-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, LRQtb1YnglvO2dcWqGuuUq3Xk8nf5rJtsrDW7yE18K3+YGntYUg23ojoqnkqxqCq Y92gSM7mSeT9B/ngpx9Apg== 0001144204-03-008451.txt : 20031215 0001144204-03-008451.hdr.sgml : 20031215 20031215150816 ACCESSION NUMBER: 0001144204-03-008451 CONFORMED SUBMISSION TYPE: 10-Q PUBLIC DOCUMENT COUNT: 5 CONFORMED PERIOD OF REPORT: 20031101 FILED AS OF DATE: 20031215 FILER: COMPANY DATA: COMPANY CONFORMED NAME: E COM VENTURES INC CENTRAL INDEX KEY: 0000880460 STANDARD INDUSTRIAL CLASSIFICATION: RETAIL-DRUG STORES AND PROPRIETARY STORES [5912] IRS NUMBER: 650026340 STATE OF INCORPORATION: FL FISCAL YEAR END: 0205 FILING VALUES: FORM TYPE: 10-Q SEC ACT: 1934 Act SEC FILE NUMBER: 000-19714 FILM NUMBER: 031054329 BUSINESS ADDRESS: STREET 1: 251 INTERNATIONAL PARKWAY CITY: SUNRISE STATE: FL ZIP: 33325 BUSINESS PHONE: 3058891600 MAIL ADDRESS: STREET 1: 251 INTERNATIONAL PARKWAY CITY: SUNRISE STATE: FL ZIP: 33325 FORMER COMPANY: FORMER CONFORMED NAME: PERFUMANIA INC DATE OF NAME CHANGE: 19930328 10-Q 1 v00992-10q.txt FORM 10-Q UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 FORM 10-Q Quarterly Report Under Section 13 or 15(d) of the Securities Exchange Act of 1934 For the Quarterly Period Ended November 1, 2003 Commission File Number 0-19714 E COM VENTURES, INC. State of Florida I.R.S. No. 65-0977964 251 International Parkway Sunrise, Florida 33325 Telephone Number: (954) 335-9100 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 whether the registrant is an accelerated filer (as defined in Rule 12b-2 of the Exchange Act). YES |_| NO |X| As of December 12, 2003, the registrant had 2,433,384 shares of its common stock, $0.01 par value, outstanding. TABLE OF CONTENTS E COM VENTURES, INC. AND SUBSIDIARIES PART I FINANCIAL INFORMATION ITEM 1 FINANCIAL STATEMENTS (unaudited)........................................3 Consolidated Condensed Balance Sheets...................................3 Consolidated Condensed Statements of Operations.........................4 Consolidated Condensed Statements of Cash Flows.........................5 Notes to Consolidated Condensed Financial Statements....................6 ITEM 2 MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS..............................................10 ITEM 3 QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISKS...........................................................16 ITEM 4 CONTROLS AND PROCEDURES................................................16 PART II OTHER INFORMATION ITEM 1 LEGAL PROCEEDINGS......................................................16 ITEM 2 CHANGES IN SECURITIES AND USE OF PROCEEDS..............................16 ITEM 3 DEFAULTS UPON SENIOR SECURITIES........................................16 ITEM 4 SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS....................16 ITEM 5 OTHER INFORMATION......................................................16 ITEM 6 EXHIBITS AND REPORTS ON FORM 8-K.......................................17 SIGNATURES ...................................................................18 2 PART I. FINANCIAL INFORMATION ITEM 1. FINANCIAL STATEMENTS E COM VENTURES, INC. AND SUBSIDIARIES CONSOLIDATED CONDENSED BALANCE SHEETS (Unaudited)
November 1, 2003 February 1, 2003 ---------------- ---------------- ASSETS: Cash and cash equivalents $ 1,556,632 $ 2,964,645 Trade receivables, net 909,636 744,456 Advances to suppliers 1,285,059 1,814,935 Inventories, net 76,779,825 68,717,163 Prepaid expenses and other current assets 1,402,921 1,169,524 Investments available for sale 121,660 210,607 ------------- ------------- Total current assets 82,055,733 75,621,330 Property and equipment, net 25,120,295 24,556,691 Goodwill, net 1,904,448 1,904,448 Other assets, net 982,055 1,340,155 ------------- ------------- Total assets $ 110,062,531 $ 103,422,624 ============= ============= LIABILITIES AND SHAREHOLDERS' EQUITY: Current liabilitites: Bank line of credit $ 35,501,284 $ 32,081,831 Current portion of long-term debt -- 31,860 Trade payables 22,869,254 20,905,826 Trade payables - related parties 20,740,358 13,331,718 Accrued expenses and other liabilities 5,151,634 5,168,634 Subordinated note payable, affiliate 4,000,000 100,000 Current portion of obligations under capital leases 277,120 981,784 Convertible notes payable -- 1,215,215 ------------- ------------- Total current liabilities 88,539,650 73,816,868 Long term portion of obligations under capital leases 7,812,372 7,752,315 ------------- ------------- Total liabilities 96,352,022 81,569,183 ------------- ------------- Commitments and contingencies Stockholders' equity: Preferred stock, $0.10 par value, 1,000,000 shares authorized, none issued -- -- Common stock, $.01 par value, 6,250,000 shares authorized; 3,279,458 and 3,215,761 shares issued in fiscal years 2003 and 2002, respectively 32,795 32,158 Additional paid-in capital 71,326,199 71,387,794 Treasury stock, at cost, 826,274 and 779,952 shares in fiscal years 2003 and 2002, respectively (7,602,539) (7,085,940) Accumulated deficit (49,607,661) (42,028,563) Notes and interest receivable from shareholder and officers (323,384) (311,604) Accumulated other comprehensive loss (114,901) (140,404) ------------- ------------- Total stockholders' equity 13,710,509 21,853,441 ------------- ------------- Total liabilities and stockholders' equity $ 110,062,531 $ 103,422,624 ============= =============
See accompanying notes to consolidated condensed financial statements. 3 E COM VENTURES, INC. AND SUBSIDIARIES CONSOLIDATED CONDENSED STATEMENTS OF OPERATIONS (Unaudited)
