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                     U.S. SECURITIES AND EXCHANGE COMMISSION

                             WASHINGTON, D.C. 20549
                                   FORM 10-KSB

                    ANNUAL REPORT UNDER SECTION 13 or 15 (d)

                       THE SECURITIES EXCHANGE ACT OF 1934


For the fiscal year ended                             Commission file number
     March 31, 2003                                          0-16819

                             FRAGRANCENET.COM, INC.
                             ----------------------
             (Exact name of Registrant as specified in its charter)

                Delaware                                     94-3054267
        ----------------------                         ----------------------
       (State of incorporation)                       (IRS Employer ID Number)

 909 Motor Parkway, Hauppauge, New York                        11788
----------------------------------------                     ---------
(Address of principal executive offices)                     (Zip Code)

Registrant's telephone number, including area code: (631) 582-5204

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

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

                                                Number of Shares Outstanding
       Title of Class                                as of March 31, 2003
------------------------------                      --------------------
Common Stock, $.01 par value                              17,468,330

Check whether the issuer (1) filed all reports required to be filed by Section
13 or 15(d) of the Securities Exchange Act of 1934 during the past 12 months (or
for such shorter period that the registrant was required to file such reports),
and (2) has been subject to such filing requirements for the past 90 days
YES [X]   NO  [ ]

Check if disclosure of delinquent filers in response to Item 405 of Regulation
S-B is not contained in this form, and no disclosure will be contained, to the
best of Registrant's knowledge, in definitive proxy or information statements
incorporated by reference in Part III of this Form 10-KSB or any amendment to
this Form 10-KSB [ ].

Issuer's revenues for its most recent fiscal year:  $10,499,441

The aggregate market value of the voting and non-voting common equity held by
non-affiliates of the Registrant, based on the closing price for such common
equity on June 25, 2003 is approximately $2,340,094.

The number of shares outstanding of the Issuer's common stock, as of June 25,
2003:

                                17,468,330 shares





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Forward-Looking Statements

Certain statements within this Form 10-KSB constitute "forward-looking
statements" within the meaning of the Private Securities Litigation Reform Act
of 1995. Such forward-looking statements involve known and unknown risks,
uncertainties and other factors that may cause the actual results, performance
or achievements of FragranceNet.com, Inc. to be materially different from any
future results, performance or achievements expressed or implied by such
forward-looking statements. These forward-looking statements are based on our
current expectations and are subject to a number of risks, uncertainties and
assumptions relating to our operations, financial condition and results of
operations, including, among others, rapid technological and other changes in
the market we serve, our numerous competitors and the few barriers to entry for
potential competitors, the short-term nature of many of our contracts, the
seasonality and quarterly variations we experience in our revenue, our uncertain
revenue growth, our ability to attract and retain qualified personnel, our
ability to expand our infrastructure and manage our growth, and our ability to
identify, finance and integrate acquisitions, among others. If any of these
risks or uncertainties materialize, or if any of the underlying assumptions
prove incorrect, actual results may differ significantly from results expressed
or implied in any forward-looking statements made by us. These and other risks
are detailed in this Annual Report on Form 10-KSB and in other documents filed
by us with the Securities and Exchange Commission. FragranceNet.com, Inc.
undertakes no obligation to update publicly any forward-looking statements for
any reason, even if new information becomes available or other events occur in
the future.

                                     PART I

Item 1. Business

         FragranceNet.com, Inc. ("FragranceNet" or the "Company") operates the
world's largest Internet discount fragrance store offering more than 3,500
brand-name fragrances at the lowest prices. By combining an extensive selection
with free U.S. shipping and handling on orders over $60, FragranceNet customers
are treated to a unique and easy shopping experience. FragranceNet recently
formed a new entity, which is wholly-owned, under the name of FragranceNet
Wholesales, Inc. to pursue the wholesale sale of fragrances and related
products. The wholesale business is in its infancy and generated sales during
the fiscal year ended March 31, 2003 of approximately $570,000. FragranceNet
performs fulfillment services for companies who pay a fee for the Company to
fulfill orders from other websites. These fees represent incremental income to
the Company performed within our current warehouse space, with our current
employees.

         On July 28, 1999, the Company, then known as National Capital
Management Corporation ("NCMC"), a publicly held company with no substantial
business operations, entered into an Agreement and Plan of Merger (the "Merger
Agreement") by and among the Company, FAC, Inc., a Delaware corporation and
wholly-owned subsidiary of NCMC ("Merger Sub"), Telescents, Inc., a New York
corporation ("Telescents"), and Dennis M. Apfel, Jason S. Apfel and Growth
Capital Partners, L.L.C., a Delaware limited liability company ("GCP"), the
holders of all of the outstanding capital stock of Telescents (the "Telescents
Shareholders"). Pursuant to the terms of the Merger Agreement, Merger Sub merged
with and into Telescents (the "Merger") in accordance with the provisions of the
Delaware General Corporation Law and the New York Business Corporation Law
effective as of July 28, 1999, whereupon the separate corporate existence of
Merger Sub ceased and Telescents continued as the surviving corporation





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(the "Surviving Corporation"). Pursuant to the Merger Agreement, the Company
issued to the Telescents Shareholders an aggregate of 4,900,000 shares of common
stock of NCMC ("Common Stock") and an aggregate of 1,029,514 shares of Preferred
Stock of NCMC ("Preferred Stock") in exchange for all the outstanding shares of
TeleScents. The preferred stock had voting privileges on an "as converted"
basis. The Preferred Stock was convertible into Common Stock on a 1-for-10 basis
at such time as the Certificate of Incorporation of the Company was amended to
increase the authorized shares of Common Stock to a number of shares of Common
Stock sufficient to effect the conversion. Such conversion took place in
November, 1999 immediately following the 1999 Annual Meeting of Stockholders of
the Company. Accordingly, upon consummation of the Merger the Telescents
Shareholders, in the aggregate, held approximately 89.55% of the total voting
power of the Company's voting stock.

         In connection with the Merger Agreement, the Telescents Shareholders
entered into a Shareholders Agreement dated as of July 28, 1999 (the
"Shareholders Agreement"). Pursuant to the Shareholders Agreement, during the
period commencing July 28, 1999 and continuing until the first to occur of (a)
July 31, 2002 or (b) the date on which GCP beneficially owns (within the meaning
of Rule 13d-3 under the Securities Exchange Act of 1934, as amended (the
"Exchange Act")) shares of Common Stock and/or Preferred Stock of the Company
representing less than ten percent (10%) of the aggregate voting power of the
outstanding capital stock of the Company, the Telescents Shareholders have
agreed that each of them shall use his or her best efforts to cause the Board of
Directors of the Company to nominate such of Philip D. Gunn or Theodore V.
Buerger, who is also a principal of GCP, as shall be designated by GCP (the "GCP
Director") for election as a director of the Company, and shall vote all shares
of Common Stock and Preferred Stock beneficially owned by such Telescents
Shareholders for election of the GCP Director as a director of the Company, at
each annual meeting of the Company's stockholders.

         As of March 31, 2003, 17,468,330 shares of Common Stock were issued and
outstanding.

                  The Online Store

         The Company operates an online store that specializes in the sale of
brand-name fragrances, bath and body products, gels, candles, powders and soaps
directly to the consumer. The Company sells women's and men's products and does
not sell any imitations or knock-offs. FragranceNet now offers its customers
over 3,500 products at discounts of up to 60%. In addition, FragranceNet offers
free shipping within the United States on all orders over $60. The products sold
by the Company include major brands and hard-to-find and discontinued items.
Visitors to the FragranceNet site find a user-friendly vehicle for purchase of
products. The online store has search capability by price, name and type of
scent. There is a reminder club that users may register with to be reminded by
e-mail 2 weeks before any birthday or anniversary.

         Within seconds following every order placed with FragranceNet, the
Company sends an e-mail confirmation detailing all aspects of the customer's
order. The Company has available live customer service representatives to answer
questions a consumer may have either about their order or about a particular
fragrance.

         The Company has integrated over 25 suppliers into its business that
allows for availability of over 3,500 items on a daily basis and, due to the
many sources of merchandise, contributes to the high gross profit percentage
FragranceNet enjoys. The inventory is real time and can be adjusted many times
each day if necessary. Approximately 45% of sales is made with inventory
purchased in advance of sales and 55% of sales is made with inventory purchased
by




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the Company when a consumer buys it and has paid for it. Customer payment is
made by check or credit card and the goods are not shipped to the customer until
the check clears or authorization from the credit card company is obtained. A
small number of wholesale customers are on credit. Therefore, accounts
receivable balances represent payments due from credit card companies and new
wholesale customers. The Company has provided an allowance for product returns,
which have been minimal.

         FragranceNet's online store provides its retail customers with superior
features, pricing and convenience. The online store offers consumers over 3,500
fragrances and related products. They are displayed in a framed format which
allows for easy and simple navigation with one button click. There are special
sections of the store offering gift sets and specials, women's fragrances, men's
fragrances, scented candles and customer service. The online store features the
ability to search for any fragrance by name, price and/or type of scent such as
fruity, oriental and/or spicy. The online store features a simple click of a
button to add items to the customer's shopping cart and to check out on a secure
server. The site also permits the addition and subtraction of items with a
simple click of a button. When the customer is finished shopping, clicking on
the checkout button allows for easy checkout with the customer having three
options of payment. The customer can pay by credit card over a secure server;
they can fill out all information and send a check, or they can call or fax
their credit card information to customer service.

                  Market Opportunity

           The worldwide fragrance market is estimated to be in excess of $20
billion of which approximately $6 billion are U.S. sales. Approximately five
percent of FragranceNet's sales for fiscal 2003 were to international customers.
However, there is no assurance the Company can maintain its market share.
FragranceNet is recognized as the leader in the sale of fragrances over the
Internet. Forrester Research estimates that e-tailing will increase from $20
billion in the U.S. to over $184 billion by the year 2004, reaching 7% of total
retail sales.

                  Strategy

FragranceNet's strategy is based upon the belief that if you provide brand-name
fragrances at discount prices and add to that free U.S. shipping on orders over
$60, and live customer service representatives who are knowledgeable in the
fragrance industry, the Company should be able to continue to attract new
customers and grow. FragranceNet believes there is strong demand for its
products, delivery system and discounts. The Company also believes that it has
the ability to combine its expertise in marketing, unique supplier arrangements
and overall strategy to become the most dominant player in its marketplace. The
same strategy is employed in the wholesale business.

                  Partnerships

         FragranceNet is featured in major search engines such as Yahoo!,
Google, Hotbot, GoTo and AOL Netfind. In addition, the Company has established
increased exposure through today's top online communities and malls including
placements within Visa Shopping Offers, Excite Shopping Guide, Prodigy Shopping,
First USA Online Deals, Coolsavings, Ebates and MyPoints.




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                  Competition

         FragranceNet's online store competes against a number of retailers
within different channels of distribution. Its competition includes (1)
traditional department stores and perfume retailers such as Macy's and
Bloomingdale's, (2) nationally known discount perfume retailers that seek to
purchase high-demand or limited-supply products, (3) websites maintained by
online retailers of fragrance and fragrance products, such as perfumania.com and
sephora.com (4) catalog retailers of fragrance and fragrance-related products,
(5) Internet portals and online service providers that feature shopping
services, such as America Online, Yahoo!, Excite and Lycos and (6) mass market
retailers such as Wal-Mart.

         Online fragrance competitors include:

         (1) Department stores' Websites;

         (2) Specialty stores' Websites;

         (3) Companies with little name recognition or, in many cases, little
             access to capital; and

         (4) Mass merchandisers.

         Many department stores and mass merchandisers carry tens of thousands
of different items and the Company believes that they cannot compete favorably
with FragranceNet. The department stores (Bloomingdales, Macy's, Nordstrom, Saks
Fifth Avenue, etc.) and specialty stores sell products using full retail price
models. The e-tailers that are fragrance and beauty sites, such as sephora.com
and gloss.com, are also full retail models and include cosmetics as a major
component of their product mix. The Company believes that none of the possible
competition has the breadth of inventory that the Company carries. FragranceNet
believes that it has a rapidly emerging brand-name, has established industry
relationships, a convenient shopping experience, an extensive product selection
and competitively priced products.

