8-K/A

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 8-K/A

(Amendment No. 1)

CURRENT REPORT

Pursuant to Section 13 OR 15(d) of The Securities Exchange Act of 1934

Date of Report (Date of earliest event reported): August 11, 2008

Perfumania Holdings, Inc.

(Exact Name of Registrant as Specified in Charter)

Florida	0-19714	65-0977964
(State or Other Jurisdiction of Incorporation	(Commission File Number)	(IRS Employer Identification No.)

35 Sawgrass Drive, Suite 2

Bellport, NY 11713

(Address of Principal Executive Offices)(Zip Code)

(631) 866-4100

(Registrant’s telephone number, including area code)

(Former Name or Former Address, if Changed Since Last Report)

Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions (see General Instruction A.2. below):

¨ Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)

¨ Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)

¨ Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))

¨ Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))

Explanatory Note

As reported on the current report on Form 8-K filed on August 11, 2008 (the “Initial Form 8-K”), on August 11, 2008, Perfumania Holdings, Inc. (“Perfumania”) completed the acquisition of Model Reorg, Inc. (“Model Reorg”) when Model Reorg merged into Perfumania’s wholly owned subsidiary, Model Reorg Acquisition LLC. The information reported in the Initial Form 8-K is incorporated herein by reference.

As permitted by Item 9.01(a)(4) of Form 8-K, the Initial Form 8-K did not include certain financial statement and pro forma financial information. This Form 8-K/A amends the Initial Form 8-K to include the financial statements of Model Reorg and the pro forma financial information required by Items 9.01(a) and 9.01(b) of Form 8-K, respectively. Except where explicitly stated otherwise, the notes to the financial statements and pro forma financial information included herein speak as of July 31, 2008, before the closing of the Merger. Until August 8, 2008, Perfumania’s corporate name was E Com Ventures, Inc.

Item 9.01. Financial Statements and Exhibits.

(a) Financial Statements of Businesses Acquired.

The audited consolidated financial statements of Model Reorg as of October 31, 2007 and 2006 and for the years ended October 31, 2007, 2006 and 2005, including the report of its independent registered public accounting firm, BDO Seidman, LLP, were previously filed on July 25, 2008 at pages F-37 through F-52 of the definitive proxy statement (File No. 000-19714), are filed herewith as Exhibit 99.2 and are incorporated herein by reference. The unaudited consolidated financial statements of Model Reorg as of July 31, 2008 and for the three months and nine months ended July 31, 2008 and 2007 are attached hereto as Exhibit 99.3 and incorporated herein by reference.

(b) Pro Forma Financial Information.

The unaudited pro forma combined condensed financial information for Perfumania and Model Reorg required by Article 11 of Regulation S-X is attached hereto as Exhibit 99.4 and incorporated herein by reference.

(d) Exhibits.

See the Exhibit Index attached to this Current Report on Form 8-K, which is incorporated herein by reference.

SIGNATURE

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 hereunto duly authorized.

	Perfumania Holdings, Inc.
Date: October 27, 2008	By:	/s/ Donna Dellomo
		Donna Dellomo Chief Financial Officer

EXHIBIT INDEX

Exhibit No.	Description
2.1	Agreement and Plan of Merger, dated as of December 21, 2007, by and among E Com Ventures, Inc., Model Reorg, Inc., the shareholders of Model Reorg, Inc., and Model Reorg Acquisition LLC (“Merger Agreement”) (Incorporated by reference to Exhibit 2.1 to Perfumania’s Current Report on Form 8-K filed December 21, 2007).
2.2	First Amendment to Merger Agreement, dated as of July 8, 2008 (Incorporated by reference to the Exhibit 2.2 to Perfumania’s Current Report on Form 8-K filed July 11, 2008).
99.1	Press Release, dated August 8, 2008, issued by Perfumania (Previously filed as the same numbered exhibit to the Initial Form 8-K).
99.2	Audited consolidated financial statements of Model Reorg, Inc. as of October 31, 2007 and 2006 and for the years ended October 31, 2007, 2006 and 2005, including the report of its independent registered public accounting firm, BDO Seidman, LLP (Incorporated by reference to pages F-37 through F-52 of Perfumania’s definitive proxy statement (File No. 000-19714) filed July 25, 2008).
99.3	Unaudited consolidated financial statements of Model Reorg, Inc. as of July 31, 2008 and October 31, 2007, and for the three months and nine months ended July 31, 2008 and 2007.*
99.4	Unaudited pro forma combined condensed financial information.*

* Filed herewith.

EX-99.3

Exhibit 99.3

Unaudited Condensed Consolidated Financial Statements of Model Reorg, Inc.
Balance Sheets as of July 31, 2008 and October 31, 2007	2
Statements of Operations for the three and nine months ended July 31, 2008 and 2007	3
Statements of Cash Flows for the nine months ended July 31, 2008 and 2007	4
Notes to Condensed Consolidated Financial Statements	5-10

1

Model Reorg, Inc. and Subsidiaries

Unaudited Condensed Consolidated Balance Sheets

(In Thousands)

