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 September 30, 2000
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 November 13, 2000, there were outstanding 2,907,460 shares of the
issuer's common shares, $.001 par value.
<PAGE>
DAG MEDIA, INC.
QUARTERLY REPORT ON FORM 10-QSB
FOR THE QUARTERLY PERIOD ENDED SEPTEMBER 30, 2000
TABLE OF CONTENTS
Part I - FINANCIAL INFORMATION
Page Number
-----------
Item 1. Financial Statements (unaudited)
Balance Sheet at September 30, 2000 (unaudited)................. 2
Statement of Operations for the Three and Nine
Month Periods Ended September 30, 2000 and 1999................. 3
Statements of Cash Flows for the Nine
Month Periods Ended September 30, 2000 and 1999................. 4
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 2. Changes in Securities and Use of Proceeds....................... 11
Item 6. Exhibits and Reports............................................ 14
SIGNATURES.............................................................. 14
<PAGE>
DAG MEDIA, INC.
BALANCE SHEET
SEPTEMBER 30, 2000
(unaudited)
<TABLE>
<S> <C>
Assets
Current assets:
Cash and cash equivalents $ 6,110,730
Trade accounts receivable, net of allowance for doubtful accounts of $460,000 2,507,521
Directories in progress 657,966
Other current assets 78,452
------------
Total current assets 9,354,669
------------
Restricted cash 1,000,000
Fixed assets, net of accumulated depreciation of $56,865 222,658
Goodwill and trademarks, net of accumulated amortization of $74,305 1,276,676
Other assets 103,005
------------
Total assets $ 11,957,008
============
Liabilities and Shareholders' Equity
Current liabilities:
Accounts payable and accrued expenses $ 59,764
Accrued commissions and commissions payable 541,683
Advanced billing for unpublished directories 1,486,201
Income tax payable 403,859
Deferred tax payable 497,080
------------
Total current liabilities 2,988,587
------------
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 7,799,789
Treasury stock, at cost- 68,730 shares (231,113)
Retained earnings 1,396,769
------------
Total shareholders' equity 8,968,421
------------
Total liabilities and shareholders' equity $ 11,957,008
============
</TABLE>
The accompanying notes are an integral part of this balance sheet.
2
<PAGE>
DAG MEDIA, INC.
STATEMENTS OF OPERATIONS
(unaudited)
<TABLE>
<CAPTION>
Three Months Ended Nine Months Ended
September 30, September 30,
2000 1999 2000 1999
----------- ----------- ----------- -----------
<S> <C> <C> <C> <C>
Net advertising revenues $ 1,812,034 $ 1,593,800 $ 5,295,479 $ 3,862,581
Publishing costs 187,697 68,074 1,040,509 398,843
----------- ----------- ----------- -----------
Gross profit 1,624,337 $ 1,525,726 4,254,970 3,463,738
Operating costs and expenses:
Selling expenses 773,052 949,037 1,779,137 1,568,819
Administrative and general 686,459 408,988 1,929,155 910,987
----------- ----------- ----------- -----------
Total operating costs and expenses 1,459,512 1,358,025 3,708,293 2,479,806
Interest income 111,252 86,838 297,514 129,899
Earnings from operations before
provision for income taxes and equity
in loss of affiliate 276,078 254,539 844,192 1,113,831
Provision for income taxes 133,648 108,677 404,173 514,590
Equity in loss of affiliate -- -- -- (2,654)
----------- ----------- ----------- -----------
Net income available to common
shareholders $ 142,430 $ 145,862 $ 440,019 $ 596,587
=========== =========== =========== ===========
Net income per common share
--Basic $ 0.05 $ 0.05 $ 0.15 $ 0.29
=========== =========== =========== ===========
--Diluted $ 0.05 $ 0.05 $ 0.15 $ 0.29
=========== =========== =========== ===========
Weighted average number of common
shares outstanding
--Basic 2,907,460 2,964,785 2,907,460 2,070,485
=========== =========== =========== ===========
--Diluted 2,907,460 2,965,104 2,910,201 2,070,502
=========== =========== =========== ===========
</TABLE>
The accompanying notes are an integral part of these financial statements.
3
<PAGE>
DAG MEDIA, INC.