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

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

               o    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.

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

               o    Due to the significant costs of carrying inventory in
                    multiple store locations, traditional retailers focus their
                    product selection on the most





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                    popular products that produce the highest inventory turns,
                    thereby further limiting consumer selection.

         The unique characteristics of the Internet provide a number of
advantages for retail 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 conduct
business on the Internet, 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.

                  Usage. The number of customers who visit the site has grown
consistently, increasing from 2,000 per month during 1997 to over 850,000 per
month during the month of December 2002.

                  Marketing and Advertising

         FragranceNet has established a variety of relationships with several
Internet sites to build traffic and attract customers which is done on a cost
per click basis on search engines such as Overture, Findwhat and Sprinks.
FragranceNet intends to expand its use of these kinds of alliances in the
future. FragranceNet strives 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. FragranceNet sends e-mails
to its customers advising them of its promotions and other pricing specials for
their favorite fragrances. FragranceNet intends to continue to advertise in
whichever forms of media prove most effective.

                  Fulfillment and Inventory Management

         FragranceNet offers over 3,500 fragrances and fragrance-related
products, which it believes is a wider selection of products than offered by
most traditional fragrance sellers. FragranceNet may obtain inventory directly
from any number of suppliers depending on which offers the most favorable
selection, pricing, quality and quantity terms. FragranceNet performs
fulfillment for third parties as an additional source of revenue.

                  Technology

         FragranceNet uses an advanced software platform that allows it to grow
rapidly while providing reliable, secure and cost-effective e-commerce
solutions. Using a MY-SQL database, FragranceNet displays extensive data on its
over 3,500 brand-name fragrances. An application server dramatically improves a
Website's interactive characteristics by monitoring transactions, creating and
managing content published on the site and storing data, among other things.
This technology offers Web shoppers a host of leading-edge features including
real time inventory updates, the reminder club system, an online shipping
calculator for orders originating outside the U.S., extensive product searching
options and electronic gift certificates and coupons. With




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MY-SQL, FragranceNet has been able to enhance the store and expand its customer
services enormously. The MY-SQL platform provides FragranceNet with a level of
stability, flexibility and scalability which provides major assistance in
driving its current growth. With a MY-SQL database FragranceNet displays a
wealth of data for its 3,500 fragrances.

         Using its system, FragranceNet has taken steps to prevent the failure
of its mission-critical business applications. While no system is foolproof the
Company has taken reasonable steps to provide a secure site. Routers, switches,
firewalls and servers associated with its Website are all deployed with backup
or stand-by components. The security 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. The security architecture is a layered approach that addresses
security at every layer and ensures that the primary aspects of security -
confidentiality, integrity and availability -- are addressed and that customer
information is secure.

         FragranceNet uses its software package to fulfill orders and conduct
general business activities. Scanning technology is also used. The system will
print packing slips and shipping labels, and direct the fulfillment team to
conduct efficient product picking and packing. Once the order is fulfilled and
shipped, the database is updated with the new shipping status. The software
package is capable of very high scaling, allowing for growth. In summary,
management believes that FragranceNet's technology infrastructure provides the
highest customer-centric, complete and reliable shopping experience currently
available.

         Using FragranceNet's software package, orders are tracked and each
customer receives a unique identifying number. All aspects of the business are
conducted through computer programs that are backed up at least three times
daily. Scanning technology is used for inventory control and order shipping
information which makes these processes more accurate and efficient. The system
automatically prints all purchase orders, packing lists and shipping labels. The
software packages used by FragranceNet are capable of running businesses much
larger with significant scalability.

         Credit cards are authorized and processed securely using Web Authorize
software. The authorizations are done in batches and upon each successful
authorization, the product is ordered from the suppliers or taken from inventory
and shipped to consumers.

                  Employees

         As of March 31, 2003, FragranceNet employed 28 individuals and
considers its relationship with its employees to be excellent. None of
FragranceNet's employees are represented by unions. FragranceNet believes that
success is dependent on its ability to attract and retain qualified personnel in
numerous areas, including software development.

                  Risk Factors Related to Fragrancenet's Business

         The management of FragranceNet is aware of the risk factors facing the
Company as it strives to grow from its current stage. In this regard, management
has carefully analyzed the risks facing FragranceNet in its efforts to achieve
the objectives as described herein and the steps it must take to lessen these
risks. An examination of these risk factors follows:




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         MANAGEMENT OF GROWTH

         FragranceNet's success will depend on its ability to effectively manage
its future growth. As its sales continue to grow, it will incur increases in
expenses and its managerial and operational resources could become severely
strained. To manage its future growth effectively, it must do the following:

          o    implement its business model;

          o    anticipate and adapt to rapid changes in its markets;

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

          o    introduce new and enhanced services, products and alliances;

          o    maintain its profit margins notwithstanding price competition or
               rising wholesale prices;

          o    minimize technical difficulties, system downtime and the effect
               of Internet brownouts; and

          o    manage the timing of promotions and sales programs.

         If FragranceNet does not effectively manage its future growth, its
revenues and operating results could be materially adversely affected and it
could fail to maintain profitability.

         RECRUITMENT  AND  RETENTION OF PROFESSIONALS

         FragranceNet's success depends on the expertise of its key technical,
sales and senior management personnel. FragranceNet's senior management has
approximately six years' experience operating and managing an online store
engaged in the sale of fragrance-related products. FragranceNet depends heavily
on the continuing service of its management and on their ability to retain
further expertise in all aspects of the business. The loss of Dennis Apfel,
Jason Apfel, Eric Apfel or other key employees would hurt the business.
FragranceNet anticipates hiring additional persons to serve on its management
team. Its success depends on its ability to continue to attract, retain and
motivate skilled employees who can effectively manage an online fragrance
business. FragranceNet may be unable to retain its present key employees or to
attract, assimilate or retain other qualified employees in the future. It may
experience difficulty in hiring and retaining skilled employees with appropriate
qualifications. The business will be harmed if FragranceNet fails to attract and
retain key employees.

         COMPETITION

         FragranceNet believes that its ability to compete depends upon many
factors, including:

         o        the market acceptance of its website and online services;

         o        the success of its sales and marketing efforts;

         o        the performance and reliability of its services;




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         o        the price of its products; and

         o        the effectiveness of its customer service and support efforts.

         FragranceNet's competitors may be larger and may have substantially
greater financial and marketing resources. In addition, its 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 FragranceNet.

         FragranceNet intends to maintain detailed awareness of all its
competitors, many of which are public companies with information readily
available. FragranceNet will strive to develop market share through its
marketing and sales plan, the development of enhanced services, an effective
pricing schedule, the continual outstanding quality and performance of its
services, and the professionalism and competency of its personnel. Management of
FragranceNet intends to make the mark, "FragranceNet", a nationally recognized
brand which will provide FragranceNet with a distinct competitive advantage.
However, there is no assurance that the mark will become nationally recognized.

         POTENTIAL FLUCTUATIONS IN QUARTERLY PERFORMANCE

         FragranceNet's revenues and operating results may vary significantly
from quarter to quarter due to a number of factors. Many of these factors are
outside of its control and include:

          o    seasonal fluctuations in consumer purchasing patterns and
               advertising expenses;

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

          o    actions of competitors;

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

          o    general economic and market conditions.

         Because FragranceNet has a limited operating history, its future
revenues are difficult to forecast. A shortfall in revenues will damage its
business and would likely affect the market price of the Common Stock. Its
limited operating history and the new and rapidly evolving Internet market make
it difficult to ascertain the effects of seasonality on the business. If
seasonal and cyclical patterns emerge in Internet purchasing, the results of
operations from quarter to quarter may vary greatly and may cause the business
to suffer. Fragrance sales are generally lower in the first half of each fiscal
year and increase substantially during the Christmas purchasing season and other
holidays. FragranceNet expects to experience similar seasonality in its
business. It is possible that in some future periods, results of operations may
be below the expectations of public market analysts and investors. In this
event, the price of the Common Stock may fall.

         To minimize quarterly fluctuations in operating results, FragranceNet
will attempt to (i) coordinate all service offerings between in-house personnel,
vendors and partners, (ii) maintain




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close awareness of all competitors' services activities, (iii) use advisors,
input from partners and customers to determine sales status, (iv) closely
monitor the performance level of all employees, (v) constantly review the
acceptability, demand and quality and type of the services offered and (vi)
rigidly adhere to a level of expenditures consistent with ongoing sales.

         RAPID TECHNOLOGY CHANGE

         The Internet is changing very rapidly and the skills of FragranceNet
employees could become obsolete quickly. Success will depend, in part, on its
ability to improve its existing services, and develop new services and solutions
that address the increasingly sophisticated and varied needs of its current and
prospective customers. The Company must also respond to technological advances,
competitive service offerings, and emerging Internet standards and practices.

         DEPENDENCE ON OTHERS

         FragranceNet 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, it has no ability or resources to obtain or
deliver merchandise on its own. The business cannot operate unless carriers such
as the United States Postal Service, United Parcel Service, Airborne Express and
Federal Express deliver inventory and ship merchandise to customers. Strikes or
other service interruptions will affect FragranceNet 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. FragranceNet and Internet users also depend on communications
providers to provide Internet users with access to FragranceNet's online store.
The store and its users would experience disruptions or interruptions in service
due to failures by these providers. These types of occurrences could cause users
to perceive the online store as not functioning properly and therefore cause
them to stop using FragranceNet's services. These risks pose a greater threat to
FragranceNet than to traditional "bricks and mortar" fragrance sellers whose
operations can continue despite a communications systems failure. Unlike those
competitors, FragranceNet is virtually certain to lose sales as a result of a
systems failure.

         FragranceNet's business depends on the ability of third-party vendors
to provide it with popular, high-demand fragrances at competitive prices and in
sufficient quantities. FragranceNet in fiscal 2003 purchased more than 90% of
its merchandise from 25 vendors. Many of the smaller suppliers used by
FragranceNet have limited resources, production capacities and operating
histories. FragranceNet's success depends on its ability to obtain products to
satisfy customer demand and the business could be harmed if the ability to
procure products were limited.

         ADEQUACY OF WORKING CAPITAL

         FragranceNet is expected to have sufficient capital to implement its
operating plan. However, FragranceNet may have to curtail some of its immediate
plans or attempt to obtain financing from other sources if expenses increase or
revenues decline. FragranceNet is in a highly competitive business that may
require additional capital for marketing, services development, human resources
and working capital in order to generate growth. In this regard, the expansion
of FragranceNet's business may depend on its ability to locate capital resources
to finance its working capital, additions to personnel and other requirements.
No assurance can be




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given that additional financing will be available to FragranceNet at any time in
the future, or that if financing is available at all, it will be available on
reasonable and satisfactory terms.

         FRAGRANCENET BUSINESS MODEL IS UNPROVEN

         FragranceNet's strategy is based on an unproven business model. Its
business model depends on the acceptance of the Internet for
business-to-consumer transactions and the ability of FragranceNet's technology
to continue evolving and gain widespread acceptance.

         NO ASSURANCE OF AVAILABILITY OF PERSONNEL

         FragranceNet is dependent upon its ability to attract and retain
qualified personnel. There is intense competition for qualified personnel in its
business. Although FragranceNet believes that such personnel will be available
and attainable at reasonable compensation levels, no assurance can be given that
FragranceNet will be able to attract and retain the qualified personnel
necessary for the development of our business.

         FUTURE GOVERNMENT REGULATIONS AFFECTING THE INTERNET

         With the exception of regulations applicable to businesses generally,
FragranceNet is not currently subject to direct regulation by any government
agency. Due to increasing popularity and use of the Internet, however, it is
possible in the future that a number of laws may be adopted with respect to the
Internet, covering issues such as user privacy, pricing of goods and services,
and types of products and services offered. One example of this is the
Telecommunications Act of 1996. The Telecommunications Act prohibited the
transmission over the Internet of certain types of information. Although certain
provisions of the Telecommunications Act were held unconstitutional, similar
laws may be enacted in the future. Other nations, including Germany, have taken
similar actions to restrict the free flow of information deemed to be
objectionable on the Internet. Additionally, certain telecommunications carriers
continue to advocate that telecommunications over the Internet should be
regulated by the Federal Communications Commission in the same manner as other
telecommunications services. These telecommunications carriers want to see the
government eliminate the current exemption from payment of telecommunications
access charges for Internet service providers.

