UNITED STATES
                       SECURITIES AND EXCHANGE COMMISSION
                             WASHINGTON, D.C. 20549

                                    FORM 10-K

    FOR ANNUAL AND TRANSITION REPORTS PURSUANT TO SECTION 13 OR 15(d) OF THE
                            SECURITIES EXCHANGE ACT

|X|   ANNUAL REPORT  PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES  EXCHANGE
      ACT OF 1934

      For the fiscal year ended January 29, 2005

                                       OR

|_|   TRANSITION  REPORT  PURSUANT  TO  SECTION  13 OR 15(d)  OF THE  SECURITIES
      EXCHANGE ACT OF 1934

      For the transition period from _________ to _________


                         Commission file number: 0-10714


                              E COM VENTURES, INC.
             (Exact name of Registrant as specified in its charter)

            Florida                                        65-0977964
(State or other jurisdiction of                         (I.R.S. Employer
  incorporation or organization)                       Identification No.)


          251 International Parkway
            Sunrise, Florida                                  33325
  (Address of principal executive offices)                  (Zip Code)


       Registrant's telephone number, including area code: (954) 335-9100

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

                                      None

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

                           Common stock $.01 par value

Indicate by check mark whether the Registrant (1) has filed all reports required
to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during
the  preceding 12 months (or for such  shorter  period that the  Registrant  was
required  to file  such  reports),  and  (2) has  been  subject  to such  filing
requirements for the past 90 days. Yes |X| No |_|

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

      Indicate by check mark whether the Registrant is an accelerated  filer (as
defined in Exchange Act Rule 12b-2). Yes |_| No|X|

      The aggregate market value of the voting stock held by  non-affiliates  of
the Registrant was  approximately  $10.6 million as of July 30, 2004, based on a
market price of $9.06 per share. For purposes of the foregoing computation,  all
executive  officers,  directors and 5% beneficial  owners of the  registrant are
deemed  to be  affiliates.  Such  determination  should  not be  deemed to be an
admission that such executive  officers,  directors or 5% beneficial owners are,
in fact, affiliates of the registrant.

      The number of shares  outstanding of the  Registrant's  common stock as of
April 22, 2005: 2,941,935 shares

                       Documents Incorporated By Reference

      Portions  of the  Registrant's  definitive  proxy  statement  for its 2005
annual  meeting of  shareholders,  which proxy  statement will be filed no later
than 120 days after the close of the Registrant's  fiscal year ended January 29,
2005, are hereby  incorporated by reference in Part III of this Annual Report on
Form 10-K

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

<PAGE>

                                TABLE OF CONTENTS

ITEM                                                                        PAGE
----                                                                        ----

                                     PART I

1.    Business                                                                3
2.    Properties                                                              9
3.    Legal Proceedings                                                       9
4.    Submission of Matters to a Vote of Security Holders                     9


                                     PART II

5.    Market  for  Registrant's  Common  Equity,  Related  Stockholder
      Matters and Issuer Purchases of Equity Securities                      10
6.    Selected Financial Data                                                12
7.    Management's  Discussion and Analysis of Financial Condition and
      Results of Operations                                                  13
7A.   Quantitative and Qualitative Disclosures About Market Risk             23
8.    Financial Statements and Supplementary Data                            24
9.    Changes in and Disagreements  with Accountants on Accounting and
      Financial Disclosure                                                   42
9A.   Controls and Procedures                                                42
9B.   Other Information                                                      42

                                    PART III

10.   Directors and Executive Officers of the Registrant                     42
11.   Executive Compensation                                                 42
12.   Security  Ownership of Certain  Beneficial Owners and Management
      and Related Stockholder Matters                                        42
13.   Certain Relationships and Related Transactions                         42
14.   Principal Accountant Fees and Services                                 42

                                     PART IV

15.   Exhibits and Financial Statement Schedules                             43


                                        2
<PAGE>

                                     PART I.

ITEM 1. BUSINESS

GENERAL

      E Com Ventures,  Inc., a Florida  corporation  ("ECOMV" or the "Company"),
performs  all  of  its  operations   through  two   wholly-owned   subsidiaries,
Perfumania,  Inc.  ("Perfumania"),  a Florida corporation,  which is a specialty
retailer and wholesaler of fragrances and related products,  and perfumania.com,
Inc.,  ("perfumania.com"),  a Florida corporation, which is an Internet retailer
of fragrances and other specialty items.

      Perfumania is a leading specialty retailer and wholesale  distributor of a
wide range of brand  name and  designer  fragrances.  As of  January  29,  2005,
Perfumania  operated a chain of 223 retail  stores  specializing  in the sale of
fragrances at  discounted  prices up to 75% below the  manufacturers'  suggested
retail  prices.  Perfumania's  wholesale  division  distributes  fragrances  and
related products primarily to an affiliate. Perfumania.com offers a selection of
the Company's more popular  products for sale over the Internet and serves as an
alternative shopping experience to the Perfumania retail stores.

      Perfumania  operates  its  wholesale  business  directly.  It operates its
retail business through Magnifique Parfumes and Cosmetics,  Inc. ("Magnifique"),
a  wholly-owned  subsidiary  of  Perfumania,  although the stores are  generally
operated  under the name  Perfumania  as  described  below under "Trade Name and
Service  Mark."  Perfumania's  retail stores are  generally  located in regional
malls,  manufacturers'  outlet  malls,  airports and on a  stand-alone  basis in
suburban  strip  shopping  centers.  The number of retail stores in operation at
January 29, 2005,  January 31, 2004, and February 1, 2003 were 223, 232 and 238,
respectively.

      Sales of  perfumania.com  are included within those of our retail business
in this Form  10-K.  For ease of  reference  in this Form  10-K,  our retail and
wholesale  business  are  referred  to as  divisions.  See  Item 6 for  Selected
Financial Data by division.

      Our executive offices are located at 251 International  Parkway,  Sunrise,
Florida  33325,  our telephone  number is (954)  335-9100,  our retail  internet
address  is   www.perfumania.com.   and  our   business   internet   address  is
www.ecomv.com.  Through our business website, we make available, free of charge,
our annual reports on Form 10-K, quarterly reports on Form 10-Q, current reports
on  Form  8-K,  and  amendments  to  those  reports  as  soon  as is  reasonably
practicable  after we  electronically  file them with,  or furnish  them to, the
Securities  and  Exchange  Commission.  In  addition,  we have  made our Code of
Business Conduct and Ethics  available  through our website under "about ECOMV -
corporate  compliance."  The  reference  to  our  website  does  not  constitute
incorporation by reference of the information  contained on our website, and the
information contained on the website is not part of this Form 10-K.

      The  Company's  fiscal  year ends on the  Saturday  closest to January 31.
Fiscal  year 2004 ended on January 29,  2005,  fiscal year 2003 ended on January
31,  2004 and fiscal  year 2002 ended on  February  1, 2003.  Each of the fiscal
years presented contain fifty-two weeks.

RETAIL DIVISION

STRATEGY

      Each of Perfumania's  retail stores  generally  offers  approximately  175
different  brands of fragrances  for women and men at prices up to 75% below the
manufacturer's  suggested  retail  prices.  Stores stock brand name and designer
brands such as Estee Lauder(R), Fendi(R), Yves Saint Laurent(R), Fred Hayman(R),
Calvin  Klein(R),  Giorgio  Armani(R),  Gucci(R),  Ralph  Lauren/Polo(R),  Perry
Ellis(R),  Liz Claiborne(R),  Giorgio(R),  Hugo Boss(R),  Halston(R),  Christian
Dior(R), Chanel(R) and Cartier(R).  Perfumania also carries a private label line
of bath & body treatment products under the name Jerome Privee(R).

      The cornerstone of Perfumania's marketing philosophy is customer awareness
that its  stores  offer an  extensive  assortment  of  brand  name and  designer
fragrances at discount prices. Perfumania posts highly visible price tags in its
stores, listing both the manufacturers' suggested retail prices and Perfumania's
discounted prices to enable customers to make price comparisons. In addition, we
utilize  sales  promotions  such as "gift  with  purchase"  and  "purchase  with
purchase"  offers.  From time to time,  we test market in our stores  additional
specialty gift items.


                                       3
<PAGE>

      Perfumania's  stores  are  "full-service"   stores.   Accordingly,   store
personnel are trained to establish personal rapport with customers,  to identify
customer  preferences  with  respect to both  product  and price  range,  and to
successfully  conclude  a sale.  Management  believes  that  attentive  personal
service  and  knowledgeable  sales  personnel  are key factors to the success of
Perfumania's  retail stores.  Perfumania's  store personnel are compensated on a
salary plus bonus basis.  Perfumania  has several  bonus  programs  that provide
incentives  for store  personnel to sell  merchandise  which have higher  profit
margins.  In addition,  to provide an incentive to reduce  expenses and increase
sales,  regional and district  managers are eligible to receive a bonus if store
profitability  and  operational  goals are met.  Management  believes that a key
component of Perfumania's ability to increase  profitability will be its ability
to hire,  train and retain store  personnel  and district  managers.  Perfumania
conducts  comprehensive  training  programs  for store  associates,  designed to
achieve higher levels of customer satisfaction.

      Perfumania  primarily  relies on its  distinctive  store design and window
displays  to attract  the  attention  of  prospective  customers.  In  addition,
Perfumania  distributes  advertising  flyers  and  brochures  by mail and in its
stores  and in the  malls in  which  its  stores  are  located.  The  amount  of
advertising varies with the seasonality of the business.

RETAIL STORES

      Perfumania's standard store design includes signs and merchandise displays
which are  designed to enhance  customer  recognition  of  Perfumania's  stores.
Perfumania's stores average  approximately  1,400 square feet;  however,  stores
located in manufacturers' outlet malls tend to be larger than Perfumania's other
stores. A store is typically  managed by one manager and one assistant  manager.
The  average  number  of  employees  in a  Perfumania  store is five,  including
part-time help.  District  managers visit stores on a regular basis in an effort
to ensure  knowledgeable  and attentive  customer  service and  compliance  with
operational policies and procedures.

INFORMATION SYSTEMS

      Perfumania has an integrated  information  system  including retail outlet
and corporate  systems.  Perfumania.com has a completely  integrated  e-commerce
system.  These systems  encompass every  significant phase of our operations and
provide information for planning, purchasing, pricing, distribution, finance and
human resource decisions.  E-mail and other information are communicated between
the corporate office and store locations  through an  enterprise-wide  Intranet.
Daily  compilation  of  sales,   gross  margin,  and  inventory  levels  enables
management to analyze profitability and sell-through by item and product line as
well as monitor the success of sale promotions. Inventory is tracked through its
entire  life  cycle.  During  fiscal  year 2003,  a new point of sale system was
implemented in all stores. This system enabled improved  communication,  pricing
and promotion programs,  time and attendance  reporting,  and enhanced inventory
control.

STORE LOCATION AND EXPANSION

      Perfumania's stores are located in 34 states, the District of Columbia and
Puerto  Rico,  including  41  locations  in  Florida,  19 in both  New  York and
California,  17 in Texas and 16 in Puerto Rico.  Perfumania's  current  business
strategy  focuses on  maximizing  sales by raising the  average  dollar sale per
transaction,   reducing  expenses  at  existing  stores,   selectively   closing
under-performing  stores and on a limited  basis,  opening  new stores in proven
geographic  markets.  When  opening  new  stores,   Perfumania  seeks  locations
primarily in regional and  manufacturers'  outlet malls and,  selectively,  on a
stand-alone basis in suburban shopping centers in metropolitan areas. To achieve
economies of scale with respect to advertising and management costs,  Perfumania
evaluates  whether to open  additional  stores in markets where it already has a
presence or whether to expand into  additional  markets that it believes  have a
population density to support a cluster of stores.

      In fiscal  years  2004,  2003 and 2002,  Perfumania  opened 14 stores,  11
stores  and 4  stores,  respectively.  Perfumania  continuously  monitors  store
performance  and  from  time  to  time  closes  under-performing  stores,  which
typically  have been older stores in less  trafficked  locations.  During fiscal
years  2004,  2003 and 2002,  Perfumania  closed 27  stores,  17 and 13  stores,
respectively.  For  fiscal  year  2005,  Perfumania  will  continue  to focus on
improving the  profitability  of its existing  stores and management  expects to
open approximately 25 stores and close approximately 4 stores.

WHOLESALE DIVISION

      During fiscal year 2004 Perfumania  distributed  fragrances on a wholesale
basis primarily to Quality King  Distributors,  Inc.  ("Quality  King").  During
fiscal years 2003 and 2002,  the  wholesale  division  sold to  approximately  5
customers.  Our current President and Chief Executive Officer,  Michael Katz and
our  principal  shareholders,  Stephen  Nussdorf,  the  Chairman of our Board of
Directors  and Glenn  Nussdorf,  his brother,  are  affiliates  of Quality King.
Quality  King  accounted  for 100%,  81% and 47% of net  wholesale  sales during
fiscal years 2004, 2003 and 2002, respectively. See further discussion at Note 5
to our Consolidated Financial Statements included in Item 8, hereof.


                                       4
<PAGE>


PERFUMANIA.COM

      Perfumania.com provides a number of advantages for retail fragrance sales.
Our  Internet  site  enables  us to  display a larger  number of  products  than
traditional  store-based  or  catalog  sellers.  In  addition,  the  ability  to
frequently  adjust  featured  selections  and edit content and pricing  provides
significant  merchandising  flexibility.  Our Internet  site  benefits  from the
ability  to  reach  a  large  group  of  customers  from  a  central   location.
Additionally,  we can also obtain  demographic and behavioral data of customers,
increasing opportunities for direct marketing and personalized services. Because
brand loyalty is a primary factor influencing a fragrance  purchase,  we believe
the ability to  physically  sense the  fragrance  product is not critical to the
purchasing decision.  Perfumania.com's  online store provides its customers with
value, selection, pricing and convenience.

CHANGE OF CONTROL

      Effective  January 30, 2004,  Ilia Lekach,  the Company's then Chairman of
the Board and Chief Executive  Officer,  and several other parties controlled by
Mr. Lekach and his wife Deborah Lekach (collectively, "Lekach"), entered into an
option  agreement (the "Nussdorf  Option  Agreement")  with Stephen Nussdorf and
Glenn Nussdorf (the  "Nussdorfs"),  pursuant to which the Nussdorfs were granted
options to acquire up to an aggregate  720,954  shares of the  Company's  common
stock  beneficially  owned by Lekach,  for a purchase price of $12.70 per share,
exercisable at various dates.

      As of May 10, 2004,  Mr. Lekach had exercised his options from the Company
to acquire  443,750  shares and the  Nussdorfs  had acquired all 720,954  shares
pursuant to the Nussdorf  Option  Agreement.  Currently,  the  Nussdorfs  own an
aggregate of 1,113,144  shares of the Company's  common stock  outstanding.  The
Nussdorfs  also  collectively  have the right to acquire an  additional  444,445
shares of the  Company's  common  stock  upon  conversion  of their  Convertible
Debenture.  See  further  discussion  in  Note 5 to our  Consolidated  Financial
Statements.

SOURCES OF SUPPLY

      During fiscal years 2004 and 2003,  Perfumania  purchased  fragrances from
approximately 120 and 100 different suppliers, respectively,  including national
and  international  manufacturers,   distributors,  wholesalers,  importers  and
retailers.  Perfumania  generally  makes  its  purchases  based  on a  favorable
available  combination  of prices,  credit  terms,  quantities  and  merchandise
selection and, accordingly, the extent and nature of Perfumania's purchases from
its various  suppliers  change  constantly.  As is  customary  in the  fragrance
industry, Perfumania has no long-term or exclusive contracts with suppliers.

      Approximately 27% and 5% of Perfumania's  total  merchandise  purchased in
fiscal years 2004 and 2003, respectively,  was from our affiliate, Quality King.
Approximately 26% and 23% of Perfumania's total merchandise  purchased in fiscal
years  2004  and  2003,  respectively,   was  from  another  affiliate,   Parlux
Fragrances,   Inc.  ("Parlux"),  a  manufacturer  and  distributor  of  prestige
fragrances and related beauty products.  Ilia Lekach, our former Chairman of the
Board and Chief  Executive  Officer and one of our principal  shareholders  with
approximately 10% of our outstanding  common stock, is the Chairman of the Board
and Chief Executive  Officer of Parlux which also owns  approximately 13% of our
outstanding  common stock. No other supplier  accounted for more than 10% of our
merchandise purchases during 2004 or 2003.

      A portion of Perfumania's  merchandise is purchased from secondary sources
such  as  distributors,   wholesalers,   importers  and  retailers.  Merchandise
purchased from secondary sources includes  trademarked and copyrighted  products
that were  manufactured in the United States,  sold to foreign  distributors and
then re-imported into the United States,  as well as trademarked and copyrighted
products  manufactured and intended for sale in foreign countries.  From time to
time,  U.S.  trademark  and  copyright  owners  and  their  licensees  and trade
associations  have initiated  litigation or administrative  agency  proceedings,
based on U.S.  Customs  Service  regulations  or trademark  or  copyright  laws,
seeking to halt the  importation  into the United  States of such "gray  market"
merchandise  or to restrict its resale in the United  States,  and some of these
actions have been  successful.  However,  the U.S.  courts remain divided on the
extent to which  trademark,  copyright or other existing laws or regulations can
be used to restrict the  importation  or sale of "gray market"  merchandise.  In
addition,  from time to time federal  legislation to restrict the importation or
sale of "gray market" merchandise has been proposed, but no such legislation has
been adopted.

      As is often the case in the fragrance and cosmetics business,  some of the
merchandise  purchased by  Perfumania  may have been  manufactured  by entities,
particularly  foreign  licensees  and  others,  who are not  the  owners  of the
trademarks or copyrights  for the  merchandise.  Perfumania's  secondary  market
sources generally will not disclose the identity of their suppliers,  which they
consider to be proprietary trade  information.  As a result,  Perfumania may not
always be able to demonstrate that the manufacturer of specific  merchandise had
proper   authority  from  the  trademark  or  copyright  owner  to  produce  the
merchandise or permit it to be resold in the United States.  Accordingly,  there
is a risk that if  Perfumania  were called upon or  challenged by the owner of a
particular  trademark or copyright to demonstrate that specific  merchandise was
produced  and  sold  with  the  proper  authority  and it was  unable  to do so,
Perfumania  could,   among  other  things,  be  restricted  from  reselling  the
particular merchandise or be subjected to other liabilities.