STATEMENTS OF CASH FLOWS
(unaudited)
<TABLE>
<CAPTION>
Nine Months Ended Nine Months Ended
September 30, September 30,
2000 1999
----------- -----------
<S> <C> <C>
Cash flows from operating activities:
Net income $ 440,019 $ 596,587
Adjustment to reconcile net income to net cash provided by
by operating activities--
Depreciation and amortization 69,172 35,727
Bad debt expense 762,457 174,754
Changes in operating assets and liabilities--
Accounts receivable (804,422) (529,595)
Directories in progress 255,303 230,107
Deferred tax asset -- 21,000
Advances to employees (27,553) --
Other current and noncurrent assets (30,833) (54,689)
Dividend receivable -- (14,050)
Accounts payable and accrued expenses 29,809 31,627
Commissions payable (28,622) 314,154
Advance billing for unpublished directories (1,039,153) (692,915)
Income taxes payable 390,939 166,311
----------- -----------
Net cash provided by operating activities 17,116 279,018
----------- -----------
Cash flows from investing activities:
Cash restricted (1,000,000) --
Investments in affiliates -- 41,875
Acquisition of business -- 43,125
Net purchase of fixed assets (107,243) (2,507)
----------- -----------
Net cash (used in) provided by investing activities (1,107,243) 82,493
----------- -----------
Cash flows from financing activities:
Proceeds from IPO, net of expenses -- 6,423,287
Purchase of treasury shares -- (147,381)
Repayment of loans to shareholders, net -- 221,347
----------- -----------
Net cash provided by financing activities -- 6,497,253
----------- -----------
Net (decrease) increase in cash (1,090,127) 6,858,764
----------- -----------
Cash and cash equivalents, beginning of period 7,200,857 310,185
----------- -----------
Cash and cash equivalents, end of period $ 6,110,730 $ 7,168,949
=========== ===========
</TABLE>
The accompanying notes are an integral part of these financial statements.
4
<PAGE>
DAG MEDIA, INC.
Item 1. NOTES TO FINANCIAL STATEMENTS
September 30, 2000
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 year ended December 31, 1999 and the notes thereto included
in the Company's 10KSB. 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 December 1999, the Securities and Exchange Commission (SEC) issues 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. SAB 101 is required
to be applied in the fourth quarter of this year, effective from January 1,
2000. The cumulative effect of this change with respect to 1999 would be a
decrease of $502,000 ($.22 per share). Had the Company applied this policy
during fiscal 2000, net income for the nine months ended September 30, 2000
would have increased by $46,000 ($.02 per share).
3. RESTRICTED CASH
On September 21, 2000 the Company pledged $1,000,000 as security for a
promissory note signed by its Chief Executive Officer and its restriction
expires in conjunction with the settlement of its officers' promissory note,
which is due on demand.
4. 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)
outstanding 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.
5
<PAGE>
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:
<TABLE>
<CAPTION>
Nine Months Ended September 30,
2000 1999
--------- ---------
<S> <C> <C>
Basic 2,907,460 2,070,485
Incremental shares for assumed conversion of options 2,741 17
--------- ---------
Diluted 2,910,201 2,070,502
--------- ---------
</TABLE>
The difference between basic and diluted weighted average common shares resulted
from the assumption that the dilutive stock options outstanding were exercised.
There were 155,884 and 104,884 convertible securities that were not included in
the diluted earnings per share calculation for the three and nine month periods
ended September 30,2000.
5. STOCK OPTION PLAN
At the Company's annual shareholder meeting held on July 18, 2000, 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.
6. RECLASSIFICATIONS
Certain items in the prior periods' financial statements have been reclassified
to conform to the nine months ended September 30, 2000 presentation.
6
<PAGE>
DAG MEDIA, INC.
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. Our directories are target niche markets as well as challenge the
dominance of Verizon directories in the mainstream yellow page industry 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.
Advertising fees, whether collected in cash or evidenced by a receivable,
generated in advance of publication dates, are recorded as "Advanced billings
for unpublished directories" on our balance sheet. Many of our advertisers pay
the 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. In the case of NewYellow, a
portion of the advertising fee is allocated to internet advertising, and is,
therefore, recognized when the ad is published in the online version of
NewYellow. Similarly, 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 NewYellow 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).
