NEW YORK, August 10, 2007 / PRIME NEWSWIRE/ -- DAG Media, Inc. (Nasdaq: DAGM - news)

 

 DAG Media, Inc. announced today that net sales for the three month period ended June 30, 2007 were $47,000 versus net sales of $0 for the same period in 2006.  This increase in net sales is mainly due to the sales made through DAG Media, Inc.’s subsidiary, Shopila, Inc.’s marketplaces.

      Loss from operations for the three month period ended June 30, 2007 was $666,000 (including write-off of Goodwill and Other intangible assets in the amount of $449,000) compared to a loss of $300,000 for the same period in 2006, an increase of $366,000. This increase resulted mainly from the write-off of Goodwill and Other intangible assets related to the acquisition of Shopila, in the amount of $449,000.

     For the three month period ended June 30, 2007, the consolidated loss from continuing operation was $433,000 or $(0.13) per basic and diluted common share (based on 3.236 million shares), compared to a loss of $208,000 or $(0.07) per basic and diluted common share (based on 3.157 million shares), for the three month period ended June 30, 2006. The increase in a loss of $225,000 resulted mainly from the write-off of Goodwill and Other intangible assets related to the acquisition of Shopila, in the amount of $449,000, offset by a decrease in Web development expenses of $100,000, which related to nextyellow.com web development expenses and an income tax benefit in 2007 of $61,000.

     Basic and diluted net loss per common share was $(0.11) for the three month period ended June 30, 2007, mainly due to  write-off of Goodwill and Other intangible assets in the amount of $449,000, versus basic and diluted net income  per common share of $0.14  for the three month period ended June 30, 2006. In 2006 net income was attributable to the gain on the sale of the Directories business.

      Net sales for the six month period ended June 30, 2007 were $72,000 versus net sales of $0 for the same period in 2006.  This increase in net sales is mainly due to the sales made through DAG Media, Inc.’s subsidiary, Shopila, Inc.’s marketplaces.
 
     Basic and diluted net loss per common share was $(0.16) for the six month period ended June 30, 2007, mainly due to  write-off of Goodwill and Other intangible assets in the amount of $449,000 in the second quarter, versus basic and diluted net income  per common share of $0.02  for the six month period ended June 30, 2006. In 2006 net income was attributable to the gain on the sale of the Directories business.

       On May 15, 2007, the Company formed a new wholly-owned subsidiary named DAG Funding Solutions, Inc, (“DAG Funding”). DAG Funding was formed to carry out a new business initiative centered on money lending services to businesses. More specifically, DAG Funding offers commercial short term funding solutions and loan services against collateral such as real estate, receivables, marketable securities, etc., accompanied, in most cases, by personal guarantees from the principals.

     Assaf Ran, Chairman of the Board and CEO stated, “In 2007 I have set my first priority to regain profitability and positive cash flow from operations, therefore we are committed to cut cash infusion to our cash draining operations and focus on enhancing profitable models, while maintaining our expense reduction approach. That means that DAG Funding is now our best performer while Next Yellow- our innovative patent pending online yellow pages solution is awaiting financing transaction on the subsidiary level. Since we will not issue more loans to Shopila and since Shopila is struggling financially and facing insufficient operating cash flow, we had to write-off the value of its goodwill and other intangible assets, which cause the majority of the loss in this quarter.”

  “I believe that now we have cleared the road a head.” added Mr. Ran.

    DAG Media, Inc. through our subsidiaries provides solutions to the online yellow pages industry and to local search, as well as e-commerce web site and short term none banking commercial loans. We operate several  web sites: http://www.nextyellow.com, http://www.shopila.com, http://www.dagfundingsolutions.com andhttp://www.dagmedia.com
This release contains forward-looking statements within the meaning Section 21E of the Securities Exchange Act of 1934, as amended (the “Exchange Act”) and the safe harbor provisions of the Private Securities Litigation Reform Act of 1995.  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 integration of new businesses that we have acquired or may acquire; (ii) the successful consummation of the sale of our directories business; (iii)  the success of our new business strategy; (iv) our limited operating history; (v) 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. 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.  You should review all of our reports filed with the Securities and Exchange Commission along with this press release.  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. AND SUBSIDIARIESCONSOLIDATED BALANCE SHEET

(unaudited)

 

 

