltaVista and Modern Bride through banners and keyword
searches. We are receiving up to 50 million page views under this agreement.

MICROSOFT SIDEWALK. We have entered into an agreement with Microsoft
Sidewalk to advertise our banners and tiles on their online shopping guide. We
pay a flat fee per city for continual inclusion on this site. We may remove
cities at our option.

We intend to expand our use of these kinds of alliances in the future. We
will strive to ensure that future alliances are cost-effective in terms of the
potential customers to be acquired, potential revenue to be generated, level of
exclusivity and brand exposure. We send e-mails to our customers advising them
of our promotions and other pricing specials

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<PAGE> 38

for their favorite fragrances. We intend to continue to advertise in whichever
forms of media prove most effective.

TRADITIONAL MARKETING AND ADVERTISING

In February 1999, we began a comprehensive national advertising campaign to
increase awareness of our online store. Our online store is advertised in a
number of national print media sources, including USA Today, The Wall Street
Journal, The Chicago Tribune as well as other local media.

Our advertising initiatives also include collaborative advertising efforts
with Perfumania, Inc. Our Web site is advertised in all of Perfumania, Inc.'s
stores and advertising materials. We are participating in the exclusive online
launch of WCW cologne in a joint marketing effort with Perfumania, Inc. and
World Championship Wrestling.

FULFILLMENT AND INVENTORY MANAGEMENT

We offer over 1,700 fragrances and fragrance related products which we
believe is a wider selection of products than offered by most traditional
fragrance sellers. We obtain most of our inventory from Perfumania, Inc. because
they have offered the most favorable pricing and services to date. Our
relationship with our parent gives us access to their extensive network of
suppliers and we may obtain inventory directly from these and other suppliers
depending on which offers us the most favorable selection, pricing quality and
quantity terms.

Our inventory is stocked in our Miami, Florida facility. Products are
generally shipped within 24 hours unless they are out-of-stock in which case
they are generally shipped within 48 to 96 hours. Customers have numerous
shipping options including overnight or international shipping. Orders not
filled through our online network are processed by a telephone order group.

TECHNOLOGY

We believe that we use an advanced e-commerce platform. We believe that our
platform will allow us to grow rapidly while providing reliable, secure, and
cost-effective e-commerce solutions. Our online store is hosted by
USinternetworking in Annapolis, Maryland.

Our Web sites are Microsoft NT Server 4 based, running Internet Information
Server, Site Server Commerce Edition, and SQL Server. Site Server Commerce
Edition and Internet Information Server together offer a comprehensive Web
server platform, optimized for Windows NT Server and conducting business online.

We have taken steps to prevent the failure of our mission-critical business
applications. Routers, switches, firewalls, and servers associated with our Web
sites are all deployed with backup or stand-by components so that we have at
least six different paths to the Internet. Our Web site uses USinternetworking's
total security architecture. This architecture is specially designed and built
to deliver Web-enabled enterprise applications and ensures that customer
information is protected and that transactions are conducted securely over the
Internet. USinternetworking has taken significant measures to provide customers
with secure application hosting services. The security architecture is a layered
approach that addresses security at every layer from the application down to the
physical

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<PAGE> 39

wire and ensures the primary aspects of security -- confidentiality, integrity,
and availability -- are addressed and that customer information is secure.

Our technology allows us to avoid Internet congestion as we have secured
direct access to each of the six major Internet backbones in the U.S. This
enables our customers to achieve LAN-like speeds for over 80% of all Internet
connections, which makes roundtrip performance up to four times faster than can
be achieved using traditional Internet service provider network architectures.

The Web site's workload will be distributed over a web server and a
database server, both high-end Compaq machines. With this solution,
perfumania.com can rapidly achieve its goal of implementing a fully scalable and
a robust e-commerce Web site without investing in hardware, software, servers,
or infrastructure. If, in the future, it becomes necessary to increase the
capacity of the Web site, USinternetworking can easily do this for
perfumania.com by adding new hardware. With a file replication system in place,
identical Web sites can easily be hosted on multiple Web servers. With the
addition of a Cisco Local Director switch, the workload can be dynamically
balanced across the different Web servers. The high-performance switch is
equipped with a failure mechanism that eliminates all points of failure for the
Web server platform.

Credit cards will be authorized and processed securely using Cybercash,
which handles the authorization in real time, while the shopper is online. If
the authorization is successful, the user is presented with an order
confirmation message and number, and the order information is written to a
database at USinternetworking.

All order information written to the USinternetworking Internet site
database is automatically written to the database at perfumania.com. This
synchronization is conducted securely through a virtual private network using
Checkpoint Firewall-1 at both USinternetworking and perfumania.com. If the
connection between the two databases were to go down, the replication would
resume upon reconnection and resynchronize the database. This provides a high
level of fault tolerance. On an hourly basis we move the new order data to our
back office system.

Using our software package's accounting, merchandising, and warehousing
modules, fulfilling orders and running other aspects of the business will be a
very efficient process. RF scanning technology is used when receiving goods from
vendors, fulfilling orders, and conducting inventory counts, making these
processes more accurate and efficient. Our system will print packing slips,
shipping labels, and direct the fulfillment team to conduct efficient product
picking and packing using the RF scanners' LED readout. Once the order is
fulfilled and shipped, the customer will be e-mailed and the Web sites' database
will be updated with the new shipping status. Our software package is capable of
scaling very high, often running businesses much larger than perfumania.com.

COMPETITION

Our competition includes:

- traditional department stores;

- nationally known discount fragrance retailers;

- competition from other retailers who seek to purchase high demand or
limited supply products;

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<PAGE> 40

- Web sites maintained by online retailers of fragrances and fragrance
related products including fragrancecounter.com and fragrancenet.com;

- catalog retailers of fragrances and fragrance related products; and

- Internet portals and online service providers that feature shopping
services.

We believe that our ability to compete depends upon many factors,
including:

- the market acceptance of our online store and services;

- the success of sales and marketing efforts;

- the performance and reliability of our services;

- the price of our products; and

- the effectiveness of our customer service and support efforts.

Our competitors may be larger than us and may have substantially greater
financial, distribution and marketing resources. In addition, our competitors
may be able to secure products from vendors on more favorable terms, fulfill
customer orders more efficiently and adopt more aggressive pricing or inventory
availability policies than we can. Traditional retailers also enable customers
to see, feel, and smell products in a manner that is not possible over the
Internet. Some online competitors including fragrancenet.com and
fragrancecounter.com may be able to use the Internet as a marketing medium to
reach significant numbers of potential customers more effectively that we can.

EMPLOYEES

As of the date of this prospectus, perfumania.com employed 10 full-time
employees. We also employ independent contractors to perform duties in various
departments, including software development. The loss of services of one or more
of our key employees could damage our business. Our employees are not
represented by unions, and we consider our relationship with our employees to be
excellent. We believe that success is dependent on our ability to attract and
retain qualified personnel in numerous areas, including software development.

FACILITIES

Our administrative and warehouse facilities are located in Miami, Florida
and total approximately 20,000 square feet. We believe that these facilities
will be sufficient to accommodate our anticipated growth over the next 12
months. Our space is shared with Perfumania, Inc. pursuant to an intercompany
services agreement. See "Certain Transactions."

LEGAL PROCEEDINGS

perfumania.com is not presently involved in any legal proceedings.

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<PAGE> 41

MANAGEMENT

DIRECTORS AND EXECUTIVE OFFICERS

Our board of directors and executive officers consist of the following
persons:

<TABLE>
<CAPTION>
NAME AGE POSITION
- ---- --- --------
<S> <C> <C>
Rachmil Lekach............................ 52 Chairman of the Board of Directors,
President and Chief Executive Officer
Michael Amideo............................ 30 Chief Financial Officer, Chief Operating
Officer and Director
Richard Veliz............................. 30 Chief Technology Officer
Ilia Lekach............................... 50 Director
Daniel Manella............................ 74 Director Nominee
Daniel Sawicki............................ 48 Director Nominee
</TABLE>

RACHMIL LEKACH has served as president and a director of perfumania.com
since inception in January 1999 and as its chief executive officer and chairman
of the board of directors since July 1999. Mr. Lekach is a co-founder of
Perfumania, Inc. and was Perfumania, Inc.'s chief operating officer from 1990 to
1994. Mr. Lekach joined perfumania.com from Ocean Reef Capital Management, an
investment banking boutique, where he served as chief executive officer from
1996 to 1999. From August 1996 to February 1997, Mr. Lekach served as chairman
of the board and from August 1996 to August 1997 as chief executive officer and
a director of L. Luria & Son, Inc. From 1993 until 1996, Mr. Lekach served as
the president and a director of Parlux Fragrances, Inc.

MICHAEL AMIDEO has served as the chief financial officer, chief operating
officer and a director of perfumania.com since June 1999. From April 1999 to
June 1999, Mr. Amideo served as controller of Perfumania, Inc. From 1995 to
1999, Mr. Amideo was employed by PricewaterhouseCoopers, LLP, as a certified
public accountant. From 1994 to 1995, Mr. Amideo was employed by Arthur Anderson
LLP as a certified public accountant.

RICHARD VELIZ has served as perfumania.com's chief technology officer since
April 1999. Mr. Veliz worked in Internet design and development for Strategic
Business Systems from July 1997 until April 1999. He performed the same function
for AIC, a computer consulting business, from August 1998 until April 1999 and
for Sterling Solutions Group, an IT solutions business from February 1997 until
April 1998. Mr. Veliz worked in software design for Blockbuster Entertainment
Group from May 1996 until January 1997 and for The College Experience from
December 1992 until May 1996.

ILIA LEKACH served as chairman of the board and chief executive officer of
perfumania.com from its inception in January 1999 to July 1999 when he resigned
as chairman and chief executive officer of perfumania.com, inc. and currently
serves as a director. Mr. Lekach is a co-founder of Perfumania, Inc. and was
Perfumania, Inc.'s chairman of the board and chief executive officer from its
incorporation in 1988 until his resignation in April 1994. In October 1998 Mr.
Lekach was reappointed Perfumania, Inc.'s chairman of the board and chief
executive officer. Mr. Lekach served as Chairman of the Board of L. Luria & Son,
Inc., a South Florida-based catalog retailer from January 1997 through

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<PAGE> 42

August 1997. Mr. Lekach has also served as chairman of the board and chief
executive officer of Parlux Fragrances, Inc., a publicly traded manufacturer of
fragrance and related products since 1990. Mr. Lekach is expected to devote only
a portion of his working time to the business of perfumania.com.

DANIEL MANELLA will become a director upon completion of the offering. From
1997 to present, Mr. Manella has served as the chief executive officer of the
Jel Sert, a food manufacturer and distributor. From December 1990 to 1997, Mr.
Manella was engaged in personal investment activities. Prior to that, he served
as the chairman of the board and chief executive officer of McGregor
Corporation, a manufacturer of men's and boy's apparel, and as the chairman of
the board and chief executive officer of Faberge Incorporated, a manufacturer of
toiletries and fragrances. He also served as the chairman of the board and chief
executive officer of Elizabeth Arden, Inc. a manufacturer of cosmetics and
fragrances and a wholly owned subsidiary of Faberge. Mr. Manella is a member of
our audit committee.

DANIEL SAWICKI will become director of perfumania.com upon completion of
the offering. Mr. Sawicki served as the president of Hero Communications,
Incorporated, a satellite television company from 1986 until 1996. From 1992
until 1998, Mr. Sawicki served as Vice President of Hero Productions, Inc., a
teleport company. Mr. Sawicki also founded HTV, Inc., a cable television
network, in 1995 and served as an executive officer of the company until its
sale in 1999.

Ilia Lekach and Rachmil Lekach are brothers. There are no other family
relationships among our directors and executive officers.

In August 1996 ORM, Inc. and its affiliates, of which Ilia Lekach and
Rachmil Lekach are principals, purchased a controlling interest in L. Luria &
Son, Inc., a catalog showroom with serious financial problems. Shortly
thereafter they joined L. Luria & Son, Inc. in management positions and
attempted to work out its problems with the creditors. Those efforts failed and
on August 13, 1997, L. Luria & Son, Inc. filed for relief under Chapter 11 of
the Bankruptcy Code and has since been liquidated.

Upon completion of this offering, we will establish audit and compensation
committees of our board of directors, which will each have a majority of
non-employee directors.

perfumania.com's amended and restated articles of incorporation divides the
board of directors into three approximately equal classes with staggered terms.
Directors are elected for three-year terms and, in each case, until their
successors are duly elected and qualified or until their earlier death,
resignation or removal. The members of each class will be appointed upon
completion of the public offering.

Our executive officers are elected annually by the board of directors and
serve at the discretion of the board of directors.

COMPENSATION OF DIRECTORS

Our non-employee directors will receive compensation for their services as
a director in the amount of $5,000 per year. We will reimburse them for any
expenses related to attendance of such meeting. Non-employee directors will also
be eligible to receive grants of stock options under our 1999 Incentive Stock
Option Plan. See "-- 1999 Incentive

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<PAGE> 43

Stock Option Plan" with respect to stock options granted to our non-employee
director nominees.

LIMITATION OF LIABILITY AND INDEMNIFICATION MATTERS

Our amended and restated articles of incorporation contains provisions to
indemnify directors and officers to the extent permitted by Florida law. Under
current law indemnification or advancement of expenses may not be made to or on
behalf of any director, officer, employee, or agent of perfumania.com if a
judgment or other final adjudication establishes that his or her actions, or
omissions to act, were material to the cause of action so adjudicated and
constitute:

- a violation of the criminal law, unless the director, officer, employee,
or agent had reasonable cause to believe his or her conduct was lawful or
had no reasonable cause to believe his or her conduct was unlawful;

- a transaction from which the director, officer, employee, or agent
derived an improper personal benefit;

- in the case of a director, liability for unlawful distributions; or

- willful misconduct or a conscious disregard for our best interests in a
proceeding by or in the right of the corporation to procure a judgment in
its favor or in the proceeding by or in the right of a shareholder.

Our bylaws provide that perfumania.com will indemnify its directors,
officers and employees against judgments, fines, amounts paid in settlement and
reasonable expenses.

EXECUTIVE COMPENSATION

We were incorporated in January 1999 and have paid compensation to Ilia
Lekach, Rachmil Lekach, Michael Amideo and Richard Veliz, in the amounts of
$50,000, $236,538, $4,615, and $30,000, respectively. See "-- 1999 Incentive
Stock Option Plan" with respect to stock options granted to the Messrs. Lekach,
Amideo and Veliz.

EMPLOYMENT AGREEMENTS

RACHMIL LEKACH. Effective May 1, 1999, we entered into an employment
agreement with Rachmil Lekach under which Mr. Lekach serves as our president for
an initial period of five years ending in April 2004. The agreement will
automatically renew for additional one year terms unless terminated by Mr.
Lekach or us on not less than 60 days' notice given prior to the expiration of
the initial term or any renewal term. The employment agreement provides for a
base salary of $200,000 and other benefits including certain health benefits.
Pursuant to the employment agreement, Mr. Lekach has been granted options under
the 1999 Incentive Stock Option Plan to purchase 225,000 shares of common stock
at an exercise price equal to the initial public offering price. These stock
options vest as of the date of grant and will expire ten years from the date of
grant.

If Mr. Lekach's employment is terminated by us without cause, in addition
to his base salary and any accrued but unpaid bonus to the date of such
termination, Mr. Lekach will be entitled to receive a lump sum equal to the base
salary that he would have otherwise received through the end of the initial or
renewal term.

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<PAGE> 44

In the event that Mr. Lekach's employment is terminated by us within six
months of a change of control of perfumania.com as defined in the agreement, he
will be entitled to receive a lump sum payment equal to three times his base
salary. In addition, all unvested stock options will immediately vest.

Mr. Lekach is also entitled to terminate his employment and receive the
payments described above if, within six months, following a change in control,
Mr. Lekach's title or duties are diminished in any material respect or Mr.
Lekach is required to relocate out of the South Florida area.

Under the non-competition clause contained in the employment agreement, Mr.
Lekach is prevented from engaging in any business competing with our business
during:

- his active employment with us;

- all times while he is receiving the base salary from us; and

- the period of 12 months following the expiration of the initial term or
any renewal term of the employment agreement.

The non-competition clause does not prevent Mr. Lekach from accepting
employment from Perfumania, Inc. or Parlux Fragrances, Inc. following a
change-in-control of our business so long as those businesses are not engaged in
the online sale of fragrances or related products.

MICHAEL AMIDEO. We entered into an employment agreement with Michael
Amideo which is effective July 1999 pursuant to which Mr. Amideo is to serve as
our chief financial officer and chief operating officer for a term of three
years expiring in July 2002. The employment agreement provides for a base salary
of $120,000 with an annual increase of at least 5%, and other benefits including
health benefits. Mr. Amideo has been granted options under our 1999 Incentive
Stock Option Plan to purchase 50,000 shares of common stock vesting over a three
year period with an exercise price equal to the initial public offering price.
In the event of a change of control as defined in the employment agreement, Mr.
Amideo's salary and stock options will be doubled and will immediately vest.

RICHARD VELIZ. We entered into an employment agreement with Richard Veliz
which is effective July 1999 pursuant to which Mr. Veliz is to serve as our
chief technology officer for a term of three years expiring in July 2002. The
employment agreement provides for a base salary of $140,000 with an annual
increase of at least 5%, and other benefits including health benefits. Mr. Veliz
has been granted options under our 1999 Incentive Stock Option Plan to purchase
50,000 shares of common stock vesting over a three year period with an exercise
price equal to the initial public offering price. In the event of a change of
control as defined in the employment agreement, Mr. Veliz's salary and stock
options will be doubled and will immediately vest.

COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION

Prior to this offering, we have not had a compensation committee. All
decisions concerning compensation of executive officers were made by the board
of directors as a whole.

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<PAGE> 45

1999 INCENTIVE STOCK OPTION PLAN

GENERAL. perfumania.com's 1999 Incentive Stock Option Plan provides that
options to acquire shares of common stock may be granted to key officers,
employees, consultants, advisors and directors or others designated by the board
of directors. The plan assists in attracting and retaining individuals who will
contribute to our success and achieve appreciation in your investment. Awards
under the plan may take the form of stock options, including corresponding share
appreciation rights or SARs.

SHARE AUTHORIZATION. Up to 1,000,000 shares of our common stock may be
awarded under the plan. Unexercised portions of options, forfeited options and
common stock subject to any awards that are otherwise surrendered by a
participant without receiving any payment or other benefit with respect thereto
may again be subject to new awards under the plan. Shares subject to options
with respect to which SARs are exercised, are not again available for the grant
of awards under the plan.

The shares to be issued or delivered under the plan are authorized and
unissued shares, or issued shares that may be acquired in the open market or
from private sources by perfumania.com, or both.

PLAN ADMINISTRATION. The plan is administered by the compensation
committee. Our board of directors may remove members from, add members to, or
fill vacancies in the compensation committee. The committee may establish such
rules and regulations as it may deem appropriate for the conduct of meetings and
proper administration of the plan. Subject to the provisions of the plan, the
committee may grant awards under the plan, interpret the provisions of the plan
and administer the plan or any award thereunder as it may deem necessary or
advisable.

OPTIONS. Incentive stock options meeting requirements of Section 422 of
the Internal Revenue Code of 1986, as amended, and nonqualified stock options
that do not meet such requirements are both available for grant under the plan.
The term of each option will be determined by the committee. No option will be
exercisable prior to six months from the date of grant or more than ten years
after the date of grant (except in the case of options that are nonqualified
stock options, where the committee can specify a longer period). Options may
also be subject to restrictions on exercise, such as exercise in periodic
installments, as determined by the committee.

In general, the exercise price for incentive stock options must be at least
equal to 100% of the fair market value of the shares on the date of the grant
and the exercise price for nonqualified stock options will be determined by the
compensation committee at the time of the grant and will be at least equal to
50% of the fair market value of the shares on the date of the grant. The
exercise price can be paid in cash or by tendering shares owned by the
participant. Options are not transferable except by will or the laws of descent
and distribution and may generally be exercised only by the participant (or his
guardian or legal representative) during his or her lifetime, provided, however,
the nonqualified stock options may, under certain circumstances, be transferable
to family members and trusts for the benefit of the participant or his family
members.

