8-K/A

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, DC 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): October 31, 2006

ICONIX BRAND GROUP, INC.

(Exact name of registrant as specified in its charter)

Delaware	0-10593	11-2481093
(State or Other Jurisdiction of Incorporation)	(Commission File Number)	(IRS Employer Identification No.)

1450 Broadway, New York, NY	10018
(Address of Principal Executive Offices)	(Zip Code)

Registrant's telephone number, including area code      (212) 730-0030

Not Applicable

(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):

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

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

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

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

On November 6, 2006, Iconix Brand Group, Inc., a Delaware corporation (the “Registrant”, “we”, “us”, “our” or similar pronouns ), filed a Current Report on Form 8-K (the “Form 8-K”) with the Securities and Exchange Commission (the “SEC”) announcing, among other things, the October 31, 2006 completion of its acquisition of Mossimo, Inc. a Delaware corporation. The Registrant is now filing this amendment to the Form 8-K to include the financial statements and pro forma financial information described in Item 9.01 below.

Item 9.01    Financial Statements and Exhibits

(a)    Financial Statements of Businesses Acquired

Audited Financial Statements of Mossimo, Inc.: (Filed herewith as Exhibit 99.4)

Table of Contents to Financial Statements

Report of independent registered public accounting firm

Consolidated balance sheets as of December 31, 2005 and 2004

Consolidated statements of earnings for the years ended December 31, 2005, 2004 and 2003

Consolidated statements of stockholders’ equity for the years ended December 31, 2005, 2004 and 2003

Consolidated statements of cash flows for the years ended December 31, 2005, 2004 and 2003

Notes to consolidated financial statements

Unaudited Financial Statements of Mossimo, Inc.: (filed herewith as Exhibit 99.5)

Table of Contents to Financial Statements

Condensed consolidated balance sheets as of September 30, 2006 and December 31, 2005

Condensed consolidated statements of earnings for the nine months ended September 30, 2006 and 2005

Condensed consolidated statements of cash flows for the nine months ended September 30, 2006 and 2005

Notes to condensed consolidated financial statements

(b)    Pro Forma Financial Information

Unaudited Pro Forma Condensed Combined Financial Statements: (Filed herewith as Exhibit 99.6)

Introduction

Unaudited Pro forma Condensed Combined Balance Sheet as of September 30, 2006

Unaudited Pro forma Condensed Combined Statement of Operations for the year ended December 31, 2005 and nine months ended September 30, 2006

Notes to Unaudited Pro Forma Condensed Combined Financial Statements

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(d)    Exhibits. 

Exhibit 2.1*	Agreement and Plan of Merger dated as of March 31, 2006 by and among the Registrant, Moss Acquisition Corp., Mossimo, Inc., and Mossimo Giannulli. (1)
Exhibit 10.1	Registration Rights Agreement dated October 31, 2006 by and among the Registrant, Mossimo Giannulli and Edwin Lewis. (2)
Exhibit 10.2*	Loan and Security Agreement dated as of October 31, 2006 among Mossimo Holdings LLC, Mossimo Management LLC, and Merrill Lynch Mortgage Capital Inc., as agent and lender. (2)
Exhibit 10.3	Guaranty dated as of October 31, 2006 by the Registrant in favor of Merrill Lynch Mortgage Capital Inc., as agent (2)
Exhibit 23.1	Consent of KPMG LLP, Independent Registered Public Accounting Firm.
Exhibit 99.1	Form of global certificate in respect of non-transferable contingent share rights. (2)
Exhibit 99.2	Lock-up Agreement dated October 31, 2006 by and among the Registrant, Moss Acquisition Corp., Mossimo Giannulli and Edwin Lewis. (2)
Exhibit 99.3	Agreement for Creative Director Services dated as of October 31, 2006 by and among Registrant, Mossimo, Inc. and Mossimo Giannulli. (2)
Exhibit 99.4	Report of independent registered public accounting firm; Consolidated balance sheets as of December 31, 2005 and 2004; Consolidated statements of earnings for the years ended December 31, 2005, 2004 and 2003; Consolidated statements of stockholders’ equity for the years ended December 31, 2005, 2004 and 2003; Consolidated statements of cash flows for the years ended December 31, 2005, 2004 and 2003; Notes to consolidated financial statements
Exhibit 99.5	Unaudited Condensed consolidated balance sheets as of September 30, 2006 and December 31, 2005; Unaudited Condensed consolidated statements of earnings for the nine months ended September 30, 2006 and 2005; Unaudited Condensed consolidated statements of cash flows for the nine months ended September 30, 2006 and 2005; Unaudited Notes to condensed consolidated financial statements
Exhibit 99.6	Introduction; Unaudited Pro forma Condensed Combined Balance Sheet as of September 30, 2006; Unaudited Pro forma Condensed Combined Statement of Operations for the year ended December 31, 2005 and nine months ended September 30, 2006; Notes to Unaudited Pro forma Condensed Combined Financial Statements.

(1) Previously filed as an exhibit to Registrant’s Current Report on Form 8-K filed with the SEC on April 26, 2006 (SEC Accession No. 0000950117-06-001668) and incorporated herein by reference.

(2) Previously filed as an exhibit to Registrant’s Current Report on Form 8-K filed with the SEC on November 6 , 2006 (SEC Accession No. 0001144204-06-045497) and incorporated herein by reference.

* The Registrant has omitted certain schedules and exhibits pursuant to Item 601(b)(2) of Regulation S-K and shall furnish supplementally to the SEC copies of any of the omitted schedules and exhibits upon request by the SEC.

-3-

SIGNATURES

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.

	ICONIX BRAND GROUP, INC. (Registrant)
Date:  January 12, 2007	By:	/s/ Warren Clamen
		Name: Warren Clamen Title: Chief Financial Officer

-4-

EX-23.1

CONSENT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

The Board of Directors

Iconix Brand Group Inc.

We consent to the incorporation by reference in the registration statements on Form S-3 (Nos. 333-96985, 333-116716, 333-120581, 333-128425, 333-129075, 333-137383 and 333-139575) and on Form S-8 (Nos. 333-27655, 333-49178, 333-68906, 333-75658, 333-127416 and 333-138134) of Iconix Brand Group, Inc. of our report dated March 24, 2006, with respect to the consolidated balance sheets of Mossimo, Inc. as of December 31, 2005 and 2004, and the related consolidated statements of earnings, stockholders’ equity and cash flows for each of the years in the three-year period ended December 31, 2005, which report appears in the Current Report on Form 8-K/A of Iconix Brand Group, Inc. for the event dated October 31, 2006.

/s/ KPMG LLP 

Los Angeles, California

January 12, 2007

EX-99.4

EXHIBIT 99.4

INDEX TO AUDITED FINANCIAL STATEMENTS MOSSIMO, INC. AND SUBSIDIARY
Consolidated Financial Statements
Report of independent registered public accounting firm	F-2
Consolidated balance sheets as of December 31, 2005 and 2004	F-3
Consolidated statements of earnings for the years ended December 31, 2005, 2004 and 2003	F-4
Consolidated statements of stockholders’ equity for the years ended December 31, 2005, 2004 and 2003	F-5
Consolidated statements of cash flows for the years ended December 31, 2005, 2004 and 2003	F-6
Notes to consolidated financial statements	F-7

EX-99.5

EXHIBIT 99.5

INDEX TO UNAUDITED FINANCIAL STATEMENTS MOSSIMO, INC. AND SUBSIDIARY
Consolidated Financial Statements (Unaudited)
Condensed consolidated balance sheets as of September 30, 2006 and December 31, 2005	F-2
Condensed consolidated statements of earnings for the nine months ended September 30, 2006 and 2005	F-3
Condensed consolidated statements of cash flows for the nine months ended September 30, 2006 and 2005	F-4
Notes to condensed consolidated financial statements	F-5

MOSSIMO, INC.

