Summary of PERFUMANIA HOLDINGS, INC.

Item 1.01 Entry into a Material Definitive Agreement.

Perfumania Holdings, Inc. (the "Company") entered into Waiver and Amendment No.1, dated as of May 26, 2009, to its senior, secured credit facility, the Credit Agreement dated as of August 11, 2008 (the "Senior Credit Facility"). The other parties to the Credit Agreement are the Company's subsidiaries, Quality King Fragrance, Inc., Scents Of Worth, Inc., Five Star Fragrance Company, Inc., Distribution Concepts, LLC, Northern Group, Inc., Perfumania, Inc., Magnifique Parfumes And Cosmetics, Inc., Ten Kesef II, Inc. and Perfumania Puerto Rico, Inc., as Borrowers, certain other subsidiaries of the Company signatory thereto, as Credit Parties, the bank lenders signatory thereto from time to time, as Lenders, General Electric Capital Corporation ("GECC"), as Agent, Collateral Agent and Lender, GE Capital Markets, Inc., as Joint Lead Arranger and Book Runner, Wachovia Capital Markets LLC, as Joint Lead Arranger, and Wachovia Bank, National Association, as Syndication Agent.

In Waiver and Amendment No.1, the Lenders waived the Company's default of the maximum leverage ratio covenant as of October 31, 2008 and January 31, 2009, as well as the Company's defaults of the minimum fixed charge coverage ratio and inventory turnover ratio covenants as of January 31, 2009, and certain other breaches. In addition, the following material changes were made to the Credit Agreement:

Interest under the Senior Credit Facility was amended to be, at the Company's election unless an event of default exists, either (i) the highest of (A) The Wall Street Journal "prime rate," (B) the federal funds rate plus .50% or
(C) the sum of the applicable 3-month London interbank offered rate ("LIBOR") plus 1.00% (the "Index Rate"), plus 3.50% or (ii) LIBOR (but not less than 2.00%) plus 4.50%. Waiver and Amendment No.1 sets forth maximum levels of eligible inventory that may be included in the Borrowing Base from time to time, sets forth certain additional reporting requirements, requires appraisals of inventory no less frequently than each fiscal quarter and desktop appraisals of inventory no less frequently than monthly, provides for no testing of the minimum fixed charge coverage ratio, the inventory turnover ratio or the maximum leverage ratio covenants for the fiscal quarter ended May 2, 2009, deletes the inventory turnover ratio covenant and the maximum leverage ratio covenant thereafter, suspends the minimum fixed charge coverage ratio covenant until the fiscal quarter ending January 30, 2010, and provides for reserves against borrowing availability increasing from $9,000,000 to $15,000,000 at August 4, 2009 and thereafter, in addition to any reserves that may be imposed from time to time in GECC's reasonable credit judgment. In addition, the Company will be required to pay fees equal to 1.00% of the unused amount of the Senior Credit Facility and 4.50% of the outstanding amount of letters of credit under that facility.

Waiver and Amendment No.1 is filed as Exhibit 10.1 to this Form 8-K and is incorporated herein by reference.

In addition, effective May 26, 2009, the Company and its subsidiary, Model Reorg Acquisition LLC, respectively, entered into Note and Subordination Amendment Agreements amending the following subordinated debt obligations as a condition to the banks' entry into Waiver and Amendment No.1: (i) Subordinated Secured Convertible Note, as amended January 24, 2006, held by Stephen Nussdorf, the Chairman of the Company's Board of Directors and a principal shareholder of the Company, and his brother, Glenn Nussdorf, a principal shareholder of the Company (the "Convertible Note"), (ii) Subordinated Promissory Note, dated as of August 11, 2008, held by Quality King Distributors, Inc., a corporation owned by Stephen Nussdorf, Glenn Nussdorf, and their sister, Arlene Nussdorf, who is also a principal shareholder of the Company, and (iii) Subordinated Promissory Notes, dated as of August 11, 2008, held by Glenn Nussdorf 10 Year Grantor Retained Annuity Trust dated 11/1/98, Glenn Nussdorf 15 Year Grantor Retained Annuity Trust dated 11/2/98, Stephen Nussdorf 10 Year Grantor Retained Annuity Trust dated 11/1/98, Stephen Nussdorf 15 Year Grantor Retained Annuity Trust dated 11/2/98, Arlene Nussdorf 10 Year Grantor Retained Annuity Trust dated 11/1/98, and Arlene Nussdorf 15 Year Grantor Retained Annuity Trust dated 11/2/98 (collectively, the "Subordinated Notes").

