DAG Media, Inc. Reports Third Quarter Financial Results and a $0.28 Per Share Cash Dividend

Monday October 25, 6:16 pm ET

NEW YORK, Oct. 25 /PRNewswire-FirstCall/ -- DAG Media, Inc. (Nasdaq: DAGM - News), a leading independent publisher of print and online ethnic business directories, announced today that net advertising revenue for the quarter ended September 30, 2004 was $1,987,000 versus advertising revenue of $2,043,000 for the same period last year, a decrease of $56,000 or 2.74%. The slight decrease was primarily attributable to the decrease in recognized revenue related to the Jewish Israeli Yellow Pages Directory.
Net income was $1.189 million or $0.38 per basic share (based on 3.152 million shares) and $0.37 per diluted share (based on 3.238 million shares) compared with net income of $1.138 million and $0.39 per basic share (based on 2.929 million shares) and $0.38 per diluted share (based on 3.011 million shares). The increase was primarily due to the sale of Blackbook Photography Inc., which is reflected on the Discontinued operations section. On August 24, 2004, the company sold its wholly owned subsidiary, Blackbook Photography Inc., for $2.25 million. The Company's net profit from the sale after direct related costs, net of tax effect, totaled $1.169 million.

Net advertising revenue for the nine months ended September 30, 2004 was $5,027,000 compared with $5,580,000 for the same period last year. Net income for the period was $1,138,000 or $0.36 per basic share (based on 3.125 million shares) and $0.35 per diluted share (based on 3.230 million shares), compared with a net income of $1.151 million or $0.39 per basic share (based on 2.928 million shares and $0.37 per diluted share (based on 3.102 million shares), in the prior period. The decrease in net revenues was primarily attributable to the reduction of recognized revenues related to the New Yellow Manhattan Directory ninth edition (sold) partly offset by the increased recognized revenues of the tenth edition of the Jewish Master Guide Directory. The increased net income results primarily due to the sale of Blackbook Photography Inc., which is reflected on the Discontinued operation section.

The Company also reported increased cash, cash equivalents, other marketable securities and short term investments of $1,274,000 to $9,982,000 or $3.17 per share versus the same period last year. As of September 30, 2004 the Company also reported current assets of $13,189,000, total assets of $13,800,000, total shareholders' equity of $9,465,000 and deferred revenues of $2,794,000.

Due to the increases of both income and cash related to the sale of Blackbook Photography Inc., the Board of directors declared a $0.28 per share cash dividend to all shareholders of record on December 1st, 2004 to be paid on January 5, 2005.

Assaf Ran, Chairman of the board and CEO stated, "Our third quarter revenue reflects as expected the maturity and stability of the Jewish Israeli Yellow Pages directory. Growth should be anticipated in our other directory, The Jewish Master Guide (recognized in the fourth quarter)."

"I'm pleased with the board decision to distribute a dividend for the second year in a row which was enabled thanks to the Blackbook deal," added Mr. Ran.

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; 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)

Assets September 30, 2004

Current assets:

Cash and cash equivalents $4,347,203
Marketable securities 4,590,734
Short term investment - insurance annuity contract
- at fair value 1,044,202
Total cash and cash equivalents, marketable
securities and short terms investments 9,982,139

Trade accounts receivable, net of allowance for
doubtful accounts of $450,000 1,620,193
Directories in progress 1,328,918
Other current assets 257,304
Total current assets 13,188,554
Property and equipment, net 217,226
Trademarks and other intangibles, net 275,518
Other assets 118,863
Total assets $13,800,161

Liabilities and Shareholders' Equity

Current liabilities:
Accounts payable and accrued expenses $265,928
Accrued commissions and commissions payable 605,000
Advanced billing for unpublished directories 2,793,983
Income tax payable 670,248
Total current liabilities 4,355,159

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;
3,152,190 issued and 3,083,460 outstanding 3,152

Additional paid-in capital 8,374,913
Treasury stock, at cost - 68,730 shares (231,113)
Deferred compensation (31,478)
Accumulated other comprehensive income 35,284
Retained earnings 1,314,244
Total shareholders' equity 9,465,002
Total liabilities and shareholders' equity $13,800,161


DAG MEDIA, INC.
STATEMENTS OF OPERATIONS
(unaudited)

Three Months Ended Nine Months Ended
September 30, September 30,
2004 2003 2004 2003
Advertising revenues $1,986,744 $2,043,232 $5,027,356 $5,580,216
Publishing costs 225,496 225,892 772,837 928,910
Gross Profit 1,761,248 1,817,340 4,254,519 4,651,306