CONDENSED CONSOLIDATED BALANCE SHEETS

(IN THOUSANDS, EXCEPT SHARE DATA)

(Unaudited)

	September 30, 2006			December 31, 2005
ASSETS
CURRENT ASSETS:
Cash and cash equivalents	$	24,471		$	19,658
Restricted cash		734			726
Accounts receivable, net		5,911			4,372
Merchandise inventory		431			101
Deferred income taxes		3,223			4,004
Prepaid expenses and other current assets		1,461			388
Total current assets		36,231			29,249
PROPERTY AND EQUIPMENT, at cost, net of accumulated depreciation and amortization		812			893
DEFERRED INCOME TAXES		1,609			1,923
TRADENAME		81			90
OTHER ASSETS		52			79
	$	38,785		$	32,234
LIABILITIES AND STOCKHOLDERS’ EQUITY
CURRENT LIABILITIES:
Accounts payable	$	1,060		$	884
Accrued liabilities		2,574			503
Accrued commissions		1,368			388
Accrued bonuses		3,304			3,458
Total current liabilities		8,306			5,233
DEFERRED RENT		110			128
Total liabilities		8,416			5,361
COMMITMENTS AND CONTINGENCIES
STOCKHOLDERS’ EQUITY:
Preferred stock, par value $.001; authorized shares 3,000,000; no shares issued or outstanding		—			—
Common stock, par value $.001; authorized shares 30,000,000; issued and outstanding 16,002,775 at September 30, 2006 and 15,828,754 at December 31, 2005		15			15
Additional paid-in capital		41,364			40,222
Accumulated deficit		(11,010	)		(13,364	)
Net stockholders’ equity		30,369			26,873
	$	38,785		$	32,234

See accompanying notes to consolidated financial statements

F-2

MOSSIMO, INC.

CONDENSED CONSOLIDATED STATEMENTS OF EARNINGS

(IN THOUSANDS, EXCEPT PER SHARE DATA)

(Unaudited)

	For the Nine Months September 30,
	2006		2005
Revenue from license royalties and design service fees	$	17,023	$	19,705
Product sales		5,537		4,775
Total revenues		22,560		24,480
Operating expenses:
Cost of product sales		2,875		2,937
Selling, general and administrative		16,397		14,864
Total operating expenses		19,272		17,801
Operating earnings		3,288		6,679
Interest income		672		232
Earnings before income taxes		3,960		6,911
Income taxes		1,606		2,226
Net earnings	$	2,354	$	4,685
Net earnings per common share:
Basic	$	0.15	$	0.30
Diluted	$	0.15	$	0.30
Weighted average common shares outstanding:
Basic		15,963		15,742
Diluted		16,020		15,770

See accompanying notes to consolidated financial statements

F-3

MOSSIMO, INC.

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

(IN THOUSANDS)

(Unaudited)

	For the Nine Months Ended September 30,
	2006			2005
CASH FLOWS FROM OPERATING ACTIVITIES:
Net earnings	$	2,354		$	4,685
Adjustments to reconcile net earnings to net cash provided by operating activities:
Depreciation and amortization		243			346
Inventory write-down		108			255
Deferred rent		(18	)		(3	)
Provision for bad debt		290			49
Deferred income taxes		1,095			1,411
Excess tax benefit from stock-based compensation		(141	)		—
Stock-based compensation		144			—
Changes in:
Accounts receivable		(1,829	)		(1,692	)
Merchandise inventory		(438	)		(725	)
Prepaid expenses and other current assets		(1,073	)		134
Other assets		27			59
Accounts payable		176			1,204
Accrued liabilities		2,212			388
Accrued commissions		980			124
Accrued bonuses		(154	)		2,362
Net cash provided by operating activities		3,976			8,597
CASH FLOWS FROM INVESTING ACTIVITIES:
Proceeds from sale of available-for-sale securities		—			4,800
Payments for acquisition of property and equipment		(153	)		(132	)
Net cash provided by (used in) investing activities		(153	)		4,668
CASH FLOWS FROM FINANCING ACTIVITIES:
Restricted cash—certificates of deposit		(8	)		(309	)
Excess tax benefit from stock-based compensation		141			—
Proceeds from issuance of common stock		857			25
Net cash provided by (used in) financing activities		990			(284	)
NET INCREASE IN CASH AND CASH EQUIVALENTS		4,813			12,981
CASH AND CASH EQUIVALENTS, beginning of period		19,658			4,903
CASH AND CASH EQUIVALENTS, end of period	$	24,471		$	17,884
SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION:
Cash paid during the year for state income taxes	$	273		$	195

See accompanying notes to consolidated financial statements

F-4

MOSSIMO, INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(Unaudited)

1. Basis of presentation

The condensed consolidated financial statements presented herein have not been audited, but include all material adjustments (consisting of normal recurring adjustments), which are, in the opinion of management, necessary for a fair statement of the financial condition, results of operations and cash flows for the periods presented. However, these results are not necessarily indicative of results for any other interim period or for the full year. The condensed consolidated balance sheet data presented herein for December 31, 2005 was derived from the Company’s audited consolidated financial statements for the year then ended, but does not include all disclosures required by accounting principles generally accepted in the United States of America.

The consolidated financial statements include the accounts of Mossimo, Inc. and its wholly-owned subsidiary, Modern Amusement, Inc. All significant inter-company balances and transactions have been eliminated in consolidation.

On January 16, 2004, Mossimo, Inc. acquired substantially all the assets of Modern Amusement LLC through a wholly owned subsidiary, Modern Amusement, Inc. (“Modern Amusement”). All inter-company accounts and transactions have been eliminated in consolidation.

The preparation of financial statements in conformity with accounting principles generally accepted in the United States requires management 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 the reported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates.

Certain information and footnote disclosures normally included in annual financial statements in accordance with accounting principles generally accepted in the United States of America have been omitted pursuant to the Regulations of the Securities and Exchange Commission. The Company believes the disclosures included in the accompanying interim condensed consolidated financial statements and notes thereto are adequate to make the information not misleading, but should be read in conjunction with the financial statements and notes thereto included in our Form 10-K for the year ended December 31, 2005.

As of March 31, 2006, the Company entered into an agreement and plan of merger by and among the Company, Iconix Brand Group, Inc., Moss Acquisition Corp., a wholly-owned subsidiary of Iconix, and Mossimo Giannulli, the Chairman and Co-Chief Executive Officer and 64.6% stockholder of the Company (“Merger Agreement”). Pursuant to the agreement, the Company merged with and into Moss Acquisition Corp., the surviving company, on October 31, 2006. At the time, the Company ceased being a separately traded public company on NASDAQ and its securities were deregistered with the Securities and Exchange Commission.

As consideration for investment banking services provided in connection with Mossimo’s negotiation and evaluation of the proposed merger and any alternative proposals, Mossimo has agreed to pay B. Riley & Co., Inc. an investment banking fee of $600,000. This fee is not contingent on the completion of any transaction. Bryant R. Riley, a director of Mossimo, is chairman and chief executive officer of B. Riley & Co., Inc. This fee was accrued in the first quarter of 2006.

Share-based compensation

On January 1, 2006, the Company adopted Statement of Financial Accounting Standards No. 123 (revised 2004), “Share-based payment,” (“SFAS 123(R)”) which requires the measurement and recognition of

F-5

MOSSIMO, INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

(Unaudited)

compensation expense for all share-based payment awards made to employees and directors for employee stock options based on estimated fair values. SFAS 123(R) supersedes the Company’s previous accounting under Accounting Principles Board Opinion No. 25, “Accounting for stock issued to employees” (“APB 25”) for periods beginning on or after January 1, 2006. In March 2005, the Securities and Exchange Commission issued Staff Accounting Bulletin No. 107 (“SAB 107”) relating to SFAS 123(R). The Company has applied the relevant provisions of SAB 107 in its adoption of SFAS 123(R).

The Company adopted SFAS 123(R) using the modified prospective method, which requires the application of the accounting standard as of January 1, 2006, the first day of the Company’s 2006 fiscal year. The Company’s consolidated financial statements for the nine months ended September 30, 2006 reflect the impact of SFAS 123(R). In accordance with the modified prospective transition method, the Company’s consolidated financial statements for prior periods have not been restated to reflect, and do not include, the impact of SFAS 123(R). Stock-based compensation expense recognized under SFAS 123(R) for the nine months ended September 30, 2006 was $144,000.

SFAS 123(R) requires companies to estimate the fair value of share-based payment awards on the date of grant using an option-pricing model. The value of the portion of the award that is ultimately expected to vest is recognized as expense over the requisite service periods in the Company’s consolidated statement of earnings. Prior to the adoption of SFAS 123(R), the Company accounted for stock-based compensation in accordance with Accounting Principles Board (“APB”) Opinion No. 25, “Accounting for stock issued to employees”, and related interpretations. The Company followed the pro forma disclosure requirements of SFAS No. 123, “Accounting for Stock-Based Compensation”, which requires presentation of the pro forma effect of the fair value based method on net earnings and net earnings per share in the financial statement footnotes.

