FORWARD-LOOKING STATEMENTS

                                     PART I

We currently publish and distribute two yellow page directories, the Jewish Israeli Yellow Pages and the Master Guide, in print and on the world wide web. These directories cover the New York metropolitan market, which includes the five boroughs of New York City, Nassau, Suffolk, Westchester and Rockland counties and northern New Jersey. Based on our knowledge of the market, we believe that our yellow page directories have more paying advertisers than those of any publisher of yellow page directories for the New York metropolitan market except Bell Atlantic. However, there is no independent source to confirm this belief. In addition, to give added value to users of and advertisers in our directories, we also operate the Jewish Referral Service, and a "portal" web site. In May 1999, we launched NewYellow, an English-only, general interest yellow page directory that competes directly with the Bell Atlantic Yellow Pages in the New York metropolitan market.

Industry background*

In 1999, yellow page advertising revenues in the United States were estimated by the Yellow Pages Publishers Association ("YPPA") to be $12.6 billion. The eight largest publishers of yellow page directories in the United States, including the five regional bell operating companies, GTE, SNET and Sprint, account for the overwhelming majority of yellow page advertising revenues. Bell Atlantic and SBC Directory Operations, a division of SBC Corporation, one of the regional bell operating companies, are the two largest publishers of yellow page directories in the United States, each having annual yellow page advertising revenue in excess of $2 billion.

There are many independent publishers of yellow page directories in the United States. In 1998, the yellow page advertising revenues of United States publishers of yellow page directories not affiliated with local telephone companies were estimated by the YPPA to be between 7% to 10% of the United States yellow page advertising market.

Further, in 1997 the total aggregate yellow page advertising revenues of companies that publish yellow page directories on the Internet were approximately $21.8 million. Simba estimates that yellow page Internet advertising revenues will grow significantly, reaching $164.9 million by 2000.

Products and services

The Jewish Israeli Yellow Pages. The Jewish Israeli Yellow Pages is a bilingual, yellow page directory that is distributed free through local commercial and retail establishments in the New York metropolitan area as well as through travel agencies in Israel. All ads in the Jewish Israeli Yellow Pages are in English and Hebrew unless the advertiser specifically requests that the ad be English only. The Jewish Israeli Yellow Pages is organized according to the Hebrew alphabet, although it is indexed in both Hebrew and English. We believe that the Jewish Israeli Yellow Pages is used principally by persons whose native language is Hebrew, although it is also used by members of the Jewish community whether or not they speak Hebrew.

The Jewish Israeli Yellow Pages was first published in February 1990 and has been published in February and August of each year since 1991. Currently, approximately 350,000 copies of the Jewish Israeli Yellow Pages are printed and distributed annually. The Jewish Israeli Yellow Pages has grown substantially since its initial edition. The 1st edition, published in February 1990, had 118 pages and approximately 217

* Except as otherwise indicated, all industry data are based on the Yellow Pages & Directory Report, a publication of Cowles/Simba Information, a unit of Cowles Business Media; Internet Yellow Pages, 1998: Business Models and Market Opportunities, an annual research report published by Cowles/Simba; and oral communications with representatives of Cowles/Simba in January 1999 and of the YPPA in March 2000.

advertisers. The 19th edition, published in August 1999, has 1,632 pages and more than 3,200 advertisers. No single advertiser accounts for a material portion of our ad revenues. We believe that, based on the number of pages and paying advertisers, the Jewish Israeli Yellow Pages is the largest yellow page directory in the New York metropolitan area not published by Bell Atlantic.

