-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, PMCTHOL4e/r5O936O+GytrQR8yrhUuDbWeJISURKClr/9vHNdfHat1bFV2vUccNT xoPZdX2NFylf4FcevYrHug== 0001005477-01-500406.txt : 20010810 0001005477-01-500406.hdr.sgml : 20010810 ACCESSION NUMBER: 0001005477-01-500406 CONFORMED SUBMISSION TYPE: 10QSB PUBLIC DOCUMENT COUNT: 1 CONFORMED PERIOD OF REPORT: 20010630 FILED AS OF DATE: 20010809 FILER: COMPANY DATA: COMPANY CONFORMED NAME: DAG MEDIA INC CENTRAL INDEX KEY: 0001080340 STANDARD INDUSTRIAL CLASSIFICATION: MISCELLANEOUS PUBLISHING [2741] IRS NUMBER: 113474831 STATE OF INCORPORATION: NY FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: 10QSB SEC ACT: 1934 Act SEC FILE NUMBER: 000-25991 FILM NUMBER: 1702068 BUSINESS ADDRESS: STREET 1: 125 QUEENS BLVD., SUITE 14 CITY: KEW GARDENS STATE: NY ZIP: 11415 MAIL ADDRESS: STREET 1: 125 QUEENS BLVD., SUITE 14 CITY: KEW GARDENS STATE: NY ZIP: 11415 10QSB 1 d01-34055.txt FORM 10QSB SECURITIES AND EXCHANGE COMMISSION WASHINGTON, D.C. 20549 FORM 10-QSB QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the Quarterly Period Ended June 30, 2001 Commission File Number 000-25991 DAG MEDIA, INC. (Exact name of small business issuer as specified in its charter) New York 13-3474831 (State or other jurisdiction of (I.R.S. Employer incorporation or organization) Identification Number) 125-10 Queens Boulevard Kew Gardens, NY 11415 (Address of principal executive offices) (Zip Code) (718) 263-8454 (Issuer's telephone number, including area code) Check whether the issuer (1) has filed all reports required to be filed by Section 13 or 15(d) of the Exchange Act during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes |X| No |_| As of August 10, 2001, there were outstanding 2,907,460 shares of the issuer's common shares, $.001 par value. DAG MEDIA, INC. QUARTERLY REPORT ON FORM 10-QSB FOR THE QUARTERLY PERIOD ENDED JUNE 30, 2001 TABLE OF CONTENTS Part I - FINANCIAL INFORMATION Page Number ----------- Financial Statements (unaudited) Balance Sheet at June 30, 2001 (unaudited).............. 2 Statements of Operations for the Three and Six Month Periods Ended June 30, 2001 and 2000.............. 3 Statements of Cash Flows for the Six Month Periods Ended June 30, 2001 and 2000.............. 4 Item 1. Notes to Financial Statements........................... 5 Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations........... 7 Part II - OTHER INFORMATION Item 3. Changes in Securities and Use of Proceeds............... 12 Item 4. Submission of Matters to a Vote of Security Holders..... 13 Item 5. Exhibits and Reports.................................... 13 SIGNATURES ........................................................ 14 DAG MEDIA, INC. BALANCE SHEET JUNE 30, 2001 (unaudited) Assets Current assets: Cash and cash equivalents $ 6,652,893 Restricted cash 244,987 Trade accounts receivable, net of allowance for doubtful accounts of $ 528,500 2,313,962 Directories in progress 1,430,585 Deferred tax asset 78,202 Other current assets 210,700 ------------ Total current assets 10,931,329 ------------ Fixed assets, net of accumulated depreciation of $ 89,820 243,619 Goodwill and trademarks, net of accumulated amortization of $ 114,835 1,236,146 Other assets 17,346 ------------ Total assets $ 12,428,440 ============ Liabilities and Shareholders' Equity Current liabilities: Accounts payable and accrued expenses $ 126,664 Accrued commissions and commissions payable 552,000 Advanced billing for unpublished directories 3,236,666 Income tax payable 296,090 ------------ Total current liabilities 4,211,420 ------------ Shareholders' equity: Preferred shares - $ .01 par value; 5,000,000 shares authorized; no shares issued -- Common shares - $ .001 par value; 25,000,000 authorized; 2,976,190 issued and 2,907,460 outstanding 2,976 Additional paid-in capital 7,916,701 Treasury stock, at cost- 68,730 shares (231,113) Deferred compensation (68,387) Retained earnings 596,843 ------------ Total shareholders' equity 8,217,020 ------------ Total liabilities and shareholders' equity $ 12,428,440 ============
The accompanying notes are an integral part of this balance sheet. 2 DAG MEDIA, INC. STATEMENTS OF OPERATIONS (unaudited)
