DAGM Dag Media (MM)

NEW YORK, March 16 /PRNewswire-FirstCall/ -- DAG Media Inc. (NASDAQ:DAGM) announced today that advertising revenue for the year ended December 31, 2005 was $4,447,000 versus advertising revenue of $5,949,000 for fiscal year 2004, a decrease of $1,502,000 or 25.20%. Advertising revenues for the year ended December 31, 2004 included $461,000 of net 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 $1,010,000 decrease in revenues was attributable to decreased revenues from the Jewish Israeli Yellow Pages directory by $873,000 and a $137,000 decrease in revenue of the Jewish Master Guide directories published in fiscal 2005. As DAG Interactive, Inc. and NextYellow.com initiate operation on or about June of 2006, we anticipate revenues to derive from monthly fees of subscriptions charges to businesses, which will be in excess to the leads generated by NextYellow.com. In addition, we intend to sell advertising on our web site. Gross profit decreased to $3,788,000 for the year ended December 31, 2005 versus gross profit of $5,046,000 in fiscal 2004. For the year ended December 31, 2005, consolidated loss from continuing operation before provision for income taxes was $456,000 compared to income of $176,000 in fiscal 2004. The decrease of $632,000 was mainly attributable to decreased revenues on our current publications combined with the lack of income resulting from the sold New Yellow Manhattan directory, which was still published during 2004. Net loss from continuing operations was $456,000 and loss from discontinued operations was $55,000 in fiscal 2005, versus net income from continuing operations of $105,000 and income from discontinued operations $930,000, in fiscal 2004, respectively. The decreased in income from discontinued operations of $985,000 was mainly attributable to the gain resulting from the sale of the Blackbook Photography Inc., on August 2004. Net loss for the year ended December 31, 2005 was $511,000 versus net income of $1,035,000 in fiscal 2004. Basic and diluted net loss per common share was $(0.16) and $(0.16) in fiscal 2005 versus income per common share of $0.34 and $0.32 in fiscal 2004. At December 31, 2005, the Company also reported $7,400,000 or approximately $2.37 per share in cash, cash equivalent, marketable securities and short-term investments, current assets of $9,668,000 and total assets of $10,177,000. On December 5, 2005, following the execution of a web-site development and services agreement signed between us, and Ocean-7 Development, Inc., a company experienced in Internet and software development, we announced the formation of DAG Interactive, Inc, a subsidiary of DAG Media, Inc., through which we anticipate operating our New internet business, NextYellow.com. The objective of DAG Interactive, Inc. is to introduce our unique and innovative software solution to the online Yellow Pages industry. DAG Interactive, Inc.'s new business, NextYellow.com, will utilize a new patent pending application, which will facilitate highly accurate and instant automated matching between consumers' needs and businesses' capabilities. To utilize this application, a customer will visit our website and describe, as necessary, a certain need that the customer has for goods or services. Upon completing this description, our application will characterize the consumers' requests by geographic location as well as by a DAG Interactive-developed category index and ultimately locate a businesses or vendors which provide the sought after services or goods, and will automatically match those businesses or vendors with the customer's request. Upon completing the match, an automated message will be sent from our system to those matching businesses or vendors who are ultimately responsible for following up on the lead and contacting the customer. In simplistic terms, businesses, service providers and retailers can register and receive leads for prospective customers in their geographic coverage area and categories for a monthly fee and generate business in response to inquiries submitted by customers' who visit our website. We believe that the application, which covers the typical Yellow Pages index and more, transforms the old-fashioned "Let your fingers do the walking" way of thinking into a new paradigm: "Let the business do the walking" (a trademark of DAG Interactive), where businesses will contact customers in response to customers' inquiries. On January 7, 2005, we announced our intention to sell our classified directories business, consisting of the Jewish Israeli Yellow Pages and the Master or