SHARE APPRECIATION RIGHTS. The plan provides that SARs may be granted in
connection with the grant of options. Each SAR must be associated with a
specific option and must be granted at the time of grant of such option. A SAR
is exercisable only to the extent the related option is exercisable.

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<PAGE> 46

ANTIDILUTION PROVISIONS. The number of shares authorized to be issued
under the plan and subject to outstanding awards (and the grant or exercise
price thereof) may be adjusted to prevent dilution or enlargement of rights
under certain circumstances.

CHANGE IN CONTROL. Upon the occurrence of a change in control of
perfumania.com, all options and related SARs may become immediately exercisable,
the restricted shares may fully vest and stock purchase loans may be forgiven in
full.

TERMINATION AND AMENDMENT. The plan will automatically terminate in 2009.
No awards may be made after that date. Awards outstanding on the termination
date will remain valid in accordance with their terms. The terms of awards under
the plan may be amended by the compensation committee.

OUTSTANDING OPTIONS. As of the date of this prospectus, we have granted
options to purchase a total of 630,000 shares of common stock under the plan,
including options to purchase 200,000, 225,000, 50,000, and 50,000 shares
granted to Ilia Lekach, Rachmil Lekach, Michael Amideo, and Richard Veliz,
respectively and options to purchase 15,000 shares of common stock granted to
each of our non-employee director nominees. The exercise price of these options
is equal to the initial public offering price. Options to purchase 100,000
shares of common stock granted to Ilia Lekach vest immediately. All options
expire ten years from the date of grant.

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<PAGE> 47

PRINCIPAL SHAREHOLDERS

The following table sets forth certain information regarding beneficial
ownership of the common stock as of the date of this prospectus by each person
known by perfumania.com to own beneficially more than 5% of the outstanding
shares of common stock, each of perfumania.com's directors, and all directors,
director nominees and executive officers as a group.

<TABLE>
<CAPTION>
AMOUNT AND NATURE OF
BENEFICIAL OWNERSHIP PERCENT OF CLASS OUTSTANDING
NAME OF BENEFICIAL OWNER ---------------------------------- --------------------------------
OR IDENTITY OF GROUP(1)(2) BEFORE OFFERING AFTER OFFERING BEFORE OFFERING AFTER OFFERING
- -------------------------- --------------- -------------- --------------- --------------
<S> <C> <C> <C> <C>
Perfumania, Inc. ....... 5,000,000 4,000,000 100.0% 53.3%
Ilia Lekach............. 5,200,000(3) 4,200,000(6) 100.0% 56.0%
Rachmil Lekach.......... 225,000(4) 225,000 4.5% 3.0%
Michael Amideo.......... 50,000 50,000 1.0% *
Richard Veliz........... 50,000 50,000 1.0% *
Daniel Sawicki.......... 15,000(4) 15,000 * *
Daniel Manella.......... 15,000(4) 15,000 * *
All directors, director
nominees and executive
officers as a group (six
persons).............. 5,555,000(5) 4,555,000(7) 100.0% 60.73%
</TABLE>

- -------------------------

* represents less than 1% of the outstanding shares of common stock after the
offering.

(1) the address of each person named in the table is c/o perfumania.com, 11701
NW 101st Road, Miami, Florida 33178.

(2) Except as other indicated, the persons named in this table have sole voting
and investment power with respect to all shares of common stock listed,
which includes shares that these people have a right to acquire a beneficial
ownership interest within 60 days of the date of the prospectus.

(3) Represents 5,000,000 shares owned by Perfumania, Inc. and 200,000 shares
issuable upon the exercise of stock options.

(4) Represents shares of common stock issuable upon the exercise of stock
options.

(5) Includes 5,000,000 shares owned by Perfumania, Inc. and 555,000 shares of
common stock issuable upon the exercise of stock options.

(6) Represents 4,000,000 shares owned by Perfumania, Inc. and 200,000 shares
issuable upon the exercise of stock options.

(7) Represents 4,000,000 shares owned by Perfumania, Inc. and 555,000 shares of
common stock issuable upon the exercise of stock options.

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<PAGE> 48

CERTAIN TRANSACTIONS

GENERAL

Since January 7, 1999 (date of inception) through June 1, 1999, Perfumania,
Inc. has advanced to us approximately $2.0 million which has been utilized
primarily to finance our start-up costs. We expect such advances to total
approximately $3.0 million at the time of the offering. Such advance bears
interest at a rate of 12.5% per annum and is payable upon demand. We will use a
portion of the net proceeds of this offering to repay this amount to Perfumania,
Inc.

Since inception, we have purchased approximately 98% of our inventory from
Perfumania, Inc. at a price equal to our parent's cost plus five percent. For
the period from January 7, 1999 through January 30, 1999 and for the
three-months ended May 1, 1999; such purchases totaled approximately $220,000,
and $284,000. We will continue to obtain merchandise from Perfumania, Inc.
pursuant to the intercompany services agreement described below. We may,
however, secure products from other distributors and suppliers, including Parlux
Fragrances, Inc. Ilia Lekach, our chairman of the board occupies the same
offices at Parlux Fragrances, Inc.

Since inception, Perfumania, Inc. has provided us with corporate,
fulfillment, inventory supply, advertising, and space-sharing and other
administrative services. Perfumania, Inc. charged us approximately $30,000 and
$93,000 for such services during the period from January 7, 1999 to January 30,
1999, and the three-months ended May 1, 1999. We will continue to receive these
services from Perfumania, Inc. pursuant to the intercompany services agreement.

Ilia Lekach provided consulting services to us amounting to $50,000 during
the period from January 7, 1999 to January 30, 1999. In addition, a party
related to Mr. Lekach provided consulting services to us amounting to $65,000
since our inception to January 30, 1999. We do not expect to receive any further
consulting services from these persons.

TECHNOLOGY TRANSFER AND LICENSING AGREEMENT

Effective May 1, 1999, perfumania.com entered into a technology transfer
and license agreement, pursuant to which we have has been granted an exclusive
royalty-free license to use the Perfumania name and trademarks in our
operations. The license is not revocable unless we default under the agreement
or there is a change in control of perfumania.com. The agreement also gives us
the right to use Perfumania, Inc.'s inventory sourcing and special order
software, customer lists and demographic information. The license agreement
renews annually unless terminated by either party on at least 90 days written
notice prior to the commencement of the renewal year. Perfumania, Inc. may
terminate the technology transfer and transfer and license agreement of any
person other than Perfumania or its affiliates or strategic partners acquires
75% or more of the voting power of perfumania.com and under certain other
limited circumstances.

INTERCOMPANY SERVICES AGREEMENT

Effective May 1, 1999, perfumania.com entered into an intercompany services
agreement with Perfumania, Inc. pursuant to which Perfumania, Inc. will provide
services to us, including corporate, fulfillment, inventory supply, advertising,
space-sharing, and

44
<PAGE> 49

other administrative services. Perfumania, Inc.'s obligations to deliver those
services will terminate if and when the technology transfer and license
agreement is terminated.

CORPORATE SERVICES. Perfumania, Inc. will provide all of the services it
currently provides to perfumania.com, such as merchandising, inventory
management, creative, marketing, technical, human resources, finance,
accounting, administrative, and other services, as well as those services
perfumania.com requires by virtue of its status as an independent public
company. Perfumania, Inc. will provide these services to us at a monthly fee of
$10,000 until such time as our monthly gross sales exceed $50,000, at which time
the fee will be increased to $10,000 plus two percent of monthly gross sales.

FULFILLMENT SERVICES. Perfumania, Inc. will provide us with warehousing
and fulfillment services, including receiving, quality control, storage,
processing and shipping orders and processing of customer returns. For these
services, we will pay Perfumania, Inc. an amount equal to three percent of the
cost of goods sold by us which have been handled by Perfumania, Inc. under the
intercompany services agreement.

INVENTORY SUPPLY. Perfumania, Inc. will supply inventory to us. We will
pay Perfumania, Inc. an amount equal to 105% of Perfumania, Inc.'s cost for the
inventory. We must pay Perfumania, Inc. within 30 days of invoice.

ADVERTISING. Perfumania, Inc. has agreed to include references to our
business and Web sites in their print and electronic media advertising materials
or in-store displays. We presently intend to participate in all advertising
campaigns of Perfumania, Inc. and will share the advertising costs. We will pay
Perfumania, Inc. either 20% or 50% of the advertising costs, based on the amount
of space we receive in the advertisement.

SPACE-SHARING. Perfumania, Inc. will permit us to use a portion of its
office and warehouse space that we mutually agree upon. Our cost for this space
will be an amount equal to our proportionate share of Perfumania, Inc.'s cost of
the space, initially 15% plus a proportionate share of common area maintenance
changes, taxes and utilities for the space.

APPROVAL OF AFFILIATED TRANSACTIONS.

We believe that each of the foregoing transactions were on terms no less
favorable than those which could have been obtained from unaffiliated third
parties. Following completion of this offering, all transactions between us and
our directors, executive officers and principal shareholders will be on terms no
less favorable than could be obtained from unaffiliated third parties and have
been and will be approved by a majority of our independent outside directors,
when elected.

45
<PAGE> 50

DESCRIPTION OF CAPITAL STOCK

GENERAL

The following is a description of perfumania.com's capital stock and
certain provisions of our amended and restated articles of incorporation and the
bylaws. The following discussion summarizes those documents. We recommend that
you refer to the full text of the documents for a complete description of those
documents.

Our authorized capital stock consists of 20,000,000 shares of common stock,
par value $.01 per share and 5,000,000 shares of preferred stock, par value $.01
per share.

COMMON STOCK

All of our 5,000,000 issued and outstanding shares of common stock are held
by one shareholder, Perfumania, Inc. There will be 7,500,000 shares of common
stock outstanding upon the closing of the offering, 4,000,000 of which will be
held by Perfumania, Inc.

VOTING RIGHTS. The holders of common stock are entitled to one vote per
share on all matters to be voted on by shareholders. Holders are not entitled to
cumulate their votes in the election of directors. Generally, all matters to be
voted on by shareholders must be approved by a majority of common stock present
in person or represented by proxy, voting together as a single class, subject to
any voting rights granted to holders of any preferred stock. Amendments to our
articles of incorporation must be approved by a majority of the outstanding
shares of common stock voting together as a single class. Amendments to the
anti-takeover provisions of our amended and restated articles of incorporation
must be approved by the holders of two-thirds of the shares of common stock.
Perfumania, Inc. as a holder of approximately two-thirds of our common stock
can, on its own, cause us to amend our articles and bylaws.

DIVIDENDS. Holders of common stock will share ratably in any dividend
declared by the board of directors, subject to any preferential rights of any
outstanding preferred stock. No dividends have been paid and we do not
anticipate paying dividends for the foreseeable future.

OTHER RIGHTS. If we merge or consolidate with or into another company and
shares of common stock are converted into or exchanged for shares of stock,
other securities or property including cash in that transaction all holders of
common stock, will be entitled to receive the same kind and amount of shares of
stock and other securities and property including cash.

Upon liquidation, dissolution or winding up, after payment in full of the
amounts required to be paid to holders of preferred stock, if any, all holders
of common stock are entitled to share ratably in all assets available for
distribution to holders of shares of common stock.

No common stock is subject to redemption or has preemptive rights to
purchase additional shares of common stock. Upon consummation of the offering,
all the outstanding shares of common stock will be legally issued, fully paid
and nonassessable.

46
<PAGE> 51

PREFERRED STOCK

The board of directors is authorized, without further shareholder approval,
to issue from time to time up to an aggregate of 5,000,000 shares of preferred
stock and to fix or alter the designations, fix the dividend rights, dividend
rates, conversion rights, voting rights, terms of redemption (including sinking
fund provisions), redemption price or prices, liquidation preferences and the
number of shares constituting any series or designations of such series. No
shares of preferred stock are outstanding and we do not presently anticipate
offering preferred stock for the foreseeable future.

AUTHORIZED BUT UNISSUED SHARES

The authorized but unissued shares of common stock and preferred stock are
available for future issuance without shareholder approval. These additional
shares may be utilized for a variety of corporate purposes, including future
public offerings to raise additional capital, corporate acquisitions and
employee benefit plans. The existence of authorized but unissued shares of
common stock and preferred stock could render more difficult or discourage an
attempt to obtain control of perfumania.com by means of a proxy contest, tender
offer, merger or otherwise.

ANTI-TAKEOVER EFFECTS OF OUR ARTICLES OF INCORPORATION AND BYLAWS

GENERAL. Certain provisions of our articles of incorporation and bylaws
may be deemed to have an anti-takeover effect and may delay, defer or prevent a
tender offer or takeover attempt, including attempts that might result in a
premium being paid over the market price for the shares held by stockholders.

CLASSIFIED BOARD OF DIRECTORS. Our board of directors will be divided into
three classes of directors serving staggered three-year terms. As a result,
approximately one-third of the board of directors will be elected each year.
These and other provisions may deter a shareholder from removing incumbent
directors and simultaneously gaining control of the board of directors by
filling the vacancies created by such removal with its own nominees.

SPECIAL MEETING OF SHAREHOLDERS. Special meetings of our shareholders may
be called only by the chairman of the board of directors, a majority of the
board of directors, or the holders of not less than 50% of all votes entitled to
be cast on any issue proposed to be considered at such meeting. This provision
could make it more difficult for shareholders to take actions opposed by the
board of directors.

ADVANCE NOTICE REQUIREMENTS FOR SHAREHOLDER PROPOSALS AND DIRECTOR
NOMINATIONS. Our bylaws state that shareholders must provide timely notice of
their intention to bring business before an annual meeting of shareholders, or
to nominate candidates for election as directors at an annual meeting of
shareholders.

To be timely, notice must be delivered to, or mailed and received by us,
not less than 120 days nor more than 180 days prior to the first anniversary of
the date of our notice of annual meeting for the previous year's annual meeting.
If we held no annual meeting in the previous year or the date of the annual
meeting of shareholders is more than 30 calendar days earlier than, or 60
calendar days after, such anniversary, a timely notice must be received not more
than 60 days prior to the annual meeting of shareholders or the close of
business on the 10th day following the date of the meeting. The form and content
of a shareholder's notice must comply with the bylaws. These provisions may
preclude

47
<PAGE> 52

shareholders from bringing matters before an annual meeting of shareholders or
from making nominations for directors at an annual meeting of shareholders.

ANTI-TAKEOVER EFFECTS OF FLORIDA LAW

We are subject to several anti-takeover provisions that apply to a public
corporation organized under Florida law, unless the corporation has elected to
opt out of those provisions in its articles of incorporation or bylaws. We have
not elected to opt out of those provisions. Florida law prohibits the voting of
shares in a publicly-held Florida corporation that are acquired in a control
share acquisition unless the holders of a majority of the corporation's voting
shares, exclusive of shares held by officers of the corporation, inside
directors or the acquiring party approve the granting of voting rights as to the
shares acquired in the control share acquisition.

A control share acquisition is defined as an acquisition that immediately
thereafter entitles the acquiring party to 20% or more of the total voting power
in an election of directors. Florida law contains an "affiliated transaction"
provision that prohibits a publicly-held Florida corporation from engaging in a
broad range of business combinations or other extraordinary corporate
transactions with an "interested shareholder" unless:

- the transaction is approved by a majority of disinterested directors
before the person becomes an interested shareholder;

- the interested shareholder has owned at least 80% of the corporation's
outstanding voting shares for at least five years; or

- the transaction is approved by the holders of two-thirds of the
corporation's voting shares other than those owned by the interested
shareholder.

An interested shareholder is defined as a person who together with
affiliates and associates beneficially owns more than 10% of the corporation's
outstanding voting shares. This may include takeover attempts that might result
in a premium over the market price for the shares held by shareholders.

TRANSFER AGENT AND REGISTRAR

The transfer agent and registrar for the common stock is Continental Stock
Transfer & Trust Company, New York, New York.

SHARES ELIGIBLE FOR FUTURE SALE

When the offering is completed, we will have a total of 7,500,000 shares of
common stock outstanding, of which the 3,500,000 shares sold in this offering
will be freely tradable. The remaining 4,000,000 shares of our common stock
outstanding after the offering, which are held by Perfumania, Inc. are
restricted shares. These restricted shares may be resold only through
registration under the Securities Act of 1933 or under an available exemption
from registration, such as provided through Rule 144. All of these shares will
be eligible for result beginning in January 2000, subject to the volume
limitation and other requirements of Rule 144 and the lock-up agreement
described in the next paragraph.

48
<PAGE> 53

Perfumania, Inc. and our directors and executive officers, have agreed that
they will not without the prior written consent of Cruttenden Roth Incorporated,
directly or indirectly offer, sell or otherwise dispose of any shares of our
common stock or any other equity security of perfumania.com, or any securities
convertible into or exercisable or exchangeable for our common stock or enter
into any agreement to do any of the foregoing, for a period of 270 days from the
date of this prospectus.

In addition, options to purchase 630,000 shares of Common Stock have been
granted under our 1999 Incentive Stock Option Plan to our directors, executive
officers and other employees. It is anticipated that a registration statement on
Form S-8 covering the common stock that may be issued pursuant to the options
granted under the 1999 Incentive Stock Option Plan will be filed after this
offering. The shares of common stock issued pursuant to the Form S-8
Registration Statement generally may be resold in the public market without
restriction or limitation, except in the case of affiliates of perfumania.com
who generally may only resell such shares in accordance with the provisions of
Rule 144, other than the holding period requirement and subject to the lock-up
agreement.

The sale of a substantial number of shares of common stock, or the
perception that such sales could occur, could adversely affect prevailing market
prices for the common stock. In addition, any such sale or perception could make
it more difficult for perfumania.com to sell equity securities or equity-related
securities in the future at a time and price that we deem appropriate.

49
<PAGE> 54

UNDERWRITING

Subject to the terms and conditions of our underwriting agreement, the
underwriters named below, for whom Cruttenden Roth Incorporated and Pennsylvania
Merchant Group are acting as representatives, have severally agreed to purchase
from us and Perfumania, Inc. and we and Perfumania, Inc. have agreed to sell to
the underwriters, the respective number of shares of common stock set forth
opposite each underwriter's name below:

<TABLE>
<CAPTION>
NUMBER
UNDERWRITERS OF SHARES
- ------------ ---------
<S> <C>
Cruttenden Roth Incorporated................................
Pennsylvania Merchant Group.................................
---------
Total.................................................. 3,500,000
=========
</TABLE>

Our underwriting agreement provides that the obligations of the
underwriters are subject to certain conditions precedent, including the absence
of any material adverse change in our business, the receipt of certificates,
opinions and letters from our counsel and independent public accountants. The
nature of the underwriters' obligation is such that they are committed to
purchase and pay for all the shares of common stock if any are purchased.

We have been advised by the representatives that the underwriters propose
to offer the shares of common stock directly to the public on the terms set
forth on the cover page of this prospectus. The underwriters may allow selected
dealers a concession of not more than $ per share, and the underwriters may
allow, and such selected dealers may re-allow, a concession of not more than
$ per share, to other dealers. After the initial public offering of our
common stock, the public offering price and other selling terms may be changed
by the representative. No change in these terms will change the amount of
proceeds to be received by us and Perfumania, Inc. as set forth on the cover
page of this prospectus.

We have granted an option to the underwriters, exercisable for a period of
45 days after the date of this prospectus, to purchase up to an additional
525,000 shares of common stock at the same price per share as the initial shares
to be purchased by the underwriters to cover over allotments, if any. To the
extent that the underwriters exercise this option, each of the underwriters will
be committed, subject to certain conditions, to purchase such additional shares
of common stock in approximately the same proportion as set forth in the above
table. The representatives have advised us that they do not expect any sales of
the shares of common stock offered hereby to be made to discretionary accounts
controlled by the underwriters.

