<PAGE>

                                    FORM 10-Q


                       SECURITIES AND EXCHANGE COMMISSION
                             Washington, D.C. 20549

      (Mark one)

         [X]      QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15 (D) OF THE
                  SECURITIES EXCHANGE ACT OF 1934.

                For the quarterly period ended December 31, 2000

                                       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 0-16819

                             FRAGRANCENET.COM, INC.
             (exact name of registrant as specified in its charter)

<TABLE>
<S>                                             <C>                                         <C>
                  Delaware                                  5990                                94-3054267

       (State or other jurisdiction of          (Primary Standard Industrial                 (I.R.S. Employer
       incorporation or organization)            Classification Code Number)                Identification No.)
</TABLE>


                                909 Motor Parkway
                            Hauppauge, New York 11788
                                 (631) 582-5204
                   (Address, including zip code, and telephone
             number, including area code, of registrant's principal
                               executive offices)



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 the number of shares outstanding of each of the issuer's
classes of common stock, as of the latest practicable date.



CLASS                                OUTSTANDING AT DECEMBER 31, 2000
-----                                --------------------------------
Common Stock, par value                         16,968,330
$  .01 per share


<PAGE>


                                      Index

                             FRAGRANCENET.COM, INC.

<TABLE>
<CAPTION>

                                                                                               PAGE NUMBER

<S>                                                                                            <C>
Part I.  Financial Information

Item 1.  Financial Statements

         Balance Sheets at December 31, 2000 (unaudited) and March 31, 2000 .........................3

         Unaudited Statements of Operations for the Three and Nine
         Months Ended December 31, 2000 and December 31, 1999........................................4-5

         Unaudited Statements of Cash Flows for the Nine
         Months Ended December 31, 2000 and December 31, 1999........................................6

         Notes to Unaudited Financial Statements.....................................................7 - 8


Item 2.  Management's Discussion and Analysis
of Results of Operations and Financial Condition.....................................................8 - 9


Item 3.  Quantitative and Qualitative Disclosures about Market Risk..................................10

Part II.  Other Information

Item 6.  Exhibits and Reports on Form 8-K............................................................11

Signatures...........................................................................................12
</TABLE>


<PAGE>


ITEM 1.  FINANCIAL STATEMENTS

BALANCE SHEETS

December 31, 2000 and March 31, 2000

<TABLE>
<CAPTION>
                                                                  December 31,    March 31,
Assets                                                                2000          2000
                                                                  -----------    -----------
                                                                  (unaudited)
<S>                                                               <C>            <C>
Current assets:
    Cash and cash equivalents                                     $   826,834    $   283,433
    Accounts receivable,  net                                          72,336         22,049
    Inventory                                                         173,297         54,896
    Prepaid expenses and other current assets                          43,576         24,054
                                                                  -----------    -----------

              Total current assets                                  1,116,043        384,432
                                                                  -----------    -----------

    Property and equipment, net                                        47,145         28,517
    Intangible asset, net                                               6,500          6,875
    Other assets                                                       21,130         12,700
                                                                  -----------    -----------

              Total assets                                        $ 1,190,818    $   432,524
                                                                  ===========    ===========

Liabilities and Stockholders' Equity (Deficit)

Current liabilities:
    Accounts payable                                              $   579,741    $   144,004
    Accrued expenses                                                  343,269        311,093
    Deferred revenue                                                    6,439         20,387
                                                                  -----------    -----------

Total liabilities                                                     929,449        475,484
                                                                  -----------    -----------

Stockholders' equity (deficit):
    Common stock, $.01 par value; 50,000,000 shares authorized,
       16,968,330 shares issued and outstanding                       169,683        169,683
    Additional paid-in capital                                        368,020        368,020

    Accumulated deficit                                              (276,334)      (580,663)
                                                                  -----------    -----------

              Total stockholders' equity (deficit)                    261,369        (42,960)
                                                                  -----------    -----------

              Total liabilities and stockholders' equity          $ 1,190,818    $   432,524
                                                                  ===========    ===========
</TABLE>

See accompanying notes to financial statements.

