a
60 Cutter Mill Rd.
Suite 205
Great Neck, NY
11021
Tel: 516.444.3400
Fax: 516.444.3404

 

Press Releases

Press Release Source: DAG Media, Inc.

DAG Media, Inc. Reports Second Quarter Financial Results

Monday August 14, 4:00 pm ET

NEW YORK, -- DAG Media Inc., announced today that net income for the quarter ended June 30, 2006 was $445,000 versus net loss of $16,000 for the same period last year, the net income was attributable to the gain on the sale of the Directories business, as defined below amounting to $766,000.

On February 6, 2006, DAG Media, Inc. (the "Company") entered into an asset purchase agreement to sell the assets and liabilities of our two Jewish Directories, The Jewish Israeli Yellow Pages and The Jewish Master Guide, also known as the Kosher Yellow Pages (the "Directories"), to DAG-Jewish Directories, Inc., a buying entity that was established by a group of sales agencies' owners and a few of our employees. The assets were sold for (i) $291,667 paid in cash at the closing; (ii) the delivery of a promissory note with payment totaling $613,333 (which includes interest payments in the rate of 5% per annum) which will be paid in 24 consecutive monthly installments of $25,556; and (iii) the Buyer's assumption of liabilities relating to the Directories business in the amount of approximately $3,197,000. The actual closing of the sale was held on April 20, 2006.

The Company has reflected the sale of the Directories business as a discontinued operation in the accompanying financial statements as of June 30, 2006. As a result, revenues, publishing costs and related expenses have been reclassified in the statement of operations and are shown separately as a net amount under the caption loss from discontinued operations for all periods presented. Accordingly, the Company recorded a loss from discontinued operation totaling $113,973 and $97,260 for the three month periods ended June 30, 2006 and 2005, respectively, and a loss from discontinued operations totaling $75,129 and $96,912 for the six month periods ended June 30, 2006 and 2005, respectively. Net revenue from the discontinued operations was $(9,896) (which consists of credits issued to customers) and $713,487, for the three month periods ended June 30, 2006 and 2005, respectively, and net revenue from the discontinued operations was $1,370,242 and $2,393,561, for the six month periods ended June 30, 2006 and 2005, respectively.

Loss from operations for the three month period ended June 30, 2006 was $300,000 compared to a loss of $172,000 for the same period in 2005, an increase of $128,000, or 74.4%. This increase is attributable primarily to web development costs of $113,000 associated with the programming of nextyellow.com's website and an increase in compensation expenses of $46,000 due to the adoption of SFAS 123R effective January 1, 2006, offset by a decrease in professional fees of $41,000 mainly due to replacing our legal consultants. We expect general and administrative expenses to increase as a result of the growth related to the operation of nextyellow.com.

Net loss from continuing operations for the three month period ended June 30, 2006 was $208,000, or $(0.07) per basic and diluted share (based on 3.157 million shares), compared to a net income of $81,000, or $0.03 per basic and diluted share (based on 3.118 million shares), for the same period in 2005. The net loss was attributable to the increase in loss from operations and decrease in other income which attributable primarily to the fluctuation in performance of the Company's portfolio and marketable securities.

Loss from operations for the six month period ended June 30, 2006 was $507,000 compared to a loss of $331,000 for the same period in 2005, an increase of $176,000, or 53.2%. This increase is attributable primarily to web development costs of $113,000 associated with the programming of nextyellow.com's website and an increase in compensation expenses of $79,000 relating to the adoption of SFAS 123R effective January 1, 2006, offset by a decrease in professional fees of $36,000 mainly due to replacing our legal consultants. We expect general and administrative expenses to increase as a result of the growth related to the operation of nextyellow.com.

Net loss from continuing operations for the six month period ended June 30, 2006 was $457,000, or $(0.15) per basic and diluted share (based on 3.150 million shares), compared to a net loss of $106,000, or $(0.04) per basic and diluted share (based on 3.113 million shares), for the same period in 2005. The increase was attributable to the increase in loss from operations and decrease in other income which was attributable primarily to the fluctuation in performance of the Company's portfolio and marketable securities.