Advertisers in the Jewish Israeli Yellow Pages include companies such as Sprint PCS and AllState Insurance Company, as well as local and neighborhood businesses, such as restaurants, car dealerships, retail establishments, professionals (such as doctors, accountants and lawyers), and travel agencies. Typically, the advertisers provide us with the copy of their ad and our trained bilingual staff produces Hebrew text for the ad. Our editors also design ads for our advertisers. The size of an ad can range from a single line listing to a full page. Approximately 1% of the ads are line listings; the others are at least one-sixth of a page. Prices range from $300 for a line listing to $4,206 for a full page. Special rates apply for full color ads and premium positioning. Full color ads are $6,250 and premium positioning ranges from $8,250 to $22,000. Except for line listings, prices include all copy, graphic and design work. Basic ads are printed in black and red while premium ads are printed in four colors.

All production, including layout, design, edit and most proofreading functions, for the Jewish Israeli Yellow Pages is performed locally. The final version of the Jewish Israeli Yellow Pages is shipped to Israel to be printed by HaMakor Printing Ltd. The printed directories are shipped to our main office in New York for distribution. We believe that HaMakor provides us with a competitive advantage with respect to cost, quality and responsiveness. From time to time we receive solicitations from printers who would like to publish our directory. We have consistently found their pricing to be significantly higher than that of HaMakor, even after taking into account shipping costs. In addition, we believe the quality of HaMakor's product is superior to anything that a local printer would produce, particularly because so much of the directory is in Hebrew. Finally, because of our long standing relationship with HaMakor we receive timely service.

The Master Guide. In October 1998 we published the first edition of the Master Guide, a yellow page directory designed to meet the special needs of the Hasidic and ultra-Orthodox Jewish communities in the New York metropolitan area. The second edition was published in June 1999 and the third publication is scheduled for April 2000. We produce the Master Guide generally in the same manner as we do the Jewish Israeli Yellow Pages, including printing it in Israel. The Master Guide differs from the Jewish Israeli Yellow Pages in that the Master Guide is published in English only, does not advertise products or services that might offend the Hasidic and ultra-Orthodox Jewish communities and is only published once a year. Generally, advertising rates for the Master Guide are lower than those for the Jewish Israeli Yellow Pages because the market that it serves is smaller. Distribution of the Master Guide is accomplished by placing copies of the directory in synagogues, community centers and businesses located in Hasidic and ultra-Orthodox neighborhoods. The development of the Master Guide reflects our strategy to expand by identifying and pursuing niche markets for yellow page directories.

We buy all our paper for our Jewish Israeli Yellow Pages and Master Guide directories on the local market at prevailing prices. Accordingly, we do not depend on any single source of supply although we are subject to market forces that affect the price of paper. Paper costs fluctuate according to supply and demand in the marketplace. In addition, paper costs can be affected by events outside of our control, such as fluctuations in currency rates, political events, global economic conditions, environmental issues and acts of nature.

NewYellow. On May 12, 1999, we launched a general interest English-only yellow page directory that competes directly with Bell Atlantic Yellow Pages in New York City. Currently, NewYellow is available online at our web site and we expect that the first edition of NewYellow will be available in print in March 2000. In November 1999, we signed a printing contract with the Quebecor Printing Directory Sales Corporation located in Pennsylvania for the printing of the first edition of NewYellow. We have recently opened two new sales agencies dedicated exclusively to NewYellow.

The Jewish Referral Service. The Jewish Referral Service provides added value to users of and advertisers in our directories. Potential consumers who are looking to purchase goods or services call the referral service and an operator directs them to one or more advertisers in our directories. Tourists also call the

referral service with questions involving travel, lodging, visa issues, driver's license issues and the like. Finally, advertisers use the referral service as a tool to generate new business.

The telephone number for the Jewish Referral Service is published throughout our directories and in newspapers serving the Jewish and Israeli communities. As part of the referral service, we recently established a program under which participating advertisers have agreed to give discounts to customers who produce the Jewish Israeli Yellow Pages Consumer Discount Card. This card is distributed with the Jewish Israeli Yellow Pages or the Master Guide or can be ordered directly from us. By presenting the card at participating establishments, consumers can receive discounts of up to 10%.