         If the government adopts any additional laws or regulations covering
the use of the Internet, such actions could decrease the growth of the Internet.
Any such reduction in the growth of the Internet may negatively impact the
customers that use our services. This could cause the demand for our services to
be significantly reduced and raise the cost of providing those services.
Decrease in growth could also result if existing U.S. state and federal laws and
foreign laws governing issues such as commerce, taxation, property ownership,
defamation and personal privacy are increasingly applied to the Internet.

         INTERNET SECURITY RISKS

         The secure transmission of confidential information over public
telecommunications facilities is a significant barrier to electronic commerce
and communications on the Internet. Many factors may cause compromises or
breaches of security systems used by the Company and other Internet sites to
protect proprietary information. A compromise of security on the Internet would
materially negatively affect the use of the Internet for commerce and
communications. This in turn would negatively affect our business. Circumvention
of FragranceNet's security





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measures could result in misappropriation of our proprietary information or
cause interruptions of FragranceNet's operations. Protecting against the threat
of such security breaches may require us to expend significant amounts of
capital and other resources. There can be no assurance that FragranceNet's
security measures will prevent security breaches.

         INFRASTRUCTURE OF THE INTERNET

         The success of commercial use of the Internet depends in large part
upon the development and maintenance of the Internet's infrastructure, including
the development of complementary products such as various broadband
technologies. The number of users of the Internet and the amount of traffic on
the Internet have grown significantly and are expected to continue to grow,
placing greater demands on the Internet's infrastructure. This infrastructure
may not be able to support the demands placed on it by this continued growth
without its performance or reliability being decreased. Any outages or delays in
services could lower the level of Internet usage. In addition, the
infrastructure and complementary products and services necessary to make the
Internet a viable commercial marketplace may not develop. If usage of the
Internet is curtailed due to infrastructure constraints or lack of complementary
products, FragranceNet expects an adverse impact on its business and revenues.
Even if such infrastructure and complementary products and services do develop,
there can be no guarantee that the Internet will become a viable commercial
marketplace for products and services such as those offered by FragranceNet.

Item 2. Properties

         FragranceNet's administration and warehouse facilities are located in
an 8,000 square foot facility in Hauppauge, New York. The lease for this
facility expires on May 31, 2005. The Company moved into this facility during
September 2000 and believes that it will be adequate for its current operations
and contemplated growth.

Item 3. Legal Proceedings

         FragranceNet is not a party to any legal proceedings.

Item 4. Submission of Matters to a Vote of Security Holders

     (a) The Annual Meeting of Stockholders (the "Meeting") of the Company was
held on November 25, 2002 at the offices of the Company.

     (b)  Matters voted on at the Meeting were as follows:

          (i)  Dennis M. Apfel, Jason S. Apfel and Eric Apfel were elected
               directors of the Company.


<TABLE>
<CAPTION>

                                                                                              Withheld/
                                                                   Votes For      Votes Against     Abstain
                                                                   ---------      -------------     -------
<S>                                                                <C>             <C>              <C>
          (ii)  Approval of an amendment to the Certificate of     11,611,246      4,746,635        8,253
                Incorporation of the Company to effect a reverse
                1 for 10

</TABLE>





<PAGE>



<TABLE>
<CAPTION>

                                                                                              Withheld/
                                                             Votes For      Votes Against     Abstain
                                                             ---------      -------------     -------
<S>                                                          <C>             <C>              <C>

                split of the Common Stock,
                par value  $.01 per share

         (iii)  Ratification of the Board of                 16,349,025         10,688        6,421
                Directors' selection of Marcum &
                Kliegman LLP to serve as
                the Company's independent accountants
                for the Company's fiscal year ending
                March 31, 2003

</TABLE>

The reverse 1 for 10 split of the Common Stock has not been implemented by the
Board of Directors as of June 27, 2003.




<PAGE>



                                     PART II

Item 5. Market for Common Equity and Related Stockholder Matters

     a. Market Information

         The Company's Common Stock trades on the OTC Bulletin Board under the
symbol FRGN.

         The high and low bid prices for shares of Common Stock of the Company
         for each quarter during the years ended March 31, 2003 and March 31,
         2002 are as follows:

<TABLE>
<CAPTION>

                                                         Bid Price
                                               High                    Low

<S>                                            <C>                    <C>
          For the Quarter Ended

          March 31, 2003                        .16                    .09
          December 31, 2002                     .25                    .05
          September 30, 2002                    .15                    .12
          June 30, 2002                         .44                    .14

          March 31, 2002                        .34                    .16
          December 31, 2001                     .50                    .17
          September 30, 2001                    .53                    .35
          June 30, 2001                         .53                    .15

</TABLE>

         The quotations represent inter dealer quotations without retail
mark-up, mark-down or commission, and do not necessarily represent actual
transactions. The last reported sales price per share of the Company's Common
Stock on March 31, 2003 was $.15.

     b. Number of Holders of Common Stock at March 31, 2003:

<TABLE>

<S>                                                          <C>
Authorized Shares:                                           50 million
Shares Outstanding:                                          17,468,330
Number of holders of record                                  810
of shares of Common Stock
</TABLE>





<PAGE>




                  Dividends on Common Stock

         The Company did not pay any dividends to its stockholders in fiscal
2003 and does not anticipate paying any dividends in the foreseeable future.

Item 6. Management's Discussion and Analysis

         The following discussion may contain forward-looking statements. The
Company's actual results could differ materially from those discussed in such
forward-looking statements. Factors that could cause or contribute to such
differences include those discussed below and elsewhere in this Annual Report on
Form 10-KSB. The following discussion and analysis should be read in conjunction
with the Consolidated Financial Statements and the Notes thereto which appear
elsewhere in this Annual Report on Form 10-KSB.

         The Company sells brand name fragrances and related products over the
Internet through a website located at www.fragrancenet.com. The Company
purchases products from over 25 different suppliers and 55% of the time does not
purchase the products until they are ordered and paid for by the consumer.
Payment in the case of retail sales is made by credit card or by check and goods
are not shipped to the customer until the check clears and/or authorization from
the credit card company is obtained. Approximately 45% of sales are made with
inventory purchased in advance of sales. A small number of wholesale customers
are on credit. Therefore, accounts receivable balances represent payments due
from credit card companies and new wholesale customers

         Results of Operations

         FISCAL YEAR ENDED MARCH 31, 2003 COMPARED TO THE
         FISCAL YEAR ENDED MARCH 31, 2002

         Net sales. Net sales primarily includes the sale of our fragrances and
fragrance-related products, net of discounts, coupons and returns. Net sales for
the fiscal year ended March 31, 2002 were $7,502,186 and were $10,499,441 for
the year ended March 31, 2003. The increase resulted from a lowering of prices
which resulted in greater conversion of sales from the visitors to the website.

         Cost of sales. Cost of sales consists primarily of the cost of
merchandise sold plus freight-in. Cost of sales for the fiscal year ended March
31, 2002 was $4,515,079. Cost of sales was $6,834,672 for the year ended March
31, 2003. The increase was due to greater sales volume and therefore greater
purchases.

         Gross profit. For the fiscal year ended March 31, 2002, gross profit
was $2,987,107 or 40% of net sales compared to gross profit of $3,664,769 or 35%
for fiscal 2003. The decrease in gross profit percentage was primarily due to a
lowering of prices to the consumer.

         Selling and marketing expenses. Selling and marketing expenses consist
of expenditures related to advertising and promotion and shipping. Selling and
marketing expenses for the fiscal year ended March 31, 2002 was $1,278,891 and
increased to $1,703,963 for the 2003 fiscal





<PAGE>



year. The increase was due to increased advertising by the Company on search
engines and placing greater emphasis on the affiliate program.

         General and administrative expenses. General and administrative
expenses consist of payroll and related expenses for executive, accounting and
administrative personnel, professional fees and other general corporate
expenses. General and administrative expenses for the fiscal year ended March
31, 2002 was $1,533,616 and increased to $1,903,986 for fiscal 2003. The
increase was attributable to the general increase in expenses to support the
increased sales and future growth of the Company. The Company believes general
and administrative expenses will continue to increase in fiscal 2004, to support
the anticipated additional growth of the Company.

         Other income and expense. Interest expense was $22,461 in fiscal 2002
and decreased to $18,640 in fiscal 2003. Other income of $20,400 and $15,200 in
fiscal 2002 and 2003, respectively, consists primarily of sublease rental income
related to a portion of the Company's administrative and warehouse facility
rented to an entity in which the Chief Executive Officer is a partner.

         Net Income. As a result of the factors discussed above, the net income
for the fiscal year ended March 31, 2002 was $177,151 compared to $57,496 for
the 2003 fiscal year.

         Liquidity and Capital Resources

         At March 31, 2002, FragranceNet had cash and cash equivalents of
$389,441 compared to $355,251 at March 31, 2003.

         Net cash provided by operating activities was $230,413 for the fiscal
year ended March 31, 2002, compared net cash used of $30,122 for the fiscal year
ended March 31, 2003. The decrease was primarily due to the purchase of
inventory in fiscal 2003.

         Net cash used in investing activities for the fiscal year ended March
31, 2003 was $0. The Company believes capital expenditures in fiscal 2004 will
be greater than the fiscal 2003 level.

         Net cash used in financing activities was $4,097 for the year ended
March 31, 2002, compared to $4,068 used in the 2003 fiscal year.

         FragranceNet's principal capital and operating requirements are to
acquire merchandise, maintain and improve our online store and engage in
advertising and promotional activities. FragranceNet's long-term capital
requirements will depend on numerous factors, including, but not limited to, the
following:

          o    the rate of market acceptance of the online store;

          o    the ability to expand our customer base;

          o    the cost of upgrades to our online store; and

          o    the level of expenditures for sales and marketing.

     FragranceNet's principal capital requirements are to:




<PAGE>



          o    Build up our technical infrastructure so that we can rapidly
               fulfill future customer requirements and increase our development
               efficiency;

          o    Continue to expand development of new technologies so that we can
               increase our competitiveness and gross margins;

          o    Extend and intensify our marketing efforts so that we can achieve
               a leading position in the fragrance e-commerce industry and
               achieve our revenue growth objectives;

          o    Fund future strategic acquisitions, if any; and

          o    Provide working capital in order to achieve our business
               objectives.

         New Accounting Pronouncements

         In April 2002, the Financial Accounting Standards Board ("FASB") issued
Statement of Financial Accounting Standard ("SFAS") No. 145, "Rescission of FASB
Statements No.4, 44 and 64, Amendment of FASB Statement No. 13 and Technical
Corrections." SFAS No. 145 requires that gains and losses from extinguishment of
debt be classified as extraordinary items only if they meet the criteria in APB
No. 30. Applying the provisions of APB No. 30 will distinguish transactions that
are part of an entity's recurring operations from those that are unusual and
infrequent that meet the criteria for classification for an extraordinary item.
The adoption of this statement did not have a material effect on the Company's
consolidated financial position and results of operations.

         In June 2002, the FASB issued SFAS No. 146, "Accounting for Costs
Associated with Exit or Disposal Activities." SFAS No. 146 addresses accounting
and reporting for costs associated with exit or disposal activities and
nullifies Emerging Issues Task Force Issue No. 94-3, "Liability Recognition for
Certain Employee Termination Benefits and Other Costs to Exit an Activity
(Including Certain Costs Incurred in a Restructuring)." SFAS No. 146 requires
that a liability for a cost associated with an exit or disposal activity be
recognized and measured initially at fair value when the liability is incurred.
SFAS No. 146 is effective for exit or disposal activities that are initiated
after December 31, 2002 with early application encouraged. The adoption of this
statement did not have a material effect on the Company's consolidated financial
position and results of operations.

         In November 2002, the FASB issued Interpretation No. 45 ("FIN 45"),
"Guarantor's Accounting and Disclosure Requirements for Guarantees, Including
Indirect Guarantees of Indebtedness of Others." FIN 45 requires a company, at
the time it issues a guarantee, to recognize an initial liability for the fair
value of obligations assumed under the guarantee and elaborates on existing
disclosure requirements related to guarantees and warranties. The initial
recognition requirements of FIN 45 are effective for guarantees issued or
modified after December 31, 2002. Adoption of the disclosure requirements were
effective for interim and annual periods ending after December 15, 2002 and did
not have a material impact on the Company's consolidated financial position and
results of operations.

