CDSI Reports 1998 Fourth Quarter and Full Year Financial Results.

MIAMI--(BUSINESS WIRE)--April 14, 1999--

CDSI Holdings Inc. (OTC: CDSI) today reported financial results for the 1998 fourth quarter and the full year period ended December 31, 1998.

Fourth quarter 1998 revenues were $50,568, compared to revenues of $30,472 in the 1997 quarter. In the 1998 quarter, the net loss applicable to common shares was $733,999, or $0.24 per common share, compared to a net loss applicable to common shares of $441,334, or $0.15 per common share, in the 1997 period.

Full year 1998 revenues were $122,545, compared to revenues of $143,132 in 1997. In 1998, the net loss applicable to common shares was $2,356,807, or $0.77 per common share, compared to a net loss applicable to common shares of $1,339,835, or $0.53 per common share, in 1997.

CDSI, a Delaware corporation, conducts business as a marketer of an inventory control system for tobacco products, through its subsidiary, Controlled Distribution Systems, Inc. and as a delivery provider of an on-line electronic delivery information service through its 42.5% investment in Digital Asset Management, Inc.

CDSI Holdings Inc. and Subsidiaries
Unaudited Consolidated Statements of Operations


                       Three months ended              Year ended
                          December 31,                 December 31,

                      1998           1997         1998            1997

Revenues           $ 50,568       $ 30,472     $ 122,545       $ 143,132

Costs and expenses:
  Costs of revenues 314,870         22,926       613,492         119,759
  Research and
    development       6,485         43,630       156,025         168,959
  Sales and
    marketing        28,151         46,061       481,943         192,313
  General and
    administrative  316,006        420,209     1,238,103         943,883
                    --------       --------   ----------         -------
                    665,512        532,826     2,489,563       1,424,914
                    --------       --------   ----------       ---------

Operating loss     (614,944)      (502,354)   (2,367,018)     (1,281,782)

Other income
(expense):
  Interest and other
    income           14,819         61,020       144,085         169,428
  Interest expense        -              -             -         (94,002)
  Equity loss in Digital Asset Management,
    Inc.           (133,874)             -      (133,874)              -
                   ---------    -----------     ----------      ---------
                   (119,055)        61,020        10,211          75,426
                   ---------    -----------     ----------      ---------

Loss before
  income taxes     (733,999)      (441,334)   (2,356,807)     (1,206,356)

Income taxes              -              -             -             800
                   ---------    -----------     ---------       ---------

Net loss           (733,999)      (441,334)   (2,356,807)     (1,207,156)

Dividends on preferred
  shares                  -              -             -        (132,679)

Net loss applicable to
  common stock    $(733,999)     $(441,334)  $(2,356,807)    $(1,339,835)
                  ==========     ==========  ============    ============

Net loss per share (basic and diluted)
                    $ (0.24)       $ (0.15)      $ (0.77)        $ (0.53)
                    ========       ========      ========        ========

Shares used in computing
  net loss per
    share         3,120,000      2,972,500     3,067,661       2,542,524
                  ==========     ==========    ==========       =========