Tag-It Pacific, Inc. reported that for the fiscal year ended December 31, 2002, net sales increased approximately $16.5 million, or 38%, to $60.1 million, compared to $43.6 million for fiscal 2001. Earnings per share reached 14 cents per share for the year, compared with a loss of 16 cents per share for 2001. Net income reached approximately $1.5 million in 2002, compared to a loss of $1.2 million in 2001.

Colin Dyne, CEO of Tag-It, commented: “We achieved a significant increase in sales for the year and we expect sales growth to continue. Last year’s sales increase was primarily due to an increase in trim- related sales from our Managed Trim Solution(TM) trim package program. Zipper sales have also started to grow under our Talon brand name to our Managed Trim Solution(TM) customers in Mexico and our other Talon customers in both the Western Hemisphere and Asia. Talon has been successful in becoming an approved zipper vendor for major brands and retailers, and we expect this division to provide increasing revenues and profits to the company.

“The initial results of our TekFit division have also been very exciting. Sales to date have exceeded our expectations and we are actively working on developing this technology into numerous apparel categories with some of the biggest names in the industry. Our exclusive supply agreement with Levi Strauss & Co. has been a success and we look forward to growing this relationship.

“We are very satisfied with the company’s performance in 2002 and excited about what the future holds for Tag-It Pacific. The results of our 2001 restructuring efforts have made a positive impact, which we believe will continue to result in earnings growth this year. Our continued focus on streamlining operations and our strategy of leveraging our value-added trim services, Talon Zipper brand name, and licensed proprietary fabric technologies will, in our opinion, deliver both top and bottom line growth in 2003.”

                         TAG-IT PACIFIC, INC.
                 Consolidated Statements of Operations
                (all numbers (excluding EPS) in $000s)

                                            Year Ended December 31,
                                                 2002            2001
Net sales                                $     60,073    $     43,568
Cost of goods sold                             44,633          31,679
 Gross profit                                  15,440          11,889
Selling expenses                                2,126           1,639
General and administrative expenses            10,270           8,940
Restructuring charges                               -           1,562
 Total operating expenses                      12,396          12,141
Income (loss) from operations                   3,044            (252)
Interest expense, net                           1,269           1,397
Income (loss) before income taxes               1,775          (1,649)
Provision (benefit) for income taxes              279            (423)
Net income (loss)                        $      1,496    $     (1,226)
Less:  Preferred stock dividends                 (184)            (50)
Net income (loss) to common shareholders $      1,312    $     (1,276)