         In January 2003, the FASB issued Interpretation No. 46 ("FIN 46"),
"Consolidation of Variable Interest Entities, an Interpretation of ARB No. 51."
FIN 46 requires certain variable interest entities to be consolidated by the
primary beneficiary of the entity if the equity investors





<PAGE>



in the entity do not have the characteristics of a controlling financial
interest or do not have sufficient equity at risk for the entity to finance its
activities without additional financial support from other parties. FIN 46 is
effective for all new variable interest entities created or acquired after
January 31, 2003. For variable interest entities created or acquired prior to
February 1, 2003, the provisions of FIN 46 must be applied for the first interim
or annual period beginning after June 15, 2003. The Company does not expect the
adoption of FIN 46 to have a material effect on its consolidated financial
position and results of operations.

         In April 2003, the FASB issued SFAS No. 149, "Amendment of Statement
133 on Derivative Instruments and Hedging Activities." The statement amends and
clarifies financial accounting and reporting for derivative instruments,
including certain derivative instruments embedded in other contracts and for
hedging activities under SFAS No. 133. SFAS No. 149 is effective for contracts
entered into or modified after June 30, 2003 except for the provisions that were
cleared by the FASB in prior pronouncements. The Company is currently assessing
the financial impact of adopting SFAS No.149.

         On May 15, 2003, the FASB issued SFAS No. 150, "Accounting for Certain
Financial Instruments with Characteristics of Both Liabilities and Equity." SFAS
No. 150 establishes standards for how an issuer classifies and measures certain
financial instruments with characteristics of both liabilities and equity. It
requires that an issuer classify a financial instrument that is within its scope
as a liability (or an asset in some circumstances). SFAS 150 affects the
issuer's accounting for three types of freestanding financial instruments:

          o    mandatorily redeemable shares, which the issuing company is
               obligated to buy back in exchange for cash or other assets;

          o    instruments that do or may require the issuer to buy back some of
               its shares in exchange for cash or other assets; includes put
               options and forward purchase contracts; and

          o    obligations that can be settled with shares, the monetary value
               of which is fixed, tied solely or predominately to a variable
               such as a market index or varies inversely with the value of the
               issuers' shares.

SFAS No. 150 does not apply to features embedded in a financial instrument that
is not a derivative in its entirety. Most of the guidance in SFAS No. 150 is
effective for all financial instruments entered into or modified after May 31,
2003 and otherwise is effective at the beginning of the first interim period
beginning after June 15, 2003. The Company has not yet completed its analysis of
SFAS No. 150; however, it believes that it is currently in substantial
compliance with the requirements of SFAS No. 150.

         Seasonality

         FragranceNet's operations are expected to fluctuate according to the
retail industry's seasonalities.

         Impact of Inflation

         The primary inflationary factor affecting our operations is increased
labor costs. Competition for qualified personnel could increase labor costs for
the Company in the future.



<PAGE>


Item 7. Financial Statements.

         The consolidated financial statements for the Company are included in
this Annual Report on Form 10-KSB at pages F-1 to F-19.

Item 8. Changes in and Disagreements with Accountants on Accounting and
        Financial Disclosure.

         During the fiscal years ended March 31, 2002 and 2003, there were no
(i) disagreements between Marcum & Kleigman, LLP and the Registrant on any
matter of accounting principles or practices, financial statement disclosure, or
auditing scope or procedure, which disagreements, if not resolved to the
satisfaction of Marcum & Kleigman, LLC, would have caused it to make a reference
to the subject matter of the disagreement in connection with its reports on the
Registrant's financial statements, or (ii) "reportable events" within the
meaning of Item 304(a)(1)(v) of Regulation S-K promulgated under the Securities
Act of 1933, as amended.

                                    PART III

Item 9. Directors and Executive Officers of the Registrant.

The Directors and Executive Officers of FragranceNet are as follows:


<TABLE>
<CAPTION>
Name                            Age      Position
----                            ---      --------
<S>                             <C>      <C>
Dennis M. Apfel                 57       Chairman of the Board of Directors,  Chief  Executive
                                         Officer and Chief Financial Officer

Jason S. Apfel                  30       President, Chief Operating Officer and  Director

Eric J. Apfel                   28       Vice President, Secretary and Director
</TABLE>


         Jason S. Apfel, age 30. Mr. Apfel has been President of the Company
since July 1999 and was Chief Executive Officer of the Company from July 1999 to
December 2002. He has been the Chief Operating Officer of the Company since
December 2002. He has been President of TeleScents since April 1998. Mr. Apfel
was Vice President of TeleScents from April 1997 to April 1998 and from 1995 to
April 1997 he was Vice President of a predecessor company of TeleScents which
sold fragrances through a toll-free telephone number.

         Dennis M. Apfel, age 57. Mr. Apfel has been Chairman of the Company
since May 14, 2001 and Chief Financial Officer since July 1999. He was President
and Chief Executive Officer of TeleScents from April 1997 to April 1998 and
Chairman and Chief Executive Officer of TeleScents from April 1998 to July 1999.
In December 2002, Mr. Apfel became Chief Executive Officer of the Company. Mr.
Apfel is a partner in the law firm of Miller & Apfel in Hauppauge, New York and
has been a practicing attorney since 1972.

         Eric J. Apfel, age 28. Mr. Apfel joined the Company during fiscal year
2003. From July 1998 to November 2001, prior to joining FragranceNet.com, he was
a research analyst covering Food, Beverage and Media companies at Dresdner
Kleinwort Wasserstein. From July





<PAGE>



1997 to June 1998, Mr. Apfel was an Associate Portfolio Manager at Sanford C.
Bernstein & Co. Mr. Apfel is a Chartered Financial Analyst.

         During the fiscal year ended March 31, 2003, the Board of Directors of
the Company met twice. All of the directors attended each meeting of the Board
of Directors. The Board of Directors does not have any committees.

         Dennis Apfel and Jason Apfel are father and son; Dennis Apfel and Eric
Apfel are father and son; and Jason Apfel and Eric Apfel are brothers.

         The term of Philip D. Gunn as a director of the Company ended on
November 25, 2002, the date of the 2002 Annual Meeting of Stockholders of the
Company.

Section 16(a) Beneficial Ownership Reporting Compliance

          Under Section 16(a) of the Securities Exchange Act of 1934, directors
and officers of the Company, and persons who own more than ten percent of the
Common Stock, are required to file reports concerning their beneficial ownership
of securities of the Company with the Securities and Exchange Commission.
Directors, officers and greater than ten percent stockholders are required by
regulations of the Commission to furnish the Company with copies of all Section
16(a) reports they file.

         To the Company's knowledge, based solely on a review of copies of such
reports furnished to the Company and confirmations that no other reports were
required during the fiscal year ended March 31, 2003, its directors, officers
and greater than ten percent stockholders complied with all Section 16(a) filing
requirements, except that Eric Apfel filed a late report covering his receipt of
a restricted stock award from the Company.



Item 10. Executive Compensation

         The following table sets forth information for the fiscal years ended
March 31, 2003 and 2002 concerning the compensation of the Chief Executive
Officer of the Company, and the three other most highly compensated executive
officers of the Company whose total annual salary and bonus exceeded $100,000.




<PAGE>



                           SUMMARY COMPENSATION TABLE


<TABLE>
<CAPTION>
                                             Annual Compensation                   Long-Term Compensation
                                      ------------------------------       -------------------------------------
                                                                                     Awards              Payouts
                                                                           -------------------------     -------
                             Year      Salary      Bonus       Other                      Securities
                                                               Annual      Restricted     Underlying               All Other
   Name and Principal                                          Compen-        Stock        Options/        LTIP     Compen-
        Position                                               sation       Award(s)         SARs        Payouts     sation
----------------------------------------------------------------------------------------------------------------------------
<S>                          <C>      <C>         <C>         <C>          <C>            <C>            <C>       <C>
Jason S. Apfel
  Chief Operating
  Officer (1)                2003     $250,000    $50,000        -              -              -            -          -
                             2002     $250,000       -           -              -              -            -          -
                             2001     $180,000    $70,000        -              -              -            -          -

Dennis M. Apfel
  Chairman of the Board,
  Chief Executive
  Officer Chief
  Financial Officer and
  Vice President (2)         2003     $125,000    $25,000        -              -              -            -          -
                             2002     $125,000       -           -              -              -            -          -
                             2001     $125,000    $35,000        -              -              -            -          -

Eric J. Apfel                2003     $104,000       -           -         $50,000 (4)         -            -          -
 Vice President and
 Secretary (3)
</TABLE>

----------
     (1)  Jason Apfel was Chief Executive Officer of the Company until December
          2002, when he became Chief Operating Officer.

     (2)  Dennis Apfel became Chief Executive Officer of the Company in December
          2002.

     (3)  Eric Apfel joined the Company during the 2003 fiscal year.

     (4)  Restricted stock award consisting of 500,000 shares of Common Stock,
          of which 333,333 shares became vested in January 2003 and 166,667
          shares will become vested in January 2004.

         None of the persons named above were granted options for Common Stock
during the fiscal year ended March 31, 2003.

         Employment Agreements with Executive Officers

         The Company has entered into an Employment Agreement with Jason S.
Apfel. The term of the Employment Agreement commenced July 28, 1999 and
continues until terminated by Mr. Apfel or the Company upon 30 days' advance
notice. The Employment Agreement provides for an initial salary of $110,000 per
annum, an annual incentive bonus based on increases in sales over targeted sales
and an annual salary increase equal to the amount of the incentive bonus for the
prior year. Once $10 million in annual sales is reached, the bonus formula is
subject to good faith renegotiation. The Employment Agreement provides that in
the event that the employment of Mr. Apfel is terminated by the Company without
cause, the Company will continue to pay his base salary for six months after
termination and will pay his incentive bonus for the year of termination. Under
the Employment Agreement, Mr. Apfel is prohibited from engaging in any





<PAGE>



business in competition with the Company during the period of his employment
with the Company and for one year thereafter.

         The Company has entered into an Employment Agreement with Dennis M.
Apfel. The term of the Employment Agreement commenced July 28, 1999 and
continues until terminated by Mr. Apfel or the Company upon 30 days' advance
notice. The Employment Agreement provides for an initial salary of $55,000 per
annum, an annual incentive bonus based on increases in sales over targeted sales
and an annual salary increase equal to the amount of the incentive bonus for the
prior year. Once $10 million in annual sales is reached, the bonus formula is
subject to good faith renegotiation. The Employment Agreement provides that in
the event that the employment of Mr. Apfel is terminated by the Company without
cause, the Company will continue to pay his base salary for six months after
termination and will pay his incentive bonus for the year of termination. Under
the Employment Agreement, Mr. Apfel is prohibited from engaging in any business
in competition with the Company during the period of his employment with the
Company and for one year thereafter.

         Bonus Deferrals

         Pursuant to the employment agreements with Dennis M. Apfel and Jason
Apfel for the fiscal year ended March 31, 2003, Dennis Apfel was entitled to a
bonus of $25,000 and Jason Apfel was entitled to a bonus of $50,000. Both agreed
to a deferral of the payment of bonuses for the 2003 fiscal year, as well as for
the 2001 and 2000 fiscal years, until June 30, 2003 and both will further agree
to a deferral of payment of those bonuses to a date not earlier than August 31,
2003. The bonuses were included in accrued liabilities at March 31, 2002 and
2003.

         Compensation of Directors

         The Company does not pay its directors any fees. Any future directors
will be paid as determined by the Board. The Company had previously entered into
a Consulting Agreement with an affiliate of Philip D. Gunn. The term of the
Consulting Agreement commenced on July 28, 1999 and expired on July 31, 2002 and
was not renewed. The Consulting Agreement provided for an initial consulting fee
of $2,300 per month, an annual incentive bonus based on the performance of the
Company and an annual consulting fee increase equal to the amount of the
incentive bonus for the prior year.

         Compensation Committee
         Interlocks and Insider Participation

         The Board of Directors of the Company does not have a Compensation
Committee. Compensation decisions are made by the Board of Directors, with each
of Dennis M. Apfel, Jason Apfel and Eric J. Apfel abstaining on decisions
relating to his compensation.


