Class Action Suit Filed Against Mossimo, Inc. and its Officers and Directors Alleging Misrepresentations, False Financial Statements and Insider Trading.

SAN DIEGO--(BUSINESS WIRE)--Sept. 24, 1997--A class action has been commenced in the United States District Court for the Central District of California on behalf of purchasers of Mossimo, Inc. ("Mossimo") common stock during the period February 22, 1996 to January 14, 1997.

The complaint charges Mossimo, a men's and women's activewear and sportswear designer that began designing beachwear and more recently expanded into higher-end designer sportswear, and certain of its officers and directors with violations of the federal securities laws.

On February 22, 1996, Mossimo went public through an $82.8 million public offering. The Company sold 2,000,000 shares at $18 per share, while Mossimo Giannulli sold 2.6 million shares, netting more than $43 million. In addition, of the Company's $32 million in proceeds from the IPO, approximately $17 million was paid to Giannulli in connection with the termination of Mossimo's status as a Subchapter S corporation.

Mossimo purported to be a rapidly expanding, emerging designer company targeting an attractive market niche -- teens to mid-30's -- that was "very early in its growth curve," "only beginning to scratch the surface of several key opportunities," and which would be able to "expand its business in a controlled manner."

Throughout the spring and summer of 1996, Mossimo continued to report explosive sales growth and strong margins, while assuring the market that its menswear business continued to perform well and that a new womenswear line was being enthusiastically received by retailers. Mossimo's stock price, which was issued on the IPO at $18 per share, quickly rose to more than $50 per share on June 3, 1996.

However, defendants knew that their positive statements and financial statements were false and misleading when reported and/or made, and that, as Mossimo had rapidly expanded, defendants had completely lost control of the Company's operations and finances such that the Company was unable to ship merchandise to customers in a timely fashion and maintain control over its inventories.

Recognizing that they could not continue to conceal the adverse facts known to them, defendants gradually revealed in a series of announcements that Mossimo's gross margins were being restrained by "unusually high production development costs" and "cost inefficiencies" from changing and adding sourcing agents and manufacturers, that the Company had to sell large amounts of out-of-season merchandise at a substantial discount, that the Company's marketing expenses going forward would be significantly increased because of additional promotional costs associated with Mossimo's expansion of its in-store shops and department stores, and that earnings were being impacted by a physical inventory shortage.

Mossimo also revealed that it would be forced to restrain its sales growth to only 15% in 1997 in an attempt to establish control over its operations. As a result of these revelations, Mossimo's stock price, which had traded as high as $51.125 per share during the Class Period, plummeted to as low as $8.88 per share.

Plaintiffs seek to recover damages on behalf of all purchasers of Mossimo common stock during the Class Period (the "Class"). They are represented by several law firms including Milberg Weiss Bershad Hynes & Lerach LLP, Savett Frutkin Podell & Ryan, P.C. and the Law Offices Of Bernard M. Gross, P.C., who have expertise in prosecuting investor class actions and extensive experience in actions involving financial fraud. For additional information about Milberg Weiss, see the firm's website at http://www.milberg.com .

If you are a member of the Class described above, you may, no later than 60 days from today, move the Court to serve as lead plaintiff of the Class, if you so choose. In order to serve as lead plaintiff, however, you must meet certain legal requirements. If you wish to discuss this action or have any questions concerning this notice or your rights or interests, please contact plaintiffs' counsel, William S. Lerach, Jan M. Adler or Spencer Burkholz of Milberg Weiss at 800/449-4900 or via e-mail at [e-mail], Robert P. Frutkin of Savett Frutkin at 800/993-3233 or Deborah R. Gross of Law Offices Of Bernard M. Gross at 800/258-9349.

CONTACT: Milberg Weiss

William S. Lerach or Jan M. Adler

or Spencer Burkholz, 800/449-4900

[e-mail]

or

Savett Frutkin

Robert P. Frutkin, 800/993-3233

or

Law Offices Of Bernard M. Gross

Deborah R. Gross, 800/258-9349