We have agreed to pay the representatives a non-accountable expense
allowance equal to 1% of the aggregate price of the shares of common stock
offered hereby including with respect to shares of common stock underlying the
over allotment option, if and to the extent it is exercised as set forth on the
front cover of this prospectus.

The representatives' expenses in excess of the non-accountable expense
allowance, including its legal expenses, will be borne by the representatives.
We have agreed to issue to the representatives at the closing of the offering
warrants to purchase up to 350,000 shares of common stock at an exercise price
per share equal to 120% of the initial per

50
<PAGE> 55

share public offering price. The representatives' warrants are exercisable for a
period of four years beginning one year from the date of this prospectus.

The holders of the representatives' warrants will have no voting, dividend
or other shareholder rights until the representatives' warrants are exercised.
The terms of the representatives' warrants were established as the result of
negotiations between the representatives and us. If the representatives'
warrants are exercised, the representative may realize additional compensation.
By their terms, the representatives' warrants will be restricted from sale,
transfer, assignment or hypothecation, except to persons that are officers of
the representative.

The number of shares covered by the representatives' warrants and the
exercise price are subject to adjustment to prevent dilution. In addition, we
have granted certain rights to the holders of the representatives' warrants to
register the representatives' warrants and the common stock underlying the
representatives' warrants under the Securities Act of 1933. Total compensation
to the representatives and the underwriters is as follows:

<TABLE>
<S> <C>
Commissions........................... $ per share of common stock sold
Nonaccountable expense allowance...... per share of common stock sold
Warrants.............................. 350,000 shares of common stock at 120% of
the initial public offering price.
</TABLE>

Perfumania, Inc. and our directors and executive officers have agreed that
they will not without the prior written consent of Cruttenden Roth Incorporated,
directly or indirectly offer, sell or otherwise dispose any of our shares of
common stock or any other equity security of perfumania.com, or any securities
convertible into or exercisable or exchangeable for our common stock or enter
into any agreement to do any of the foregoing for a period of 270 days from the
date of this prospectus. Cruttenden Roth Incorporated has no present intention
to release the locked-up shares prior to expiration of the 270-day period
although Cruttenden Roth Incorporated may release the locked-up shares prior to
expiration of such period. The granting of any release would be conditioned, in
the judgment of Cruttenden Roth Incorporated, on such sale not materially
adversely impacting the prevailing trading market for the common stock on the
American Stock Exchange. Specifically, factors such as average trading volume,
recent price trends, and the need for additional public float in the market for
the common stock would be considered in evaluating such a request.

Prior to the offering, there has been no established trading market for the
common stock. Consequently, the initial public offering price for the common
stock offered hereby has been determined by negotiations among the
representatives and us and Perfumania, Inc. Among the factors considered in such
negotiations were the preliminary demand for the common stock, the prevailing
market and economic conditions, our results of operations, estimates of our
business potential and prospects, the present state of our business operations,
an assessment of our management, the consideration of these factors in relation
to the market valuation of comparable companies in related businesses, the
current conditions of the markets in which we operate, and other factors deemed
relevant. There can be no assurance that an active trading market will develop
for the common stock or that the common stock will trade in the public market
after the offering at or above the initial public offering price.

The representatives have advised us that, pursuant to Regulation M under
the Securities Act of 1933, some persons participating in the offering may
engage in
51
<PAGE> 56

transactions, including stabilizing bids, syndicate covering transactions or the
imposition of penalty bids, that may have the effect of stabilizing or
maintaining the market price of the shares of common stock at a level above that
which might otherwise prevail in the open market. A stabilizing bid is a bid for
or the purchase of shares of common stock on behalf of the underwriters for the
purpose of fixing or maintaining the price of the common stock. A syndicate
covering transaction is the bid for or purchase of common stock on behalf of the
underwriters to reduce a short position incurred by the underwriters in
connection with the offering. A penalty bid is an arrangement permitting the
representatives to reclaim the selling concession otherwise accruing to an
underwriter or syndicate member in connection with the offering if the common
stock originally sold by such underwriter or syndicate member purchased by the
representative in a syndicate covering transaction and has therefore not been
effectively placed by such underwriter or syndicate member. The representatives
have advised us that such transactions may be effected on the American Stock
Exchange or otherwise and, if commenced, may be discontinued at any time. The
underwriting agreement provides that we will indemnify the underwriters and
their controlling persons against liabilities under the Securities Act of 1933
or will contribute to payments the underwriters and their controlling persons
maybe required to make in respect thereof.

VALIDITY OF COMMON STOCK

The validity of the shares of common stock issued by us in this offering
will be passed upon for perfumania.com and Perfumania, Inc. by Greenberg
Traurig, McLean, Virginia, and for the underwriters by Broad and Cassel, a
partnership including professional associations, Miami, Florida.

EXPERTS

The financial statements as of January 30, 1999 and May 1, 1999 and the
period from January 7, 1999 (date of inception) through January 30, 1999 and for
the three-month period ended May 1, 1999, included in this prospectus have been
so included in reliance on the report (which contains an explanatory paragraph
relating to perfumania.com's ability to continue as a going concern as described
in Note 2 to the financial statements) of PricewaterhouseCoopers LLP,
independent accountants, given on the authority of said firm as experts in
auditing and accounting.

52
<PAGE> 57

WHERE YOU CAN FIND MORE INFORMATION

perfumania.com has filed a registration statement on Form S-1 with the SEC
in connection with this offering. In addition, we will file annual, quarterly
and current reports, proxy statements and other information with the SEC. You
may read and copy the registration statement and any other documents filed by
perfumania.com at the SEC's public reference room at 450 Fifth Street, NW,
Washington, DC 20549. Please call the SEC at 1-800-SEC-0330 for further
information on the public reference room. Our SEC filings are also available to
the public at the SEC's Internet site at http://www.sec.gov. This prospectus is
part of the registration statement and does not contain all of the information
included in the registration statement. Whenever reference is made in this
prospectus to any contract or other document of perfumania.com, the reference
may not be complete and you should refer to the exhibits that are part of the
registration statement for a copy of the contract or the document.

53
<PAGE> 58

PERFUMANIA.COM, INC.
(A WHOLLY-OWNED SUBSIDIARY OF PERFUMANIA, INC.)

INDEX TO FINANCIAL STATEMENTS

<TABLE>
<CAPTION>
PAGE
----
<S> <C>
Report of Independent Certified Public Accountants.......... F-2
Balance Sheets as of January 30, 1999 and May 1, 1999....... F-3
Statements of Operations for the period from January 7, 1999
(date of inception) through January 30, 1999 and for the
three-month period ended May 1, 1999...................... F-4
Statements of Changes in Shareholder's Deficit for the
period from January 7, 1999 (date of inception) through
January 30, 1999 and for the three-month period ended May
1, 1999................................................... F-5
Statements of Cash Flows for the period from January 7, 1999
(date of inception) through January 30, 1999 and for the
three-month period ended May 1, 1999...................... F-6
Notes to Financial Statements............................... F-7
</TABLE>

F-1
<PAGE> 59

REPORT OF INDEPENDENT CERTIFIED PUBLIC ACCOUNTANTS

To the Board of Directors and
Shareholder of perfumania.com, inc.

In our opinion, the financial statements listed in the accompanying index
present fairly, in all material respects, the financial position of
perfumania.com, inc. (the "Company") at January 30, 1999 and May 1, 1999, and
the results of its operations and its cash flows for the period from January 7,
1999 (date of inception) through January 30, 1999 and the three-month period
ended May 1, 1999 in conformity with generally accepted accounting principles.
These financial statements are the responsibility of the Company's management;
our responsibility is to express an opinion on these financial statements based
on our audits. We conducted our audits of these financial statements in
accordance with generally accepted auditing standards which 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, assessing the accounting principles used and significant estimates
made by management, and evaluating the overall financial statement presentation.
We believe that our audits provide a reasonable basis for the opinion expressed
above.

The accompanying financial statements have been prepared assuming that the
Company will continue as a going concern. As discussed in Note 2 to the
financial statements, the Company has incurred net losses since January 7, 1999
(date of inception) and has a working capital deficit of $1,065,000 at May 1,
1999. In addition, the Company is significantly dependent upon its Parent
(Perfumania, Inc.) for the conduct of its operations. The Parent has incurred
substantial losses in its prior two fiscal years and was in default of its bank
line of credit agreement as a result of its violation of certain debt covenants,
which violations have subsequently been waived by the bank. There is no
assurance that the Company will be able to generate future net income or that
the Company's Parent will be able to secure a long-term credit agreement and
generate profits in the future. These matters create substantial doubt about the
Company's ability to continue as a going concern. Management's plans in regard
to these matters are also described in Note 2. The financial statements do not
include any adjustments that might result from the outcome of this uncertainty.

PricewaterhouseCoopers LLP

Miami, Florida
May 14, 1999, except for Note 8 as to which

the date is July 14, 1999

F-2
<PAGE> 60

PERFUMANIA.COM, INC.
(A WHOLLY-OWNED SUBSIDIARY OF PERFUMANIA, INC.)

BALANCE SHEETS

<TABLE>
<CAPTION>
JANUARY 30, MAY 1,
1999 1999
----------- -----------
<S> <C> <C>
ASSETS
Current assets:
Cash and cash equivalents........................... $ 100,000 $ 100,808
Credit card receivable.............................. -- 21,042
Prepaid expenses.................................... -- 50,000
Inventory, net...................................... 209,655 432,722
--------- -----------
Total current assets............................. 309,655 604,572
Property and equipment, net......................... 14,213 26,649
--------- -----------
Total assets..................................... $ 323,868 $ 631,221
========= ===========
LIABILITIES AND SHAREHOLDER'S DEFICIT
Current liabilities:
Due to Parent....................................... $ 531,326 $ 1,617,332
Accounts payable and accrued expenses............... 66,037 52,041
--------- -----------
Total current liabilities........................ 597,363 1,669,373
--------- -----------
Commitments and Contingencies......................... -- --
Shareholder's deficit:
Common stock, $0.01 par value, 20 million shares
authorized, 5,000,000 shares issued and
outstanding...................................... 50,000 50,000
Accumulated deficit................................. (323,495) (1,088,152)
--------- -----------
Total shareholder's deficit...................... (273,495) (1,038,152)
--------- -----------
Total liabilities and shareholder's deficit...... $ 323,868 $ 631,221
========= ===========
</TABLE>

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

F-3
<PAGE> 61

PERFUMANIA.COM, INC.
(A WHOLLY-OWNED SUBSIDIARY OF PERFUMANIA, INC.)

STATEMENTS OF OPERATIONS

<TABLE>
<CAPTION>
FOR THE PERIOD FROM
JANUARY 7, 1999 FOR THE
(DATE OF INCEPTION) THREE-MONTH
THROUGH PERIOD ENDED
JANUARY 30, 1999 MAY 1, 1999
------------------- ------------
<S> <C> <C>
Net sales....................................... $ -- $ 161,972
Cost of goods sold.............................. -- 110,666
--------- ---------
Gross profit.................................... -- 51,306
--------- ---------
Operating expenses:
General and administrative expenses........... 60,245 213,698
Management fees to Parent..................... 29,644 93,001
Marketing and sales expenses.................. 32,852 347,272
Web site development expenses................. 18,146 87,633
Consulting fees -- related parties............ 115,000 --
Consulting fees............................... 15,019 42,324
--------- ---------
Total operating expenses................... 270,906 783,928
--------- ---------
Loss from operations............................ (270,906) (732,622)
Interest expense to Parent...................... (2,599) (32,035)
--------- ---------
Net loss........................................ $(273,505) $(764,657)
========= =========
Basic and diluted loss per common share......... $ 0.05 $ 0.15
========= =========
Weighted average number of common shares
outstanding................................... 5,000,000 5,000,000
========= =========
</TABLE>

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

F-4
<PAGE> 62

PERFUMANIA.COM, INC.
(A WHOLLY-OWNED SUBSIDIARY OF PERFUMANIA, INC.)

STATEMENTS OF CHANGES IN SHAREHOLDER'S DEFICIT
FOR THE PERIOD FROM JANUARY 7, 1999 (DATE OF INCEPTION)
THROUGH JANUARY 30, 1999
AND FOR THE THREE-MONTH PERIOD ENDED MAY 1, 1999

<TABLE>
<CAPTION>
COMMON STOCK
-------------------- ACCUMULATED
SHARES AMOUNT DEFICIT TOTAL
--------- ------- ----------- -----------
<S> <C> <C> <C> <C>
Balance at January 7, 1999
(date of inception)......... 1,000 $ 10 $ -- $ 10
5,000-for-1 stock split (see
Note 8)..................... 4,999,000 49,990 (49,990) --
--------- ------- ----------- -----------
Net loss for the period from
January 7, 1999 (date of
inception) through January
30, 1999.................... -- -- (273,505) (273,505)
--------- ------- ----------- -----------
Balance at January 30, 1999... 5,000,000 50,000 (323,495) (273,495)
Net loss for the three-month
period ended May 1, 1999.... -- -- (764,657) (764,657)
--------- ------- ----------- -----------
Balance at May 1, 1999........ 5,000,000 $50,000 $(1,088,152) $(1,038,152)
========= ======= =========== ===========
</TABLE>

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

F-5
<PAGE> 63

PERFUMANIA.COM, INC.
(A WHOLLY-OWNED SUBSIDIARY OF PERFUMANIA, INC.)

STATEMENTS OF CASH FLOWS

<TABLE>
<CAPTION>
FOR THE PERIOD FROM
JANUARY 7, 1999 FOR THE
(DATE OF INCEPTION) THREE-MONTH
THROUGH PERIOD ENDED
JANUARY 30, 1999 MAY 1, 1999
------------------- ------------
<S> <C> <C>
Cash flows from operating activities:
Net loss...................................... $(273,505) $(764,657)
Adjustments to reconcile net loss to net cash
used in operating activities:
Provision for inventory.................... 11,035 16,500
Depreciation and amortization.............. 95 968
Change in operating assets and liabilities:
Credit card receivable........................ -- (21,042)
Prepaid expenses.............................. -- (50,000)
Inventory..................................... -- 44,433
Accounts payable and accrued expenses......... 66,037 (13,996)
--------- ---------
Net cash used in operating activities...... (196,338) (787,794)
--------- ---------
Cash flows from investing activities:
Purchase of property and equipment............ (14,308) (13,404)
--------- ---------
Net cash used in investing activities...... (14,308) (13,404)
--------- ---------
Cash flows from financing activities:
Net borrowings from Parent.................... 310,646 802,006
--------- ---------
Net cash provided by financing
activities............................... 310,646 802,006
--------- ---------
Net increase in cash and cash equivalents....... 100,000 808
Cash and cash equivalents at beginning of
period........................................ -- 100,000
--------- ---------
Cash and cash equivalents at end of period...... $ 100,000 $ 100,808
========= =========
</TABLE>

Supplemental cash flow information:

- No amounts were paid for interest or income taxes for the period from
January 7, 1999 (date of inception) through January 30, 1999 and for the
three-month period ended May 1, 1999.

- Inventory in the amount of approximately $220,000 and $284,000 for the
period from January 7, 1999 (date of inception) through January 30, 1999
and for the three-month period ended May 1, 1999, respectively, was
purchased from the Parent in a non-cash transaction.

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

F-6
<PAGE> 64

PERFUMANIA.COM, INC.
(A WHOLLY-OWNED SUBSIDIARY OF PERFUMANIA, INC.)

NOTES TO FINANCIAL STATEMENTS

NOTE 1. NATURE OF OPERATIONS:

perfumania.com, inc., (the "Company") is a wholly-owned subsidiary of
Perfumania, Inc. (the "Parent"), and was incorporated in the State of Florida on
January 7, 1999. The Company is an online retailer of fragrances and fragrance
related products. The Company utilizes the Parent's business relationships and
infrastructure and has relied on the Parent to provide financing for its
operations.

NOTE 2. SIGNIFICANT ACCOUNTING POLICIES:

Significant accounting principles and practices used by the Company in the
preparation of the accompanying financial statements are as follows:

FISCAL YEAR END

The Company's fiscal year ends the Saturday closest to January 31 to enable
the Company's operations to be reported in a manner which more closely coincides
with general retail reporting practices and the financial reporting needs of the
Company.

BASIC AND DILUTED NET LOSS PER SHARE

The Company computes net loss per share in accordance with the provisions
of Statement of Financial Accounting Standards No. 128, "Earnings per Share"
("SFAS 128") and SEC Staff Accounting Bulletin No. 98 ("SAB 98"). Under the
provisions of SFAS 128 and SAB 98, basic and diluted net loss per share is
computed by dividing the net loss available to common shareholders for the
period by the weighted average number of common shares outstanding for the
period. The calculation of basic and diluted net loss per share excludes shares
of common stock issuable upon exercise of employee stock options as the effect
of the exercise would be antidilutive.

MANAGEMENT ESTIMATES

The preparation of financial statements in conformity with generally
accepted accounting principles requires management to make estimates and
assumptions that affect the reported amounts of assets and liabilities and
disclosure of contingent assets and liabilities at the date of the financial
statements and the reported amounts of revenues and expenses during the
reporting period. The most significant estimates made by management in the
accompanying financial statements relate to the estimated sales returns,
inventory reserves and estimated useful lives of property and equipment. Actual
results could differ from those estimates.

MANAGEMENT FEES

Management fees reflected in the statements of operations represents shared
expenses which have been allocated to the Company by the Parent for costs
associated with resources it shares with the Parent using the proportional cost
allocation method. Such allocations include the prorata share of the rent,
utilities, facilities, maintenance, and administrative services provided by the
Parent. Prorata amounts of rent, utilities and facilities expense were
determined based on the square footage utilized by the Company

F-7
<PAGE> 65
PERFUMANIA.COM, INC.
(A WHOLLY-OWNED SUBSIDIARY OF PERFUMANIA, INC.)

NOTES TO FINANCIAL STATEMENTS -- (CONTINUED)

while administrative services charges by the Parent were determined based on the
prorata share of time spent by the Parent's administrative personnel. Although
no formal agreement existed through May 1, 1999, management believes these
allocations are reasonable. The financial statements of the Company do not
necessarily reflect the results of operations or financial position that would
have existed had the Company been independent of the Parent, however, management
believes that these fees are representative of the fair value of the services
provided.

Effective May 1, 1999, the Company entered into an intercompany services
agreement (the "Agreement") with its Parent. Under the terms of the Agreement,
the Company will pay various management fees to the Parent as follows: for
corporate services, the monthly fee is fixed at $10,000 unless monthly gross
sales exceed $50,000, at which time, the monthly fee will amount to $10,000 plus
two percent of the Company's monthly gross sales; for fulfillment services, the
fee is equal to three percent of the costs of goods sold by the Company and
serviced by the Parent; for advertising services, the fee ranges between 20% to
50% of the cost of the advertisement incurred by the Parent; for shared
facilities, the fee is equal to a proportionate share of the facility costs
incurred by the Parent, initially 15%; and for inventory purchases, the purchase
price is equal to 105% of the Parent's cost of such inventory.

MARKETING AND SALES EXPENSES

Marketing and sales expenses, which consist primarily of advertising and
promotional costs, are charged to operations as incurred.

WEB SITE DEVELOPMENT EXPENSES

Web site development expenses consist principally of expenses incurred for
the development of the Company's web site and are expensed as incurred. These
costs are primarily covered under a service agreement with a software and
network developer providing web hosting services (see Note 6).

BASIS OF PRESENTATION

The accompanying financial statements have been prepared on a going concern
basis, which contemplates the realization of assets and the satisfaction of
liabilities in the normal course of business. As shown in the financial
statements, the Company incurred net losses of approximately $765,000 and
$274,000 during the three-month period ended May 1, 1999 and for the period from
January 7, 1999 (date of inception) to January 30, 1999, respectively, and has a
working capital deficit of $1,065,000 at May 1, 1999. The Company is
significantly dependent on its Parent for the conduct of its operations. The
report of PricewaterhouseCoopers LLP that accompanied the Parent's audited
financial statements as of January 30, 1999 contained an explanatory paragraph
indicating factors which create substantial doubt about the Parent's ability to
continue as a going concern. Such factors include the Parent's recurring net
losses in fiscal 1999 and 1998 and a loan default, which has subsequently been
waived by the bank, on the Parent's bank line of credit agreement as a result of
its violation of certain debt covenants (see Note 8).