	July 31, 2008
	(unaudited)			October 31, 2007
Assets
Current:
Cash	$	1,012		$	2,988
Accounts receivable—net of allowances of $129 and $269		27,036			56,960
Receivables from an affiliate		44,482			25,484
Inventories, net		205,382			218,206
Advances to suppliers for future purchases		104			1,132
Prepaids and other		5,258			7,554
Total current assets		283,274			312,324
Property and equipment, at cost, less accumulated depreciation		2,958			2,496
Goodwill		20,434			20,434
Other assets, net		12,608			9,734
	$	319,274		$	344,988
Liabilities and Stockholders’ Equity
Current
Accounts payable	$	29,730		$	30,882
Accounts payable—affiliates		—			2,152
Accrued expenses		6,551			9,359
Other current liabilities		3,260			2,548
Current maturities of long-term debt		205			209
Total current liabilities		39,746			45,150
Long-term debt and other		113,563			138,914
Payable to affiliate		73,263			76,313
Total liabilities		226,572			260,377
Commitments and Contingencies
Stockholders’ equity
Common stock, no par value—200 shares authorized 111 shares issued at October 31, 2007 and July 31, 2008		1			1
Additional paid-in capital		13,905			13,905
Retained earnings		80,271			72,180
Treasury stock—14 shares at cost		(1,475	)		(1,475	)
Total stockholders’ equity		92,702			84,611
	$	319,274		$	344,988

See accompanying notes to condensed consolidated financial statements

2

Model Reorg, Inc. and Subsidiaries

Unaudited Condensed Consolidated Statements of Operations

(In Thousands)

	Three Months Ended				Nine Months Ended
	July 31, 2008		July 31, 2007		July 31, 2008		July 31, 2007
Net revenues, unaffiliated	$	55,833	$	62,564	$	213,037	$	218,708
Net revenues, affiliated		7,952		4,989		27,336		16,177
Total net revenues		63,785		67,553		240,373		234,885
Cost of goods sold, unaffiliated		41,259		45,116		152,539		154,825
Cost of goods sold, affiliated		4,757		2,958		19,488		12,645
Gross profit		17,769		19,479		68,346		67,415
Selling, warehouse, delivery and administrative expenses		13,558		13,741		47,221		44,071
Income from operations		4,211		5,738		21,125		23,344
Interest expense		1,975		2,978		7,275		9,083
Income before income taxes		2,236		2,760		13,850		14,261
Income taxes		899		1,104		5,759		5,704
Net income	$	1,337	$	1,656	$	8,091	$	8,557

See accompanying notes to condensed consolidated financial statements

3

Model Reorg, Inc. and Subsidiaries

Unaudited Condensed Consolidated Statements of Cash Flows

(In Thousands)

	Nine Months Ended July 31,
	2008			2007
Cash flows from operating activities:
Net income	$	8,091		$	8,557
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation and amortization		1,174			1,159
Provision for losses on accounts receivable		50			3
Changes in assets and liabilities:
Decrease (increase) in:
Accounts receivable		29,874			20,839
Receivables from affiliate		(18,998	)		(5,503	)
Inventories		12,824			131
Advances to suppliers for future purchases		1,028			(1,854	)
Prepaids and other		2,296			(1,380	)
(Decrease) increase in:
Accounts payable		(1,152	)		(10,839	)
Accounts payable, affiliates		(2,152	)		7,513
Accrued expenses and other liabilities		(2,096	)		(386	)
Total adjustments		22,848			9,683
Net cash provided by operating activities		30,939			18,240
Cash flows from investing activities:
Purchase of property and equipment		(1,027	)		(1,982	)
Other investing activities		(3,483	)		(627	)
Net cash used in investing activities		(4,510	)		(2,609	)
Cash flows from financing activities:
Decrease in revolving credit borrowings		(25,201	)		(8,695	)
Repayment of affiliated payable		(3,050	)		(5,510	)
Payment of long-term debt and other		(154	)		(2,436	)
Payment of notes payable—former stockholder		—			(158	)
Net cash used in financing activities		(28,405	)		(16,799	)
Net decrease in cash		(1,976	)		(1,168	)
Cash, beginning of period		2,988			2,737
Cash, end of period	$	1,012		$	1,569

See accompanying notes to condensed consolidated financial statements

4

Model Reorg, Inc. and Subsidiaries

Notes to Condensed Consolidated Financial Statements

(Unaudited)

($ in thousands)

1. Summary of Accounting Policies (a)    Basis of Presentation   The condensed consolidated financial statements of Model Reorg, Inc. include the following wholly owned subsidiaries: Five Star Fragrance Co. Inc., Quality King Fragrance, Inc., Scents of Worth, Inc. and Jacavi, LLC (collectively the “Company”). The Company is an affiliate of Quality King Distributors, Inc. (“QKD”) and E Com Ventures, Inc. (“E Com”) through common ownership.   Effective October 2004, Model Reorg acquired all of the stock of Northern Group, Inc., (“Northern”), a fragrance distributor, for a total purchase price of $11,998 in a business combination accounted for as a purchase. The results of operations of Northern are included in the accompanying condensed consolidated financial statements as of the date of acquisition. Based on the fair values of the assets acquired and liabilities assumed, the Company recorded goodwill of $9,392.   On October 5, 2007, Model Reorg acquired all the stock of Jacavi, LLC (“Jacavi”) a fragrance distributor, in exchange for shares of Model Reorg common stock which was valued at approximately $11,000. The acquisition was accounted for as a purchase and the results of operations of Jacavi are included in the accompanying condensed consolidated financial statements as of the date of acquisition. In connection with the acquisition, Model Reorg obtained a valuation of Jacavi from an independent company. Based on the fair value of the assets acquired and liabilities assumed, and the purchase consideration associated with the merger, Model Reorg recorded goodwill of $11,042, including $242 of acquisition costs.   All intercompany balances and transactions have been eliminated.