                                       5
<PAGE>

      Perfumania's  business  activities  could  become the  subject of legal or
administrative actions brought by manufacturers,  distributors or others, any of
which actions could have a material  adverse effect on our business or financial
condition.  In addition,  future judicial,  legislative or administrative agency
action,  including possible import,  export, tariff or other trade restrictions,
could limit or eliminate some of Perfumania's secondary sources of supply or any
of its business activities.

DISTRIBUTION

      Perfumania  utilizes  independent  national trucking  companies to deliver
merchandise to its stores.  Retail store  deliveries  generally are made weekly,
with more frequent  deliveries during the holiday season. Such deliveries permit
the stores to minimize  inventory storage space and increase the space available
for display and sale of merchandise.  To expedite delivery of merchandise to its
customers,  Perfumania  sometimes  instructs its  suppliers to ship  merchandise
directly to wholesale  division  customers.  Sales of perfumania.com are shipped
through national carriers and are typically delivered within a few days of being
ordered.

COMPETITION

      Retail  and  wholesale   perfume   businesses   are  highly   competitive.
Perfumania's retail competitors include department stores, regional and national
retail chains,  independent  drug stores,  duty-free  shops and other  specialty
retail  stores.  We believe  Perfumania  is the  largest  specialty  retailer of
discounted fragrances in the United States in terms of number of stores. Some of
Perfumania's competitors sell fragrances at discount prices and some are part of
large national or regional chains that have substantially  greater resources and
name recognition than  Perfumania.  Perfumania's  stores compete on the basis of
selling price, promotions, customer service, merchandise variety, store location
and ambiance. Perfumania believes that its perfumery concept, full-service sales
staff,  discount  prices,  large and varied selection of brand name and designer
fragrances and attractive shopping  environment are important to its competitive
position.

      Perfumania's  wholesale  division  competes  directly  with other  perfume
wholesalers and perfume manufacturers,  some of which have substantially greater
resources  or  merchandise  variety  than  Perfumania.  The  wholesale  division
competes  principally  on  the  basis  of  merchandise   selection,   price  and
availability.

EMPLOYEES

      At January 29, 2005, we had 1,363  employees,  of whom 1,202 were employed
in Perfumania's  retail stores,  59 were employed in Perfumania's  warehouse and
distribution  operations and 102 were employed in executive,  administrative and
other   positions.   Temporary  and   part-time   employees  are  added  between
Thanksgiving  and  Christmas.  None of our employees are covered by a collective
bargaining  agreement and we consider our relationship  with our employees to be
good.

TRADE NAME AND SERVICE MARK

      Perfumania's  stores use the trade name and  service  mark  Perfumania(R);
Perfumania also operates under the trade names, Also Perfumania, Class Perfumes,
Touch at Perfumania,  Perfumania Too and Perfumania Plus.  Perfumania has common
law rights to its trade names and service mark in those  general  areas in which
its  existing   stores  are  located  and  has   registered   the  service  mark
Perfumania(R)  with the U.S.  Patent  and  Trademark  Office.  The  registration
expires in 2009 and may be renewed for 10-year terms thereafter.

INVESTMENT IN NIMBUS GROUP, INC.

      Our former Chairman of the Board and Chief Executive Officer, Ilia Lekach,
was also Chairman and interim CEO of Nimbus  Group,  Inc.  ("Nimbus"),  formerly
known as TakeToAuction.com ("TTA"), a public company previously committed to the
development  of a private jet air taxi  network.  TTA  initially  sold  consumer
products on Internet auction sites.

      From fiscal year 2000 through  fiscal year 2002 we acquired  approximately
1,003,000  shares of Nimbus common stock.  The investment in Nimbus was shown on
our balance sheets as investments available for sale. During fiscal year 2003 we
disposed  of our  holding  in Nimbus in open  market  transactions  at a loss of
approximately $172,000.


                                       6
<PAGE>

      As of February 1, 2003,  the market  price for  Nimbus'  common  stock was
below  the  Company's  average  cost per  share of $4.13.  In  consideration  of
accounting guidance that considers a six to nine month decline in stock price to
be other than temporary, the Company recorded a non-cash-charge of approximately
$700,000  in realized  loss on  investments  on the  consolidated  statement  of
operations for fiscal year 2002.

RISK FACTORS THAT MAY AFFECT FUTURE RESULTS

      The  following  set forth certain risk factors that may affect the Company
and results of operations.  These may be additional risks not set forth below or
in this  Annual  Report on form 10-K,  which may also affect the Company and its
operations.

We could face  liquidity  and working  capital  constraints  if we are unable to
generate sufficient cash flows from operations

      If we are unable to  generate  sufficient  cash flows from  operations  to
service  our   obligations,   we  could  face  liquidity  and  working   capital
constraints, which could adversely impact our future operations and growth.

Failure to comply with covenants in our existing credit facility could result in
our inability to borrow additional funds

      Our credit  facility  requires  us to  maintain  compliance  with  various
financial  covenants.  Our  ability to meet those  covenants  can be affected by
events  beyond  our  control,  and  therefore  we may be  unable  to meet  those
covenants. If our actual results deviate significantly from our projections,  we
may not be in  compliance  with the covenants and might not be allowed to borrow
under  the  credit  facility.  If we were not able to borrow  under  our  credit
facility, we would be required to develop an alternative source of liquidity, or
to sell  additional  securities  which  would  result in  dilution  to  existing
shareholders.   We  cannot  assure  that  we  could  obtain  replacement  credit
facilities on favorable terms or at all. Without a source of financing, we could
experience  cash flow  difficulties  and be forced to curtail  our then  current
operations.

Perfumania may have problems raising money needed in the future

      Our  growth  strategy  includes  selectively  opening  and  operating  new
Perfumania  retail  locations and increasing the average retail sales per store.
We may need to  obtain  funding  to  achieve  our  growth  strategy.  Additional
financing  may not be  available  on  acceptable  terms,  if at all. In order to
obtain additional financing, we may be required to issue securities with greater
rights than those  currently  possessed by holders of our common  stock.  We may
also be required to take other actions, which may lessen the value of our common
stock, including borrowing money on terms that are not favorable.

Perfumania's business is subject to seasonal  fluctuations,  which could lead to
fluctuations in our stock price

      Perfumania   has   historically   experienced   and  expects  to  continue
experiencing  higher sales in the fourth fiscal  quarter than in the first three
fiscal  quarters.  Purchases of  fragrances  as gift items  increase  during the
Holiday  season,  which results in  significantly  higher fourth fiscal  quarter
retail sales. If our quarterly operating results are below expectations of stock
market analysts, our stock price might decline. Sales levels of new and existing
stores  are  affected  by a variety  of  factors,  including  the  retail  sales
environment,  the level of competition,  the effect of marketing and promotional
programs,  acceptance of new product  introductions,  adverse weather conditions
and general economic conditions. Our quarterly results may also vary as a result
of the timing of new store openings and store closings, net sales contributed by
new stores and fluctuations in comparable sales of existing stores.

Perfumania may experience  shortages of the merchandise it needs because it does
not have long-term agreements with suppliers

      Perfumania's  success  depends to a large degree on our ability to provide
an extensive assortment of brand name and designer fragrances. Perfumania has no
long-term purchase contracts or other contractual assurance of continued supply,
pricing or access to new products. If Perfumania is unable to obtain merchandise
from one or more key  suppliers on a timely  basis or  acceptable  terms,  or if
there  is  a  material  change  in  Perfumania's  ability  to  obtain  necessary
merchandise, our results of operations could be seriously harmed.

Perfumania  purchases  merchandise  from  related  parties,  which  may  cause a
conflict of interest

      Approximately 53% and 28%, respectively, of Perfumania's total merchandise
purchased  in fiscal years 2004 and 2003 were from our  affiliates  Quality King
and Parlux.  While we believe the terms of these purchases are more favorable to
us than the  terms of third  party  arrangements,  there  may be a  conflict  of
interest  between our interest in  purchasing at the best price and those of our
principal  shareholders  and  affiliates  in obtaining  the best price for their
respective companies.


                                       7
<PAGE>


Perfumania needs to successfully manage its growth

      Perfumania  may not be able to sustain  growth in  revenues.  Perfumania's
growth is somewhat  dependent  upon opening and operating new retail stores on a
profitable  basis,  which in turn is subject to,  among other  things,  securing
suitable  store sites on  satisfactory  terms,  hiring,  training and  retaining
qualified management and other personnel,  having adequate capital resources and
successfully  integrating  new stores into existing  operations.  It is possible
that   Perfumania's  new  stores  might  not  achieve  sales  and  profitability
comparable  to  existing  stores,  and it is  possible  that the  opening of new
locations might adversely affect sales at existing locations.

Perfumania could be subject to litigation because of the merchandising aspect of
its business

      Some  of  the   merchandise   Perfumania   purchases   from  suppliers  is
manufactured  by entities who are not the owners of the trademarks or copyrights
for the  merchandise.  The owner of a  particular  trademark  or  copyright  may
challenge  Perfumania to demonstrate that the specific  merchandise was produced
and sold with the proper  authority,  and if Perfumania is unable to demonstrate
this, it could,  among other things, be restricted from reselling the particular
merchandise.  This  type of  restriction  could  adversely  affect  Perfumania's
business and results of operations.

Our stock price volatility  could result in securities class action  litigation,
substantial cost, and diversion of management's attention

      The price of our common  stock has been and  likely  will  continue  to be
subject to wide fluctuations in response to a number of events, such as:

      o     quarterly variations in operating results;

      o     acquisitions,  capital  commitments of strategic  alliances by us or
            our competitors;

      o     legal regulatory matters that are applicable to our business;

      o     the operating and stock price  performances  of other companies that
            investors may deem comparable to us; and

      o     news reports relating to trends in our markets.

      In addition, the stock market in general has experienced significant price
and volume  fluctuations  that often have been  unrelated to the  performance of
specific  companies.  The broad market  fluctuations  may  adversely  affect the
market price of our common stock,  regardless of our operating performance.  Our
stock price  volatility  could  result in class  action  litigation  which would
require  substantial  monetary  cost to  defend,  as well  as the  diversion  of
management  attention from day-to-day  activities which could negatively  affect
operating performance.  Such litigation could also have a negative impact on the
price  of our  common  stock  due  to the  uncertainty  and  negative  publicity
associated with litigation.

Future growth may place  strains on our  managerial,  operational  and financial
resources

      If  we  grow  as  expected,   a  significant  strain  on  our  managerial,
operational  and financial  resources may occur.  Further,  as the number of our
users,  advertisers  and other  business  partners  grow, we will be required to
manage multiple  relationships  with various  customers,  strategic partners and
other third  parties.  Future  growth or increase in the number of our strategic
relationships could strain our managerial,  operational and financial resources,
inhibiting our ability to achieve the rapid execution  necessary to successfully
implement our business plan. In addition, our future success will also depend on
our  ability  to expand our sales and  marketing  organization  and our  support
organization commensurate with the growth of our business and the Internet.

We are subject to competition

      Some of  Perfumania's  competitors  sell fragrances at discount prices and
some are part of large  national  or  regional  chains  that have  substantially
greater  resources and name  recognition than  Perfumania.  Perfumania's  stores
compete on the basis of selling price, customer service, merchandise variety and
store  location.  Many of our current and  potential  competitors  have  greater
financial,  technical,  operational, and marketing resources. We may not be able
to compete  successfully against these competitors in developing our products or
services.  These factors, as well as demographic trends, economic conditions and
discount   pricing   strategies  by  competitors,   could  result  in  increased
competition  and could  have a  material  adverse  effect on our  profitability,
operating cash flow, and many other aspects of our business,  prospects, results
of operations and financial condition.


                                       8
<PAGE>

The loss of or disruption  in our  distribution  facility  could have a material
adverse effect on our sales

      We currently have one distribution facility,  which is located in Sunrise,
Florida.  The loss of,  or  damage to this  facility,  as well as the  inventory
stored therein,  would require us to find replacement  facilities and assets. In
addition,  weather  conditions,  such as natural  disasters,  could  disrupt our
distribution  operations.  If we cannot  replace our  distribution  capacity and
inventory in a timely,  cost-efficient  manner, it could reduce the inventory we
have available for sale,  adversely  affecting our  profitability  and operating
cash flows.

Expanding our business through  acquisitions and investments in other businesses
and technologies presents special risks

      We  may  expand  through  the  acquisition  of  and  investment  in  other
businesses. Acquisitions involve a number of special problems, including:

      o     difficulty  integrating  acquired  technologies,   operations,   and
            personnel with our existing business;

      o     diversion  of   management's   attention  in  connection  with  both
            negotiating the acquisitions and integrating the assets;

      o     the need for additional financing;

      o     strain on managerial and operational  resources as management  tries
            to oversee larger operations; and

      o     exposure to unforeseen liabilities of acquired companies.

      We may not be able to successfully address these problems.  Moreover,  our
future operating  results will depend to a significant  degree on our ability to
successfully manage growth and integrate acquisitions.

ITEM 2. PROPERTIES

      Our  executive  offices and  distribution  center are located in a 179,000
square foot  facility  in  Sunrise,  Florida.  The  facility  is leased  through
December 2017 pursuant to a lease which  currently  provides for monthly rent of
approximately $82,000 with specified increases.

      All of Perfumania's retail stores are located in leased premises.  Most of
the store  leases  provide for the payment of a fixed amount of base rent plus a
percentage of sales,  ranging from 3% to 15%, over certain minimum sales levels.
Store leases  typically  require  Perfumania to pay its  proportionate  share of
utility charges,  insurance premiums, real estate taxes and certain other costs.
Some of  Perfumania's  leases permit the  termination  of the lease if specified
minimum  sales  levels are not met.  See Note 11 to our  Consolidated  Financial
Statements included in Item 8 hereof, for additional information with respect to
our store leases.

ITEM 3. LEGAL PROCEEDINGS

      We are involved in legal  proceedings in the ordinary  course of business.
Management  cannot  presently  predict  the outcome of these  matters,  although
management  believes that the ultimate  resolution  of these matters  should not
have a  materially  adverse  effect  on our  financial  position  or  result  of
operations.

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

      On December 14, 2004, we held our annual meeting of  shareholders.  At the
annual meeting,  the  shareholders  elected Michael W. Katz,  Stephen  Nussdorf,
Carole  Ann  Taylor,  Joseph  Bouhadana,  and  Paul  Garfinkle  to the  Board of
Directors.  In addition, the shareholders ratified the appointment of Deloitte &
Touche LLP as our independent auditors. The following table reflects the results
of the meeting:

<TABLE>
<CAPTION>
    ELECTION OF DIRECTORS:
    ---------------------

                           SHARES        SHARES VOTED        SHARES VOTED     ABSTAIN/
     TOTAL                 VOTED             FOR               AGAINST        WITHHELD        NON-VOTES
----------------           -----          ----------        -------------    ---------        ---------
<S>                     <C>             <C>                 <C>              <C>              <C>
Michael W. Katz          2,316,120        2,278,782               --           37,338           93,211

Stephen Nussdorf         2,316,120        2,308,646               --            7,474           93,211

Carole Ann Taylor        2,316,120        2,314,396               --            1,724           93,211

Joseph Bouhadana         2,316,120        2,308,596               --            7,524           93,211

Paul Garfinkle           2,316,120        2,314,446               --            1,674           93,211
</TABLE>


                                       9
<PAGE>


<TABLE>
<CAPTION>
RATIFICATION OF AUDITORS:
------------------------

                           SHARES        SHARES VOTED       SHARES VOTED     ABSTAIN/
     TOTAL                 VOTED             FOR               AGAINST        WITHHELD        NON-VOTES
----------------           -----          ----------        -------------    ---------        ---------
<S>                     <C>             <C>                 <C>              <C>              <C>
Ratify Appointment of    2,316,120         2,314,030           2,090              --            93,211
Deloitte & Touche LLP
</TABLE>

      On February 6, 2004, Miles Raper,  Donovan Chin and Daniel Bengio resigned
as members of the  Company's  Board of  Directors,  and Stephen  Nussdorf,  Paul
Garfinkle and Michael W. Katz were elected to the Company's  Board of Directors.
Effective  February  10,  2004,  Mr.  Lekach's  employment  with the Company was
terminated  and Mr.  Lekach  ceased  serving as an  employee  and officer of the
Company.  In addition,  on February 10, 2004, Mr. Lekach resigned from the Board
of Directors and Stephen L. Nussdorf was appointed the Company's Chairman of the
Board and  Michael  W. Katz was  appointed  the  Company's  President  and Chief
Executive Officer.

                                    PART II.

ITEM 5. MARKET FOR REGISTRANT'S  COMMON EQUITY,  RELATED STOCKHOLDER MATTERS AND
        ISSUER PURCHASES OF EQUITY SECURITIES

MARKET INFORMATION

      Our common  stock is traded on the NASDAQ  Stock  Market  under the symbol
ECMV.  The following  table sets forth the high and low closing sales prices for
our common  stock for the periods  indicated,  as  reported by the NASDAQ  Stock
Market.

                  FISCAL 2004           HIGH            LOW
                -----------------      --------      ---------

                First Quarter           $14.70          $9.92
                Second Quarter           12.16           6.85
                Third Quarter            12.04           8.35
                Fourth Quarter           15.42          10.02


                  FISCAL 2003             HIGH            LOW
                -----------------      --------      ---------

                First Quarter            $5.00          $2.61
                Second Quarter           12.00           2.60
                Third Quarter            15.69           9.92
                Fourth Quarter           15.50          11.00


      As of April 19,  2005,  there  were 63 holders  of record  which  excluded
common stock held in street name.  The closing  sales price for the common stock
on April 19, 2005 was $12.00 per share.

REVERSE STOCK-SPLIT

      Our Board of Directors  authorized a one-for-four  reverse  stock-split of
our outstanding  shares of common stock for  shareholders of record on March 20,
2002.  Accordingly,  all share and per  share  data  shown in this Form 10-K for
periods  ended  prior to March  20,  2002 have been  retroactively  adjusted  to
reflect this reverse stock split.

DIVIDEND POLICY

      We have not declared or paid any  dividends on our common stock and do not
currently  intend to declare or pay cash  dividends in the  foreseeable  future.
Payment  of  dividends,  if  any,  will be at the  discretion  of the  Board  of
Directors  after taking into account  various  factors,  including our financial
condition,  results of operations,  current and anticipated cash needs and plans
for expansion.  Perfumania is prohibited  from paying cash  dividends  under its
line of credit agreement with GMAC Commercial Finance LLC and Congress Financial
Corporation.


                                       10
<PAGE>


EQUITY COMPENSATION PLAN INFORMATION

      The following  table sets forth  information as of January 29, 2005,  with
respect  to our  compensation  plans  under  which  our  equity  securities  are
authorized for issuance.


