1

UNITED STATES DISTRICT COURT SOUTHERN DISTRICT OF FLORIDA

__________________________________________ BRAD BOGUE, Individually and On Behalf of All Others Similarly Situated,

Plaintiff,

vs.

PARLUX FRAGRANCES, INC., ILIA LEKACH, and FRANK A. BUTTACAVOLI,

Defendants. __________________________________________

) ))))))))))) ) )

CIVIL ACTION NO. CLASS ACTION COMPLAINT JURY TRIAL DEMANDED

Plaintiff, Brad Bogue, (“Plaintiff”), alleges the following based upon the investigation by

Plaintiff’s counsel, which included, among other things, a review of the defendants’ public

documents, conference calls and announcements made by defendants, United States Securities

and Exchange Commission (“SEC”) filings, wire and press releases published by and regarding

Parlux Fragrances, Inc. (“Parlux” or the “Company”) securities analysts’ reports and advisories

about the Company, and information readily available on the Internet, and Plaintiff believes that

substantial additional evidentiary support will exist for the allegations set forth herein after a

reasonable opportunity for discovery.

NATURE OF THE ACTION AND OVERVIEW

1. This is a federal class action on behalf of purchasers of the common stock of

Parlux between February 8, 2006 and August 10, 2006, inclusive (the “Class Period”), seeking to

pursue remedies under the Securities Exchange Act of 1934 (the “Exchange Act”).

2. Parlux is a manufacturer and international distributor of prestige products. The

Company holds licenses for Paris Hilton fragrances, watches, cosmetics, sunglasses, handbags

2

and other small leather accessories in addition to licenses to manufacture and distribute the

designer fragrance brands of Perry Ellis, GUESS?, XOXO, Ocean Pacific (OP), Maria

Sharapova, Andy Roddick, babyGund and Fred Hayman Beverly Hills.

3. The complaint alleges that, throughout the Class Period, defendants failed to

disclose material adverse facts about the Company’s financial well-being. Specifically,

defendants failed to disclose: (1) that increased advertising costs and decreased sales were

negatively impacting the Company’s financial results; (2) that the Company lacked adequate

internal controls; and (3) that, as a result of the above, defendants’ statements concerning

Parlux’s financial performance were lacking in any reasonable basis when made.

4. On June 29, 2006, Parlux announced that it would delay filing its Form 10-K for a

second time because management had not yet completed its assessment of the internal controls

and reporting requirements of the Sarbanes-Oxley Act of 2002.

5. On this news, shares of Parlux shed $0.31, or 3.1 percent, to close, on June 30,

2006, at $9.69 per share.

6. On August 10, 2006, after the market closed and despite previous assurances that

the Company had resolved its internal controls and Sarbanes-Oxley reporting issues, Parlux

stunned investors when the Company announced that it would delay filing its quarterly report

with the SEC. Additionally, Parlux reported that its earnings for the quarter would be lower than

previous guidance suggested due to decreased sales to U.S. department stores and significantly

increased advertising and promotional costs.

7. On this news, shares of Parlux plummeted $3.38, or 41.4 percent, to close, on

August 11, 2006, at $4.78 per share, on unusually heavy trading volume.

3

JURISDICTION AND VENUE

8. The claims asserted herein arise under and pursuant to Sections 10(b) and 20(a) of

the Exchange Act, (15 U.S.C. §§ 78j(b) and 78t(a)), and Rule 10b-5 promulgated thereunder (17

C.F.R. § 240.10b-5).

9. This Court has jurisdiction over the subject matter of this action pursuant to

Section 27 of the Exchange Act (15 U.S.C. § 78aa) and 28 U.S.C. § 1331.

10. Venue is proper in this Judicial District pursuant to Section 27 of the Exchange

Act, 15 U.S.C. § 78aa and 28 U.S.C. § 1391(b). Many of the acts and transactions alleged

herein, including the preparation and dissemination of materially false and misleading

information, occurred in substantial part in this Judicial District. Additionally, the Company

maintains a principal executive office within this Judicial District.

11. In connection with the acts, conduct and other wrongs alleged in this complaint,

defendants, directly or indirectly, used the means and instrumentalities of interstate commerce,

including but not limited to, the United States mails, interstate telephone communications and

the facilities of the national securities exchange.

PARTIES

12. Plaintiff, Brad Bogue, as set forth in the accompanying certification, incorporated

by reference herein, purchased Parlux common stock at artificially inflated prices during the

Class Period and has been damaged thereby.

13. Defendant Parlux is a Delaware corporation with its principal place of business

located at 3725 South West 30th Avenue, Fort Lauderdale, Florida 33312.

14. Defendant Ilia Lekach (“Lekach”) was, at all relevant times, the Company’s

Chairman and Chief Executive Officer.

4

15. Defendant Frank A. Buttacavoli (“Buttacavoli”) was, at all relevant times, the

Company’s Executive Vice President, Chief Operating Officer, and Chief Financial Officer.