5

(b)    Organization and Business

The Company is primarily a promotional wholesale distributor of fragrances. Customers include traditional wholesalers, chain stores, mass merchandisers and retail wholesale clubs throughout the United States. In addition, the Company has arrangements with major retailers covering approximately 3,100 store locations and sells designer fragrances on consignment. The Company also manufactures fragrances that it owns or licenses from others.

(c)    Use of Estimates

In preparing condensed consolidated financial statements in conformity with accounting principles generally accepted in the United States of America, management is required to make estimates and assumptions that affect the reported amounts of assets and liabilities and the disclosure of contingent assets and liabilities at the date of the financial statements and revenues and expenses during the reporting period. Actual results could differ from those estimates and assumptions.

(d)    Inventories

Inventories are valued at the lower of cost or market with cost being determined using the weighted average method, which approximates first-in, first-out (FIFO).

(e)    Property and Equipment, and Depreciation

Depreciation is computed by the straight-line and accelerated methods over the estimated useful lives of the assets ranging primarily from three to seven years.

(f)     Leased Property Under Capital Leases

Property under capital leases is amortized over the lives of the respective leases or the useful lives of the assets, whichever is shorter, ranging from five to ten years.

(g)    Income Taxes

Model Reorg and subsidiaries are C corporations and provisions have been made for income tax expense at statutory rates.

The Company follows the liability method of accounting for income taxes. The primary objectives of accounting for income taxes are to recognize the amount of tax payable for the current year and recognize the amount of deferred tax asset or liability for the future tax consequences of events that have been reflected in the Company’s financial statements or tax returns.

6

		(h)    Revenue Recognition
		Sales are recognized when title passes, which occurs either upon shipment of products or sale to the ultimate customers from consignment inventories. Allowances for estimated returns and pricing adjustments are provided when sales are recognized and are recorded as a reduction of sales. Allowances provided for advertising, marketing and tradeshows are recorded as selling expenses since they are costs for services received from the customer which are separable from the customer’s purchase of the Company’s products. Accruals and allowances are estimated based on available information including third party data.
		(i)     Concentrations of Credit Risk
		The Company is potentially subject to a concentration of credit risk with respect to its trade receivables, the majority of which are due from retailers and wholesale distributors. Credit risks also relate to the seasonal nature of the business. The Company’s sales are concentrated in November and December for the holiday season. The Company performs ongoing credit evaluations of its customers and generally does not require collateral. The Company maintains allowances to cover potential or anticipated losses for uncollectible accounts. The Company maintains credit insurance on certain receivables, which minimizes the financial impact of uncollectible accounts.
2.	Inventories	Inventories, which are primarily comprised of finished products, are shown net of reserves for obsolescence and market write downs. Reserves at July 31, 2008 and October 31, 2007 were $1,944 and $2,968, respectively.
3.	Related Party Transactions	(a)    The Company receives services from QKD and E Com pursuant to service agreements. The agreement with QKD provides for the allocation of expenses, which are calculated based on various assumptions and methods. The methods employed utilize various allocation bases including the number of transactions processed, estimated delivery miles, warehouse square footage, payroll dollars and sales and inventory ratios. Allocated operating expenses for the three and nine months ended July 31, 2008 were $.5 million and $1.9 million or 3.7% and 4.0% of total operating expenses, as compared to $.9 million and $3.0 million or 6.5% and 6.8% of total operating expenses for the three and nine months ended July 31, 2007. Allocated interest expense represents interest expense on the Company’s revolving credit borrowings and is allocated at the same effective rate as in the QKD Credit Agreement. The Company believes that the allocated expenses are reasonable and approximate those expenses that would have been incurred had the Company not operated under a service agreement.

7

(b)    On August 2, 2007 the Company entered into a service agreement with E Com whereby E Com provides IT Management Support services for all of the Company’s computer systems at a rate of $25 per month, plus out of pocket expenses. This agreement terminated at consummation of the Company’s merger with E Com on August 11, 2008.

(c)    The Company had sales and purchase transactions with E Com as follows: sales for the three and nine months ended July 31, 2008 were $7,952 and $27,336, respectively, and for the three and nine months ended July 31, 2007, $4,989 and $16,177, respectively. Purchases for the three and nine months ended July 31, 2008 were $4,477 and $25,565, respectively, and for the three and nine months ended July 31, 2007, $18,933 and $27,061, respectively. The Company had a receivable balance from this affiliate of $44,482, and $25,484 at July 31, 2008 and October 31, 2007, respectively. The Company had a payable balance to this affiliate of $2,152 at October 31, 2007.

(d)    Effective January 2008, the Company began subletting new office and warehouse space from QKD (see Note 4).

(e)    Included in other current liabilities is deferred compensation due to an officer. The Company’s liability is calculated by a formula and totals $1.9 million and $1.5 million at July 31, 2008 and October 31, 2007, respectively.

(f)     On December 21, 2007, the Company and its stockholders entered into an Agreement and Plan of Merger with E Com whereby the Company would be merged into a newly formed wholly-owned acquisition subsidiary of E Com in exchange for the issuance of 5,900,000 shares of E Com’s common stock and warrants to acquire an additional 1,500,000 common shares of E Com. The acquisition subsidiary would be the surviving entity and for accounting purposes, the Company would be the acquirer. The Merger was consummated on August 11, 2008 having met the conditions necessary including shareholder approval, approval by NASDAQ of the listing of shares to be issued, and the availability of a new $250 million secured credit facility to replace the Company’s and E Com’s existing third party credit facilities. The credit facility has a term of three years, expiring on August 11, 2011 and provides for borrowings based on eligible accounts receivable and inventories, both are secured assets. The interest rate applicable to borrowings is based on, at Perfumania’s option, the LIBOR rate or prime rate. In connection with the credit agreement, Perfumania is required to maintain certain financial ratios and comply with certain restrictions.