F-8
<PAGE> 66
PERFUMANIA.COM, INC.
(A WHOLLY-OWNED SUBSIDIARY OF PERFUMANIA, INC.)

NOTES TO FINANCIAL STATEMENTS -- (CONTINUED)

These factors among others indicate that the Company may be unable to
continue as a going concern for a reasonable period of time. The financial
statements do not include any adjustments that might result from the outcome of
this uncertainty. The Company's continuation as a going concern is dependent
upon obtaining adequate financial resources from its Parent or through a
contemplated initial public offering of its shares or otherwise. The Company
expects to have sufficient working capital from the proceeds of the initial
public offering to support its operations during the twelve-month period
subsequent to May 1, 1999, thereby making the Company financially independent of
its Parent. However, there can be no assurance that such offerings will be
successful or such resources will be available from its Parent.

The accompanying financial statements have been prepared giving retroactive
effect of a share dividend of an aggregate of 4,999,000 shares of Common Stock,
$0.01 par value, to its shareholder of record in order to effect the equivalent
of a 5,000-for-1 stock split to increase the number of shares of Common Stock
outstanding from 1,000 shares to 5,000,000 shares (see Note 8).

REVENUE RECOGNITION

Revenue from on-line retail transactions is recognized, net of discounts
and estimated returns, upon shipment of inventory.

INVENTORY

Inventory, consisting of finished goods purchased primarily from the
Parent, is stated at the lower of cost or market, cost being determined on a
moving average cost basis. The cost of inventory includes product cost and
freight charges. The Company recorded a provision of approximately $11,000 and
$17,000 for the period from January 7, 1999 (date of inception) through January
30, 1999 and for the three-month period ended May 1, 1999, respectively, to
reduce the carrying amount of inventory to its net realizable value. Provision
for potentially slow moving or damaged inventory is recorded based on
management's analysis of inventory levels and future sales forecasts.

PROPERTY AND EQUIPMENT

Property and equipment is carried at cost, less accumulated depreciation.
Depreciation is calculated using the straight-line method over the estimated
useful lives of the related assets. Costs of major additions and improvements
are capitalized and expenditures for maintenance and repairs which do not extend
the useful life of the asset are expensed when incurred. Gains or losses arising
from sales or retirements are included in income currently.

INCOME TAXES

The Company files a consolidated U.S. Federal income tax return with its
Parent. The provision for income taxes is computed as if the Company filed a
separate tax return, on a stand-alone basis.

F-9
<PAGE> 67
PERFUMANIA.COM, INC.
(A WHOLLY-OWNED SUBSIDIARY OF PERFUMANIA, INC.)

NOTES TO FINANCIAL STATEMENTS -- (CONTINUED)

The Company utilizes the asset and liability method of accounting for
deferred income taxes. Under this method, deferred tax assets and liabilities
are determined based on the difference between the financial statement and tax
bases of assets and liabilities using tax rates in effect for the year in which
the differences are expected to reverse. A valuation allowance is established
when it is more likely than not that some or all of the deferred tax assets will
not be realized.

DUE TO PARENT

Due to Parent includes amounts payable to the Parent primarily for working
capital requirements. Such amounts are due on demand. Interest is charged at
12.5% per annum. Total interest expense was $2,599 and $32,035 for the period
from January 7, 1999 (date of inception) to January 30, 1999 and for the
three-month period ended May 1, 1999, respectively.

CASH AND CASH EQUIVALENTS

The Company considers all highly liquid investments purchased with an
original maturity of three months or less to be cash equivalents.

FAIR VALUE OF FINANCIAL INSTRUMENTS

The carrying amount of cash and credit card receivable approximate fair
value as of January 30, 1999 and May 1, 1999.

RECENT ACCOUNTING PRONOUNCEMENTS

In June 1998, the Financial Accounting Standards Board issued Statement of
Financial Accounting Standards No. 133 Accounting for Derivative Instruments and
Hedging Activities ("SFAS No. 133"). Among other provisions, SFAS No. 133
establishes accounting and reporting standards for derivative instruments and
for hedging activities. It also requires that an entity recognize all
derivatives as either assets or liabilities in the statement of financial
position and measure those instruments at fair value. SFAS No. 133 is effective
for financial statements for fiscal years beginning after June 15, 1999.
Management has not determined the effect, if any, of adopting SFAS No. 133.

F-10
<PAGE> 68
PERFUMANIA.COM, INC.
(A WHOLLY-OWNED SUBSIDIARY OF PERFUMANIA, INC.)

NOTES TO FINANCIAL STATEMENTS -- (CONTINUED)

NOTE 3. PROPERTY AND EQUIPMENT:

Property and equipment includes the following:

<TABLE>
<CAPTION>
ESTIMATED
JANUARY 30, MAY 1, USEFUL LIVES
1999 1999 (IN YEARS)
----------- ------- ------------
<S> <C> <C> <C>
Furniture, fixtures and equipment........... $ -- $11,538 5-7
Computer equipment and software............. 14,308 16,174 3
------- -------
14,308 27,712
Less: Accumulated depreciation.............. (95) (1,063)
------- -------
$14,213 $26,649
======= =======
</TABLE>

NOTE 4. RELATED PARTY TRANSACTIONS:

The Company has purchased a majority of the inventory sold since inception
from the Parent at an amount equal to the Parent's cost plus five percent. For
the period from January 7, 1999 (date of inception) through January 30, 1999 and
for the three-month period ended May 1, 1999, such purchases totaled
approximately $220,000 and $284,000, respectively.

The Company is charged for various services provided by the Parent
including administrative, distribution and other services. Such charges were
approximately $30,000 and $93,000 for the period from January 7, 1999 (date of
inception) to January 30, 1999 and the three-month period ended May 1, 1999,
respectively, and are classified as management fees in the accompanying
statements of operations. Purchases of inventory and expenses charged by the
Parent are not necessarily indicative of costs and expenses which might have
been incurred had the Company been operating as a separate, or stand-alone
company. Management believes that all operating costs incurred by the Parent on
behalf of the Company are reflected in the accompanying financial statements.

The Company's former Chief Executive Officer (the "former CEO") provided
consulting services to the Company amounting to $50,000 during the period from
January 7, 1999 (date of inception) through January 30, 1999 (see Note 6). In
addition, a party related to the former CEO provided consulting services to the
Company amounting to $65,000 during the period from January 7, 1999 (date of
inception) through January 30, 1999. These consulting services were not subject
to a written consulting agreement. Management believes that these amounts are
representative of the time both parties spent in providing these consulting
services to the Company during the respective period. Both of these amounts are
included in consulting fees in the accompanying statement of operation during
the period from January 7, 1999 (data of inception) through January 30, 1999.

F-11
<PAGE> 69
PERFUMANIA.COM, INC.
(A WHOLLY-OWNED SUBSIDIARY OF PERFUMANIA, INC.)

NOTES TO FINANCIAL STATEMENTS -- (CONTINUED)

NOTE 5. INCOME TAXES:

The income tax provision differs from the amount obtained by applying the
statutory Federal income tax rate to pretax income as follows:

<TABLE>
<CAPTION>
PERIOD FROM FOR THE
JANUARY 7, 1999 THREE-MONTH
(DATE OF INCEPTION) PERIOD ENDED
TO JANUARY 30, 1999 MAY 1, 1999
------------------- ------------
<S> <C> <C>
Benefit at Federal statutory rates.............. $ (95,723) $(267,630)
State income taxes, net of Federal benefit...... (7,193) (20,105)
--------- ---------
(102,916) (287,735)
Valuation allowance............................. 102,916 287,735
--------- ---------
$ -- $ --
========= =========
</TABLE>

The primary components of temporary differences which give rise to the
Company's net deferred tax assets at January 30, 1999 and May 1, 1999 are as
follows:

<TABLE>
<CAPTION>
JANUARY 30, MAY 1,
1999 1999
----------- ---------
<S> <C> <C>
Deferred tax assets:
Net operating losses carryforward.................... $ 98,763 $ 327,283
Allowances and reserves.............................. 4,153 64,425
--------- ---------
Total deferred tax assets......................... 102,916 391,708
Deferred tax liabilities:
Property and equipment............................... -- (1,057)
--------- ---------
Net deferred tax assets.............................. 102,916 390,651
Valuation allowance.................................. (102,916) (390,651)
--------- ---------
$ -- $ --
========= =========
</TABLE>

The Company provides a valuation allowance against deferred tax assets if,
based on the weight of available evidence, it is more likely than not that some
or all of the deferred tax assets will not be realized. The Company has
established a valuation allowance against deferred tax assets of $102,916 and
$390,651 at January 30, 1999 and May 1, 1999, respectively.

The Company has Federal and State net operating loss carryforwards of
approximately $870,000, both of which will begin to expire in the year 2019.

The Company, which is a wholly owned subsidiary, participates in the
filling of a consolidated U.S. Federal income tax return of its Parent. Once the
Company is no longer a subsidiary of its Parent, the amount of net operating
loss carryforwards may decrease or become limited.

F-12
<PAGE> 70
PERFUMANIA.COM, INC.
(A WHOLLY-OWNED SUBSIDIARY OF PERFUMANIA, INC.)

NOTES TO FINANCIAL STATEMENTS -- (CONTINUED)

NOTE 6. COMMITMENTS:

Effective April 15, 1999, the Company entered into a 36 month service
agreement with a software and network developer providing web hosting services.
Pursuant to the agreement, the Company must remit 36 equal monthly installments
of $14,200. Under the term of the service agreement, in return for displaying
the network developer's corporate logo on the Company's web page, the Company
shall receive a marketing credit of $1,700 per month, resulting in a net
marketing fee of $12,500 per month. The Company is subject to an early
termination fee of $201,165 if cancelled within the first 12 months and $100,583
if cancelled after 24 months of service. The monthly service fee is expensed as
incurred and is reflected in web site development expenses in the accompanying
financial statements.

Effective May 1, 1999, the Company entered into an employment agreement
with its chief executive officer and president for a five year initial term.
Total annual base salary is $200,000. A total of 225,000 common stock options
were granted at an exercise price equal to the contemplated initial public
offering (the "Offering") price. These Options will vest immediately at the date
of grant. Upon change of control of the Company, the president will be entitled
to a lump sum payment equal to three times the annual base salary. Upon
termination without cause the president will be entitled to receive a lump sum
payment equal to the base salary through the end of the initial term of his
employment agreement.

NOTE 7. STOCK OPTION PLAN:

Effective May 1, 1999 the Company adopted the 1999 Incentive Stock Option
Plan (the "Plan"). Officers, key employees and nonemployee consultants may be
granted stock options, stock appreciation rights, stock awards, performance
shares and performance units under the Plan. The Company has reserved 1,000,000
shares of common stock for issuance under the Plan, subject to the share
dividend effective upon the consummation of the Offering and subject to further
antidilution adjustments.

Prior to establishment of a Compensation Committee (the "Committee") of the
Board of Directors, the Plan will be administered by the Board of Directors of
the Company. The Board of Directors or the Committee will be authorized to
determine, among other things, the key employees to whom, and the time at which,
options and other benefits are to be granted, the number of shares subject to
each option, the applicable vesting schedule and the exercise price. The Board
of Directors or the Committee will also determine the treatment to be afforded
to a participant in the Plan in the event of termination of employment for any
reason, including death, disability or retirement. Under the Plan the maximum
term of an incentive stock option is 10 years and the maximum term of a
nonqualified stock option is 10 years.

The Board of Directors has the power to amend the Plan from time to time.
Shareholder approval of an amendment is only required to the extent that it is
necessary to maintain the Plan's status as a protected plan under applicable
securities laws or the Plan's status as a qualified plan under applicable tax
laws.

Options to purchase an aggregate of 630,000 shares have been granted under
the Plan to employees (400,000 shares) and non-employee director nominees
(230,000 shares) of

F-13
<PAGE> 71
PERFUMANIA.COM, INC.
(A WHOLLY-OWNED SUBSIDIARY OF PERFUMANIA, INC.)

NOTES TO FINANCIAL STATEMENTS -- (CONTINUED)

the Company at an exercise price equal to the Offering price of the common stock
offered hereby. These options have a total term of ten years. Out of those
630,000 options granted, options to purchase 135,000 shares vested immediately
on the date of grant and options to purchase the remaining 495,000 shares will
vest as follows: 16%, 34% and 50% of the total number of shares granted on the
first, second and third anniversary of the date of grant.

Statement of Financial Accounting Standards No. 123, Accounting for Stock
Based Compensation ("SFAS No. 123"), encourages, but does not require, companies
to record compensation cost for stock-based employee compensation plans at fair
value. The Company will measure compensation expense for the stock Plans using
the intrinsic value method prescribed by Accounting Principal Board Opinion No.
25, "Accounting for Stock Issued to Employees" ("APB No. 25"). Accordingly,
compensation expense for qualified and non-qualified employee stock options
granted under the Plan is equal to the difference between the fair market value
of the stock at the date of grant and the amount an employee must pay to acquire
the stock. For options granted to employees which were outstanding prior to the
Offering, the compensation expense is equal to the difference between the fair
market value of the stock upon consummation of the Offering and the amount an
employee must pay to acquire the stock. For options granted to non-employee
directors or other than employees in exchange for goods or services,
compensation cost is measured in accordance with SFAS No. 123.

NOTE 8. SUBSEQUENT EVENTS:

On June 7, 1999 the Company's shareholder approved an increase in the
number of authorized shares of common stock from 1,000 shares to twenty million
shares. The Company also authorized five million shares, par value $0.01 per
share, of preferred stock.

Effective June 7, 1999, the Company declared a share dividend of an
aggregate of 4,999,000 shares of common stock, $0.01 par value, payable to its
shareholder of record in order to effect the equivalent of a 5,000-for-1 stock
split to increase the number of shares of common stock outstanding from 1,000
shares to 5,000,000 shares.

On July 14, 1999, Perfumania, Inc. obtained a waiver of default from the
bank as of and for the year ended January 30, 1999 through September 30, 1999.
The bank agreed to less restrictive covenants provided that certain events
commence prior to September 30, 1999. One such event includes that the Company
is to receive at least $10 million from the Offering proceeds, of which $2
million is to be repaid to Perfumania, Inc.

F-14
<PAGE> 72

INSIDE BACK COVER

THE ENTIRE BACKGROUND OF THIS PAGE IS A PICTURE OF A COMPUTER KEYBOARD WITH
THE FOCUS ON THE "ENTER" KEY. THIS IMAGE IS GRAY WITH AN ELECTRIC BLUE COLORED
"ENTER" KEY.

AT THE TOP OF THIS PAGE IS THE WEB SITE ADDRESS, WWW.PERFUMANIA.COM.

LINED UP ON THE LEFT SIDE OF THIS PAGE (STACKED) IS "SHOP 24 (UNDERLINED)
HOURS A DAY", "7 (UNDERLINED) DAYS A WEEK", "365 (UNDERLINED) DAYS A YEAR" AND
"GREAT LOW PRICES (UNDERLINED)".

JUST BELOW "GREAT LOW PRICES" (STACKED) IS "CONVENIENT (UNDERLINED)
SHOPPING", "SAFE, SECURE (UNDERLINED) TRANSACTIONS", "FREE (UNDERLINED) GROUND
SHIPPING IN THE CONTINENTAL U.S."

F-15
<PAGE> 73

------------------------

PROSPECTUS
------------------------

3,500,000 SHARES OF COMMON STOCK

PERFUMANIA.COM, INC. [LOGO]

-------------------------

CRUTTENDEN ROTH INCORPORATED

PENNSYLVANIA MERCHANT GROUP

, 1999
<PAGE> 74

PART II

INFORMATION NOT REQUIRED IN PROSPECTUS

ITEM 13. OTHER EXPENSES OF ISSUANCE AND DISTRIBUTION

The following table sets forth the estimated expenses, other than
underwriting discounts and commissions, in connection with the issuance and
distribution of the shares of common stock being registered, all of which we
will pay:

<TABLE>
<S> <C>
SEC Registration fee........................................ $ 11,121
NASD filing fee............................................. 4,501
American Stock Exchange listing fee......................... 27,000
Printing and engraving...................................... 30,000
Legal fees.................................................. 250,000
Blue Sky fees and expenses.................................. 20,000
Accounting fees............................................. 125,000
Transfer Agent and Registrar fees and expenses.............. 10,000
Miscellaneous............................................... 22,594
--------
Total.................................................. 500,216
========
</TABLE>

All amounts except SEC registration fee and the NASD filing fee are
estimated.

ITEM 14. INDEMNIFICATION OF DIRECTORS AND OFFICERS

The articles of incorporation and bylaws provide that perfumania.com
indemnify any person who was or is a party or is threatened to be made a party
to any threatened, pending or completed proceeding by reason of the fact that he
is or was a director or officer of perfumania.com or any other person designated
by the board of directors which may include any person serving at the request of
perfumania.com as a director, officer, employee, agent, fiduciary or trustee of
another corporation, partnership, joint venture, trust, employee benefit plan or
other entity or enterprise, in each case, against certain liabilities including
damages, judgments, amounts paid in settlement, fines, penalties and expenses
including attorneys' fees and disbursements, except where such indemnification
is expressly prohibited by applicable law, where such person has engaged in
willful misconduct or recklessness or where such indemnification has been
determined to be unlawful. Such indemnification as to expenses is mandatory to
the extent the individual is successful on the merits of the matter. Florida law
permits perfumania.com to provide similar indemnification to employees and
agents who are not directors or officers. The determination of whether an
individual meets the applicable standard of conduct may be made by the
disinterested directors, independent legal counsel or the shareholders. Florida
law also permits indemnification in connection with a proceeding brought by or
in the right of perfumania.com to procure a judgment in its favor. Insofar as
indemnification for liabilities arising under the SEC may be permitted to
directors, officers, or persons controlling perfumania.com pursuant to the
foregoing provisions, perfumania.com has been informed that in the opinion of
the SEC such indemnification is against public policy as expressed in the
Securities Act of 1933 and is therefore unenforceable.

II-1
<PAGE> 75

ITEM 15. RECENT SALES OF UNREGISTERED SECURITIES

perfumania.com issued an aggregate of 1,000 shares of its common stock to
Perfumania, Inc. in January 1999. The foregoing securities were all issued
without registration under the Securities Act of 1933, as amended, by reason of
the exemption from registration afforded by the provisions of Section 4(2)
thereof, as transactions by an issuer not involving public offering, Perfumania,
Inc. having consented to the imposition of restrictive legends upon the
certificates evidencing such securities.

ITEM 16. EXHIBITS AND FINANCIAL STATEMENT SCHEDULES

(a) EXHIBITS

The following is a list of exhibits filed as part of this Registration
Statement.

<TABLE>
<CAPTION>
EXHIBIT
- -------
<C> <S>
1.1 Form of Underwriting Agreement.*
3.1 Amended and Restated Certificate of Incorporation
3.2 Bylaws
5.1 Opinion of Greenberg Traurig regarding legality of the
shares of Common Stock being registered*
10.1 1999 Incentive Stock Option Plan(1)
10.2 Intercompany Services Agreement dated as of May 1, 1999 by
and between perfumania.com, inc. and Perfumania, Inc.
10.3 Technology Transfer and License Agreement dated as of May 1,
1999 by and between the perfumania.com, inc. and Perfumania,
Inc.
10.4 Employment Agreement of Rachmil Lekach(1)
10.5 Employment Agreement of Richard Veliz(1)
10.6 Employment Agreement of Michael Amideo(1)
23.1 Consent of PricewaterhouseCoopers LLP
23.2 Consent of Greenberg Traurig (included in its opinion filed
as Exhibit 5.1 hereto).*
23.3 Consent of director nominee Daniel Sawicki
23.4 Consent of director nominee Daniel Manella
24.1 Power of Attorney (included on signature page to this
Registration Statement).
27.1 Financial Data Schedule, January 30, 1999 (for SEC only).
27.2 Financial Data Schedule, May 1, 1999 (for SEC only).
</TABLE>

- -------------------------

* To be filed by amendment.