Thirteen Weeks Thirteen Weeks Thirty-Nine Weeks Thirty-Nine Weeks Ended Ended Ended Ended November 1, 2003 November 2, 2002 November 1, 2003 November 2, 2002 ------------------ ------------------ ------------------- ------------------ Net sales $ 48,057,940 $ 43,112,160 $ 135,693,738 $ 131,370,000 Cost of goods sold 30,078,345 25,209,920 80,325,921 76,139,529 ------------- ------------- ------------- ------------- Gross profit 17,979,595 17,902,240 55,367,817 55,230,471 ------------- ------------- ------------- ------------- Operating expenses: Selling, general and administrative 19,444,364 18,318,006 56,902,115 54,241,209 Provision for impairment of receivable from affiliate -- 1,941,369 -- 1,941,369 Depreciation and amortization 1,586,774 1,469,191 4,510,912 4,416,271 ------------- ------------- ------------- ------------- Total operating expenses 21,031,138 21,728,566 61,413,027 60,598,849 ------------- ------------- ------------- ------------- Loss from operations (3,051,543) (3,826,326) (6,045,210) (5,368,378) Interest expense, net (619,736) (423,517) (1,480,056) (1,507,719) Realized loss on investments (53,832) (709,662) (53,832) (709,662) ------------- ------------- ------------- ------------- Net loss $ (3,725,111) $ (4,959,505) $ (7,579,098) $ (7,585,759) ============= ============= ============= ============= Net loss per common share: Basic $ (1.51) $ (1.92) $ (3.07) $ (3.04) ============= ============= ============= ============= Diluted $ (1.51) $ (1.92) $ (3.07) $ (3.04) ============= ============= ============= ============= Weighted average number of common shares outstanding: Basic 2,468,336 2,583,331 2,469,547 2,495,840 ============= ============= ============= ============= Diluted 2,468,336 2,583,331 2,469,547 2,495,840 ============= ============= ============= =============
See accompanying notes to consolidated condensed financial statements. 4 E COM VENTURES, INC. AND SUBSIDIARIES CONSOLIDATED CONDENSED STATEMENTS OF CASH FLOWS (Unaudited)
Thirty-Nine Weeks Ended Thirty-Nine Weeks Ended November 1, 2003 November 2, 2002 ----------------------- ----------------------- Cash flows from operating activities: Net loss $ (7,579,098) $ (7,585,759) Adjustments to reconcile net loss to net cash provided by operating activities: Provision for impairment of receivable from affiliate -- 1,941,369 Provision for impairment of assets and store closing 364,930 440,470 Realized loss on investment 53,832 709,662 Depreciation and amortization 4,510,912 4,416,271 Change in operating assets and liabilities: Trade receivables (165,180) (149,424) Advances to suppliers 529,876 (2,279,184) Inventories (8,062,662) (12,548,633) Prepaid expenses and other current assets (245,177) 136,149 Due from affiliate -- (1,130,200) Other assets 183,936 154,314 Trade payables 1,963,428 2,453,392 Trade payables - related parties 12,408,640 14,674,666 Accrued expenses and other liabilities (17,000) (696,650) ------------ ------------ Net cash provided by operating activities 3,946,437 536,443 ------------ ------------ Cash flows from investing activities: Additions to property and equipment (4,850,652) (1,132,706) Proceeds from sale of investments 60,618 11,733 ------------ ------------ Net cash used in investing activities (4,790,034) (1,120,973) ------------ ------------ Cash flows from financing activities: Net borrowings under bank line of credit 3,419,453 5,998,280 Repayment of notes payable (31,860) (343,377) Repayment of subordinated notes (1,100,000) (150,000) Principal payments under capital lease obligations (1,059,237) (1,289,934) Net advances to shareholders and officers -- (431,081) Repayment of convertible notes payable (1,458,259) (2,758,157) Exercise of stock options 182,086 3,132 Purchases of treasury stock (516,599) (47,302) ------------ ------------ Net cash (used in ) provided by financing activities (564,416) 981,561 ------------ ------------ (Decrease) increase in cash and cash equivalents (1,408,013) 397,031 Cash and cash equivalents at beginning of period 2,964,645 1,600,787 ------------ ------------ Cash and cash equivalents at end of period $ 1,556,632 $ 1,997,818 ============ ============
See accompanying notes to consolidated condensed financial statements. 5 E COM VENTURES, INC. AND SUBSIDIARIES NOTES TO CONSOLIDATED CONDENSED FINANCIAL STATEMENTS (Unaudited) NOTE 1 - OPERATIONS AND BASIS OF PRESENTATION E Com Ventures, Inc., a Florida Corporation ("ECOMV"), is structured as a holding company that owns and operates Perfumania Inc. ("Perfumania"), a specialty retailer and wholesaler of fragrances and related products, and perfumania.com, inc., an Internet retailer of fragrance and other specialty items. Perfumania is incorporated in Florida and operates under the name Perfumania. 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 November 1, 2003 and November 2, 2002 were 234 and 242, respectively. The consolidated condensed financial statements include the accounts of ECOMV and subsidiaries (collectively, the "Company"). All material intercompany balances and transactions have been eliminated in consolidation. The accompanying unaudited consolidated condensed financial statements have been prepared in accordance with the rules and regulations of the Securities and Exchange Commission (the "SEC"). Certain information and note disclosures normally included in annual financial statements, prepared in accordance with generally accepted accounting principles in the United States of America ("GAAP"), have been condensed or omitted pursuant to those rules and regulations. The financial information presented herein, which is not necessarily indicative of results to be expected for the current fiscal year, reflect all adjustments, which, in the opinion of management, are necessary for a fair presentation of the interim unaudited consolidated condensed financial statements. It is suggested that these consolidated condensed financial statements be read in conjunction with the financial statements and the notes thereto included in our Annual Report on Form 10-K for the fiscal year ended February 1, 2003 filed with the SEC on April 30, 2003. As shown in the accompanying consolidated condensed financial statements, the Company has incurred a net loss of $7.6 million for the thirty-nine weeks period ended November 