8

4.	Commitments and Contingencies	(a)    Leases Total rent expense for warehouse space and equipment charged to operations for the three and nine months ended July 31, 2008 was approximately $1,192 and $3,892, respectively and for the three and nine months ended July 31, 2007 was approximately $1,218 and $2,881, respectively. This includes allocated warehouse rent from QKD. In January 2008 the Company began subleasing a new office and warehouse facility from QKD at a rate of $193 per month at an annual escalation of 3%. This sublease expires December 2027.
		(b)    Litigation The Company is a defendant in various lawsuits and claims which are in various stages of discovery and therefore no conclusions can be made as to their outcomes. Management believes that the outcome of these pending lawsuits and claims will not materially affect the operations, financial condition or cash flows of the Company.

9

5. Segment Information Model Reorg operates in three industry segments, wholesale distribution, retail and manufacturing. Management reviews segment information by segment and on a consolidated basis each month. Model Reorg distributes fragrances to wholesalers and mass market retailers. Retail sales are made on a consignment basis at leased store locations. The manufacturing of owned and licensed brands is outsourced to third party fillers. The accounting policies for the segments are the same as those described in the Summary of Accounting Policies in the notes to the audited consolidated financial statements. Model Reorg’s chief operating decision maker assesses segment performance by reference to gross profit. Each of the segments has its own assets, liabilities, revenues and cost of goods sold. While each segment has certain unallocated operating expenses, these expenses are not reviewed by the chief operating decision maker on a segment basis but rather on a consolidated company basis.

	Three months ended July 31,					Nine months ended July 31,
	2008			2007		2008			2007
Net revenues:
Wholesale	$	46,263		$	49,876	$	174,856		$	170,017
Retail		17,386			15,664		63,048			60,833
Manufacturing		136			2,013		2,469			4,035
	$	63,785		$	67,553	$	240,373		$	234,885
Gross profit:
Wholesale	$	10,258		$	12,448	$	41,501		$	42,212
Retail		7,696			6,401		25,339			23,742
Manufacturing		(185	)		630		1,506			1,461
	$	17,769		$	19,479	$	68,346		$	67,415
						As of July 31, 2008			As of October 31, 2007
Total assets:
Wholesale						$	328,330		$	339,630
Retail							78,460			75,887
Manufacturing							24,792			25,401
						$	431,582		$	440,918
Eliminations							(112,308	)		(95,930	)
Consolidated assets						$	319,274		$	344,988

		(a) Adjustment to eliminate intercompany receivables and investment in subsidiaries. Goodwill for the wholesale and retail segments was $27,176 and $5,356 respectively, at both July 31, 2008 and October 31, 2007.
6.	New Accounting Pronouncements	In December 2007, the FASB issued SFAS No. 141(R), “Business Combinations” (“SFAS 141(R)”). SFAS 141(R) establishes principles and requirements for how an acquirer recognizes and measures in its financial statements the identifiable assets acquired, the liabilities assumed, the goodwill acquired, and any noncontrolling interest in the acquiree. This statement also establishes disclosure requirements to enable the evaluation of the nature and financial effect of the business combination. SFAS 141(R) is effective for fiscal years beginning after December 15, 2008. The Company is in the process of evaluating the effect the adoption of SFAS 141(R) will have on its results of operations, financial position and cash flows. In February 2007, the FASB issued SFAS 159, “The Fair Value Option for Financial Assets and Financial Liabilities—Including an amendment of FASB Statement No. 115.” (“SFAS 159”). SFAS 159 permits entities to choose to measure eligible items at fair value at specified election dates and report unrealized gains and losses on items for which the fair value option has been elected in earnings at each subsequent reporting date. SFAS 159 is effective for the Company’s fiscal year ended October 31, 2009. The adoption of SFAS 159 did not have any effect on the Company’s results of operations, financial position and cash flows. In September 2006, the FASB issued SFAS 157, “Fair Value Measurements” (“SFAS 157”). SFAS 157 defines fair value, establishes a framework for measuring fair value and expands disclosure of fair value measurements. SFAS 157 applies under other accounting pronouncements that require or permit fair value measurements and, accordingly, does not require any new fair value measurements. SFAS 157 is effective for the first interim period beginning in fiscal 2008 for financial assets and liabilities, as well as for any other assets and liabilities that are carried at fair value on a recurring basis in financial statements. In November 2007, the FASB provided a one year deferral for the implementation of SFAS 157 for other nonfinancial assets and liabilities. The Company does not expect the adoption of SFAS 157 to have a material effect on its results of operations, financial position and cash flows. In June 2006, the FASB issued FASB Interpretation No. (“FIN”) 48, Accounting for Uncertainty in Income Taxes-an interpretation of FASB Statement No. 109. FIN 48 clarifies the accounting for uncertainty in income taxes recognized under SFAS No. 109, Accounting for Income Taxes. FIN 48 prescribes a recognition threshold and measurement attribute for financial statement recognition and measurement of a tax position taken or expected to be taken in a tax return and also provides guidance on various related matters such as derecognition, interest and penalties, and disclosure. The effective date of FIN 48 for non-public enterprises is for annual periods beginning after December 15, 2007. The Company has begun evaluating the financial impact of applying the provisions of FIN 48 to all tax positions and it does not believe there will be a material financial impact upon the initial adoption of FIN 48.