16. Defendants Lekach and Buttacavoli are collectively referred to hereinafter as the

“Individual Defendants.” The Individual Defendants, because of their positions with the

Company, possessed the power and authority to control the contents of Parlux’s quarterly

reports, press releases and presentations to securities analysts, money and portfolio managers and

institutional investors, i.e., the market. Each defendant was provided with copies of the

Company’s reports and press releases alleged herein to be misleading prior to or shortly after

their issuance and had the ability and opportunity to prevent their issuance or cause them to be

corrected. Because of their positions and access to material non-public information available to

them, each of these defendants knew that the adverse facts specified herein had not been

disclosed to and were being concealed from the public and that the positive representations

which were being made were then materially false and misleading. The Individual Defendants

are liable for the false statements pleaded herein, as those statements were each “group-

published” information, the result of the collective actions of the Individual Defendants.

SUBSTANTIVE ALLEGATIONS Background

17. Parlux is a manufacturer and international distributor of prestige products. The

Company holds licenses for Paris Hilton fragrances, watches, cosmetics, sunglasses, handbags

and other small leather accessories in addition to licenses to manufacture and distribute the

designer fragrance brands of Perry Ellis, GUESS?, XOXO, Ocean Pacific (OP), Maria

Sharapova, Andy Roddick, babyGund and Fred Hayman Beverly Hills.

5

Materially False and Misleading Statements Issued During the Class Period

18. The Class Period begins on February 8, 2006. At that time, Parlux announced

financial results for the quarter ended December 31, 2005. The Company reported that net sales

were $56,412,315 compared to $28,748,499 in the same period of the prior year, an increase of

96 percent. The Company’s net income more than doubled to $5,996,089 compared to

$2,867,746 in the same period of the prior year. Earnings per share on a diluted basis were $0.57

compared to prior-year earnings of $0.27 per share, an increase of 111 percent.

19. Commenting on these results, defendant Lekach stated:

Paris Hilton fragrances continued to achieve strong consumer demand. Our GUESS? women’s fragrance established a strong sales base in its first holiday season, which will be expanded with the launch of the GUESS? men’s fragrance this spring. Perry Ellis fragrance products retain their strength. Perry Ellis remains our largest brand, representing almost half of our total business and we will be introducing a new “Perry Ellis 18” fragrance in summer 2006. It is important to note that our GUESS?, Paris Hilton and Maria Sharapova fragrances continue to be launched in a number of international markets. We anticipate shipping Paris Hilton watches and handbags during our fourth quarter, and development for Paris Hilton cosmetics and a babyGund fragrance are on schedule for holiday 2006. I am especially pleased that our earnings growth has accelerated.

20. Additionally, defendant Lekach reaffirmed the Company’s financial guidance for

fiscal 2007. Specifically, defendant Lekach stated:

Assuming the acceptance of our new product introductions remain on course and economic conditions stay stable, our previous earnings guidance of $2.00 to $2.20 per share on revenues of approximately $190 million for the fiscal year ending March 31, 2006 should be achieved. Based on the continued strength of our brands and the planned new product introductions, our preliminary guidance for fiscal 2007 is for sales to exceed $300 million, with earnings in the range of $3.00 to $3.25 per share.

21. On February 9, 2006, Parlux filed its quarterly report with the SEC on Form

6

10-Q. The Company’s Form 10-Q was signed by the Individual Defendants and reaffirmed the

Company’s previously announced financial results. The Company’s Form 10-Q also contained

the following Sarbanes-Oxley required certifications signed by the Individual Defendants:

1. I have reviewed this report on Form 10-Q of Parlux Fragrances, Inc.;

2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;

4. The registrant’s other certifying officers and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e) for the registrant, and have:

a) Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

b) Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and

c) Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and

7

5. The registrant’s other certifying officers and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of registrant’s board of directors (or persons performing the equivalent functions):

a) All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and

b) Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.

***

SECTION 906 CERTIFICATION

1. The Report fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934; and

2. The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company.

22. On May 9, 2006, Parlux announced that the Company anticipated record revenues

and record diluted earnings per share for the fiscal year ended March 31, 2006. Specifically, the

Company stated:

Parlux Fragrances, Inc. announced today that based upon preliminary unaudited information, the Company anticipates reporting record total revenues and record fully diluted earnings per share for the fiscal year ended March 31, 2006.

Revenues for the fiscal year are expected to approximate $183 million, an increase of 82 percent over the prior fiscal year ended March 31, 2005. Fully diluted earnings per share for the fiscal year ended March 31, 2006 are expected to more than double and be in the range of $2.05 to $2.10 per share compared to $1.02 per share for the prior fiscal year.

23. Commenting on the anticipated financial results, defendant Lekach stated:

Our excellent results were attributable to the continuing solid

8

performance of our Perry Ellis fragrances combined with the stellar growth of Paris Hilton fragrances and the successful launch of our GUESS fragrances. We recently initiated the sale of Paris Hilton watches and handbags and expect to introduce Paris Hilton cosmetics and sunglasses during fiscal 2007. I remain optimistic for fiscal 2007 and anticipate revenues in the range of $270-$280 million and earnings in the range of $2.80-$2.90 per share assuming the successful implementation of our anticipated new launches and stable economic conditions.

24. On June 13, 2006, after the market closed, Parlux announced financial results for

the 2006 fiscal year. The Company reported that its unaudited fiscal 2006 results reflected sales

of $182,236,594 compared to its prior year of $100,360,981, an increase of 82 percent.

Unaudited net income was $22,483,263, or $2.13 per diluted share compared to the prior year’s

net income of $10,824,256, or $1.02 per share, an increase of 109 percent, exceeding previous

estimates. Additionally, the Company announced that it would delay filing its annual report with

the SEC on Form 10-K.