1, 2003. In addition, as of November 1, 2003, the Company has a seasonal working capital deficiency of $6.5 million and an accumulated deficit of $49.6 million. As of November 1, 2003, the Company has cash balances totaling approximately $1.6 million and an additional borrowing capacity of $4.4 million under its bank line of credit which is scheduled to expire in May 2004. Management believes that the cash balances, the available borrowing capacity and the expected ability to obtain suitable financing terms subsequent to May 2004, and the projected future operating results will generate sufficient liquidity to support the Company's working capital needs and capital expenditures for the next twelve months; however, there can be no assurance that management's plans and expectations will be successful. If the Company is unable to generate sufficient cash flows from operations in the future to service its obligations, refinance its existing debt and achieve improved operating results, the Company could face liquidity and working capital constraints, which could adversely impact future operations and growth and, thereby, may raise a question as to the Company's ability to remain a going concern. RECLASSIFICATION Certain fiscal year 2002 amounts have been reclassified to conform with the fiscal year 2003 presentation. NOTE 2 - ACCOUNTING FOR STOCK-BASED COMPENSATION The Company accounts for its stock-based compensation plans under Accounting Principles Board ("APB") Opinion No. 25, "Accounting for Stock Issued to Employees." Accordingly, because the grant price equals the market price on the date of the grant, no compensation expense is recognized by the Company for stock options issued pursuant to its stock-based compensation plans. The pro forma information below is based on provisions of Statement of Financial Accounting Standard ("SFAS") No. 123, "Accounting for Stock-Based Compensation," as amended by SFAS 148, "Accounting for Stock-Based Compensation - Transition and Disclosure," issued in December 2002. 6
Thirteen Weeks Ended Thirteen Weeks Ended Thirty-nine Weeks Ended Thirty-nine Weeks Ended November 1, 2003 November 2, 2002 November 1, 2003 Novmeber 2, 2002 -------------------- -------------------- ----------------------- ----------------------- Net loss as reported $(3,725,111) $(4,959,505) $(7,579,098) $(7,585,759) Add: Total fair value of stock based employee compensation expense not included in reported net loss, net (58,138) (127,836) (232,048) (335,519) ----------- ----------- ----------- ----------- Proforma net loss $(3,783,249) $(5,087,341) $(7,811,146) $(7,921,278) =========== =========== =========== =========== Proforma net loss per share: Basic $ (1.53) $ (1.97) $ (3.16) $ (3.17) =========== =========== =========== =========== Diluted $ (1.53) $ (1.97) $ (3.16) $ (3.17) =========== =========== =========== ===========
NOTE 3 - BANK LINE OF CREDIT Perfumania's senior secured credit facility with GMAC Commercial Credit LLC ("GMAC") provides for borrowings of up to $40 million, of which approximately $4.4 million was available at November 1, 2003, and supports normal working capital requirements and other general corporate purposes. The facility expires in May 2004. 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 less 0.75% to prime plus 1% or (b) LIBOR plus 1.75% - 3.50% depending on a financial ratio test. As of November 1, 2003, the credit facility bore interest at 3.6%. Borrowings are secured by a first lien on all assets of Perfumania and the assignment of a life insurance policy on Ilia Lekach, the Company's Chairman of the Board of Directors and Chief Executive Officer. The credit facility contains limitations on additional borrowings, capital expenditures and other items, and contains various covenants including maintenance of minimum net worth, and certain key ratios, as defined by the lender. As of November 1, 2003, Perfumania was not in compliance with its tangible net worth ratio, fixed charge ratio, leverage ratio and capital expenditures limitation. On December 11, 2003, Perfumania obtained a waiver from GMAC for all instances of non-compliance as of November 1, 2003. NOTE 4 - BASIC AND DILUTED LOSS PER COMMON SHARE Basic loss per common share has been computed by dividing net loss by the weighted average number of common shares outstanding during the period. Diluted loss per share includes, in periods in which they have a dilutive effect, the impact of common shares issuable upon exercise of stock options and other common stock equivalents. For all periods presented in the accompanying consolidated condensed statements of operations, incremental shares attributed to outstanding stock options and convertible notes were not included because the results would be anti-dilutive. NOTE 5 - COMPREHENSIVE INCOME (LOSS) Comprehensive income (loss) represents all non-owner changes in shareholders' equity and consists of the following:
Thirteen Weeks Thirteen Weeks Thirty-nine Weeks Thirty-nine Weeks Ended Ended Ended Ended November 1, 2003 November 2, 2002 November 1, 2003 November 2, 2002 ------------------- ------------------- ------------------- ------------------- Net loss $(3,725,111) $(4,959,505) $(7,579,098) $(7,585,759) Other comprehensive loss - net unrealized gain (loss) on investments 6,759 (830,009) 25,503 (241,334) ----------- ----------- ----------- ----------- Total comprehensive loss $(3,718,352) $(5,789,514) $(7,553,595) $(7,827,093) =========== =========== =========== ===========
