Alloy Acquires Old Glory, Extends Direct Marketing Reach to Music and Entertainment Lifestyle Merchandise.

Business Editors

NEW YORK--(BUSINESS WIRE)--Dec. 17, 2002

Alloy, Inc. (Nasdaq:ALOY), a media, direct marketing and marketing services company targeting the dynamic Generation Y population, today announced that it has acquired Old Glory Boutique Distributing, Inc. Launched in 1993, Old Glory has become a major direct marketer of music and entertainment related lifestyle products including apparel, accessories and collectibles through direct mail catalogs and the Internet.

Alloy paid approximately $9.6 million in cash to complete the acquisition.

Matt Diamond, Alloy's Chairman and Chief Executive Officer stated, "Old Glory is a recognized direct marketer of music and entertainment lifestyle merchandise, vibrant product categories with great appeal to our Generation Y audience. We plan to fully integrate Old Glory's operations with our direct marketing infrastructure and combine Old Glory's database of over 300,000 names with Alloy's 12.5 million name database. Additionally, we plan to leverage Old Glory's strong distribution brand to further drive sponsorship revenues, particularly enhancing our marketing programs for music and entertainment clients."

Mr. Diamond concluded, "In addition to expanding our youth-focused direct marketing franchise, we expect the acquisition of Old Glory to increase our fiscal 2003 merchandise revenues by $8 million to $10 million and provide at least $1 million in incremental EBITDA."

About Alloy

Alloy, Inc. is a media, direct marketing and marketing services company targeting Generation Y, a key demographic segment comprising the more than 60 million boys and girls in the United States between the ages of 10 and 24. Alloy's convergent media model uses a wide range of media assets to reach more than 25 million Generation Y consumers each month. Through Alloy's 360 Youth media and marketing services unit, marketers can connect with the Generation Y audience through a host of advertising and marketing programs incorporating Alloy's media and marketing assets such as direct mail catalogs, magazines, college and high school newspapers, Web sites, school-based media boards, college guides, and sponsored on- and off-campus events. Alloy generates revenue from its broad reach in the Generation Y community by providing marketers advertising and marketing services through 360 Youth and by selling apparel, accessories, footwear, room furnishings and action sports equipment directly to the youth market through catalogs, Web sites and magazines. For further information regarding Alloy, please visit our Web site (www.alloy.com) and click on "Investor Info". Information on 360 Youth's marketing services can be found at www.360youth.com.

This announcement may contain forward-looking statements that involve risks and uncertainties, including statements regarding our expectations and beliefs regarding our future results or performance. When used in this announcement, the words "anticipate", "believe", "estimate", "expect", "expectation", "project" and "intend" and similar expressions are intended to identify such forward-looking statements. Our actual results could differ materially from those projected in the forward-looking statements. Additionally, you should not consider past results to be an indication of our future performance. Factors that might cause or contribute to such differences include, among others, our ability to: increase revenues, generate high margin sponsorship and multiple revenue streams, increase visitors to our Web sites (www.alloy.com, www.ccs.com, and www.danscomp.com) and build customer loyalty; develop our sales and marketing teams and capitalize on these efforts, develop commercial relationships with advertisers and the continued resilience in advertising spending to reach the teen market; manage the risks and challenges associated with integrating newly acquired businesses; and identify and take advantage of strategic, synergistic acquisitions and other revenue opportunities. Other relevant factors include, without limitation: our competition; seasonal sales fluctuations; the uncertain economic and political climate in the United States and throughout the rest of the world and the potential that such climate may deteriorate further; and general economic conditions. For a discussion of certain of the foregoing factors and other risk factors see the "Risk Factors That May Affect Future Results" sections included in our annual report on Form 10-K for the year ended January 31, 2002 and in our quarterly report on Form 10-Q for the period ended October 31, 2002, both of which are on file with the Securities and Exchange Commission. We do not intend to update any of the forward-looking statements after the date of this announcement to conform these statements to actual results or to changes in management's expectations, except as may be required by law.