25. The statements contained in ¶¶ 18-24 were materially false and misleading when

made because defendants failed to disclose or indicate the following: (1) that increased

advertising costs and decreased sales were negatively impacting the Company’s financial results;

(2) that the Company lacked adequate internal controls; and (3) that, as a result of the above, the

Company’s statements concerning Parlux’s financial performance were lacking in any

reasonable basis when made.

The Truth Begins to Emerge

26. Also on June 13, 2006, defendant Lekach revealed that he would attempt to take

Parlux private. Specifically, on June 13, 2006, after the market closed, PF Acquisition of Florida

LLC (“PF Acquisition”), a Delaware limited liability company owned by defendant Lekach,

announced that it had made a proposal to the Board of Directors of Parlux to acquire all of the

outstanding shares of the Company other than those owned by defendant Lekach, IZJD Corp.

9

and Pacific Investment Group, Inc., for $29.00 per share in cash. PF Acquisition further stated

that defendant Lekach’s proposal was made to “eliminate the substantial public company

compliance costs currently incurred by [Parlux] and to end the disruptions in [Parlux’s]

operations caused primarily by short sellers.”

27. On this news, shares of the Company’s stock rose $1.74, or 9.3 percent, to close,

on June 14, 2006, at $20.48 per share.

28. On June 14, 2006, after the market closed, Parlux announced that, due to

defendant Lekach’s unsolicited offer to acquire all of the Company’s common shares, the

Company would suspend its Annual Investors’ Day scheduled for Friday, June 23rd in

Hollywood, Florida. The Company further announced that the offer had been referred to the

Special Committee of Independent Directors of the Board of Parlux for consideration.

29. On June 21, 2006, after the market closed, Parlux announced that it had sent a

response to PF Acquisition and defendant Lekach’s acquisition proposal. Specifically, the

Company stated:

Parlux Fragrances, Inc. (“Parlux”) announced today that on June 20, 2006, the Independent Committee (the “Committee”) of the Board of Directors of Parlux sent a response to the proposal received from PF Acquisition of Florida LLC (“Acquisition Co.”), which is owned by Ilia Lekach, Chairman and CEO of Parlux, to acquire all of the outstanding common shares of Parlux, pursuant to an offer at a price of $29.00 per share in cash (the “Proposal”) (previously disclosed in Parlux’s June 14, 2006 Form 8-K). Mr. Lekach is currently the beneficial owner of 26.2% of the common stock of Parlux.

Through their legal counsel, the Committee responded (the “Response”) to the offer by stating that the Committee does not believe it is prudent for Parlux to move forward to consider the transaction with the significant financial and other contingencies contained in the Proposal. Further, the Committee questions the propriety of a proposed break up fee. The Committee believes that if Parlux proceeds with the Proposal and the transaction does not close, it may have a very negative effect on Parlux. In order to

10

protect Parlux and its shareholders, the Committee believes that the closing contingencies should be removed from the Proposal and Acquisition Co. should provide a deposit to the Company as evidence of Acquisition Co.’s ability to proceed and in recognition of the significant cost Parlux will incur in considering the Proposal. The Committee continues to state that, in the event that the transaction cannot be completed due to an inability by Acquisition Co. to obtain financing, the deposit would be used to reimburse Parlux for its costs and expenses in connection with the consideration of the Proposal.

After receiving the Response, Acquisition Co. sent a follow-up letter (the “Follow-up Letter”). The Follow-up Letter stated that Acquisition Co. does not expect the Committee to incur any expense until Acquisition Co. has obtained its financing commitments and when Acquisition Co. completes that task, it would expect to proceed in a customary fashion without any deposit or waiver of the financial and other contingencies and with a break up fee.

At this time Parlux intends to continue operations in the ordinary course and meet its SEC reporting requirements.

30. However, despite Parlux’s negative response, on June 22, 2006, while the market

was open, defendant Lekach reiterated his commitment to taking Parlux private. Specifically,

defendant Lekach stated:

Ilia Lekach, the principal of PF Acquisition of Florida LLC, a Delaware limited liability company, announced today that [PF Acquisition] has retained financial advisors and investment bankers to pursue its “going private” proposal of Parlux Fragrances, Inc. (Nasdaq: PARL - News). PF Acquisition of Florida is currently in discussions with a variety of financing partners to execute this “going private” proposal. Commenting on the proposal, Mr. Lekach stated, “I am fully committed to this ‘going private’ proposal and once the financing is in place, it will be up to Parlux’s independent shareholders to vote on this ‘going private’ initiative.”

31. On this news, shares of the Company’s stock rose as high as $11.25 per share, and

closed, on June 22, 2006, at $11.09 per share.

32. On June 29, 2006, after the market closed, Parlux announced that the filing of its

11

Form 10-K would again be delayed as management had not yet completed its assessment of the

internal controls and reporting requirements under Section 404 of the Sarbanes-Oxley Act of

2002. The Company further reported that the delay in the Company’s Sarbanes-Oxley

procedures was not expected to affect the Company’s previous announcement that net sales for

the fiscal year ended March 31, 2006 would approximate $182 million and net earnings per share

would reach $2.13 ($1.07 post common stock split) per share. Specifically, the Company stated:

Parlux Fragrances, Inc. announced today that the filing of its Form 10-K would be delayed as a result of management not yet completing its assessment of the internal controls and reporting requirements under Section 404 of the Sarbanes-Oxley Act of 2002 (SOX).

