D.G. Jewelry Inc. Reports Entry of Haymarket Judgment.

Business Editors

TORONTO--(BUSINESS WIRE)--Aug. 23, 2002

D.G. Jewelry Inc. (Nasdaq:DGJL), which designs, manufactures, merchandises and distributes stone-set jewelry, reports that final judgment has been entered against the company for damages in its long-standing litigation with Haymarket in the total amount of $1,371,696.03, inclusive of damages, interest to August 20, 2002, and assessed costs.

In June, 2002, Mark Valentine, former Chairman of Canadian broker-dealer, Thomson, Kernaghan, was placed under suspension by the Ontario Securities Commission as the result of an investigation in which it is alleged that Valentine has been guilty of conflicts of interest, non-compliance with and breach of Ontario securities laws, and failure to deal honestly and in good faith with clients, including orchestrating "death spiral" or "toxic financing" transactions. On August 14, 2002, Valentine was arrested in Frankfort, Germany, as the result of an FBI and RCMP sting operation, "Bermuda Short", into stock fraud and money laundering, in which at least 60 persons have now been charged. The FBI is seeking extradition of Valentine to the United States to face charges. Valentine has been charged in that matter with conspiracy to commit wire, mail and securities fraud, and with two counts of securities fraud. The indictment also alleges that Valentine was to cause securities brokers to receive kickbacks in return for helping to manipulate the market price of three companies by selling their stock to unsuspecting clients.

As these activities have similar overtones to the kind of market manipulation which D.G. Jewelry had alleged at trial had occurred in the trading of its stock, and, since Valentine and Thomson, Kernaghan had played a key role with Haymarket in the trading of D.G. Jewelry's stock which Haymarket had received in the May, 1999 financing, D.G. Jewelry is considering its options as a result of these recent developments, including seeking a stay of enforcement of the judgment as a result of new evidence that might have been or may be discovered in the course of these investigations, and/or seeking redress against those persons responsible for any illegal activities in relation to trading of its stock in that transaction either in New York or in the Canadian courts.

D.G. Jewelry Inc. is primarily engaged in the design, merchandising and distribution of stone-set jewelry for major retailers including department stores, mass merchants, shopping networks, major high-volume retailers and other major discounters in the U.S., Canada and Europe. For more information, please visit us at www.dgjewelry.com.

Except for the historical information contained herein, the matters discussed in this 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, other risk factors detailed in the company's most recent annual report and filings with the Securities and Exchange Commission.