Stock-based compensation expense recognized during the period is based on the value of the portion of share-based payment awards that is ultimately expected to vest during the period. Stock-based compensation expense recognized in the Company’s consolidated statement of earnings for the nine months ended September 30, 2006 included compensation expense for share-based payment awards granted prior to, but not yet vested as of December 31, 2005 based on the grant date fair value estimated in accordance with the pro forma provisions of SFAS 123. The Company uses the straight-line single option method of attributing the value of the share-based compensation expense. As stock-based compensation expense recognized in the consolidated statement of earnings for the first, second and third quarter of 2006 is based on awards ultimately expected to vest, it has been reduced for estimated forfeitures. SFAS 123(R) requires forfeitures to be estimated at the time of grant and revised, if necessary, in subsequent periods if actual forfeitures differ from those estimates. In the Company’s pro forma information required under SFAS 123 for the periods prior to 2005, the Company accounted for forfeitures as they occurred.

Upon adoption of SFAS 123(R), the Company continues to use the Black-Scholes option pricing model for valuation of share-based awards granted beginning in 2006. The Company’s determination of fair value of share-based payment awards on the date of grant using an option-pricing model is affected by the Company’s stock price as well as assumptions regarding a number of highly complex and subjective variables. These variables include, but are not limited to, the Company’s expected stock price volatility over the term of the awards, and actual and projected employee stock option exercise behaviors.

F-6

MOSSIMO, INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

(Unaudited)

2. Revenue recognition

Revenue from license royalties and design service fees are recognized in accordance with the terms of the underlying agreements, which is generally after the design services are performed, and as the licensee achieves sales of the Company’s products. During the periods presented herein, a substantial amount of the Company’s revenue from license royalties and design fees were generated under the Target Agreement under a rate of 1% to 4% that declines as the contract year progresses and Target achieves certain levels of retail sales. Accordingly, the Company’s revenues from Target decreases as the year progresses. The declining rate is reset each contract year beginning on February 1. Revenue recognized in the first and second quarters of the Company’s calendar year in connection with the Target Agreement is significantly higher than in the third and fourth quarters of the Company’s calendar year due to the declining rates in the Target Agreement. Revenues from license royalties and design service fees under license agreements other than the Target Agreement are generally collected on a quarterly basis, and they range from 2% to 5% of sales, as defined in the respective agreements.

On March 31, 2006, the Company and Target restated the Target Agreement. The restated Target Agreement extends Target’s exclusive license to produce and distribute substantially all Mossimo-branded products sold in the United States, its territories and possessions through Target retail stores or any other retail store or other merchandising activity operated by Target or its affiliates, including direct mail and Internet merchandising until January 31, 2010.

Under the restated Target Agreement, the Company will ensure the availability of Mossimo Giannulli, the Co-Chief Executive Officer of the Company, to provide the services of creative director in connection with Mossimo-branded products sold though Target stores. Target will pay the Company an annual guaranteed minimum fee of $9,625,000 for each contract year (defined as each period from February 1 through January 31 during the term of the agreement), against which Target may charge back and offset certain amounts. As amended, the agreement requires the Company to pay Target a one-time, nonrefundable reimbursement of fees paid by Target related to contract year 2006 revenues in the amount of $6,000,000 on or before June 30, 2006. The payment was made in the second quarter of 2006 in accordance with the terms of the agreement, but was recorded as a reduction in revenue during the first quarter of 2006.

Modern Amusement recognizes wholesale operations revenue from the sale of merchandise when products are shipped, FOB Modern Amusement’s distribution facilities, and the customer takes title and assumes risk of loss, collection is reasonably assured, pervasive evidence of an arrangement exists, and the sales price is fixed or determinable.

3. Inventory

The Company maintains inventories for the Modern Amusement segment. Inventories are valued at the lower of cost (first-in, first-out) or market and are made up primarily of finished goods. The Company continually evaluates its inventories by assessing slow moving current product as well as prior seasons’ remaining inventory. Market value of non-current inventory is estimated based on the impact of market trends, an evaluation of economic conditions and the value of current orders relating to the future sales of this type of inventory. Management makes reserves against such inventory as seen appropriate, which reduces gross margin, operating income and carrying value of inventories.

F-7

MOSSIMO, INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

(Unaudited)

4. Executive bonus plans

The Company has bonus plans covering two executive officers which are administered by the Compensation Committee of the Board of Directors, and that provide for discretionary bonuses based on the Company’s overall performance, with the total amount of the bonuses not to exceed a percent (as defined) of the excess over the minimum total guaranteed fees, if any, of license royalties paid to the Company under the Target Agreement, and as defined in each of the respective bonus plans. The Company has expensed approximately $3.2 million and $2.4 million for the nine month periods ended September 30, 2006 and 2005, respectively.

5. Income taxes

The Company accounts for income taxes in accordance with Statement of Financial Accounting Standard (“SFAS”) No. 109, “Accounting for Income Taxes”. Deferred taxes result from the recognition of the income tax benefit to be derived from the Company’s net operating loss carry forward for income taxes purposes.

The Company recorded a provision for income taxes of $1,606,000 for the nine months ended September 30, 2006, compared to a provision for income taxes of $2,226,000 for the nine months ended September 30, 2005. Both provisions approximate the Company’s combined effective rate as estimated for the entire fiscal year, for Federal and California state income taxes. The income tax rate for the nine months ended September 30, 2006 is 41% compared to 32% for the comparable period of the prior year.

At September 30, 2006, the Company has recorded a total net deferred tax asset of $4.83 million, with $3.22 million classified as current in the accompanying condensed consolidated balance sheet, primarily reflecting the extension of the Target Agreement through January 31, 2010. The Company has considered the projected taxable income from the Target Agreement and other agreements in its estimate of deferred tax asset recoverability and has recorded a valuation allowance for its net deferred tax assets of $245,000 as of September 30, 2006. The valuation allowance relates principally to foreign tax credits for which there is uncertainty about their recoverability within the period prior to the expiration of the carryforwards.

The Company has approximately $329,000 and $1.50 million of federal and state income tax net operating loss carry forwards, respectively, available to offset future taxable income which expire in various years through 2022.

In addition to the Company’s taxable income being subject to federal, state and local income taxes, the Company may be classified as a “personal holding company” from time to time. Personal holding company status results from more than 50 percent of the value of outstanding stock being owned directly or indirectly by five or fewer individuals, and more than 60 percent of the Company’s income, as defined, being derived from royalties. Personal holding companies are subject to an additional federal tax at the highest personal income tax rate on undistributed after tax earnings.

Over 50 percent of the value of the Company’s outstanding stock is owned by one stockholder, however it is presently anticipated that in 2006, no more than 60 percent of the Company’s income, as defined, would be derived from license royalties. Accordingly, at this time the Company is not anticipating being classified as a personal holding company at the end of 2006 and the Company intends to continue to take appropriate measures to avoid being classified as a personal holding company at the end of 2006 and beyond. However, there can be no assurance that the Company will be successful in its efforts to avoid classification as a personal holding company at the end of 2006 or in future years.

F-8

MOSSIMO, INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

(Unaudited)

6. Earnings per share and stock option plans

Basic earnings per share is computed by dividing net earnings available to common stockholders by the weighted average number of common shares outstanding. Diluted earnings per share includes the effect of potential shares outstanding, including dilutive stock options, using the treasury stock method. Securities excluded from diluted weighted average shares outstanding are comprised of stock options.

The reconciliation between earnings and weighted average shares outstanding for basic and diluted earnings per share is as follows (amounts in thousands, except per share data):

	Nine months ended September 30,
	2006		2005
Net income	$	2,354	$	4,685
Weighted average number of common shares:
Basic		15,963		15,742
Effect of dilutive securities-stock options		57		28
Diluted		16,020		15,770
Earnings per share:
Basic	$	0.15	$	0.30
Effect of dilutive securities-stock options		—		—
Diluted	$	0.15	$	0.30
Excluded securities—antidilutive		100		399

The Company adopted the Mossimo, Inc. 1995 Stock Option Plan (the “1995 Plan”), which provides for the grant of stock options, stock appreciation rights and other stock awards to certain officers and key employees of the Company and to certain advisors or consultants to the Company. In addition, the Company adopted a Non-Employee Directors Stock Option Plan (the “Directors Plan”) that provides for the grant of stock options to non-employee directors. Stock options issued to employees are granted at the market price on the date of grant, generally vest at 33% per year, and generally expire ten years from the date of grant. The Company issues new shares of common stock upon exercise of stock options. This plan expired at the annual meeting held on December 15, 2005, therefore, no additional share will be issued under this plan.