The Company became obligated to comply with the quicker implementation schedule under Section 404 when it became an accelerated filer on September 30, 2005, the end of its second quarter. Management completed its testing and has concluded that its internal control procedures contain material weakness in areas such as access to certain computer master files, segregation of duties, processing of certain adjustments to accounts payable and accounts receivable, and management overrides, despite the fact that the Company’s testing did not disclose any improprieties.

The Company is completing the assessment and reporting process involved in complying with its SOX obligations. The Company will issue its Form 10-K after the assessment and reporting processes, including those of the Company’s independent auditors, are completed.

This delay in the Company’s SOX procedures is not expected to affect the Company’s previous announcement that net sales for the fiscal year ended March 31, 2006 will approximate $182 million and net earnings per share will reach $2.13 ($1.07 post common stock split) per share.

33. On July 5, 2006, while the market was open, Parlux announced that the Company

had received a delisting notice from NASDAQ due to the delayed filing of its Form 10-K.

Specifically, the Company stated:

12

Parlux Fragrances, Inc. announced today that due to the delay in filing its Form 10-K for the period ended March 31, 2006, the Company has received a letter from The Nasdaq Stock Market indicating that the Company’s common stock is subject to delisting pursuant to Nasdaq Marketplace Rule 4310(c)(14). Nasdaq Marketplace Rule 4310(c)(14) requires the Company to file all reports with the Securities and Exchange Commission on a timely basis, as required by the Securities Exchange Act of 1934, as amended.

Parlux will request a hearing before the Nasdaq Listing Qualifications Panel, thereby automatically deferring the delisting of its common stock pending the Panel’s review and determination. Until the Panel issues a determination and the expiration of any exception granted by the Panel, Parlux’s common stock will continue to be traded on The Nasdaq National Market. However, as a result of the delayed filing of its Form 10-K, the trading symbol for the Company’s common stock will be changed from PARL to PARLE.

As announced on June 29, 2006, Parlux has delayed filing its Annual Report on Form 10-K until completion of management’s assessment of the internal controls and reporting requirements under Section 404 of the Sarbanes-Oxley Act of 2002 (“SOX”). Parlux intends to file its Form 10-K for the fiscal year ended March 31, 2006 as soon as practicable following completion of the SOX assessment and reporting processes, including those of the Company’s independent auditors.

34. On July 13, 2006, while the market was open, Parlux announced that, despite his

previous expressions of commitment, the Company received written notification that defendant

Lekach had withdrawn his privatization offer.

35. On this news, shares of Parlux’s common stock fell $0.65, or 7.6 percent, to close,

on July 13, 2006, at $7.91 per share, on heavy trading volume.

36. On July 24, 2006, Parlux announced that the Company had filed its Form 10-K

for the fiscal year ended March 31, 2006. The Company also reported that its filed results

confirmed net sales of $182,236,594, an increase of 82 percent over the prior year, and net

earnings of $1.08 per share, an increase of 108 percent over the prior year’s $0.52 per share

13

($2.15 compared to $1.02 on a pre-stock split basis). Specifically, the Company stated:

Parlux Fragrances, Inc. (“Parlux”) announced today that it had filed its Form 10-K for the fiscal year ended March 31, 2006. Filed results confirmed net sales of $182,236,594, an increase of 82% over prior year, and net earnings of $1.08 per share, an increase of 108% over prior year’s $0.52 per share ($2.15 compared to $1.02 on a pre-stock split basis). All share calculations, including prior years, and those on the attached table, have been adjusted to reflect the stock split effected on June 16, 2006.

Due to an increase in the Company’s market capitalization as measured on September 30, 2005, the Company became an accelerated filer under the Sarbanes-Oxley Act of 2002 (“SOX”). While reducing the year end filing requirements from 90 to 75 days, SOX also required the Company to assess its internal controls and report on their effectiveness for the full fiscal year, although the first half of the year had already passed. Management’s report, included in the Annual Report on Form 10-K for the fiscal year ended March 31, 2006, indicates that the Company did not maintain effective control over financial reporting as a result of material weaknesses outlined in such report.

As announced on June 29, 2006, Parlux had delayed filing its Annual Report on Form 10-K until completion of management’s assessment of the internal controls and reporting requirements. The Company received a letter from The Nasdaq Stock Market indicating that the Company’s common stock was subject to delisting pursuant to Nasdaq Marketplace Rule 4310(c)(14), which requires the Company to file all reports with the Securities and Exchange Commission on a timely basis, as required by the Securities Exchange Act of 1934, as amended. Parlux requested a hearing before the Nasdaq Listing Qualifications Panel, thereby automatically deferring the delisting of its common stock pending the Panel’s review and determination and believes that today’s filing will fulfill all of its reporting requirements. Therefore, Parlux believes that such a hearing will no longer be necessary, and its common stock shall continue to be listed on The Nasdaq Stock Market.

37. Also on July 24, 2006, Parlux filed its annual report with the SEC on Form 10-K.

The Company’s Form 10-K was signed by the Individual Defendants and reaffirmed the

Company’s previously announced financial results. Additionally, the Company’s Form 10-K

contained the following Sarbanes-Oxley required certifications signed by the Individual

14

Defendants:

1. I have reviewed this annual report on Form 10-K of Parlux Fragrances, Inc.;

2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;

4. The registrant’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant, and have:

a) Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

b) Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;

c) Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and

d) Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s

15

fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and

5. The registrant’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):

a) All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and

b) Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.