(1) Management compensation plan or arrangement

(b) FINANCIAL STATEMENT SCHEDULES

All schedules for which provision is made in the applicable accounting
regulations of the SEC are not required under the related instructions or are
not applicable, and therefore have been omitted.

II-2
<PAGE> 76

ITEM 17. UNDERTAKINGS

(i) The undersigned Registrant hereby undertakes to provide to the
Underwriters at the closing specified in the Underwriting Agreement certificates
in such denominations and registered in such names as required by the
Underwriters to permit prompt delivery to each purchaser.

(ii) Insofar as indemnification for liabilities arising under the
Securities Act may be permitted to directors, officers and controlling persons
of the Registrant pursuant to the foregoing provisions, or otherwise, the
Registrant has been advised that in the opinion of the Commission such
indemnification is against public policy as expressed in the Securities Act and
is, therefore, unenforceable. In the event that a claim for indemnification
against such liabilities (other than the payment by the Registrant of expenses
incurred or paid by a director, officer or controlling person of the Registrant
in the successful defense of any action, suit or proceeding) is asserted by such
director, officer or controlling person in connection with the securities being
registered, the Registrant will, unless in the opinion of its counsel the matter
has been settled by controlling precedent, submit to a court of appropriate
jurisdiction the question whether such indemnification by it is against public
policy as expressed in the Securities Act and will be governed by the final
adjudication of such issue.

(iii) The undersigned Registrant hereby undertakes that:

(1) For purposes of determining any liability under the Securities
Act, the information omitted from the form of prospectus filed as part of
this Registration Statement in reliance upon Rule 430A and contained in a
form of prospectus filed by the Registrant pursuant to Rule 424(b)(1) or
(4) or 497(h) under the Securities Act shall be deemed to be part of this
Registration Statement as of the time it was declared effective.

(2) For the purpose of determining any liability under the Securities
Act, each post-effective amendment that contains a form of prospectus shall
be deemed to be a new registration statement relating to the securities
offered therein, and the offering of such securities at that time shall be
deemed to be the initial bona fide offering thereof.

II-3
<PAGE> 77

SIGNATURES

Pursuant to the requirements of the Securities Act of 1933, as amended, the
registrant has duly caused this Registration Statement to be signed on its
behalf by the undersigned, thereunto duly authorized, in Miami, Florida, on July
28, 1999.

perfumania.com, inc.

By: /s/ RACHMIL LEKACH

-----------------------------------

Rachmil Lekach

Chairman of the Board of Directors,
President and Chief Executive
Officer

PURSUANT TO THE REQUIREMENTS OF THE SECURITIES ACT OF 1933, AS AMENDED,
THIS REGISTRATION STATEMENT HAS BEEN SIGNED BELOW BY THE FOLLOWING PERSONS IN
THE CAPACITIES AND ON THE DATES INDICATED.

Each person in so signing also makes, constitutes and appoints Rachmil
Lekach, and each of them acting alone, his true and lawful attorney-in-fact,
with full power of substitution, to execute and cause to be filed with the
Securities and Exchange Commission pursuant to the requirements of the
Securities Act of 1933, as amended, any and all amendments and post-effective
amendments to this Registration Statement, and including any Registration
Statement for the same offering that is to be effective upon filing pursuant to
Rule 462(b) under the Securities Act, with exhibits thereto and other documents
in connection therewith, and hereby ratifies and confirms all that said
attorney-in-fact or his substitute or substitutes may do or cause to be done by
virtue hereof.

<TABLE>
<CAPTION>
NAME CAPACITY DATE
---- -------- ----
<C> <S> <C>
/s/ RACHMIL LEKACH Chairman of the Board of July 28, 1999
- --------------------------------------------------- Directors, President
Rachmil Lekach and Chief Executive
Officer (Principal
Executive Officer)

/s/ MICHAEL AMIDEO Chief Financial Officer July 28, 1999
- --------------------------------------------------- and Chief Operating
Michael Amideo Officer (Principal
Financial and
Accounting Officer)
</TABLE>

II-4

<PAGE> 1
EXHIBIT 10.1

PERFUMANIA.COM, INC.
1999 INCENTIVE STOCK OPTION PLAN

ARTICLE I
ESTABLISHMENT OF THE PLAN

perfumania.com, inc. (the "Corporation") hereby establishes this 1999
Incentive Stock Option Plan (the "Plan") upon the terms and conditions
hereinafter stated.

ARTICLE II
PURPOSE OF THE PLAN

2.01 This Plan is intended to secure for the Corporation and its
stockholders the benefits arising from ownership of the Corporation's common
stock by those responsible for its future growth. The Plan is designed to help
attract and retain superior Officers, Directors, Employees, and Advisors, to
provide such personnel with an additional incentive to contribute to the success
of the Corporation, and to promote a closer identity of interests between the
Corporation's Shareholders and those responsible for its operations and
management. All Incentive Stock Options issued under the Plan are intended to
comply with the requirements of Section 422 of the Code, and the regulations
thereunder, and all provisions under the Plan relating to Incentive Stock
Options shall be read, interpreted and applied with that purpose in mind.
Capitalized terms are defined in Article III, below.

ARTICLE III
DEFINITIONS

3.01 "Acceleration Price" is the excess over the Option Price of
the highest of the following on the date of a Change in Control: (a) the highest
reported sales price of the Common Stock within the sixty days preceding the
date of the Change in Control, as reported on any securities exchange or
quotation system upon which the Common Stock is traded, (b) the highest tender
offer price paid for the Common Stock, and (c) any cash merger or similar price.
For Incentive Stock Options and Stock Appreciation Rights granted with respect
to Incentive Stock Options, the Acceleration Price is limited to the spread
between the Fair Market Value on the date of the purchase of such awards by the
Company and the Option Price.

3.02 "Acquiring Person" shall mean any Person who is or becomes a
"beneficial owner" (as defined in Rule 13d-3 of the Exchange Act) of securities
of the Company representing twenty-five percent (25%) or more of the combined
voting power of the Company's then outstanding voting securities, unless such
Person has filed Form 13G and all required amendments thereto with respect to
its holdings and continues to hold such securities for

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<PAGE> 2

investment in a manner qualifying such Person to utilize Form 13G for reporting
of ownership.

3.03 "Advisor" means any consultant, agent, or independent
contractor who is neither a Director nor an Employee.

3.04 "Affiliate" and "Associate" shall have the respective meanings
ascribed to such terms in Rule 12b-2 of the General Rules and Regulations under
the Exchange Act as in effect on the date hereof.

3.05 "Award" means an Option or associated Stock Appreciation Right
granted pursuant to the Article VIII or Article IX of this Plan, respectively.

3.06 "Board" means the Board of Directors of the Corporation.

3.07 "Cause" shall mean termination because of such person's
dishonesty, incompetence, willful misconduct, breach of fiduciary duty involving
personal profit, intentional failure to perform stated duties, willful violation
of any law, rule, or regulation (other than traffic violations or similar
offenses) or final cease-and-desist order.

3.08 "Change in Control" shall mean a change in control of the
Corporation of a nature that would be required to be reported in response to
Item 6(e) of Schedule 14A of Regulation 14A promulgated under the Exchange Act.

In addition, without limitation, a Change in Control shall be
deemed to have occurred if (i) any Person is or becomes the "beneficial owner"
(as defined in Rule 13d-3 under the Exchange Act), directly or indirectly, of
securities of the Corporation representing twenty-five percent (25%) or more of
the combined voting power of the Corporation's then outstanding securities, (ii)
during any period of two consecutive years individuals who at the beginning of
such period constitute the Board of the Corporation cease for any reason to
constitute at least a majority thereof or to be Continuing Directors, unless the
election, or the nomination for election by the Corporation's stockholders, of
each director who was not a director at the date of grant has been approved in
advance by directors representing at least two-thirds of the directors then in
office who were directors at the beginning of the period, (iii) the stockholders
of the Corporation approve a merger or consolidation of the Corporation with any
other entity, other than a merger or consolidation that would result in the
voting securities of the Corporation outstanding therefore continuing to
represent (either by remaining outstanding or by being converted into voting
securities of the surviving entity) more than 50% of the combined voting power
of the voting securities of the Corporation outstanding immediately after such
merger or consolidation; or (iv) the stockholders of the Corporation approve a
plan of complete liquidation of the Corporation or an agreement for the sale or
disposition by the Corporation of all or substantially all of the Corporation's
assets. If any of the events enumerated in clauses (i) through (iv) occur, the
Board shall determine the effective date of the Change in Control resulting
therefrom for purposes of the Plan. Notwithstanding anything herein to the
contrary, the Corporation will not

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<PAGE> 3

be deemed to have experienced a Change in Control following the initial public
offering of its stock.

3.09 "Code" means the Internal Revenue Code of 1986, as amended.

3.10 "Committee" means a committee of two or more directors
appointed by the Board pursuant to Article IV hereof.

3.11 "Common Stock" means shares of stock, $ 0.01 par value per
share, of the Corporation.

3.12 "Continuing Directors" shall mean any member of the Board who
was a member of the Board prior to the date hereof, and any successor of a
Continuing Director while such successor is a member of the Board who is not an
Acquiring Person or an Affiliate or Associate of an Acquiring Person or of any
such Affiliate or Associate and is recommended or elected to succeed the
Continuing Director by a majority of the Continuing Directors.

3.13 "Disability" means any physical or mental impairment which
qualifies an individual for disability benefits under the applicable long-term
disability plan maintained by the Corporation or, if no such plan applies, which
would qualify such individual for disability benefits under the long-term
disability plan maintained by the Corporation, if such individual were covered
by that plan.

3.14 "Effective Date" means the day upon which the Board approves
this Plan.

3.15 "Employee" means any person who is employed by the Corporation
or is an Officer of the Corporation, but not including directors who are not
also Officers of or otherwise employed by the Corporation.

3.16 "Exchange Act" means the Securities Exchange Act of 1934, as
amended.

3.17 "Fair Market Value" means, with respect to a share of Common
Stock, the average of the high and low quoted sales price on the date in
question (or, if there is no reported sale on such date, on the last preceding
date on which any reported sale occurred) of a Share on the Composite Tape for
the New York Stock Exchange-Listed Stocks, or, if on such date the Shares are
not quoted on the Composite Tape, on the New York Stock Exchange, or, if the
Shares are not listed or admitted to trading on such Exchange, on the principal
United States securities exchange registered under the Securities Exchange Act
of 1934 on which the Shares are listed or admitted to trading, or, if the Shares
are not listed or admitted to trading on any such exchange, the mean between the
closing high bid and low asked quotations with respect to a Share on such date
on the NASDAQ System, or any similar system then in use, or, if no such
quotations are available, the fair market value on such date of a Share as the
Board shall determine.

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<PAGE> 4

3.18 "Incentive Stock Option" means any Option granted under this
Plan which the Board intends (at the time it is granted) to be an incentive
stock option within the meaning of Section 422 of the Code or any successor
thereto.

3.19 "Non-Employee Director" means a member of the Board of the
Corporation who is not an Officer or Employee of the Corporation.

3.20 "Non-Qualified Option" means any Option granted under this
Plan which is not an Incentive Stock Option.

3.21 "Offering" means the initial public offering of Common Stock
by the Corporation.

3.22 "Officer" means an Employee whose position in the Corporation
is that of a corporate officer, as determined by the Board.

3.23 "Option" means a right granted under this Plan to purchase
Common Stock.

3.24 "Option Price" means the purchase price of each share of
Common Stock subject to an Option.

3.25 "Optionee" means a current or former Employee, Advisor, or
Non-Employee Director to whom an Option is granted under the Plan.

3.26 "Person" shall mean any individual, corporation, partnership,
group, association or other "person", as such term is used in Section 13(d) and
14(d) of the Exchange Act.

3.27 "Retirement" means a termination of employment which
constitutes a "retirement" under any applicable qualified pension benefit plan
maintained by the Corporation, or, if no such plan is applicable, which would
constitute "retirement" under the Corporation's pension benefit plan, if such
individual were a participant in that plan, or under any applicable policy of
the Corporation.

3.28 "Share" means shares of Common Stock.

ARTICLE IV
ADMINISTRATION OF THE PLAN

4.01 DUTIES OF THE COMMITTEE. The Plan shall be administered and
interpreted by the Committee, as may be appointed from time to time by the Board
or, if the Committee has not been appointed, by the full board. The Committee
may adopt, amend and rescind such rules, regulations and procedures as it deems
advisable, including, without limitation, rules, regulations

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<PAGE> 5

and procedures which (i) deal with satisfaction of an Optionee's tax withholding
obligation pursuant to Section 13.02 hereof, (ii) include arrangements to
facilitate the Optionee's ability to borrow funds for payment of the exercise or
purchase price of an Award, if applicable, from securities brokers and dealers,
and (iii) include arrangements which provide for the payment of some or all of
such exercise or purchase price by delivery of previously-owned shares of Common
Stock or other property and/or by withholding some of the shares of Common Stock
which are being acquired. Any decision or action taken or omitted to be taken by
the Committee, arising out of or in connection with the construction,
administration, interpretation and effect of the Plan and of its rules and
regulations, shall, to the extent permitted by law, be within its absolute
discretion (except as otherwise specifically provided herein) and shall be
conclusive and binding upon all Grantees and any person claiming under or
through any Grantee.

4.02 AUTHORITY TO GRANT AWARDS. Without limiting the generality of
Section 4.01, the Committee shall have plenary authority, subject to the
provisions of the Plan, to grant Incentive Stock Options, Nonstatutory Stock
Options and Stock Appreciation Rights and to determine to whom Options and Stock
Appreciation Rights shall be granted and the number of shares subject thereto,
the Term of each Option, and the terms of such awards, and the waiver or
acceleration thereof, including to accelerate the exercisability or vesting of
all or any portion of any Option or to extend the period during which an Option
is exercisable, provided that no Incentive Stock Option shall be granted which
is exercisable after the expiration of ten (10) years from the date it is
granted.

4.03 APPOINTMENT AND OPERATION OF THE COMMITTEE. The members of the
Committee shall consist of not less than two (2) members and shall be appointed
by, and will serve at the pleasure of, the Board. No member of the Committee
shall be employed by the Company or any of its Subsidiaries and each shall
qualify in all respects as a "disinterested person" as defined in Rule 16b-3
under the Exchange Act. The Committee shall act by vote or written consent of a
majority of its members. Subject to the express provisions and limitations of
the Plan, the Committee may adopt such rules, regulations and procedures as it
deems appropriate for the conduct of its affairs. It may appoint one of its
members to be chairman and any person, whether or not a member, to be its
secretary or agent. If no Committee is appointed, then the full Board shall be
the Committee for purposes of Plan administration.

4.04 REVOCATION FOR MISCONDUCT. The Board or the Committee may by
resolution immediately revoke, rescind and terminate any Option, or portion
thereof, to the extent not yet vested, previously granted or awarded under this
Plan to any Officer, Director, Employee or Advisor who is discharged from the
employ of the Corporation for Cause.

4.05 LIMITATION ON LIABILITY. Neither the members of the Board nor
any member of the Committee shall be liable for any action or determination made
in good faith with respect to the Plan, any rule, regulation or procedure
adopted by it pursuant thereto or any Awards granted under it in accordance with
the provisions of the Articles of Incorporation of the Corporation. If a member
of the Board or the Committee is a party or is threatened to be made a party to
any

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<PAGE> 6

threatened, pending or completed action, suit or proceeding, whether civil,
criminal, administrative or investigative, by reason of anything done or not
done by him in such capacity under or with respect to the Plan, the Corporation
shall, subject to the requirements of the Corporation's Articles of
Incorporation and/or Bylaws and of applicable laws and regulations, indemnify
such member against all liabilities and expenses (including attorneys' fees),
judgments, fines and amounts paid in settlement actually and reasonably incurred
by him in connection with such action, suit or proceeding if he acted in good
faith and in a manner he reasonably believed to be in the best interests of the
Corporation and/or its Subsidiary Companies and, with respect to any criminal
action or proceeding, had no reasonable cause to believe his conduct was
unlawful.

4.06 COMPLIANCE WITH LAW AND REGULATIONS. All Awards granted
hereunder shall be subject to all applicable federal and state laws, rules and
regulations and to such approvals by any government or regulatory agency as may
be required. The Corporation shall not be required to issue or deliver any
certificates for shares of Common Stock prior to the completion of any
registration or qualification of or obtaining of consents or approvals with
respect to such shares under any federal or state law or any rule or regulation
of any government body, which the Corporation shall, in its sole discretion,
determine to be necessary or advisable. Moreover, no Option may be exercised if
such exercise would be contrary to applicable laws and regulations.

4.07 RESTRICTIONS ON TRANSFER. The Corporation may place a legend
upon any certificate representing shares acquired pursuant to an Award granted
hereunder noting that the transfer of such shares may be restricted.

ARTICLE V
ELIGIBILITY

Incentive Stock Options and Stock Appreciation Rights may be granted to
such Employees of the Corporation as may be designated from time to time by the
Board or the Committee. Non-Employee Directors and Advisors to the Corporation
shall be eligible to receive only Non-Qualified Options pursuant to Section 8.02
of the Plan or Stock Appreciation Rights under Section 9.01 of the Plan.

ARTICLE VI
COMMON STOCK COVERED BY THE PLAN

6.01 OPTION SHARES. The aggregate number of shares of Common Stock
which may be issued pursuant to this Plan, subject to adjustment as provided in
Article X, shall be one million (1,000,000) shares of Common Stock. None of such
shares shall be the subject of more than one Award at any time, but if an Option
as to any shares is surrendered before exercise, or expires or terminates for
any reason without having been exercised in full, or for any other reason ceases
to be exercisable, the number of shares covered thereby shall again become
available for

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<PAGE> 7

grant under the Plan as if no Awards had been previously granted with respect to
such shares.

6.02 SOURCE OF SHARES. The shares of Common Stock issued under the
Plan may be authorized but unissued shares, treasury shares or shares purchased
by the Corporation on the open market or from private sources for use under the
Plan.

6.03 SHARES SURRENDERED UPON EXERCISE OF STOCK APPRECIATION RIGHTS.
Shares as to which there is a surrender in whole or in part of an Option upon
the exercise of a Stock Appreciation Right shall not again be available for
grant of Options. Shares of Common Stock delivered upon the exercise of a Stock
Appreciation Right shall be provided from Common Stock held in the Company's
treasury which is not reserved for some other purpose or from authorized and
unissued Common Stock which is not reserved for some other purpose.

ARTICLE VII
DETERMINATION OF AWARDS

7.01 DETERMINATION OF AWARDS. The Board or the Committee shall, in
its discretion, determine from time to time the recipients of Awards under the
Plan, the number of shares of Common Stock subject to each Award, whether each
Option will be an Incentive Stock Option or a Non-Qualified Stock Option and the
exercise price of an Option. In making all such determinations there shall be
taken into account the duties, responsibilities and performance of each
respective recipient, his present and potential contributions to the growth and
success of the Corporation, his salary and such other factors deemed relevant to
accomplishing the purposes of the Plan.

ARTICLE VIII
OPTIONS

Each Option granted hereunder shall be on the following terms and
conditions:

8.01 STOCK OPTION AGREEMENT. The proper Officers on behalf of the
Corporation and each Optionee shall execute a Stock Option Agreement in the form
provided by the Corporation which shall set forth the total number of shares of
Common Stock to which it pertains, the exercise price, whether it is a
Non-Qualified Option or an Incentive Stock Option, and such other terms,
conditions, restrictions and privileges as the Board or the Committee in each
instance shall deem appropriate, provided they are consistent with the terms,
conditions and provisions of this Plan. Each Optionee shall receive a copy of
his executed Stock Option Agreement.