Item 11. Security Ownership of Certain Beneficial Owners and Management and
         Related Stockholder Matters

         The stockholders (including any "group," as that term is used in
Section 13(d)(3) of the Exchange Act) who, to the knowledge of the Board of
Directors of the Company beneficially owned more than five percent of the Common
Stock as of March 31, 2003, and their respective shareholdings as of such date
(according to information furnished by them to the Company), are





<PAGE>



set forth in the following table. Except as indicated in the footnotes to the
table, all of such shares are owned with sole voting and investment power.

<TABLE>
<CAPTION>
                                             Shares of Common Stock
        Name and Address                       Owned Beneficially                  Percent of Class
---------------------------------            ----------------------                ----------------
<S>                                              <C>                                    <C>
Jason S. Apfel                                   4,559,390                              26%
909 Motor Parkway
Hauppauge, New York 11788

Dennis M. Apfel                                  6,076,360                              35%
909 Motor Parkway
Hauppauge, New York 11788

Philip D. Gunn                                   2,865,753                              16%
c/o Growth Capital Partners, Inc.
520 Madison Avenue
New York, New York 10022

Theodore V. Buerger                              1,995,475                              11%
394 Bedford Road
Pleasantville, New York
</TABLE>


         The following table sets forth, as of March 31, 2003, the number of
shares of Common Stock of the Company beneficially owned by each of the
Company's directors, each of the Company's executive officers named in the
Summary Compensation Table, and all directors and executive officers as a group,
based upon information provided by such persons to the Company.

<TABLE>
<CAPTION>
                                             Shares of Common Stock
        Name and Address                       Owned Beneficially                  Percent of Class
---------------------------------            ----------------------                ----------------
<S>                                              <C>                                    <C>
Jason S. Apfel                                    4,559,390                             26%
President, Chief Operating Officer
and Director

Dennis M. Apfel                                   6,076,360                             35%
Chairman of the Board, Chief
Executive Officer, Chief Financial
Officer and Director

Eric J. Apfel                                       508,000                              3%
Vice President, Secretary and
Director

All directors and executive officers as          11,143,750                             64%
a group
</TABLE>

         The following table sets forth information, as of March 31, 2003, with
respect to compensation plans (including individual compensation arrangements)
under which equity securities of the registrant are authorized for issuance:




<PAGE>



<TABLE>
<CAPTION>
                                      EQUITY COMPENSATION INFORMATION
---------------------------------------------------------------------------------------------------------------------
March 31, 2003                                   (a)                        (b)                        (c)

Plan category                          Number of securities to       Weighted-average         Number of securities
                                       be issued upon exercise       exercise price of       remaining available for
                                       of outstanding options,     outstanding options,       future issuance under
                                         warrants and rights        warrants and rights     equity compensation plans
                                                                                              (excluding securities
                                                                                            reflected in column (a))
<S>                                            <C>                          <C>                        <C>
Equity compensation
plans approved by                              500,000 (1)                    N/A
security holders                                20,000 (2)                   $.40                      980,000
                                               -----------                  ------                     -------
Equity compensation plans
not approved by security
holders                                          -0-                          -0-                        -0-
-------------------------                      -----------                  ------                     -------
Total                                          520,000                       $.40                      980,000
                                               -----------                  ------                     -------
</TABLE>

(1)      Restricted Stock Award

(2)      Options

Item 12. Certain Relationships and Related Transactions

         None

Item 13. Exhibits and Reports on Form 8-K

         (a) Exhibits:

             2.1  Agreement and Plan of Merger dated as of July 28, 1999 by and
                  among National Capital Management Corporation, FAC, Inc.,
                  Telescents, Inc., and Dennis M. Apfel, Jason Apfel and Growth
                  Capital Partners, L.L.C. (Incorporated herein by reference to
                  Exhibit 2.1 of the Company's Current Report on Form 8-K filed
                  on August 10, 1999).

             3.1  Articles of Incorporation and By-Laws of the Company
                  (Incorporated herein by reference from Schedule 4 to the
                  prospectus included in the Registration Statement on Form S-4
                  of the Company (No. 33-19149) filed on December 18, 1987).

             3.2  Certificate of Amendment dated June 29, 1995 of Certificate of
                  Incorporation implementing a one-for-three reverse stock split
                  (Incorporated herein by reference to Exhibit 3.2 of the
                  Company's Annual Report on Form 10-KSB filed on April 15,
                  1999).




<PAGE>



             3.3  Certificate of Amendment of Certificate of Incorporation
                  (Incorporated herein by reference to Exhibit 3.4 of the
                  Company's Current Report on Form 8-K filed on November 30,
                  1999).

             3.4  Certificate of Designations of Series A Preferred Stock
                  (Incorporated herein by reference to Exhibit 4.1 of the
                  Company's Current Report on Form 8-K filed on August 10,
                  1999).

             3.5  Resolution of Board of Directors dated April 12, 1995 amending
                  the By-Laws (Incorporated herein by reference to Exhibit
                  3(ii).1 of the Annual Report on Form 10-K of the Company filed
                  on April 17, 1995).

             10.1 Agreement regarding Certain Closing and Post Closing Matters
                  dated as of July 28, 1999 (Incorporated herein by reference to
                  Exhibit 10.1 to the Company's Current Report on Form 8-K filed
                  on August 10, 1999).

             10.2 Stock Purchase Agreement dated as of June 29, 1999 by and
                  among National Capital Management Corporation and Resource
                  Holdings Associates (Incorporated herein by reference to
                  Exhibit 2.1 to the Company's Current Report on Form 8-K filed
                  on July 20, 1999).

             10.3 Employment Agreement dated July 23, 1999 between Telescents,
                  Inc. and Jason Apfel (Incorporated herein by reference to
                  Exhibit 10.3 to the Company's Annual Report on Form 10-K filed
                  on July 5, 2000).+

             10.4 Employment Agreement dated July 23, 1999 between Telescents,
                  Inc. and Dennis M. Apfel (Incorporated herein by reference to
                  Exhibit 10.4 to the Company's Annual Report on Form 10-K filed
                  on July 5, 2000).+

             10.5 FragranceNet.com Inc. 1999 Long Term Incentive Plan
                  (Incorporated herein by reference to Exhibit A of the
                  Company's Proxy Statement filed on October 20, 1999).+

             21.1 List of Subsidiaries*

             99.1 Certification of Chief Executive Officer and Chief Financial
                  Officer

                  --------------
                  *        Included with this Annual Report on Form 10-KSB.

                  +        Management Contract or Compensatory Plan

         (b) Current Reports on Form 8-K:

             None.

Item 14. Controls and Procedures

(a)      Evaluation of disclosure controls and procedures. As of a date within
         the 90-day period prior to the filing of this report, an evaluation of
         the effectiveness of the Company's "disclosure controls and procedures"
         (as such term is defined in Rules 13a-14(c) and 15d-14(c) of the United
         States Securities Exchange Act of 1934 (the "Exchange Act")) was





<PAGE>



         carried out by the Chief Executive Officer and Chief Financial Officer
         ("CEO/CFO") of the Company. Based on that evaluation, the CEO/CFO has
         concluded that as of such date the Company's disclosure controls and
         procedures are effective to ensure that information required to be
         disclosed by the Company in reports that it files or submits under the
         Exchange Act is recorded, processed, summarized and reported within the
         time periods specified in United States Securities and Exchange
         Commission rules and forms.

(b)      Changes in Internal Controls. Subsequent to the completion of their
         evaluation, there have been no significant changes in the Company's
         internal controls or in other factors that could significantly affect
         the internal controls, including any corrective actions with regard to
         significant deficiencies and material weaknesses.






<Page>





                                         FRAGRANCENET.COM, INC. AND SUBSIDIARIES


                                      Index to Consolidated Financial Statements
--------------------------------------------------------------------------------


<TABLE>
<CAPTION>
                                                                                                 Page
                                                                                                 ----
<S>                                                                                         <C>
   INDEPENDENT AUDITORS' REPORTS                                                                  F-1


   FINANCIAL STATEMENTS

     Consolidated Balance Sheets as of March 31, 2003 and 2002                              F-2 - F-3
     Consolidated Statements of Income for the years ended
       March 31, 2003 and 2002                                                                    F-4
     Consolidated Statements of Stockholders' Equity for the
      years ended March 31, 2003 and 2002                                                         F-5
     Consolidated Statements of Cash Flows for the years ended
      March 31, 2003 and 2002                                                               F-6 - F-7


   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS                                              F-8 - F-19

</TABLE>





<Page>









                          INDEPENDENT AUDITORS' REPORT


The Board of Directors and Stockholders
FragranceNet.com, Inc.:


We have audited the accompanying consolidated balance sheets of
FragranceNet.com, Inc. and Subsidiaries (the "Company") as of March 31, 2003 and
2002 and the related consolidated statements of income, stockholders' equity and
cash flows for the years then ended. These consolidated financial statements are
the responsibility of the Company's management. Our responsibility is to express
an opinion on these consolidated financial statements based on our audits.

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

In our opinion, the consolidated financial statements referred to above present
fairly, in all material respects, the consolidated financial position of
FragranceNet.com, Inc. and Subsidiaries as of March 31, 2003 and 2002, and the
results of its consolidated operations and its consolidated cash flows for the
years then ended in conformity with accounting principles generally accepted in
the United States of America.



                                      Marcum & Kliegman LLP

May 23, 2003
Woodbury, New York



                                                                             F-1







<Page>





                                         FRAGRANCENET.COM, INC. AND SUBSIDIARIES

                                                     CONSOLIDATED BALANCE SHEETS

                                                         MARCH 31, 2003 AND 2002
--------------------------------------------------------------------------------


                                     ASSETS

<TABLE>
<CAPTION>
                                                                                         2003              2002
                                                                                -------------------------------------
<S>                                                                                    <C>               <C>
CURRENT ASSETS
--------------
Cash and cash equivalents                                                              $355,251          $389,441
Accounts receivable, net of allowance for returns
  of $1,000 for both 2003 and 2002                                                      142,001            63,116
Inventory                                                                               256,303            78,150
Prepaid expenses and other current assets                                                19,770            74,912
                                                                                       --------          --------


TOTAL CURRENT ASSETS                                                                    773,325           605,619


PROPERTY AND EQUIPMENT, Net                                                              44,767           103,159
----------------------


INTANGIBLE ASSET, Net                                                                     5,375             5,875
----------------


OTHER ASSETS                                                                             23,658            21,683
------------                                                                           --------          --------


TOTAL ASSETS                                                                           $847,125          $736,336
                                                                                       ========          ========




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

</TABLE>



                                                                             F-2





<Page>






                                         FRAGRANCENET.COM, INC. AND SUBSIDIARIES

                                                     CONSOLIDATED BALANCE SHEETS

                                                         March 31, 2003 and 2002
--------------------------------------------------------------------------------


                      LIABILITIES AND STOCKHOLDERS' EQUITY


<TABLE>
<CAPTION>
                                                                                           2003              2002
                                                                                -------------------------------------
<S>                                                                                     <C>               <C>
CURRENT LIABILITIES
-------------------
Accounts payable                                                                        $ 213,558         $ 228,952
Accrued expenses                                                                          452,596           428,937
Deferred revenue                                                                           49,108            35,782
Obligation under capital lease, current portion                                             3,613             4,068
                                                                                        ---------         ---------

Total Current Liabilities                                                                 718,875           697,739

Obligation under capital lease, net of current portion                                         --             3,613
Other liabilities                                                                           6,498             6,305
                                                                                        ---------         ---------

TOTAL LIABILITIES                                                                         725,373           707,657
                                                                                        ---------         ---------

STOCKHOLDERS' EQUITY
--------------------
Convertible Series A preferred stock - $.01 par value;
  3,000,000 shares authorized, none issued                                                     --                --
Common stock, par value $.01; 50,000,000 shares authorized;
  17,468,330 and 16,968,330 shares issued and outstanding,
  in 2003 and 2002, respectively                                                          174,683           169,683
Additional paid-in capital                                                                413,020           368,020
Unearned compensation                                                                     (14,423)               --
Accumulated deficit                                                                      (451,528)         (509,024)
                                                                                        ---------         ---------