The Company adopted the Mossimo, Inc 2005 stock Option Plan (the “2005 Plan) to replace the 1995 Plan and the Directors Plan both of which terminated as of December 31, 2005. The 2005 Plan provides for the grant of stock options to certain officers, key employees and non-employee directors. A total of 1,500,000 shares have been reserved for issuance under the 2005 Plan. Options granted under the 2005 Plan will have an exercise price equal to the fair market value of the common stock on the date of grant. Options will be exercisable in accordance with vesting schedules to be established by the Compensation Committee. As of September 30, 2006, no options have been granted under the 2005 Plan.

F-9

MOSSIMO, INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

(Unaudited)

A summary of option activity follows:

	Shares		Weighted Average Price	Weighted Average Remaining Contractual Term (in years)	Aggregate Intrinsic Value
Outstanding, at December 31, 2005	554,331		6.34
Granted	—		—
Exercised	(174,021	)	4.93
Canceled/forfeited	(25,000	)	10.40
Outstanding, at September 30, 2006	355,310		6.72	4.95	$	1,022,660
Options exercisable, at September 30, 2006	262,644		7.55	4.91	$	699,675

The weighted-average grant-date fair value of options granted during the nine months ended September 30, 2005 was $2.88. The aggregate intrinsic value in the table above represents the total pretax intrinsic value (the difference between our closing stock price on September 30, 2006 and the exercise price, multiplied by the number of in-the-money options) that would have been received by the option holders had all option holders exercised their options on September 30, 2006. This amount changes based on the fair market value of our stock. Total intrinsic value of options exercised for the nine month period ended September 30, 2006 was $352,000. 10,000 options were exercised during the nine month period ended September 30, 2005. As of September 30, 2006, total unrecognized stock-based compensation expense related to non-vested stock options was approximately $188,000, which is expected to be recognized over a weighted average period of approximately two years.

The following table summarizes stock-based compensation expense, net of tax, related to employee stock options under SFAS 123(R) for the nine months ended September 30, 2006 which was allocated as follows (in thousands):

	Nine months ended September 30,
	2006			2005
Stock-based compensation expense included in operating expenses	$	144		$	—
Tax benefit		(57	)		—
Stock-based compensation expense related to employee stock options, net of tax	$	87		$	—

As noted above, the impact of net earnings from the adoption of SFAS 123(R) was a reduction in net earnings of $87,000 or $0.00 per diluted share for the nine months ended September 30, 2006. Prior to the adoption of SFAS 123(R), we presented all tax benefits resulting from the exercise of stock options as operating cash flows in our consolidated statement of cash flows. SFAS 123(R) requires such benefits to be recorded as financing cash flows. The impact of this changes in not material to our statement of cash flows.

Before January 1, 2006, the Company accounted for stock-based compensation in accordance with Accounting Principles Board (“APB”) Opinion No. 25, “Accounting for Stock Issued to Employees”, and related interpretations. The Company follows the pro forma disclosure requirements of SFAS No. 123, “Accounting for

F-10

MOSSIMO, INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

(Unaudited)

stock-based compensation”, which requires presentation of the pro forma effect of the fair value based method on net earnings and net earnings per share in the financial statement footnotes.

If compensation expense was determined based on the fair value method, the Company’s net earnings and earnings per share would have resulted in the approximate pro forma amounts indicated below for the nine month period ended September 30, 2005 (in thousands, except per share data):

	Nine months ended September 30, 2005
Net earnings as reported	$	4,685
Deduct:
Total stock-based employee compensation expense determined under fair market value based method for all awards, net of related tax effects		(48	)
Pro forma net earnings	$	4,637
Earnings per share—basic and diluted
As reported—basic	$	0.30
As reported—diluted	$	0.30
Pro forma—basic	$	0.29
Pro forma—diluted	$	0.29

The fair value of each option grant was estimated as of the grant date using the Black-Scholes option-pricing model for the nine months ended September 30, 2005, assuming risk-free interest rates of 4.28 percent; volatility of approximately 84 percent; zero dividend yield; and expected lives of 6.50 years.

The expected term of the options represents the estimated period of time until exercise and is based on historical experience of similar options, giving consideration to the contractual terms, vesting schedules and expectations of future employee behavior. Expected stock price volatility is based on the historical volatility of our stock for the period equal to the expected term. The risk-free interest rate is based on the U.S. Treasury yield in effect at the time of grant with an equivalent remaining term. The Company has not paid dividends in the past and does not currently plan to pay any dividends in the near future.

7. Litigation

On April 12, 2005, Mossimo Giannulli offered to acquire all of the outstanding publicly held common stock of Mossimo at a price of $4.00 per share. Following the announcement, six purported class action lawsuits were filed in the Court of Chancery of the State of Delaware. Each of the complaints asserted that the Mossimo directors breached their fiduciary duties to Mossimo’s stockholders, and sought an injunction preventing the acquisition. On April 19, 2005, the Board of Directors appointed a Special Committee to consider and evaluate Mr. Giannulli’s proposal. The Special Committee retained Houlihan Lokey and Gibson Dunn & Crutcher to serve as the Committee’s independent financial advisor and legal counsel, respectively, with respect to the Committee’s evaluation of Mr. Giannulli’s proposal. On May 27, 2005, the above referenced cases were consolidated under the following caption: In re Mossimo, Inc. Shareholder Litigation, Consolidated Civil Action No.1246-N (the “Delaware Action”).

F-11

MOSSIMO, INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

(Unaudited)

On April 12, 2006, a purported shareholder class action lawsuit was filed in the Superior Court of the State of California for the County of Los Angeles entitled Laborers’ Local #231 Pension Fund vs. Mossimo, Inc. et al (the “California Action”). The lawsuit alleges that Mossimo and its board of directors breached their fiduciary duties and engaged in self-dealing in approving the merger agreement and seeks, among other relief, to enjoin the proposed merger of the Mossimo with Iconix, the rescission of any agreements entered into in connection with the proposed merger, and costs, including attorney’s fees.

On or about September 26, 2006, Mossimo and other defendants entered into a Memorandum of Understanding (“MOU”) with the Delaware plaintiffs to settle the Delaware Action, subject to final approval of the settlement by the Delaware Chancery Court. The terms of the settlement provide that the Merger Agreement be amended so that the amount of the Termination Fee that Mossimo must pay Iconix if the Merger is terminated prior to the Effective Date (as defined in the Merger Agreement) under the specific circumstances and conditions set forth in the Merger Agreement, will be reduced from $5 million to $3.5 million. The settlement also provides that should Iconix sell Mossimo to an unaffiliated third party in the twelve month period following the effective date of the Merger for consideration of more than 20% greater than the total merger consideration, Iconix and Mossimo will pay liquidated damages to the shareholders in the amount of 30% of all consideration above the 20% increase over the total merger consideration. In addition, certain additional disclosures were made in disclosures to Mossimo’s public shareholders in conjunction with the Merger. The Company also agreed to negotiate in good faith with the plaintiffs’ lead counsel concerning the amount of attorney fees and expenses to be paid, and not to oppose plaintiffs’ lead counsel’s application to the Delaware Chancery Court of up to $800,000 for attorneys’ fees and expense to be paid by Mossimo or its successors. In consideration of these terms, the parties agreed that they would fully and finally release and discharge all claims against each other.

Mossimo and other defendants entered into a settlement letter dated October 27, 2006 with the California plaintiffs in the California Action. Under the terms of this agreement, Mossimo agreed to pay plaintiff’s counsel the sum total of $650,000 in exchange for the California plaintiffs abiding by and agreeing to be bound by the terms of the Delaware settlement once it is approved by the Delaware Chancery Court.

