DAGM Dag Media (MM)

NEW YORK, Oct. 28 /PRNewswire-FirstCall/ -- DAG Media Inc. (NASDAQ:DAGM) DAG Media, Inc., announced today that net advertising revenue for the quarter ended September 30, 2005 was $1,444,000 versus advertising revenue of $1,987,000 for the same period last year, a decrease of $543,000 or 27.3%. The decrease in revenues was attributable to the decrease in revenue of the Jewish Israeli Yellow Pages directory recognized in the three month period ended September 30, 2005. Gross profit decreased to $1,236,000 for the quarter ended September 30, 2005 from $1,761,000 in the three month period ended September 30, 2004. Net loss was $96,000 or $(0.03) per basic and diluted share (based on 3.120 million shares) compared with net income of $1,189,000 or $0.38 per basic and $0.37 per diluted share (based on 3.152 million shares and 3.238 million shares, accordingly). Advertising revenues for the nine month period ended September 30, 2005 was $3,838,000 versus advertising revenues of $5,027,000 for the nine months ended September 30, 2004, a decrease of $1,189,000, or 23.7%. Advertising revenues for the nine months ended September 30, 2004 included $466,000 of recognized revenues resulting from the ninth and last edition of the sold New Yellow Manhattan directory as well as one time graphics income of $31,000. The remaining $692,000 decrease in revenues was attributable primarily to the decrease in revenues of the Jewish Israeli Yellow Pages directory, which had produced record high revenues in prior years offset by increased revenues from the eleventh and twelfth edition of the Jewish Master Guide, also known as the Kosher Yellow Pages, recognized in the three month period ended June 30, 2005. The increase in revenue from the Jewish Master Guide was due to a significant increase in number of sales representatives dedicates to its sales, especially after the sale of the New Yellow Manhattan directory in August of 2003. Gross profit decreased to $3,305,000 for the nine month period ended September 30, 2005 from $4,255,000 in the nine month period ended September 30, 2004. Net loss was $299,000 or $(0.10) per basic and diluted share (based on 3.115 million shares) compared with net income of $1,138,000 or $0.36 per basic and $0.35 per diluted share (based on 3.125 million shares and 3.230 million shares, accordingly). The Company also reported cash, cash equivalents, other marketable securities and short-term investments of $7,692,000 or $2.41 per share. As of September 30, 2005 the Company also reported current assets of $9,930,000, total assets of $10,459,000, total shareholder's equity of $7,014,000 and deferred revenues of $2,079,000. Assaf Ran, Chairman of the board and CEO stated, "After three consecutive years of growth and breaking sales records, our Jewish Israeli Yellow Pages is now taking a breather. This is a normal cycle for this publication and its sales force. We are now working on training more sales representatives in order to catch up. Simultaneously, we are increasing efforts and making progress in the process of redefining our business plan for the future", added Mr. Ran. DAG Media publishes and distributes Yellow Pages for domestic niche markets. We also operate several web sites that complement our directories at http://www.newyellow.com; http://www.jewishyellow.com; http://www.jewishmasterguide.com; and http://www.theonlykosherdirectory.com Forward-looking statements in this release are made pursuant to the "safe harbor" provisions of the Private Securities Litigation Reform Act of 1995. Investors are cautioned that such forward-looking statements involve risks and uncertainties, including, without limitation, continued acceptance of the Company's products, increased levels of competition, new products introduced by competitors, changes in the rates of subscriber acquisition and retention, and other risks detailed from time to time in the Company's periodic reports filed with the Securities and Exchange Commission. DAG MEDIA, INC. BALANCE SHEET (unaudited) September 30, 2005 Assets Current assets: Cash and cash equivalents $2,476,720 Marketable securities 4,139,380 Short term investment - insurance annuity contract - at fair value 1,075,964 Total cash and cash equivalents, marketable securities and short terms investments 7,692,064 Trade accounts receivable, net of allowance for doubtful accounts of $ 395,000 1,047,863 Directories in progress 1,041,600 Other current assets 148,194 Total current assets 9,929,721 Property and equipment, net 148,913 Trademarks and other intangibles, net 261,479 Other assets 118,863 Total assets $10,458,976 Liabilities and Shareholders' Equity Current