Kosher Guide. The sale would include applicable trademarks, trade names and other intellectual property. We decided to seek a buyer for our directories business because the complexity, scale and probable margins of this business make the costs of compliance with new regulatory requirements for public companies, under the Sarbanes Oxley Act and other government strictures, prohibitive, as well as the lack of our Jewish directories business and the substantial losses of our Jewish Directories business in recent years. On February 6, 2006, we entered into an asset purchase agreement to sell the assets and liabilities of the Jewish Israeli Yellow Pages directory and the Jewish Master Guide directory to DAG-Jewish Directories, Inc. The deal is subject to, among other things, the receipt of shareholder approval and the receipt of a fairness opinion. While attempting to consummate the sale of our Jewish directories, in addition to beginning 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. 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 publishes and distributes Yellow Pages and business directories 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/; http://www.theonlykosherdirectory.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 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; (vi) our dependence on a limited number of suppliers; and (vii) other risks detailed from time to time in our periodic reports filed with the Securities and Exchange Commission. 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 SUBSIDIARY CONSOLIDATED BALANCE SHEET DECEMBER 31, 2005 Assets Current assets: Cash and cash equivalents $ 4,210,427 Marketable securities 2,106,097 Short term investment - insurance annuity contract - at fair value 1,083,923 Total cash and cash equivalents, marketable securities and short terms investments 7,400,447 Trade accounts receivable, net of allowance for doubtful accounts of $295,000 877,083 Directories in progress 1,230,763 Other current assets 159,381 Total current assets 9,667,674 Property and equipment, net 132,781 Trademarks, net 257,969 Other assets 118,863 Total assets $ 10,177,287 Liabilities and Shareholders' Equity Current liabilities: Accounts payable and accrued expenses $ 287,792 Commissions payable 366,200 Advanced billing for unpublished directories 2,374,474 Dividends payable 314,246 Income taxes payable 367,332 Total current liabilities 3,710,044 Commitments and contingencies (Note 8) 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 8,590,174 Treasury stock, at cost - 68,730 shares (231,113) Stock subscription receivable (47,400) Deferred compensation (26,841) Accumulated other comprehensive loss (403,512) Accumulated deficit (1,417,276) Total shareholders' equity 6,467,243 Total liabilities and shareholders' equity $ 10,177,287 DAG MEDIA, INC. AND SUBSIDIARY CONSOLIDATED STATEMENTS OF OPERATIONS FOR THE YEARS ENDED DECEMBER 31, 2005 AND 2004 2005 2004 Advertising revenues, net $ 4,447,430 $ 5,948,701 Publishing costs 659,463 902,326 Gross profit 3,787,967 5,046,375 Operating costs and expenses: Selling expenses 2,125,700 2,627,616 General and administrative expenses 2,631,305 2,829,308 Total operating costs and expenses 4,757,005 5,456,924 Loss from operations (969,038) (410,549) Interest income 224,977 191,384 Realized gain on marketable securities 288,008 395,134 Total other income 512,985 586,518 (Loss) income from continuing operations before provision for income taxes (456,053) 175,969 Provision for income taxes --- 70,802 (Loss) income from continuing operations (456,053) 105,167 Discontinued Operations: (Loss) gain from Sale of Blackbook, due to release from escrow amount in 2005, net of tax effect of $775,000 in 2004 (55,000) 1,164,213 Loss from operations of Blackbook, net of tax benefit of $156,000 in 2004 --- (234,343) (Loss) income from discontinued operations (55,000) 929,870 Net (loss) income $(511,053) $1,035,037 Basic net (loss) income per common share Continuing operations $(0.14) $0.04 Discontinued operations $(0.02) $0.30 Total net (loss) income per common share - Basic $(0.16) $0.34 Diluted net (loss) income per common share Continuing operations $(0.14) $0.03 Discontinued operations $(0.02) $0.29 Total net (loss) income per common share - Diluted $(0.16) $0.32 Weighted average number of common shares outstanding - Basic 3,118,381 3,065,080 - Diluted 3,118,381 3,243,101 DAG MEDIA, INC. AND SUBSIDIARY CONSOLIDATED STATEMENTS OF CHANGES IN SHAREHOLDERS' EQUITY FOR THE YEARS ENDED DECEMBER 31, 2005 AND 2004 Additional Common Stocks Paid-in Treasury Shares