During the third quarter of 2006, the Company accrued for the estimated losses from both the Delaware and California class action cases and recorded a receivable from the Company’s insurance carrier for the amount deemed probable of recovery under the Company’s policy covering these cases. As of September 30, 2006, the Company has an accrual for loss of $1.55 million recorded in accrued liabilities and an insurance proceeds receivable of $700,000 recorded in prepaid expenses and other current assets.

8. Segment information

The Company operates in two business segments: Mossimo (design and licensing services) and Modern Amusement (Modern) (wholesale). The following tables summarize various financial amounts for each of our business segments (in thousands):

Nine months ended September 30, 2006	Mossimo		Modern			Total
Revenues	$	17,023	$	5,537		$	22,560
Gross Profit		—		2,662			2,662
Depreciation and Amortization		81		162			243
Selling, general and administrative expenses		13,451		2,946			16,397
Operating Income (loss)		3,573		(285	)		3,288
Interest Income		664		8			672
Total Assets		34,126		4,659			38,785
Capital Expenditures		110		43			153

F-12

MOSSIMO, INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

(Unaudited)

Nine months ended September 30, 2005	Mossimo		Modern			Total
Revenues	$	19,705	$	4,775		$	24,480
Gross Profit		—		1,838			1,838
Depreciation and Amortization		158		188			346
Selling, general and administrative expenses		11,790		3,074			14,864
Operating Income (loss)		7,915		(1,236	)		6,679
Interest Income		232		—			232
Total Assets		27,875		3,831			31,706
Capital Expenditures		54		78			132

The following information should be considered when reading the above table:

Ÿ The Company has no inter-segment revenue or expense.

Ÿ Corporate overhead has been allocated to the Mossimo segment.

Ÿ The provision for income tax is not allocated to business segments.

Ÿ All long-lived assets were geographically located in the United States.

Ÿ Revenue from countries other than the United States did not account for 10% or more of total revenue.

Ÿ For the nine months ended September 30, 2006 sales of the Modern segment were $5.54 million reduced by cost of sales of $2.88 million to arrive at a gross profit of approximately $2.66 million, compared to sales of $4.78 million reduced by cost of sales of $2.94 million to arrive at a gross profit margin of $1.84 million for the nine months ended September 30, 2005.

Ÿ Operating expenses that have a direct correlation to each segment have been recorded in each respective segment.

F-13

EX-99.6

Exhibit 99.6

UNAUDITED PRO FORMA CONDENSED COMBINED FINANCIAL STATEMENTS

Introduction

On October 31, 2006, we acquired all of the outstanding capital stock of Mossimo, Inc., referred to as Mossimo, through its merger with, and into, Moss Acquisition Corp., a wholly-owned subsidiary formed by us for such purpose, with Moss Acquisition Corp. continuing as the surviving corporation and our wholly-owned subsidiary. As consideration for the merger, we paid the stockholders of Mossimo, a total of $67.5 million in cash and 3,608,810 shares of our common stock, referred to as the initial merger consideration. In addition, the recipients of the initial merger consideration have the right to receive additional shares of our common stock, referred to as the additional merger consideration, if our common stock does not close at or above $18.71 for at least 20 consecutive trading days during the 12 months ending October 31, 2007, referred to as the measurement period, which rights are evidenced by the non-transferable contingent share rights that we granted to them upon the consummation of the merger.

If the additional merger consideration becomes payable, each former holder of Mossimo common stock entitled to such consideration may exercise its non-transferable contingent share rights to receive such number of additional shares of our common stock as is determined by dividing (1) the product of (a) the number of shares of our common stock issued to such holder as initial merger consideration, multiplied by (b) the difference between (i) $18.71 and (ii) the greater of (x) $18.50 (the average closing sale price of our common stock for the three days prior to the closing of the merger) and (y) the highest 20-consecutive trading day average closing sale price of our common stock during the measurement period (the higher stock price in this clause (ii) is referred to as the actual price), by (2) the actual price. The aggregate number of shares of our common stock issuable as additional merger consideration is subject to limitation as set forth in the merger agreement governing the Mossimo merger. See Note P to the Unaudited Proforma Condensed Combined Financial Statements.

In connection with the Mossimo merger, each unexpired and unexercised option to purchase Mossimo common stock, whether vested or unvested and without regard to whether such option was then exercisable, was cancelled. As consideration for such cancellations, we paid the former holders of such cancelled Mossimo options, a total of $950,000 in cash. In addition, if the additional merger consideration becomes payable as described above, each of such former option holders will also receive a cash payment equal to the per-share cash value of the additional merger consideration he or she would have received if he or she had exercised the option prior to the merger (and had thus been a stockholder of Mossimo, Inc. at the time of the merger), less any applicable tax withholding.

Prior to the Mossimo merger, in April 2006, Mossimo, Inc. received an unsolicited proposal from Cherokee Inc. to acquire all of its outstanding capital stock. We subsequently entered into a termination and settlement agreement with Cherokee pursuant to which it agreed to withdraw such proposal (and not to reinstate or make any new offer) and, effective upon the closing of the merger, to terminate its finder’s fee agreement with Mossimo, Inc. in respect of its royalties from Target. In exchange for such withdrawal and termination, we paid Cherokee $33.0 million upon the closing of the merger.

In connection with the Mossimo merger, our wholly owned subsidiary, Mossimo Holdings, LLC which we formed for such purpose and whose activities are limited to acquiring intellectual property assets, exploiting and maintaining such assets and borrowing funds in connection with those activities, obtained a loan from Merrill Lynch Mortgage Capital Inc. in the amount of $90.0 million, secured by the Mossimo trademarks, license agreements, including the proceeds therefrom, and related intellectual property assets, which we simultaneously sold to Mossimo Holdings upon the closing of the merger. The note evidencing this loan bears interest at a variable rate equal to the three-month LIBOR plus 5.125% per annum and matures on December 18, 2008, with principal payable in quarterly payments totaling $10.5 million in the first year and $10.8 million in the second year, with the balance due upon maturity. The $90.0 million in proceeds from this secured loan, together with $17.5 million of the cash acquired by us in the merger, was or will be used by us as follows: $67.5 million was used to pay the cash portion of the initial merger consideration; $33.0 million was paid to Cherokee Inc., as described above; approximately $950,000 was used to buy out the cancelled Mossimo stock options as described above; approximately $5.2 million was or will be used to pay costs associated with the merger and $900,000 was used to pay costs associated with the loan financing. The costs of $900,000 relating to the $90.0 million loan have been deferred and will be amortized over the life of the loan, using the effective interest method.

On April 11, 2006, we completed our acquisition of certain assets of Mudd (USA) LLC related to its business of marketing, licensing and managing its Mudd brands, trademarks, intellectual property and related names worldwide, excluding China, Hong Kong, Macau and Taiwan. We paid the following consideration for such assets: (a) $45.0 million in cash, which was funded from a portion of the proceeds of the notes issued by IP Holdings, LLC, referred to as IP Holdings, which is a special purpose entity in which we own, directly, a 53.5% limited liability company interest and, indirectly through other of our subsidiaries, the remaining limited liability company interests, and (b) our issuance to the seller of 3,269,231 restricted shares of our common stock. In connection with the transaction, we simultaneously sold the assets to IP Holdings. On the closing date, IP Holdings, also entered into a license agreement with Mudd (USA) LLC, in which IP Holdings granted Mudd (USA) LLC the exclusive right to use the Mudd trademark in connection with the design, manufacture, sale and distribution of women’s and children’s woven bottoms and related products in the United States. Mudd (USA) LLC has guaranteed for two years certain minimum licensing revenues to us from the purchased assets and royalties under the license agreement. The guarantee and certain other of the seller’s obligations to us under the purchase agreement are secured by its pledge of a portion of the cash and shares issued by us as consideration in the acquisition.

The financing for IP Holding’s purchase of the purchased assets from us was accomplished through its private placement of asset-backed notes. The issuance of the notes raised $49.0 million in new financing for IP Holdings (before giving effect to the payment of expenses in connection with the issuance of the notes and required deposits to reserve funds) and refinanced the approximately $87.0 million principal amount then outstanding under the notes previously issued by IP Holdings. The notes are secured by the purchased assets, as well as by other intellectual property assets owned by IP Holdings. The payment of the principal amount of, and interest on, the notes will be made from amounts received by IP Holdings under license agreements with various licensees of the purchased assets and IP Holdings’ other intellectual property assets. We are not obligated, and our assets are not available, to pay any amounts with respect to the notes if amounts received by IP Holdings under such license agreements are insufficient to make the required payments. In addition, the assets of IP Holdings are not available to pay any of our obligations.