<TABLE>
<CAPTION>
                                                                                        Number of securities
                                                                                         remaining available
                                                                                         for future issuance
                                    Number of securities        Weighted-average            under equity
                                      to be issued upon        exercise price of         compensation plans
                                         exercise of              outstanding           excluding securities
                                    outstanding options,       options, warrants         reflected in column
                                     warrants and rights           and rights                  (a)(1)
                                    ----------------------    ---------------------    ------------------------
<S>                                 <C>                       <C>                      <C>
     Plan Category:                          (a)                      (b)                        (c)
     Equity compensation plans
       approved by stockholders                   212,032                    $9.46                     494,697
     Equity compensation plans
       not approved by
       stockholders                                    --                       --                          --
                                    ----------------------    ---------------------    ------------------------

     Total                                        212,032                    $9.46                     494,697
                                    ----------------------    ---------------------    ------------------------

</TABLE>

(1)   The  number  of  shares   available  under  our  2000  Stock  Option  Plan
      automatically  increases  each year by 3% of the shares of common stock of
      the Company outstanding at the end of the immediate preceding year.


                                       11
<PAGE>


ITEM 6. SELECTED FINANCIAL DATA

      The selected  financial data presented below should be read in conjunction
with such financial statements and related notes.

      Our fiscal year ends on the Saturday closest to January 31. All references
herein to fiscal years are to the calendar year in which the fiscal year begins;
for  example,  fiscal year 2004 refers to the fiscal year that began on February
1, 2004 and ended on January 29, 2005. All fiscal years  presented below contain
fifty-two weeks, except fiscal year 2000, which contains fifty-three weeks.

<TABLE>
<CAPTION>
                                                                             FISCAL YEAR ENDED
                                                -------------------------------------------------------------------------------
                                                JANUARY 29,      JANUARY 31,      FEBRUARY 1,      FEBRUARY 2,      FEBRUARY 3,
                                                   2005             2004             2003             2002             2001
                                                -----------      -----------      -----------      -----------      -----------
                                                             (IN THOUSANDS, EXCEPT FOR SHARE AND PER SHARE AMOUNTS)
<S>                                             <C>              <C>              <C>              <C>              <C>
STATEMENT OF OPERATIONS DATA:
Net sales, retail division                      $   201,425      $   198,479      $   199,369      $   184,142      $   185,371
Net sales, wholesale division                        23,578           14,089            2,145            9,210           21,199
                                                -----------      -----------      -----------      -----------      -----------
  Total net sales                                   225,003          212,568          201,514          193,352          206,570
                                                -----------      -----------      -----------      -----------      -----------
Gross profit, retail division                        90,049           81,923           84,159           78,468           79,218
Gross profit, wholesale division                      1,288            1,454              435            1,767            4,216
                                                -----------      -----------      -----------      -----------      -----------
  Total gross profit                                 91,337           83,377           84,594           80,235           83,434
                                                -----------      -----------      -----------      -----------      -----------
Selling, general and administrative expenses         78,521           82,297           76,178           72,918           79,884
Provision for doubtful accounts                          --               --               --               55               55
Change of control expenses                               --            4,931               --               --               --
Provision for receivables from affiliate                 --               --            1,961               --               --
Provision for impairment of assets
  and store closings                                    314              593              663              727           22,894
Depreciation and amortization                         5,875            6,103            6,024            6,825            5,819
                                                -----------      -----------      -----------      -----------      -----------
  Total operating expenses                           84,710           93,924           84,826           80,525          108,652
                                                -----------      -----------      -----------      -----------      -----------
Income (loss) from operations                         6,627          (10,547)            (232)            (290)         (25,218)
Other income (expense)

  Interest expense, net                              (3,326)          (2,153)          (1,883)          (3,095)          (8,179)
  Share of loss of partially-owned affiliate             --               --               --               --           (1,388)
  Gain on sale of affiliate's common stock               --               --               --               --           33,399
  Realized loss on investments                           --             (172)            (711)              --           (4,819)
  Miscellaneous (expense) income, net                    --               --               --              (18)              85
                                                -----------      -----------      -----------      -----------      -----------
Income (loss) before income taxes                     3,301          (12,872)          (2,826)          (3,403)          (6,120)
Benefit (provision) for income taxes                   (150)              --               --              211               --
                                                -----------      -----------      -----------      -----------      -----------
Net income (loss)                               $     3,151      $   (12,872)     $    (2,826)     $    (3,192)     $    (6,120)
                                                ===========      ===========      ===========      ===========      ===========

Weighted average shares outstanding:
  Basic                                           2,832,107        2,454,340        2,528,326        2,420,467        2,360,456
  Diluted                                         3,001,844        2,454,340        2,528,326        2,420,467        2,360,456

Basic income (loss) per share                   $      1.11      $     (5.24)     $     (1.12)     $     (1.32)     $     (2.59)
Diluted income (loss) per share                 $      1.06      $     (5.24)     $     (1.12)     $     (1.32)     $     (2.59)

SELECTED OPERATING DATA:
Number of stores open at end of period                  223              232              238              247              257
Comparable store sales increase                         1.8%             1.1%            10.2%             2.5%            16.9%

BALANCE SHEET DATA:
Working capital (deficiency)                    $     2,240      $    (9,090)     $     1,804      $     2,760      $     7,015
Total assets                                        107,817           92,463          103,423          102,559          107,329
Long-term debt, less current portion                 12,972            7,746            7,752            5,204           11,531
Total shareholders' equity                           15,060           10,222           21,853           22,603           26,395
</TABLE>


                                       12
<PAGE>


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

ACQUISITION OF PERFUMANIA.COM

      On May 10, 2000, the Company acquired perfumania.com for 400,000 shares of
Envision  Development  Corporation  ("EDC") stock held by the Company which were
restricted  securities under Rule 144 of the Securities Act of 1933, as amended,
and  subject  to a  lock-up  agreement  as well as  certain  other  restrictions
including  approval  by an  affiliate  of EDC prior to the sale of shares by the
Company.  The lock-up  agreement  did not allow the Company to dispose of any of
their EDC shares until May 2000,  after which the Company was allowed to dispose
of up to 50,000  shares per month from May through  December  2000, up to 75,000
shares per month from  January  through  July 2001 and up to 100,000  shares per
month thereafter. Approval required by the affiliate of EDC allowing the Company
to sell 50,000 shares in May 2000 was withheld and the Company  believed that it
would not  obtain  approval  to sell such  shares  or any  additional  shares in
subsequent months. In addition, management of the Company had concerns about the
direction and business  prospects of EDC and the future value of the EDC shares.
The Company recorded the acquisition of  perfumania.com  at $5.4 million,  which
was based on an  independent  appraisal  completed in December 2000. The Company
used this  valuation  because it believed  that the  appraisal  was more clearly
evident of the fair value of the transaction than the quoted market price of the
EDC stock at the time of the transaction.  In December 2000, the EDC shares were
delisted  from the American  Stock  Exchange and the value of its shares  became
nominal.

      The  presentation of this  transaction was revised in the fiscal 2003 10-K
from the previously  reported  amounts to reflect the accounting  treatment that
would  result  from  using  the  quoted  market  price of the EDC  shares on the
acquisition  date rather than the  appraised  value as the more clearly  evident
indicator of the value of the transaction. The market price of EDC shares on the
acquisition  date was $70.25 per share and would have valued  perfumania.com  in
the aggregate at  approximately  $28.1  million  resulting in an increase in the
gain on the sale of affiliate's  common stock of $23.4  million,  an increase in
the acquisition price from $5.4 million to $28.8 million, and the recognition of
additional  goodwill of $23.4 million at the time of the  transaction.  Based on
the results of the independent  appraisal of the value of  perfumania.com  using
the  discounted  cash flow method,  goodwill  would have been  impaired by $23.4
million.  Gross  profit and net income  remained  unchanged  for the fiscal year
ended February 3, 2001.

GENERAL

      Perfumania's  retail division accounts for most of our net sales and gross
profit. Perfumania's overall profitability depends principally on our ability to
attract  customers  and  successfully   conclude  retail  sales.  Other  factors
affecting our profitability  include general economic  conditions,  competition,
availability of volume discounts, number of stores in operation, timing of store
openings  and  closings  and  the  effect  of  special   promotions  offered  by
Perfumania.

      The following table sets forth items from our  Consolidated  Statements of
Operations  expressed  as a  percentage  of  total  net  sales  for the  periods
indicated:

<TABLE>
<CAPTION>
                             PERCENTAGE OF NET SALES

                                                                     FISCAL YEAR
                                                           2004         2003         2002
                                                          ------       ------       ------
<S>                                                       <C>          <C>          <C>
Net sales, retail division ..........................       89.5%        93.4%        98.9%
Net sales, wholesale division .......................       10.5          6.6          1.1
                                                          ------       ------       ------
  Total net sales ...................................      100.0        100.0        100.0
                                                          ------       ------       ------
Gross profit, retail division .......................       40.0         38.5         41.8
Gross profit, wholesale division ....................        0.6          0.7          0.0
                                                          ------       ------       ------
  Total gross profit ................................       40.6         39.2         42.0
                                                          ------       ------       ------
Selling, general and administrative expenses ........       34.9         38.7         37.8
Change of control expenses ..........................        0.0          2.3          0.0
Provision for impairment of receivable from affiliate        0.0          0.0          1.0
Provision for impairment of assets and store closings        0.1          0.3          0.3
Depreciation and amortization .......................        2.6          2.9          3.0
                                                          ------       ------       ------
  Total operating expenses ..........................       37.6         44.2         42.1
                                                          ------       ------       ------
Income (loss) from operations before other expense ..        2.9         (5.0)        (0.1)
                                                          ------       ------       ------

Other expense:
  Interest expense, net .............................       (1.5)        (1.0)        (0.9)
  Realized loss on investments ......................        0.0         (0.1)        (0.4)
                                                          ------       ------       ------
Loss before income taxes ............................        1.5         (6.0)        (1.4)
(Provision) benefit from income taxes ...............       (0.1)         0.0          0.0
                                                          ------       ------       ------
Net income (loss) ...................................        1.4%        (6.1)%       (1.4)%
                                                          ------       ------       ------
</TABLE>

                                       13
<PAGE>

FORWARD LOOKING STATEMENTS

      Some of the statements in this Annual Report on Form 10-K, including those
that contain the words "anticipate,"  "believe," "plan,"  "estimate,"  "expect,"
"should,"  "intend,"  and  other  similar   expressions,   are  "forward-looking
statements' within the meaning of the Private  Securities  Litigation Reform Act
of 1995.  Those  forward-looking  statements  involve  known and unknown  risks,
uncertainties  and other factors that may cause our actual results,  performance
or  achievements  of those of our industry to be materially  different  from any
future  results,  performance  or  achievements  expressed  or  implied by those
forward-looking  statements.  Among the factors that could cause actual results,
performance or achievement to differ  materially from those described or implied
in the forward-looking statements are our ability to service our obligations and
refinance our credit  facility on acceptable  terms,  our ability to comply with
the covenants in our credit facility,  general economic  conditions  including a
continued  decrease  in  discretionary   spending  by  consumers,   competition,
potential  technology changes,  changes in or the lack of anticipated changes in
the  regulatory  environment  in  various  countries,   the  ability  to  secure
partnership or joint-venture  relationships with other entities,  the ability to
raise additional capital to finance expansion, the risks inherent in new product
and service  introductions  and the entry into new geographic  markets and other
factors included in our filings with the Securities and Exchange Commission (the
"SEC"),  including the Risk Factors included in this Annual Report on Form 10-K.
Copies of our SEC filings  are  available  from the SEC or may be obtained  upon
request from us. We do not  undertake any  obligation to update the  information
contained herein, which speaks only as of this date.

CRITICAL ACCOUNTING ESTIMATES

      Our  consolidated  financial  statements  have been prepared in accordance
with accounting  principles  generally accepted in the United States of America.
Preparation  of these  statements  requires  management  to make  judgments  and
estimates.  As such,  some  accounting  policies  have a  significant  impact on
amounts reported in these financial statements. The judgments and estimates made
can significantly affect results. Materially different amounts would be reported
under  different  conditions  or by using  different  assumptions.  A summary of
significant  accounting  policies  can be  found  in Note 2 to the  Consolidated
Financial Statements.

      We consider an accounting policy to be critical if it requires significant
judgment and estimates in its application. We have identified certain accounting
policies that we consider critical to our business and our results of operations
and have provided below additional information on those policies.

Inventory Adjustments and Reserves

      Inventories  are  stated  at the  lower  of cost  or  market,  cost  being
determined  on a weighted  average  cost  basis.  We review our  inventory  on a
regular basis for excess and  potentially  slow moving  inventory based on prior
sales,   forecasted   demand,   historical   experience  and  through   specific
identification  of  obsolete  or  damaged  merchandise  and we record  inventory
writeoffs in accordance with our expectations.  If there are material changes to
these estimates, additional writeoffs could be necessary.

Impairment of Long-Lived Assets

      When  facts and  circumstances  indicate  that the  values  of  long-lived
assets, including intangibles,  may be impaired, an evaluation of recoverability
is performed by comparing the carrying  value of the assets to projected  future
cash flows in addition to other quantitative and qualitative analyses.  Inherent
in this process is  significant  management  judgment as to the  projected  cash
flows.  Upon  indication  that  the  carrying  value of such  assets  may not be
recoverable,  the Company  recognizes  an  impairment  loss as a charge  against
current  operations.  Cash  flows  for  retail  assets  are  identified  at  the
individual store level.  Judgments are also made as to whether  under-performing
stores  should  be  closed.  Even if a  decision  has been  made not to close an
under-performing  store, the assets at that store may be impaired.  If there are
material  changes to these judgments or estimates,  additional  charges could be
necessary.


                                       14
<PAGE>


COMPARISON OF FISCAL YEARS 2004 AND 2003

Revenues:

<TABLE>
<CAPTION>
                                                          For the year ended
                          -----------------------------------------------------------------------------------
                                                           ($ in thousands)

                                               Percentage
                                                   of                             Percentage      Percentage
                          January 29, 2005      Revenues      January 31, 2004    of Revenues      Increase
                          -----------------    -----------    -----------------   ------------    -----------
<S>                       <C>                  <C>            <C>                 <C>             <C>
Wholesale                          $23,578          10.5%              $14,089           6.6%          67.4%

Retail                             201,425          89.5%              198,479          93.4%           1.5%
                          -----------------    -----------    -----------------   ------------    -----------

Total Revenues                    $225,003         100.0%             $212,568         100.0%           5.9%
                          -----------------    -----------    -----------------   ------------    -----------
</TABLE>


      In fiscal  year 2004 net sales  increased  for both  wholesale  and retail
sales.  The  increase in wholesale  sales was due to  purchases  made by Quality
King. The Company, through its supplier relationships, is able to obtain certain
merchandise  at better prices and quantities  than Quality King.  Overall retail
sales increased by 1.5% and comparable store sales increased by 1.8%. Comparable
store  sales  measure  the sales from stores that have been open for one year or
more.  The average  number of stores  operated  decreased from 235 during fiscal
year 2003 to 230 in fiscal  year 2004  primarily  due to the  closure  of older,
underperforming   stores.  We  believe  that  Perfumania's   retail  sales  were
negatively  impacted  in fiscal  year 2004 by the  overall  soft  United  States
economy  earlier in the year and management  transition  following the change in
control.  However,  the later months of fiscal 2004 were improved due to greater
availability  of merchandise  brands,  quantity of product and as new management
programs, which are discussed below, took effect.


Cost of Goods Sold:

<TABLE>
<CAPTION>
                                              For the year ended
                         -------------------------------------------------------------
                                               ($ in thousands)

                                                                        Percentage
                                                                         Increase
                          January 29, 2005      January 31, 2004        (Decrease)
                         -------------------   -------------------    ----------------
<S>                      <C>                   <C>                    <C>
Wholesale                           $22,291               $12,635               76.4%

Retail                              111,376               116,556              (4.4%)
                         -------------------   -------------------    ----------------

Total cost of goods
sold                               $133,667              $129,191                3.5%
                         -------------------   -------------------    ----------------
</TABLE>

Gross Profit:

<TABLE>
<CAPTION>
                                             For the year ended
                         -------------------------------------------------------------
                                              ($ in thousands)
                                                                       Percentage
                                                                        Increase
                          January 29, 2005    January 31, 2004         (Decrease)
                         -------------------  ------------------   -------------------
<S>                      <C>                  <C>                  <C>
Wholesale                            $1,288              $1,454                (11.4%)

Retail                               90,049              81,923                  9.9%
                         -------------------  ------------------   -------------------

Total gross profit                  $91,337             $83,377                  9.5%
                         -------------------  ------------------   -------------------
</TABLE>


                                       15
<PAGE>


       Gross profit for the retail division increased principally as a result of
lower cost of inventory  purchases  and marginal  adjustments  to sales  prices.
Total gross profit  increased as a result of higher sales and profit  margins in
the  retail  division  offset by higher  sales and lower  profit  margins in the
wholesale division.


Gross Profit Margin Percentages:

                                   For the year ended
                          ---------------------------------------

                           January 29, 2005    January 31, 2004
                          -------------------  ------------------

Wholesale                               5.6%               10.3%
Retail                                 44.7%               41.3%

Gross profit margin                    40.6%               39.2%


      The decrease in gross margin on wholesale  sales resulted from an increase
in the cost of the  wholesale  goods  which were sold to Quality  King.  We were
unable to offset this higher cost by  increasing  sales prices to Quality  King.
See Note 5 to our Consolidated Financial Statements for further discussion.

Operating Expenses and Income (loss) from Operations:

<TABLE>
<CAPTION>
                                                          For the year ended
                                      ------------------------------------------------------------
                                                           ($ in thousands)

                                                                                   Percentage
                                                             January 31,            Increase
                                      January 29, 2005          2004               (Decrease)
                                      -----------------    ----------------    -------------------
<S>                                   <C>                  <C>                 <C>
Selling, general and
administrative                                 $78,521             $82,297                 (4.6%)

Change of control expenses                          --               4,931                   --

Asset impairment charges                           314                 593                (47.1%)

Depreciation and amortization                    5,875               6,103                 (3.7%)
                                      -----------------    ----------------    -------------------

Total operating expenses                        84,710              93,924                 (9.8%)
                                      -----------------    ----------------    -------------------

Income (loss) from operations                   $6,627            ($10,547)                  --
                                      -----------------    ----------------    -------------------
</TABLE>


      The  decrease  in  selling,   general  and   administrative   expenses  is
attributable  primarily  to lower store  associate  compensation  costs,  better
control of store  operating  costs and a result of the  reduction of our average
number of stores.  During fiscal 2004 we improved our method of scheduling store
associates,  modified our sales incentive programs and refocused our advertising
and promotional efforts at lower costs. The majority of our selling, general and
administrative expenses relate to the retail division.