Online services. Initially our web site, launched in 1995, contained an English-only version of the Jewish Israeli Yellow Pages. In 1999 we expanded our online presence so that our web site functions as a "portal" with links to a variety of sites on the web, particularly those that carry information and news that may be of particular interest to the Israeli and Jewish communities. It also provides a link to our directories as well as the web sites of our advertisers. We also develop web sites for our advertisers for a fee. We plan to further enhance our web site by providing links to NewYellow and community-focused yellow page directories, by including news and information and by creating strategic alliances with other Internet portals. We plan to explore ways in which our portal can be used to generate additional advertising revenue.

Growth strategy

In May 1999, we expanded our operations by introducing an internet version of NewYellow, an English-only, general interest yellow page directory, in the New York metropolitan area. In March 2000, we printed and intend to begin to distribute the first print edition of this directory in Manhattan. If the Manhattan NewYellow directory is successful, we plan to offer additional NewYellow directories covering the other boroughs in New York City, the other counties in the New York metropolitan area and northern New Jersey.

NewYellow competes directly with yellow page directories published by Bell Atlantic. Ads in NewYellow are priced significantly below the rates currently charged by Bell Atlantic for its yellow page directories. Thus, NewYellow is positioned as a low-cost alternative to the Bell Atlantic Yellow Pages, appealing to smaller businesses that are looking for a less expensive alternative. Although we have not conducted any formal marketing surveys, some of our advertisers have told us that they do not advertise in the Bell Atlantic Yellow Pages because the rates are too high and other advertisers have indicated that they would switch from the Bell Atlantic Yellow Pages if a less expensive alternative were available. We believe that our lower advertising rates as well as our expertise in publishing yellow page directories, particularly our ability to hire, train and manage an effective sales force, and our low overhead will enable us to compete effectively with Bell Atlantic.

To successfully introduce NewYellow into the New York market and sustain and increase our profitability, we must do the following:

      o     convince advertisers that NewYellow will be used by sufficient
            number of their potential customers to make it worthwhile and cost
            effective for them to advertise in NewYellow;

      o     manage the production, including ad sales, graphic design, layout,
            editing and proofreading, of multiple directories addressing
            different markets in varying stages of development;

      o     attract, retain and motivate qualified personnel and expand the
            number of sales, operating and management personnel;

      o     provide high quality, easy to use and reliable directories;

      o     establish a brand identity for NewYellow;

      o     develop new and maintain existing relationships with advertisers
            without diverting revenues from our existing directories;

      o     develop and upgrade our management, technical, information and
            accounting systems;

      o     respond to competitive developments promptly;

      o     introduce enhancements to our existing products and services to
            address new technologies and standards and evolving customer
            demands;

      o     control costs and expenses and manage higher levels of capital
            expenditures and operating expenses; and

      o     maintain effective quality control over all of our directories.

In order to prepare for publishing NewYellow in March 2000, during 1999 we hired and trained many new sales representatives and established two sales agencies to promote and sell NewYellow.

We may also explore opportunities for adding Jewish Israeli Yellow Pages and Master Guide directories in other cities with large Jewish and Israeli populations, like Miami, Florida and Los Angeles, California.

In 1999, DAG Media signed an Agreement with InfoUSA.com ("infoUSA") which owns information on approximately 10 million businesses and 110 million individuals, and has incorporated this information into a FREE yellow and white page online directory assistance service. We are authorized and have linked our Internet service to infoUSA. Additional corporate plans include the expansion and development of our website porty.com and increase its capacity for on-line advertisement and increased traffic-flow. We also plan to consider the enhancement of our website and progress with additional corporate affiliations.