7 NOTE 6 - CONVERTIBLE NOTES PAYABLE During the first thirty-nine weeks of fiscal year 2003, the Company paid approximately $1,458,000 to the holders of its Series C and D Convertible Notes, in accordance with an amended Convertible Note Option Repurchase Agreement. This represented approximately $1,215,000 of principal and $243,000 of premiums. The Convertible Notes were fully repaid on September 15, 2003. NOTE 7 - CONTINGENCIES The Company is involved in legal proceedings in the ordinary course of business. Management cannot presently predict the outcome of these matters. Management believes that the Company would have meritorious defenses and that the ultimate resolution of these matters should not have a material adverse effect on the Company's financial position or result of operations. NOTE 8 - RELATED PARTY TRANSACTIONS The Company's Chairman of the Board of Directors and Chief Executive Officer, Ilia Lekach, is also the Chairman of the Board of Directors and Chief Executive Officer of Parlux Fragrances, Inc. ("Parlux"). Purchases of product from Parlux was approximately $20,022,000 and $9,806,000 for the first thirty-nine weeks of fiscal years 2003 and 2002, respectively, representing approximately 23.0% and 11.5% of the Company's total inventory purchases, respectively. The amount due to Parlux at November 1, 2003 was approximately $19,758,000 including a $4,000,000 subordinated note payable bearing interest at prime plus 1% per annum and $15,758,000 of accounts payable. Accounts payable due to Parlux are non-interest bearing and are included in trade payables - related parties in the accompanying consolidated condensed balance sheets. During the first thirty-nine weeks of 2003, the Company purchased approximately $5,116,000 of merchandise from a company owned by a brother of Ilia Lekach, compared to $8,491,000 during the same period of the prior year. In addition, purchases of $3,044,000 during the first thirty-nine weeks of 2003 and $4,721,000 during the comparable period of the prior year were made from a company owned by another brother of Ilia Lekach. The amounts due to these companies at November 1, 2003 was approximately $2,484,000 and $1,047,000, respectively, and are included in trade payables - related parties in the accompanying consolidated condensed balance sheets. In the prior comparable period the amounts due to these companies was $2,951,000 and $1,961,000, respectively. Purchases from these brothers did not include products manufactured or distributed by Parlux. Purchases from related parties are on an arms-length basis with prices and/or terms generally better than would otherwise be available from third parties. During the first thirty-nine weeks of 2003, the Company purchased approximately $4,392,000 of merchandise from Quality King Distributors, Inc. ("Quality King"), and sold approximately $8,715,000 of different merchandise to Quality King. In the prior comparable period, there were $887,000 of purchases from Quality King and $1,000,000 of merchandise sold to Quality King. Quality King's Chairman and Chief Executive Officer, Glenn Nussdorf, and his brother Stephen Nussdorf, the President of the fragrance division of Quality King (collectively, the "Nussdorfs"), have disclosed in filings with the SEC they collectively own approximately 407,000 shares of common stock representing approximately 16% of the Company's outstanding shares. The Nussdorfs have also requested the Company's Board of Directors to approve the potential acquisition of up to a total of 40% of the Company's outstanding shares, and the request was approved by the Board. On September 15, 2003, the Company was advised that Stephen Nussdorf had provided personal loans to Ilia Lekach aggregating $3.5 million at a 6% interest rate payable in 5 years. On December 8, 2003, Stephen Nussdorf loaned $1,000,000 to Ilia Lekach pursuant to a demand note that bears interest at 6% and is due on demand on or after January 5, 2004. After January 5, 2004 the interest rate increases to 10%. The note can be repaid at any time prior to January 5, 2004. The note if not repaid is convertible as to principle and interest into the Company's common stock owned by Ilia Lekach at a price of $12.70 per share. The Company is not, in any manner, a guarantor to these loans. On September 16, 2003, the Company entered into non-binding letters of intent to acquire two subsidiaries of Quality King. In addition, the Company announced that in anticipation of its potential acquisition the Company and Quality King have agreed to use their reasonable efforts to coordinate purchasing activities upon terms and conditions to be agreed upon by the parties. During the thirteen weeks ended November 1, 2003, the Company sold 327,000 shares of Nimbus Group, Inc. common stock in open market transactions. As of November 1, 2003, the Company owned approximately 676,000 shares of Nimbus Group, Inc. ("Nimbus") common stock representing approximately 9% of the total outstanding common stock of Nimbus. The investment in Nimbus appears on the Company's consolidated condensed balance 8 sheets as investments available for sale. Ilia Lekach previously served as Chairman of the Board and Interim Chief Executive Officer of Nimbus. Notes and interest receivable from Ilia Lekach were approximately $323,000 as of November 1, 2003. The notes are unsecured, mature in five years and bear interest at prime plus 1% per annum. Principal and interest are payable in full at maturity. NOTE 9 - NON CASH TRANSACTIONS Supplemental disclosures of non-cash investing and financing activities are as follows:
For the Thirty-nine Weeks Ended ------------------------------------- November 1, 2003 November 2, 2002 ---------------- ---------------- Equipment under capital leases $ 414,630 $ 429,993 Conversion of debt and accrued interest payable in exchange for common stock $ -- $ 517,367 Decrease in accounts payable in exchange for subordinated notes payable - affiliate $ 5,000,000 $ 3,000,000 Unrealized gain (loss) on investments available for sale $ 25,503 $ (241,334) Cash paid during the period for: Interest $ 1,493,101 $ 1,714,823
NOTE 10 - SEGMENT INFORMATION The Company operates in two industry segments, specialty retail sales and wholesale distribution of fragrances and related products. Financial information for these segments is summarized in the following table.