Three Months Ended June 30, Six Months Ended June 30, 2001 2000 2001 2000 ---- ---- ---- ---- Advertising revenues $ 1,431,633 $ 135,498 $2,934,832 $ 2,768,952 Publishing costs 599,645 61,466 788,952 562,282 ----------- ----------- ---------- ----------- Gross profit 831,988 74,032 2,145,880 2,206,670 Operating costs and expenses: Selling expenses 490,452 84,491 1,076,055 944,389 Administrative and general 513,083 568,976 1,188,169 1,247,657 ----------- ----------- ---------- ----------- Total operating costs and expenses 1,003,535 653,467 2,264,224 2,192,046 Interest income 80,708 106,263 162,888 186,262 Gain on sale of investments 89,863 -- 89,863 -- ----------- ----------- ---------- ----------- Other income 170,571 106,263 252,751 186,262 (Loss) earnings from operations before provision (benefits) for income taxes and cumulative effect of change in accounting principle (976) (473,172) 134,407 200,886 Provision (benefit) for income taxes -- (215,359) 69,000 (94,707) Cumulative effect of change in accounting principle, net of tax benefit -- -- -- (511,071) ----------- ----------- ---------- ----------- Net (loss) income available to common shareholders $ (976) $ (257,813) $ 65,407 $ (404,892) =========== =========== ========== =========== Net (loss) income per common share --Basic Income before cumulative effect of change in accounting principle $ 0.00 $ (.09) $ .02 $ .04 Cumulative effect of change in accounting principle -- -- -- (.18) ----------- ----------- ---------- ----------- Net loss (income) per common share $ 0.00 $ (.09) $ .02 $ (.14) =========== =========== ========== =========== --Diluted Income before cumulative effect of change in accounting principle $ 0.00 $ (.09) $ .02 $ .04 Cumulative effect of change in accounting principle -- -- -- (.18) ----------- ----------- ---------- ----------- Net loss (income) per common share $ 0.00 $ (.09) $ .02 $ (.14) =========== =========== ========== =========== Weighted average number of common shares outstanding --Basic 2,907,460 2,907,460 2,907,460 2,907,460 =========== =========== ========== =========== --Diluted 2,907,460 2,907,460 2,910,384 2,908,133 =========== =========== ========== ===========
The accompanying notes are an integral part of these financial statements. 3 DAG MEDIA, INC. STATEMENTS OF CASH FLOWS (unaudited)
Six Months Six Months Ended Ended June 30, 2001 June 30, 2000 ------------- ------------- Cash flows from operating activities: Net income (loss) $ 65,407 $ (404,892) Adjustment to reconcile net income to net cash used in operating activities-- Cumulative effect of change in accounting principle -- 511,071 Depreciation and amortization 49,210 45,374 Amortization of deferred compensation 8,674 -- Bad debt expense 375,000 526,933 Deferred taxes 108,856 (381,067) Gain on sale of investments (89,863) -- Changes in operating assets and liabilities-- Accounts receivable (389,695) (721,390) Directories in progress 38,597 (222,504) Advances to employees (6,543) (90,841) Other current and noncurrent assets (96,138) (60,440) Accounts payable and accrued expenses 50,910 23,551 Accrued commissions and commissions payable (1,116) 71,674 Advance billing for unpublished directories (308,545) 187,404 Income taxes payable (39,855) 472,776 ----------- ----------- Net cash used in operating activities (235,101) (42,351) ----------- ----------- Cash flows from investing activities: Restricted cash (244,987) -- Investment in AdStar (250,000) -- Proceeds from sales 277,363 -- Purchase of fixed assets (43,046) (102,812) ----------- ----------- Net cash used in investing activities (260,670) (102,812) ----------- ----------- Net decrease in cash $ (495,771) (145,163) ----------- ----------- Cash and cash equivalents, beginning of period 7,148,664 7,200,857 ----------- ----------- Cash and cash equivalents, end of period $ 6,652,893 $ 7,055,694 =========== ===========
The accompanying notes are an integral part of these financial statements. 4 DAG MEDIA, INC. Item 1. NOTES TO FINANCIAL STATEMENTS June 30, 2001 1. THE COMPANY The accompanying unaudited financial statements of DAG Media, Inc. ("DAG" or the "Company") included herein have been prepared by the Company in accordance with generally accepted accounting principles for interim financial information and with instructions to Form 10-QSB. Accordingly, they do not include all of the information and footnotes required by generally accepted accounting principles for complete financial statements. However, in the opinion of management, all adjustments (consisting of normal recurring accruals) considered necessary for a fair presentation have been included. The accompanying unaudited financial statements should be read in conjunction with the Company's audited financial statements for the years ended December 31, 2000 and the notes thereto included in the Company's 10KSB and Registration Statement on Form SB-2, respectively. Results of operations for the interim period are not necessarily indicative of the operating results to be attained in the entire fiscal year. 2. NEW ACCOUNTING PRONOUNCEMENTS In June 2001, the FASB approved SFAS Nos. 141 and 142 entitled "Business Combinations" and "Goodwill and Other Intangible Assets," respectively. SFAS No. 141, among other things, eliminates the pooling of interests method of accounting for business acquisitions entered into after June 30, 2001. SFAS No. 142 requires companies to use a fair-value approach to determine whether there is an impairment of existing and future goodwill. These statements are effective beginning January 1, 2002. The Company is in the process of evaluating the SFAS Nos. 141 and 142 and the effect that it will have on the Company's financial position, results of operations and cash flows. 