***

SECTION 906 CERTIFICATION

1. The Report fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934; and

2. The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company.

38. The statements contained in ¶¶ 30, 32, 36, and 37 were materially false and

misleading when made because defendants failed to disclose or indicate the following: (1) that

increased advertising costs and decreased sales were negatively impacting the Company’s

financial results; (2) that the Company lacked adequate internal controls; and (3) that, as a result

of the above, defendants’ statements concerning Parlux’s financial performance were lacking in

any reasonable basis when made.

The Truth Continues to Emerge

39. On August 10, 2006, Parlux stunned investors when the Company announced that

it would delay filing its quarterly report with the SEC. Additionally, Parlux reported that its

16

earnings for the quarter would be lower than previous guidance suggested due to decreased sales

to U.S. department stores and significantly increased advertising and promotional costs.

Specifically, the Company stated:

The Company anticipates that diluted earnings per share for the quarter ended June 30, 2006 will be in the range of $0.04 to $0.05 per share, compared to $0.18 per share in the prior year comparable quarter. The reduction is mainly attributable to the decrease in sales to U.S. department stores due to the acquisitions and consolidations in this sector, and a reduction in sales to related parties. Department store advertising and promotional programs, committed to in advance, also had a disproportionate impact on earnings. Net sales are anticipated to increase by approximately 22% for the comparable three-month period, while the increase in advertising and promotional costs is expected to exceed 40%. In addition, the sales increase during the period was mainly attributable to increased sales to international distributors, which sales result in lower gross margins.

40. On this news, shares of Parlux plummeted $3.38, or 41.4 percent, to close, on

August 11, 2006, at $4.78 per share, on unusually heavy trading volume.

Post Class Period Disclosures

41. On August 23, 2006, after the market closed, Parlux announced that due to the

delay in filing its Form 10-Q for the period ended June 30, 2006, the Company had received a

letter from NASDAQ which indicated that the Company’s common stock was subject to

delisting. Specifically, the Company stated:

Parlux Fragrances, Inc. announced today that due to the delay in filing its Form 10-Q for the period ended June 30, 2006, the Company has received a letter from The Nasdaq Stock Market indicating that the Company’s common stock is subject to delisting pursuant to Nasdaq Marketplace Rule 4310(c)(14). Nasdaq Marketplace Rule 4310(c)(14) requires the Company to file all reports with the Securities and Exchange Commission on a timely basis, as required by the Securities Exchange Act of 1934, as amended.

Parlux will request a hearing before the Nasdaq Listing Qualifications Panel, thereby automatically deferring the delisting

17

of its common stock pending the Panel’s review and determination. Until the Panel issues a determination and the expiration of any exception granted by the Panel, Parlux’s common stock will continue to be traded on The Nasdaq National Market.

As announced on August 17, 2006, Parlux has delayed filing its Quarterly Report on Form 10-Q pending determination of a non-cash charge to be recorded in accordance with Statement of Financial Accounting Standards No. 123R “Share Based Payment.” This non-cash charge was due to the modification of fully vested warrants, issued during the period from 1999 through 2002, to reflect the Company’s stock split effected June 19, 2006. The charge will have no effect on the stockholders’ equity of the Company since the same amount appearing as a share-based compensation charge will be recorded as an increase to addition paid-in-capital, and the book value per share will remain unchanged. Parlux intends to file the Form 10-Q as soon as practicable.

PLAINTIFF’S CLASS ACTION ALLEGATIONS

42. Plaintiff brings this action as a class action pursuant to Federal Rule of Civil

Procedure 23(a) and (b)(3) on behalf of a Class, consisting of all those who purchased the

common stock of Parlux between February 8, 2006 and August 10, 2006, inclusive (the “Class

Period”) and who were damaged thereby. Excluded from the Class are defendants, the officers

and directors of the Company, at all relevant times, members of their immediate families and

their legal representatives, heirs, successors or assigns and any entity in which defendants have

or had a controlling interest.

43. The members of the Class are so numerous that joinder of all members is

impracticable. Throughout the Class Period, Parlux’s common stock was actively traded on

NASDAQ. While the exact number of Class members is unknown to Plaintiff at this time and

can only be ascertained through appropriate discovery, Plaintiff believes that there are hundreds

or thousands of members in the proposed Class. Record owners and other members of the Class

may be identified from records maintained by Parlux or its transfer agent and may be notified of

18

the pendency of this action by mail, using the form of notice similar to that customarily used in

securities class actions.

44. Plaintiff’s claims are typical of the claims of the members of the Class as all

members of the Class are similarly affected by defendants’ wrongful conduct in violation of

federal law that is complained of herein.

45. Plaintiff will fairly and adequately protect the interests of the members of the

Class and has retained counsel competent and experienced in class and securities litigation.

46. Common questions of law and fact exist as to all members of the Class and

predominate over any questions solely affecting individual members of the Class. Among the

questions of law and fact common to the Class are:

a. whether the federal securities laws were violated by defendants’ acts as

alleged herein;

b. whether statements made by defendants to the investing public during the

Class Period misrepresented material facts about the business, operations

and management of Parlux; and

c. to what extent the members of the Class have sustained damages and the

proper measure of damages.