The following unaudited pro forma condensed combined financial statements give effect to (a) the Mossimo merger and (b) three acquisitions recently completed by us: (i) our purchase of certain Mudd (USA) LLC assets in April 2006, (ii) the Rampage brand acquisition in September 2005 and (iii) the Joe Boxer brand acquisition in July 2005, under the purchase method of accounting. They do not give effect to our November 2006 acquisition of the Ocean Pacific brand or our August 2006 purchase of the London Fog trademarks, as such pro forma disclosure is not required with respect to such transactions under the rules and regulations of the Securities and Exchange Commission. These unaudited pro forma condensed combined statements are presented for illustrative purposes only. The pro forma adjustments are based upon available information and certain assumptions that our management believes are reasonable. The unaudited pro forma condensed combined financial statements do not purport to represent what our results of operations would actually have been if the merger and acquisitions had actually occurred at the beginning of the periods presented, nor do they purport to project our results of operations for any future period.

Under the purchase method of accounting, tangible and identifiable intangible assets acquired and liabilities assumed are recorded at their estimated fair values. The estimated fair values, useful lives and amortization of certain assets acquired are based on a preliminary valuation and are subject to final valuation adjustments. The Mossimo, Mudd, Joe Boxer and Rampage trademarks have been determined to have an indefinite useful life and, therefore, consistent with SFAS No. 142, no amortization will be recorded in our consolidated statements of operations. Instead, the related intangible asset will be tested for impairment at least annually, with any related impairment charge recorded to the statement of operations at the time of determining such impairment.

-2-

The unaudited pro forma condensed combined balance sheet as of September 30, 2006 assumes that the Mossimo merger had occurred on that date. The unaudited pro forma condensed combined statement of operations for the year ended December 31, 2005 was prepared by combining our historical statement of operations for the year ended December 31, 2005 with the Mossimo, Inc. statement of operations for the year ended December 31, 2005, the Mudd USA (LLC) statement of revenues and direct operating expenses of the assets sold for its fiscal year ended March 31, 2006 and the Joe Boxer and Rampage results of operations prior to the dates of the related acquisitions, giving effect to the merger and each of the acquisitions as though they had occurred at the beginning of the year (January 1, 2005).  In addition, the pro forma statements of operation include 21 days of historical operations from July 1, 2005 to July 21, 2005 for Joe Boxer and two and a half months of historical operations from July 1, 2005 to September 15, 2005 for Rampage. The unaudited pro forma condensed combined statement of operations for the nine months ended September 30, 2006 was prepared by combining our historical statement of operations for the nine months ended September 30, 2006 with Mossimo Inc.’s historical statement of operations for the nine months ended September 30, 2006 and financial information from the Mudd USA (LLC) statement of revenues and direct operating expenses of the assets sold for the three months ended March 31, 2006 (prior to the date of the related acquisition) giving effect to the merger and the Mudd USA (LLC) asset acquisition as though they had occurred at the beginning of the period (January 1, 2006).

-3-

Unaudited pro forma condensed combined balance sheet

As of September 30, 2006

(000’s omitted, except per share information) 

	Iconix as			Mossimo as												Pro forma
	of 9/30/06			of 9/30/06			Pro forma adjustments									condensed
	(historical)			(historical)			Note (a)			Notes (b)/(c)			Note (d)			combined
Assets
Current assets
Cash (including restricted cash)	$	21,255		$	25,205		$	(1,767	)	$	15,158		$	(23,438	)	$	36,413
Accounts receivable, net		11,808			5,911			(1,648	)		4,263			(4,263	)		16,071
Due from affiliate		244			—			—			1,000			—			1,244
Inventories		—			431			(431	)		—			—			—
Deferred income taxes		6,691			3,223			—			—			(3,223	)		6,691
Prepaid advertising and other		1,854			1,461			(192	)		1,269			(1,269	)		3,123
Total current assets		41,852			36,231			(4,038	)		21,690			(32,193	)		63,542
Property and equipment at cost:
Furniture, fixtures and equipment		2,585			2,459			(1,001	)		1,458			(1,458	)		4,043
Less: accumulated depreciation and amortization		(1,332	)		(1,647	)		472			(1,175	)		1,175			(2,507	)
		1,253			812			(529	)		283			(283	)		1,536
Other assets:
Restricted cash		10,575			—			—			—			—			10,575
Goodwill		42,528			—			—			48,491			—			91,019
Intangibles, net		267,938			81			(81	)		145,640			—			413,578
Deferred financing costs, net		3,547			—			—			900			—			4,447
Deferred income taxes		12,597			1,609			—			4,832			(1,609	)		17,429
Other		3,274			52			(11	)		(204	)		(41	)		3,070
		340,459			1,742			(92	)		199,659			(1,650	)		540,118
Total assets	$	383,564		$	38,785		$	(4,659	)	$	221,632		$	(34,126	)	$	605,196
Liabilities and stockholders equity
Current liabilities:
Accounts payable and accrued expenses	$	5,391		$	8,306		$	(612	)	$	13,192		$	(7,694	)	$	18,583
Promissory note payable		750			—			—			—			—			750
Accounts payable, subject to litigation		4,886			—			—			—			—			4,886
Current portion of deferred revenue		3,152			—			—			—			—			3,152
Current portion of long term debt		25,549			—			—			10,500			—			36,049
Total current liabilities		39,728			8,306			(612	)		23,692			(7,694	)		63,420
Deferred rent		—			110			(90	)		—			(20	)		—
Deferred income taxes		7,939			—			—			49,000			—			56,939
Long term debt		144,882			—			—			79,500			—			224,382
Total liabilities		192,549			8,416			(702	)		152,192			(7,714	)		344,741
Contingencies and commitments		—			—			—			—			—			—
Stockholders’ equity:
Common stock, $.001 par value—shares authorized 75,000		41			15			—			4			(15	)		45
Additional paid-in capital		203,153			41,364			(375	)		69,591			(40,989	)		272,744
Accumulated other comprehensive income		155			—			—			(155	)		—			—
Accumulated earnings (deficit)		(11,667	)		(11,010	)		(3,582	)		—			14,592			(11,667	)
Treasury stock—198 shares at cost		(667	)		—			—			—			—			(667	)
Total stockholders’ equity		191,015			30,369			(3,957	)		69,440			(26,412	)		260,455
Total liabilities and stockholders’ equity	$	383,564		$	38,785		$	(4,659	)	$	221,632		$	(34,126	)	$	605,196

See accompanying introduction and notes to unaudited pro forma condensed combined financial statements.

-4-

Unaudited pro forma condensed combined statement of operations

For the year ended December 31, 2005

(000’s omitted, except per share information) 

							2005 closed			Year								Year
		Year ended			2005 closed		acquisitions			ended								ended										Total pro
		12/31/2005			acquisitions		(pro forma			3/31/2006		Mudd pro			Pro			12/31/2005			Pro forma							forma
		Iconix			(historical)		adjustments)			Mudd		forma			forma			Mossimo			adjustment			Pro forma				condensed
		(historical)			Note (e)		Note (f)			(historical)		adjustment	Notes		Iconix			(historical)			note (l)			adjustment		Notes		combined		Notes
Net sales	$	—		$	—	$	—		$	—	$	—		$	—		$	6,730		$	(6,730	)	$	—			$	—
Licensing income		30,156			14,890		—			10,994		8,000	(g)		64,040			24,298			—			—				88,338
Net revenue		30,156			14,890		—			10,994		8,000			64,040			31,028			(6,730	)		—				88,338
Cost of goods sold		—			—		—			—		—			—			3,993			(3,993	)		—				—
Gross profit		30,156			14,890		—			10,994		8,000			64,040			27,035			(2,737	)		—				88,338
Selling, general and administrative expenses		13,880			4,588		835			6,061		868	(h)		26,232			20,294			(4,191	)		1,725		(m)		44,060
Special charges		1,466			—		—			—		—			1,466			212			—			—				1,678
Operating income (loss)		14,810			10,302		(835	)		4,933		7,132			36,342			6,529			1,454			(1,725	)			42,600
Net interest expense (income)		3,902			1,243		2,518			—		4,503	(i)		12,166			(420	)		—			9,415		(n)		21,161
Income (loss) before income taxes		10,908			9,059		(3,353	)		4,933		2,629			24,176			6,949			1,454			(11,140	)			21,439
Provision (benefit) for income taxes		(5,035	)		—		1,000			—		2,571	(j)		(1,464	)		2,248			—			(3,179	)	(o)		(2,395	)
Net income (loss)	$	15,943		$	9,059	$	(4,353	)	$	4,933	$	58		$	25,640		$	4,701		$	1,454		$	(7,961	)		$	23,834
Earnings per share:
Basic	$	0.51												$	0.67												$	0.57		(q)
Diluted	$	0.46												$	0.61												$	0.52		(q)
Weighted number of common shares outstanding:
Basic		31,284					6,521					3,269	(k)		38,512									3,608		(p)		42,120
Diluted		34,773					6,521					3,327	(k)		42,059									3,649		(p)		45,708

 

See accompanying introduction and notes to unaudited pro forma condensed combined financial statements.