8.02 OPTION EXERCISE PRICE.

(A) INCENTIVE STOCK OPTIONS. The Option Price for an
Incentive Stock Option

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<PAGE> 8

shall be the greater of par value or at least one hundred percent (100%) of the
Fair Market Value of a share of Common Stock at the time such Incentive Stock
Option is granted, except as provided in Section 8.09(b).

(B) NON-QUALIFIED OPTIONS. The Option Price for a
Non-Qualified Option shall be established by the Committee at the time of grant
but in no event shall be less than 50% of the Fair Market Value at the time of
grant.

8.03 VESTING AND EXERCISE OF OPTIONS.

(A) GENERAL RULES. Unless otherwise specified in the
Stock Option Agreement, Incentive Stock Options and Non-Qualified Options
granted to Employees shall become vested and exercisable over a three (3) year
vesting schedule in the following manner: Options shall vest and become
exercisable with respect to one-sixth (1/6) of the total number of shares
subject to the Option on the one year anniversary of the date of the grant of
the Option, with respect to one- third (1/3) of the total number of shares
subject to an Option on the two year anniversary of the date of the grant of the
Option, and with respect to the remaining one-half (1/2) of the shares subject
to the Option on the three year anniversary of the date of the grant of the
Option. Notwithstanding the foregoing, no vesting shall occur after an
Employee's employment or service, or a Non-Employee Director's service, with the
Corporation is terminated for any reason other than his death or Disability. In
determining the number of shares of Common Stock with respect to which Options
are vested and/or exercisable, fractional shares will be rounded up to the
nearest whole number if the fraction is 0.5 or higher, and down if it is less.

(B) ACCELERATED VESTING. Unless the Stock Option
Agreement provides otherwise at the time an Option is granted, all Options and
any associated Stock Appreciation Rights granted under this Plan shall become
vested and exercisable in full on the date an Optionee terminates his employment
with the Corporation, or service as a Non-Employee Director, because of his
death or Disability. All Options hereunder shall become immediately vested and
exercisable in full upon a Change in Control or on the date an Optionee
terminates his employment with the Corporation, or service as a Non-Employee
Director due to Retirement if, as of such date of such Change in Control of the
Corporation or Retirement, such treatment is either authorized or is not
prohibited by applicable laws and regulations.

(C) GRANTEE PURCHASE ELECTION. Upon a Change in Control,
Grantees may elect to have the Company purchase the Options as to which no stock
appreciation rights have been granted for cash for a period of ninety (90) days
following a Change in Control at the Acceleration Price

8.04 DURATION OF OPTIONS.

(A) GENERAL RULE. Except as provided in Sections 8.04(b)
and 8.09, each

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<PAGE> 9

Option or portion thereof or Stock Appreciation Right granted to an Optionee
shall be exercisable at any time on or after it vests and until the earlier of
(i) ten (10) years after its date of grant or (ii) one (1) year after the date
on which the Optionee ceases to be employed by the Corporation or serve as a
Non-Employee Director, unless the Board or the Committee in its discretion
decides at the time of grant or thereafter to extend such period of exercise
upon termination of employment or service from three (3) months to a period not
exceeding five (5) years.

(B) EXCEPTIONS. If an Employee dies while in the employ
of the Corporation or terminates employment with the Corporation as a result of
Disability without having fully exercised his Options, the Optionee or the
executors, administrators, legatees or distributees of his estate shall have the
right, during the twelve-month period following the earlier of his death or
termination due to Disability, to exercise such Options. If a Non-Employee
Director dies while serving as a Non-Employee Director or terminates his service
to the Corporation as a result of Disability without having fully exercised his
Options, the Non-Employee Director or the executors, administrators, legatees or
distributees of his estate shall have the right, during the twelve-month period
following the earlier of his death or termination due to Disability, to exercise
such Options. No Option shall be exercisable more than ten (10) years from the
date it was granted. In the event of Retirement, an Employee or Non-Employee
Director shall be entitled to the same time period set forth above in this
Section 8.04(b) to exercise an Option if, as of the date of such Retirement,
such treatment is either authorized or is not prohibited by applicable laws and
regulations.

8.05 NONASSIGNABILITY. Options shall not be transferable by an
Optionee except by will or the laws of descent or distribution, and during an
Optionee's lifetime shall be exercisable only by such Optionee or the Optionee's
guardian or legal representative. Notwithstanding the foregoing, or any other
provision of this Plan, an Optionee who holds Non-Qualified Options may transfer
such Options to his or her spouse, lineal ascendants, lineal descendants, or to
a duly established trust for the benefit of one or more of these individuals.
Options so transferred may thereafter be transferred only to the Optionee who
originally received the grant or to an individual or trust to whom the Optionee
could have initially transferred the Option pursuant to this Section 8.05.
Options which are transferred pursuant to this Section 8.05 shall be exercisable
by the transferee according to the same terms and conditions as applied to the
Optionee.

8.06 MANNER OF EXERCISE. Options may be exercised in part or in
whole and at one time or from time to time. The procedures for exercise shall be
set forth in the written Stock Option Agreement.

8.07 PAYMENT FOR SHARES. Payment in full of the purchase price for
shares of Common Stock purchased pursuant to the exercise of any Option shall be
made to the Corporation upon exercise of the Option. All shares sold under the
Plan shall be fully paid and nonassessable. Payment for shares may be made by
the Optionee, (a) in cash, (b) by delivering

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<PAGE> 10
shares of Common Stock (including shares acquired pursuant to the exercise of
an Option) or other property equal in Fair Market Value to the purchase price of
the shares to be acquired pursuant to the Option, or (c) by any combination of
the foregoing.

8.08 VOTING AND DIVIDEND RIGHTS. No Optionee shall have any voting
or dividend rights or other rights of a stockholder in respect of any shares of
Common Stock covered by an Option prior to the time that his name is recorded on
the Corporation's stockholder ledger as the holder of record of such shares
acquired pursuant to an exercise of an Option.

8.09 ADDITIONAL TERMS APPLICABLE TO INCENTIVE STOCK OPTIONS. All
Options issued under the Plan as Incentive Stock Options will be subject, in
addition to the terms detailed in Sections 8.01 to 8.08 above, to those
contained in this Section 8.09.

(A) Notwithstanding any contrary provisions contained
elsewhere in this Plan and as long as required by Section 422 of the Code, the
aggregate Fair Market Value, determined as of the time an Incentive Stock Option
is granted, of the Common Stock with respect to which Incentive Stock Options
are exercisable for the first time by the Optionee during any calendar year
under this Plan, and stock options that satisfy the requirements of Section 422
of the Code under any other stock option plan or plans maintained by the
Corporation (or any parent or Subsidiary Company), shall not exceed $100,000.

(B) LIMITATION ON TEN PERCENT STOCKHOLDERS. The price at
which shares of Common Stock may be purchased upon exercise of an Incentive
Stock Option granted to an individual who, at the time such Incentive Stock
Option is granted, owns, directly or indirectly, more than ten percent (10%) of
the total combined voting power of all classes of stock issued to stockholders
of the Corporation, shall be no less than one hundred and ten percent (110%) of
the Fair Market Value of a share of the Common Stock of the Corporation at the
time of grant, and such Incentive Stock Option shall by its terms not be
exercisable after the earlier of the date determined under Section 8.03 or the
expiration of five (5) years from the date such Incentive Stock Option is
granted.

(C) NOTICE OF DISPOSITION; WITHHOLDING; ESCROW. An
Optionee shall immediately notify the Corporation in writing of any sale,
transfer, assignment or other disposition (or action constituting a
disqualifying disposition within the meaning of Section 421 of the Code) of any
shares of Common Stock acquired through exercise of an Incentive Stock Option,
within two (2) years after the grant of such Incentive Stock Option or within
one (1) year after the acquisition of such shares, setting forth the date and
manner of disposition, the number of shares disposed of and the price at which
such shares were disposed of. The Corporation shall be entitled to withhold from
any compensation or other payments then or thereafter due to the Optionee such
amounts as may be necessary to satisfy any withholding requirements of federal
or state law or regulation and, further, to collect from the Optionee any
additional amounts which may be required for such purpose. The Committee may, in
its discretion, require shares of

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<PAGE> 11

Common Stock acquired by an Optionee upon exercise of an Incentive Stock Option
to be held in an escrow arrangement for the purpose of enabling compliance with
the provisions of this Section 8.09(c).

8.10 RIGHT OF FIRST REFUSAL. If at the time an Optionee wishes to
sell Common Stock purchased with an Option granted hereunder, and if at such
time the Common Stock is not publicly traded, then the Corporation shall have
the right to purchase such Common Stock from the Optionee at a price equal to
its Fair Market Value. If the Corporation does not choose to purchase the Common
Stock from an Optionee, then the other Common Stock shareholders shall have the
right to purchase such Common Stock at a price equal to its Fair Market Value on
a "first-come, first-serve" basis.

ARTICLE IX
STOCK APPRECIATION RIGHTS

9.01 GRANT OF STOCK APPRECIATION RIGHTS. The Committee may grant a
Stock Appreciation Right to the Grantee of an Option, either at the time the
Option is granted or by amending the Option Agreement at any time thereafter
prior to the end of the Term of the associated Option. A Stock Appreciation
Right shall be exercisable only during the Term of the associated Option, and
only when the Fair Market Value of the shares of Common Stock subject to the
Option exceeds the Option Price of such shares.

9.02 CONDITIONS TO GRANT. The Committee may, at the time of
granting a Stock Appreciation Right, add such conditions and limitations to the
Stock Appreciation Right as it shall deem advisable.

9.03 EXERCISE OF STOCK APPRECIATION RIGHT. A Stock Appreciation
Right may be exercised in whole or in part in accordance with the terms set
forth in the Grantee's Option Agreement. The date of exercise shall be the date
upon which notice thereof is received in the office of the Corporation's
Secretary.

9.04 ACCELERATION OF STOCK APPRECIATION RIGHTS. Stock Appreciation
Rights shall become immediately exercisable in full for cash at the Acceleration
Price. Grantees may elect to have the Company make payment on such Stock
Appreciation Rights within a period of thirty (30) days following a Change in
Control

9.05 PAYMENT. Upon the exercise of a Stock Appreciation Right, the
payment to be made to the Grantee may be in cash, or in shares of Common Stock
valued at their Fair Market Value on the date of exercise, or partly in cash and
partly in shares of Common Stock, as determined by the Committee.

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ARTICLE X
ADJUSTMENTS FOR CAPITAL CHANGES

The aggregate number of shares of Common Stock available for issuance
under this Plan, the number of shares to which any outstanding Award relates,
the maximum number of shares that can be covered by Award to each Optionee and
the exercise price per share of Common Stock under any outstanding Option shall
be proportionately adjusted for any increase or decrease in the total number of
outstanding shares of Common Stock issued subsequent to the effective date of
this Plan resulting from a split, subdivision or consolidation of shares or any
other capital adjustment, the payment of a stock dividend, or other increase or
decrease in such shares effected without receipt or payment of consideration by
the Corporation. If, upon a merger, consolidation, reorganization, liquidation
or recapitalization of the Corporation, Common Stock shall be exchanged for
other securities of the Corporation or of another corporation, each recipient of
an Award shall be entitled, subject to the conditions herein stated, to purchase
or acquire such number of shares of Common Stock or amount of other securities
of the Corporation or such other corporation as were exchangeable for the number
of shares of Common Stock of the Corporation which such optionees would have
been entitled to purchase or acquire except for such action, and appropriate
adjustments shall be made to the per share exercise price of outstanding
Options. Notwithstanding any provision to the contrary, the exercise price of
shares subject to outstanding Awards may be proportionately adjusted upon the
payment of a special large and nonrecurring dividend that has the effect of a
return of capital to the stockholders.

ARTICLE XI
AMENDMENT AND TERMINATION OF THE PLAN

The Board may, by resolution, at any time terminate or amend the Plan
with respect to any shares of Common Stock as to which Awards have not been
granted, subject to any required stockholder approval or any stockholder
approval which the Board may deem to be advisable for any reason, such as for
the purpose of obtaining or retaining any statutory or regulatory benefits under
tax, securities or other laws or satisfying any applicable stock exchange
listing requirements. The Board may not, without the consent of the holder of an
Award, alter or impair any Award previously granted or awarded under this Plan
as specifically authorized herein.

ARTICLE XII
EMPLOYMENT AND SERVICE RIGHTS

Neither the Plan nor the grant of any Awards hereunder nor any action
taken by the Committee or the Board in connection with the Plan shall create any
right on the part of any Employee or Non-Employee Director to continue in such
capacity.

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<PAGE> 13

ARTICLE XIII
WITHHOLDING

13.01 TAX WITHHOLDING. The Corporation may withhold from any cash
payment made under this Plan sufficient amounts to cover any applicable
withholding and employment taxes, and if the amount of such cash payment is
insufficient, the Corporation may require the Optionee to pay to the Corporation
the amount required to be withheld as a condition to delivering the shares
acquired pursuant to an Award. The Corporation also may withhold or collect
amounts with respect to a disqualifying disposition of shares of Common Stock
acquired pursuant to exercise of an Incentive Stock Option, as provided in
Section 8.09(c).

13.02 METHODS OF TAX WITHHOLDING. The Board or the Committee is
authorized to adopt rules, regulations or procedures which provide for the
satisfaction of an Optionee's tax withholding obligation by the retention of
shares of Common Stock to which the Employee would otherwise be entitled
pursuant to an Award and/or by the Optionee's delivery of previously-owned
shares of Common Stock or other property.

ARTICLE XIV
EFFECTIVE DATE OF THE PLAN; TERM

14.01 EFFECTIVE DATE OF THE PLAN. This Plan shall become effective
on the Effective Date, and Awards may be granted hereunder no earlier than the
date that this Plan is approved by stockholders of the Corporation and prior to
the termination of the Plan, provided that this Plan is approved by stockholders
of the Corporation pursuant to Article XV hereof.

14.02 TERM OF THE PLAN. Unless sooner terminated, this Plan shall
remain in effect for a period of ten (10) years from the Effective Date.
Termination of the Plan shall not affect any Awards previously granted and such
Awards shall remain valid and in effect until they expire or are earned,
exercised, surrendered, or forfeited.

ARTICLE XV
STOCKHOLDER APPROVAL

The Corporation shall submit this Plan to stockholders for approval at
a meeting of stockholders, or by the unanimous written consent of the
stockholders, of the Corporation held within twelve (12) months following the
Effective Date in order to meet the requirements of (i) Section 422 of the Code
and regulations thereunder, and (ii) Section 162(m) of the Code and regulations
thereunder, and (iii) the National Association of Securities Dealers, Inc. for
quotation of the Common Stock on the NASDAQ Stock Market's National Market or
any other securities market or exchange, if applicable.

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ARTICLE XVI
MISCELLANEOUS

16.01 GOVERNING LAW. To the extent not governed by federal law, this
Plan shall be construed under the laws of the State of Delaware.

16.02 PRONOUNS. Wherever appropriate, the masculine pronoun shall
include the feminine pronoun, and the singular shall include the plural

<PAGE> 1
Exhibit 10.4

EMPLOYMENT AGREEMENT

THIS EMPLOYMENT AGREEMENT is dated as of this 28th day of July, 1999,
between perfumania.com, inc., a Florida corporation (the "Corporation") and
Rachmil Lekach (the "Executive").

WITNESSETH

WHEREAS, the Executive is presently the President of the Corporation
who, in accordance with the policies established by the Board of Directors of
the Corporation (the "Board"), develops and oversees the implementation of the
goals and objectives of the Corporation; and

WHEREAS, the Executive and the Corporation entered into an employment
agreement effective May 1, 1999 (the "Prior Agreement"); and

WHEREAS, the Executive has been appointed to and has accepted the
position of Chief Executive Officer of Corporation effective July 28, 1999 and
the Executive and the Corporation desire to amend the Prior Agreement to reflect
respective duties and responsibilities of the Exeucutive and the Corporation;
and

WHEREAS, the Corporation desires to be ensured of the Executive's
continued active participation in the business of the Corporation; and

WHEREAS, in order to induce the Executive to remain in the employ of
the Corporation and in consideration of the Executive's agreement to remain in
the employ of the Corporation pursuant to the terms and conditions hereof, the
parties desire to specify the terms and conditions of Executive's continuing
employment with the Corporation and to provide certain severance benefits which
shall be due the Executive in the event that his employment with the
Corporation is terminated under specified circumstances;

NOW THEREFORE, in consideration of the premises and the mutual
agreements herein contained, the parties hereto, intending to be legally bound,
hereby agree as follows:

1. DEFINITIONS. The following words and terms shall have the meanings
set forth below for the purposes of this Agreement:

(a) Affiliates. "Affiliates" of the Corporation, or a person
"affiliated" with the Corporation, are any persons or entities which, directly
or indirectly, through one or more intermediaries, controls or are controlled
by or are under common control with, the persons or entities specified.

(b) Average Annual Compensation. "Average Annual
Compensation" means the average level of compensation paid to the Executive by
the Corporation or any Subsidiary thereof during the most recent three taxable
years preceding the Date of Termination (or such shorter period as the
Executive was employed), including Base Salary and bonuses or other
compensation under any employee benefit plans of the Corporation.

<PAGE> 2

(d) Cause. Termination of the Executive's employment for
"Cause" shall mean termination because of willful misconduct, breach of
fiduciary duty involving personal profit, intentional failure to perform stated
duties, willful violation of any law, rule or regulation (other than traffic
violations or similar offenses) or final cease-and-desist order or material
breach of any provision of this Agreement. For purposes of this paragraph, no
act or failure to act on the Executive's part shall be considered "willful"
unless done, or omitted to be done, by the Executive not in good faith and
without reasonable belief that the Executive's action or omission was in the
best interest of the Corporation. Cause shall be determined in good faith by
the affirmative vote of a majority of the whole Board of Directors (excluding
the Executive) after the Executive has been provided the opportunity to make a
presentation to the Board which presentation to the Board may be with counsel.

(e) Change in Control of the Corporation. "Change in Control
of the Corporation" shall mean a change in control of a nature that would be
required to be reported in response to Item 6(e) of Schedule 14A of Regulation
14A promulgated under the Securities Exchange Act of 1934, as amended
("Exchange Act"), or any successor thereto, whether or not the Corporation is
registered under Exchange Act; provided that, without limitation, such a change
in control shall be deemed to have occurred if (i) any "person" (as such term
is used in Sections 13(d) and 14(d) of the Exchange Act) other than Perfumania,
Inc., the Executive or the Corporation, is or becomes the "beneficial owner"
(as defined in Rule 13d-3 under the Exchange Act), directly or indirectly, of
securities of the Corporation representing 25% or more of the combined voting
power of the Corporation's then outstanding securities; or (ii) during any
period of twenty-four consecutive months, individuals who, at the beginning of
such period constitute the Corporation's Board of Directors, cease for any
reason to constitute at least a majority thereof unless the election, or the
nomination for election by stockholders, of each new director was approved by a
vote of at least two-thirds of the directors then still in office who were
directors at the beginning of the period.

(f) Code. "Code" shall mean the Internal Revenue Code of
1986, as amended.

(g) Date of Termination. "Date of Termination" shall mean (i)
if the Executive's employment is terminated for Cause, Disability or for
Retirement, the date specified in the Notice of Termination, and (ii) if the
Executive's employment is terminated for any other reason, the date on which a
Notice of Termination is given or as specified in such Notice.

(h) Disability. Termination by the Corporation of the
Executive's employment based on "Disability" shall mean termination because of
any physical or mental impairment which qualifies the Executive for disability

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<PAGE> 3

benefits under the applicable long-term disability plan maintained by the
Corporation or any subsidiary or, if no such plan applies, which would qualify
the Executive for disability benefits under the Federal Social Security System.