47. A class action is superior to all other available methods for the fair and efficient

adjudication of this controversy since joinder of all members is impracticable. Furthermore, as

the damages suffered by individual Class members may be relatively small, the expense and

burden of individual litigation make it impossible for members of the Class to individually

redress the wrongs done to them. There will be no difficulty in the management of this action as

a class action.

19

UNDISCLOSED ADVERSE FACTS

48. The market for Parlux’s common stock was open, well-developed and efficient at

all relevant times. As a result of these materially false and misleading statements and failures to

disclose, Parlux’s common stock traded at artificially inflated prices during the Class Period.

Plaintiff and other members of the Class purchased or otherwise acquired Parlux common stock

relying upon the integrity of the market price of Parlux’s common stock and market information

relating to Parlux, and have been damaged thereby.

49. During the Class Period, defendants materially misled the investing public,

thereby inflating the price of Parlux’s common stock, by publicly issuing false and misleading

statements and omitting to disclose material facts necessary to make defendants’ statements, as

set forth herein, not false and misleading. Said statements and omissions were materially false

and misleading in that they failed to disclose material adverse information and misrepresented

the truth about the Company, its business and operations, as alleged herein.

50. At all relevant times, the material misrepresentations and omissions particularized

in this Complaint directly or proximately caused or were a substantial contributing cause of the

damages sustained by Plaintiff and other members of the Class. As described herein, during the

Class Period, defendants made or caused to be made a series of materially false or misleading

statements about Parlux’s business, prospects and operations. These material misstatements and

omissions had the cause and effect of creating in the market an unrealistically positive

assessment of Parlux and its business, prospects and operations, thus causing the Company’s

common stock to be overvalued and artificially inflated at all relevant times. Defendants’

materially false and misleading statements during the Class Period resulted in Plaintiff and other

members of the Class purchasing the Company’s common stock at artificially inflated prices,

20

thus causing the damages complained of herein.

LOSS CAUSATION

51. Defendants’ wrongful conduct, as alleged herein, directly and proximately caused

the economic loss suffered by Plaintiff and the Class.

52. During the Class Period, Plaintiff and the Class purchased common stock of

Parlux at artificially inflated prices and were damaged thereby. The price of Parlux common

stock declined when the misrepresentations made to the market, and/or the information alleged

herein to have been concealed from the market, and/or the effects thereof, were revealed, causing

investors’ losses.

SCIENTER ALLEGATIONS

53. As alleged herein, defendants acted with scienter in that defendants knew that the

public documents and statements issued or disseminated in the name of the Company were

materially false and misleading; knew that such statements or documents would be issued or

disseminated to the investing public; and knowingly and substantially participated or acquiesced

in the issuance or dissemination of such statements or documents as primary violations of the

federal securities laws. As set forth elsewhere herein in detail, defendants, by virtue of their

receipt of information reflecting the true facts regarding Parlux, their control over, and/or receipt

and/or modification of Parlux’s allegedly materially misleading misstatements and/or their

associations with the Company which made them privy to confidential proprietary information

concerning Parlux, participated in the fraudulent scheme alleged herein.

54. Additionally, in a move meant solely to hide the Company’s internal controls

problems, defendants further manipulated the Company’s stock price by their attempt to have the

Company be taken private.

21

55. During the Class Period, and with the Company’s stock trading at artificially

inflated prices, the Individual Defendants sold 385,618 shares for gross proceeds of

$12,865,495.14, as evidenced by the following chart:

NAME DATE SHARES SOLD

PRICE GROSS PROCEEDS

Frank A. Buttacavoli 2/13/2006 2/13/2006 2/13/2006 2/13/2006 2/13/2006 2/13/2006 2/13/2006 2/13/2006 2/13/2006 2/13/2006 2/13/2006 2/13/2006 2/13/2006 2/13/2006 2/13/2006 2/13/2006 2/13/2006 2/13/2006 2/13/2006 2/13/2006 2/13/2006 2/13/2006 2/13/2006 2/13/2006 2/13/2006 2/13/2006 2/13/2006 2/13/2006 2/13/2006 2/13/2006

2,191 1,000 100 899 500 2,000 200 400 299 99 99 99 101 300 100 1,900 400 200 1,053 400 1,800 160 400 1,495 2,800 1,509 5,148 400 4,649 4,917 Total: 35,618

$33.02 $33.03 $33.05 $33.08 $33.09 $33.12 $33.13 $33.15 $33.16 $33.17 $33.18 $33.19 $33.21 $33.25 $33.26 $33.27 $33.28 $33.35 $33.36 $33.38 $33.40 $33.41 $33.42 $33.43 $33.50 $33.51 $33.52 $33.53 $33.54 $33.55

$72,346.82 $33,030.00 $3,305.00 $29,738.92 $16,545.00 $66,240.00 $6,626.00 $13,260.00 $9,914.84 $3,283.83 $3,284.82 $3,285.81 $3,354.21 $9,975.00 $3,326.00 $63,213.00 $13,312.00 $6,670.00 $35,128.08 $13,352.00 $60,120.00 $5,345.60 $13,368.00 $49,977.85 $93,800.00 $50,566.59 $172,560.96 $13,412.00 $155,927.46 $164,965.35 Total: $1,189,235.14