      Change of control  expenses  described in the  comparison  of fiscal years
2003 and 2002 did not affect fiscal 2004. The asset  impairment  charges in both
fiscal years relate to retail store locations with negative cash flows that were
either closed or targeted for closure. The asset impairment charges were reduced
as we do not expect more than 4 closures during fiscal year 2005.


                                       16
<PAGE>

Other Expense:

<TABLE>
<CAPTION>

                                                    For the year ended
                              ------------------------------------------------------------
                                                     ($ in thousands)

                                                                           Percentage
                                                                            Increase
                              January 29, 2005     January 31, 2004        (Decrease)
                              ------------------   -----------------    ------------------
<S>                           <C>                  <C>                  <C>
Interest expense, net                    $3,326              $2,153                 54.5%

Loss on investments                          --                 172                   --
                              ------------------   -----------------    ------------------

Total other expense                      $3,326              $2,325                 43.1%
                              ------------------   -----------------    ------------------
</TABLE>


      The increase in interest expense resulted from higher loan balances on our
new  expanded  revolving  line of  credit,  higher  interest  rates and a new $5
million convertible note payable to the Nussdorfs.


Provision for Income Taxes:

<TABLE>
<CAPTION>
                                                     For the year ended
                                -------------------------------------------------------------
                                                      ($ in thousands)

                                   January 29,                                Percentage
                                     2005           January 31, 2004           Increase
                                ----------------    ------------------    -------------------
<S>                             <C>                 <C>                   <C>
Provision for income taxes             $150,000                 --                     --
</TABLE>

      The tax provision resulted primarily from alternative minimum taxes due to
the utilization of net operating loss carry forwards.


Net Income (Loss):

<TABLE>
<CAPTION>
                                             For the year ended
                        -------------------------------------------------------------
                                              ($ in thousands)

                                                                      Percentage
                        January 29, 2005     January 31, 2004          Increase
                        -----------------    -----------------    -------------------
<S>                     <C>                  <C>                  <C>
Net Income (loss)                 $3,151            ($12,872)                  --
</TABLE>


      As a result of our increase in sales and gross profit and the reduction in
expenses  described  above, we realized net income compared to a net loss in the
prior year.


                                       17
<PAGE>


COMPARISON OF FISCAL YEARS 2003 AND 2002

Revenues:

<TABLE>
<CAPTION>
                                                                For the year ended
                          -----------------------------------------------------------------------------------------------
                                                                 ($ in thousands)

                                                                                                            Percentage
                                                 Percentage                             Percentage of        Increase
                          January 31, 2004       of Revenues      February 1, 2003         Revenues         (Decrease)
                          ------------------    --------------    ------------------    ---------------    --------------
<S>                       <C>                   <C>               <C>                   <C>                <C>
Wholesale                           $14,089              6.6%                $2,145               1.1%            556.8%

Retail                              198,479             93.4%               199,369              98.9%            (0.4)%
                          ------------------    --------------    ------------------    ---------------    --------------

Total Revenues                     $212,568            100.0%              $201,514             100.0%              5.5%
                          ------------------    --------------    ------------------    ---------------    --------------
</TABLE>


      Net sales  increased  due to an increase in wholesale  sales,  offset by a
decrease in retail sales.  The increase in wholesale  sales was due primarily to
$11.4 million of sales made to Quality King.  The Company,  through its supplier
relationships,  is able to  obtain  certain  merchandise  at better  prices  and
quantities  than  Quality  King.  See  Note  5  to  our  Consolidated  Financial
Statements for further discussion. Comparable store sales measure the sales from
stores that have been open for one year or more.  Perfumania's  comparable store
sales increased 1.1% in fiscal year 2003. However,  the average number of stores
operated  decreased  from 242 during fiscal year 2002 to 235 in fiscal year 2003
primarily due to the closure of older,  underperforming  stores. We believe that
Perfumania's  retail sales were negatively impacted for part of fiscal year 2003
by the overall soft United States economy, the war in Iraq and disruption in our
inventory supplies due to the relocation of our distribution facility.

Cost of Goods Sold:


                                            For the year ended
                          -----------------------------------------------------
                                             ($ in thousands)

                                                                   Percentage
                                                                    Increase
                          January 31, 2004     February 1, 2003    (Decrease)
                          -----------------    -----------------  -------------

Wholesale                          $12,635               $1,710         638.9%

Retail                             116,556              115,210           1.2%
                          -----------------    -----------------  -------------

Total cost of goods sold          $129,191             $116,920          10.5%
                          =================    =================  =============


Gross Profit:

                                            For the year ended
                          ------------------------------------------------------
                                             ($ in thousands)

                                                                    Percentage
                                                                     Increase
                          January 31, 2004     February 1, 2003     (Decrease)
                          -----------------    -----------------   -------------

Wholesale                           $1,454                 $435          234.3%

Retail                              81,923               84,159          (2.7)%
                          -----------------    -----------------   -------------

Total gross profit                 $83,377              $84,594          (1.4)%
                          -----------------    -----------------   -------------


      Gross profit  decreased as a result of lower sales and gross profit in the
retail  division  offset by  higher  sales  and  gross  profit in the  wholesale
division.


                                       18
<PAGE>


      Gross profit for the retail division decreased  principally as a result of
lower retail sales. Based on a comprehensive review of the Company's merchandise
offerings  conducted by  management,  approximately  3,400 stock  keeping  units
("skus")  of our  25,000  skus were  identified  which we intend to  discontinue
offering for sale in Perfumania's  retail stores. We recorded writeoffs totaling
approximately  $2.6  million as of fiscal year end 2003,  which  represents  the
difference  between the estimated  selling value and the historical cost of this
inventory. This writeoff is included in cost of goods sold and accounts for 1.4%
of the decrease in our retail  gross profit as a percentage  of net retail sales
for fiscal year 2003.

      The increase in gross profit in the  wholesale  division was due to higher
wholesale sales as discussed above.  Wholesale sales  historically yield a lower
gross margin compared to retail sales.


Gross Profit Margin Percentages:


                                  For the year ended
                          ------------------------------------

                            January 31,         February 1,
                               2004                2003
                          ----------------    ----------------

Wholesale                           10.3%               20.3%
Retail                              41.7%               43.0%

Gross profit margin                 39.2%               42.0%


      The decrease in wholesale gross profit margins was primarily  attributable
to larger number of units per wholesale  transaction  in fiscal 2004 compared to
fiscal 2003. Large unit orders yield lower margins than small orders.

Operating Expenses and Loss from Operations:

<TABLE>
<CAPTION>
                                                       For the year ended
                                   ------------------------------------------------------------
                                                         ($ in thousands)

                                                                                Percentage
                                                                                 Increase
                                   January 31, 2004     February 1, 2003        (Decrease)
                                   ------------------   -----------------    ------------------
<S>                                <C>                  <C>                  <C>
Selling, general and
administrative                          $82,297               $76,178                 8.0%

Change of control expenses                4,931                    --                  --

Asset impairment charges                    593                   663               (10.6%)

Receivable impairment
amortization                                 --                 1,961                  --

Depreciation and amortization             6,103                 6,024                 1.3%
                                        -------               -------             -------

Total operating expenses                 93,924                84,826                10.7%
                                        -------               -------             -------

Loss from operations                    $10,547               $   232              4446.1%
                                        -------               -------             -------
</TABLE>

      The  increase  in  selling,   general  and   administrative   expenses  is
attributable  primarily to higher  employee  compensation  costs and other store
operating costs.  During fiscal 2003 we also incurred increased expenses for the
relocation of our corporate  headquarters and distribution center as well as the
implementation of new point of sale software in our stores.  The majority of our
selling, general and administrative expenses relate to the retail division.

      Change of control  expenses of  approximately  $4.9 million in fiscal year
2003 represents  expenses  incurred as a result of the Nussdorf Option Agreement
which was entered into effective January 30, 2004 between Ilia Lekach,  our then
Chairman  of the Board and Chief  Executive  Officer,  IZJD  Corp.  and  Pacific
Investment  Group Inc., each of which are wholly-owned by Mr. Lekach and Deborah
Lekach,  Mr. Lekach's wife, and Stephen and Glenn Nussdorf.  Approximately  $2.6
million of these  expenses  represent  amounts paid to certain of our  executive
officers and a consultant  pursuant to employment and consulting  agreements and
approximately  $2.3  million  represents  a  non-cash  charge  for stock  option
expenses, also relating to these same employment and consulting agreements.  See
further  discussion  in Item 1 and  also  Note 5 to our  Consolidated  Financial
Statements.


                                       19
<PAGE>

      The asset  impairment  charges in both fiscal years relate to retail store
locations  with  negative cash flows that were either closed or are targeted for
closure.

      The  provision  for  receivables  during  fiscal  year 2002  relates to an
affiliate  receivable  which  management  determined  was not  collectible.  See
further discussion at Note 5 of the Notes to Consolidated Financial Statements.

Other Expense:

                                          For the year ended
                        -------------------------------------------------------
                                           ($ in thousands)

                                                                   Percentage
                                                                    Increase
                        January 31, 2004     February 1, 2003      (Decrease)
                        -----------------    -----------------    -------------

Interest expense                  $2,179               $2,072             5.2%

Loss on investments                  172                  711          (75.8)%
                        -----------------    -----------------    -------------

Total other expense               $2,351               $2,783          (15.5)%
                        =================    =================    =============


      The  increase in  interest  expense was  primarily  due to lower  interest
incurred on the capital lease for our corporate office and  distribution  center
to which we relocated in the second quarter of fiscal year 2003.

      The realized loss on  investments in fiscal year 2002 was due to a decline
in the market  prices on  securities  available  for sale that  resulted  in the
Company  recording  a  non-cash  charge.  During  fiscal  year 2003 the  Company
recorded a loss from the sale of these same investments.  See further discussion
at Note 9 of the Notes to Consolidated Financial Statements.


Net Loss:


                                         For the year ended
                       -------------------------------------------------------
                                          ($ in thousands)

                                                                  Percentage
                       January 31, 2004     February 1, 2003       Increase
                       -----------------    -----------------    -------------

Net Loss                        $12,872               $2,826           355.5%


      As a result  of the  foregoing  our net loss was  increased  as  indicated
above.


                                       20
<PAGE>


LIQUIDITY AND CAPITAL RESOURCES

      Our principal  capital  requirements  for  operating  purposes are to fund
Perfumania's inventory purchases,  renovate existing stores and selectively open
new stores.  During fiscal years 2004 and 2003, we financed  these  requirements
primarily  through  cash flows  from  operations,  borrowings  under our line of
credit,  issuance  of  convertible  notes and other  short-term  borrowings.  We
believe we will have  adequate  liquidity  in fiscal  year 2005 to  operate  our
business and to meet our cash requirements.

      A summary of our cash flows is as follows:

                                                      For the year ended
                                                       January 29, 2005
                                                     ---------------------
                                                       ($ in thousands)

Summary Cash Flow Information:
Cash used in operating activities                              $  (4,369)
Cash used in investing activities                                 (4,148)
Cash provided by financing activities                               7,806
                                                     ---------------------
  Decrease in cash and cash equivalents                             (711)

Cash and cash equivalents, February 1, 2004                         1,961
                                                     ---------------------
Cash and cash equivalents. January 29, 2005                      $  1,250
                                                     ---------------------


      In May 2004,  we entered  into a three-year  amended and  restated  senior
secured credit facility with GMAC Commercial  Finance LLC and Congress Financial
Corporation.  The line of credit  provides for  borrowings of up to $60 million,
increased  from $40  million in our  previous  credit  facility,  of which $31.5
million was outstanding under our line of credit and $12.6 million was available
as of January 29, 2005, to support normal working capital requirements and other
general  corporate  purposes.  Advances  under the line of credit are based on a
formula of eligible  inventories  and bears  interest at a floating rate ranging
from (a) prime to prime plus 1.25% or (b) LIBOR plus 2.5% to 3.75%  depending on
a financial  ratio test.  Advances  are secured by a first lien on all assets of
Perfumania.  The credit facility contains limitations on additional  borrowings,
capital expenditures and other items, and contains various covenants including a
fixed charge coverage ratio, a leverage ratio and capital  expenditure limits as
defined.  As of  January  29,  2005,  we were in  compliance  with all  covenant
requirements.

      In March 2004, the Nussdorfs made a $5,000,000 subordinated secured demand
loan to  Perfumania.  The demand  loan bore  interest at the prime rate plus 1%,
required  quarterly  interest payments and was secured by a security interest in
Perfumania's  assets pursuant to a Security  Agreement,  by and among Perfumania
and the  Nussdorfs.  There  were  no  prepayment  penalties  and  the  loan  was
subordinate to all bank related  indebtedness.  On December 9, 2004, we issued a
Subordinated  Convertible  Note (the  "Convertible  Note") in  exchange  for the
$5,000,000 subordinated secured demand loan. The Convertible Note bears interest
at the prime rate plus 1%, requires  quarterly  interest payments and is secured
by a security interest in the Company's assets pursuant to a Security Agreement,
by and among the Company and the  Nussdorfs.  There are no prepayment  penalties
and the Convertible  Note is subordinate to all bank related  indebtedness.  The
Convertible  Note is payable in January 2007 and allows the Nussdorfs to convert
the  Convertible  Note into shares of our common stock at a conversion  price of
$11.25,  which equals the closing market price of the Company's  common stock on
December 9, 2004.

      On June 30,  2003,  Perfumania  signed a $5.0  million  subordinated  note
agreement with Parlux.  The note was in consideration  for the reduction of $5.0
million  in trade  payables  due to  Parlux  in that  year.  The note was due on
February 29, 2004, with various periodic  principal  payments,  bore interest at
prime  plus 1% and was  subordinated  to all bank  related  indebtedness.  As of
January  31,  2004,  the  outstanding  principal  balance  due on the  note  was
$250,000.  The note was repaid in full in February 2004 in  accordance  with its
terms.

      In  fiscal  year  2004,   net  cash  used  in  operating   activities  was
approximately  $4.4 million  compared with net cash provided of $10.2 million in
fiscal year 2003. Net cash used in operating  activities in fiscal year 2004 was
primarily  to fund  the net  change  in our  inventories,  accounts  payable  to
affiliates,  accrued expenses and other liabilities. In January 2004 we incurred
and  accrued   approximately   $4.9  million  in  change  of  control  expenses.
Approximately $2.6 million of these expenses represented amounts paid to certain
of our executive officers and a consultant pursuant to employment and consulting
agreements  during  fiscal 2004 and  approximately  $2.3 million  represented  a
non-cash  charge  for  stock  option  expenses,  also  relating  to  these  same
employment and consulting  agreements.  As a result of the anticipated change in
management,  which would follow the change in control,  inventory purchases were
delayed at fiscal year-end 2003 resulting in the  comparative  large increase in
inventory levels at fiscal year-end 2004.


                                       21
<PAGE>

      Net  cash  used  in   investing   activities   in  fiscal  year  2004  was
approximately  $4.1  million,  compared  with $5.7 million for fiscal year 2003.
Investing activities generally represent spending for the renovation of existing
stores and new store  openings.  During fiscal year 2004 we opened 14 new stores
and remodeled/relocated 7 stores. Approximately $1.1 million of the $5.7 million
used in investing  activities  during fiscal year 2003 was  attributable  to the
relocation of the Company's corporate office and distribution center to Sunrise,
Florida.  We intend to focus on continuing to improve the  profitability  of our
existing  stores and growing the number of stores.  We  anticipate  that we will
open approximately 25 stores in fiscal 2005.

       In fiscal  year 2004,  net cash  provided  by  financing  activities  was
approximately  $7.8 million compared with $5.5 million used in fiscal year 2003.
Cash provided by financing activities in fiscal year 2004 was principally due to
$5  million  in  proceeds  from a  subordinated  secured  demand  loan  from the
Nussdorfs,  $1.1  million  of net  bank  borrowings  and $1.7  million  from the
proceeds of stock option exercises.

       In December 1999,  our Board of Directors  approved the repurchase by the
Company of up to 375,000 shares of our common stock,  reflecting its belief that
our common stock  represented  a significant  value at its then current  trading
price.  In January 2001, the Board approved an increase in the stock  repurchase
program by an additional 250,000 shares, in February 2002, the Board approved an
increase in the stock repurchase  program by an additional 250,000 shares and in
April 2002, the Board approved an increase in the stock repurchase program by an
additional 100,000 shares. Pursuant to these authorizations, we have repurchased
approximately  898,000  shares of common  stock for  approximately  $8.6 million
since December 1999, including  approximately 118,000 shares for $1.5 million in
fiscal year 2003.  There were no  repurchases  of our common stock during fiscal
year 2004.

       Management  believes  that  Perfumania's  borrowing  capacity  under it's
current credit  facility,  projected cash flows from  operations and other short
term borrowings will be sufficient to support our working capital needs, capital
expenditures and debt service for at least the next twelve months.  There can be
no assurance that management's plans and expectations will be successful.

<TABLE>
<CAPTION>
                                                                    Payments due by period
                                             -----------------------------------------------------------------------
                                                                       ($ in thousands)
                                                            less than                                     more than
Contractual Obligations                        Total          1 year      1-3 years       3-5 years        5 years
-----------------------                      ----------    ------------   -----------    -----------    ------------
<S>                                          <C>           <C>            <C>            <C>            <C>
Capital Lease Obligations                      $16,243          $1,165        $2,285         $2,377         $10,416
Operating Lease Obligations                     44,868          11,496        16,605          8,533           8,234
                                             ----------    ------------   -----------    -----------    ------------

Total                                          $61,111         $12,661       $18,890        $10,910         $18,650
                                             ==========    ============   ===========    ===========    ============
</TABLE>


SEASONALITY AND QUARTERLY RESULTS

      Our operations  historically have been seasonal,  with higher sales in the
fourth fiscal quarter than the other three fiscal quarters. Significantly higher
fourth  quarter  retail sales result from  increased  purchases of fragrances as
gift items during the holiday season.  Our quarterly results may vary due to the
timing  of  new  store  openings,  net  sales  contributed  by  new  stores  and
fluctuations  in  comparable  sales of existing  stores.  Results of any interim
period are not necessarily indicative of the results that may be expected during
a full fiscal year.

