Press Releases
DAG Media, Inc. Reports First Quarter Financial Results
NEW YORK, May 15, 2006 /PRNewswire/ -- DAG Media Inc. (Nasdaq: DAGM - news)
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 in the amount of $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 $3,047,000. In this first quarter of 2006 the Company recorded a loss on the sale of the Directories amounting to $158,585 for the three months ended March 31, 2006 which includes legal, accounting, printing and professional fees. However, the actual closing of the sale was held on April 20, 2006, and therefore the actual gain on the sale of the Directories will be reflected in the second quarter of 2006.
The Company has reflected the sale of the Jewish Directories as a discontinued operation in the accompanying financial statements as of March 31, 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 an income from discontinued operations totaling $38,844 and $348 for the three-month periods ended March 31, 2006 and 2005, respectively. Net revenue from the discontinued operations was $1,380,138 and $1,680,074 for the three month periods ended March 31, 2006 and 2005, respectively.
Loss from operations for the three month period ended March 31, 2006 was $207,000 compared to a loss of $159,000 for the same period in 2005, an increase of $48,000, or 30%. This increase is primarily attributable to compensation expenses of $34,000 relating to the adoption of SFAS 123R effective January 1, 2006 and accounting expenses of $26,000, offset by a decrease in professional fees of $21,000. 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 was $249,000, or $(0.08) per basic and diluted share (based on 3.142 million shares), compared with net loss from continuing operations of $186,000, or $(0.06) per basic and diluted share (based on 3.107 million shares). The increase was attributable to the increase in loss from operations and increase in other expenses which attributable primarily to the fluctuation in performance of the Company’s portfolio and marketable securities.
As we begin 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 case 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.
DAG Media, Inc. (Nasdaq: DAGM), 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 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) our limited operating history; (iv) potential fluctuations in our quarterly operating results; (v) challenges facing us relating to our growth; and (vi) 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”, 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 |
March 31, 2006 |
Current assets: |
|
Cash and cash equivalents |
$3,325,439 |
Marketable securities |
2,652,430 |
Short term investment – insurance annuity contract – at fair value |
1,091,940 |
Total cash and cash equivalents, marketable securities and short terms investments |
7,069,809 |
Other current assets |
17,587 |
Current assets from discontinued operations |
2,023,520 |
Total current assets |
9,110,916 |
|
|
Property and equipment, net |
30,950 |
Other assets |
167,526 |
Other assets from discontinued operations |
359,421 |
Total assets |
$9,668,813 |
Liabilities and Shareholders’ Equity
Current liabilities: |
|
Accounts payable and accrued expenses |
$98,304 |
Current liabilities from discontinued operations |
3,185,057 |
Total current liabilities |
3,283,361 |
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; 3,211,190 issued and 3,142,460 outstanding |
3,211 |
Additional paid-in capital |
8,627,894 |
Treasury stock, at cost- 68,730 shares |
(231,113) |
Stock subscription receivable |
(18,012) |
Deferred compensation |
(20,981) |
Accumulated other comprehensive loss |
(189,069) |
Accumulated deficit |
(1,786,478) |
Total shareholders’ equity |
6,385,452 |
Total liabilities and shareholders’ equity |
$9,668,813 |
DAG MEDIA, INC. CONSOLIDATED STATEMENTS OF OPERATIONS
(unaudited)
|
Three Months Ended March 31, |
|
|
2006 |
2005 |
General and administrative expenses |
206,833 |
158,918 |
Total operating costs and expenses |
206,833 |
158,918 |
Loss from operations |
(206,833) |
(158,918) |
Other expenses |
(42,629) |
(27,435) |
Loss from continuing operations |
(249,462) |
(186,353) |
|
|
|
Discontinued Operations: |
|
|
Loss on the sale of discontinued operations |
(158,585) |
--- |
Income from discontinued operations |
38,844 |
348 |
Income (Loss) from discontinued operation |
(119,741) |
348 |
|
|
|
Net loss |
$(369,203) |
$(186,005) |
Adjustment to reconcile net income to net cash used in |
|
|
operating activities: |
|
|
Depreciation and amortization |
3,714 |
3,714 |
Amortization of deferred compensation and non cash compensation |
43,580 |
9,610 |
Tax benefit for stock options |
---- |
15,940 |
Realized loss on sale of marketable securities |
64,473 |
88.171 |
Changes in operating assets and liabilities: |
|
|
Other current assets |
(4,200) |
(3,212) |
Other assets |
(13,138) |
--- |
Accounts payable and accrued expenses |
17,025 |
(26,270) |
Assets and Liabilities from discontinued operations |
116,386 |
(118,195) |
Net cash used in operating activities |
(141,463) |
(216,247) |
|
|
|
Cash flows from investing activities: |
|
|
Proceeds from sale of marketable securities |
2,420,000 |
4,584,241 |
Investment in convertible loan |
(25,000) |
---- |
Investment in preferred stock, marketable securities |
(2,824,379) |
(6,173,344) |
Assets from discontinued operations |
---- |
(6,072) |
Net cash used in investing activities |
(429,379) |
(1,595,175) |
|
|
|
Cash flows from financing activities: |
|
|
Dividend paid ($0.4 per share) |
(314,246) |
(867,289) |
Proceeds from exercise of stock options |
---- |
29,220 |
Net cash used in financing activities |
(314,246) |
(838,069) |
|
|
|
Net decrease in cash and cash equivalents |
$(884,988) |
$(2,649,491) |
Cash and cash equivalents, beginning of period |
4,210,427 |
3,547,742 |
Cash and cash equivalents, end of period |
$3,325,439 |
$898,251 |
Supplemental Cash Flow Information: |
|
|
Capitalized software acquired through issuance of stock |
$29,388 |
--- |