Ilia Lekach 2/15/06 2/15/06 2/15/06 2/15/06 2/15/06 2/15/06 2/15/06

50,000 2,500 2,000 1,000 1,000 2,500 1,500

$34.00 $33.89 $33.81 $33.70 $33.56 $33.50 $33.44

$1,700,000.00 $84,725.00 $67,620.00 $33,700.00 $33,560.00 $83,750.00 $50,160.00

22

2/15/06 2/15/06 2/15/06 2/15/06 2/16/06 2/16/06 2/16/06 2/16/06 2/16/06 2/16/06 2/16/06

2,000 15,000 4,000 86,000 2,000 4,000 10,000 3,000 45,500 5,000 113,000 Total: 350,000

$33.35 $33.32 $33.31 $33.25 $33.48 $33.31 $33.30 $33.26 $33.25 $33.21 $33.20

$66,700.00 $499,800.00 $133,240.00 $2,859,500.00 $66,960.00 $133,240.00 $333,000.00 $99,780.00 $1,512,875.00 $166,050.00 $3,751,600.00 Total: $11,676,260.00

TOTAL: 385,618

TOTAL: $12,865,495.14

Applicability of Presumption of Reliance:

Fraud On The Market Doctrine

56. At all relevant times, the market for Parlux common stock was an efficient market

for the following reasons, among others:

a. Parlux stock met the requirements for listing, and was listed and actively

traded on NASDAQ, a highly efficient and automated market;

b. As a regulated issuer, Parlux filed periodic public reports with the SEC

and NASDAQ;

c. Parlux regularly communicated with public investors via established

market communication mechanisms, including through regular

disseminations of press releases on the national circuits of major newswire

services and through other wide-ranging public disclosures, such as

communications with the financial press and other similar reporting

services; and

d. Parlux was followed by several securities analysts employed by major

23

brokerage firms who wrote reports which were distributed to the sales

force and certain customers of their respective brokerage firms. Each of

these reports was publicly available and entered the public marketplace.

57. As a result of the foregoing, the market for Parlux common stock promptly

digested current information regarding Parlux from all publicly-available sources and reflected

such information in Parlux’s stock price. Under these circumstances, all purchasers of Parlux

common stock during the Class Period suffered similar injury through their purchase of Parlux

common stock at artificially inflated prices and a presumption of reliance applies.

NO SAFE HARBOR

58. The statutory safe harbor provided for forward-looking statements under certain

circumstances does not apply to any of the allegedly false statements pleaded in this complaint.

Many of the specific statements pleaded herein were not identified as “forward-looking

statements” when made. To the extent there were any forward-looking statements, there were no

meaningful cautionary statements identifying important factors that could cause actual results to

differ materially from those in the purportedly forward-looking statements. Alternatively, to the

extent that the statutory safe harbor does apply to any forward-looking statements pleaded

herein, defendants are liable for those false forward-looking statements because at the time each

of those forward-looking statements was made, the particular speaker knew that the particular

forward-looking statement was false, and/or the forward-looking statement was authorized

and/or approved by an executive officer of Parlux who knew that those statements were false

when made.

24

FIRST CLAIM Violation of Section 10(b) of

The Exchange Act and Rule 10b-5 Promulgated Thereunder Against All Defendants

59. Plaintiff repeats and realleges each and every allegation contained above as if

fully set forth herein.

60. During the Class Period, defendants carried out a plan, scheme and course of

conduct which was intended to and, throughout the Class Period, did: (i) deceive the investing

public, including Plaintiff and other Class members, as alleged herein; and (ii) cause Plaintiff and

other members of the Class to purchase Parlux common stock at artificially inflated prices. In

furtherance of this unlawful scheme, plan and course of conduct, defendants, and each of them,

took the actions set forth herein.

61. Defendants (a) employed devices, schemes, and artifices to defraud; (b) made

untrue statements of material fact and/or omitted to state material facts necessary to make the

statements not misleading; and (c) engaged in acts, practices, and a course of business which

operated as a fraud and deceit upon the purchasers of the Company’s common stock in an effort

to maintain artificially high market prices for Parlux’s common stock in violation of Section

10(b) of the Exchange Act and Rule 10b-5. All defendants are sued either as primary

participants in the wrongful and illegal conduct charged herein or as controlling persons as

alleged below.

62. Defendants, individually and in concert, directly and indirectly, by the use, means

or instrumentalities of interstate commerce and/or of the mails, engaged and participated in a

continuous course of conduct to conceal adverse material information about the business,

operations and future prospects of Parlux as specified herein.

63. These defendants employed devices, schemes and artifices to defraud, while in

25

possession of material adverse non-public information and engaged in acts, practices, and a

course of conduct as alleged herein in an effort to assure investors of Parlux’s value and

performance and continued substantial growth, which included the making of, or the

participation in the making of, untrue statements of material facts and omitting to state material

facts necessary in order to make the statements made about Parlux and its business operations

and future prospects in light of the circumstances under which they were made, not misleading,

as set forth more particularly herein, and engaged in transactions, practices and a course of

business which operated as a fraud and deceit upon the purchasers of Parlux common stock

during the Class Period.