Sales

Advertisements for the Jewish Israeli Yellow Pages and the Master Guide are sold through our network of trained sales representatives, all of which are independent contractors and are paid solely on a commission basis. There are approximately 80 sales representatives in our network including those employees hired by the respective sales agencies with which we have agency agreements, B.I.Y., Inc. and M.I.Y. Inc. The sales representatives operated by us work out of our offices in Queens, New York and Fairlawn, New Jersey. B.I.Y. is located in Brooklyn, New York and M.I.Y. is located in Manhattan, New York. Our selling force is based in these locations because of the high concentration of Jewish and Israeli consumers in these areas. M.I.Y. is owned by Daniel Frank and B.I.Y. is owned by Avi Sheffi.

In 1999, we contracted with three new sales agencies. One agency is located in Long Island and is dedicated to the Jewish Israeli Yellow Pages and the Master Guide. Two agencies are located in Manhattan and are exclusively dedicated to the sales of NewYellow. We also plan to open a new company -owned sales office in Manhattan dedicated to NewYellow.

Under our agreements with the sales agencies, which are terminable upon 30 days notice, the agencies may not sell advertising for any yellow page directories other than those we publish. Generally, each sales agency is responsible for all fixed costs relating to its operations. We pay sales commissions to the agencies, which, in turn, pays commissions to the individual sales representatives who sell the ads. The commissions payable to the individual sales representatives are prescribed in our agreements with the agencies and are consistent with the commissions we pay to the sales representatives that we hire directly.

We are responsible for training each sales representative, whether hired directly by us or by one of our sales agencies. Generally, training consists of one-day orientation, during which one of our sales managers

educates the sales representative about our business and operations, and a two-week period during which the sales representative receives extensive supervision and support from a sales manager or another experienced sales representative.

Marketing strategy

The Jewish Israeli Yellow Pages and Master Guide are marketed to the Jewish and Israeli communities living in the New York metropolitan area. According to the American Jewish Congress, there are approximately two million Jews living in this market, representing approximately 10.6% of the total population. We believe that the Jewish population has higher than average disposable income, is well educated and possesses a strong sense of community. In addition, while there is no precise data as to the number of Israeli immigrants living in the New York metropolitan area, we believe the number is substantial. Moreover, a significant number of Israeli tourists visit the area annually. Accordingly, we believe that advertisers are attracted to the Jewish Israeli Yellow Pages as a way to advertise directly to this market.

We further believe that the Jewish population in the New York metropolitan area is likely to use the Jewish Israeli Yellow Pages because of the impression that businesses that advertise in the Jewish Israeli Yellow Pages support or are affiliated with the Jewish community. In the case of the Master Guide, users can be comfortable that none of its advertisers will offend their religious beliefs. We also believe that our advertising rates are attractive, particularly to small businesses which cannot afford to advertise in the Bell Atlantic Yellow Pages. Generally, advertising rates for the Jewish Israeli Yellow Pages and the Master Guide are approximately 33% of the rates for the Bell Atlantic Yellow Pages.

NewYellow will initially compete directly with the Bell Atlantic Yellow Pages in Manhattan and then with the Bell Atlantic Yellow Pages in the other boroughs of New York City and in the surrounding suburbs. Initially, we dedicated 10 sales representatives from our existing network, spread out over the four sales offices, to selling ads for NewYellow. In the year 2000, we will open a new company-owned sales office, which will be staffed by sales representatives that we hire directly and which will be dedicated to selling ads exclusively for NewYellow. Because NewYellow is a new publication, it is more difficult to sell, and because it competes directly with Bell Atlantic, the commission structure for NewYellow sales representatives is higher than it is for our other directories.

We believe that advertisers will be attracted to NewYellow for several reasons. First, NewYellow is likely to be smaller and less dense than the Bell Atlantic Yellow Pages, so that each advertisement in NewYellow will stand out more prominently than it would in the Bell Atlantic Yellow Pages. Second, advertising rates for NewYellow are significantly lower than the comparable rates for advertising in the Bell Atlantic Yellow Pages. Accordingly, we believe that NewYellow will attract advertisers who do not currently advertise in the Bell Atlantic Yellow Pages as well as existing Bell Atlantic Yellow Page advertisers.