10

EX-99.4

Exhibit 99.4

UNAUDITED PRO FORMA CONDENSED COMBINED FINANCIAL STATEMENTS

The following unaudited pro forma condensed combined financial statements give effect to the merger transaction (the “Merger”) pursuant to which Perfumania Holdings, Inc. (“Perfumania”) acquired Model Reorg, Inc. when Model Reorg merged into Perfumania’s wholly owned subsidiary, Model Reorg Acquisition LLC. The Merger was completed on August 11, 2008. Due to a number of factors, including that the shares issued to Model Reorg’s shareholders in the Merger constituted a majority of the outstanding shares of Perfumania’s common stock after the transaction, Model Reorg is deemed to be the acquiring company for accounting purposes. Accordingly, the total estimated purchase price, calculated as described below in Note 1 to the unaudited pro forma condensed combined balance sheet, is allocated to the net tangible and intangible assets acquired and liabilities assumed of Perfumania in connection with the transaction, based on their estimated fair values as of the completion of the Merger, while the assets and liabilities of Model Reorg are reflected at historical cost in the combined condensed pro forma balance sheet. The transaction has been accounted for under the purchase method of accounting in accordance with FASB Statement No. 141, Business Combinations.

The unaudited pro forma condensed combined financial statements presented below are based upon the historical financial statements of both companies, reflecting the restatement of Perfumania’s financial statements for reporting periods ending before 2008 (as described in Note 3 to Perfumania’s Consolidated Financial Statements beginning on page F-14 of Perfumania’s definitive proxy statement filed on July 25, 2008 (the “Proxy Statement”), adjusted to give effect to the Merger. The pro forma adjustments are described in the accompanying notes presented on the following pages. Because Model Reorg is considered to be the acquiring company, the statement of operations information is presented below as of October 31, 2007 and July 31, 2008, the last day of Model Reorg’s most recently completed fiscal year and interim period, respectively, before the Merger, and the balance sheet information is presented as of July 31, 2008. However, going forward, Perfumania will continue to use its historical fiscal year end, the Saturday closest to January 31, which is conventional for retail businesses, as well as the corresponding Saturdays as the end of each fiscal quarter.

Until August 8, 2008, Perfumania’s corporate name was E Com Ventures, Inc.

The amounts in the unaudited pro forma condensed combined financial statements are subject to a final determination of the fair market value of Perfumania’s assets acquired and liabilities assumed. The final purchase price allocation may be materially different from the allocation used in calculating goodwill for the pro forma adjustments shown below. As a result, actual income from operations may differ significantly from the pro forma amounts included below. There can be no assurance that such adjustments will not be material to the combined financial statements.

All intercompany balances and transactions between Model Reorg and Perfumania, consisting primarily of sales, purchases, profits in ending inventory, receivables and payables, as of the dates and for the periods of these unaudited pro forma combined financial statements, have been eliminated in the unaudited pro forma combined financial statements. Certain reclassification adjustments have been made to conform Perfumania’s historical reported balances to Model Reorg’s financial statement basis of presentation.

The unaudited pro forma condensed combined financial statements are provided for illustrative purposes only and do not purport to represent the financial condition or results of operations had the Merger been completed as of the dates indicated, nor are they necessarily indicative of future consolidated results of operations or financial position.

The unaudited pro forma condensed combined financial statements do not include the realization of cost savings from operating efficiencies, synergies, or other restructuring effects resulting from the Merger. The unaudited pro forma condensed combined financial statements should be read in conjunction with the historical financial statements and accompanying notes that are included in the Proxy Statement and filed as Exhibit 99.2 to this Current Report on Form 8-K.

1

Unaudited Pro Forma Condensed Combined Balance Sheet

($ in thousands)

	As of July 31, 2008
	Historical							Pro Forma Adjustments			Pro Forma Combined Model Reorg and E Com
	E Com			Model Reorg
Assets
Current:
Cash	$	1,380		$	1,012			$	—		$	2,392
Accounts receivable - net		1,285			27,036				—			28,321
Receivables from an affiliate		275			44,482		(a)		(44,757	)		—
Inventories, net		128,997			205,382		(h)		(4,627	)		328,384
							(i)		(1,368	)
Advances to suppliers for future purchases		—			104				—			104
Prepaids and other		7,328			5,259		(l)		(1,862	)		10,725
Total current assets		139,265			283,275				(52,614	)		369,926
Property and equipment, net		40,561			2,958		(g)		(12,082	)		31,437
Goodwill		1,904			20,434		(m)		(1,904	)		20,434
Other assets, net		7,300			12,608		(f)		(5,484	)		14,424
	$	189,030		$	319,275			$	(72,084	)	$	436,221
Liabilities and Shareholders' Equity
Current:
Accounts payable, non affiliates		27,290			29,731				—			57,021
Accounts payable, affiliates		58,043			—		(a)		(44,757	)		13,286
Accrued expenses		10,123			9,811		(j)		591			15,626
							(l)		(4,899	)
Bank line of credit		50,253			—		(b)		(50,253	)		—
Current maturities of long-term debt		5,374			205				—			5,579
Total current liabilities		151,083			39,747				(99,318	)		91,512
Long-term debt and other		6,987			113,563		(b)		33,016			153,566
Payable to affiliate		—			73,263		(b)		17,237			90,500
Total liabilities		158,070			226,573				(49,065	)		335,578
Commitments and Contingencies
Shareholders’ equity
Common stock		40			1		(e)		59			99
							(d)		(1	)
Additional paid in capital		79,183			13,905		(e)		(59	)		33,874
							(k)		(39,686	)
							(d)		1
							(f)		(5,484	)
							(g)		(12,082	)
							(m)		(1,904	)
Retained (deficit) earnings		(39,686	)		80,271		(k)		39,686			75,247
							(c)		(1,475	)
							(h)(i)(j)		(6,586	)
							(l)		3,037
Treasury Stock		(8,577	)		(1,475	)	(c)		1,475			(8,577	)
Total shareholders’ equity		30,960			92,702				(23,019	)		100,643
	$	189,030		$	319,275			$	(72,084	)	$	436,221
(a)    Adjustment to eliminate intercompany payable and receivables between E Com and Model Reorg