64. Each of the Individual Defendants’ primary liability, and controlling person

liability, arises from the following facts: (i) the Individual Defendants were high-level executives

and/or directors at the Company during the Class Period and members of the Company’s

management team or had control thereof; (ii) each of these defendants, by virtue of his

responsibilities and activities as a senior officer and/or director of the Company was privy to and

participated in the creation, development and reporting of the Company’s internal budgets, plans,

projections and/or reports; (iii) each of these defendants enjoyed significant personal contact and

familiarity with the other defendants and was advised of and had access to other members of the

Company’s management team, internal reports and other data and information about the

Company’s finances, operations, and sales at all relevant times; and (iv) each of these defendants

was aware of the Company’s dissemination of information to the investing public which they

knew or recklessly disregarded was materially false and misleading.

65. The defendants had actual knowledge of the misrepresentations and omissions of

material facts set forth herein, or acted with reckless disregard for the truth in that they failed to

26

ascertain and to disclose such facts, even though such facts were available to them. Such

defendants’ material misrepresentations and/or omissions were done knowingly or recklessly and

for the purpose and effect of concealing Parlux’s operating condition and future business

prospects from the investing public and supporting the artificially inflated price of its common

stock. As demonstrated by defendants’ overstatements and misstatements of the Company’s

business, operations and earnings throughout the Class Period, defendants, if they did not have

actual knowledge of the misrepresentations and omissions alleged, were reckless in failing to

obtain such knowledge by deliberately refraining from taking those steps necessary to discover

whether those statements were false or misleading.

66. As a result of the dissemination of the materially false and misleading information

and failure to disclose material facts, as set forth above, the market price of Parlux common

stock was artificially inflated during the Class Period. In ignorance of the fact that market prices

of Parlux’s common stock were artificially inflated, and relying directly or indirectly on the false

and misleading statements made by defendants, or upon the integrity of the market in which the

common stock trades, and/or in the absence of material adverse information that was known to or

recklessly disregarded by defendants, but not disclosed in public statements by defendants during

the Class Period, Plaintiff and the other members of the Class acquired Parlux common stock

during the Class Period at artificially high prices and were damaged thereby.

67. At the time of said misrepresentations and omissions, Plaintiff and other members

of the Class were ignorant of their falsity, and believed them to be true. Had Plaintiff and the

other members of the Class and the marketplace known the truth regarding the problems that

Parlux was experiencing, which were not disclosed by defendants, Plaintiff and other members

of the Class would not have purchased or otherwise acquired their Parlux common stock, or, if

27

they had acquired such common stock during the Class Period, they would not have done so at

the artificially inflated prices which they paid.

68. By virtue of the foregoing, defendants have violated Section 10(b) of the

Exchange Act and Rule 10b-5 promulgated thereunder.

69. As a direct and proximate result of defendants’ wrongful conduct, Plaintiff and

the other members of the Class suffered damages in connection with their respective purchases

and sales of the Company’s common stock during the Class Period.

SECOND CLAIM Violation of Section 20(a) of

The Exchange Act Against the Individual Defendants

70. Plaintiff repeats and realleges each and every allegation contained above as if

fully set forth herein.

71. The Individual Defendants acted as controlling persons of Parlux within the

meaning of Section 20(a) of the Exchange Act as alleged herein. By virtue of their high-level

positions, and their ownership and contractual rights, participation in and/or awareness of the

Company’s operations and/or intimate knowledge of the false financial statements filed by the

Company with the SEC and disseminated to the investing public, the Individual Defendants had

the power to influence and control and did influence and control, directly or indirectly, the

decision-making of the Company, including the content and dissemination of the various

statements which Plaintiff contends are false and misleading. The Individual Defendants were

provided with or had unlimited access to copies of the Company’s reports, press releases, public

filings and other statements alleged by Plaintiff to be misleading prior to and/or shortly after

these statements were issued and had the ability to prevent the issuance of the statements or

cause the statements to be corrected.

28

72. In particular, each of these defendants had direct and supervisory involvement in

the day-to-day operations of the Company and, therefore, is presumed to have had the power to

control or influence the particular transactions giving rise to the securities violations as alleged

herein, and exercised the same.

73. As set forth above, Parlux and the Individual Defendants each violated Section

10(b) and Rule 10b-5 by their acts and omissions as alleged in this Complaint. By virtue of their

positions as controlling persons, the Individual Defendants are liable pursuant to Section 20(a) of

the Exchange Act. As a direct and proximate result of defendants’ wrongful conduct, Plaintiff

and other members of the Class suffered damages in connection with their purchases of the

Company’s common stock during the Class Period.

WHEREFORE, Plaintiff prays for relief and judgment, as follows:

a. Determining that this action is a proper class action under Rule 23 of the

Federal Rules of Civil Procedure;

b. Awarding compensatory damages in favor of Plaintiff and the other Class

members against all defendants, jointly and severally, for all damages

sustained as a result of defendants’ wrongdoing, in an amount to be

proven at trial, including interest thereon;

c. Awarding Plaintiff and the Class their reasonable costs and expenses

incurred in this action, including counsel fees and expert fees; and

d. Such other and further relief as the Court may deem just and proper.

29

JURY TRIAL DEMANDED

Plaintiff hereby demands a trial by jury.

Respectfully submitted,

Dated: SCHIFFRIN & BARROWAY, LLP Marc A. Topaz Richard A. Maniskas Alison K. Clark 280 King of Prussia Rd. Radnor, PA 19087 (610) 667-7706 Attorneys for Plaintiff