Thirteen Weeks Thirteen Weeks Thirty-nine Weeks Thirty-nine Weeks Ended Ended Ended Ended November 1, 2003 November 2, 2002 November 1, 2003 November 2, 2002 ---------------- ---------------- ---------------- ---------------- Net sales to external custormers: Retail $ 41,910,440 $ 43,109,026 $ 124,254,871 $ 129,268,689 Wholesale 6,147,500 3,134 11,438,867 2,101,311 ------------- ------------- ------------- ------------- $ 48,057,940 $ 43,112,160 $ 135,693,738 $ 131,370,000 ============= ============= ============= ============= Gross profit: Retail $ 17,394,333 $ 18,006,642 $ 54,144,300 $ 54,795,420 Wholesale 585,262 (104,402) 1,223,517 435,051 ------------- ------------- ------------- ------------- $ 17,979,595 $ 17,902,240 $ 55,367,817 $ 55,230,471 ============= ============= ============= =============
9 ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS RESULTS OF OPERATIONS COMPARISON OF THE THIRTEEN-WEEKS ENDED NOVEMBER 1, 2003 WITH THE THIRTEEN-WEEKS ENDED NOVEMBER 2, 2002. Net sales increased 11.5% from $43.1 million in the thirteen-weeks ended November 2, 2002 to $48.1 million in the thirteen-weeks ended November 1, 2003. The increase in sales was primarily due to an increase in wholesale sales to $6.1 million in the thirteen weeks ended November 1, 2003, offset by a 2.8% decrease in retail sales from $43.1 million in the thirteen weeks ended November 2, 2002 to $41.9 million in the thirteen weeks ended November 1, 2003. There were no wholesale sales during the thirteen weeks ended November 2, 2002. The decrease in retail sales is due to a 3.0% decrease in comparable store sales as well as a 3.0% decrease in the average number of stores operated, which was 234 during the thirteen-weeks ended November 1, 2003 versus 241 in the thirteen-weeks ended November 2, 2002. The decrease in comparable store sales were partially a result of the relocation of our distribution facility and a weak retail industry. Gross profit increased 0.4% from $17.9 million in the thirteen-weeks ended November 2, 2002 (41.5% of net sales) to $18.0 million in the thirteen-weeks ended November 1, 2003 (37.4% of net sales). The decrease in the gross profit as a percentage of net sales is due to the increase in wholesale sales during the thirteen weeks ended November 1, 2003 compared with the thirteen weeks ended November 2, 2002. Wholesale sales yield significantly lower gross margins than retail sales. Selling, general and administrative expenses increased 6.1% from $18.3 million in the thirteen-weeks ended November 2, 2002 to $19.4 million in the thirteen-weeks ended November 1, 2003. The increase is attributable primarily to higher payroll and employee related costs compared with 2002. Depreciation and amortization expense was $1.6 million in the thirteen-week period ended November 1, 2003 compared to $1.5 million in the thirteen-week period ended November 2, 2002. Provision for impairment of receivable from affiliate was $1.9 million during the thirteen-weeks ended November 2, 2002, and represented a provision for a receivable which management deemed unlikely to be collectible. Interest expense, net increased by 46.3% from $0.4 million for the thirteen-weeks ended November 2, 2002 to $0.6 million for the thirteen-weeks ended November 1, 2003. The increase results from the Company's new corporate office and distribution facility which has been recorded as a capitalized lease, offset by lower interest rates and a reduction in the outstanding average balance of convertible notes payable in the thirteen-weeks ended November 1, 2003 compared to the thirteen-weeks ended November 2, 2002. Realized loss on investments of approximately $0.1 million during the thirteen weeks ended November 1, 2003 was due to the resale of 327,000 shares of Nimbus Group, Inc. common stock. Realized loss on investments of $0.7 million during the thirteen-weeks ended November 2, 2002 was due to a decline in the market price on Nimbus Group, Inc. common stock resulting in the Company recording a non-cash charge. As a result of the foregoing, we had a net loss of $3.7 million, or ($1.51) per diluted share, in the thirteen-weeks ended November 1, 2003 compared to a net loss of $5.0 million, or $(1.92) per diluted share in the thirteen-weeks ended November 2, 2002. EBITDA(a), defined as net income (loss) less depreciation, amortization and interest expense, was ($1.5) million in the thirteen-weeks ended November 1, 2003 compared with ($3.1) million in the thirteen-weeks ended November 2, 2002. 10 THIRTEEN WEEKS ENDED ------------------------------------ EBITDA Reconciliation (a): November 1, 2003 November 2, 2002 - -------------------------- ---------------- ---------------- Net loss $(3,725,111) $(4,959,505) Interest expense 619,736 423,517 Depreciation and amortization 1,586,774 1,469,191 ----------- ----------- EBITDA $(1,518,601) $(3,066,797) =========== =========== In order to fully assess our financial operating results, management believes that EBITDA is an appropriate measure of evaluating our operating performance, because it is an indicator of the profitability and performance of our core operations and reflects the changes in our operating results. However, these measures should be considered in addition to, not as a substitute, or superior to, net income (loss), cash flows, or other measures of financial performance prepared in accordance with GAAP. EBITDA should not be considered as an alternative to, or more meaningful than, net income (loss) as determined in accordance with GAAP, or as a measure of liquidity. Because EBITDA is not calculated in the same manner by all companies, the representation herein may not be comparable to other similarly titled measures of other companies. COMPARISON OF THE THIRTY-NINE WEEKS ENDED NOVEMBER 1, 2003 WITH THE THIRTY-NINE WEEKS ENDED NOVEMBER 2, 2002. Net sales increased 3.0% from $131.4 million in the thirty-nine weeks ended November 2, 2002 to $135.7 million in the thirty-nine weeks ended November 1, 2003. The increase in net sales was principally due to a $9.3 million increase in wholesales from $2.1 million in the thirty-nine weeks ended November 2, 2002 to $11.4 million in the thirty-nine weeks ended November 1, 2003, offset by a 3.9% decrease in retail sales from $129.3 million in the thirty-nine weeks ended November 2, 2002 to $124.3 million in the thirty-nine weeks ended November 1, 2003. The decrease in retail sales was due to a 3.0% decrease in comparable store sales as well as a 2.5% decrease in the average number of stores operated, which was 236 during the thirty-nine weeks ended November 1, 2003 versus 242 in the thirty-nine weeks ended November 2, 2002. The decrease in comparable store sales were partially a result of the relocation of our distribution facility and a weak retail industry. Gross profit increased 0.2% from $55.2 million in the thirty-nine weeks ended November 2, 2002 (42.0% of net sales) to $55.4 million in the thirty-nine weeks ended November 1, 2003 (40.8% of net sales). The decrease in the gross profit as a percentage of net sales is due to the increase in wholesale sales during the thirty-nine weeks ended November 1, 2003 compared with the thirty-nine weeks ended November 2, 2002. Wholesale sales yield significantly lower gross margins than retail sales. Selling, general and administrative expenses increased 4.9% from $54.2 million in the thirty-nine weeks ended November 2, 2002 to $56.9 million in the thirty-nine weeks ended November 1, 2003. The increase is attributable primarily to higher payroll and employee related costs. Depreciation and amortization expense increased 2.1% from $4.4 million in the thirty-nine weeks ended November 2, 2002 to $4.5 million in the thirty-nine weeks ended November 1, 2003. Provision for impairment of receivable from affiliate was $1.9 million during the thirty-nine weeks ended November 2, 2002, and represented a provision for a receivable which management deemed unlikely to be collectible. Interest expense, net was $1.5 million for both the thirty-nine weeks ended November 1, 2003 and November 2, 2002. Realized loss on investments of $0.7 million during the thirty-nine weeks ended November 2, 2002 was due to a decline in the market price on Nimbus Group, Inc. common stock resulting in the Company recording a non-cash charge. During the thirty-nine weeks ended November 1, 2003 the Company had a net loss of $7.6 million or ($3.07) per diluted share, compared to a net loss of $7.6 million or ($3.04) per diluted share during the thirty-nine weeks ended November 2, 2002. 11 EBITDA, defined as net income (loss) less depreciation, amortization and interest expense was ($1.6) million in the thirty-nine weeks ended November 1, 2003 compared with ($1.7) million in the thirty-nine weeks ended November 2, 2002. THIRTY-NINE WEEKS ENDED ---------------------------------------- EBITDA Reconciliation (a): November 1, 2003 November 2, 2002 - -------------------------- ---------------- ---------------- Net loss $(7,579,098) $(7,585,759) Interest expense 1,480,056 1,507,719 Depreciation and amortization 4,510,912 4,416,271 ----------- ----------- EBITDA $(1,588,130) $(1,661,769) =========== =========== In order to fully assess our financial operating results, management believes that EBITDA is an appropriate measure of evaluating our operating performance, because it is an indicator of the profitability and performance of our core operations and reflects the changes in our operating results. However, these measures should be considered in addition to, not as a substitute, or superior to, net income (loss), cash flows, or other measures of financial performance prepared in accordance with GAAP. EBITDA should not be considered as an alternative to, or more meaningful than, net income (loss) as determined in accordance with GAAP, or as a measure of liquidity. Because EBITDA is not calculated in the same manner by all companies, the representation herein may not be comparable to other similarly titled measures of other companies. LIQUIDITY AND CAPITAL RESOURCES Our principal capital requirements are to fund Perfumania's inventory purchases, renovate existing stores, and selectively open new stores. For the first thirty-nine weeks of fiscal 2003, these capital requirements generally were satisfied through borrowings under our credit facility and cash flows from operations. At November 1, 2003, we had negative working capital of approximately $6.5 million compared to working capital of approximately $1.8 million at February 1, 2003. The decrease was primarily due to the net loss during the current period, increased purchases of property plant and equipment and lower long-term debt. Net cash provided by operating activities during the current period was approximately $4.0 million compared with approximately $0.5 million for the same period in the prior year. The change in cash provided by operating activities was principally a result of the net change in our inventories and accounts payable. Net cash used in investing activities was approximately $4.8 million, compared with approximately $1.1 million for the same period in the prior year. Investing activities generally represent spending for the renovation of existing stores and new store openings. Approximately $1.1 million of the $4.8 million used in investing activities is attributable to the relocation of the Company's corporate office and distribution center to Sunrise, Florida in the second quarter of fiscal year 2003. The balance is due to the opening of 7 new stores and the remodel/relocation of 12 stores. Net cash used in financing activities during the current period was approximately $0.6 million compared with net cash used of approximately $1.0 million for the same time period in the prior year. The change was due primarily to lower borrowings on our bank line of credit offset by lower repayments of convertible notes payables. Perfumania's senior secured credit facility with GMAC Commercial Credit LLC provides for borrowings of up to $40 million, of which approximately $4.4 million was available at November 1, 2003, and supports normal working capital requirements and other general corporate purposes. The facility expires in May 2004. 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 less 0.75% to prime plus 1% or (b) LIBOR plus 1.75% - 3.50% depending on a financial ratio test. As of November 1, 2003, the credit facility bore interest at 3.6%. Borrowings are secured by a first lien on all assets of Perfumania and the assignment of a life insurance policy on Ilia Lekach. The credit facility contains limitations on additional borrowings, capital expenditures and other items, and contains various covenants including maintenance of minimum net worth, and certain key ratios, as defined by the lender. As of November 1, 2003, Perfumania was not in compliance with its tangible net worth ratio, fixed charge ratio and leverage ratio. On December 11, 2003, Perfumania obtained a waiver from GMAC for all instances of non-compliance as of November 1, 2003. 