RECENT ACCOUNTING STANDARDS

      On December 16, 2004 the Financial  Accounting  Standards  Board  ("FASB")
issued Statement No. 123 (revised 2004)("SFAS 123(R)"),  "Share-Based  Payment,"
which is effective for reporting  periods  beginning  after June 15, 2005.  SFAS
123(R) requires an entity to recognize  compensation  expense in an amount equal
to the fair value of  share-based  payments  granted to employees.  On April 14,
2005, the Securities and Exchange Commission ("SEC") amended the compliance date
for SFAS 123(R). The SEC's new rule allows  implementation of SFAS 123(R) at the
beginning  of an entity's  next fiscal  year that  begins  after June 15,  2005.
Accordingly,  we will adopt SFAS 123(R) at the beginning of fiscal year 2006 and
apply the  standard  using  the  modified  prospective  method,  which  requires
compensation  expense  to be  recorded  for new  and  modified  awards.  For any
unvested  portion of  previously  issued and  outstanding  awards,  compensation
expense is required to be recorded  based on the  previously  disclosed SFAS 123
methodology  and  amounts.  Prior  periods  presented  are  not  required  to be
restated.  We are in the  process  of  assessing  the  impact on our  results of
operations and financial position upon the adoption of SFAS 123(R).


                                       22
<PAGE>


CHANGES IN FOREIGN EXCHANGE RATES CREATE RISK

      Although  large  fluctuations  in  foreign  exchange  rates  could  have a
material  effect on the prices we pay for  products  purchased  from outside the
United  States,  such  fluctuations  have not been  material  to our  results of
operations  to date.  Transactions  with foreign  suppliers are in United States
dollars.  We believe  inflation has not had a material  impact on our results of
operations  and  we are  generally  able  to  pass  through  cost  increases  by
increasing sales prices.

ITEM 7A. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

      We conduct business in the United States where the functional  currency of
the country is the United States dollar.  As a result, we are not at risk to any
foreign exchange translation exposure on a prospective basis.

      Our  exposure  to  market  risk for  changes  in  interest  rates  relates
primarily to our bank line of credit.  The bank line of credit bears interest at
a variable rate, as discussed above under "Liquidity and Capital Resources".  We
mitigate  interest rate risk by  continuously  monitoring the interest rates and
reacting  to  changes  in LIBOR  and  prime  rates.  As a result  of  borrowings
associated  with our  operating  and  investing  activities,  we are  exposed to
interest  rate risk.  As of January 29, 2005 and January 31,  2004,  our primary
source of funds for  working  capital  and other  needs is a line of credit that
provides for borrowings up to $60 million and $40 million, respectively.

      Of the $44.7  million  and  $38.7  million  of  short-term  and  long-term
borrowings  on our balance  sheet as of January  29, 2005 and January 31,  2004,
respectively,  approximately  18.4% and 20.7%,  respectively,  represented fixed
rate  instruments.  The line of credit bears interest at a floating rate ranging
from (a) prime to prime plus 1.25%, or (b) LIBOR plus 2.5% to 3.75% depending on
financial  ratio tests.  For fiscal year 2004, the credit facility bore interest
at an average rate of 4.7%. A  hypothetical  10% adverse move in interest  rates
would increase fiscal years 2004 and 2003 interest expense by approximately $0.1
million in both years.


                                       23
<PAGE>

ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA

      The financial  information and the supplementary data required in response
to this Item are as follows:

<TABLE>
<CAPTION>
                                                                                                  PAGE
                                                                                                  ----
<S>                                                                                               <C>
          E Com Ventures, Inc. and Subsidiaries

          Report of Independent Registered Public Accounting Firm.............................      25

          Consolidated Balance Sheets as of January 29, 2005 and January 31, 2004.............      26

          Consolidated Statements of Operations for the Fiscal Years Ended January 29, 2005,
          January 31, 2004 and February 1, 2003...............................................      27

          Consolidated Statements of Changes in Shareholders' Equity for the Fiscal Years Ended
          January 29, 2005, January 31, 2004, and February 1, 2003............................      28

          Consolidated Statements of Cash Flows for the Fiscal Years Ended January 29, 2005,
          January 31, 2004, and February 1, 2003..............................................      29

          Notes to Consolidated Financial Statements..........................................      30

          Supplemental  schedules  have been  omitted,  as all required
          information is disclosed or not applicable.
</TABLE>


                                       24
<PAGE>



REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

To the Board of Directors and Shareholders of
E Com Ventures, Inc.
Sunrise, Florida


We have audited the accompanying  consolidated balance sheets of E Com Ventures,
Inc. and  subsidiaries  (the  "Company")  as of January 29, 2005 and January 31,
2004,  and  the  related  consolidated  statements  of  operations,  changes  in
shareholders'  equity,  and cash flows for each of the three years in the period
ended January 29, 2005. These financial statements are the responsibility of the
Company's  management.  Our  responsibility  is to  express  an opinion on these
financial statements based on our audits.

We conducted our audits in accordance  with the standards of the Public  Company
Accounting Oversight Board (United States). Those standards require that we plan
and perform the audit to obtain reasonable assurance about whether the financial
statements  are free of material  misstatement.  The Company is not  required to
have,  nor were we engaged to perform,  an audit of its  internal  control  over
financial reporting.  Our audits included consideration of internal control over
financial  reporting  as  a  basis  for  designing  audit  procedures  that  are
appropriate  in the  circumstances,  but not for the  purpose of  expressing  an
opinion on the  effectiveness  of the Company's  internal control over financial
reporting.  Accordingly,  we express  no such  opinion.  An audit also  includes
examining,  on a test basis,  evidence supporting the amounts and disclosures in
the  financial   statements,   assessing  the  accounting  principles  used  and
significant  estimates  made by  management,  as well as evaluating  the overall
financial  statement  presentation.   We  believe  that  our  audits  provide  a
reasonable basis for our opinion.

In our opinion,  such consolidated  financial  statements present fairly, in all
material  respects,  the  financial  position  of  E  Com  Ventures,   Inc.  and
subsidiaries  as of January 29, 2005 and  January 31,  2004,  and the results of
their  operations and their cash flows for each of the three years in the period
ended January 29, 2005,  in  conformity  with  accounting  principles  generally
accepted in the United States of America.


/s/ DELOITTE & TOUCHE LLP
Certified Public Accountants

Miami, Florida
April 27, 2005


                                       25
<PAGE>

                      E COM VENTURES, INC. AND SUBSIDIARIES
                           CONSOLIDATED BALANCE SHEETS

<TABLE>
<CAPTION>
ASSETS:                                                      JANUARY 29, 2005      JANUARY 31, 2004
                                                             ----------------      ----------------
Current assets:
<S>                                                           <C>                    <C>
Cash and cash equivalents                                     $   1,249,543          $   1,961,310
Trade receivables, net                                              695,812                777,186
Inventories                                                      78,929,639             60,877,451
Prepaid expenses and other current assets                         1,149,723              1,461,493
Notes and interest receivable from shareholder and
  officer                                                                --                327,311
                                                              -------------          -------------
  Total current assets                                           82,024,717             65,404,751

Property and equipment, net                                      23,070,723             24,414,624
Goodwill                                                          1,904,448              1,904,448
Other assets, net                                                   817,156                739,575
                                                              -------------          -------------
  Total assets                                                $ 107,817,044          $  92,463,398
                                                              =============          =============

LIABILITIES AND SHAREHOLDERS' EQUITY:

Current liabilities:
Bank line of credit                                           $  31,528,212          $  30,472,027
Accounts payable                                                 18,111,196             16,459,786
Accounts payable, affiliates                                     23,228,325             17,440,492
Accrued expenses and other liabilities                            6,685,494              9,614,287
Subordinated note payable, affiliate                                     --                250,000
Current portion of obligations under capital leases                 231,353                258,700
                                                              -------------          -------------
  Total current liabilites                                       79,784,580             74,495,292

Convertible note payable - affiliate                              5,000,000                     --
Long-term portion of obligations under capital leases             7,972,455              7,746,262
                                                              -------------          -------------
  Total liabilities                                              92,757,035             82,241,554
                                                              -------------          -------------

Commitments and contingencies (See Note 11)

Shareholders' equity:
Preferred stock, $0.10 par value, 1,000,000
  shares authorized, none issued                                         --                     --
Common stock, $.01 par value, 6,250,000 shares
  authorized; 3,834,684 and 3,285,758 shares issued
  in fiscal years 2004 and 2003, respectively                        38,347                 32,858
Additional paid-in capital                                       75,347,588             73,666,193
Treasury stock, at cost, 898,249 shares
  in fiscal years 2004 and 2003                                  (8,576,944)            (8,576,944)
Accumulated deficit                                             (51,748,982)           (54,900,263)
                                                              -------------          -------------
  Total shareholders' equity                                     15,060,009             10,221,844
                                                              -------------          -------------
  Total liabilities and shareholders' equity                  $ 107,817,044          $  92,463,398
                                                              =============          =============
</TABLE>

           See accompanying notes to consolidated financial statements.

                                       26
<PAGE>

                      E COM VENTURES, INC. AND SUBSIDIARIES
                      CONSOLIDATED STATEMENTS OF OPERATIONS

<TABLE>
<CAPTION>
                                                                       FOR THE FISCAL YEARS ENDED
                                                     --------------------------------------------------------------
                                                     January 29, 2005       January 31, 2004      February 1, 2003
                                                     -----------------     ------------------    ------------------
<S>                                                    <C>                    <C>                    <C>
Net sales                                              $ 225,003,201          $ 212,567,569          $ 201,513,897
Cost of goods sold                                       133,666,605            129,190,549            116,919,385
                                                       -------------          -------------          -------------
Gross profit                                              91,336,596             83,377,020             84,594,512
                                                       -------------          -------------          -------------

Operating expenses:
  Selling, general and administrative expenses            78,521,215             82,297,031             76,177,549
  Change of control expenses                                      --              4,931,221                     --
  Provision for receivables from
    an affiliate                                                  --                     --              1,961,355
  Provision for impairment of
    assets and store closings                                313,888                593,109                663,391
  Depreciation and amortization                            5,874,591              6,102,823              6,024,400
                                                       -------------          -------------          -------------
    Total operating expenses                              84,709,694             93,924,184             84,826,695
                                                       -------------          -------------          -------------

Income (loss) from operations                              6,626,902            (10,547,164)              (232,183)
                                                       -------------          -------------          -------------

Other income (expense):
  Interest expense:
  Affiliates                                                (248,124)              (109,217)               (43,049)
  Other                                                   (3,079,695)            (2,070,034)            (2,029,290)
                                                       -------------          -------------          -------------
                                                          (3,327,819)            (2,179,251)            (2,072,339)
                                                       -------------          -------------          -------------
  Interest income:
    Affiliates                                                    --                 15,707                173,526
    Other                                                      2,198                 10,687                 16,176
                                                       -------------          -------------          -------------
                                                               2,198                 26,394                189,702
                                                       -------------          -------------          -------------

  Realized loss on investments                                    --               (171,679)              (710,880)
                                                       -------------          -------------          -------------

    Total other expense                                           --               (171,679)              (710,880)
                                                       -------------          -------------          -------------

Income (loss) before income taxes                          3,301,281            (12,871,700)            (2,825,700)
Provision for income taxes                                   150,000                     --                     --
                                                       -------------          -------------          -------------
  Net income (loss)                                    $   3,151,281          $ (12,871,700)         $  (2,825,700)
                                                       =============          =============          =============

Basic income (loss) per common share                   $        1.11          $       (5.24)         $       (1.12)
                                                       =============          =============          =============
Diluted income (loss) per common share                 $        1.06          $       (5.24)         $       (1.12)
                                                       =============          =============          =============

Weighted average number of shares outstanding:
  Basic                                                    2,832,107              2,454,340              2,528,326
                                                       =============          =============          =============
  Diluted                                                  3,001,844              2,454,340              2,528,326
                                                       =============          =============          =============
</TABLE>

          See accompanying notes to consolidated financial statements.

                                       27
<PAGE>

                      E COM VENTURES, INC. AND SUBSIDIARIES
           CONSOLIDATED STATEMENTS OF CHANGES IN SHAREHOLDERS' EQUITY
          FOR THE FISCAL YEARS ENDED JANUARY 29, 2005, JANUARY 31, 2004
                              AND FEBRUARY 1, 2003

<TABLE>
<CAPTION>

                                                  Common Stock                 Additional                  Treasury Stock
                                        -------------------------------         Paid-In           -------------------------------
                                           Shares             Amount            Capital              Shares             Amount
                                        ------------       ------------       ------------        ------------       ------------
<S>                                     <C>                <C>                <C>                 <C>                <C>
Balance at February 2, 2002                2,980,305       $     29,803       $ 71,455,401             766,802       $ (7,038,638)


Components of comprehensive loss:
  Net loss                                        --                 --                 --                  --                 --
  Unrealized gain
    on investments                                --                 --                 --                  --                 --

  Total comprehensive loss                        --                 --                 --                  --                 --


Exercise of stock options                     59,808                598            112,949                  --                 --

Purchase of treasury stock                        --                 --                 --              13,150            (47,302)
Conversion of debt and
  accrued interest to
  common stock                               175,648              1,757            515,277                  --                 --
Net change in notes and
  interest receivable from
  shareholder and officer                         --                 --                 --                  --                 --
Premium repayment of
  convertible notes payable                       --                 --           (695,833)                 --                 --
                                        ------------       ------------       ------------        ------------       ------------

Balance at February 1, 2003                3,215,761             32,158         71,387,794             779,952         (7,085,940)


Components of comprehensive loss:
  Net loss                                        --                 --                 --                  --                 --
  Unrealized loss
    on investments                                --                 --                 --                  --                 --

  Total comprehensive loss                        --                 --                 --                  --                 --


Exercise of stock options                     69,997                700            235,805                  --                 --

Purchase of treasury stock                        --                 --                 --             118,297         (1,491,004)
Stock Compensation                                --                 --          2,285,640                  --                 --
Net change in notes and
  interest receivable from
  shareholder and officer                         --                 --                 --                  --                 --
Premium repayment of
  convertible notes payable                       --                 --           (243,046)                 --                 --
                                        ------------       ------------       ------------        ------------       ------------


Balance at January 31, 2004                3,285,758             32,858         73,666,193             898,249         (8,576,944)


Net income and
  comprehensive income                            --                 --                 --                  --                 --


Exercise of stock options                    548,926              5,489          1,681,395                  --                 --
                                        ------------       ------------       ------------        ------------       ------------


Balance at January 29, 2005                3,834,684       $     38,347       $ 75,347,588             898,249       $ (8,576,944)
                                        ============       ============       ============        ============       ============
</TABLE>

<TABLE>
<CAPTION>
                                         Accumulated                              Notes and
                                            Other                             Interest Receivable
                                        Comprehensive        Accumulated       From Shareholders
                                         Income (Loss)          Deficit          and Officers           Total
                                         ------------        ------------        ------------        ------------
<S>                                      <C>                 <C>                 <C>                 <C>
Balance at February 2, 2002              $    241,334        $(39,202,863)       $ (2,881,624)       $ 22,603,413
                                                                                                     ------------

Components of comprehensive loss:
  Net loss                                         --          (2,825,700)                 --          (2,825,700)
  Unrealized gain
    on investments                           (381,738)                 --                  --            (381,738)
                                                                                                     ------------
  Total comprehensive loss                         --                  --                  --          (3,207,438)
                                                                                                     ------------

Exercise of stock options                          --                  --                  --             113,547

Purchase of treasury stock                         --                  --                  --             (47,302)
Conversion of debt and
  accrued interest to
  common stock                                     --                  --                  --             517,034
Net change in notes and
  interest receivable from
  shareholder and officer                          --                  --           2,570,020           2,570,020
Premium repayment of
  convertible notes payable                        --                  --                  --            (695,833)
                                         ------------        ------------        ------------        ------------

Balance at February 1, 2003                  (140,404)        (42,028,563)           (311,604)         21,853,441
                                                                                                     ------------

Components of comprehensive loss:
  Net loss                                         --         (12,871,700)                 --         (12,871,700)
  Unrealized loss
    on investments                            140,404                  --                  --             140,404
                                                                                                     ------------
  Total comprehensive loss                         --                  --                  --         (12,731,296)
                                                                                                     ------------

Exercise of stock options                          --                  --                  --             236,505

Purchase of treasury stock                         --                  --                  --          (1,491,004)
Stock Compensation                                 --                  --                  --           2,285,640
Net change in notes and
  interest receivable from
  shareholder and officer                          --                  --             311,604             311,604
Premium repayment of
  convertible notes payable                        --                  --                  --            (243,046)
                                         ------------        ------------        ------------        ------------


Balance at January 31, 2004                        --         (54,900,263)                 --          10,221,844
                                                                                                     ------------

Net income and
  comprehensive income                             --           3,151,281                  --           3,151,281
                                                                                                     ------------

Exercise of stock options                          --                  --                  --           1,686,884
                                         ------------        ------------        ------------        ------------


Balance at January 29, 2005              $         --        $(51,748,982)       $         --        $ 15,060,009
                                         ============        ============        ============        ============
</TABLE>

  References to share amounts in the schedule above for periods ended prior to
   March 20, 2002 reflect the effect of the one for four reverse stock-split.

          See accompanying notes to consolidated financial statements.