7
<PAGE>
Results of Operations
Three Months Ended September 30, 2000 Compared to Three Months Ended September
30, 1999
Net advertising revenues
Net advertising revenues for three months ended September 30, 2000 were $
1,812,000 compared to $1,594,000 for the three months ended September 30, 1999,
an increase of 13.7 %. The increase was primarily attributable to increased
sales resulting primarily from Internet sales relating to the NewYellow.com.
Publication costs
Publication costs for the three months ended September 30, 2000 were $188,000
compared to $68,000, for the corresponding period in 1999, an increase of 176.5
%. As a percentage of net advertising revenues, publication costs were 10.4 % in
the period ending September 30, 2000 compared to 4.3 %, in the corresponding
1999 period. The increase in publication costs primarily reflects that in the
three month period ending September 30, 2000, we published a larger directory
and distribution costs for our print directories increased. Also, there was an
increase in the graphic department costs as they relate to the on-line
publication of NewYellow.com, which is growing rapidly.
Selling expenses
Selling expenses for the three months ended September 30, 2000 were $773,000
compared to $949,000 for the corresponding period in 1999, a decrease of 18.5 %.
As a percentage of net advertising revenues, selling expenses decreased to 42.7
% in the period ending September 30, 2000 from 59.5 % in the corresponding 1999
period. This decrease primarily results from the sales breakout between DAG
direct sales representatives versus agency sales representatives whom receive
higher commission rates.
Administrative and general costs
Administrative and general expenses for the quarter ended September 30, 2000
were $686,000 compared to $409,000 for the same period in 1999, an increase of
67.7 %. This increase is primarily attributable to (1) increased bad debt (2)
increased officer and administrative salaries related to the Company's expansion
(3) increased consulting, investor relations and professional service costs and
(4) increased advertising costs for the promotion of New Yellow and the Company
itself.
Interest income
For the quarter ended September 30, 2000, we had interest income of $111,000
compared to interest income of $87,000 for the quarter ended September 30, 1999.
This increase was primarily attributable to increased interest rates resulting
in increased interest income in the third quarter of 2000.
8
<PAGE>
Provision for income taxes
Provision for income taxes for the three months ended September 30, 2000 and
September 30, 1999 was $134,000 and $109,000 respectively. In the third quarter
of 2000, we used a 46 % rate to calculate taxes.
Nine Months Ended September 30, 2000 Compared to Nine Months Ended September 30,
1999
Net advertising revenues
Net advertising revenues for the nine months ended September 30, 2000 was $
5,295,000 compared to $3,863,000 for the nine months ended September 30, 1999,
an increase of 37.1 %. The increase was primarily attributable to increased
advertising revenue with respect to the publication of (1) the year 2000 issues
of the The Jewish Israeli Yellow Pages, (2) the third edition of the Master
Guide directory in September 2000 and (3) the first printed edition of the New
Yellow Manhattan directory as well as its internet version on-line. Also, in the
prior comparable period, we did not have Internet advertising sales for the full
period.
Publication costs
Publication costs for the nine months ended September 30, 2000 were $1,041,000
compared to $399,000 for the corresponding period in 1999, an increase of 160.9
%. However, as a percentage of net advertising revenues, publication costs were
19.7 % in the 2000 period compared to 10.3 %, in the 1999 period. The increase
in publication costs reflects the fact that we published four directories in the
nine month period ended of 2000 compared to three directories in the nine month
period ended 1999. The increase of publication costs as a percentage of net
advertising revenues reflect the costs related to additional directories, both
in print and on-line as well as a general increase in the current year for the
cost of paper thereby affecting the printing costs of the directories.
Selling expenses
Selling expenses for the nine months ended September 30, 2000 were $1,779,000
compared to $1,569,000 for the corresponding period in 1999, an increase of 13.4
%. As a percentage of net advertising revenues, selling expenses decreased to
33.6 % from 40.6 %. The increase in selling expenses was attributable to the
increases in net advertising revenues as well as an increase in the commission
rates and bonus payments made, particularly associated with New Yellow sales.
The decrease in selling expenses as a percentage of revenues is related to the
combined effect of which directory is published in the given period and thereby
its revenues recognized, as well as which office is generating the sale thereby
giving effect to a different selling commission rate structure.