TOTAL STOCKHOLDERS' EQUITY                                                                121,752            28,679
                                                                                        ---------        ----------

TOTAL LIABILITIES AND
   STOCKHOLDERS' EQUITY                                                                 $ 847,125         $ 736,336
                                                                                        =========         =========


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

</TABLE>



                                                                             F-3






<Page>




                                         FRAGRANCENET.COM, INC. AND SUBSIDIARIES

                                               CONSOLIDATED STATEMENTS OF INCOME

                                     For the Years Ended March 31, 2003 and 2002
--------------------------------------------------------------------------------


<TABLE>
<CAPTION>
                                                                                          2003               2002
                                                                                ---------------------------------------
<S>                                                                                   <C>                 <C>
NET SALES                                                                             $10,499,441         $7,502,186
---------

COST OF SALES                                                                           6,834,672          4,515,079
-------------                                                                          ----------         ----------

GROSS PROFIT                                                                            3,664,769          2,987,107
                                                                                       ----------         ----------

OPERATING EXPENSES
------------------
Selling and marketing                                                                   1,703,963          1,278,891
General and administrative                                                              1,903,986          1,533,616
                                                                                       ----------         ----------

TOTAL OPERATING EXPENSES                                                                3,607,949          2,812,507
                                                                                       ----------         ----------

INCOME FROM OPERATIONS                                                                     56,820            174,600
----------------------

OTHER INCOME (EXPENSE)
----------------------
  Interest expense                                                                        (18,640)           (22,461)
  Interest income                                                                           4,116              4,612
  Other income                                                                             15,200             20,400
                                                                                      -----------         ----------

         NET INCOME                                                                   $    57,496         $  177,151
                                                                                      ===========         ==========

         Basic and diluted net income per share                                             $0.00              $0.01
                                                                                            =====              =====

         Weighted average number of common shares outstanding                          17,116,556         16,968,330
                                                                                       ==========         ==========

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

</TABLE>



                                                                             F-4








<Page>




                                         FRAGRANCENET.COM, INC. AND SUBSIDIARIES

                                 CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY

                                     For the Years Ended March 31, 2003 and 2002
--------------------------------------------------------------------------------



<TABLE>
<CAPTION>
                                                          Additional
                                    Common Stock            paid-in        Unearned      Accumulated
                                Shares        Amount        Capital      Compensation      Deficit          Total
                            -------------------------------------------------------------------------------------------

<S>                             <C>            <C>           <C>         <C>              <C>            <C>
BALANCE -
---------
April 1, 2001                   16,968,330     $169,683      $368,020    $        --      $(686,175)     $ (148,472)

Net Income                              --           --            --             --        177,151         177,151
                                ----------     --------      --------    -----------      ---------      ----------
BALANCE -
---------
March 31, 2002                  16,968,330      169,683       368,020             --       (509,024)         28,679

Common stock issued
 for services                      500,000        5,000        45,000        (14,423)            --          35,577

Net Income                              --           --            --             --         57,496          57,496
                                ----------     --------      --------    -----------      ---------      ----------

BALANCE -
---------
March 31, 2003                  17,468,330     $174,683      $413,020       $(14,423)     $(451,528)     $  121,752
                                ==========     ========      ========    ===========      =========      ==========

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

</TABLE>



                                                                             F-5










<Page>




                                         FRAGRANCENET.COM, INC. AND SUBSIDIARIES

                                           CONSOLIDATED STATEMENTS OF CASH FLOWS

                                     For the Years Ended March 31, 2003 and 2002
--------------------------------------------------------------------------------


<TABLE>
<CAPTION>
                                                                                           2003             2002
                                                                                  ---------------- -----------------
<S>                                                                                     <C>              <C>
CASH FLOWS FROM OPERATING ACTIVITIES
------------------------------------
 Net income                                                                             $  57,496        $ 177,151
                                                                                        ---------        ---------
  Adjustments to reconcile net income to net cash (used in)
   provided by operating activities:
    Depreciation and amortization                                                          58,892           64,438
    Non-cash stock compensation expense                                                    35,577               --
  Changes in operating assets and liabilities:
    Accounts receivable                                                                   (78,885)         (46,636)
    Inventory                                                                            (178,153)          96,850
    Prepaid expenses and other current assets                                              53,167          (47,209)
    Accounts payable, accrued expenses and other liabilities                                8,458          (41,943)
    Deferred revenue                                                                       13,326           27,762
                                                                                        ---------        ---------


       TOTAL ADJUSTMENTS                                                                  (87,618)          53,262
                                                                                        ---------        ---------


       NET CASH (USED IN) PROVIDED BY OPERATING
        ACTIVITIES                                                                        (30,122)         230,413
                                                                                        ---------         --------


CASH FLOWS USED IN INVESTING ACTIVITIES
---------------------------------------
  Expenditures for property and equipment                                                      --          (21,312)
                                                                                        ---------        ---------


CASH FLOWS USED IN FINANCING ACTIVITIES
---------------------------------------
  Principal payments on capital lease obligation                                           (4,068)          (4,097)
                                                                                        ---------        ---------


       NET (DECREASE) INCREASE IN CASH AND
        CASH EQUIVALENTS                                                                  (34,190)         205,004


CASH AND CASH EQUIVALENTS - Beginning                                                     389,441          184,437
-------------------------                                                                --------         --------


CASH AND CASH EQUIVALENTS - Ending                                                       $355,251         $389,441
-------------------------                                                                ========         ========

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

</TABLE>



                                                                             F-6






<Page>




                                         FRAGRANCENET.COM, INC. AND SUBSIDIARIES

                                CONSOLIDATED STATEMENTS OF CASH FLOWS, CONTINUED

                                     For the Years Ended March 31, 2003 and 2002
--------------------------------------------------------------------------------


SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION

<TABLE>
<CAPTION>
                                                                                           2003            2002
                                                                                  ---------------- -----------------
<S>                                                                                       <C>            <C>
       Cash paid during the year for income taxes                                          $  581         $    578
       Cash paid during the year for interest                                              $5,874         $  4,661


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

</TABLE>



                                                                             F-7








<Page>






                     FRAGRANCENET.COM, INC. AND SUBSIDIARIES

                        NOTES TO CONSOLIDATED STATEMENTS


NOTE 1 - Nature of Business

       FragranceNet.com, Inc. (the "Company") is primarily engaged in the retail
       sale of brand name fragrances and related products over the Internet.
       During fiscal 2003, the Company began selling its products on a wholesale
       basis; these sales represented less than 10% of the Company's net sales.
       Accordingly, the Company believes it operates in a single industry
       segment.


NOTE 2 - Summary of Significant Accounting Policies

       Basis of Presentation and Consolidation
       ---------------------------------------
       The accompanying consolidated financial statements present the historical
       financial results of TeleScents, Inc. and include the net assets acquired
       in National Capital Management Corporation's ("NCMC") acquisition of
       TeleScents on July 28, 1999, which was accounted for as a reverse
       acquisition (see Note 3). NCMC had no operations subsequent to July 28,
       1999. In connection with the merger, NCMC changed its name to
       FragranceNet.com, Inc.

       The accompanying consolidated financial statements also include the
       accounts of FragranceNet Wholesales, Inc., a wholly owned subsidiary of
       the Company that was incorporated on March 14, 2002.

       The consolidated financial statements include the accounts of
       FragranceNet.com, Inc. and its subsidiaries. All significant intercompany
       transactions and balances have been eliminated in consolidation.

       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.

       The Company has cash deposits in the bank in excess of the maximum amount
       insured by the FDIC at March 31, 2003 and 2002.

       Accounts Receivable
       -------------------
       Accounts receivable have been adjusted for all known uncollectible
       accounts. An allowance for doubtful accounts is not provided since, in
       the opinion of management, all accounts recorded on the books are deemed
       collectible.

                                                                             F-8





<Page>




       Revenue Recognition, continued
       --------------------
       The Company recognizes revenue from product sales, net of any discounts
       and coupons, when the products are shipped to customers. The Company
       provides an allowance for sales returns. Revenue from the sale of gift
       certificates is deferred until the gift certificates are redeemed. The
       Company does not charge its customers for shipping costs if the total
       sale price exceeds a certain threshold. These shipping costs are included
       in selling and marketing expenses in the consolidated statements of
       income. Outbound shipping costs for the shipment of product to customers
       amounted to $758,244 and $553,306 for the years ended March 31, 2003 and
       2002, respectively.

       The Company follows the provisions of EITF No. 00-14, "Accounting for
       Sales Incentives," and reflects its sales incentives as a reduction of
       sales.

       Inventory
       ---------
       Inventory consists of fragrance products and is stated at the lower of
       cost or market. Cost is determined by using the first-in, first-out
       method and market represents the lower of replacement cost or estimated
       net realizable value.

       Property and Equipment
       ----------------------
       Property and equipment are stated at cost. Depreciation of property and
       equipment is calculated on a straight-line basis over the estimated
       useful lives of the related assets as follows:

              Computer and office equipment                    5-7 years
              Computer software                                  3 years

       Intangible Asset
       ----------------
       The intangible asset consists of a purchased trade name that is amortized
       on a straight-line basis over its expected useful life of fifteen years.

       Income Taxes
       ------------
       The Company accounts for income taxes using the liability method. The
       liability method requires the determination of deferred tax assets and
       liabilities based on the differences between the financial statement and
       income tax bases of assets and liabilities, using enacted tax rates.
       Additionally, net deferred tax assets are adjusted by a valuation
       allowance if, based on the weight of available evidence, it is more
       likely than not that some portion or all of the net deferred tax assets
       will not be realized. Income tax expense consists of the tax payable for
       the period and the change during the period in deferred tax assets and
       liabilities.

       Earnings Per Share
       ------------------
       Basic earnings per share is computed by dividing net income by the
       weighted average number of shares of common stock outstanding during the
       period. Diluted


                                                                             F-9




<Page>





       earnings per share reflects the amount of earnings for the period
       available to each share of common stock outstanding during the reporting
       period, giving effect to all potentially dilutive shares of common stock
       from the potential exercise of stock options and warrants.

       The dilutive effect of outstanding options and warrants and their
       equivalents are reflected in dilutive earnings per share by the
       application of the treasury stock method. Options and warrants will have
       a dilutive effect only when the average market price of the common stock
       during the period exceeds the exercise price of the options or warrants.
       The Company had 20,000 potentially dilutive options and warrants
       outstanding during the years ended March 2003 and 2002, respectively,
       that have not been considered in the computation of diluted earnings per
       share since the effect of their inclusion would be anti-dilutive.

       Stock Options and Similar Equity Instruments
       --------------------------------------------
       At March 31, 2003, the Company had one stock-based employee plan, which
       is described more fully in Note 7. As permitted under Statement of
       Financial Accounting Standards ("SFAS") No. 148, "Accounting for
       Stock-Based Compensation - Transition and Disclosure," which amended SFAS
       No. 123, "Accounting for Stock-Based Compensation," the Company has
       elected to continue to follow the intrinsic value method in accounting
       for its stock-based employee compensation arrangements as defined by
       Accounting Principles Board Opinion ("APB") No. 25, "Accounting for Stock
       Issued to Employees," and related interpretations including Financial
       Accounting Standards Board ("FASB") Interpretation No. 44, "Accounting
       for Certain Transactions Involving Stock Compensation," an interpretation
       of APB No. 25. No stock-based employee compensation cost is reflected in
       operations, as all options granted under those plans have an exercise
       price equal to the market value of the underlying common stock on the
       date of grant. The only options outstanding were granted and vested in
       fiscal 2000. Accordingly, pro forma financial information for fiscal 2003
       and 2002 is not required.

       Fair Value of Financial Instruments
       -----------------------------------
       The fair value of financial instruments is determined by reference to
       market data and other valuation techniques as appropriate. The Company
       believes the fair value of its financial instruments at March 31, 2003
       and 2002, principally cash and cash equivalents, accounts receivable,
       accounts payable and accrued expenses, approximates their recorded values
       due to the short-term nature of the instruments.