                                       28
<PAGE>

                      E COM VENTURES, INC. AND SUBSIDIARIES
                      CONSOLIDATED STATEMENTS OF CASH FLOWS


<TABLE>
<CAPTION>
                                                                                FOR THE FISCAL YEARS ENDED
                                                               ----------------------------------------------------------
                                                               January 29, 2005     January 31, 2004    February 1, 2003
                                                               ------------------   -----------------   -----------------
<S>                                                            <C>                  <C>                 <C>
Cash flows from operating activities:
Net income (loss)                                                 $  3,151,281        $(12,871,700)       $ (2,825,700)
Adjustments to reconcile net loss to net cash
    provided by operating activities:
  Provision for receivables from affiliate                                  --                  --           1,961,355
  Provision for impairment of assets and store closings                313,388             593,109             663,391
  Writeoff of inventories                                              188,035             897,874           1,189,734
  Depreciation and amortization                                      5,874,591           6,102,823           6,024,400
  Writeoff of discontinued inventory                                   185,088           2,558,805                  --
  Realized loss on investments                                              --             171,679             710,880
  Stock compensation                                                        --           2,285,640                  --
  Change in operating assets and liabilities:
    Trade receivables                                                   81,374             (32,730)           (109,215)
    Inventories                                                    (18,425,311)          4,383,033          (1,519,327)
    Prepaid expenses and other current assets                          311,770           1,507,259           1,778,353
    Due from affiliate                                                      --                  --          (1,150,186)
    Other assets                                                      (309,799)            368,363             216,091
    Accounts payable, non-affiliate                                  1,651,410          (4,446,040)         (4,593,171)
    Accounts payable, affiliate                                      5,537,833           4,258,774           4,138,159
    Accrued expenses and other liabilities                          (2,928,793)          4,445,653            (788,111)
                                                                  ------------        ------------        ------------
Net cash (used in) provided by operating activities                 (4,369,133)         10,222,542           5,696,653
                                                                  ------------        ------------        ------------

Cash flows from investing activities:

  Additions to property and equipment                               (4,148,335)         (5,907,018)         (1,893,664)
  Proceeds from investments available for sale                              --             179,332              10,515
                                                                  ------------        ------------        ------------
Net cash used in investing activities                               (4,148,335)         (5,727,686)         (1,883,149)
                                                                  ------------        ------------        ------------

Cash flows from financing activities:
  Net borrowings and (repayments) under bank line
    of credit and notes payable                                      1,056,185          (1,641,664)            892,950
  Principal payments under capital lease obligations                  (264,679)         (1,143,767)         (1,771,037)
  Net advances to shareholders and officers                                 --                  --            (400,000)
  Proceeds from note and interest receivable,
   shareholder and officer                                             327,311                  --           2,970,020
  Proceeds from subordinated secured demand loan, affiliate          5,000,000                  --                  --
  Repayments of convertible notes payable                                   --          (1,458,261)         (4,207,824)
  Proceeds from exercise of stock options                            1,686,884             236,505             113,547
  Purchases of treasury stock                                               --          (1,491,004)            (47,302)
                                                                  ------------        ------------        ------------
    Net cash provided by (used in) financing activities              7,805,701          (5,498,191)         (2,449,646)
                                                                  ------------        ------------        ------------
(Decrease) increase in cash and cash equivalents                      (711,767)         (1,003,335)          1,363,858
Cash and cash equivalents at beginning of period                     1,961,310           2,964,645           1,600,787
                                                                  ------------        ------------        ------------
Cash and cash equivalents at end of period                        $  1,249,543        $  1,961,310        $  2,964,645
                                                                  ============        ============        ============

Cash paid during the period for:
  Interest                                                        $  3,139,425        $  2,034,666        $  2,196,062
                                                                  ============        ============        ============
</TABLE>

          See accompanying notes to consolidated financial statements.

                                       29
<PAGE>

                      E COM VENTURES, INC. AND SUBSIDIARIES

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
          FOR THE FISCAL YEARS ENDED JANUARY 29, 2005, JANUARY 31, 2004
                              AND FEBRUARY 1, 2003

NOTE 1 - NATURE OF BUSINESS

      E Com Ventures,  Inc., a Florida  corporation  ("ECOMV" or the "Company"),
performs  all  of  its  operations   through  two   wholly-owned   subsidiaries,
Perfumania,  Inc.  ("Perfumania"),  a Florida corporation,  which is a specialty
retailer and wholesaler of fragrances and related  products and  perfumania.com,
inc., a Florida  corporation  which is an Internet  retailer of  fragrances  and
other specialty items.

      Perfumania's  retail stores are located in regional malls,  manufacturers'
outlet malls,  airports and on a stand-alone  basis in suburban  strip  shopping
centers.  The number of retail stores in operation at January 29, 2005,  January
31, 2004, and February 1, 2003 were 223, 232 and 238, respectively.

NOTE 2 - SIGNIFICANT ACCOUNTING POLICIES

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

FISCAL YEAR END

      The  Company's  fiscal  year ends the  Saturday  closest  to January 31 to
enable the  Company's  operations  to be reported in a manner which more closely
coincides with general retail  reporting  practices and the financial  reporting
needs of the Company. In the accompanying notes, fiscal year 2004, 2003 and 2002
refer to the years ended  January  29,  2005,  January 31, 2004 and  February 1,
2003, respectively. The fiscal years presented each contain fifty-two weeks.

MANAGEMENT ESTIMATES

      The  preparation  of 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 financial  statements  and the reported  amounts of revenues and
expenses during the reporting  period.  The most  significant  estimates made by
management in the accompanying  consolidated  financial statements relate to the
allowance for doubtful accounts,  inventory  reserves,  self-insured health care
reserves,  long-lived  asset  impairments and estimated useful lives of property
and equipment. Actual results could differ from those estimates.

PRINCIPLES OF CONSOLIDATION

      The consolidated  financial statements include accounts of E Com Ventures,
Inc. and its wholly owned subsidiaries.  All significant  intercompany  balances
and transactions have been eliminated in consolidation.

REVENUE RECOGNITION

      Revenue from wholesale transactions is recorded upon shipment of inventory
when risk of  ownership  and title  transfers  to the buyer.  Revenue from store
sales is recorded  net of  discounts  when the  customer  pays at the  register.
Revenue from Internet  sales is recognized at the time products are delivered to
customers.  Returns of store and  Internet  sales are allowed  within 30 days of
purchase and are limited to exchanges.  Because returns are primarily exchanged,
there is no significant effect on revenue.

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.

INVENTORIES

      Inventories, consisting of finished goods, are stated at the lower of cost
or market,  cost being  determined on a weighted average cost basis. The cost of
inventory  includes product cost and freight  charges.  Writeoffs of potentially
slow moving or damaged inventory are recorded based on management's  analysis of
inventory levels, future sales forecasts and through specific  identification of
obsolete or damaged merchandise. The Company's writeoffs were approximately $0.4
million and $3.5  million  for the years ended  January 29, 2005 and January 31,
2004, respectively.


                                       30
<PAGE>

      In fiscal year 2003 management had identified  approximately  3,400 of the
Company's  25,000 stock  keeping  units  ("skus").  The Company  intends to sell
through its existing on hand  inventory  of these skus during  fiscal year 2005.
The total cost of this inventory as of January 31, 2004 was  approximately  $9.4
million.  The Company recorded an income statement charge of approximately  $2.6
million in fiscal 2003, which  represented the difference  between the estimated
selling  value and the weighted  average cost of this  inventory.  These charges
were included in cost of goods sold on the accompanying  consolidated  statement
of operations for the year ended January 31, 2004.

PROPERTY AND EQUIPMENT

      Property and equipment is carried at cost, less  accumulated  depreciation
and amortization. Depreciation is calculated using the straight-line method over
the estimated  useful lives of the related assets.  Leasehold  improvements  are
amortized over the shorter of the term of the lease  including  renewal  periods
that are reasonably  assured, or the estimated useful lives of the improvements,
generally ten years.  Costs of major additions and  improvements are capitalized
and expenditures for maintenance and repairs which do not extend the useful life
of the asset are expensed when  incurred.  Gains or losses arising from sales or
retirements are included in income currently.

GOODWILL

      Goodwill  represents  the  excess  purchase  price paid over net assets of
businesses  acquired  resulting from the  application of the purchase  method of
accounting.  Goodwill  is  tested  annually  for  impairment  at the  end of the
Company's fiscal year. No impairment occurred as a result of the annual tests.

OTHER INTANGIBLE ASSETS

      Intangible assets include store design, real estate leases and non-compete
agreements  based upon their  relative fair values at the date of acquisition as
determined  by  management  with  the  assistance  of an  independent  valuation
consultant.  Intangible  assets do not include  goodwill.  The  amortization  of
intangible  assets amounted to  approximately  $0.2 million in fiscal years 2004
and 2003.  Amortization  of  intangible  assets in the  amount of  approximately
$140,000 is anticipated  during fiscal year 2005, which is the remaining life of
these assets.

INCOME TAXES

      Income tax  expense is based  principally  on  pre-tax  financial  income.
Deferred tax assets and liabilities  are recognized for the differences  between
the  financial  reporting  carrying  values  and the tax  bases  of  assets  and
liabilities  and are measured  using the enacted tax rates and laws that will be
in effect when the differences are expected to reverse. A valuation allowance is
recognized to reduce net deferred tax assets to amounts that management believes
are more likely than not expected to be realized.

BASIC AND DILUTED INCOME (LOSS) PER SHARE

      Basic income (loss) per common share is computed by dividing income (loss)
attributable  to common  shareholders  by the weighted  average number of common
shares  outstanding  during the period.  Diluted  income (loss) per common share
includes,  in periods in which they have a dilutive effect,  the dilutive effect
of those common stock  equivalents  where the average market price of the common
shares exceeds the exercise  prices for the respective  years.  For fiscal years
2003 and  prior  in the  accompanying  consolidated  statements  of  operations,
incremental  shares attributed to common stock equivalents and convertible notes
were not included because the results would be anti-dilutive.


                                       31
<PAGE>

      Basic and diluted loss per share are computed as follows:

<TABLE>
<CAPTION>
                                                                   FISCAL YEAR
                                               ---------------------------------------------------
                                                   2004               2003                2002
                                               ------------       ------------        ------------
<S>                                            <C>                <C>                 <C>
Numerator:
  Net income (loss) - basic                    $  3,151,281       $(12,871,700)       $ (2,825,700)
    Add: interest on convertible note                44,131                 --                  --
                                               ------------       ------------        ------------
  Net income (loss) - diluted                  $  3,195,412       $(12,871,700)       $ (2,825,700)
                                               ============       ============        ============

Denominator:
  Weighted average number of shares
  for basic income (loss) per share               2,832,107          2,454,340           2,528,326
  Options to purchase common stock                  105,024                 --                  --
  Convertible note                                   64,713                 --                  --
                                               ------------       ------------        ------------
  Denominator for dilutive income (loss)
     per share                                    3,001,844          2,454,340           2,528,326
                                               ============       ============        ============
Basic income (loss) per share                  $       1.11       $      (5.24)       $      (1.12)
                                               ============       ============        ============
Diluted income (loss) per share                $       1.06       $      (5.24)       $      (1.12)
                                               ============       ============        ============

Antidilutive securities not included
  in the diluted income (loss) per share
  computation:

  Options to purchase common stock                   86,256            696,436             666,501

  Range of exercise prices                         $12.52 -            $1.64 -             $1.64 -
                                                   $21.52             $21.52              $21.52
</TABLE>


FAIR VALUE OF FINANCIAL INSTRUMENTS

      Statement of Financial  Accounting  Standards No. 107  "Disclosures  about
Fair Value of Financial  Instruments"  ("SFAS 107"),  requires disclosure of the
fair value of financial  instruments  held by the Company.  SFAS 107 defines the
fair value of a financial instrument as the amount at which the instrument could
be exchanged in a current  transaction  between willing  parties.  The following
methods and assumptions were used to estimate fair value:

-     The carrying amounts of cash and cash equivalents, accounts receivable and
      accounts payable approximate fair value due to their short-term nature;

-     The fair  value of  investments  are based on  quoted  market  prices,  if
      available, and;

-     The fair value of the  Company's  bank line of credit,  convertible  notes
      payable,  obligations  under capital leases and loans payable are based on
      current interest rates and repayment terms of the individual notes.

ASSET IMPAIRMENT

      The Company reviews long-lived assets and makes a provision for impairment
whenever  events or changes in  circumstances  indicate that the projected  cash
flows of related  activities  may not provide for cost  recovery.  An impairment
loss is generally  recorded when the net book value of assets exceeds  projected
undiscounted  future cash flows.  The impairment loss is determined based on the
difference  between  the net book  value and the fair value of the  assets.  The
estimated fair value is based on anticipated  discounted  future cash flows. Any
impairment is charged to operations in the period in which it is identified.

STOCK BASED COMPENSATION

      The Company  accounts for  stock-based  compensation  using the  intrinsic
value  method  prescribed  in  Accounting   Principles  Board  Opinion  No.  25,
"Accounting  for Stock Issued to Employees"  ("APB 25"),  and provides  proforma
disclosure  of net income  and  earnings  per share as if the fair  value  based
method  prescribed  by  Statement  of  Financial  Accounting  Standards  No. 123
"Accounting for  Stock-Based  Compensation,"  ("SFAS 123") as amended,  had been
applied in measuring  compensation  expense for options granted to employees and
directors  in fiscal  years  2004,  2003 and 2002.  In  accordance  with APB 25,
compensation  cost for stock  options is measured as the excess,  if any, of the
quoted  market  price of the  Company's  stock at the date of the grant over the
amount an employee or director must pay to acquire the stock.  Had  compensation
cost for options  granted  been  determined  in  accordance  with the fair value
provisions  of SFAS No. 123, the Company's net loss and net loss per share would
have been  increased to the proforma  amounts  presented  below for fiscal years
2003 and 2002:


                                       32
<PAGE>

Basic and diluted loss per share are computed as follows:

<TABLE>
<CAPTION>
                                                                FISCAL YEAR
                                            ----------------------------------------------------
                                                2004                2003                2002
                                            ------------        ------------        ------------
<S>                                         <C>                 <C>                 <C>
Net income (loss) as reported               $  3,151,281        $(12,871,700)       $ (2,825,700)
Add: Total fair value of stock based
  employee compensation expense not
  included in reported net income (loss)         (94,731)         (1,425,284)           (478,449)
                                            ------------        ------------        ------------

Proforma net income (loss)                  $  3,056,550        $(14,296,984)       $ (3,304,149)
                                            ============        ============        ============

Proforma net income (loss) per share:
  Basic                                     $       1.08        $      (5.83)       $      (1.31)
                                            ============        ============        ============
  Diluted                                   $       1.03        $      (5.83)       $      (1.31)
                                            ============        ============        ============
</TABLE>


UNREALIZED GAIN (LOSS) ON INVESTMENTS

      Equity  securities  classified  as available for sale are adjusted to fair
market value as of the balance  sheet date based on quoted  market  prices.  The
related   unrealized   gain  (loss)  on   investments   is  reflected  in  other
comprehensive income (loss) and accumulated other comprehensive income (loss) on
the consolidated  statements of changes in shareholders' equity and consolidated
balance sheets, respectively.  Realized losses on investments resulting from the
sale or  other-than-temporary  declines  in fair  market  values  of  securities
classified as available for sale are included in the results of operations.

PRE-OPENING EXPENSES

      Pre-opening  expenses  related to  opening  new  stores  are  expensed  as
incurred.

SHIPPING AND HANDLING FEES AND COSTS

      Income  generated  from  shipping  and  handling  fees  is  classified  as
revenues.  The Company  classifies the costs related to shipping and handling as
cost of goods sold.

ADVERTISING COSTS

      Advertising  expense  for  the  fiscal  years  2004,  2003  and  2002  was
approximately $1,441,000,  $1,876,000 and $1,286,000,  respectively, and charged
to expense when incurred.  Cooperative advertising amounts received from vendors
for  fiscal  years  2004,   2003  and  2002  were  $0,  $200,000  and  $200,000,
respectively, and recorded as an offset to advertising expense.

RECLASSIFICATION

      Certain  fiscal  year  2003 and 2002  amounts  have been  reclassified  to
conform with the fiscal 2004 presentation.

RECENT ACCOUNTING PRONOUNCEMENTS

      On December 16, 2004 the Financial  Accounting  Standards  Board  ("FASB")
issued Statement No. 123 (revised 2004)("SFAS 123(R)"),  "Share-Based  Payment,"
which is effective for reporting  periods  beginning  after June 15, 2005.  SFAS
123(R) requires an entity to recognize  compensation  expense in an amount equal
to the fair value of  share-based  payments  granted to employees.  On April 14,
2005, the Securities and Exchange Commission ("SEC") amended the compliance date
for SFAS 123(R). The SEC's new rule allows  implementation of SFAS 123(R) at the
beginning  of an entity's  next fiscal  year that  begins  after June 15,  2005.
Accordingly,  we will adopt SFAS 123(R) at the beginning of fiscal year 2006 and
apply the  standard  using  the  modified  prospective  method,  which  requires
compensation  expense  to be  recorded  for new  and  modified  awards.  For any
unvested  portion of  previously  issued and  outstanding  awards,  compensation
expense is required to be recorded  based on the  previously  disclosed SFAS 123
methodology  and  amounts.  Prior  periods  presented  are  not  required  to be
restated.  We are in the  process  of  assessing  the  impact on our  results of
operations and financial position on the adoption of SFAS 123(R).


                                       33
<PAGE>


NOTE 3 - NON-CASH TRANSACTIONS

Supplemental disclosures of non-cash investing and financing activities:


<TABLE>
<CAPTION>
                                                                     FISCAL YEAR ENDED
                                            --------------------------------------------------------------------
         NON-CASH TRANSACTIONS               January 29, 2005        January 31, 2004        February 1, 2003
----------------------------------------    --------------------    --------------------    --------------------
<S>                                         <C>                     <C>                     <C>
Equipment and building under capital
  leases                                         $   463,525            $   414,630              $ 7,764,203
Unrealized gain (loss) on investments                     --                140,404                 (381,738)
Subordinated debt issued to affiliate                     --              5,000,000                3,000,000
Conversion of debt and accrued interest
  payable in exchange for common stock                    --                     --                  517,034
Subordinated debt exchanged for
  convertible note payable, affiliate              5,000,000                     --                       --
</TABLE>


NOTE 4 - PROPERTY AND EQUIPMENT

       Property and equipment consisted of:

<TABLE>
<CAPTION>
                                                       FISCAL YEAR ENDED
                                            ----------------------------------------      Estimated Useful Lives
                                            January 29, 2005      January 31, 2004              (In Years)
                                            ------------------    ------------------      -----------------------
<S>                                         <C>                   <C>                     <C>
Furniture, fixtures and equipment            $  24,945,705         $  21,221,687                    5-7
Leasehold improvements                          27,055,275            25,369,583                     10
Equipment under capital leases                     521,161             6,774,897       shorter of 5 years or lease term

Building under capital lease                     8,188,945             7,725,420                     15
                                            ------------------    ------------------
                                                60,711,086            61,091,587

Less:
  Accumulated depreciation and
   amortization                                (37,640,363)          (36,676,963)
                                            ------------------    ------------------
                                             $  23,070,723         $  24,414,624
                                            ==================    ==================
</TABLE>


      See Note 11 for further discussion of capital leases.

      Approximately $4,164,000 of point of sale registers were reclassified from
equipment  under capital  leases to furniture,  fixtures and equipment in fiscal
year 2004 as the leases matured and the Company exercised its option to purchase
the registers. In addition, the Company disposed of approximately  $2,090,000 of
equipment  under capital leases in fiscal year 2004, on equipment that was fully
depreciated.  There was no effect in the  Company's  consolidated  statement  of
operations.