3. CUMULATIVE EFFECT OF CHANGE IN ACCOUNTING PRINCIPLE In December 1999, the Securities and Exchange Commission (SEC) issued Staff Accounting Bulletin (SAB) No. 101, "Revenue Recognition in Financial Statements. SAB No. 101" expresses the views of the SEC staff in applying generally accepted accounting principles to certain revenue recognition issues. The Company adopted SAB 101 effective January 1, 2000. The effect of the adoption of SAB 101 in the prior year was reflected as cumulative effect of change in accounting principle. 4. RESTRICTED CASH In April, 2001, the Company made a strategic investment in an advertising solution provider, AdStar.Com (nasdaq: ADST). In consideration for a $250,000 payment to AdStar.Com ("AdStar"), the company received 250,000 units of AdStar; a unit consists of two shares of AdStar common stock and one warrant to purchase an additional share. AdStar is a leading provider of remote ad entry solutions for newspapers and advertisers. AdStar's products and services enable newspapers to increase advertising received directly from advertisers, thereby improving newspaper profitability. The Company sold 5 substantially all the securities acquired in the aforementioned transaction. Of the common shares sold, 350,000 shares were sold that were pending settlement. The cash from the sale of these shares is being held under restriction until the transfer of the shares is completely settled. The shares settled and the restricted cash was released in July 2001. 5. EARNINGS PER SHARE OF COMMON STOCK The Company has applied SFAS No. 128, "Earnings Per Share" in its calculation and presentation of earnings per share - "basic" and "diluted". Basic earnings per share is computed by dividing income available to common shareholders (the numerator) by the weighted average number of common shares (the denominator) for the period. The computation of diluted earnings per share is similar to basic earnings per share, except that the denominator is increased to include the number of additional common shares that would have been outstanding if the potentially dilutive common shares had been issued. The numerator in calculating both basic and diluted earnings per common share for each period is the reported net income. The denominator is based on the following weighted average number of common shares: Six Months Ended June 30, 2001 2000 - -------------------------------------------------------------------------------- Basic 2,907,460 2,907,460 Incremental shares for assumed conversion of options 2,924 673 - -------------------------------------------------------------------------------- Diluted 2,910,384 2,908,133 - -------------------------------------------------------------------------------- The difference between basic and diluted weighted average common shares resulted from the assumption that the dilutive stock options outstanding were exercised. There were 359,884 and 241,884 stock options and warrants not included in the diluted earnings per share calculation for the respective six months and three months periods ended June 30, 2001, as their effect would have been anti-dilutive. For the respective six months and three months period ended June 30,2000, there were 74,384 and 86,884 stock options and warrants not included in the diluted earnings per share calculation as their effect would have been anti-dilutive. 6. SIGNIFICANT EVENTS In May 2001, the Company authorized the opening of its third independent agency, Five Boroughs Media Inc. in Manhattan. This agency will focus on promoting and selling advertising for the New Yellow directory. At the Company's annual shareholder meeting held on June 22, 2001, an amendment to the Company's Stock Option Plan to increase by 145,000 options the maximum number of options issuable there under was proposed and passed. Additionally, 70,000 options were approved for grant to Assaf Ran, the Company's CEO. 6 7. OTHER MATTERS On July 9, 2001, the Company's CFO, Secretary, Treasurer and a Board Director, Orna Kirsh submitted her resignation due to personal considerations. She will remain with the Company through August 15, 2001 and will be available for consultation until the Company finds a new CFO. Yael Shimor-Golan will take over the position of Corporate CFO effective with Miss Kirsh's resignation on August 15, 2001. Item 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS The following management's discussion and analysis of financial condition and results of operations should be read in conjunction with our unaudited consolidated financial statements and notes thereto contained elsewhere in this report. This discussion contains forward-looking statements based on current expectations that involve risks and uncertainties. Actual results and the timing of certain events may differ significantly from those projected in such forward-looking statements. We currently publish and distribute yellow page directories in print and on the worldwide web, both in the mainstream yellow page industry as well as in targeted niche markets in the New York metropolitan area. We sell yellow page advertisements as part of an overall media package that includes print advertising, on-line advertising and other added value services such as our referral service and consumer discount club. We operate three internet portals, a mainstream general portal NewYellow.com, targeting the general population, JewishYellow.com targeting worldwide Jewish communities and JewishMasterguide.com, targeting the ultra-orthodox Hasidic communities. Our principal source of revenue derives from the sale of ads in our print and on-line directories. NewYellow was launched on May 12, 1999 as the Company's first general interest, English only yellow page directory. The first NewYellow publication was printed and distributed in March 2000. NewYellow competes directly with the Verizon Yellow Pages in New York City. New Yellow is the only general interest yellow page directory to provide full-color advertisements. NewYellow was also the first directory to include e-mail addresses. Also, as part of our service, we offer to all New Yellow advertisers free e-mail addresses as well as electronic mail boxes. These mailboxes are often used to provide our advertisers with electronic referrals. NewYellow is available online at our web site www.newyellow.com. New Yellow is now in its third year of production. Our principal source of revenue derives from the sale of ads for our NewYellow and Jewish Israeli Yellow Pages directories. Our NewYellow rates are significantly less than those of the Verizon Yellow Pages and must remain so in order to maintain our competitive sales advantage with our advertisers. Advertising fees, whether collected in cash or evidenced by an agreement, generated in advance of publication dates, are recorded as "Advanced billings for unpublished directories" on our balance sheet. Many of our advertisers pay the ad fee over a period of time. In that case, the entire amount of the deferred payment is booked as a receivable. Revenues are recognized at the time the directory in which the ad appears is published. 7 Thus, costs directly related to the publication of a directory in advance of publication are recorded as "Directories in progress" on our balance sheet and are recognized when the directory to which they relate is published. All other costs are expensed as incurred. The principal operating costs incurred in connection with publishing the directories are commissions payable to sales representatives and costs for paper and printing. Generally, advertising commissions are paid as advertising revenue is collected. However, in connection with New Yellow we pay commissions to our sales representatives even before we collect the related advertising revenue. We do not have any long term agreements with paper suppliers or printers. Since ads are sold before we purchase paper and print a particular directory, a substantial increase in the cost of paper or printing costs would reduce our profitability. Administrative and general expenses include expenditures for marketing, insurance, rent, sales and local franchise taxes, licensing fees, office overhead and wages and fees paid to employees and contract workers (other than sales representatives). Results of Operations Three Months Ended June 30, 2001 Compared to Three Months Ended June 30, 2000 Advertising revenues Advertising revenues for three months ended June 30, 2001 were $1,432,000 compared to $135,000 for the three months ended June 30, 2000, an increase of $1,297,000. The increase was primarily attributable to the fact that only The Jewish Master Guide directory was published in the three months period ended June 30, 2000 whereas in the three months period ended June 30, 2001 both The Jewish Master Guide directory and the New Yellow directory were published. Publication costs Publication costs for the three months ended June 30, 2001 were $600,000 compared to $61,000, for the corresponding period in 2000, an increase of $539,000. As a percentage of advertising revenues, publication costs were 41.9% in the period ending June 30, 2001 compared to 45.2%, in the corresponding 2000 period. The increase in publication costs primarily reflects that in the three month period ending June 30, 2001, we published two directories including the larger New Yellow directory. The decrease in the publication cost as a percentage of revenues is a result of minor decreases in the overall publication costs. Selling expenses Selling expenses for the three months ended June 30, 2001 were $490,000 compared to $84,000 for the corresponding period in 2000, an increase of $406,000. This increase is primarily a result of the increased