(b) Adjustment to reflect the post-merger financing, which includes the pay down of intercompany debt with QKD of $73.3 million, of which $55.5 million is to be refinanced by affiliates of Model Reorg, $35 million is to be refinanced by a Note Payable to QKD and the balance will reduce bank borrowings. Bank borrowings are expected to be refinanced through a $250 million revolving credit facility.

(c) Adjustment to record retirement of Model Reorg treasury stock

(d) Adjustment to record the cancellation of Model Reorg common stock

(e) Adjustment to record the issuance of the additional 5,900,000 shares of E Com common stock

(f) Adjustment to record estimated transaction fees, which are reflected as a component of purchase price. See Note 1 below.

(g) Adjustment to record goodwill related to the merger. Goodwill is calculated as the excess of purchase price over the fair value of the assets acquired and liabilities assumed. See Note 1 below.

(h) Adjustment to remove any affiliated profit in E Com inventory as of July 31, 2008

(i) Adjustment to remove any affiliated profit in Model Reorg inventory as of July 31, 2008

(j) Tax effect of the pro forma adjustments at 40%, which approximates Model Reorg’s effective tax rate

(k) Adjustment to eliminate E Com’s historical accumulated deficit

(l) Adjustment to reverse E Com’s historical accrued straight line and deferred rent, which does not represent a legal obligation of the combined company and will have no value upon the completion of the Merger, and its related Deferred Tax Asset, and to recognize post-Merger rent expense on a straight-line basis

(m) Adjustment to eliminate E Com’s pre-merger goodwill of $1.9 million

Note 1: Since Model Reorg is deemed to be the acquirer for accounting purposes, in accordance with GAAP, the total purchase price will be determined based on the fair value of the outstanding shares of E Com prior to the merger, plus the Model Reorg transaction costs. The preliminary estimated transaction costs and purchase price are as follows (the actual purchase price will be calculated based on the fair value of the E Com shares at the date the Merger is consummated and the actual transaction costs):

	($ in thousands)
Fair value of E Com common stock(x)	$	55,369
Estimated transaction costs		5,484
	$	60,853

(x) 3,059,041 E Com common shares outstanding as of July 31, 2008 at a closing market price of $18.10 per share.

Under the purchase method of accounting, for purposes of the table above, the total preliminary estimated purchase price is allocated to the E Com net tangible and identifiable intangible assets acquired and liabilities assumed based on their estimated fair values as of the completion date of the Merger. The preliminary estimated purchase price has been allocated based on estimates taking into account various factors as described in the introduction to these unaudited pro forma condensed combined financial statements. The allocation of the preliminary estimated purchase price is as follows:

	($ in thousands)
Current assets	$	134,363
Property and equipment, net		40,561
Other assets		7,300
Goodwill		(12,082	)
Liabilities assumed		(109,289	)
	$	60,853

2

Unaudited Pro Forma Condensed Combined Statements of Operations

($ in thousands, except weighted average and per share amounts)

	Nine Months ended July 31, 2008
	Historical
	E Com *			Model Reorg			Pro Forma Adjustments			Combined Model Reorg and E Com
Net sales, unaffiliated	$	203,100		$	213,073		$	—		$	416,173
Net sales, affiliated		25,994			27,300	(a)		(53,294	)		—
Total net sales		229,094			240,373			(53,294	)		416,173
Cost of goods sold		137,625			172,027	(a)		(53,294	)		256,588
						(b) (c)		230
Gross profit		91,469			68,346			(230	)		159,585
Selling, warehouse, delivery and administrative expenses		84,108			46,048	(f)		(69	)		128,429
						(g)		(1,658	)
Depreciation and amortization		5,296			1,173			—			6,469
Income from operations		2,065			21,125			1,497			24,687
Interest expense		2,893			7,275			—			10,168
Income (loss) before income taxes		(828	)		13,850			1,497			14,519
Income tax expense (benefit)		277			5,759	(d) (e)		(9	)		6,027
Net (loss) income	$	(1,105	)	$	8,091		$	1,506		$	8,492
Weighted average shares
Basic (h)		3,059,041			5,900,000			8,959,041			8,959,041
Diluted (h)		3,059,041			5,900,000			9,461,510			9,461,510
Net (loss) income per share
Basic (h)	$	(0.36	)	$	1.37		$	0.17		$	0.95
Diluted (h)	$	(0.36	)	$	1.37		$	0.16		$	0.93

* E Com’s historical statement of operations for the nine months ended July 31, 2008 combines the results of the last quarter of E Com’s 2007 fiscal year with those of the first and second quarters of its 2008 fiscal year.