The Note and Subordination Amendment Agreements provide that no interest or principal under any of the Subordinated Notes may be paid until the commitment under the Senior Credit Facility terminates. In addition, in the case of the Convertible Note (the convertibility of which expired in January 2009), the Note and Subordination Amendment Agreement provides for conversion of principal and interest at the election of the holders at a conversion price of $7.00 per share until August 11, 2011.

The Note and Subordination Amendment Agreements are filed as Exhibits 4.1, 4.2 and 4.3 to this Form 8-K and are incorporated herein by reference.

Item 7.01 Regulation FD Disclosure

The Company is unable to file its Annual Report on Form 10-K for the year ended January 31, 2009 ("fiscal 2008") within the prescribed time period because we have not finalized the calculations required to determine whether a valuation reserve against deferred tax assets is required and, if so, the amount, and have not resolved the accounting recognition required under Financial Accounting Standards Board Interpretation No. 48 ("FIN 48") for certain other matters, so as to enable us to close our books and records and prepare our consolidated financial statements. We are providing the following information regarding the Company's results of operations for fiscal 2008 and financial condition as of January 31, 2009. We are working to finalize the consolidated financial statements in order to file the fiscal 2008 Form 10-K as soon as possible.

Business of the Company

The Company is an independent, national, vertically integrated company that operates in two industry segments, wholesale distribution and specialty retail sales of designer fragrance and related products. Our wholesale division distributes designer fragrances to mass market retailers, drug and other chain stores, retail wholesale clubs, traditional wholesalers, and other distributors

throughout the United States. At January 31, 2009, our Perfumania, Inc. ("Perfumania") subsidiary operated a chain of 355 "full service" retail stores specializing in the sale of fragrances and related products at discounted prices. Our retail division also sells fragrances over the Internet and in retail stores on a consignment basis. During fiscal 2008, approximately 47.8% of our net sales and 33.2% of our gross profit were provided by our wholesale division, and approximately 52.2% and 66.8%, respectively, by our retail division.

The Company's business is highly seasonal, with the most significant activity occurring from September through December each year. Wholesale sales are stronger during the months of September through November, since retailers need to receive merchandise well before the holiday season begins, with approximately 34.6% of total revenues being generated during these three months. Retail revenues are the greatest in December, with approximately 36.4% of retail revenues being generated this month, as is typical for a retail operation.

We have not declared or paid any dividends on our common stock and do not currently intend to declare or pay cash dividends in the foreseeable future. Payment of dividends, if any, will be at the discretion of the Board of Directors after taking into account various factors, including our financial condition, results of operations, current and anticipated cash needs and plans for expansion. Our bank credit facility limits our ability to pay dividends and make other distributions to shareholders.

The Company's principal executive offices and distribution center are located in Bellport, New York, where we have subleased 280,000 square feet of a new, 560,000 square foot facility since December 2007. The space is leased through December 2027. We also have leased (through December 2017) an additional 179,000 square foot facility in Sunrise, Florida that is currently used for administrative offices. All of Perfumania's retail stores are located in leased premises. As of January 31, 2009, we had a total of approximately 516,000 leased store square feet with an average store size of 1,455 square feet.

At January 31, 2009, the Company had 2,123 employees, of whom 278 were involved in warehousing, 1,654 were employed in Perfumania's retail stores, 137 in marketing, sales and operations, and 54 in finance and administration. Temporary and part-time employees are added between Thanksgiving and Christmas.

Results of Operations

On August 11, 2008, Model Reorg, Inc. ("Model Reorg") was merged into a wholly owned subsidiary of Perfumania Holdings, Inc. ("the Merger"). Perfumania Holdings, Inc. had been named E Com Ventures, Inc. ("E Com") before the Merger. Before the Merger, Model Reorg was a diversified wholesale and retail fragrance company and E Com was a specialty retailer and wholesale distributor of fragrances, doing business primarily through the Perfumania retail store chain and over the Internet.

For accounting purposes, Model Reorg was considered to be the acquirer in the Merger. Accordingly, the Company's historical financial statements reflect the results of Model Reorg for periods before the Merger and those of the combined companies beginning August 11, 2008. Therefore, the results of Perfumania's retail operations are included in our financial statements only for the period August 11, 2008 through January 31, 2009. In addition, wholesale transactions between E Com and Model Reorg that were recorded before the Merger as affiliate transactions became intercompany transactions that are eliminated in consolidation.

