268% Net Sales Increase Reported by ModaCAD, Inc. for Fiscal 1998 Third Quarter Results.

LOS ANGELES--(BUSINESS WIRE)--Nov. 16, 1998--ModaCAD, Inc. (Nasdaq:MODA), a leading developer and supplier of e-commerce applications featuring advanced visualization technologies, announced today operating results for the quarter and nine months ended Sept. 30, 1998.

For the third quarter of 1998, revenues showed a record 268% increase to $1,959,803 over the $533,141 reported for the comparable period last year. The company also reported a loss for the third quarter of $1,000,462 or $0.15 diluted per share, on 6,107,222 weighted average shares outstanding as compared with a net loss of $559,439 or $0.09 diluted per share on 5,399,722 weighted average shares outstanding, for the same period last year.

For the nine months ended Sept. 30, 1998, revenues grew to $6,554,543 versus $2,261,553 for the same period last year, an increase of over 190%. The company also reported a loss of $2,822,826, or $0.43 diluted per share, on 6,077,769 weighted average shares outstanding as compared with a loss of $705,173, or $0.14 diluted per share on 4,405,929 weighted average shares outstanding, for the same nine month period last year.

Joyce Freedman, chief executive officer of ModaCAD, said, "ModaCAD is reaching new milestones in revenue growth. In addition, ModaCAD continues to report strong balance sheet data including a cash position of $9,358,123, stockholders' equity of $18,716,879 and an 11-to-1 current ratio. We are aggressively executing our business strategy and pursuing new opportunities for growth in the e-commerce market place while maintaining the financial fundamentals."

During the third quarter of 1998 ModaCAD introduced a Web-enabled CD-ROM application called Fashion Trip. Demo versions of this application were distributed in key markets to approximately 300,000 women ages 15-28 in conjunction with Seventeen Magazine. Another 200,000 are set to be on the newsstands in secondary markets on Nov. 15, 1998.

In September, the company embarked on a massive media campaign, running full-page ads in major magazines popular among this demographic, as well as promoting the Fashion Trip CD-ROM through banner ads and, on nationwide college and high school tours. In just a few months, Fashion Trip is building a brand identity among young women, creating a growing user base that is returning to the Fashion Trip web site again and again.

This new and ever-changing site, located at www.fashiontrip.com is freely available to anyone and consists of an on-line lifestyle magazine that features information on fashion, beauty, events, movies, fashion horoscopes, music and video clips. The magazine also provides advice columns where visitors can ask questions relating to beauty, fashion, career, lifestyle and even relationships. The site is also host to give-aways and contests.

Maurizio Vecchione, ModaCAD's president and chief operating officer, stated, "The amount of traffic we have received to the Fashion Trip web site has exceeded our expectations and those of our advertisers. With the upcoming distribution of an additional 200,000 CD-ROM's in Seventeen Magazine plus the continued execution of our marketing campaign, we expect to continue growing."

Vecchione added, "ModaCAD has now proven that it can run a successful on-line site that brings consumers back time and time again. Fashion Trip contains within itself its own promotional venue that provides the company with additional revenues, builds a real-time database of valuable marketing data and, provides the company with conversion rates for advertising our future sites and products."

Now, ModaCAD is in the process of adding commerce functionality to the Fashion Trip web site. The growing Fashion Trip user base will be able to link directly into ModaCAD's recently announced Fashion Finder in order to shop and make transactions on-line. The recently announced web-based fashion e-commerce product will allow free access to all and will evolve to target more mature audiences. Fashion Finder will provide the company with a variety of new and expanded revenue streams including e-commerce fulfillment agreements.

ModaCAD is a premier developer and supplier of digital content management technology enabling advanced product visualization for electronic commerce. For the past 10 years it has leveraged its core, patented rendering technology into a variety of electronic merchandising products primarily targeted at the home design, home furnishings, apparel and industrial design industries. -0-

                             ModaCAD, Inc.
                         Financial Highlights

                      Three Months Ended       Nine Months Ended
                        September 30,             September 30,
                     1998          1997        1998           1997

Net sales         $1,959,803    $  533,141   $6,554,543    $2,261,553
Net loss         ($1,000,462)  ($  559,439) ($2,822,826)  ($  705,173)
Basic loss
 per share       ($     0.16)  ($     0.10) ($     0.46)  ($     0.16)
Diluted loss
 per share       ($     0.15)  ($     0.09) ($     0.43)  ($     0.14)
Weighted average
 common Shares
 outstanding       6,107,222     5,399,722    6,077,769     4,405,929


                       Balance Sheet Highlights

                            September 30, 1998     December 31, 1997

Cash                                $9,358,123           $12,419,992
Total current assets               $12,547,090           $15,328,920
Total current liabilities           $1,191,536              $465,001
Total stockholders' equity         $18,716,879           $20,939,055

-0-

This press release contains forward-looking statements including statements regarding the timing and composition of revenues, future operating results and the timing of product introductions, among others. Except for historical information, the matters discussed in this release are forward-looking statements that are subject to certain risks and uncertainties that could cause the actual results to differ materially from those projected. Factors that could cause actual results to differ materially include the following: (i) the timely completion of the development of the Company's software products, including ModaCAD's e-commerce software products, consumer software and enhanced or updated versions of the Company's electronic merchandising and CAD software products; (ii) unforeseen technical or other obstacles in the development or production of such products and software; (iii) acceptance of ModaCAD's products and consumer software by the publisher/distributor of such products and software and the release and marketing plans of the publisher/distributor; (iv) customer acceptance of ModaCAD's e-commerce and consumer software products and updated or revised versions of the Company's electronic merchandising and CAD software products; (v) the Company's and its publisher/distributor's ability to produce its software products on a cost-effective and timely basis; and (vi) factors not directly related to the Company, such as competitive pressures on pricing, market conditions in general, competition, technological progression, product obsolescence and the changing needs of potential customers and the e-commerce, software, textile, apparel, home furnishings and home design industries in general.