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Aussie Apparel Group  &  Federation Group Agreement

From: ASAP

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Aussie Apparel Group, Ltd., (BULLETIN BOARD: AAPG) today announced that John Fraser, Managing Director of Federation Group, and Bruce MacGregor, President/CEO of Aussie Apparel Group, Ltd., met in Los Angeles last week and signed the closing documents pertaining to AAPG's acquisition of the Hot Tuna (surf/wakeboarding), Xisle (surf/skate), Piranha Boy and Piranha Girl brands (children's surf) from Federation Group. The definitive acquisition agreement, signed on December 17, 2002, is valued at approximately $7,500,000 U.S. Dollars.

Mr. MacGregor immediately announced his company's plans pertaining to a fall 2003 launch at retail. "The samples for the 2003 fall season for all three brands are being completed as we speak and will be in Los Angeles by the end of the month. Stewart Kawamura, our National Sales Manager for Hot Tuna, is finalizing the appointment of sales reps in the areas where Hot Tuna has a long and established reputation with the core surf community. These areas include Hawaii, Puerto Rico, California, the Northwest, Florida and the Mid-Atlantic. We will then fill the sales rep positions for the remainder of the country. We plan on having Hot Tuna product on retail shelves by June 2003," stated MacGregor.

MacGregor went on to add, "The Hot Tuna and Xisle brands will utilize distinct and separate sales forces. We are in the final stages of bringing a sales management team on board for the Xisle brand. We also intend to deliver the first Xisle product into the mid-tier distribution channel by fall 2003. With respect to the Piranha brand, we plan on selling into the targeted major retailers on a direct basis."

The fall 2003 product lines have been designed and developed by Federation out of Australia. AAPG will design and develop its first line for all three brands for Spring 2004 delivery. According to MacGregor, "We still intend to utilize Australian resources on the design side given the Aussie roots and authenticity of the various brands."

Simultaneously, AAPG will proceed to set up International distribution. "The Hot Tuna brand in particular is well known throughout the world surfing community in places like Brazil, Europe and Asia. We would like to move as quickly as possible to capitalize on this awareness," reasoned MacGregor.

Additionally, the Company announced the appointment of Mr. Read Worth to the position of Senior Vice President of Merchandising. Mr. Worth comes to AAPG from Polo Sport where he was Senior VP of Merchandising. "Read's experience in merchandising global apparel brands such as Nike, Patagonia and Polo Sport will be paramount to our success. He clearly has the pulse on the youth market," stated MacGregor.

Asked about the retailer reaction to the closed transaction, MacGregor responded, "We received a tremendous amount of enthusiasm at Surf Expo to the news that Hot Tuna would finally be entering the North American market in a significant way. Hot Tuna's brand awareness within core surf shops is obviously very high."

This release is intended as a forward-looking statement within the meaning of the Private Securities Litigation Reform Act of 1995. The risks and uncertainties that may affect the operations, performance development and results of the Company's business include but are not limited to fluctuations in financial results, availability and customer acceptance of our products and services, the impact of competitive products, services and pricing, general market trends and conditions, and other risks detailed in the Company's SEC reports.

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