	June 30, 2007
Assets
Current assets:
Cash and cash equivalents	$2,330,524
Marketable securities	2,713,505
Short term investment – insurance annuity contract – at fair value	1,019,688
Total cash and cash equivalents, marketable securities and short term investment	6,063,717
Trade accounts receivable	9,539
Due from purchaser	291,937
Short term notes	795,000
Other current assets	52,853
Total current assets	7,213,046
Property and equipment, net	14,238
Capitalized web development costs, net	98,687
Other assets	142,515
Total assets	$7,468,486

 

Liabilities and Shareholders’ Equity

 

Current liabilities:
Accounts payable and accrued expenses	$127,065
Promissory note	50,000
Line of credit	54,506
Income tax payable	336,917
Deferred gain from the sale of Jewish Directories	218,751
Commitments and contingencies	787,239
Commitments and contingencies	-

 

	Three Months Ended June 30,		Six Months Ended June 30,
	2007	2006	2007	2006
Net sales	$46,612	----	$71,636	----
Cost of goods sold	34,000	----	52,013	----
Gross profit	12,612	----	19,623	----
Interest income from short term notes	4,967	----	4,967	----
Operating costs and expenses:
Selling expenses	8,958	----	13,791	----
Web development expenses	12,336	112,994	24,672	112,994
Marketing expenses	11,677	15,529	14,866	15,529
Write off of Goodwill and Other intangible assets	449,057	----	449,057	----
General and administrative expenses	201,429	171,681	430,450	378,514
Total operating costs and expenses	683,457	300,204	932,836	507,037
Loss from operations	(665,878)	(300,204)	(908,246)	(507,037)
Other income, net	111,584	92,368	136,391	49,739
Loss from continuing operations before income tax benefit and minority interest	(554,294)	(207,836)	(771,855)	(457,298)
Income tax benefit	61,290	----	67,600	----
Loss  from continuing operations before minority interest	(493,004)	(207,836)	(704,255)	(457,298)
Minority interest	60,149	----	66,724	----
Loss  from continuing operations	(432,855)	(207,836)	(637,531)	(457,298)
Discontinued Operations:
Gain on the sale of discontinued operations	72,916	766,385	121,527	607,800
Loss from discontinued operations	----	(113,973)	----	(75,129)
Income from discontinued operations	72,916	652,412	121,527	532,671
Net Income (loss)	$(359,939)	$444,576	$(516,004)	$75,373
Basic and Diluted net income (loss) per common share outstanding:
Continuing operations	$(0.13)	$(0.07)	$(0.20)	$(0.15)
Discontinued operations	0.02	0.21	0.04	0.17
Net income (loss) per common share	$(0.11)	$0.14	$(0.16)	$0.02
Weighted average number of common shares outstanding
--Basic and Diluted	3,236,460	3,157,405	3,236,460	3,149,973

DAG MEDIA, INC. AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF CASH FLOWS

(unaudited)

 

Six Months Ended June 30,
	2006	2007
Cash flows from operating activities:
Net income (loss)	$(516,004)	$75,373
Adjustments to reconcile net income (loss) to net cash used in
operating activities:
Gain on the sale of  Jewish Directories	(121,527)	(426,107)
Depreciation and amortization	32,330	6,602
Amortization of deferred compensation and non cash compensation	86,408	166,374
Write off of Goodwill and Other intangible assets	449,057	----
Minority Interest	(66,724)	----
Realized loss on sale of marketable securities	10,569	70,861
Deferred tax	(67,600)	----
Gain on the sale of fixed assets	----	(14,232)
Changes in operating assets and liabilities:
Accounts receivable	(3,417)	----
Other current assets	(14,263)	(58,563)
Due from purchasers	----	(58,881)
Accounts payable and accrued expenses	(136,915)	87,328
Income tax payable	(4,764)	----
Assets and liabilities of discontinued operations	----	(104,249)
Net cash used in operating activities	(352,850)	(255,494)

 

Cash flows from investing activities:
Proceeds from sale of marketable securities	480,439	2,541,023
Investment in marketable securities	(806,391)	(2,558,739)
Issuance of short term notes	(795,000)	----
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	173,389	181,693
Net cash provided by (used in) investing activities	(947,563)	142,602
Cash flows from financing activities:
Dividend paid ($0.4 per share)	----	(314,246)
Proceeds from exercise of stock options	----	5,520
Net cash used in financing activities	----	(308,726)

 

Net decrease in cash	(1,300,413)	(421,618)
Cash and cash equivalents, beginning of period	3,630,937	4,210,427
Cash and cash equivalents, end of period	$2,330,524	$3,788,809
Supplemental Cash Flow Information:
Capitalized software acquired through issuance of stock	----	$37,920
Common stock issued for services performed	----	$45,000
Taxes paid during the period	$4,764	$5,844