(a) Adjustment to eliminate affiliated sales and purchases

(b) Adjustment to remove the increase in affiliated profit in E Com’s inventory in the amount of $0.60 million as of July 31, 2008

(c) Adjustment to add the decrease in affiliated profit in Model Reorg’s inventory in the amount of $0.37 million as of July 31, 2008

(d) Tax effect of the pro forma adjustments at 40%, which approximates Model Reorg’s effective tax rate

(e) To adjust tax expense to the combined companies’ effective tax rate of approximately 40% (See Note 1 below)

(f) Adjustment to reverse E Com’s accrued straight line rent and deferred rent, which does not represent a legal obligation of the combined company, and will have no value, upon the completion of the Merger, and to recognize post-Merger rent expense on a straight-line basis.

(g) Adjustment to reverse the write-off of E Com’s transaction costs

(h) Basic net income per share is computed by dividing net income by the weighted average number of common shares outstanding during the period. In computing diluted net income per share, the weighted average number of common shares outstanding includes all common stock equivalents with exercise prices at or below the average market price for the respective period. The calculations for the nine months ended July 31, 2008 are as follows:

	E Com Historical 9 Months Ended July 31, 2008			Model Reorg Historical 9 Months Ended July 31, 2008
Numerator:
Net (loss) income - basic	$	(1,105	)	$	8,091
Net (loss) income - diluted	$	(1,105	)	$	8,091
Denominator:
Weighted average number of shares for basic net (loss) income per share		3,059,041			5,900,000
Denominator for dilutive net (loss) income per share		3,059,041			5,900,000
Basic net (loss) income per common share	$	(0.36	)	$	1.37
Diluted net (loss) income per common share	$	(0.36	)	$	1.37

Pro forma share numbers represent the weighted average shares outstanding of E Com for the nine months ended July 31, 2008 assuming the issuance at the beginning of the period of the 5.9 million shares issuable in the merger. Pro forma share numbers used in the computation of diluted net income per share also assume the issuance of 58,024 shares issuable upon the exercise of stock options for the nine months ended July 31, 2008 and 444,445 shares of our common stock upon the conversion of the Convertible Note. The 1.5 million shares issuable upon exercise of warrants issuable in the Merger (the “Warrants”) are not included in the pro forma share numbers since they would be antidilutive.

Note 1: The adjustments of $0.009 million to decrease tax expense consists of a provision for $0.691 million and a benefit of $0.700 million. The provision for $0.691 million results from the $0.069 million reversal of E Com’s historical accrued straight-line rent, and to recognize post-Merger rent expense on a straight-line basis; and an adjustment for the reversal of the write-off of $1.658 million in E Com’s transaction costs. The benefit results from the reduction of the pro forma tax expense as a result of elimination of an aggregate of $0.230 of affiliated profit in inventory and an adjustment to realign tax expense to Model Reorg’s estimated effective rate of 40%.

3

	Twelve Months Ended October 31, 2007
	Historical						Pro Forma Adjustments			Pro Forma Combined Model Reorg and E Com
	E Com*		Model Reorg
	($ in thousands, except weighted average and per share amounts)
Net sales, unaffiliated	$	236,089	$	302,530			$	—		$	538,619
Net sales, affiliated		48,910		25,182		(a)		(74,092	)		—
Total net sales		284,999		327,712				(74,092	)		538,619
Cost of goods sold		174,426		237,203		(a)		(74,092	)		339,337
		—		—		(b)(c)		1,800
Gross profit		110,573		90,509				(1,800	)		199,282
Selling, warehouse, delivery and administrative expenses		95,812		60,113		(f)		171			156,096
Depreciation and amortization		5,847		1,411				—			7,258
Recovery on vendor advances		—		(2,367	)			—			(2,367	)
Income from operations		8,914		31,352				(1,971	)		38,295
Interest expense		4,912		12,749				—			17,661
Income before income taxes		4,002		18,603				(1,971	)		20,634
Income taxes		79		7,353		(d)(e)		822			8,254
Net income	$	3,923	$	11,250			$	(2,793	)	$	12,380
Weighted average shares
Basic(g)		3,055,510		5,900,000							8,955,510
Diluted(g)		3,569,706		5,900,000							9,469,706
Net income (loss) per share
Basic(g)	$	1.28	$	1.91			$	(0.31	)	$	1.38
Diluted(g)	$	1.23	$	1.91			$	(0.29	)	$	1.36

* E Com’s historical statement of operations for the twelve months ended October 31, 2007 combines the results of the fourth quarter of E Com’s 2006 fiscal year with those of the first nine months of its 2007 fiscal year.