liabilities: Accounts payable and accrued expenses $245,270 Accrued commissions and commissions payable 433,500 Advanced billing for unpublished directories 2,079,007 Dividends Payable 312,246 Income tax payable 374,479 Total current liabilities 3,444,502 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; 3,191,190 issued and 3,122,460 outstanding 3,191 Additional paid-in capital 8,539,953 Treasury stock, at cost- 68,730 shares (231,113) Deferred compensation (33,611) Accumulated other comprehensive loss (373,381) Accumulated deficit (890,565) Total shareholders' equity 7,014,474 Total liabilities and shareholders' equity $10,458,976 DAG MEDIA, INC. STATEMENTS OF OPERATIONS (unaudited) Three Months Nine Months Ended September 30, Ended September 30, 2005 2004 2005 2004 Advertising revenues $1,444,253 $1,986,744 3,837,814 $5,027,356 Publishing costs 208,293 225,496 532,735 772,837 Gross Profit 1,235,960 1,761,248 3,305,079 4,254,519 Operating costs and expenses: Selling expenses 757,315 963,068 1,924,154 2,280,664 Administrative and general costs 624,863 745,178 1,955,063 2,015,866 Total operating costs 1,382,178 1,708,246 3,879,217 4,296,530 and expenses (Loss) income from operations (146,218) 53,002 (574,138) (42,011) Other income 105,048 84,735 330,549 328,520 (Loss) income from continuing operations before benefit for income taxes (41,170) 137,737 (243,589) 286,509 Provision for income taxes --- (134,340) --- (134,340) (Loss) income from (41,170) 3,397 (243,589) 152,169 continuing operations Discontinued Operations: (Loss) gain on sale of Blackbook net of tax effect of $770,000, in 2004 (55,000) 1,169,213 (55,000) 1,169,213 Gain (loss) from operation of Blackbook, net of tax provision of $3,487 and $120,000, in 2004 --- 16,480 --- (183,352) (Loss) income from discontinued operations (55,000) 1,185,693 (55,000) 985,861 Net (loss) income $(96,170) $1,189,090 $(298,589) $1,138,030 Basic net (loss) income per common share outstanding: Continuing operations $(0.01) $0.00 $(0.08) $0.05 Discontinued operations (0.02) 0.38 (0.02) $0.31 Total net (loss) income per common share - Basic $(0.03) $0.38 $(0.10) $0.36 Diluted net (loss) income per common share outstanding: Continuing operations $(0.01) $0.00 $(0.08) $0.04 Discontinued operations (0.02) 0.37 (0.02) $0.31 Total net (loss) income per common share - Diluted $(0.03) $0.37 $(0.10) $0.35 Weighted average number of common shares outstanding --Basic 3,119,764 3,152,190 3,115,101 3,125,455 --Diluted 3,119,764 3,237,608 3,115,101 3,230,197 DAG MEDIA, INC. STATEMENTS OF CASH FLOWS (unaudited) Nine Months Ended September 30, 2005 2004 Cash flows from operating activities: Net (loss) income $(298,589) $1,138,030 Adjustment to reconcile net loss to net cash used in operating activities: Depreciation and amortization 65,788 102,403 Amortization of deferred compensation and non cash compensation 28,829 65,614 Gain on sale of Blackbook Photography Inc. (1,939,213) Bad debt expense 265,311 524,926 Tax benefit for stock options --- 137,680 Realized gain on sale of marketable securities (169,277) (191,989) Deferred taxes --- (63,571) Changes in operating assets and liabilities: Accounts receivable 50,742 (486,514) Directories in progress 447,094 322,070 Other current assets 133,917 85,814 Other assets --- (4,412) Accounts payable and accrued expenses 46,098 (342,968) Accrued commissions and commissions payable (116,500) (61,817) Advance billing for unpublished directories (880,781) 11,006 Income taxes payable (180,807) 581,248 Net cash used in operating activities (608,175) (121,693) Cash flows from investing activities: Proceeds from sale of marketable securities 14,412,975 7,328,008 Purchase of fixed assets (6,072) (24,969) Investment in marketable securities (13,413,188) (5,258,515) Cash received on sale of Blackbook Photography Inc., net of expenses and amount in escrow and cash surrendered on sale --- 1,800,245 Net cash provided by investing activities 993,715 3,844,769 Cash flows from financing activities: Dividend paid ($0.48 per share) (1,490,982) (744,113) Proceeds from forfeit of gain on sale of restricted stocks --- 10,279 Proceeds from exercise of stock options 34,420 156,142 Net cash used in financing activities (1,456,562) (577,692) Net (decrease) increase in cash $(1,071,022) $3,145,384 Cash and cash equivalents, beginning of period 3,547,742 1,201,819 Cash and cash equivalents, end of period $2,476,720 $4,347,203 Supplemental cash flow information: Dividends declared but not paid $ 312,246 --- DATASOURCE: DAG Media Inc. CONTACT: Assaf Ran, CEO, or Yael Shimor-Golan, CFO, both of Dag Media, Inc., +1-718-520-1000

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