As we began the operation of nextyellow.com through DAG Interactive, Inc., we will seek to acquire a new, potentially larger and more profitable business, more suitable for operation in a publicly traded company that is synergistic with nextyellow.com. However, we cannot assure you that we will acquire a business in this sector and we may use our available cash for other viable acquisitions. We believe that the sale of our Directories business, the commencement of nextyellow.com operation and the acquisition of a new business more suitable for operation in a public company is the best way to enhance shareholder value and optimize asset growth.

About DAG Media, Inc.

DAG Media, Inc. (Nasdaq: DAGM - News), through its subsidiary DAG Interactive, Inc. is a provider of an innovative solution to the online yellow pages industry and to local search. A preview of our patent pending technology is now operating at http://www.nextyellow.com and represents a shift in yellow pages approach from 'let your fingers do the walking' to 'let the businesses do the walking'.

This release contains forward-looking statements within the meaning section 21E of the Securities Exchange Act of 1934, as amended (the "Exchange Act"). Forward-looking statements are typically identified by the words "believe," "expect," "intend," "estimate" and similar expressions. Those statements appear in a number of places in this release and include statements regarding our intent, belief or current expectations or those of our directors or officers with respect to, among other things, trends affecting our financial conditions and results of operations and our business and growth strategies. These forward-looking statements are not guarantees of future performance and involve risks and uncertainties. Actual results may differ materially from those projected, expressed or implied in the forward-looking statements as a result of various factors (such factors are referred to herein as "Cautionary Statements"), including but not limited to the following: (i) the successful consummation of the sale of our directories business; (ii) the success of our new business strategy; (iii) potential acquisitions; (iv) our limited operating history; iv) potential fluctuations in our quarterly operating results; (vi) challenges facing us relating to our growth; and (vii) our dependence on a limited number of suppliers. The accompanying information contained in this release, including the information set forth under "Management's Discussion and Analysis of Financial Condition and Results of Operations," which can be found in our Form 10-Q filed for the quarter ended June 30, 2006, identifies important factors that could cause such differences. These forward-looking statements speak only as of the date of this release, and we caution potential investors not to place undue reliance on such statements. We undertake no obligation to update or revise any forward-looking statements. All subsequent written or oral forward-looking statements attributable to us or persons acting on our behalf are expressly qualified in their entirety by the Cautionary Statements.

 




                               DAG MEDIA, INC.

                          CONSOLIDATED BALANCE SHEET

                                 (unaudited)



    Assets                                           June 30, 2006

    Current assets:

      Cash and cash equivalents                         $3,788,809

      Marketable securities                              2,205,739

      Short term investment - insurance

       annuity contract - at fair value                  1,100,017

        Total cash and cash equivalents, marketable

         securities and short term investment            7,094,565



      Other current assets                                  74,565

      Due from purchasers                                  350,548

        Total current assets                             7,519,678



    Property and equipment, net                              5,588

    Capitalized web development costs                      125,602

    Other assets                                           164,945

    Due from purchasers                                    604,426

        Total assets                                    $8,420,239



    Liabilities and Shareholders' Equity

    Current liabilities:

    Accounts payable and accrued expenses                 $131,758

    Deferred subscription revenue                            1,849

    Income tax payable                                     361,371

    Deferred gain from the sale of Jewish Directories      267,362

    Current liabilities of discontinued operations          35,000

        Total current liabilities                          797,340



    Long term liabilities:

    Deferred gain from the sale of Jewish Directories     $604,426



    Commitments and contingencies



    Shareholders' equity:

      Preferred shares - $ .01 par value;

       5,000,000 shares authorized; no shares issued          ----

      Common shares - $ .001 par value;

       25,000,000 authorized; 3,235,190 issued

       and 3,166,460 outstanding                             3,235

      Additional paid-in capital                         8,838,135

      Treasury stock, at cost- 68,730 shares              (231,113)

      Deferred compensation                                (15,249)

      Accumulated other comprehensive loss                (234,631)

      Accumulated deficit                               (1,341,904)

        Total shareholders' equity                       7,018,473

        Total liabilities and shareholders' equity      $8,420,239







                               DAG MEDIA, INC.