(a) Adjustment to eliminate affiliated sales and purchases

(b) Adjustment to remove the increase in affiliated profit in E Com inventory in the amount of $800 as of October 31, 2007

(c) Adjustment to remove the increase in affiliated profit in Model Reorg inventory in the amount of $1,000 as of October 31, 2007

(d) Tax effect of the pro forma adjustments at 40%, which approximates Model Reorg’s effective tax rate (See Note 1 below)

(e) To adjust tax expense to the combined companies’ effective tax rate of approximately 40% (See Note 1 below)

(f) Adjustment to reverse E Com’s historical accrued straight line rent, which does not represent a legal obligation of the combined company, and will have no value, upon completion of the Merger, and to recognize post-Merger rent expense on a straight-line basis

(g) Basic net income per share is computed by dividing net income by the weighted average number of common shares outstanding during the period. In computing diluted net income per share, the weighted average number of common shares outstanding includes all common stock equivalents with exercise prices at or below the average market price for the respective period. The calculations for the twelve months ended October 31, 2007 are as follows:

	E Com		Model Reorg		Pro Forma Adjustments			Pro Forma Combined Model Reorg and E Com
	($ in thousands, except weighted average and per share amounts)
Numerator:
Net income (loss)—Basic	$	3,923	$	11,250	$	(2,793	)	$	12,380
Add: Interest on Convertible Note		473		—		—			473
Net income (loss)—Diluted	$	4,396	$	11,250	$	(2,793	)	$	12,853
Denominator:
Weighted average number of shares for basic net income (loss) per share		3,055,510		5,900,000		8,955,510			8,955,510
Shares issuable upon exercise of stock options		69,751		—		69,751			69,751
Convertible Note		444,445		—		444,445			444,445
Denominator for dilutive net income (loss) per share		3,569,706		5,900,000		9,469,706			9,469,706
Basic net income (loss) per common share	$	1.28	$	1.91	$	(0.31	)	$	1.38
Diluted net income (loss) per common share	$	1.23	$	1.91	$	(0.29	)	$	1.36

Pro forma share numbers represent the weighted average shares outstanding of E Com for the twelve months ended October 31, 2007, assuming the issuance at the beginning of the period of the 5.9 million shares issuable in the Merger. Pro forma share numbers used in the computation of diluted net income per share also assume the issuance of 69,751 shares issuable upon exercise of stock options for the twelve months ended October 31, 2007 and 444,445 shares of E Com’s common stock upon conversion of the Convertible Note. The 1.5 million Warrant shares are not included in the pro forma share numbers since they would be antidilutive.

Note 1: The adjustment of $0.822 million to increase income tax expense consists of a provision for $1.542 million and a benefit of $0.72 million. The provision for $1.542 million results from the requirement to reflect the effective E Com income tax expense in this pro forma statement of operations for a period other than that of E Com’s normal fiscal year and the $0.171 million to reverse E Com’s historical accrued straight line rent, which will have no value upon completion of the Merger, and to recognize post-Merger rent expense on a straight-line basis. The benefit results from the reduction of the pro forma income tax expense as a result of the elimination of an aggregate of $1.8 million of affiliated profit in inventory.

4

	Historical									Pro Forma
	Twelve Months ended October 31, 2007				Nine Months ended July 31, 2008					Twelve Months ended October 31, 2007		Nine Months ended July 31, 2008
	E Com		Model Reorg		E Com			Model Reorg
Basic net income (loss) per share (1) (2)	$	1.28	$	1.91	$	(0.36	)	$	1.37	$	1.38	$	0.95
Diluted net income (loss) per share (1) (2)	$	1.23	$	1.91	$	(0.36	)	$	1.37	$	1.36	$	0.93
Shares used in the computation of basic net income (loss) per share (3) (4)		3,055,510		5,900,000		3,059,041			5,900,000		8,955,510		8,959,041
Shares used in the computation of diluted net income (loss) per share (3) (4)		3,569,706		5,900,000		3,059,041			5,900,000		9,469,706		9,461,510
					As of July 31, 2008
					E Com			Model Reorg				As of July 31, 2008
Book value per share					$	10.12		$	15.71			$	11.23
Shares used in the computation of book value per share (3) (4)						3,059,041			5,900,000				8,959,041

(1) Basic net income (loss) per share is computed by dividing net income by the weighted average number of common shares outstanding during the period. In computing diluted net income (loss) per share, the weighted average number of common shares outstanding includes all common stock equivalents with exercise prices at or below the average market price for the respective period.

(2) Pro forma combined net income per share reflects certain pro forma adjustments resulting from the accounting for the Merger as a “reverse acquisition” that are set forth in the footnotes to the Unaudited Pro Forma Condensed Combined Statements of Operations. These adjustments, in total, decrease combined pro forma net income by approximately $2.8 million, or $0.31 basic net income per share and $0.29 diluted net income per share, for the twelve months ended October 31, 2007 and increase combined pro forma net income by approximately $1.5 million, or $0.17 basic net income per share and $0.16 diluted net income per share, for the nine months ended July 31, 2008.

(3) Model Reorg share numbers represent the 5.9 million shares issuable in the Merger in exchange for the common shares of Model Reorg. They do not include the 1.5 million shares issuable upon the exercise of the Warrants issuable in the Merger since they would be antidilutive as E Com’s average market price has historically been lower than the Warrant exercise price during each relevant period (including the fiscal periods shown in “Selected Financial Data for Model Reorg”) Since Model Reorg has only 96.9 shares outstanding, this treatment permits a more realistic comparison of historical net income per share between E Com and Model Reorg.

(4) Pro forma share numbers represent the weighted average shares outstanding of E Com for the respective periods, assuming in each case the issuance of the 5.9 million shares issuable in the Merger. Pro Forma share numbers used in the computation of diluted net income per share also assume the issuance of 69,751 and 58,024 shares issuable upon the exercise of stock options for the twelve months ended October 31, 2007 and the nine months ended July 31, 2008, respectively, and 444,445 shares of our common stock upon conversion of the Convertible Note. The 1.5 million Warrant shares are not included in the Pro forma share numbers since they would be antidilutive.

5