12 As shown in the accompanying consolidated condensed financial statements, we have incurred a net loss of $7.6 million for the thirty-nine weeks period ended November 1, 2003. In addition, as of November 1, 2003, we had a seasonal working capital deficiency of $6.5 million and an accumulated deficit of $49.6 million. As of November 1, 2003, we had cash balances totaling approximately $1.6 million and an additional borrowing capacity of $4.4 million under our bank line of credit which is scheduled to expire in May 2004. Management believes that the cash balances, the available borrowing capacity and the expected ability to obtain suitable financing terms subsequent to May 2004, and the projected future operating results will generate sufficient liquidity to support our working capital needs and capital expenditures for the next twelve months; however, there can be no assurance that management's plans and expectations will be successful. If we are unable to generate sufficient cash flows from operations in the future to service our obligations, refinance our existing debt and achieve improved operating results, we could face liquidity and working capital constraints, which could adversely impact future operations and growth and, thereby, may raise a question as to our ability to remain a going concern. During the thirty-nine weeks ended November 1, 2003, Perfumania closed 11 stores and opened 7 new stores. At November 1, 2003, Perfumania operated 234 stores compared to 242 stores as of November 2, 2002. Management's focus is on improving the profitability of existing stores and plans to open a maximum of 3 new stores for the remainder of fiscal year 2003. RECENT ACCOUNTING STANDARDS In May 2003, the Financial Accounting Standards Board ("FASB") issued Statement of Financial Accounting Standards ("SFAS") No. 150, "Accounting for Certain Financial Instruments with Characteristics of both Liabilities and Equity." This statement establishes standards for how an issuer classifies and measures certain financial instruments with characteristics of both liabilities and equity. It requires that an issuer classify a financial instrument that is within its scope as a liability (or asset in some circumstance). Many of those instruments were previously classified as equity. The statement is effective for financial instruments entered into or modified after May 31, 2003, and otherwise is effective at the beginning of the first interim period beginning after December 15, 2003. The adoption of SFAS No. 150 did not have a material impact on our consolidated financial position, results of operations or disclosures. In April 2003, the FASB issued SFAS No. 149, "Amendment of Statement 133 on Derivative and Hedging Activities." In general, this statement amends and clarifies accounting for derivative instruments, including certain derivative instruments embedded in other contracts, and for hedging activities under SFAS No. 133. This statement is effective for contracts entered into or modified after June 30, 2003, and for hedging relationships designated after June 30, 2003. The adoption of SFAS No. 149 did not have a material impact on our consolidated financial position, results of operations or disclosures. CRITICAL ACCOUNTING POLICIES Our consolidated condensed financial statements have been prepared in accordance with accounting principles generally accepted in the United States of America. Presentation 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 those significant accounting policies can be found in our 2002 Annual Report on Form 10-K, in the notes to the Consolidated Financial Statements, Note 2. FORWARD LOOKING STATEMENTS Some of the statements in this quarterly report, 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 or 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 general economic conditions, 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- 13 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 report. Copies of our SEC filings are available form 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. RISK FACTORS We could face liquidity and working capital constraints if we are unable to generate sufficient cash flows from operations Perfumania's $40 million credit facility with GMAC expires in May 2004. As of November 1, 2003, approximately $35.5 million was outstanding under the credit facility. The credit facility contains limitations on additional borrowings, capital expenditures and other items, and contains various covenants including maintenance of minimum net worth, and certain key ratios, as defined by the lender. As of November 1, 2003, Perfumania was not in compliance with its tangible net worth ratio, fixed charge ratio, leverage ratio and capital expenditures limitation. On December 11, 2003, Perfumania obtained a waiver from GMAC for all instances of non-compliance as of November 1, 2003. If we are unable to generate sufficient cash flows from operations to service our obligations and refinance the credit facility on acceptable terms, we could face liquidity and working capital constraints, which could adversely impact our future operations and growth. We 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 to us. 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 third and fourth fiscal quarters than in the first and second fiscal quarters. Purchases of fragrances as gift items increase during the Christmas 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. 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. 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. 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 if there is a material change in Perfumania's ability to obtain necessary merchandise, our results of operations could be seriously harmed. Perfumania needs to successfully manage its growth Perfumania may not be able to sustain the growth in revenues that it has achieved historically. 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 14 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; 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. 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 intense 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. Perfumania's business has been affected by the economic downturn Sales levels at Perfumania's retail stores have been adversely affected during fiscal year 2003 by an economic downturn in the United States. Due to higher unemployment, stagnant business growth rates and the continuing poor performance of the stock market, consumer spending in general and especially on discretionary items, has declined. The length of this economic downturn may adversely impact our business, the results of our operations and our liquidity in the future. 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. We can give no assurance that we will be able to consummate the acquisitions of the two subsidiaries of Quality King with whom we entered into non-binding letters of intent on September 16, 2003. 15 ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISKS During the quarter ended November 1, 2003, there have been no material changes in the information about our market risks as of February 1, 2003 as set forth in Item 7A of the 2002 Form 10-K. ITEM 4. CONTROLS AND PROCEDURE Our Chief Executive Officer and Chief Financial Officer have concluded, based on their evaluation as of November 1, 2003 that our disclosure controls and procedures are effective for gathering, analyzing and disclosing the information we are required to disclose in our reports filed under the Securities Exchange Act of 1934. There have been no changes in our internal control over financial reporting during the quarter ended November 1, 2003 that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting. PART II. OTHER INFORMATION ITEM 1. LEGAL PROCEEDINGS Not applicable. ITEM 2. CHANGES IN SECURITIES AND USE OF PROCEEDS Not applicable. ITEM 3. DEFAULTS UPON SENIOR SECURITIES Not applicable. ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS Not applicable. ITEM 5. OTHER INFORMATION Not applicable. ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K (a) Exhibits Index to Exhibits Exhibit No. - ----------- 31.1 Certification by Chief Executive Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002. 31.2 Certification by Chief Financial Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002. 32.1 Certification by Chief Executive Officer pursuant to Section 906 of the Sarbanes-Oxley Act of 2002. 32.2 Certification by Chief Financial Officer pursuant to Section 906 of the Sarbanes-Oxley Act of 2002. 16 (b) Reports on Form 8-K. We filed a current report on Form 8-K with the SEC dated September 15, 2003, to report under item 12, that we issued a news release to report our earnings for the thirteen weeks ended August 2, 2003. We filed a current report on Form 8-K with the SEC dated September 16, 2003 to report, under item 5 and 7, that we entered into non-binding letters of intent to acquire all of the outstanding stock of a fragrance retailer and certain assets of a fragrance wholesaler, both of which are owned by Quality King. We filed a current report on Form 8-K with the SEC dated October 2, 2003 to report, under item 5, that a member of our Board of Directors resigned. We filed a current report on Form 8-K with the SEC dated October 28, 2003 to report, under item 5, that we appointed a new member to our Board of Directors. 17 E COM VENTURES, INC. SIGNATURES Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused the report to be signed on its behalf by the undersigned, thereunto duly authorized. E COM VENTURES, INC. (Registrant) Date: December 12, 2003 By: /S/ ILIA LEKACH ------------------------------------- Ilia Lekach Chairman of the Board and Chief Executive Officer (Principal Executive Officer) By: /S/ A. MARK YOUNG ------------------------------------- A. Mark Young Chief Financial Officer (Principal Financial and Accounting Officer) 18 EX-31.1 3 v00992-ex311.txt CERTIFICATION Exhibit 31.1 I, Ilia Lekach, certify that: I have reviewed this quarterly report on Form 10-Q of E Com Ventures, Inc.; 1. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report; 2. Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report; 3. The registrant's other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) for the registrant and have: (a) Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared; (b) Evaluated the effectiveness of the registrant's disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and (c) Disclosed in this report any change in the registrant's internal control over financial reporting that occurred during the registrant's most recent fiscal quarter that has materially affected, or is reasonably likely to materially affect, the registrant's internal control over financial reporting; and 4. The registrant's other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant's auditors and the audit committee of the registrant's board of directors (or persons performing the equivalent functions): (a) All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant's ability to record, process, summarize and report financial information; and (b) Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant's internal control over financial reporting. Date: December 12, 2003 By: /s/ Ilia Lekach -------------------------------- Ilia Lekach Chief Executive Officer 19 EX-31.2 4 v00992-ex312.txt CERTIFICATION Exhibit 31.2 I, A. Mark Young, certify that: I have reviewed this quarterly report on Form 10-Q of E Com Ventures, Inc.; 1. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report; 2. Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report; 3. The registrant's other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) for the registrant and have: (a) Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared; (b) Evaluated the effectiveness of the registrant's disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and (c) Disclosed in this report any change in the registrant's internal control over financial reporting that occurred during the registrant's most recent fiscal quarter that has materially affected, or is reasonably likely to materially affect, the registrant's internal control over financial reporting; and 4. The registrant's other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant's auditors and the audit committee of the registrant's board of directors (or persons performing the equivalent functions): (a) All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant's ability to record, process, summarize and report financial information; and (b) Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant's internal control over financial reporting. Date: December 12, 2003 By: /s/ A. Mark Young -------------------------------- A. Mark Young Chief Financial Officer 20 EX-32.1 5 v00992-ex321.txt CERTIFICATION Exhibit 32.1 CERTIFICATIONS PURSUANT TO 18 U.S.C. SECTION 1350 AS ADOPTED PURSUANT TO SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002 In connection with the Quarterly Report of E Com Ventures, Inc. (the "Company") on Form 10-Q for the period ending November 1, 2003 as filed with the Securities and Exchange Commission on December 15, 2003 (the "Report"), I, Ilia Lekach, Chief Executive Officer of the Company, certify, pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, that, to my knowledge: (1) The report fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934; and (2) The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company. /s/ Ilia Lekach - ----------------------------------- Ilia Lekach Chief Executive Officer December 12, 2003 21 EX-32.2 6 v00992-ex322.txt CERTIFICATION Exhibit 32.2 CERTIFICATIONS PURSUANT TO 18 U.S.C. SECTION 1350 AS ADOPTED PURSUANT TO SECTION 906 OF THE SARBANES-OXLEY ACTO OF 2002 In connection with the Quarterly Report of E Com Ventures, Inc. (the "Company") on Form 10-Q for the period ending November 1, 2003 as filed with the Securities and Exchange Commission on December 15, 2003 (the "Report"), I, A. Mark Young, Chief Financial Officer of the Company, certify, pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, that, to my knowledge: (1) The report fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934; and (2) The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company. /s/ A. Mark Young - ----------------------------------- A. Mark Young Chief Financial Officer December 12, 2003 -----END PRIVACY-ENHANCED MESSAGE-----