(i) Good Reason. Termination by the Executive of the
Executive's employment for "Good Reason" shall mean termination by the
Executive following a Change in Control of the Corporation based on:

(i) Without the Executive's express written consent,
the failure to elect or to re-elect or to appoint or to re-appoint the
Executive to the office of President and Chief Executive Officer of the
Corporation or a material adverse change made by the Corporation in the
Executive's functions, duties or responsibilities as President and Chief
Executive Officer of the Corporation;

(ii) Without the Executive's express written
consent, a material reduction (i.e., 10% or more) by the Corporation in the
Executive's Base Salary as the same may be increased from time to time or,
except to the extent permitted by Section 3(b) hereof, a material reduction in
the package of fringe benefits provided to the Executive, taken as a whole;

(iii) Without the Executive's express written
consent, the Corporation requires the Executive to work in an office which is
more than 45 miles from the location of the Corporation's current principal
executive office, except for required travel on business of the Corporation to
an extent substantially consistent with the Executive's business travel
obligations prior to the Change in Control;

(iv) Any purported termination of the Executive's
employment for Cause, Disability or Retirement which is not effected pursuant
to a Notice of Termination satisfying the requirements of paragraph (k) below
and Section 5 hereof; or

(v) The failure by the Corporation to obtain the
assumption of and agreement to perform this Agreement by any successor as
contemplated in Section 13 hereof.

(j) IRS. "IRS" shall mean the Internal Revenue Service.

(k) Notice of Termination. Any purported termination of the
Executive's employment by the Corporation for any reason, including without
limitation for Cause, Disability or Retirement, or by the Executive for any
reason, including without limitation for Good Reason, shall be communicated by
a written "Notice of Termination" to the other party hereto. For purposes of
this Agreement, a "Notice of Termination" shall mean a dated notice which (i)
indicates the specific termination provision in this Agreement relied upon,
(ii) sets forth in reasonable detail the facts and circumstances claimed to
provide a basis for termination of Executive's employment under the provision

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<PAGE> 4

so indicated, (iii) specifies a Date of Termination, which shall be not less
than thirty (30) nor more than ninety (90) days after such Notice of
Termination is given, except in the case of the Corporation's termination of
Executive's employment for Cause for which the Date of Termination may be the
date of the notice; and (iv) is given in the manner specified in Section 14
hereof.

(l) Retirement. "Retirement" shall mean voluntary termination
by the Executive in accordance with the Corporation's retirement policies,
including early retirement, generally applicable to the Corporation's salaried
employees.

(m) Subsidiary. "Subsidiary" shall mean any subsidiary of the
Corporation.

2. TERM OF EMPLOYMENT.

(a) The Corporation hereby employs the Executive as President
and Chief Executive Officer, and Executive hereby accepts said employment and
agrees to render such services to the Corporation, on the terms and conditions
set forth in this Agreement. Unless extended as provided in this Section 2,
this Agreement shall terminate five (5) years after the date first above
written; provided, however, this Agreement shall be automatically renewed on
its anniversary date ("Annual Renewal Date") each year for one (1) additional
year unless either party shall give written notice of non-renewal, in
accordance with Section 14 hereof to the other party at least sixty (60) days
prior to an Annual Renewal Date, in which event this Agreement shall continue
in effect for a term ending on the Annual Renewal Date immediately following
such notice. Reference herein to the term of this Agreement shall refer both to
the initial term and any successive term as the context requires.

(b) During the term of this Agreement, the Executive shall
perform such executive services for the Corporation as is consistent with his
title of President and Chief Executive Officer and as directed, from time to
time, by the Board of Directors, including but not limited to, the supervision
of the Corporations day-to-day operations. The Executive shall devote his full
time, attention and energies to the business of the Corporation and shall not,
during the term hereof (as defined in Section 2(a)), be employed or involved in
any other business activity, whether or not such activity is pursued for gain,
profit or other pecuniary advantage, except for (i) volunteer services for or
on behalf of such religious, educational, non-profit and/or other eleemosynary
organization as Executive may wish to serve, (ii) service as a director of not
more than three (3) for-profit business activities, and (iii) such other
activities as may be specifically approved by the Board of Directors (without
the Executive's participation or vote). This restriction shall not, however,
preclude the Executive from employment in any capacity with affiliates of the
Corporation, nor shall any remuneration from such affiliates be considered in
calculating the Base Salary (as defined in Section 3(a)) due to Executive
hereunder.

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<PAGE> 5

3. COMPENSATION AND BENEFITS.

(a) For services rendered hereunder by the Executive, the
Corporation shall compensate and pay Executive for his services during the term
of this Agreement at a minimum base salary of Two Hundred Thousand ($200,000)
Dollars per year ("Base Salary"), which may be increased from time to time in
such amounts as may be determined by the Board of Directors of the Corporation.
In addition to his Base Salary, the Executive shall receive during the term of
this Agreement such bonus payments as may be determined by the Board of
Directors of the Corporation. In addition to any bonus paid or should the Board
of Directors not provide any bonus to Executive for any year, the Executive's
Base Salary shall automatically be increased by the amount of the prior year's
increase in the "Consumer Price Index for all Urban Consumers (1982-84=100),
Miami, Florida Area, All Items," as published by the United States Department
of Labor, Bureau of Labor Statistics (the "CPI").

(b) During the term of the Agreement, Executive shall be
entitled to participate in and receive the benefits of any pension or other
retirement benefit plan, the 401(k) plan, profit sharing, stock option,
employee stock ownership, or other plans, benefits and privileges given to
employees and executives of the Corporation, to the extent commensurate with
his duties and responsibilities, as fixed by the Board of Directors of the
Corporation. The Corporation and the Executive shall enter into a stock option
agreement dated as of the date of this Agreement pursuant to which the
Executive shall be granted an option to purchase up to 225,000 shares of common
stock of the Corporation upon terms set forth in the stock option agreement.
The Corporation shall not make any changes in such plans, benefits or
privileges which would adversely affect Executive's rights or benefits
thereunder, unless such change occurs pursuant to a program applicable to all
executive officers of the Corporation and does not result in a proportionately
greater adverse change in the rights of or benefits to Executive as compared
with any other executive officer of the Corporation. Nothing paid to Executive
under any plan or arrangement presently in effect or made available in the
future shall be deemed to be in lieu of the base salary payable to Executive
pursuant to Section 3(a) hereof.

(c) During the term of this Agreement, Executive shall be
entitled to five (5) weeks paid vacation in each calendar year to be taken and
determined in accordance with the vacation policies and procedures as
established from time to time by the Board of Directors of the Corporation.
Executive shall also be entitled to all paid holidays to which similarly
situated executives and key management employees of the Corporation are
entitled. The Executive shall be entitled to paid leave due to physical illness
in each calendar year to be taken and determined in accordance with the
policies and procedures as established from time to time by the Board of
Directors. Executive shall not be entitled to receive any additional
compensation from the Corporation for failure to take a vacation, or failure to
use "sick days," nor shall Executive be able to accumulate unused vacation or
"sick" time from one year to the next, except to the extent authorized by the
Board of Directors of the Corporation.

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<PAGE> 6

(d) The Corporation shall provide the Executive with
secretarial and support staff and furnished offices and conference facilities
in Miami, Florida, and in such other location, if any, in which the Executive
hereafter agrees to perform services on behalf of the Corporation, all of which
shall be consistent with the Executive's duties as the President and Chief
Executive Officer of the Corporation and sufficient for the efficient
performance of those duties. Nothing in this Agreement shall be construed to
require the Executive to perform or discharge his duties to the Corporation at
any office or location outside of Miami, Florida.

4. EXPENSES. The Corporation shall reimburse Executive or otherwise
provide for or pay for all reasonable expenses incurred by Executive in
furtherance of, or in connection with the business of the Corporation,
including, but not by way of limitation, traveling expenses, and all reasonable
entertainment expenses (whether incurred at the Executive's residence, while
traveling or otherwise), subject to such reasonable documentation and other
limitations as may be established by the Board of Directors of the Corporation.

5. TERMINATION.

(a) The Corporation shall have the right, at any time upon
prior Notice of Termination, to terminate the Executive's employment hereunder
for any reason, including without limitation termination for Cause, Disability
or Retirement, and Executive shall have the right, upon prior Notice of
Termination, to terminate his employment hereunder for any reason.

(b) In the event that (i) Executive's employment is
terminated by the Corporation for Cause or (ii) Executive terminates his
employment hereunder other than for Good Reason, Executive shall have no right
pursuant to this Agreement to compensation or other benefits for any period
after the applicable Date of Termination.

(c) In the event that (i) Executive's employment is
terminated by the Corporation other than for Cause, Disability, Retirement or
the Executive's death, or (ii) such employment is terminated by the Executive
due to a material breach of this Agreement by the Corporation, which breach has
not been cured within fifteen (15) days after a written notice of
non-compliance has been given by the Executive to the Corporation, then the
Corporation shall, subject to the provisions of Section 6 hereof, if
applicable,

(A) Pay to the Executive, in a lump sum or in
thirty-six (36) equal monthly installments (at the Executive's option)
beginning with or on the first business day of the month following the Date of
Termination, a cash severance amount equal to three (3) times the Executive's
Average Annual Compensation, and

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<PAGE> 7

(B) Maintain and provide for a period ending at the
earlier of (i) the expiration of the remaining term of employment pursuant
hereto prior to the Notice of Termination or (ii) the date of the Executive's
full-time employment by another Corporation, at no cost to the Executive, the
Executive's continued participation in all group insurance, life insurance,
health and accident, disability and other employee benefit plans, programs and
arrangements in which the Executive was entitled to participate immediately
prior to the Date of Termination (other than stock option and restricted stock
plans of the Corporation), provided that in the event that the Executive's
participation in any plan, program or arrangement as provided in this
subparagraph (B) is barred or during such period any such plan, program or
arrangement is discontinued or the benefits thereunder are materially reduced,
the Corporation shall arrange to provide the Executive with benefits
substantially similar to those which the Executive was entitled to receive
under such plans, programs and arrangements immediately prior to the Date of
Termination.

(d) In the event that Executive's employment is (i)
terminated by the Corporation within six months of a Change-in-Control of the
Corporation or (ii) terminated by the Executive for Good Reason subsequent to
Change in Control, then the Corporation shall:

(A) Pay to the Executive, in a lump sum payable
within five business days following the Date of Termination, a cash severance
amount equal to three (3) times the Executive's Average Annual Compensation,
and

(B) Maintain and provide for a period ending at the
earlier of (i) the expiration of the remaining term of employment pursuant
hereof prior to the Notice of Termination or (ii) the date of the Executive's
full-time employment by another Corporation, at no cost to the Executive, the
Executive's continued participation in all group insurance, life insurance,
health and accident, disability and other employee benefit plans, programs and
arrangements in which the Executive was entitled to participate immediately
prior to the Date of Termination (other than stock option and restricted stock
plans of Corporation), provided that in the event the Executive's participation
in any plan, program or arrangement is discontinued or the benefit thereunder
are materially reduced, the Corporation shall arrange to provide the Executive
with benefits substantially similar to those which the Executive was entitled
to receive under such plans, programs and arrangements immediately prior to the
Date of Termination.

(e) All unvested stock options granted to Executive shall
immediately vest upon termination of Executive's employment under Section 5(c)
or Section 5(d) of the Agreement.

6. ADDITIONAL BENEFITS UNDER CERTAIN CIRCUMSTANCES.

(a) If the Executive becomes liable, in any taxable year, for
the repayment of an excise tax under Section 4999 of the Code, or any successor

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provision of the Code, on account of any payments to the Executive pursuant to
Section 5, and the Corporation chooses not to contest the liability or has
exhausted all administrative and judicial appeals contesting the liability, the
Corporation shall pay the Executive (i) an amount equal to the excise tax for
which the Executive is liable under Section 4999 of the Code, (ii) the federal,
state, and local income taxes, and interest if any, for which the Executive is
liable on account of the payments pursuant to item (i), and (ii) any additional
excise tax under Section 4999 of the Code and any federal, state and local
income taxes for which the Executive is liable on account of payments made
pursuant to items (i) and (ii).

(b) This Section 6(b) applies if the amount of payments to
the Executive under Section 6(a) has not been determined with finality by the
exhaustion of administrative and judicial appeals. In such circumstances, the
Corporation and the Executive shall, as soon as practicable after the event or
series of events have occurred giving rise to the imposition of the excise tax,
cooperate in determining the amount of the Executive's excise tax liability for
purposes of paying the estimated tax. The Executive shall thereafter furnish to
the Corporation or its successors a copy of each tax return which reflects a
liability for an excise tax under Section 4999 of the Code at least thirty (30)
days before the date on which such return is required to be filed with the IRS.
The liability reflected on such return shall be dispositive for the purposes
hereof unless, within twenty (20) days after such notice is given, the
Corporation furnishes the Executive with a letter of the auditors or tax
advisor selected by the Corporation indicating a different liability or that
the matter is not free from doubt under the applicable laws and regulations and
that the Executive may, in such auditor's or advisor's opinion, cogently take a
different position, which shall be set forth in the letter with respect to the
payments in question. Such letter shall be addressed to the Executive and state
that he is entitled to rely thereon. If the Corporation furnishes such a letter
to the Executive, the position reflected in such letter shall be dispositive
for purposes of this Agreement, except as provided in Section 6(c) below.

(c) Notwithstanding anything in this Agreement to the
contrary, if the Executive's liability for the excise tax under Section 4999 of
the Code for a taxable year is subsequently determined to be less than the
amount paid by the Corporation pursuant to Section 6(a), the Executive shall
repay the Corporation at the time that the amount of such excise tax liability
is finally determined, the portion of such income and excise tax payments
attributable to the reduction (plus interest on the amount of such repayment at
the rate provided on Section 1274(b)(2)(B) of the Code) and if the Executive's
liability for the excise tax under Section 4999 of the Code for a taxable year
is subsequently determined to exceed the amount paid by the Corporation
pursuant to Section 6(a), the Corporation shall make an additional payment of
income and excise taxes in the amount of such excess, as well as the amount of
any penalty and interest assessed with respect thereto at the time that the
amount of such excess and any penalty and interest is finally determined.

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7. MITIGATION; EXCLUSIVITY OF BENEFITS.

(a) The Executive shall not be required to mitigate the
amount of any benefits hereunder by seeking other employment or otherwise, nor
shall the amount of any such benefits be reduced by any compensation earned by
the Executive as a result of employment by another Corporation after the Date
of Termination or otherwise.

(b) The specific arrangements referred to herein are not
intended to exclude any other benefits which may be available to the Executive
upon a termination of employment with the Corporation pursuant to employee
benefit plans of the Corporation or otherwise.

8. WITHHOLDING. All payments required to be made by the Corporation
hereunder to the Executive shall be subject to the withholding of such amounts,
if any, relating to tax and other payroll deductions as the Corporation may
reasonably determine should be withheld pursuant to any applicable law or
regulation.

9. NON-SOLICITATION OF CUSTOMERS AND EMPLOYEES.

(a) The Executive hereby acknowledges and recognizes the
highly competitive nature of the business of online sales of fragrances and
fragrance related products and accordingly agrees that, during the term of this
Agreement and, in consideration of the receipt of any payment pursuant to this
Agreement, for a period of one year following the date of termination of the
Executive's employment under this Agreement, unless otherwise agreed to in
writing by the Corporation, the Executive shall not, either directly or
indirectly, in any manner or capacity, whether as principal, agent, partner,
officer, director, employee, joint venturer, salesman, or corporate shareholder
or otherwise for the benefit of any Person (as defined below), (i) render
services to, or solicit the rendering of services to, any Person in competition
with the business of the Corporation, which then is, or at any time during a
period of one year prior to the termination of the Executive's employment under
this Agreement (the "Termination Date"), was a Customer (as defined below) of
the Corporation, or (ii) solicit the rendering of services to any Person of any
kind whatsoever which is then or has been at any time during a period of one
year prior to the Termination Date a Customer, employee, salesperson, agent or
representative of the Corporation in any manner which interferes or might
interfere with the relationship of the Corporation with such Person, or in an
effort to obtain such Person as a customer, supplier, employee, salesperson,
agent or representative of any business in competition with the Corporation, or
(iii) for a period of one year following the Termination Date, hire or
participate in the hiring by any Person of an employee of the Corporation. In
order to assure strict compliance with the foregoing, and in recognition of the
compensation to be paid by Corporation to Executive on the termination of this
Agreement, Executive agrees to notify Corporation, in writing, fourteen (14)
days prior to undertaking any employment or services within the said time
period, regardless of the nature thereof, of the name and address of any such
intended Corporation, proposed job title, proposed job description and salary,

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and the business of the prospective Corporation. If, within such fourteen (14)
day period, Corporation shall object on reasonable grounds to such anticipated
employment in writing to Executive, Executive agrees not to accept the same or
in any manner directly or indirectly render services to any such prospective
Corporation.

"Person" means any individual, trust, partnership,
corporation, limited liability company, association, or other legal entity.

"Customer" means any Person with which the Corporation or any
subsidiary is currently engaged to provide goods or services, has been engaged
to provide goods or services within twelve (12) months prior to the Termination
Date, or actively marketed, discussed a project with, negotiated with, provided
a bid to or otherwise communicated with in an effort to obtain an engagement to
provide goods or services sold by the Corporation or any subsidiary within
twelve (12) months prior to the Termination Date.

(b) It is expressly understood and agreed that although the
Executive and the Corporation consider the restrictions contained in Section
9(a) of this Agreement reasonable for the purpose of preserving for the
Corporation its good will and other proprietary rights, if a final judicial
determination is made by a court having jurisdiction that the time or territory
or any other restriction contained in Section 9(a) of this Agreement is an
unreasonable or otherwise unenforceable restriction against the Executive, the
provisions of Section 9(a) of this Agreement shall not be rendered void but
shall be deemed amended to apply as to such maximum time and territory and to
such other extent as such court may judicially determine or indicate to be
reasonable.

(c) Notwithstanding the foregoing, the Executive shall not be
subject to the prohibition contained in this Section 9 in the event the
Executive is terminated following a Change in Control of the Corporation
provided that (i) the Executive is subsequently employed by Perfumania, Inc. or
Parlux Fragrances, Inc. and (ii) neither Perfumania, Inc. nor Parlux Fragrance,
Inc. is engaged directly in the business of selling fragrances or fragrance
related products online on a retail or wholesale basis.

10. DISCLOSURE OF CONFIDENTIAL INFORMATION. The Executive acknowledges
that the Corporation's trade secrets, as they may exist from time to time, and
confidential information concerning its products, programs, technical
information, procurement and sales activities and procedures, identity of
customers and potential customers, business plans, promotion and pricing
techniques, and credit and financial data concerning customers are valuable,
special and unique assets of the Corporation. In light of the highly
competitive nature of the industry in which the Corporation's business is
conducted, the Executive agrees that all knowledge and information described in
the preceding sentence not in the public domain and heretofore or in the future
obtained by the Executive shall be considered confidential information.
Executive agrees that he will not disclose any or such secrets, processes or
information to any Person or other entity for any reason or purpose whatsoever,
except as necessary in the performance of his duties as an employee of or
consultant to the Corporation and then only upon a written confidentiality
agreement in such form and content as requested by the Corporation from time to
time, nor shall the Executive make use of any such secrets, processes or
information (other than information in the public domain) for his own purposes
or for the benefit of himself, any Person or other entity (except the

10
<PAGE> 11

Corporation and its subsidiaries) under any circumstances. The provisions
contained in this Section 10 shall also apply to information obtained by the
Executive with respect to any future subsidiary of the Corporation.

11. BUSINESS INFORMATION. Upon the termination of his employment with
the Corporation, Executive (or, as appropriate, his personal representatives)
shall deliver to the Corporation (without retaining copies of the same), all
plans, source codes, designs, customer lists, correspondence, records,
documents, accounts and papers of any description and any other property of the
Corporation within the possession or under the control of Executive (or, as
appropriate, his personal representatives) and relating to the affairs and
business of the Corporation, whether drafted, created or compiled by Executive
or received by Executive from other individuals or entities (whether employees
of or affiliated with the Corporation).