-5-

Unaudited pro forma condensed combined statement of operations

For the nine months ended September 30, 2006

(000’s omitted, except per share information)

	Nine months ended 9/30/2006 Iconix (historical)		Three months ended 3/31/2006 Mudd (historical)			Pro forma adjustment		Notes		Pro forma Iconix		Nine months ended 9/30/2006 Mossimo (historical)			Pro forma adjustment note (l)			Pro forma adjustment			Notes		Total pro forma condensed combined		Notes
Net sales	$	—	$	—		$	—			$	—	$	5,537		$	(5,537	)	$	—				$	—
Licensing income		53,791		2,607			2,000		(g)		58,398		17,023			—			—					75,421
Net revenue		53,791		2,607			2,000				58,398		22,560			(5,537	)		—					75,421
Cost of goods sold		—		—			—				—		2,875			(2,875	)		—					—
Gross profit		53,791		2,607			2,000				58,398		19,685			(2,662	)		—					75,421
Selling, general and administrative expenses		17,572		3,107			217		(h)		20,896		16,397			(2,946	)		1,294			(m)		35,641
Special charges		1,900		—			—				1,900		—			—			—					1,900
Operating income (loss)		34,319		(500	)		1,783				35,602		3,288			284			(1,294	)				37,880
Net interest expense (income)		7,991		—			1,126		(i)		9,117		(672	)		8			7,189			(n)		15,642
Income (loss) before income taxes		26,328		(500	)		657				26,485		3,960			276			(8,483	)				22,238
Provision (benefit) for income taxes		2,680		—			53		(j)		2,733		1,606			—			(3,050	)		(o)		1,289
Net income (loss)	$	23,648	$	(500	)	$	604			$	23,752	$	2,354		$	276		$	(5,433	)			$	20,949
Earnings per share:
Basic	$	0.62								$	0.60												$	0.49		(q)
Diluted	$	0.54								$	0.53												$	0.43		(q)
Weighted number of common shares outstanding:
Basic		38,075					1,223		(k)		39,298								3,608			(p)		42,906
Diluted		43,469					1,300		(k)		44,769								3,650			(p)		48,419

See accompanying introduction and notes to unaudited pro forma condensed combined financial statements.

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Unaudited pro forma condensed combined financial statements

The financial information presented in the unaudited pro forma condensed combined financial statements is based on amounts and adjustments that our management believes to be factually supportable. We have made no attempt to include forward looking assumptions in such information.

Notes to unaudited pro forma condensed combined financial statments:

(a)    Represents the elimination of Modern Amusement’s assets and liabilities resulting from the sale by Mossimo, Inc. of this subsidiary prior to the completion of the merger.

(b)    Reflects the preliminary allocation of cost associated with the Mossimo merger under the purchase method of accounting as though the merger occurred on September 30, 2006, and the impact of the financing associated with the merger.

Total purchase price was determined as follows: 

(000’s omitted except share information)
Cash paid at closing to Mossimo stockholders	$	67,532
Cash paid at closing to Cherokee		33,000
Total cash paid at closing			$	100,532
Fair value of 3,608,810 shares of our common stock, $.001 par value, at $18.50 fair market value per share(1)		66,763
Value of the contingent share right relating to fair market value thresholds guaranteed in the merger consideration (1)		769
Value of 250,000 warrants ($15.93 exercise price) issued as a cost of the merger		2,063
Total equity consideration				69,595
Shares of Mossimo stock previously acquired by Iconix				745
Buyout of Mossimo employee stock option agreements				950
Estimated liability related to possible additional payment for buyout of Mossimo employee stock option agreements				12
Other estimated costs of the merger, including $4.5 million to be paid after the closing of the merger				5,232
Total			$	177,066

(1) The target value of the shares of our common stock issued at closing totals $67.5 million and represents the lowest total value at which additional shares, referred to as the contingent shares, would not be required to be issued. This amount is calculated by multiplying 3,608,810, the number of shares issued by us as initial merger consideration, by $18.71. In the event that our common stock does not trade at or above $18.71 for 20 consecutive business days during the 12 months ending October 31, 2007, contingent shares will be required to be issued and, as discussed in note (p) below, have been illustrated as part of these pro forma financial statements.

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The preliminary purchase price allocation to the fair value of the assets acquired and liabilities assumed, is as follows: 

(000’s omitted)
Trademarks	$	140,000
License agreements		3,140
Non-compete agreements		2,500
Assumed obligation under Cherokee contract		(8,100	)
Allocation of Cherokee contract buyout		8,100
Cash acquired (including cash received from the sale of Modern Amusement of $2,236)		27,441
Note receivable, related to sale of Modern Amusement		1,500
Accounts receivable and other current assets		5,573
Fixed assets		283
Deferred tax asset		4,832
Accounts payable and accruals		(7,694	)
Deferred tax liability		(49,000	)
Goodwill		48,491
Total	$	177,066

(c)    Represents the recording of the cash paid, debt acquired, equity issued and the elimination of our investment in Mossimo, in association with the merger with Mossimo.

In connection with the Mossimo merger, our wholly owned subsidiary, Mossimo Holdings, which we formed for the purpose of the merger and whose activities are limited to acquiring intellectual property assets, exploiting and maintaining such assets and borrowing funds in connection with those activities, obtained a loan from Merrill Lynch Mortgage Capital Inc. in the amount of $90.0 million. The loan is secured by the Mossimo trademarks, license agreements, including the proceeds therefrom, and related intellectual property assets, which we simultaneously sold to Mossimo Holdings upon the closing of the merger. The note evidencing the loan bears interest at a variable rate equal to the three-month LIBOR plus 5.125% per annum, matures on December 18, 2008, with principal payable in quarterly payments totaling $10.5 million in the first year and $10.8 million in the second year, with the balance due upon maturity. The $90.0 million in proceeds from this secured loan, together with $17.5 million of the cash that was acquired in connection with the merger, is being used by us as follows: $67.5 million was used to pay the cash portion of the initial merger consideration; $33.0 million was paid to Cherokee Inc., as described above; approximately $950,000 was used to buy out the cancelled Mossimo stock options as described above; approximately $5.2 million was or will be used to pay costs associated with the merger; and $900,000 was used to pay costs associated with the loan financing. The costs of $900,000 relating to the $90.0 million loan have been deferred and are being amortized over the life of the loan, using the effective interest method.

(d)    Represents the elimination of the historical values of Mossimo’s assets and liabilities.