Capital Shares Amount Shares Cost Balance, December 31, 2003 3,045,190 $3,045 $8,054,827 68,730 ($231,113) Issuance of common stock from exercise of options 125,000 125 266,855 Non cash compensation 18,933 Forfeit of gain on sale of restricted stocks 10,779 Tax benefit related to stock options exercised 145,640 Dividend declared to be paid at 1/5/2005 ($0.28 per share) Unrealized loss on preferred stocks and other marketable securities, net of income taxes Net income for the year ended December 31, 2004 Total comprehensive income Balance, December 31, 2004 3,170,190 $3,170 $8,497,034 68,730 ($231,113) Issuance of common stock from exercise of options 21,000 21 34,399 Issuance of common stock to related party for services not yet performed 20,000 20 47,380 Non cash compensation 11,361 Dividend declared to be paid at 1/5/2006 ($0.10 per share) Unrealized loss on preferred stocks and other marketable securities Net loss for the year ended December 31, 2005 Total comprehensive loss Balance, December 31, 2005 3,211,190 $3,211 $8,590,174 68,730 ($231,113) Accumulated other Stock comprehensive Subscription Deferred income Accumulated Receivable Compensation (loss) Deficit Totals Balance, December 31, 2003 --- ($81,000) $102,185 $176,215 $8,024,159 Issuance of common stock from exercise of options 266,980 Non cash compensation 27,080 46,013 Forfeit of gain on sale of restricted stocks 10,779 Tax benefit related to stock options exercised 145,640 Dividend declared to be paid at 1/5/2005 ($0.28 per share) (867,289) (867,289) Unrealized loss on preferred stocks and other marketable securities, net of income taxes (84,873) (84,873) Net income for the year ended December 31, 2004 1,035,037 1,035,037 Total comprehensive income 950,164 Balance, December 31, 2004 --- ($53,920) $17,312 $343,963 $8,576,446 Issuance of common stock from exercise of options 34,420 Issuance of common stock to related party for services not yet performed (47,400) --- Non cash compensation 27,079 38,440 Dividend declared to be paid at 1/5/2006 ($0.10 per share) (1,250,186) (1,250,186) Unrealized loss on preferred stocks and other marketable securities (420,824) (420,824) Net loss for the year ended December 31, 2005 (511,053) (511,053) Total comprehensive loss (931,877) Balance, December 31, 2005 ($47,400) ($26,841) ($403,512)($1,417,276) $6,467,243 DAG MEDIA, INC. AND SUBSIDIARY CONSOLIDATED STATEMENTS OF CASH FLOWS FOR THE YEARS ENDED DECEMBER 31, 2005 AND 2004 2005 2004 Cash flows from operating activities: Net (loss) income $ (511,053) $ 1,035,037 Adjustment to reconcile net (loss) income to net cash used in operating activities - Gain on sale of Blackbook --- (1,939,213) Depreciation and amortization 85,428 125,040 Non cash compensation expense 38,439 46,013 Bad debt expense 472,740 798,783 Realized gain on sale of marketable securities (288,008) (395,134) Deferred taxes (11,541) 4,552 Tax benefit related to stock options exercised --- 145,640 Changes in operating assets and liabilities net of effects of disposition - Accounts receivable 14,093 (504,094) Directories in progress 257,931 162,294 Other current and non current assets 122,730 56,595 Accounts payable and accrued expenses 88,620 (409,723) Commissions payable (183,800) (116,817) Advanced billings for unpublished directories (585,314) 176,811 Income taxes payable (176,414) 454,746 Net cash used in operating activities (676,149) (359,470) Cash flows from investing activities: Investment in preferred stocks, other marketable securities and annuity contract (14,497,087) (10,446,362) Proceeds received on sale of Blackbook, net of expenses --- 1,800,245 Proceeds from sale of preferred stocks and marketable securities 17,610,799 11,842,833 Purchase of property and equipment (6,072) (24,969) Net cash provided by investing activities 3,107,640 3,171,747 Cash flows from financing activities: Proceeds from exercise of options 34,421 266,980 Dividends paid (1,803,227) (744,113) Proceeds from forfeit of gain on sale of restricted stocks --- 10,779 Net cash used in financing activities (1,768,806) (466,354) Net increase in cash and cash equivalents 662,685 2,345,923 Cash and cash equivalents, beginning of year 3,547,742 1,201,819 Cash and cash equivalents, end of year $ 4,210,427 $ 3,547,742 Supplemental Cash Flow Information: Taxes paid during the year $ 176,414 $88,935 Dividends declared but not $ 314,246 $867,289 Common stock issued for services not yet preformed $47,400 --- DATASOURCE: DAG Media Inc. CONTACT: Assaf Ran, CEO of DAG Media Inc., +1-718-520-1000

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