12. REMEDIES. The Executive acknowledges and agrees that the
Corporation's remedy at law for a breach or threatened breach of any of the
provisions of Section 9, Section 10 or Section 11 of this Agreement would be
inadequate and, in recognition of this fact, in the event of a breach or
threatened breach by the Executive of any of the provisions of Section 9,
Section 10 or Section 11 of this Agreement, it is agreed that, in addition to
any remedy at law, the Corporation shall be entitled to, without posting any
bond, (and the Executive agrees not to oppose the Corporation's request) relief
in the nature of specific performance, temporary restraining order, temporary
or permanent injunction, or any other equitable relief or remedy which may then
be available, provided, however, nothing herein shall be deemed to relieve the
Corporation of its burden to prove grounds warranting such relief nor preclude
the Executive from contesting such grounds or facts in support thereof. Nothing
herein contained shall be construed as prohibiting the Corporation form
pursuing any other remedies available to it for such breach or threatened
breach.

13. ASSIGNABILITY. The Corporation shall assign this Agreement and its
rights and obligations hereunder in whole, but not in part, to any corporation
or other entity with or into which the Corporation may hereafter merge or
consolidate or to which the Corporation may transfer all or substantially all
of its assets, if in any such case said corporation or other entity shall by
operation of law or expressly in writing assume all obligations of the
Corporation hereunder as fully as if it had been originally made a party
hereto, but may not otherwise assign this Agreement or its rights and
obligations hereunder. The Executive may not assign or transfer this Agreement
or any rights or obligations hereunder.

14. NOTICE. For the purposes of this Agreement, notices and all other
communications provided for in this Agreement shall be in writing and shall be
deemed to have been duly given when delivered or mailed by certified or
registered mail, return receipt requested, postage prepaid, addressed to the
respective addresses set forth below:

11
<PAGE> 12

To the Corporation: Board of Directors
perfumania.com, inc.
11701 NW 101st Road
Miami, Florida 33178

With copies to: Greenberg Traurig
1750 Tysons Boulevard
Suite 1200
McLean, Virginia 22102
Attention: Jeffrey R. Houle, Esq.

To the Executive: Rachmil Lekach
296 Ocean Boulevard
Golden Beach, Florida 33160

15. AMENDMENT; WAIVER. This Agreement represents the entire agreement
of the parties relating to subject matter hereof. No provisions of this
Agreement may be modified, waived or discharged unless such waiver,
modification or discharge is agreed to in writing signed by the Executive and
such officer or officers as may be specifically designated by the Board of
Directors of the Corporation to sign on its behalf. No waiver by any party
hereto at any time of any breach by any other party hereto of, or compliance
with, any condition or provision of this Agreement to be performed by such
other party shall be deemed a waiver of similar or dissimilar provisions or
conditions at the same or at any prior or subsequent time.

16. GOVERNING LAW. The validity, interpretation, construction and
performance of this Agreement shall be governed by the laws of the State of
Florida without regard to its principles of conflicts of laws.

17. NATURE OF OBLIGATIONS. The obligations of the Corporation
hereunder are unsecured and the Executive represents a general creditor of the
Corporation for compensation which may be due and owing. Nothing contained
herein shall create or require the Corporation to create a trust of any kind to
fund any benefits which may be payable hereunder, and to the extent that the
Executive acquires a right to receive benefits from the Corporation hereunder,
such right shall be no greater than the right of any unsecured general creditor
of the Corporation.

18. INTERPRETATION AND HEADINGS. This Agreement shall be interpreted
in order to achieve the purposes for which it was entered into. The section
headings contained in this Agreement are for reference purposes only and shall
not affect in any way the meaning or interpretation of this Agreement.

12
<PAGE> 13

19. SEVERABILITY. The invalidity or unenforceability of any provision
of this Agreement shall not affect the validity or enforceability of any other
provisions of this Agreement, which shall remain in full force and effect. With
respect to Section 9 of this Agreement, in the event any court of competent
jurisdiction determines that such provisions are unreasonable or contrary to
law with respect to their time or geographic restriction, or both, the parties
hereto authorize such court to substitute restrictions as it deems appropriate
without invalidating such paragraph or this Agreement.

20. COUNTERPARTS. This Agreement may be executed in one or more
counterparts, each of which shall be deemed to be an original but all of which
together will constitute one and the same instrument.

IN WITNESS WHEREOF, this Agreement has been executed as of the date
first above written.

perfumania.com, inc.

/s/ Michael Amideo
- ----------------------
Michael Amideo
Chief Financial Officer

EXECUTIVE

/s/ Rachmil Lekach
- ----------------------
Rachmil Lekach

<PAGE> 1
Exhibit 10.5

EMPLOYMENT AGREEMENT

THIS EMPLOYMENT AGREEMENT ("Agreement") is made and entered into, and
shall be binding this 12th day of July, 1999, by and between the Perfumania.com,
a Florida corporation ("Employer") and G. Richard Veliz ("Executive").

W I T N E S S E T H:

WHEREAS, Employer, is engaged in the business of selling perfumes and
cosmetics on a discount basis through the Internet; and

WHEREAS, Executive is experienced in the management and development of
Internet technology and is professionally qualified to perform such services for
the Employer; and

WHEREAS, Employer desires to retain the services of the Executive; and

WHEREAS, Executive is desirous of obtaining employment with the
Employer on the terms and conditions set forth herein.

NOW, THEREFORE, in consideration of the mutual promises set forth
herein and other good and valuable consideration, the receipt and sufficiency of
which is hereby acknowledged, Employer and Executive agree as follows:

1. Recitals, Representations and Warranties. The foregoing recitals are
true and correct and are incorporated herein by this reference. In addition to
the foregoing recitals, Executive represents that he has not been convicted of
any crime, has not been declared insolvent and has not filed for bankruptcy. In
addition to the foregoing recitals, Employer represents and warrants that the
individual executing this Agreement has authority to do so.

2. Employment. In exchange for the Compensation (as hereinafter
defined) and subject to the other terms and conditions hereinafter set forth,
Employer hereby employs Executive, as its Chief Technology Officer, to perform
the Executive Duties (as hereinafter defined) and Executive hereby accepts such
employment.

3. Duties. The Executive shall perform such executive and
administrative services in the running of the business of the Employer as the
Employer's Board of Directors and/or the President may assign to the Executive
during the Term (as hereinafter defined).

a. Performance of Executive Duties & Adherence to Policies.
During the Term, Executive shall render the Executive Duties exclusively for
Employer, shall perform the Executive Duties to the best of his ability and
shall operate Employer's business efficiently and profitably adhering, at all
times, to the policies of the Employer and Perfumania.com.

4. Term. The term of the Agreement shall commence on July 12, 1999 and
shall expire on July 12, 2002.

5. Compensation. In consideration of and as compensation in full for
Executive's performance of the Executive Duties hereunder, Employer agrees to
compensate Executive as follows:

a. Salary. During the Term of this Agreement, Employer shall
pay Executive a gross annual salary of One Hundred Forty Thousand Dollars
($140,000)("Salary"). Such Salary shall be paid by Employer in accordance with
Employer's regular payroll practices. Employer shall be entitled to deduct or
withhold from all Salary payable hereunder all amounts required to be deducted
or withheld from same pursuant to state or federal law.

b. Stock Option Plan:

(1) Executive shall be granted 50,000 options, at a
price equal to the stock price as of the date of the initial public offering.
Such options shall vest 1/6 each after the first 12 month period from date of
contract, 2/6 after the second 12 month period from date of contract, and 3/6
after the third 12 month period from date of contract. Options will not be
pro-rated for any partial 12 month period.

(2) At the discretion of the President, Executive may
be granted additional options.

<PAGE> 2

c. Expense Reimbursement & Insurance. Executive shall be
reimbursed for business expenses and receive full health, disability and life
insurance.

d. Vacation. Employee shall be entitled to take up to fifteen
(15) working days of vacation per twelve (12) month period during the Term.

e. Automobile Allowance. Employee shall be entitled to a
monthly automobile allowance of $500.

f. Cellular Telephone. Employee shall be entitled to the use
of one cellular telephone.

g. Increases In Salary. On July 12, 2000 and July 12, 2001,
Executive's salary from the previous year shall be increased by the higher of 5%
or C.P.I.

6. Termination of Contract.

a. Early Termination: To the extent that the Company shall
decide to terminate this agreement prior to July 1, 2002, Executive shall be
entitled to compensation as defined in paragraph 5 (including salary, bonus,
stock plan, 401K and insurance coverage) for the greater of twelve months or the
remainder of the Term of the agreement, and all unvested stock options shall
vest immediately. A termination of this Agreement shall be deemed to happen upon
a significant change in Executive's duties and/or title and/or to the extent
that providing such services would require a move from South Florida.

b. Change of Control: To the extent that Employer undergoes a
change of control, or is acquired accompanied by a change in senior management,
all items under Section 5, shall be doubled for the greater of the duration of
this Agreement or 24 months (salary, stock options, and other benefits listed
in Section 5).

7. Miscellaneous.

a. Notices. All notices, demands or other communications given
hereunder shall be in writing and shall be deemed to have been duly given only
upon hand delivery thereof or upon the first business day after mailing by
United States registered or certified mail, return receipt requested, postage
prepaid, addressed as follows:

To Employer: Perfumania.com
11701 N.W. 101 Road
Miami, Florida 33178
Attention: Rachmil Lekach

To Executive: G. Richard Veliz
3948 Northeast 169th Street
Suite 300
North Miami Beach, Florida 33160

or to such other address or such other person as any party shall designate, in
writing, to the other for such purposes and in the manner hereinabove set forth.

<PAGE> 3

b. Accuracy of Statements. No representation or warranty
contained in this Agreement, and no statement delivered or information supplied
to any party pursuant hereto, contains an untrue statement of material fact or
omits to state a material fact necessary in order to make the statements or
information contained herein or therein not misleading. The representations and
warranties made in this Agreement will be continued and will remain true and
complete in all material respects and will survive the execution of the
transactions contemplated hereby.

c. Entire Agreement. This Agreement sets forth all the
promises, covenants, agreements, conditions and understandings between the
parties hereto, and supersedes all prior and contemporaneous agreements,
understandings, inducements or conditions, expressed or implied, oral or
written, except as herein contained.

d. Binding Effect; Survival & No Assignment. This Agreement
shall be binding upon the parties hereto, their heirs, administrators,
successors and assigns. This Agreement shall survive and remain effective during
any bankruptcy of the Employer. Executive may not assign or transfer his
interest herein, or delegate his Executive Duties hereunder, without the written
consent of Employer. Any assignment or delegation of duties in violation of this
provision shall be null and void.

e. Amendment. The parties hereby irrevocably agree that no
attempted amendment, modification, termination, discharge or change
(collectively, "Amendment") of this Agreement shall be valid and effective,
unless the parties shall agree in writing to such Amendment.

f. No Waiver. No waiver of any provision of this Agreement
shall be effective unless it is in writing and signed by the party against whom
it is asserted, and any such written waiver shall only be applicable to the
specific instance to which it relates and shall not be deemed to be a continuing
or future waiver.

g. Gender and Use of Singular and Plural. All pronouns herein
shall be deemed to refer to the masculine, feminine, neuter, singular or plural,
as the identity of the party or parties, or their personal representatives,
successors and assigns may require.

h. Counterparts. This Agreement and any amendments may be
executed in one or more counterparts, each of which shall be deemed an original,
but all of which together will constitute one and the same instrument.

i. Headings. The article and section headings contained in
this Agreement are inserted for convenience only and shall not affect in any way
the meaning or interpretation of the Agreement.

j. Arbitration & Governing Law. Any controversy, claim or
dispute arising out of or relating to this Agreement and/or Executive's
employment with Employer shall be settled by arbitration in accordance with
applicable rules of the American Arbitration Association and judgment upon the
award rendered by the arbitrator may be entered in any court having jurisdiction
thereof. This arbitration clause shall be exactly as the arbitration clause
signed by all Perfumania employees. This Agreement shall be construed in
accordance with the laws of the State of Florida and any proceeding arising
between the parties in any manner pertaining or related to this Agreement shall,
to the extent permitted by law, be held in Dade County, Florida.

k. Further Assurances. The parties hereto will execute and
deliver such further instruments and do such further acts and things as may be
reasonably required to carry out the intent and purposes of this Agreement.

l. No Third Party Beneficiary. This Agreement is made solely
and specifically among and for the benefit of the parties hereto, and their
respective successors and assigns subject to the express provisions hereof
relating to successors and assigns, and no other person shall have any rights,
interest or claims hereunder or be entitled to any benefits under or on account
of this Agreement as a third-party beneficiary or otherwise.

<PAGE> 4

m. Severability. This Agreement is intended to be performed in
accordance with, and only to the extent permitted by, all applicable laws,
ordinances, rules, and regulations of the jurisdiction in which the parties do
business. If any provision of this Agreement, or the application thereof to any
person or circumstances shall, for any reason or to any extent, be invalid or
unenforceable, the remainder of this Agreement and the application of such
provision to other persons or circumstances shall not be affected thereby, but
rather shall be enforced to the greatest extent permitted by law.

n. Attorneys' Fees. In connection with any proceeding arising
out of this Agreement, the prevailing party shall be entitled to recover costs
and attorneys' fees, through all appeals, from the other party.

o. Renegotiation. To the extent that Employer will make a
significant acquisition or merger, this Agreement shall be renegotiated at terms
no less favorable than this Agreement.

IN WITNESS WHEREOF, Employer and Executive have executed this Agreement
as of the date first above written.

WITNESSES: EMPLOYER:

PERFUMANIA.COM

By: /s/ Rachmil Lekach
-------------------------------
Rachmil Lekach

EXECUTIVE:

By: /s/ G. Richard Veliz
--------------------------------
G. Richard Veliz

<PAGE> 1
Exhibit 10.6

EMPLOYMENT AGREEMENT

THIS EMPLOYMENT AGREEMENT ("Agreement") is made and entered into, and
shall be binding this 2nd day of July, 1999, by and between perfumania.com,
inc., a Florida corporation ("Employer") and Michael Amideo ("Executive").

W I T N E S S E T H:

WHEREAS, Employer, is engaged in the business of operating an online
store which specialized in selling perfumes and cosmetics on a discount basis;
and

WHEREAS, Executive is experienced in the management and operation of
such business and is professionally qualified to perform such services for the
Employer; and

WHEREAS, Employer desires to retain the services of the Executive; and

WHEREAS, Executive is desirous of obtaining employment with the
Employer on the terms and conditions set forth herein.

2. Employment. In exchange for the Compensation (as hereinafter
defined) and subject to the other terms and conditions hereinafter set forth,
Employer hereby employs Executive as its Chief Financial Officer and Chief
Operating Officer, to perform the Executive Duties (as hereinafter defined) and
Executive hereby accepts such employment.

3. Duties. The Executive shall perform such executive and
administrative services as is expected from a Chief Financial Officer and Chief
Operating Officer and as may be assigned by the Chief Executive Officer of
perfumania.com, inc. During the Term (as hereinafter defined), the Executive
shall report directly to the Chief Executive Officer of perfumania.com, inc.

4. Term. The term of the Agreement shall commence on July 2, 1999 and
shall expire on July 1, 2002.

5. Compensation. In consideration of and as compensation in full for
Executive's performance of the Executive Duties hereunder, Employer agrees to
compensate Executive as follows:

a. Salary. Beginning on July 2, 1999 and through the Term of
this agreement, Employer shall pay Executive a gross annual salary of
One-Hundred Twenty Thousand Dollars ($120,000)("Salary"). Such Salary shall be
paid by Employer in accordance with Employer's regular payroll practices.
Employer shall be entitled to deduct or withhold from all Salary payable
hereunder all amounts required to be deducted or withheld from same pursuant to
state or federal law.

<PAGE> 2

b. Stock Option Plan:

Executive shall be granted 50,000 options, at a price equal
to the Initial Public Offering (IPO) price. Such options shall vest in
accordance with 1999 Incentive Stock Option Plan.

c. Expense Reimbursement & Insurance. Executive shall be
reimbursed for business expenses and receive full health, disability
and life insurance.

d. Vacation. Employee shall be entitled to take up to fifteen
(15) working days of vacation per twelve (12) month period during the
Term

e. Automobile allowance. Executive shall be entitled to a
monthly automobile allowance of $500.

f. Cellular Telephone. Employee shall be entitled to the use
of one cellular telephone.

g. Increases In Salary. On July 1, 2000 and 2001 , Executive's
salary from the previous year shall be increased by 5% or higher, at the
discretion of the Chief Executive Officer or the Compensation Committee of the
Board of Directors.

6. Termination of Contract.

b. Change of Control: To the extent that Employer undergoes a
change of control, or is acquired accompanied by a change in senior management,
all items under Section 5, shall be doubled for the greater of the duration of
this Agreement or 24 months ( salary, stock options, and other benefits listed
in Sections 5).

7. Miscellaneous.

To Employer: Perfumania, Inc.
11701 N.W. 101 Road
Miami, Florida 33178

To Executive: Michael Amideo
13020 S.W. 92nd Avenue, A-306
Miami, Florida 33176

or to such other address or such other person as any party shall designate, in
writing, to the other for such purposes and in the manner hereinabove set forth.

<PAGE> 3

material fact necessary in order to make the statements or information contained
herein or therein not misleading. The representations and warranties made in
this Agreement will be continued and will remain true and complete in all
material respects and will survive the execution of the transactions
contemplated hereby.

i. Headings. The article and section headings contained in
this Agreement are inserted for convenience only and shall not affect in any way
the meaning or interpretation of the Agreement.

o. Change in Control. To the extent that Employer undergoes a
significant change in control or is acquired or merges with another
organization, all items under sections 5. and 6. above shall apply.

IN WITNESS WHEREOF, Employer and Executive have executed this Agreement
as of the date first above written.

WITNESSES:

EMPLOYER:

Perfumania.com, inc.

By: /s/ Rachmil Lekach
--------------------------------
Rachmil Lekach, President

EXECUTIVE:

By: /s/ Michael Amideo
---------------------------------
Michael Amideo, Chief Financial Officer
and Chief Operating Officer

<PAGE> 1
S-1

EXHIBIT 23.1

Consent of Independent Certified Public Accountants

We hereby consent to the use in this registration statement on Amendment
No. 1 to Form S-1 of our report dated May 14, 1999, except for Note 8 as to
which the date is July 14, 1999, relating to the financial statements of
perfumania.com, inc., which appear in such Registration Statement. We also
consent to the references to us under the headings "Experts" and "Selected
Financial Data" in such Registration Statement.

/s/ PricewaterhouseCoopers LLP
Miami, Florida
July 28, 1999

<PAGE> 1
Exhibit 23.4

CONSENT OF DIRECTOR, DIRECTOR NOMINEE, OR EXECUTIVE OFFICER

perfumania.com, inc.

I, Daniel Manella, am a Director, Director-nominee or Executive
Officer of perfumania.com, inc. (the "Company").

I hereby consent to the inclusion of my name and biographical
information in the Company's Registration Statement to be filed with the
Securities and Exchange Commission on Form S-1 (the "Registration Statement") in
connection with the Company's initial public offering. I understand that my name
and biographical information will be included for the sole purpose of
identifying and describing the directors and officers of the Company in
accordance with the Securities Act of 1933 and the rules promulgated thereunder.
I acknowledge that information about me will be published, distributed and
publicly available and waive any claims that I may assert against the Company as
a result of the inclusion of such information in the Registration Statement.

IN WITNESS WHEREOF, I have executed this Consent on this the 19th day
of July, 1999.

/s/ Daniel J. Manella
-----------------------------
Daniel J. Manella

Acknowledged and Accepted
by perfumania.com, inc. on this
the 19th day of July, 1999.

perfumania.com, inc.

/s/ Rachmil Lekach
- -----------------------------
Rachmil Lekach
Its President