sales. General and administrative costs General and administrative expenses for the quarter ended June 30, 2001 were $513,000 compared to $569,000 for the same period in 2000, a decrease of 9.8 %. This decrease is primarily attributable to (1) decreased bad debt expense related to the Company's 8 assessment of its allowance for doubtful accounts (2) decreased consulting and investor relation costs. Other income For the quarter ended June 30, 2001, the Company had other income of $171,000 compared to other income of $106,000 for the quarter ended June 30, 2000. This increase was attributable to the gains on sales of the AdStar securities sold by the Company. Provision (benefit) for income taxes There was no provision for income taxes for the three months ended June 30, 2001 as opposed to an income tax benefit of $215,000 for the three month period ended June 30, 2000. In the second quarter of 2001, we used a 46% rate to calculate taxes on the expected annual income. Six Months Ended June 30, 2001 Compared to Six Months Ended June 30, 2000 Advertising revenues Advertising revenues for the six months ended June 30, 2001 were $2,935,000 compared to $2,769,000 for the six months ended June 30, 2000, an increase of $166,000 or 6.0%. The increase was primarily attributable to increased advertising revenue, primarily with respect to the third time publication of New Yellow. Publication costs Publication costs for the six months ended June 30, 2001 were $789,000 compared to $562,000 for the corresponding period in 2000, an increase of $227,000 that is attributable to the growth of the directories and increased costs relating particularly to New Yellow. As a percentage of net advertising revenues, publication costs were 26.9% in the 2001 period compared to 20.3%, in the 2000 period. The differential in publication costs can vary as it corresponds to the particular requirements of the directory being published and on the prevalent paper costs. Selling expenses Selling expenses for the six months ended June 30, 2001 were $1,076,000 compared to $944,000 for the corresponding period in 2000, an increase of 14.0%. As a percentage of advertising revenues, selling expenses increased to 36.7% from 34.1%. The increase in selling expenses was attributable to the increases in advertising revenues as well as an increase in the bonus payments paid on the commission rates particularly associated with New Yellow sales. Administrative and general costs Administrative and general costs for the six months ended June 30, 2001 were $1,188,000 compared to $1,248,000 for the same period in 2000, a decrease of 4.8%. The decrease was primarily attributable to (1) a decrease in the expense for uncollectible receivables (2) 9 ceasing to outsource the responsibilities of investor relations and (3) decreased consulting costs. Other income For the six months ended June 30, 2001 the Company had other income of $253,000 compared to other income of $186,000 for the six months ended June 30, 2000. This increase was primarily attributable to the approximate $89,000 gain on sale of AdStar securities previously invested in. Provision (benefit) for income taxes Provision (benefit) for income taxes for the six months ended June 30, 2001 and June 30, 2000 were $69,000 and $(95,000), respectively. The increase in the provision for income taxes was directly attributable to the change in operating income. Liquidity and Capital Resources At June 30, 2001 we had cash and cash equivalents of $6,653,000 and working capital of $6,720,000 as compared to cash and cash equivalents of $7,056,000 and working capital of $6,592,000 at June 30, 2000. The decrease primarily reflects the cash placed under restriction due to the pending settlement of the AdStar shares previously invested in. Net cash used in operating activities was $235,000 for the six months ended June 30, 2001. For the comparable 2000 period, net cash used in operating activities was $42,000. The increase in net cash used in operating activities reflects increased costs particularly relating to the expansion of the company and the publication of the New Yellow Manhattan directory. Net cash used in investing activities was $261,000 for the six months ended June 30, 2001. Net cash used in investing activities for the quarter ended June 30, 2001 was primarily used for the investment in AdStar. For the comparable 2000 period net cash used in investing activities was $103,000. There was no cash used in financing activities for the periods ended June 30, 2001 and 2000, respectively. We anticipate that our current cash balances together with our cash flows from operations will be sufficient to fund the production of our directories and the maintenance of our web site as well as increases in our marketing and promotional activities for the next 12 months. However, we expect our working capital requirements to increase significantly over the