We elected to continue to use the same fiscal year end, the Saturday closest to January 31, as E Com had used before the Merger. Since Model Reorg's fiscal year end before the Merger was October 31, its last full fiscal year before the Merger ended October 31, 2007 ("fiscal 2007"), and its fiscal quarter that began November 1, 2007 and ended immediately before the beginning of E Com's next fiscal year on February 3, 2008 is a separately audited "transition period." In order to provide a meaningful period-to-period comparison, the following discussion compares fiscal 2008 with the year ended February 2, 2008. We are also providing information about Perfumania's business before August 11, 2008 to assist in understanding the trends in our current business. All amounts included in this discussion are unaudited.

Net Sales. We expect to recognize net sales of $425.6 million in fiscal 2008, an increase of 24.9% from the $340.7 million recorded in the twelve months ended February 2, 2008. We expect the breakdown of sales between wholesale and retail to be as follows:

                                                                            For the year ended
                                                                             ($ in thousands)
                                                       Percentage of                               Percentage of            Percentage
                                January 31, 2009           Sales            February 2, 2008           Sales            Increase (Decrease)
Retail                          $         222,168               52.2 %      $          76,267               22.4 %                    191.3 %
Wholesale                                 203,427               47.8 %                264,434               77.6 %                    (23.1 )%

Total net sales                 $         425,595              100.0 %      $         340,701              100.0 %                     24.9 %

Excluding $144.4 million in retail sales by Perfumania that are included in fiscal 2008 sales only for the period from August 11, 2008 through January 31, 2009, net sales decreased by $59.5 million, or 17.5%. Included in wholesale sales are $15.4 million and $32.3 million of pre-Merger sales to E Com in fiscal 2008 and the year ended February 2, 2008, respectively, which are not recognized following the Merger. The remaining decrease in wholesale sales of $44.1 million is the result of the continuing tightening of credit resources generally, which decreases customers' ability to purchase. Also, the reduction in consumer spending and the weak global economy caused wholesale customers to reduce their demand for fragrance for the 2008 holiday season.

Retail sales by Perfumania for fiscal 2008 increased by 4.0% to $253.9 million compared to the prior year. The average number of stores operated was 329 in fiscal 2008, versus 283 in the prior year, which contributed to the increase in retail sales. However, Perfumania's comparable store sales decreased by 4.4% during fiscal 2008. The average retail price per unit sold during fiscal 2008 increased 8.0% from the prior year and the total number of units sold decreased by 3.6%. We attribute the increase in the average retail price per unit sold to changes in our product mix and promotions resulting in more sales of higher priced merchandise. The number of units sold was affected by softness in the United States economy, declining consumer confidence and the resulting weak mall traffic.

We expect the softness in wholesale and retail sales to continue for the foreseeable future until consumer confidence and the global economy improve.

Cost of Goods Sold. Cost of goods sold includes the cost of merchandise sold, inventory valuation adjustments, inventory shortages, damages and freight-out charges. Cost of goods sold increased 17.1% from $243.7 million in the year ended February 2, 2008 to $285.3 million in fiscal 2008. Excluding $80.7 million in cost of goods sold for Perfumania, which is included in the above cost of goods sold for the period from August 11, 2008 through January 31, 2009, cost of goods sold decreased by $39.1 million or 16.0 %. Excluding Perfumania's results, the decrease in cost of goods sold was due principally to a decrease in wholesale sales.

Gross Profit. Gross profit increased 44.6% from $97.0 million in the year ended February 2, 2008 to $140.3 million in fiscal 2008. Excluding $63.7 million in gross profit from Perfumania, which is included in the above gross profit for the period from August 11, 2008 through January 31, 2009, gross profit decreased by $20.4 million or 21.0%. Excluding Perfumania's results, the decrease in gross profit was due principally to a decrease in wholesale sales.

Perfumania's gross profit for fiscal 2008 increased by 3.7% to $112.7 million versus $108.6 million in the prior year, due to an increase in the number of open stores. For these same periods, Perfumania's gross margins were 44.4% and 44.5%, respectively.

Operating Expenses. Principally because of the addition of Perfumania's operating expenses for the period from August 11, 2008 through January 31, 2009, we expect operating expenses for fiscal 2008, exclusive of the $68.3 million impairment charges described below, to be approximately $129.0 million, or 109.6% higher than those for the year ended February 2, 2008. Excluding expenses of Perfumania and the impairment charge, operating expenses were approximately equal to those for the year ended February 2, 2008.

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