                                       3

<PAGE>

STATEMENTS OF OPERATIONS (Unaudited)

<TABLE>
<CAPTION>

Three Months Ended December 31,                            2000         1999
<S>                                                    <C>           <C>
Net sales                                              $ 3,001,116   $ 2,136,502

Cost of sales                                            1,838,186     1,312,839
                                                       -----------   -----------

Gross profit                                             1,162,930       823,663
                                                       -----------   -----------

Operating expenses:
     Selling and marketing                                 489,541       543,829
     General and administrative                            434,770       271,939
                                                       -----------   -----------

     Total operating expenses                              924,311       815,768
                                                       -----------   -----------

Operating income                                           238,619         7,895

Interest income                                              1,793         5,199
                                                       -----------   -----------

Net Income                                                 240,412        13,094
                                                       ===========   ===========

Basic and diluted net income per share                 $      0.01   $      0.00

Weighted average number of common shares outstanding    16,968,330    16,968,330
</TABLE>

See accompanying notes to financial statements

                                       4

<PAGE>

STATEMENTS OF OPERATIONS (Unaudited)

<TABLE>
<CAPTION>
Nine Months Ended December 31,                               2000          1999

<S>                                                    <C>            <C>
Net sales                                              $  6,276,618   $  3,273,246

Cost of sales                                             3,860,982      2,035,483
                                                       ------------   ------------

Gross profit                                              2,415,636      1,237,763
                                                       ------------   ------------

Operating expenses:
     Selling and marketing                                1,109,241        840,114
     General and administrative                           1,008,401        520,118
                                                       ------------   ------------

     Total operating expenses                             2,117,642      1,360,232
                                                       ------------   ------------

Operating income (loss)                                     297,994       (122,469)

Interest income                                               6,335          7,618
                                                       ------------   ------------

Net income (loss)                                           304,329       (114,851)
                                                       ------------   ------------

Basic and diluted net income (loss) per share           $      0.02   $      (0.01)

Weighted average number of common shares outstanding     16,968,330     16,201,020
</TABLE>

See accompanying notes to financial statements

                                       5

<PAGE>

STATEMENTS OF CASH FLOWS (Unaudited)

<TABLE>
<CAPTION>

Nine Months Ended December 31,                                                2000         1999
<S>                                                                        <C>          <C>
Cash flows from operating activities:
     Net income (loss)                                                     $ 304,329    $(144,851)
     Adjustment to reconcile net loss to net cash
             provided by operating activities:
         Depreciation and amortization                                        13,496       10,549
         Changes in assets and liabilities:
             Accounts receivable                                             (50,287)     (83,042)
             Inventory                                                      (118,401)     (52,924)
             Prepaid expenses and other assets                               (27,952)     (20,730)
             Accounts payable and accrued expenses                           467,913      512,930
             Deferred revenue                                                (13,948)          --
                                                                           ---------    ---------

     Net cash provided by operating activities                               575,150      251,932
                                                                           ---------    ---------

Cash flows from investing activities:
     Acquisitions of property and equipment                                  (31,749)     (12,550)
                                                                           ---------    ---------

     Net cash used in investing activities                                   (31,749)     (12,550)
                                                                           ---------    ---------

Cash flows from financing activities:
     Repayment of loans payable                                                 --        (25,000)
     Cash acquired pursuant to the merger of
         FragranceNet.com, Inc. and Telescents                                  --        437,703
                                                                           ---------    ---------

     Net cash provided by financing activities                                  --        412,703
                                                                           ---------    ---------

                            Net increase in cash and cash equivalents        543,401      652,085

                        Cash and cash equivalents at beginning of period     283,433       77,669
                                                                           ---------    ---------

                           Cash and cash equivalents at end of period      $ 826,834    $ 729,754
                                                                           ---------    ---------

Supplemental Disclosure of Cash Flow Information:
     Cash paid during period for income taxes                              $     849    $     380
     Cash paid during period for interest                                      2,485          292
</TABLE>

                                       6

<PAGE>


Notes to Unaudited Financial Statements

1.       Basis of Presentation

The accompanying unaudited financial statements have been prepared in accordance
with generally accepted accounting principles for interim financial information
and with the instructions of Form 10-Q of Regulation S-X. Accordingly, they do
not include all the information and notes required by generally accepted
accounting principles for complete financial statements. For further
information, refer to the Company's financial statements for the year ended
March 31, 2000 and notes thereto included in the Company's annual report on Form
10-KSB. For the nine months ended December 31, 2000 and 1999, an aggregate of
59% and 77% of purchases were from two distributors, respectively.

Merger of TeleScents and FragranceNet.com, Inc.