                    CONSOLIDATED STATEMENTS OF OPERATIONS

                                 (unaudited)



                                  Three Months                Six Months

                                  Ended June 30,            Ended June 30,

                                2006         2005         2006         2005

    Operating costs and

     expenses:

    Web development costs    $112,994        $----     $112,994        $----

    Marketing expenses         15,529         ----       15,529         ----

    General and

     administrative

     expenses                 171,681      172,090      378,514      331,008

    Total operating

     costs and expenses       300,204      172,090      507,037      331,008



    Loss from operations     (300,204)    (172,090)    (507,037)    (331,008)



    Other income               92,368      252,936       49,739      225,501

    (Loss) income from

      continuing

      operations before

      benefit for income

      taxes                  (207,836)      80,846     (457,298)    (105,507)



    Discontinued operations:

    Gain on the sale of

     discontinued

     operations               766,385         ----      607,800         ----

    Loss from

     discontinued

     operations              (113,973)     (97,260)     (75,129)     (96,912)

    Income (loss) from

     discontinued operations  652,412      (97,260)     532,671      (96,912)



    Net income (loss)        $444,576     $(16,414)     $75,373    $(202,419)



    Basic and diluted

     net gain (loss) per

     common share

     outstanding:

    Continuing operations      $(0.07)       $0.03       $(0.15)      $(0.04)

    Discontinued operations      0.21        (0.04)        0.17        (0.03)

    Total net gain (loss)

     per common share

     - basic and diluted        $0.14       $(0.01)       $0.02       $(0.07)



    Weighted average number

     of common shares

     outstanding - basic

     and diluted            3,157,405    3,118,460    3,149,973    3,112,731







                               DAG MEDIA, INC.

                    CONSOLIDATED STATEMENTS OF CASH FLOWS

                                 (unaudited)

                                                    Six Months Ended June 30,

                                                       2006          2005

    Cash flows from operating activities:

     Net income (loss)                               $75,373      $(202,419)

     Adjustment to reconcile net income to net

      cash used in operating activities:

     Depreciation and amortization                     6,602          7,428

     Amortization of deferred compensation

      and non cash compensation                      166,374         19,220

     Gain on the sale of Jewish Directories         (426,107)            --

     Tax benefit for stock options                        --         15,940

     Realized loss (gain) on sale of marketable

      securities                                      70,861       (101,073)

     Gain on the sale of fixed assets                (14,232)            --

     Changes in operating assets and liabilities:

        Other current assets                         (58,563)       (16,367)

        Due from purchasers                          (58,881)            --

        Accounts payable and accrued expenses         85,479        (57,474)

        Deferred subscriptions revenues                1,849             --

        Assets and liabilities of

         discontinued operations                    (104,249)      (193,487)

          Net cash used in operating activities     (255,494)      (528,232)



    Cash flows from investing activities:

     Proceeds from sale of marketable securities   2,541,023     12,728,736

     Investment in marketable securities          (2,558,739)   (10,780,895)

     Investment in convertible loan                  (25,000)            --

     Purchase of fixed assets                         (5,588)            --

     Proceeds from sale of fixed assets                9,213             --

     Cash received on sale of Jewish Directories,

      net of expenses                                181,693             --

     Assets of discontinued operations                    --         (6,072)

          Net cash provided by investing

           activities                                142,602      1,941,769



    Cash flows from financing activities:

     Dividend paid ($0.4 per share)                 (314,246)    (1,490,982)

     Proceeds from exercise of stock options           5,520         29,220

          Net cash used in financing activities     (308,726)    (1,461,762)



    Net decrease in cash                            (421,618)       (48,225)

    Cash and cash equivalents, beginning

     of period                                     4,210,427      3,547,742

    Cash and cash equivalents, end of period      $3,788,809     $3,499,517



    Supplemental Cash Flow Information:

    Capitalized software acquired through

     issuance of stock                               $37,920             --

    Common stock issued for services performed       $45,000             --

    Non cash proceeds from the sale of fixed assets  $33,080             --

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