      Depreciation  and  amortization  expense for fiscal years 2004,  2003, and
2002  was  $5,874,591,  $6,102,823  and  $6,024,400,  respectively.  Accumulated
depreciation  for building and equipment under capital leases was $1,238,231 and
$5,428,802 as of January 29, 2005 and January 31, 2004, respectively.

NOTE 5 - RELATED PARTY TRANSACTIONS

      Effective  January 30, 2004,  Ilia Lekach,  the Company's then Chairman of
the Board and Chief Executive  Officer,  IZJD Corp. and Pacific Investment Group
Inc.,  each of which are  wholly-owned  by Mr.  Lekach and Deborah  Lekach,  Mr.
Lekach's  wife  (collectively,  "Lekach"),  entered  into  the  Nussdorf  Option
Agreement, with Stephen Nussdorf and Glenn Nussdorf (the "Nussdorfs"),  pursuant
to which the  Nussdorfs  were  granted  options to  acquire  up to an  aggregate
720,954 shares of the Company's common stock beneficially owned by Lekach, for a
purchase price of $12.70 per share exercisable in specified installments.


                                       34
<PAGE>


      Effective February 10, 2004, Mr. Lekach's  employment with the Company was
terminated  and Mr.  Lekach  ceased  serving as an  employee  and officer of the
Company.  In addition,  on February 10, 2004, Mr. Lekach resigned from the Board
of Directors and Stephen L. Nussdorf was appointed the Company's Chairman of the
Board and  Michael  W. Katz was  appointed  the  Company's  President  and Chief
Executive Officer.

      As of April 26,  2004,  Mr.  Lekach  exercised  stock  options  to acquire
318,750  common  shares  resulting  in proceeds to the Company of  approximately
$851,000 and the Nussdorfs  acquired  595,954 shares from Mr. Lekach pursuant to
the Nussdorf Option Agreement.  Mr. Lekach had stock options for another 125,000
shares which were required to be issued to Mr. Lekach by the Company pursuant to
the terms of his employment agreement as a consequence of the change of control.
These  125,000  options were only to be issued by the Company to Mr. Lekach upon
approval of an  amendment  to the  Company's  2000 Stock  Option  Plan.  Such an
amendment  was approved at a special  meeting of the Company's  shareholders  on
April 29, 2004.  Proceeds to the Company were $500,000 when Mr. Lekach exercised
the  125,000  options.  The  Nussdorfs  exercised  their  option to acquire  the
remaining  125,000  shares  subject to the  Nussdorf  Option  Agreement  and the
Nussdorfs  currently own an aggregate  1,113,144  shares of the Company's common
stock or approximately 38% of the total number of shares of the Company's common
stock as of January 29, 2005,  excluding  shares issuable upon conversion of the
Convertible Note discussed below in Note 6.

      As a  consequence  of the  change in control  provisions  set forth in the
employment   agreements  of  Mr.  Lekach,   various  executive  officers  and  a
consultant,  the Company  issued a total of 244,252  options  for the  Company's
common stock in January 2004.  Since the various  exercise prices of the options
were less than the market price of the Company's common stock on the grant date,
the Company incurred a non-cash charge of approximately $2,286,000. In addition,
pursuant to the same employment and consulting  agreements,  the Company accrued
approximately $2,645,000 in January 2004, representing amounts subsequently paid
to said  persons as a result of the change of control.  These  charges  totaling
approximately  $4,931,000  are  included in "Change of control  expenses" on the
accompanying consolidated statement of operations for the year ended January 31,
2004.  See  Note  6 for a  discussion  of the  Convertible  Note  issued  to the
Nussdorfs.

      The  Nussdorfs are officers and  principals of Quality King  Distributors,
Inc.   ("Quality  King").   During  fiscal  year  2004,  the  Company  purchased
approximately   $39,317,000   of   merchandise   from   Quality  King  and  sold
approximately  $23,570,000  of different  merchandise to Quality King. In fiscal
year 2003,  there were  approximately  $5,960,000 of purchases from Quality King
and  approximately  $11,366,000 of merchandise sold to Quality King. The amounts
due to Quality King and its affiliates at January 29, 2005 and January 31, 2004,
were approximately $13,234,000 and $797,000 respectively.

      Notes  receivable from Ilia Lekach,  the Company's  former Chairman of the
Board of Directors and Chief Executive  Officer,  was $327,311 as of January 31,
2004. The notes were unsecured, matured in five years and bore interest at prime
plus 1% per annum.  Principal  and  interest  were  payable in full at maturity.
Total  interest  income  recognized  during  fiscal  years  2004  and  2003  was
approximately $2,000 and $16,000, respectively.  Accrued interest receivable was
approximately  $27,000 and $12,000 as of January 31, 2004 and  February 1, 2003.
The notes and all accrued interest were fully paid in March 2004.

      Parlux Fragrances, Inc. ("Parlux") owns approximately 13% of the Company's
outstanding common stock.  Purchases of products from Parlux,  whose Chairman of
the Board of Directors and Chief Executive  Officer is Ilia Lekach,  amounted to
approximately  $38,360,000,  $27,701,000  and  $11,613,000 in fiscal years 2004,
2003 and 2002, representing approximately 20%, 23% and 10%, respectively, of the
Company's  total  purchases.  The amount due to Parlux on January  29,  2005 and
January 31, 2004, was  approximately  $9,994,000 and $14,506,000,  respectively.
Accounts  payable  due to Parlux are  non-interest  bearing.  The amounts due to
Parlux,  exclusive of the secured note payable  described below, are included in
the accounts payable affiliates in the accompanying consolidated balance sheets.

      On June  30,  2003,  Perfumania  signed  a  $5,000,000  subordinated  note
agreement  with  Parlux.  The note was in  consideration  for the  reduction  of
$5,000,000 in trade payables due to Parlux in the same year. The note was due on
February 29, 2004, with various periodic  principal  payments,  bore interest at
prime  plus 1% and was  subordinated  to all bank  related  indebtedness.  As of
January 31, 2004 the outstanding  principal balance due on the note was $250,000
and included in the amount due Parlux of  $14,506,000  at January 31, 2004.  The
note was paid in full in February 2004, in accordance with its terms.

      The  Company  purchased   approximately   $6,368,000  and  $10,562,000  of
merchandise in fiscal years 2003 and 2002, respectively, from a company owned by
Zalman Lekach,  a former director of the Company,  and a brother of Ilia Lekach.
The amount due to Zalman Lekach's company at January 31, 2004 was  approximately
$1,617,000,  and is included in accounts payable  affiliates in the accompanying
consolidated balance sheets.


                                       35
<PAGE>

      The  Company   purchased   approximately   $4,305,000  and  $6,021,000  of
merchandise in fiscal years 2003 and 2002, respectively, from a company owned by
another brother of Ilia Lekach. The amount due to this company was approximately
$771,000 at January 31, 2004 and is included in accounts  payable  affiliates in
the accompanying consolidated balance sheets.

NOTE 6 - BANK LINE OF CREDIT AND NOTES PAYABLE

      The bank line of credit and notes payable consist of the following:

<TABLE>
<CAPTION>
                                                                     January 29, 2005       January 31, 2004
                                                                    -------------------    -------------------
<S>                                                                 <C>                    <C>
Bank line of credit, which is classified as
  a current liability, interest payable
  monthly,  secured by a pledge of substantially all
  of Perfumania's assets (see below)                                    $  31,528,212          $  30,472,027
                                                                    ===================    ===================

Convertible note payable affiliate - long term                          $   5,000,000          $          --
                                                                    ===================    ===================
</TABLE>


      In May 2004,  Perfumania  entered into a  three-year  amended and restated
senior secured  credit  facility with GMAC  Commercial  Finance LLC and Congress
Financial  Corporation.  The line of credit provides for borrowings of up to $60
million,  increased from $40 million in the previous credit  facility,  of which
$31.5  million was  outstanding  under the line of credit and $12.6  million was
available as of January 29, 2005, to support normal working capital requirements
and other  general  corporate  purposes.  Advances  under the line of credit are
based on a formula of eligible inventories and bears interest at a floating rate
ranging  from (a)  prime to prime  plus  1.25% or (b)  LIBOR  plus 2.5% to 3.75%
depending on a financial ratio test. Advances are secured by a first lien on all
assets of Perfumania.  The credit  facility  contains  limitations on additional
borrowings, capital expenditures and other items, and contains various covenants
including  a  fixed  charge   coverage  ratio,  a  leverage  ratio  and  capital
expenditure  limits as defined.  The credit facility  expires in May 2007. As of
January 29, 2005, Perfumania was in compliance with its covenant requirements.

      In March 2004, the Nussdorfs made a $5,000,000 subordinated secured demand
loan to  Perfumania.  The demand loan bears  interest at the prime rate plus 1%,
requires  quarterly  interest  payments and is secured by a security interest in
Perfumania's  assets pursuant to a Security  Agreement,  by and among Perfumania
and the Nussdorfs. There are no prepayment penalties and the loan is subordinate
to all bank  related  indebtedness.  On December 9, 2004,  the Company  issued a
Subordinated  Convertible  Note (the  "Convertible  Note") in  exchange  for the
$5,000,000 subordinated secured demand loan. The Convertible Note bears interest
at the prime rate plus 1%, requires  quarterly  interest payments and is secured
by a security interest in the Company's assets pursuant to a Security Agreement,
by and among the Company and the  Nussdorfs.  There are no prepayment  penalties
and the Convertible  Note is subordinate to all bank related  indebtedness.  The
Convertible  Note is payable in January 2007 and allows the Nussdorfs to convert
the Convertible  Note into shares of the Company's  common stock at a conversion
price of $11.25,  which equals the closing market price of the Company's  common
stock on December 9, 2004.

NOTE 7 - IMPAIRMENT OF ASSETS

      Based on a review of the Company's  retail store  locations  with negative
cash flows, the Company recognized  non-cash  impairment charges relating to its
retail  operation of approximately  $0.3 million,  $0.6 million and $0.7 million
during  fiscal  years 2004,  2003 and 2002,  respectively.  These  charges  were
determined  based on the difference  between the carrying amounts of the assets,
representing primarily fixtures and leasehold improvements,  at particular store
locations  and the fair  values of the  assets on a  store-by-store  basis.  The
estimated fair values are based on anticipated future cash flows discounted at a
rate commensurate  with the risk involved.  These impairment losses are included
in provision  for  impairment of assets and store  closings in the  accompanying
consolidated statements of operations.


                                       36
<PAGE>


NOTE 8 - INCOME TAXES

      The provision for income taxes is comprised of the following amounts:


                                            FISCAL YEAR ENDED
                         -------------------------------------------------------
                         January 29, 2005       January 31,         February 1,
                                                   2004                2003
                         -----------------    ----------------    --------------

Current:
  Federal                 $ (75,000)            $      --            $      --
  State                     (75,000)                   --                   --
                          ---------             ---------            ---------
                           (150,000)                   --                   --
                          ---------             ---------            ---------

Deferred:
  Federal                        --                    --                   --
  State                          --                    --                   --
                          ---------             ---------            ---------

Provision for
  income taxes            $(150,000)            $      --            $      --
                          ---------             ---------            ---------


      The income tax  benefit  (expense)  differs  from the amount  obtained  by
applying the statutory Federal income tax rate to pretax income as follows:

<TABLE>
<CAPTION>
                                                                  FISCAL YEAR ENDED
                                               --------------------------------------------------------
                                            January 29, 2005     January 31, 2004      February 1, 2003
                                            -----------------    -----------------     ----------------
<S>                                         <C>                  <C>                   <C>
Benefit (expense) at federal statutory
  rates                                        $(1,122,436)         $ 4,376,378          $   960,738
Non-deductible expenses                         (1,527,156)          (1,504,335)            (283,319)
Change in the valuation allowance                3,101,821           (3,224,513)            (584,247)
Other                                             (602,229)             352,470              (93,172)
                                               -----------          -----------          -----------
Provision for income taxes                     $  (150,000)         $        --          $        --
                                               -----------          -----------          -----------
</TABLE>


      Net  deferred  tax  assets   reflect  the  tax  effect  of  the  following
differences between financial statement carrying amounts and tax basis of assets
and liabilities:

                                                   FISCAL YEAR ENDED
                                          ----------------------------------
                                           January 29,          January 31,
                                             2005                   2004
                                          ------------          ------------
Assets:
  Net operating loss & tax credit
    carryforwards                         $  6,482,224          $  5,962,433
  Capital loss carryforward                  1,571,773             1,455,119
  Inventories                                1,257,747             1,708,735
  Property and equipment                       733,777             3,291,432
  Reserves                                     143,911               167,436
  Goodwill                                     296,382               306,002
  Deferred compensation                             --               715,983
  Other                                        392,037               372,532
                                          ------------          ------------
Total deferred tax assets                   10,877,851            13,979,672
Valuation allowance                        (10,877,851)          (13,979,672)
                                          ------------          ------------
Net deferred tax assets                   $         --          $         --
                                          ============          ============


      A valuation  allowance is provided  for deferred tax assets in  accordance
with SFAS No. 109, Accounting for Income Taxes as management believes it is more
likely than not that the benefit of the deferred tax asset will not be realized.
Realization  of future  tax  benefits  related  to the  deferred  tax  assets is
dependent on many factors,  including the Company's  ability to generate taxable
income  within  the net  operating  loss  carryforward  period.  Management  has
considered  these  factors  in  reaching  its  conclusion  as to  the  valuation
allowance for financial reporting purposes.  As of January 29, 2005, the Company
has net operating loss carryforwards of approximately $17.0 million, which begin
to expire in the year 2019.


                                       37
<PAGE>


NOTE 9 - SHAREHOLDERS' EQUITY

REVERSE STOCK SPLIT

      The Company's Board of Directors  authorized a one-for-four  reverse stock
split of the Company's  outstanding  shares of common stock for  shareholders of
record as of March 20,  2002.  Accordingly,  all data shown in the  accompanying
consolidated financial statements and notes for periods ended prior to that date
have been retroactively adjusted to reflect this change.

INVESTMENTS AVAILABLE FOR SALE

      The Company's  former Chairman of the Board and Chief  Executive  Officer,
Ilia Lekach, was also Chairman and interim CEO of Nimbus Group, Inc. ("Nimbus"),
a public company  previously  committed to the  development of a private jet air
taxi network.

      From  fiscal  year 2000  through  fiscal  year 2003 the  Company  acquired
approximately  1,003,000 shares of Nimbus common stock. The Company subsequently
disposed  of its  holding  in Nimbus in open  market  transactions  at a loss of
approximately $172,000 in fiscal 2003.

      As of February 1, 2003,  the market  price for  Nimbus'  common  stock was
below  the  Company's  average  cost per  share of $4.13.  In  consideration  of
accounting guidance that considers a six to nine month decline in stock price to
be other than temporary, the Company recorded a non-cash-charge of approximately
$700,000  in realized  loss on  investments  in the  consolidated  statement  of
operations for fiscal year 2002.

PREFERRED STOCK

      The Company's  Articles of  Incorporation  authorize the issuance of up to
1,000,000 shares of preferred stock. The preferred stock may be issued from time
to time at the  discretion  of the  Board  of  Directors  without  shareholders'
approval.  The  Board of  Directors  is  authorized  to issue  these  shares  in
different  series and,  with respect to each series,  to determine  the dividend
rate, and provisions regarding redemption,  conversion,  liquidation  preference
and other rights and privileges.  As of January 29, 2005, no preferred stock had
been issued.

TREASURY STOCK

      As of February 2, 2001, the Company's  Board of Directors had approved the
repurchase by the Company of up to 625,000 shares of the Company's common stock,
reflecting  management's  belief that the Company's  common stock  represented a
significant value at its then current trading price. In February 2002, the Board
approved an increase in the stock  repurchase  program by an additional  250,000
shares and in April 2002, the Board approved an additional increase in the stock
repurchase  program of 100,000  shares.  Pursuant to these  authorizations,  the
Company  has  repurchased  approximately  898,000  shares  of  common  stock for
approximately  $8.6  million as of January  31,  2004,  including  approximately
118,000  shares for $1.5 million in fiscal year 2003.  There were no  additional
repurchases during fiscal year 2004.

STOCK OPTION PLANS

      Under the  Company's  2000 Stock Option Plan (the "Stock Option Plan") and
2000  Directors  Stock Option Plan (the  "Directors  Plan")  (collectively,  the
"Plans"),  both of which  superseded  the previously  existing  plans  effective
October 2000,  375,000 shares of common stock and 30,000 shares of common stock,
respectively,  were  initially  reserved for issuance  upon exercise of options.
Additionally,  the number of shares  available under the Stock Option Plan shall
automatically  increase  each year by 3% of the  shares  of common  stock of the
Company  outstanding at the end of the immediate  preceding  year. The Company's
Board of Directors, or a committee thereof, administers and interprets the Stock
Option Plan. The Stock Option Plan provides for the granting of both  "incentive
stock  options" (as defined in Section 422A of the  Internal  Revenue  Code) and
non-statutory stock options.  Options can be granted under the Stock Option Plan
on such terms and at such prices as determined by the Board, except that the per
share  exercise  price of options will not be less than the fair market value of
the common stock on the date of grant. Only non-employee  directors are eligible
to receive  options under the Directors Plan. The Directors Plan provides for an
automatic  grant of an option to  purchase  500  shares  of  common  stock  upon
election as a director of the Company and an automatic  grant of 1,000 shares of
common stock upon such  person's  re-election  as a director of the Company,  in
both  instances at an exercise price equal to the fair value of the common stock
on the date of grant.


                                       38
<PAGE>


      Due to the transaction  described in Note 5, a change in control  occurred
which  resulted  in the  issuance  of 244,252  options  which  were  immediately
exercisable.  The  Company  incurred  a charge of  approximately  $2,286,000  in
non-cash  compensation  expense in fiscal  2003 as a result of the  issuance  of
these  options  which  represent  the  difference  between the market  price and
exercise price on the issuance date of these options.

      In calculating the proforma net income (loss) per share for 2004, 2003 and
2002,  as shown in Note 2, the fair value of each option  grant is  estimated on
the  date of  grant  using  the  Black-Scholes  option-pricing  model  with  the
following  weighted  average  assumptions  used for grants in fiscal years 2004,
2003 and 2002:


                                 2004             2003               2002
                             ---------------  --------------    --------------

Expected life (years)          7 years          7 years          7 years
Interest rate                    4.08%           3.68%             4.88%
Volatility                       168%             165%             148%
Dividend yield                    0%               0%               0%


      Options  granted  under the Stock  Option Plan are  exercisable  after the
period or periods specified in the option  agreement,  and options granted under
the Directors Plan are exercisable immediately.  Options granted under the Plans
are not exercisable after the expiration of 10 years from the date of grant.