(e)    Represents historical information for the 2005 closed acquisitions for the Joe Boxer acquisition for the period from January 1, 2005 to July 21, 2005 and for the Rampage acquisition for the period from January 1, 2005 to September 15, 2005 derived from the following amounts: 

		Joe Boxer 1/1/05 - 6/30/05		Joe Boxer 7/1/05 - 7/21/05		Rampage 1/1/05 - 6/30/05		Rampage 7/1/05 - 9/15/05		2005 closed acquisitions (historical)
Licensing income	$	7,978	$	1,161	$	3,899	$	1,852	$	14,890
SG&A		2,015		246		1,542		785		4,588
Operating income		5,963		915		2,357		1,067		10,302
Interest expense—net		290		35		684		234		1,243
Income before income taxes		5,673		880		1,673		833		9,059
Provision (benefit) for income taxes		—		—		—		—		—
Net income (loss)	$	5,673	$	880	$	1,673	$	833	$	9,059

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(f)    Represents pro forma adjustments for the 2005 closed acquisitions for the Joe Boxer acquisition for the period from January 1, 2005 to July 21, 2005 and for the Rampage acquisition for the period from January 1, 2005 to September 15, 2005 and is comprised of: 

(000’s omitted)		Joe Boxer 1/1/05 - 6/30/05			Joe Boxer 7/1/05 - 7/21/05			Rampage 1/1/05 - 6/30/05			Rampage 7/1/05 - 9/15/05			2005 closed acquisitions (pro forma adjustments)
Licensing income	$	—		$	—		$	—		$	—		$	—
SG&A		340			42			320			133			835		(1)
Operating income		(340	)		(42	)		(320	)		(133	)		(835	)
Interest expense—net		1,744			214			317			243			2,518		(2)
Income before income taxes		(2,084	)		(256	)		(637	)		(376	)		(3,353	)
Provision (benefit) for income taxes		1,000			—			—			—			1,000		(3)
Net income (loss)	$	(3,084	)	$	(256	)	$	(637	)	$	(376	)	$	(4,353	)
Weighted number of common shares outstanding:
Basic					4,350						2,171			6,521		(4)
Diluted					4,350						2,171			6,521

(1)	For Joe Boxer, represents the six months and 21 days of additional amortization of acquired intangible assets of $1.3 million on a straight line basis over the remaining contract period of 2.5 years (approximately $299,000 in total) and the deferred refinancing fees of $1.0 million incurred in the related financing arrangement over the seven-year life of the debt (approximately $83,000 in total). For Rampage, represents the eight months and 15 days of additional amortization of acquired Rampage licensing contracts of $550,000, Rampage domain name of $230,000 and non-compete agreement of $600,000, on a straight line basis over the remaining contract period of three, five and two years, respectively (approximately $375,000 in total), as well as amortization of the deferred financing fees of $774,000 which is amortized over the seven-year life of the related debt (approximately $78,000 in total).
(2)	For Joe Boxer, represents the incremental interest expense at the historical interest rate of 8.45% related to refinancing incurred as part of the acquisition. For Rampage, represents the incremental interest expense at the historical interest rate of 8.1% related to refinancing incurred as part of the acquisition.
(3)	Represents the additional deferred income tax provision that would have been recorded against the incremental earnings generated from the acquired Joe Boxer business based on the amount of deferred tax asset recorded in the related purchase accounting.
(4)	Represents the shares of our common stock that were issued as part of the Joe Boxer and Rampage acquisitions.

(g)    Represents guaranteed minimum royalty revenues to be earned by us from the core jeans licensee, Mudd (USA) LLC, under the license agreement we signed with it as part of the acquisition. This license agreement is a two-year contract with guaranteed minimum payments to us of $8.0 million per year. Prior to the acquisition, revenue from the seller’s jeans business was included in other of its operations that were not sold to us, which operations included businesses focused on the design, manufacture and sales of apparel goods.

(h)    Represents adjustments related to the amortization of the value assigned to the acquired Mudd licensing contracts of $700,000, Mudd domain name of $340,000 and non-compete agreement of $1.4 million, on a straight line basis over the remaining contract period or estimated lives of two, five and four years, respectively (approximately $768,000 annually). Additionally includes approximately $100,000 annually for contractual compensation expense related to the management of the brand.

(i)    Represents interest expense at a fixed interest rate of 8.99% related to incremental financing incurred for the Mudd acquisition (approximately $4.4 million annually) and amortization of deferred financing fees incurred in closing the Mudd financing arrangement over the five-year term of the financed debt (approximately $98,000 annually).

(j)    Represents the provision for income taxes at a 34% effective rate related to the pro forma adjustments to income and the historical pre-tax income. The taxes were not historically reflected due to the entity’s prior status as a limited liability company.

(k)    Represents the effect of the shares of our common stock and warrants that we issued as part of the Mudd acquisition.

(l)    Represents the elimination of Modern Amusement from the Mossimo historical operations.

(m)    Represents adjustments related to the amortization of the acquired Mossimo licensing contracts and non-compete agreement on a straight line basis over the remaining contract periods of 3.25 and 5.25 years, respectively (approximately $1.5 million annually). Additionally it includes $250,000 annually for the consulting agreement with Mossimo Giannulli.

(n)    Represents interest expense at the current interest rate of 10.50% (LIBOR of 5.37% plus 5.125%) related to incremental financing incurred as part of the Mossimo merger of approximately $8.9 million for the year ended December 31, 2005 and approximately $6.8 million for the nine months ended September 30, 2006. Additionally, it includes amortization of the deferred financing fees incurred in closing the Mossimo financing arrangement over the life (25.5 months) of the financed debt of $492,000 for the year ended December 31, 2005 and approximately $369,000 for the nine months ended September 30, 2006.

(o)    Represents the additional income tax provision/(benefit) at a 34% effective rate that would have been recorded against the pro forma adjustments to income and the historical pre-tax income.

(p)    Represents the 3,608,810 shares of our common stock issued upon the closing of the Mossimo merger and also includes 40,965 contingent shares (the maximum number of contingent shares that would be issued if our common stock does not trade at $18.71 per share and stay above that share price for at least 20 consecutive trading days during the 12-month measurement period ending October 31, 2007). In the event that our common stock does trade above $18.71 per share for the requisite number of trading days during the measurement period, no contingent shares will be issued. In the event that it does not trade above $18.71 for the requisite number of trading days during such period, the number of contingent shares to be issued will be calculated by first, multiplying 3,608,810, the number of shares issued by us upon the closing of the merger, by the difference between (a) $18.71 and (b) the greater of $18.50 and the highest 20 consecutive trading day average closing sale price during the measurement period, and then, dividing the product obtained by (b). If additional shares become issuable pursuant to the contingent share rights, former Mossimo stockholders will receive such contingent shares by November 28, 2007, subject to certain exceptions in the case of calculation disputes.

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The target value of the 3,608,810 shares issued by us at the closing of the merger totals $67.5 million and represents the lowest total value at which contingent shares will not be required to be issued. This amount is calculated by multiplying 3,608,810 by $18.71. In the event that our common stock does not trade at or above $18.71 for 20 consecutive trading days during the 12 months ending October 31, 2007, contingent shares will be required to be issued and, as discussed above, have been accounted for as part of these pro forma financial statements.

(q)    Below is a summary of the calculation used to determine pro forma basic and diluted earnings per share for the periods ended December 31, 2005 and September 30, 2006: 

	For the year ended December 31, 2005				For the nine months ended September 30, 2006
(000’s omitted except per share information)	Basic		Diluted		Basic		Diluted
Pro forma net income		23,834		23,834		20,949		20,949
Weighted number of shares outstanding, as reported in Iconix 2005 Form 10-K/A and 2006 Form 10-Q for the period ended September 30, 2006		31,284		34,773		38,075		43,469
Add: Incremental shares for pre-acquisition periods:
Joe Boxer (total amount of shares issued)		2,419		2,419		N/A		N/A
Rampage (total amount of shares issued)		1,540		1,540		N/A		N/A
Subtotal prior to 2006 completed transaction		35,243		38,732		38,075		43,469
Add: Incremental shares for pre-acquisition periods:
Mudd (total amount of shares issued)		3,269		3,269		1,223		1,223
Mudd related warrants(1)		—		58		—		77
Subtotal prior to merger transaction		38,512		42,059		39,298		44,769
Number of shares issued to Mossimo stockholders at closing of merger		3,608		3,608		3,608		3,608
Mossimo related warrants(1)		—		—		—		1
Mossimo contingent shares (based on a per share value of $18.50, the average closing sale price of our common stock for the three days prior to the closing of the merger)(2)		—		41		—		41
Pro forma common and diluted shares outstanding		42,120		45,708		42,906		48,419
Earnings per share	$	0.57	$	0.52	$	0.49	$	0.43

(1)	Warrants include in the diluted share amount were calculated using the treasury stock method.
(2)	See note (p) for detail.

Additionally, as of December 31, 2005, of a total of 8,373,292 potentially dilutive shares relating to stock options, 7,321,305 were included in the computation of diluted earnings per share. At September 30, 2006, of a total 7,814,985 potentially dilutive shares relating to stock options, 7,200,545 were included in the computation of diluted earnings per share. There were no potentially dilutive securities excluded from the calculation of pro forma diluted earnings per share because their inclusion would have been antidilutive.

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