       Impairment of Long-lived Assets
       -------------------------------
       Long-lived assets and certain identifiable intangibles are reviewed for
       impairment whenever events or changes in circumstances indicate that the
       carrying amount of an asset may not be fully recoverable. Recoverability
       of assets to be held and used is measured by a comparison of the carrying
       amount of an asset to future


                                                                            F-10





<Page>




       undiscounted net cash flows expected to be generated by the asset. If
       such assets are considered to be impaired, the impairment charge to be
       recognized is measured by the amount by which the carrying amount of the
       assets exceeds the fair value of the assets.

       Advertising Costs
       -----------------
       Advertising costs are expensed as incurred. Advertising costs
       approximated $652,000 and $492,000 for the years ended March 31, 2003 and
       2002, respectively.

       Use of Estimates
       ----------------
       The preparation of the consolidated financial statements in conformity
       with accounting principles generally accepted in the United States of
       America 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 consolidated
       financial statements and the reported amount of revenues and expenses
       during the reporting period. Actual results could differ from those
       estimates.

       Commitments and Contingencies
       -----------------------------
       Liabilities for loss contingencies arising from claims, assessments,
       litigation, fines, and penalties and other sources are recorded when it
       is probable that a liability has been incurred and the amount of the
       assessment can be reasonably estimated.

       Recent Accounting Standards
       ---------------------------
       In April 2002, the FASB issued SFAS No. 145, "Rescission of FASB
       Statements No.4, 44 and 64, Amendment of FASB Statement No. 13 and
       Technical Corrections." SFAS No. 145 requires that gains and losses from
       extinguishment of debt be classified as extraordinary items only if they
       meet the criteria in APB No. 30. Applying the provisions of APB No. 30
       will distinguish transactions that are part of an entity's recurring
       operations from those that are unusual and infrequent that meet the
       criteria for classification for an extraordinary item. The adoption of
       this statement did not have a material effect on the Company's
       consolidated financial position and results of operations.

       In June 2002, the FASB issued SFAS No. 146, "Accounting for Costs
       Associated with Exit or Disposal Activities." SFAS No. 146 addresses
       accounting and reporting for costs associated with exit or disposal
       activities and nullifies Emerging Issues Task Force Issue No. 94-3,
       "Liability Recognition for Certain Employee Termination Benefits and
       Other Costs to Exit an Activity (Including Certain Costs Incurred in a
       Restructuring)." SFAS No. 146 requires that a liability for a cost
       associated with an exit or disposal activity be recognized and measured
       initially at fair value when the liability is incurred. SFAS No. 146 is
       effective for exit or disposal activities that are initiated after
       December 31, 2002 with early application


                                                                            F-11




<Page>




       encouraged. The adoption of this statement did not have a material effect
       on the Company's consolidated financial position and results of
       operations.

       In November 2002, the FASB issued Interpretation No. 45 ("FIN 45"),
       "Guarantor's Accounting and Disclosure Requirements for Guarantees,
       Including Indirect Guarantees of Indebtedness of Others." FIN 45 requires
       a company, at the time it issues a guarantee, to recognize an initial
       liability for the fair value of obligations assumed under the guarantee
       and elaborates on existing disclosure requirements related to guarantees
       and warranties. The initial recognition requirements of FIN 45 are
       effective for guarantees issued or modified after December 31, 2002.
       Adoption of the disclosure requirements were effective for interim and
       annual periods ending after December 15, 2002 and did not have a material
       impact on the Company's consolidated financial position and results of
       operations.

       In January 2003, the FASB issued Interpretation No. 46 ("FIN 46"),
       "Consolidation of Variable Interest Entities, an Interpretation of ARB
       No. 51." FIN 46 requires certain variable interest entities to be
       consolidated by the primary beneficiary of the entity if the equity
       investors in the entity do not have the characteristics of a controlling
       financial interest or do not have sufficient equity at risk for the
       entity to finance its activities without additional financial support
       from other parties. FIN 46 is effective for all new variable interest
       entities created or acquired after January 31, 2003. For variable
       interest entities created or acquired prior to February 1, 2003, the
       provisions of FIN 46 must be applied for the first interim or annual
       period beginning after June 15, 2003. The Company does not expect the
       adoption of FIN 46 to have a material effect on its consolidated
       financial position and results of operations.

       In April 2003, the FASB issued SFAS No. 149, "Amendment of Statement 133
       on Derivative Instruments and Hedging Activities." The statement amends
       and clarifies financial accounting and reporting for derivative
       instruments, including certain derivative instruments embedded in other
       contracts and for hedging activities under SFAS No. 133. SFAS No. 149 is
       effective for contracts entered into or modified after June 30, 2003
       except for the provisions that were cleared by the FASB in prior
       pronouncements. The Company is currently assessing the financial impact
       of adopting SFAS No.149.

       On May 15, 2003, the FASB issued SFAS No. 150, "Accounting for Certain
       Financial Instruments with Characteristics of Both Liabilities and
       Equity." SFAS No. 150 establishes standards for how an issuer classifies
       and measures certain financial instruments with characteristics of both
       liabilities and equity. It requires that an issuer classify a financial
       instrument that is within its scope as a liability (or an asset in some
       circumstances). SFAS No. 150 affects the issuer's accounting for three
       types of freestanding financial instruments:



                                                                            F-12




<Page>




       o    mandatorily redeemable shares, which the issuing company is
            obligated to buy back in exchange for cash or other assets;

       o    instruments that do or may require the issuer to buy back some of
            its shares in exchange for cash or other assets; includes put
            options and forward purchase contracts; and

       o    obligations that can be settled with shares, the monetary value of
            which is fixed, tied solely or predominately to a variable such as a
            market index or varies inversely with the value of the issuers'
            shares.

       SFAS No. 150 does not apply to features embedded in a financial
       instrument that is not a derivative in its entirety. Most of the guidance
       in SFAS No. 150 is effective for all financial instruments entered into
       or modified after May 31, 2003 and otherwise is effective at the
       beginning of the first interim period beginning after June 15, 2003. The
       Company has not yet completed its analysis of SFAS No. 150; however, it
       believes that it is currently in substantial compliance with the
       requirements of SFAS No. 150.

       Comprehensive Income
       --------------------
       For each year presented comprehensive income equaled net income.

       Reclassifications
       -----------------
       Certain accounts in the prior year financial statements have been
       reclassified for comparative purposes to conform to the presentation in
       the current year financial statements. These reclassifications have no
       effect on previously reported income.


NOTE 3 - Merger of TeleScents and FragranceNet.com, Inc.

       The Company was formerly known as National Capital Management Corporation
       ("NCMC"), a publicly held shell company with no substantial business
       operations. On July 28, 1999, NCMC entered into an Agreement and Plan of
       Merger (the "Merger Agreement") to acquire TeleScents, Inc., a New York
       corporation ("TeleScents"). Pursuant to the Merger Agreement, NCMC issued
       to the shareholders of TeleScents an aggregate of 4,900,000 shares of its
       common stock and an aggregate of 1,029,514 shares of its Series A
       Preferred Stock (the "Preferred Stock") in exchange for all the
       outstanding shares of TeleScents. The Preferred Stock was convertible
       into common stock on a 1-for-10 basis at such time as the Certificate of
       Incorporation of the Company was amended to increase the authorized
       shares of common stock to a number of shares sufficient to effect the
       conversion. The Preferred Stock had voting privileges on an "as
       converted" basis. Accordingly, after the merger the shareholders of
       TeleScents, in the aggregate, held approximately 90% of the total voting
       power of the Company's voting stock. The

                                                                            F-13





<Page>




       conversion of the Preferred Stock into 10,295,140 shares of common stock
       occurred subsequent to the Stockholders' meeting on November 16, 1999
       where an amendment to the Company's Certificate of Incorporation was
       approved to increase the authorized shares of common stock from 6,666,666
       to 50,000,000.

       In connection with the Merger, the Company changed its name to
       FragranceNet.com, Inc. and changed its ticker symbol to "FRGN."

       The Company's acquisition of TeleScents was accounted for as a reverse
       acquisition with TeleScents as the accounting acquirer, as the
       shareholders of TeleScents gained voting control of the Company pursuant
       to the Merger Agreement. The only asset remaining in NCMC at the time of
       the merger was $437,703 of cash. Accordingly, the reverse acquisition was
       in substance a recapitalization of TeleScents with the issuance of shares
       of common stock by TeleScents to the pre-transaction stockholders of
       FragranceNet.com in exchange for cash. For periods prior to the business
       combination, the equity of the combined enterprise is the historical
       equity of the accounting acquirer prior to the Merger Agreement
       retroactively restated to reflect the number of shares received in the
       business combination.


NOTE 4 - Property and Equipment

       Property and equipment at March 31, 2003 and 2002 consists of the
following:
<TABLE>
<CAPTION>

                                                                               2003              2002
                                                                         ---------------- ----------------
<S>                                                                          <C>               <C>
      Computer and office equipment                                          $164,798          $164,798
      Computer software                                                        45,988            45,988
                                                                            ---------         ---------
                                                                              210,786           210,786

      Less: accumulated depreciation                                          166,019           107,627
                                                                             --------          --------

                                                                            $  44,767          $103,159
                                                                            =========          ========
</TABLE>


       Depreciation expense amounted to $58,392 and $63,938 for the years ended
       March 31, 2003 and 2002, respectively.

NOTE 5 - Leases

       The Company is obligated under a capital lease for certain office
       equipment. This lease bears interest at an effective rate of 7.23% per
       annum. As of March 31, 2003, the present value of the future minimum
       lease payments is $3,614, which are scheduled for payment in fiscal 2004.



                                      F-14




<Page>





NOTE 6 - Related Party Transactions

       Office Space
       ------------
       The Company subleases a portion of its office space in Hauppauge, New
       York to a professional services firm, which is owned by the Chief
       Executive Officer of the Company. Sublease rental income was $15,200 and
       $20,400 for the years ended March 31, 2003 and 2002, respectively, which
       is included in other income in the consolidated statements of income.

       Bonus Deferrals
       ---------------
       Pursuant to employment agreements of certain of the Company's executives
       and a consultant, these individuals were entitled to bonuses in the
       aggregate of approximately $75,000 and $-0- for the years ended March 31,
       2003 and 2002, respectively. Approximately $38,000 of accrued bonuses and
       accrued interest were paid in July 2002. Accrued bonuses and accrued
       interest of approximately $325,000 and $272,000 were included in accrued
       expenses at March 31, 2003 and 2002, respectively. Payment of the balance
       of these bonuses is deferred until August 31, 2003.

       For the years ended March 31, 2003 and 2002, the Company has incurred
       interest at 7% per annum on the bonuses approximating $16,000 and $18,000
       respectively, which has been included in interest expense in the
       consolidated statements of operations.


NOTE 7 - Stockholders' Equity

       Common Stock Split
       ------------------
       On November 25, 2002, the stockholders of the Company approved a one for
       ten reverse stock split. The reverse stock split has not yet been
       effected.

       Stock Options/Stock Issuance Plan
       ---------------------------------
       On November 16, 1999, the Company's stockholders approved and adopted the
       1999 Long-Term Incentive Plan (the "Plan") under which the Company's
       Board of Directors may grant stock options or restricted securities to
       employees and directors. The Plan authorizes grants of options and
       restricted securities up to 1.5 million shares of common stock. The
       number of shares of common stock subject to all awards granted to any
       individual under the Plan in any one-year period shall not exceed 250,000
       shares.

       The exercise price per share of options may not be less than the fair
       market value of the common stock on the date of grant. The Board will
       generally fix the term of each option, except no incentive stock option
       may exceed a term of ten years. At the discretion of the Board, options
       may be exercised by payment of the exercise


                                                                            F-15




<Page>



       price in cash, stock, outstanding awards or other property having a fair
       market value equal to the exercise price.

       In fiscal 2000, the Company granted 20,000 immediately exercisable
       options to a director of the Company at an exercise price of $.40 per
       share which was equal to the fair market value of the common stock on the
       date of grant. The options expire in July 2009. At March 31, 2003 and
       2002, these were the only options outstanding, all of which were
       exercisable.

       Common Stock
       ------------
       In January 2003, the Company granted 333,000 restricted shares of common
       stock to its Vice President, valued at $33,300 and vesting immediately.
       In February 2003, the Company granted 167,000 restricted shares of common
       stock to its Vice President, valued at $16,700 and vesting in January
       2004. The Board of Directors resolved that the 250,000 share limitation
       set forth in the 1999 Long-Term Incentive Plan shall not be applicable to
       such award.


