ID Perfumes, Inc.

On September 30, 2011, the Company formally decided to discontinue its retail store operations that sold active sportswear, and to close, abandon, dispose or sell its assets relating to its retail operations. The Company decided to dispose of its retail stores because it incurred significant operating losses and was unable to sustain a viable business model for the past six years. As a result of the discontinuance of the operations, in 2011 the Company recognized a gain on two of its disposals of its stores aggregating approximately $2.3 million, of which $4.7 million results from the reversal of deferred lease incentives and deferred rent recorded in prior years. In prior years, impairment losses relating to the stores were written down to fair value prior to the sale. Furthermore, on November 22, 2011, the Company sold the assets of one store consisting of inventory, equipment and improvements to a company owned and/or operated by a former employee for approximately $36,000 plus the assumption of certain liabilities for the same amount. The abandoned store is currently operated by the former employee. The third store was sold in 2012 for the assumption of approximately $166,000 of liabilities to an affiliate that resulted in a gain on disposal of approximately $63,000 during the third quarter of 2012.

Retail sales, reported in discontinued operations for the three and nine month periods ended September 30, 2012 aggregated $37,409 and $106,207. In this connection, pre-tax losses reported in discontinued operations for the three and nine month periods ended September 30, 2012 aggregated $63,147 and $444,255, including gain on disposal – related party of $63,223 for both periods.  There were no discontinued operations balances for 2013.

In accordance with ASC 230-10-45-24, the Company has elected not to separately disclose cash flows from discontinued operations.