Government regulation

We are subject to laws and regulations relating to business corporations generally, such as the Occupational Safety and Health Act, Fair Employment Practices and minimum wage standards. We believe that we are in material compliance with all laws and regulations affecting our business and we do not have any material liabilities under these laws and regulations. In addition, compliance with all these laws and regulations does not have a material adverse effect on our capital expenditures, earnings, or competitive position.

Competition

In New York, the market for yellow page advertising is dominated by Bell Atlantic. In addition, there are a number of independent publishers of yellow page directories, including bilingual directories for specific ethnic communities. There are also independent publishers of yellow page directories that publish community or neighborhood directories. However, we are not aware of any other Hebrew-English yellow page directory or a yellow page directory that is published specifically for the Hasidic and ultra-Orthodox Jewish communities in the New York metropolitan area. By focusing on the special needs of the Hebrew speaking

and the Hasidic and ultra-Orthodox Jewish communities, we believe that we have identified niche markets that allow us to compete effectively with our larger rivals.

Unlike the Jewish Israeli Yellow Pages and the Master Guide, NewYellow competes directly with the Bell Atlantic Yellow Pages and other smaller, English-only, general interest yellow page directories published by companies other than Bell Atlantic. Since there are virtually no barriers to entry in this market, any company with a reasonable amount of capital, like the regional bell operating companies or publishers, are potential competitors. Recently, an independent yellow page publisher, Yellow Book USA, announced its proposed publication of a Manhattan yellow page directory that will also compete with the Bell Atlantic Yellow Pages and began soliciting advertisement for this directory. In addition, the Internet is growing rapidly and is a current and potential source of even greater competition. There are a number of online yellow page directories, including Big Yellow, owned by Bell Atlantic. Finally, strategic alliances could give rise to new or stronger competitors. Many of our competitors, such as Bell Atlantic, can reduce advertising rates, particularly where directory operations can be subsidized by other revenues, making advertising in our directories less attractive. In response to competitive pressures, we may have to increase our sales and marketing expenses or reduce our advertising rates. Since we may not capture a significant share of the markets where we operate, we cannot assure you that we can compete effectively.

Intellectual property

To protect our rights to our intellectual property, we rely on a combination of federal, state and common law trademarks, service marks and trade names, copyrights and trade secret protection. We have registered some of our trademarks and service marks on the supplemental register of the United States and some of our trade names in Queens, New York and New Jersey. In addition, every directory we publish has been registered with the United States copyright office. The protective steps we have taken may be inadequate to deter misappropriation of our proprietary information. We may be unable to detect the unauthorized use of, or take steps to enforce, our intellectual property rights. In addition, although we believe that our proprietary rights do not infringe on the intellectual property rights of others, other parties may assert infringement claims against us or claims that we have violated a trademark, trade name, service mark or copyright belonging to them. These claims, even if not meritorious, could result in the expenditure of significant financial and managerial resources on our part.

Employees

As of December 31, 1999, we employed four people, three of whom are full-time, and all of whom were employed in executive, managerial or administrative positions capacities. In addition, we retained the services of 13 administrative, accounting and production personnel, all of whom are independent contractors. Finally, we had a network of 80 sales representatives, 32 contracted by us and 48 hired by the sales agencies that sell ads for our directories. We believe that our relationship with our employees and contractors is good. None of our employees is represented by a labor union.

CERTAIN RISK FACTORS THAT MAY AFFECT GROWTH AND PROFITABILITY

The following factors may affect the growth and profitability of the Company and should be considered by any prospective purchaser of the Company.

Bell Atlantic and other existing or potential competitors have significant competitive advantages.

Many of our competitors, particularly Bell Atlantic, have significant operating and financial advantages. Our competitors' advantages include:

      o     greater financial, personnel, technical and marketing resources,

      o     superior systems,

      o     stronger relationships with advertisers,

      o     greater production capacity,

      o     better-developed distribution channels, and

      o     greater name recognition.