NOTE 8 - Income Taxes

       There is no provision for income taxes in each of the two years ended
       March 31, 2003 and 2002. State minimum franchise taxes are included in
       general and administrative expenses in the consolidated statements of
       income.

       The tax effects of temporary differences that give rise to significant
       portions of the deferred tax assets and liabilities at March 31, 2003 and
       2002 are as follows:


<TABLE>
<CAPTION>
                                                                        2003                2002
                                                                 ---------------------------------
<S>                                                                  <C>                <C>
      Deferred tax assets and liabilities:
        Accounts receivable (allowance for returns)                  $     400          $    400
        Accrued expenses                                               114,400            98,400
        Net operating loss carryforwards                               124,000           167,900
                                                                     ---------           -------
                                                                       238,800           266,700
      Less: valuation allowance                                        238,800           266,700
                                                                     ---------           -------

             Deferred tax assets                                     $      --          $    --
                                                                     =========          ========
</TABLE>

       During the years ended March 31, 2003 and 2002, approximately $110,000
       and $177,000, respectively, of the net operating loss carryforwards were
       utilized to reduce the taxable income. At March 31, 2003 and 2002, the
       Company has a Federal net operating loss (NOL) carryforward of
       approximately $309,000 expiring at various times from fiscal 2018 through
       fiscal 2021. In addition, certain of NCMC's NOL's may be utilizable by
       the Company, subject to an annual limitation imposed by Section 382 of
       the Internal Revenue Code for changes in ownership. In


                                                                            F-16




<Page>




       assessing the realizability of deferred tax assets, management considers
       whether it is more likely than not that some portion or all of the
       deferred tax assets will not be realized. The ultimate realization of
       deferred tax assets is dependent upon the generation of future taxable
       income during the periods in which those temporary differences become
       deductible or losses are carried forward. Management considers the
       scheduled reversal of deferred tax assets, projected future taxable
       income, and tax planning strategies in making this assessment. Although
       the Company generated taxable income in fiscal 2003 and 2002, management
       continues to believe it is more likely than not that the Company will not
       realize the benefits of these deductible differences and NOLs, and,
       accordingly, has established a full valuation allowance at March 31, 2003
       and 2002.


NOTE 9 - Commitments and Contingencies

       The Company leased a building, commencing September 1, 2000, under a
       non-cancelable operating lease, which expires on May 31, 2005. The future
       lease payments under the operating lease are as follows:

<TABLE>
<CAPTION>
                                    For the
                                  Year Ending
                                   March 31,                  Amount
                          --------------------------------- ----------------
<S>                                  <C>                       <C>
                                     2004                      $  85,000
                                     2005                         89,000
                                     2006                         15,000
                                                               ---------
                                     Total                      $189,000
                                                               =========
</TABLE>


       Total rent expense for the years ended March 31, 2003 and 2002
       approximated $84,000 and $78,000, respectively.



                                                                            F-17





<Page>




NOTE 10 - Concentration with Suppliers

       During the year ended March 31, 2003, the Company purchased a substantial
       portion of its fragrances from two suppliers. Purchases from these
       suppliers amounted to 37% and 11% of total purchases. At March 31, 2003,
       amounts due to these suppliers included in accounts payable approximated
       $45,000 and $22,000.

       During the year ended March 31, 2002, the Company purchased a substantial
       portion of its fragrances from three suppliers. Purchases from these
       suppliers amounted to 44%, 12% and 11% of total purchases. At March 31,
       2002, amounts due to these suppliers included in accounts payable
       approximated $54,000, $56,000 and $36,000.


NOTE 11 - Quarterly Results of Operations (Unaudited)

        The following is a summary of quarterly results for the years ended
March 31, 2003 and 2002:


<TABLE>
<CAPTION>
                                                                 Quarter Ended

                                               June 30,         September 30,       December 31,        March 31,
                                                 2002                2002               2002              2003
                                             ---------------------------------------------------------------------
<S>                                           <C>                 <C>                 <C>               <C>
      Net sales                               $1,970,869          $2,072,242          $4,132,261        $2,274,069
      Gross profit                               607,255             735,933           1,483,592           837,989
      Net income (loss)                       $  (76,722)         $   15,937          $  290,509        $ (172,228)

      Basic and diluted net income
      (loss) per share                        $   (0.00)          $     0.00          $     0.02        $    (0.02)

                                                                 Quarter Ended

                                               June 30,         September, 30,       December 31,        March 31,
                                                 2001                2001                2001              2002
                                             ----------------------------------------------------------------------
      Net sales                               $1,791,319          $1,390,583          $2,621,996        $1,698,288
      Gross profit                               659,812             633,467           1,061,383           632,445
      Net income (loss)                       $  (41,128)         $   76,249          $  225,339        $  (83,309)

      Basic and diluted net income
      (loss) per share                        $    (0.00)         $     0.00          $     0.01        $    (0.00)
</TABLE>

       The unaudited interim financial information reflects all adjustments,
       which in the opinion of management are necessary to present a fair
       statement of the results of the interim periods presented and are of a
       normal recurring nature.


                                                                            F-18





<Page>





       The Company's business is subject to seasonal variations and results of
       operations for the interim periods are not necessarily indicative of
       results for a full year.



















                                                                            F-19


<PAGE>



                                   SIGNATURES

         In accordance with the requirements of Section 13 or 15(d) of the
Securities Exchange Act of 1934, the Registrant caused this report to be signed
on its behalf by the undersigned, thereunto duly authorized.

         Dated: June 27, 2003

                                                     FRAGRANCENET.COM, INC.


                                                     By /s/ Dennis M. Apfel
                                                        -------------------
                                                        Dennis M. Apfel
                                                        Chief Executive Officer

                                POWER OF ATTORNEY

         The Registrant and each person whose signature appears below hereby
appoint each of Jason S. Apfel and Dennis M. Apfel as attorneys-in-fact with
full power of substitution, severally, to execute in the name and on behalf of
the Registrant and each such person, individually and in each capacity stated
below, one or more amendments to this Annual Report on Form 10-KSB, which
amendments may make such changes in this Report as the attorney-in-fact acting
in the premises deems appropriate and to file any such amendment to this Report
with the Securities and Exchange Commission.

         In accordance with the Exchange Act, this report has been signed below
by the following persons on behalf of the registrant and in the capacities and
on the dates indicated.


<TABLE>
<S>                                 <C>
Dated: June 27, 2003                By /s/Dennis M. Apfel
                                       ------------------------------------------------
                                       Dennis M. Apfel
                                       Chairman of the Board, Director, Chief Executive
                                       Officer, Chief Financial Officer and Principal
                                       Accounting Officer

Dated: June 27, 2003                By /s/Jason S. Apfel
                                       ------------------------------------------------
                                       Jason S. Apfel
                                       President, Chief Operating Officer
                                       and Director

Dated: June 27, 2003                By /s/Eric J. Apfel
                                       ------------------------------------------------
                                       Eric J. Apfel
                                       Vice President, Secretary and Director
</TABLE>




<PAGE>



                                  CERTIFICATION

         I, Dennis M. Apfel, certify that:

1.       I have reviewed this annual report on Form 10-KSB of FragranceNet.com,
         Inc.;

2.       Based on my knowledge, this annual report does not contain any untrue
         statement of a material fact or omit to state a material fact necessary
         to make the statements made, in light of the circumstances under which
         such statements were made, not misleading with respect to the period
         covered by this annual report;

3.       Based on my knowledge, the financial statements, and other financial
         information included in this annual report, fairly present in all
         material respects the financial condition, results of operations and
         cash flows of the registrant as of, and for, the periods presented in
         this annual report;

4.       I am responsible for establishing and maintaining disclosure controls
         and procedures (as defined in Exchange Act Rules 13a-14 and 15d-14) for
         the registrant and have:

a)       designed such disclosure controls and procedures to ensure that
         material information relating to the registrant, including its
         consolidated subsidiaries, is made known to me by others within those
         entities, particularly during the period in which this annual report is
         being prepared;

b)       evaluated the effectiveness of the registrant's disclosure controls and
         procedures as of a date within 90 days prior to the filing date of this
         annual report (the "Evaluation Date"); and

c)       presented in this annual report my conclusions about the effectiveness
         of the disclosure controls and procedures based on my evaluation as of
         the Evaluation Date;

5.       I have disclosed, based on my most recent evaluation, to the
         registrant's auditors and the audit committee of registrant's board of
         directors (or persons performing the equivalent function):

a)       all significant deficiencies in the design or operation of internal
         controls which could adversely affect the registrant's ability to
         record, process, summarize and report financial data and have
         identified for the registrant's auditors any material weaknesses in
         internal controls; and

b)       any fraud, whether or not material, that involves management or other
         employees who have a significant role in the registrant's internal
         controls; and

6.       I have indicated in this annual report whether or not there were
         significant changes in internal controls or in other factors that could
         significantly affect internal controls subsequent to the date of my
         most recent evaluation, including any corrective actions with regard to
         significant deficiencies and material weaknesses.

Dated: June 27, 2003
                                    /s/  Dennis M. Apfel
                                    --------------------
                                    Dennis M. Apfel
                                    Chairman, Chief Executive Officer and
                                    Chief Financial Officer





<PAGE>



                                  EXHIBIT INDEX

2.2      Agreement and Plan of Merger dated as of July 28, 1999 by and among
         National Capital Management Corporation, FAC, Inc., Telescents, Inc.,
         and Dennis M. Apfel, Jason Apfel and Growth Capital Partners, L.L.C.
         (Incorporated herein by reference to Exhibit 2.1 of the Company's
         Current Report on Form 8-K filed on August 10, 1999).

3.1      Articles of Incorporation and By-Laws of the Company (Incorporated
         herein by reference from Schedule 4 to the prospectus included in the
         Registration Statement on Form S-4 of the Company (No. 33-19149) filed
         on December 18, 1987).

3.2      Certificate of Amendment dated June 29, 1995 of Certificate of
         Incorporation implementing a one-for-three reverse stock split
         (Incorporated herein by reference to Exhibit 3.2 of the Company's
         Annual Report on Form 10-KSB filed on April 15, 1999).

3.3      Certificate of Amendment of Certificate of Incorporation (Incorporated
         herein by reference to Exhibit 3.4 of the Company's Current Report on
         Form 8-K filed on November 30, 1999).

3.4      Certificate of Designations of Series A Preferred Stock (Incorporated
         herein by reference to Exhibit 4.1 of the Company's Current Report on
         Form 8-K filed on August 10, 1999).

3.5      Resolution of Board of Directors dated April 12, 1995 amending the
         By-Laws (Incorporated herein by reference to Exhibit 3(ii).1 of the
         Annual Report on Form 10-K of the Company filed on April 17, 1995).

10.1     Agreement regarding Certain Closing and Post Closing Matters dated as
         of July 28, 1999 (Incorporated herein by reference to Exhibit 10.1 to
         the Company's Current Report on Form 8-K filed on August 10, 1999).

10.2     Stock Purchase Agreement dated as of June 29, 1999 by and among
         National Capital Management Corporation and Resource Holdings
         Associates (Incorporated herein by reference to Exhibit 2.1 to the
         Company's Current Report on Form 8-K filed on July 20, 1999).

10.3     Employment Agreement dated July 23, 1999 between Telescents, Inc. and
         Jason Apfel (Incorporated herein by reference to Exhibit 10.3 to the
         Company's Annual Report on Form 10-K filed on July 5, 2000).+

10.4     Employment Agreement dated July 23, 1999 between Telescents, Inc. and
         Dennis M. Apfel (Incorporated herein by reference to Exhibit 10.4 to
         the Company's Annual Report on Form 10-K filed on July 5, 2000).+

10.5     FragranceNet.com Inc. 1999 Long Term Incentive Plan (Incorporated
         herein by reference to Exhibit A of the Company's Proxy Statement filed
         on October 20, 1999).+

21.2     List of Subsidiaries*

99.1     Certification of Chief Executive Officer and Chief Financial Officer

--------------
*        Included with this Annual Report on Form 10-KSB.

+        Management Contract or Compensatory Plan