Operating costs and expenses:
Selling expenses 963,068 922,110 2,280,664 2,372,402
Administrative and general
costs 745,178 730,794 2,015,866 1,899,490
Total operating costs and
expenses 1,708,246 1,652,904 4,296,530 4,271,892

Gain (loss) from operations 53,002 164,436 (42,011) 379,414

Other income 84,735 95,546 328,520 200,747
Gain from sale of the New
Yellow Directory --- 1,207,997 --- 1,207,997
Total other income 84,735 1,303,543 328,520 1,408,744
Income from continuing
operations before
provision for income taxes 137,737 1,467,979 286,509 1,788,158

Provision for income taxes 134,340 189,764 134,340 205,601
Income from continuing
operations $3,397 $1,278,215 $152,169 $1,582,557

Discontinued operations:
Gain on the sale of
Blackbook, net of tax
effect of $770,000 1,169,213 --- 1,169,213 ---
Income (loss) from
discontinued operations
net of tax benefit of
$120,000 16,480 (139,786) (183,352) (431,561)
Income (loss) from
discontinued operations 1,185,693 (139,786) 985,861 (431,561)

Net income $1,189,090 $1,138,429 $1,138,030 $1,150,996

Net income (loss) per
common share - Basic
Continuing operations 0.00 0.44 0.05 0.54
Discontinuing operations 0.38 (0.05) 0.31 (0.15)
Total net income per
common share - Basic $0.38 $0.39 $0.36 $0.39

Net income (loss) per
common share - Diluted
Continuing operations 0.00 0.43 0.04 0.51
Discontinuing operations 0.37 (0.05) 0.31 (0.14)
Total net income per
common share - Diluted $0.37 $0.38 $0.35 $0.37

Weighted average number of
common shares outstanding
--Basic 3,152,190 2,929,895 3,125,455 2,928,281
--Diluted 3,237,608 3,011,636 3,230,197 3,102,791


DAG MEDIA, INC.
STATEMENTS OF CASH FLOWS
(unaudited)
Nine Months ended
September 30, September 30,
2004 2003
Cash flows from operating activities:
Net income $1,138,030 $1,150,996
Adjustment to reconcile net income to net
cash (used in) provided by
operating activities:
Depreciation and amortization 102,403 85,464
Gain on sale of New Yellow Directory ---- (1,207,997)
Gain on sale of Blackbook Photography Inc. (1,939,213) ----
Amortization of deferred compensation 49,522 11,198
Bad debt expense 524,926 667,261
Realized gain on sale of marketable securities (191,989) ----
Non cash option expense 16,092 ----
Tax benefit of stock options exercised 137,680 ----
Deferred taxes (63,571) (192,635)
Changes in operating assets and
liabilities net of disposition of Blackbook
Photography, Inc.
Accounts receivable (486,514) (604,892)
Directories in progress 322,070 396,023
Other current assets 85,814 (29,938)
Other assets (4,412) ---
Accounts payable and accrued expenses (342,968) 31,947
Accrued commissions and commissions
payable (61,817) (19,000)
Advance billing for unpublished
directories 11,006 (673,305)
Income taxes payable 581,248 201,213
Assets and liabilities from
discontinued operation ---- 416,139
Net cash (used in) provided
by operating activities (121,693) 232,474

Cash flows from investing activities:
Proceeds from sale of marketable
securities 7,328,008 4,460,453
Purchase of fixed assets (24,969) (126,933)
Investment in marketable securities move (5,258,515) (5,727,209)
Proceeds from sale of fixed assets ---- 46,200
Cash received on sale of New Yellow
Directory, net of expenses ---- 1,207,997
Cash received on sale of Blackbook
Photography Inc., net of expenses and amounts
in escrow and cash surrendered on sale 1,800,245 ----
Investment in Dune Medical Devises Ltd. ---- (100,000)
Net cash provided by (used in)
investing activities 3,844,769 (239,492)

Cash flows from financing activities:
Dividend paid (744,113) ----
Proceeds from forfeit of gain on sale
of restricted stocks 10,279 ----
Proceeds from exercise of stock options 156,142 10,640
Net cash (used in) provided
by financing activities (577,692) 10,640

Net increase in cash $3,145,384 $3,622
Cash and cash equivalents, beginning of period 1,201,819 131,611
Cash and cash equivalents, end of period $4,347,203 $135,233