Since we have never published a general interest yellow page directory, we have no relevant operating history upon which you can evaluate whether we will be successful. The risks and uncertainties involved are similar to those encountered by companies trying to introduce a new product, particularly companies proposing to enter markets dominated by large and well-known companies. In addition, our success with publishing NewYellow depends on factors outside of our control, including the development of similar or superior products by competitors, general economic conditions and economic conditions specific to publishers of yellow page directories.

Because we contract with sales agencies, we could lose half our sales force on 30 days notice.

Approximately half of our sales force is provided to us under agreements with independent sales agencies, which are terminable upon 30 days notice by either party. Accordingly, on 30 days notice we could lose half of our sales force. In addition, due to the demands of the job, many sales representatives leave within one year of their hire. Replenishing our sales force involves significant time and expense for recruiting and training.

We do not have any long-term commitments from advertisers, upon whom our success depends.

We do not have long-term contractual arrangements with advertisers. Thus, we must obtain new advertisers and renewals from existing advertisers, for each directory that we publish. There is no assurance that our current advertisers will continue to place ads in our directories or that we will be able to attract new advertisers. Any failure to achieve sufficient advertising revenues would have a material adverse effect on our business, results of operations and financial condition.

If we fail to publish a directory we may not have sufficient cash to refund our advertisers.

A significant portion of our revenues is collected prior to the publication and distribution of our directories and is used to pay our employees, contractors and suppliers. If we did not publish a directory, we would be obligated to refund certain prepaid advertising fees, but not with respect to New Yellow's portion of the fees related to the internet placement of the ad. We may possibly not have sufficient cash reserves to repay all these advances. In that event, we would have to generate cash by borrowing money, selling securities or selling assets. We do not know whether any of those alternatives will be possible. Further, any of these alternatives, particularly the sale of our assets, would inhibit our ability to conduct our business.

We do not have the ability to measure the effectiveness of advertisements. As our business grows, our customers may require us to do so.

We do not have the ability to quantify the effectiveness of advertising in our directories. However, we may have to provide this type of information when we start publishing a directory that competes directly with the Bell Atlantic Yellow Pages. The effectiveness of advertising is usually based upon demographic and other relevant statistical data. If we cannot provide our advertisers with this information or if they perceive the

information that we provide to be unreliable, they may not advertise in NewYellow or refuse to pay our standard advertising rates. Accordingly, we will have to either develop the ability to provide this information to our advertisers or contract with third parties to provide this information on our behalf. Either alternative will result in additional personnel and equipment costs for which we have not budgeted, and may also cause interruptions in our business operations.

Our growth depends on the continued services of Assaf Ran.

We depend on the continued services of Assaf Ran, our founder, president and chief executive officer. Mr. Ran supervises all aspects of our business, including our sales force and production staff. Mr. Ran has the personal relationships with the principals of our key service providers including our printer, HaMakor Printing Ltd., and the heads of the independent sales agencies which provide about half of our sales representatives. If Mr. Ran's employment terminates, our relationships with our key suppliers and vendors may be jeopardized. Mr. Ran has entered into an employment agreement, but that is no guarantee that his employment will not terminate before its expiration on June 30, 2002. In addition, we have purchased a $500,000 key man life insurance policy on Mr. Ran.

Item 2. Description of Properties

Our executive and principal operating office is located in Queens, New York in 3,000 square feet. This space is occupied under a lease that expires October 30, 2001. The monthly rent is $4,805. Our New Jersey sales office is located in an approximately 1,000 square foot facility in Fair Lawn, New Jersey. The space is leased on a month-to-month basis for $1,200 per month.

Item 3. Legal proceedings

We are not a party to any material legal proceedings.

Item 4. Submission of Matters to a Vote of Security Holders

Not Applicable.