next 12 months as we continue to market our directories and expand our on-line services, in particular for NewYellow. Forward Looking Statements This report contains forward-looking statements within the meaning of Section 27A of the Securities Act of 1933, as amended, and section 21E of the Securities Exchange Act of 1934, as amended (the "Exchange Act"). Forward-looking statements are typically 10 identified by the words "believe", "expect", "intend", "estimate" and similar expressions. Those statements appear in a number of places in this report 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) our limited operating history, (ii) potential fluctuations in our quarterly operating results, (iii) challenges facing us relating to our rapid growth and (iv) our dependence on a limited number of suppliers. The accompanying information contained in this report, including the information set forth under "Management's Discussion and Analysis of Financial Condition and Results of Operations", identifies important factors that could cause such differences. These forward-looking statements speak only as of the date of this report, and we caution potential investors not to place undue reliance on such statements. 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. 11 DAG MEDIA, INC. PART II-OTHER INFORMATION Item 3. Changes in Securities and Use of Proceeds In May 1999, we completed an initial public offering of 1,325,000 common shares (the "IPO"), of which we sold 1,250,000 common shares and Assaf Ran, our president, chief executive officer and principal shareholder, sold 75,000 common shares. The common shares were sold for $6.50 each. Net proceeds, after expenses of the IPO, were $6,423,763. We have not previously filed an initial report of sales of securities and use of proceeds. We will report the following information in our quarterly and annual filings until the proceeds have been fully used. (a) Effective date of Registration Statement: May 13, 1999 (File No. 333-74203). (b) The offering was declared effective May 13, 1999 and was consummated on May 18, 1999. (c) The managing underwriters were Paulson Investment Company, Inc. and Redwine & Company, Inc. (d) Securities Sold: (i) Common shares - common shares par value $.001 per share (ii) Representatives' warrants - warrants convertible into 132,500 common shares at a price of $7.80 per share. The representatives' warrants are exercisable over the four year period beginning on the first anniversary of the offering. These warrants were issued to the underwriters in connection with the offering. (e) Amount registered and sold: (i) Common shares - 1,523,750 common shares were registered; 1,250,000 common shares were sold for the account of the issuer and 75,000 common shares were sold for the account of Assaf Ran, our president, chief executive officer and principal shareholder. (ii) Representatives' warrants - 132,500 warrants registered and issued to the underwriters in connection with the IPO. (iii) Common shares issuable upon exercise of representatives' warrants - 132,500 common shares registered. 12 (f) Gross proceeds to issuer: $8,125,000. (g) Expenses incurred in connection with issuance of securities: Underwriting discounts and commissions $ 731,250 Expenses paid to the underwriters $ 252,455 Other expenses $ 717,532 ---------- $1,701,237 (h) Net proceeds: $6,423,763. (i) Amount of net offering proceeds used for the purposes listed below: Temporary investments with maturities of three months or less: $5,686,536 ========== New Yellow printing and distribution cost $ 735,227 ========== Item 4. Submission of Matters to a Vote of Security Holders A. The Annual Meeting of Stockholders was held on Friday, June 22, 2001. B. The names of the directors elected at the meeting: Assaf Ran, Michael J. Jackson, Orna Kirsh, Phillip Michals, Eran Goldschmid, and Stephen A. Zelnick. There are no directors whose term of office has not continued. C. At the Annual Meeting the following matters were approved by the vote indicated: 1. Election of six directors: FOR AGAINST ABSTAINED BROKER NONVOTES Assaf Ran 2,638,704 16,900 Michael J. Jackson 2,638,704 16,900 Orna Kirsh 2,638,704 16,900 Phillip Michals 2,638,704 16,900 Eran Goldschmid 2,638,604 17,000 Stephen A. Zelnick 2,638,704 16,900 2. Approval of an amendment to the Company's Stock Option Plan: FOR AGAINST ABSTAINED BROKER NONVOTES 2,629,689 24,415 1,500 Item 5. Exhibits and Reports on Form 8-K (a) Reports on Form 8-K - none 13 SIGNATURES Pursuant to the requirements of the Securities Exchange Act of 1934, the Registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized. DAG Media, Inc. (Registrant) Date: August 10, 2001 By /s/ Assaf Ran ----------------------------------- Assaf Ran, President Date: August 10, 2001 By: /s/ Orna Kirsh ----------------------------------- Orna Kirsh, Chief Financial Officer 14 -----END PRIVACY-ENHANCED MESSAGE-----