      A summary of the Company's  option activity,  and related  information for
each of the three fiscal years ended January 29, 2005 is as follows:

<TABLE>
<CAPTION>
                                                    2004                           2003                         2002
                                          -----------------------        -----------------------       ------------------------
                                                         Weighted                        Weighted                     Weighted
                                                         Average                        Average                        Average
                                                       Exercisable                     Exercisable                   Exercisable
                                           Shares         Price          Shares          Price          Shares          Price
                                          -------        --------        -------        --------       --------        --------
<S>                                      <C>            <C>            <C>             <C>            <C>            <C>
Outstanding at beginning of year          809,238        $   4.99        666,501        $   5.32        606,594        $   5.60
Granted                                     5,334           11.12        254,252            4.79        160,000            3.67
Exercised                                (551,222)           3.08        (69,996)           3.38        (59,807)           1.90
Cancelled                                 (51,318)           7.65        (41,519)          11.93        (40,286)           8.19
                                          -------                        -------                       --------
Outstanding at end of year                212,032        $   9.46        809,238        $   4.99        666,501        $   5.32
                                          =======                        =======                       ========

Options exercisable at end of year        212,032        $   9.46        696,436        $   5.10        449,714        $   5.80
Weighted-average fair value of
options granted during the year             5,334        $  11.12        254,252        $   4.79        160,000        $   3.31
</TABLE>


      The following table summarizes information about stock options outstanding
at January 29, 2005:

<TABLE>
<CAPTION>

                                                  OPTIONS OUTSTANDING                OPTIONS EXERCISABLE

                                                                 Weighted                           Weighted
                                                Weighted          Average                           Average
                                                Average          Remaining                         Remaining
     RANGE OF               NUMBER              Exercise        Contractual         NUMBER          Exercise
 EXERCISE PRICES          OUTSTANDING            Price             Life          EXERCISABLE         Price
-------------------    ------------------    ---------------    ------------    ---------------    -----------
<S>                    <C>                   <C>                <C>            <C>                 <C>
   $2.00 - $3.36              10,816               $  2.47              5.17           10,816       $  2.47
   $3.52 - $3.52              47,832                  3.52              7.32           47,832          3.52
   $3.60 - $8.24              42,876                  7.57              7.26           42,876          7.57
  $10.02 - $11.24             24,252                 10.93              5.61           24,252         10.93
  $12.52 - $21.52             86,256                 14.16              5.42           86,256         14.16
                       ------------------                                       ---------------
                              212,032              $  9.46              6.23           212,032      $  9.46
                       ==================                                       ===============
</TABLE>


                                       39
<PAGE>

NOTE 10- EMPLOYEE BENEFIT PLANS

      The  Company  has a 401(k)  Savings  and  Investment  Plan  ("the  Plan").
Pursuant to such Plan,  participants may make  contributions to the Plan up to a
maximum of 20% of total  compensation  or $13,000,  whichever  is less,  and the
Company, at its discretion, may match such contributions to the extent of 25% of
the  first  6%  of  a  participant's   contribution.   The  Company's   matching
contributions vest over a 4-year period. In addition to matching  contributions,
the Company may make additional  contributions on a discretionary basis in order
to  comply  with  certain   Internal   Revenue  Code   regulations   prohibiting
discrimination  in favor of highly  compensated  employees.  The Company did not
match contributions  during fiscal year 2004 and matching  contributions  during
fiscal years 2003 and 2002 were not significant.

NOTE 11 - COMMITMENTS AND CONTINGENCIES

      The  Company is  self-insured  for  employee  medical  benefits  under the
Company's  group  health  plan.  The Company  maintains  stop loss  coverage for
individual  medical claims in excess of $80,000 and for annual  Company  medical
claims  which exceed  approximately  $2.1  million in the  aggregate.  While the
ultimate  amount of claims  incurred are  dependent on future  developments,  in
management's opinion, recorded reserves are adequate to cover the future payment
of claims incurred as of January 29, 2005. However, it is possible that recorded
reserves may not be adequate to cover the future payment of claims. Adjustments,
if any, to estimates  recorded  resulting  from ultimate  claim payments will be
reflected in operations in the periods in which such  adjustments are known. The
self-insurance   reserve  at  January   29,   2005  and  January  31,  2004  was
approximately $426,000 and $441,000,  respectively, which is included in accrued
expenses and other liabilities in the accompanying consolidated balance sheets.

      The Company leases space for its retail stores.  The lease terms vary from
month to month  leases to ten year  leases,  in some cases with options to renew
for longer periods.  Various leases contain clauses which adjust the base rental
rate by the prevailing Consumer Price Index, as well as additional rent based on
a percentage of gross sales in excess of a specified amount.

      Rent  expense for fiscal  years  2004,  2003,  and 2002 was  approximately
$15,417,000,  $15,559,000, and $15,879,000,  respectively.  Future minimum lease
commitments  under  non-cancelable  operating  leases at January 29, 2005 are as
follows:


            FISCAL YEAR
------------------------------------
2005                                     $  11,495,511
2006                                         9,353,861
2007                                         7,251,154
2008                                         4,696,344
2009                                         3,836,922
Thereafter                                   8,233,977
                                        --------------
Total future minimum lease payments      $  44,867,769
                                        ==============

      The  Company's  capitalized  leases  consist  of a  corporate  office  and
distribution  facility in Sunrise,  Florida,  as well as computer  hardware  and
software.  The lease for the corporate office and  distribution  facility is for
approximately 15 years with monthly rent ranging from  approximately  $73,000 to
$104,000.  The lease terms for the computer  hardware and software vary from one
to three years.  The following is a schedule of future  minimum  lease  payments
under  capital  leases  together with the present value of the net minimum lease
payments, at January 29, 2005:


           FISCAL YEAR
--------------------------------
2005                                         $ 1,165,086
2006                                           1,148,423
2007                                           1,137,116
2008                                           1,145,012
2009                                           1,231,779
Thereafter                                    10,415,633
                                          ---------------
Total future minimum lease payments           16,243,049
Less: Amount representing interest            (8,039,241)
                                          ---------------
Present value of minimum lease                 8,203,808
  payments
Less: Current portion                           (231,353)
                                          ---------------
                                            $  7,972,455
                                          ===============


                                       40
<PAGE>



      The  depreciation  expense  relating  to  capital  leases is  included  in
depreciation   and  amortization   expense  in  the  accompanying   consolidated
statements of operations.

      The Company is  involved  in various  legal  proceedings  in the  ordinary
course of business.  Management  cannot  presently  predict the outcome of these
matters,  although  management  believes  that the ultimate  resolution of these
matters should not have a materially  adverse effect on the Company's  financial
position or result of operations.


NOTE 12 - SEGMENT INFORMATION

      The Company operates in two industry segments,  specialty retail sales and
wholesale distribution of fragrances and related products.  Retail sales include
sales through our Internet site, perfumania.com. Financial information for these
segments is summarized in the following table.


                                       FISCAL YEARS
                    --------------------------------------------------
                        2004               2003               2002
                    ------------       ------------       ------------
Net sales:
  Retail            $201,424,708       $198,478,506       $199,369,331
  Wholesale           23,578,493         14,089,063          2,144,566
                    ------------       ------------       ------------
                    $225,003,201       $212,567,569       $201,513,897
                    ============       ============       ============

Gross profit:
  Retail            $ 90,048,875       $ 81,923,375       $ 84,159,461
  Wholesale            1,287,721          1,453,645            435,051
                    ------------       ------------       ------------
                    $ 91,336,596       $ 83,377,020       $ 84,594,512
                    ============       ============       ============


NOTE 13- QUARTERLY FINANCIAL DATA (UNAUDITED)

      Unaudited  summarized  financial  results  for fiscal  years 2004 and 2003
follows (in thousands, except for per share data):


<TABLE>
<CAPTION>

2004 QUARTER                         FIRST           SECOND          THIRD           FOURTH
                                    --------        --------        --------        --------
<S>                                 <C>             <C>             <C>             <C>
Net sales                           $ 43,571        $ 48,471        $ 50,803        $ 82,158
Gross profit                          17,505          20,868          19,740          33,224
Net income (loss)                     (2,638)           (529)         (1,103)          7,421
Net income (loss) per basic
  share                                (1.00)          (0.18)          (0.38)           2.54
Net income (loss) per diluted
  share                                (1.00)          (0.18)          (0.38)           2.30


2003 QUARTER                         FIRST           SECOND          THIRD           FOURTH
                                    --------        --------        --------        --------
Net sales                           $ 36,888        $ 50,748        $ 48,058        $ 76,874
Gross profit                          16,815          20,573          17,980          30,442
Net loss                              (2,930)           (924)         (3,725)         (5,293)
Net loss per basic share               (1.19)          (0.37)          (1.51)          (2.16)
Net loss per diluted share             (1.19)          (0.37)          (1.51)          (2.16)
</TABLE>


      The Company  realizes  higher  sales,  gross  profit and net income in the
fourth  fiscal  quarter  than the other three  fiscal  quarters due to increased
purchases of fragrances as gift items during the holiday season. Included in the
fourth quarter results for the year ended January 31, 2004 is approximately $4.9
million attributable to change of control expenses and $2.6 million attributable
to a write-down of inventory which the Company intended to discontinue  offering
for sale in its stores.


                                       41
<PAGE>


ITEM  9.  CHANGES  IN AND  DISAGREEMENTS  WITH  ACCOUNTANTS  ON  ACCOUNTING  AND
          FINANCIAL DISCLOSURE

      None.

ITEM 9A. CONTROLS AND PROCEDURES

      Our Chief Executive  Officer and Chief  Financial  Officer have concluded,
based on their  evaluation as of January 29, 2005, that our disclosure  controls
and procedures are effective. There have been no changes in our internal control
over  financial  reporting  during the quarter  ended January 29, 2005 that have
materially affected, or are reasonably likely to materially affect, our internal
control over financial reporting.

ITEM 9B. OTHER INFORMATION

      None.


                                    PART III.

ITEM 10. DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT

      Except as  disclosed  below,  the  information  called for by this item is
incorporated  by  reference  from  E  Com  Ventures,   Inc.  Annual  Meeting  of
Shareholders  - Notice  and  Proxy  Statement  - 2004 (to be filed  pursuant  to
Regulation  14A not later than 120 days  after the close of the fiscal  year) in
accordance with General Instruction 6 to the Annual Report on Form 10-K.

      The Company has adopted a Code of Business Conduct and Ethics that applies
to all of the Company's officers,  directors and employees. The Code of Business
Conduct and Ethics is filed as an exhibit to this Annual Report on Form 10-K.

ITEM 11. EXECUTIVE COMPENSATION

      The information  called for by this item is incorporated by reference from
E Com Ventures, Inc. Annual Meeting of Shareholders - Notice and Proxy Statement
- 2004 (to be filed pursuant to Regulation 14A not later than 120 days after the
close of the fiscal year) in accordance with General Instruction 6 to the Annual
Report on Form 10-K.

ITEM 12.  SECURITY  OWNERSHIP OF CERTAIN  BENEFICIAL  OWNERS AND  MANAGEMENT AND
          RELATED STOCKHOLDER MATTERS

      The  information is required by Item 403 of Regulation S-K relating to the
ownership of our common stock by certain beneficial owners and management and is
incorporated  by  reference  from  E  Com  Ventures,   Inc.  Annual  Meeting  of
Shareholders  - Notice  and  Proxy  Statement  - 2004 (to be filed  pursuant  to
Regulation  14A not later than 120 days  after the close of the fiscal  year) in
accordance with General Instruction 6 to the Annual Report on Form 10-K.

ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS

      The  information is  incorporated  by reference from E Com Ventures,  Inc.
Annual Meeting of  Shareholders - Notice and Proxy Statement - 2004 (to be filed
pursuant to Regulation 14A not later than 120 days after the close of the fiscal
year) in  accordance  with General  Instruction  6 to the Annual  Report on Form
10-K.

ITEM 14. PRINCIPAL ACCOUNTANT FEES AND SERVICES

      The  information is  incorporated  by reference from E Com Ventures,  Inc.
Annual Meeting of  Shareholders - Notice and Proxy Statement - 2004 (to be filed
pursuant to Regulation 14A not later than 120 days after the close of the fiscal
year) in  accordance  with General  Instruction  6 to the Annual  Report on Form
10-K.


                                       42
<PAGE>

                                    PART IV.

ITEM 15. EXHIBITS AND FINANCIAL STATEMENT SCHEDULES

      (a)   The following documents are filed as part of this report:

            (1)   Financial Statements

      An index to financial  statements  for the fiscal years ended  January 29,
2005, January 31, 2004 and February 1, 2003 appears on page 24.

            (2)   Financial Statement Schedules

                  None

            (3)   Exhibits

<TABLE>
<CAPTION>
                                                                                                         PAGE NUMBER
                                                                                                       OR INCORPORATED
                                                                                                        BY REFERENCE
           EXHIBIT                                       DESCRIPTION                                       FROM
           -------                                       -----------                                       ----
<S>                      <C>                                                                           <C>
               3.1       Amended and Restated Articles of Incorporation                                     (1)

               3.2       Bylaws                                                                             (2)

              10.5       1991 Stock Option Plan, as amended*                                                (3)

              10.6       1992 Directors Stock Option Plan, as amended*                                      (3)

              10.7       Series A Securities Purchase Agreement                                             (4)

              10.8       Series B Securities Purchase Agreement                                             (5)

              10.9       Series C Securities Purchase Agreement                                             (6)

              10.10      Series D Securities Purchase Agreement                                             (6)

              10.11      2000 Stock Option Plan*                                                            (7)

              10.12      2000 Directors Stock Option Plan*                                                  (7)

              10.13      Amended and Restated Revolving Credit and Security Agreement with GMAC             (9)
                         Commercial Credit LLC, and Congress Financial Corporation (Florida),
                         date May 12, 2004

              10.14      Nussdorf Subordinated Secured Demand Note                                          (9)

              10.15      Lease agreement with Victory  Investment  Group,  LLC, dated October 21,           (8)
                         2002

              10.16      Waiver and  Amendment to the  Revolving  Credit and  Security  Agreement
                         with GMAC Commercial Credit LLC, dated April 29,2004                               (9)

              10.17      Amendment to the 2000 Stock Option Plan*                                          (10)

              10.18      Nussdorf Subordinated Secured Convertible Note                                    (11)

              21.1       Subsidiaries of the Registrant                                                     (9)

              23.1       Consent of Deloitte & Touche LLP                                                   (9)

              31.1       Certification of the Chief Executive Officer pursuant to Section 302 of            (9)
                         the Sarbanes-Oxley Act of 2002

              31.2       Certification of the Chief Financial Officer pursuant to Section 302 of            (9)
                         the Sarbanes-Oxley Act of 2002

              32.1       Certification of the Chief Executive  Officer pursuant to Section 906 of           (9)
                         the Sarbanes-Oxley Act of 2002

              32.2       Certification of the Chief Financial  Officer pursuant to Section 906 of           (9)
                         the Sarbanes-Oxley Act of 2002
</TABLE>


                                       43
<PAGE>


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

*     Management contract or compensatory plan or arrangement


(1)   Incorporated  by  reference to the exhibit of the same  description  filed
      with the Company's 1993 Form 10-K (filed April 28, 1994).

(2)   Incorporated  by  reference to the exhibit of the same  description  filed
      with the Company's Registration Statement on Form S-1 (No 33-46833).

(3)   Incorporated  by  reference to the exhibit of the same  description  filed
      with the Company's 1995 Form 10-K (filed April 26, 1996).

(4)   Incorporated  by  reference to the exhibit of the same  description  filed
      with the Company's  Registration Statement on Form S-1 filed June 11, 1999
      (No. 333-80525).

(5)   Incorporated  by  reference to the exhibit of the same  description  filed
      with the Company's  Registration Statement on Form S-1/A, filed August 31,
      1999 (No. 333-80525).

(6)   Incorporated  by  reference to the exhibit of the same  description  filed
      with the Company's Registration Statement on Form S-3 filed April 25, 2000
      (No. 333-35580).

(7)   Incorporated  by  reference to the exhibit of the same  description  filed
      with the Company's Proxy Statement (filed October 6, 2000).

(8)   Incorporated  by  reference to the exhibit of the same  description  filed
      with the Company's 2002 Form 10-K (filed April 30, 2003).

(9)   Filed Herewith.

(10)  Incorporated  by reference to Appendix A to the Company's  Proxy Statement
      (filed April 16, 2004).

(11)  Incorporated  by  reference to the exhibit of the same  description  filed
      with the Company's Form 8-K (filed in December 14, 2004).


                                       44
<PAGE>


SIGNATURES

      Pursuant  to the  requirements  of Section  13 or 15(d) of the  Securities
Exchange Act of 1934, the registrant has duly caused this report to be signed on
its behalf by the undersigned, thereunto duly authorized, April 27, 2005.


                                     E Com Ventures, Inc.

                                     By: /s/ MICHAEL W. KATZ
                                         -------------------------------------
                                         Michael W. Katz,
                                         President and Chief Executive Officer
                                         (Principal Executive Officer)

                                     By: /s/ A. MARK YOUNG
                                         -------------------------------------
                                         A. Mark Young,
                                         Chief Financial Officer
                                         (Principal Accounting Officer)


      Pursuant to the requirements of the Securities  Exchange act of 1934, 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>
<CAPTION>
SIGNATURE                                  TITLE                                   DATE
---------                                  -----                                   ----
<S>                                        <C>                                 <C>
/s/ MICHAEL W.  KATZ                       President and Chief Executive       April 27, 2005
------------------------------             Officer
Michael W. Katz                            (Principal Executive Officer)


/s/ STEPHEN NUSSDORF                       Chairman of the Board of Directors  April 27, 2005
------------------------------
Stephen Nussdorf


/s/ A. MARK YOUNG                          Chief Financial Officer,            April 27, 2005
------------------------------             (Principal Accounting Officer)
A. Mark Young


/s/ DONOVAN CHIN                           Chief Financial Officer             April 27, 2005
------------------------------             Perfumania, Inc.,
Donovan Chin


/s/ CAROLE ANN TAYLOR                      Director                            April 27, 2005
------------------------------
Carole Ann Taylor


/s/ JOSEPH BOUHADANA                       Director                            April 27, 2005
------------------------------
Joseph Bouhadana


/s/ PAUL GARFINKLE                         Director                            April 27, 2005
------------------------------
Paul Garfinkle
</TABLE>


                                       45