The Company was formerly known as National Capital Management Corporation
("NCMC"), a publicly held shell company with no substantial business operation.
On July 28, 1999, NCMC entered into an Agreement and Plan of Merger (the "Merger
Agreement") to acquire TeleScents, Inc., a New York corporation ("TeleScents").
Pursuant to the Merger Agreement, NCMC issued to the shareholders of TeleScents
an aggregate of 4,900,000 shares of its common stock and an aggregate of
1,029,514 shares of its Series A Preferred Stock (the "Preferred Stock") in
exchange for all the outstanding common shares of TeleScents.. The Preferred
Stock was convertible into common stock on a 1-for-10 basis at such time as the
Certificate of Incorporation of the Company was amended to increase the
authorized shares of common stock to a number of shares sufficient to effect the
conversion. The Preferred Stock had voting privileges on an "as converted"
basis. Accordingly, the shareholders of TeleScents, in the aggregate, held
approximately 90% of the total voting power of the Company's voting stock. The
conversion of the Preferred Stock into 10,295,140 shares of common stock
occurred subsequent to the Shareholders' meeting on November 16, 1999 where an
amendment to the Company's Certificate of Incorporation was approved to increase
the authorized shares of common stock from 6,666,666 to 50,000,000.

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

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

2.       New Accounting Pronouncements

In June 1998, the Financial Accounting Standards Board issued Statement of
Financial Accounting Standards No. 133, "Accounting for Derivative Instruments
and Hedging Activities" ("SFAS No. 133"). Among other provisions, SFAS No. 133
establishes accounting and reporting standards for derivative instruments and
for hedging activities. It also requires that an entity recognize all
derivatives as either assets or liabilities in the balance sheet and measure
those instruments at fair value. SFAS No. 133 is effective for financial
statements for fiscal years beginning after June 15, 2000. Management has not
determined the effect, if any, of adopting SFAS No. 133.

On December 3, 1999, the Securities and Exchange Commission (SEC) issued Staff
Accounting Bulletin No. 101 - "Revenue Recognition in Financial Statements" (SAB
No. 101). SAB No.101 provides the SEC staff's views on the recognition of
revenue. For the Company SAB No. 101 is required to be adopted by no later than
the fourth quarter of fiscal 2001. Management of the Company does not believe
that applying the accounting guidance of SAB No. 101 will have a material effect
on its financial position or results of operations.

In the fourth quarter of fiscal 2000, the Company implemented the provisions of
EITF No. 00-14, "Accounting for Sales Incentives", and reflects its sales
incentives as a reduction of sales.


                                       7

<PAGE>

3.       Commitments

The Company entered into a five year operating lease agreement for its facility
of approximately 8,500 square feet. The lease commenced on September 1, 2000 at
a base rent of $6,300 per month and expires in 2005.


ITEM 2.  MANAGEMENT'S DISCUSSION AND ANALYSIS OF RESULTS
OF OPERATIONS AND FINANCIAL CONDITION

The following discussion and analysis should be read in conjunction with the
financial statements and notes to the financial statements.

Results of Operations

The following table sets forth for the periods indicated certain financial
information derived from the Company's statements of operations. There can be no
assurance that trends in sales growth will continue in the future.

<TABLE>
<CAPTION>
                            Three Months Ended December 31,     Nine Months ended December 31,
                           ----------------------------------   ------------------------------
                                  2000             1999            2000               1999
                           -------------------------------------------------------------------

<S>                           <C>          <C>                  <C>             <C>
Net sales                     $ 3,001,116  $  2,136,502         $ 6,276,618     $  3,273,246

Cost of sales                   1,838,186     1,312,839           3,860,982        2,035,483

Gross profit                    1,162,930       823,663           2,415,636        1,237,763

Total operating expenses          924,311       815,768           2,117,642        1,360,232

Operating income (loss)           238,619         7,895             297,994         (122,469)

Interest Income                     1,793         5,199               6,335            7,618

Net income  (loss)                240,412        13,094             304,329         (114,851)
</TABLE>


Overview

The Company sells brand name fragrances and related products over the Internet
through a website located at www.fragrancenet.com. The Company purchases
products from 5-8 different suppliers and generally does not purchase the
products until they are ordered and paid for by the consumer. Payment is made by
credit card or by check and goods are not shipped to the customer until the
check clears and/or authorization from the credit card company is obtained. The
Company does not carry any significant level of inventory and its accounts
receivable are primarily from credit card companies.

