D.G. Jewellery of Canada Ltd. Reports Record First Quarter Earnings.

TORONTO--(BUSINESS WIRE)--June 3, 1999--

Expands Distribution Channels to Include the Internet

D.G. Jewellery of Canada Ltd. (DGJL,NM: NASDAQ), which designs, manufactures, merchandises and distributes stone-set jewelry, today reported record net income for the three months ended March 31, 1999.

First quarter net income was $1,026,033, a 26 percent increase from $815,826 for the comparable 1998 period. (All amounts expressed in US dollars.) On a per share basis, net income was 14 cents per diluted share on 7,430,000 diluted shares outstanding, unchanged from 14 cents per diluted share on 5,665,000 diluted shares outstanding for the same prior year period. Revenues for the first quarter were $7,328,266 versus $8,714,070 for the comparable 1998 period. As of March 31, 1999, the company had an average of 7.43 million shares outstanding on a diluted basis versus 5.66 million shares at the end of the same 1998 period. Gross profit margins for the three months rose to 31.5 percent from 26.5 percent from the year-earlier period.

Jack Berkovits, CEO of D. G. Jewellery, said, "Our record results reflect the success of our strategic initiatives to diversify the company's product offerings, expand sales channels such as television shopping networks and maintain tight control over operating costs. Gross profit margins have widened to targeted levels, despite lower sales volume. We are being more selective in the customers we sell to and have focused on promoting higher-margined jewelry items."

"We view the Internet as a potentially significant marketing tool and are very excited about the initial consumer response to our participation in Amazon.com and Bid.com on-line auction programs. Though not yet sizeable in dollar terms, our on-line sales more than tripled in the month of April and we foresee continued solid gains in the month's ahead. Our objective is to become the preeminent on-line jewelry source. Based on the strong first quarter results we are confident that 1999 will be an excellent year for us."

D. G. Jewellery of Canada Ltd. is primarily engaged in the design, merchandising and distribution of stone-set jewelry for department stores, mass merchants, catalog showrooms, television shopping networks and other high-volume retailers and other major discounters.

The Company maintains a broad base of customers concentrated in five major jewelry segments: Internet retailers, auctioneers and other web merchants; Department stores such as J.C. Penney and Saks Fifth Avenue; Specialty markets such as QVC Inc., Home Shopping Network, ValueVision International, Shop at Home, QVC England, QVC Germany and The Shopping Channel (Canada); Jewelry chain stores such as Zales, Gordons, and Friedmans; Mass merchandisers such as Wal-Mart and Zellers. -0-

                     D.G. JEWELLERY OF CANADA LTD.
                           INCOME STATEMENT
                      FOR THE THREE MONTHS ENDED
                  (Amounts Expressed in U.S. Dollars)

                                      For the Three Months Ended
                                        3/31/99           3/31/98

Sales                              $  7,328,266      $  8,714,070
Cost of Sales                         5,021,666         6,406,202
                                    -----------       ----------

Gross Profit                          2,306,600         2,307,868
Other Income                                 30               936
                                 --------------    --------------

    Total Income                      2,306,630         2,308,804

Gross Profit (%)                         31.48%            26.48%
Expenses:
  General and Admin.                    335,268           391,446
  Selling                               424,348           545,452
  Financial                             417,144           372,063
                                   ------------      ------------

    Total Expenses:                   1,176,730         1,308,961

Income Before Income Tax              1,129,899           999,843
Income Tax                              103,866           184,017
                                  -------------      ------------

Net Income                            1,026,033           815,826
                                   ============      ============

Earnings Per Share

  Basic                          $         0.18    $         0.16
  Diluted                        $         0.14    $         0.14

Avg. Weighted Number of Shares

  Basic                               5,668,500         5,165,000
  Diluted                             7,430,000         5,665,000

Except for the historical information contained herein the matters discussed in this earnings release include forward-looking statements that may involve a number of risks and uncertainties. Actual results may vary significantly based on a number of factors, including, but not limited to, risks in product demand, the impact of competitive products and pricing, changing economic conditions, both here and abroad, release and sales of new products, and other risk factors detailed in the Company's most recent annual report and filings with the Securities and Exchange Commission.