Administrative and general costs
Administrative and general costs for the nine months ended September 30, 2000
were $1,929,000 compared to $911,000 for the same period in 1999, an increase of
111.7 %. The increase was primarily attributable to (1) an increase in the
expense for uncollectible receivables (2) increased officer and administrative
salaries related to the company's expansion (3) increased consulting,
9
<PAGE>
investor relations and professional service costs related to our status as a
public company and (4) increased advertising costs for the promotion of New
Yellow.
Interest income, net
For the nine months ended September 30, 2000 we had net interest income of $
298,000 compared to net interest income of $130,000 for the nine months ended
September 30, 1999. This increase was attributable to the investment of the net
proceeds of our initial public offering for the full nine month period ending
September 30, 2000 as well as an overall increase in interest rates during
fiscal year 2000.
Provision for income taxes
Provision for income taxes for the nine months ended September 30, 2000 and
September 30, 1999 were $404,000 and $515,000 respectively. The decrease in the
provision for income taxes was directly attributable to the decrease in
operating income.
Liquidity and Capital Resources
At September 30, 2000 we had cash and cash equivalents of $6,111,000 and working
capital of $6,366,000 as compared to cash and cash equivalents of $ 7,169,000
and working capital of $7,374,000 at September 30, 1999. This decrease primarily
reflects the use of proceeds for the Company's decision to place $1,000,000 in
restricted cash as explained note 2 to the Company's financial statements.
Net cash provided by operating activities was $17,000 for the nine months ended
September 30, 2000. For the comparable 1999 period, net cash provided by
operating activities was $279,000. The decrease in net cash provided by
operating activities reflects increased costs related to the expansion of the
company and the first time publication of the New Yellow Manhattan directory in
the nine month period ending September 30, 2000 compared to the same period in
1999.
Net cash used by investing activities was $1,107,000 for the nine months ended
September 30, 2000. Net cash used by investing activities in the nine months
ended September 30, 2000 was primarily used for providing security for a
promissory note signed by the CEO as explained in note 2 to the Company's
financial statements. For the comparable 1999 period net cash provided by
investing activities was $82,000.
There were no financing activities during the nine months ended September 30,
2000. For the comparable 1999 period, net cash provided by financing activities
was $6,497,000 consisting primarily of the net proceeds of our initial public
offering in May 1999 and the proceeds from the repayment of Mr. Ran's loans.
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.
10
<PAGE>
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 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
<PAGE>
DAG MEDIA, INC.
PART II-OTHER INFORMATION
Item 2. 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
<PAGE>
(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 Tuesday, July 18,
2000.
B. The names of the directors elected at the meeting: Assaf Ran,
Michael J. Jackson, Orna Kirsh, Phillip Michals, Eran Goldschmid,
Stephen A. Zelnick and Gury Barlev. There are no directors whose
term of office has continued.
C. At the Annual Meeting the following matters were approved by the
vote indicated:
1. Election of seven directors:
FOR AGAINST ABSTAINED BROKER NONVOTES
Assaf Ran 1,193,407 1,950
Michael J. Jackson 1,193,307 2,050
Orna Kirsh 1,193,407 1,950
Phillip Michals 1,193,407 1,950
Eran Goldschmid 1,193,407 1,950
Stephen A. Zelnick 1,193,407 1,950
Gury Barlev 1,193,407 1,950
2. Approval of an amendment to the Company's Stock Option Plan:
FOR AGAINST ABSTAINED BROKER NONVOTES
2,741,211 13,350 2,700
3. Confirmation of the Appointment of Arthur Andersen LLP as Auditors
for the Fiscal Year Ending December 31, 2000.
FOR AGAINST ABSTAINED BROKER NONVOTES
2,753,161 2,000 2,100
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Item 6. Exhibits and Reports on Form 8-K
(a) Exhibit 27- Financial Data Schedule
(b) Reports on Form 8-K - none
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: November 13, 2000 By /s/ Assaf Ran
----------------------------------------
Assaf Ran, President
Date: November 13, 2000 By: /s/ Orna Kirsh
----------------------------------------
Orna Kirsh, Chief Financial Officer
14