On July 28, 1999, the Company completed a merger in which the Company was the
surviving entity and received $437,703 in cash, net of expenses, as a result of
the transaction (see Note 2 to the financial statements).

Net Sales

Net sales for the quarter ended December 31, 2000 increased $864,614 or 40% over
the comparable period in 1999 due to an increase in the number of customers.


                                       8
<PAGE>


Cost of Sales

The cost of sales as a percentage of sales remained constant at 61% in the
quarter ended 12/31/00 and in the quarter ended 12/31/99 and 62% for the nine
months ended 12/31/00 and 12/31/99.

Selling, General and Administrative Expenses

These expenses encompass the entire operations of the business from personnel
required to operate the office to website development and hosting of the
website. The expenses increased $108,543 in the quarter ended 12/31/00 when
compared to 12/31/99. As a percentage of sales, however, the expenses decreased
from 38% at 12/31/99 to 31% at 12/31/00. The percentage expense decrease is the
result of increased efficiencies and the scalability of the Company's
operations.

Operating Results

As a result of the Company's improved purchasing techniques and addition of new
suppliers, combined with enhanced pricing and scalability and efficiency of the
Company's operations, the Company experienced an operating profit of $238,619
for the quarter ended 12/31/00 compared to an operating profit of $7,895 for the
quarter ended 12/31/99, an increase of 29.2 times.

Income Taxes

Due to the utilization of prior net operating loss carryforwards, no income
taxes were provided for the nine months ended December 31, 2000.

The changes in the amounts for the nine months ended December 31, 2000, compared
with the nine months ended December 31, 1999, were for similar reasons as for
the quarters. Sales were up 92% for the period ended 12/31/00 when compared with
12/31/99. Cost of Sales decreased from 62.2% for the nine months ended 12/31/99
to 61.5% for the period ended 12/31/00. The Company experienced an operating
loss at 12/31/99 of $122,469 and an operating profit of $297,994 at 12/31/00.


Liquidity, Capital Resources and Changes in Financial Condition

The Company's cash was sufficient to enable it to meet its cash requirements
during the quarter ended December 31, 2000. The main reasons for capital are to
acquire merchandise for sale over the Internet through the Company website, for
the maintenance of the website and for advertising and promotion to bring
consumers to the website. The Company had cash and cash equivalents of $826,834
at December 31, 2000 as compared to $283,433 at March 31, 2000. The increase in
cash and cash equivalents of $543,401 during the nine months emded December 31,
2000 was due to cash generated from operating activities. We believe our cash
and cash equivalents and expected cash flows from operations will be sufficient
to meet our cash needs for the next 12 months.

At 12/31/00 the Company had working capital of $186,594 and cash and cash
equivalents of $826,834 as compared to working capital of $288,795 and cash and
cash equivalents of $729,754 at 12/31/99.

The merger effected by the Company on July 28, 1999 resulted in an increase in
the Company's cash of $437,703, net of related expenses.


Forward Looking Statements

Certain statements contained in "Management's Discussion and Analysis of Results
of Operations and Financial Condition" concerning future prospects of the
Company and cash flow requirements are forward looking statements, as defined in
the Private Securities Litigation Reform Act of 1995. Actual results may differ
materially from those projections in the forward looking statements which
statements involve risks and uncertainties, including but not limited to the
following: risks relating to the competitive nature of the markets for sale of
fragrances over the Internet.


                                       9
<PAGE>

ITEM 3.   QUANTITATIVE AND QUALITATIVE  DISCLOSURES ABOUT MARKET RISK

The Company has no risks which are required to be disclosed.
















                                       10

<PAGE>


ITEM 6.  EXHIBITS AND REPORTS ON FORM 8-K

(a)      Exhibits
         NONE

         (b)      Reports on Form 8-K:  None










                                       11

<PAGE>


                                   SIGNATURES


Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.



         Dated: February 9, 2001                 FRAGRANCENET.COM, INC.
                                                 ----------------------------
                                                 (Registrant)


                                                 By   /s/  JASON S. APFEL
                                                 ----------------------------
                                                 Jason S. Apfel
                                                 President and
                                                 Chief Executive Officer


                                                 By   /s/ DENNIS M. APFEL
                                                 ----------------------------
                                                 Dennis M. Apfel
                                                 Chief Financial Officer