Dreams, Inc. Announces Six Months and Quarterly Financial Results

Increased Margins, Cash Flow Improvements in Second Quarter
PLANTATION, Fla.--(Business Wire)--
Dreams, Inc. (NYSE Amex: DRJ) announced today its six-months and quarterly
financial results for the period ended June 30, 2009. For the six-months ended
June 30, 2009, Dreams, Inc.`s ("Dreams") total revenues decreased 16%, to $27.0
million, versus $32.2 million reported for the six months ended June 30, 2008.
For the quarter, revenues declined 10%, to $12.2 million, compared to $13.6
million reported in the same quarter last year. Net losses for the six months
ended June 30, 2008 were $2.0 million, versus $1.4 million in net losses for the
same period last year. However, net losses for the quarter ended June 30, 2009
showed a slight improvement with a $1.1 million loss versus a loss of $1.2
million for the same quarter last year.

Ross Tannenbaum, Dreams` President & CEO stated, "We navigated our way through
the turbulent first and second quarters with our business models and confidence
intact, and no erosion of our margin. The additional challenge that the Company
faced earlier this year was the forced liquidation of inventories by numerous
retailers which mitigated our sales opportunities as we chose not to participate
with that strategy.

"Holding to our convictions has paid off as our second quarter gross margins in
our two reportable segments, i.e. manufacturing/distribution and retail have
improved. This was the driving factor in showing an improved *EBITDA and
bottom-line results for our second quarter ended June 30, 2009, over the
comparable period last year. In fact, we recorded our first positive *EBITDA at
our Internet division for this six and three months periods, ever. This dynamic,
along with the numerous corporate savings initiatives enacted earlier this year
has greatly enhanced the Company`s cash flow. Further internal analysis reflects
net cash used in operating activities for the six months ended June 30, 2009 was
$6.1 million, with only $.2 million of that figure attributed to our second
quarter. Net cash provided by financing activities was $6.7 million for the
first six months of this year, again with only a mere sum of $.8 million
attributed to our second quarter. This is a telling trend and affirmation of the
economic benefits of our focusing on controlling costs.

"As it pertains to our revenues, we closed (4) four of our underperforming Field
of Dreams stores and we strategically chose to cease selling our manufactured
products to third party on-line retailers who compete against our own/syndicated
sites. While this decision has caused our Manufacturing/distribution revenues to
decline, our margins and retail growth improvements in the second quarter of
this year vindicate this initial sales impairment.

"With the majority of our revenues generated on-line, and the consistent and
substantial growth of our Internet sales, we are rapidly becoming a major player
in on-line retail. In the second quarter of 2009, our on-line sales were $6.7
million and represented 55% of our consolidated sales as compared to $6.0
million and 43% in the second quarter of last year.

"Also, in the second quarter, we continued to see a strong response to the
marketing of our Web Syndication services. Our portfolio of clients represents
some of the largest and best known retailers and sports properties in the
country. Recently, we announced the signing of our first NFL Team, the
Philadelphia Eagles. We are positioned to grow this business through the
addition of numerous sports-oriented companies and retailers looking to launch
an e-commerce presence on the Internet or replace an existing online fan shop
with a comprehensive, scalable e-commerce platform. This is the fastest growing
area of the Company and will remain its primary focus," concluded Tannenbaum.

DREAMS, INC. trades under the ticker symbol: NYSEAmex: DRJ

www.dreamscorp.com

Dreams, Inc. and Subsidiaries

Condensed Consolidated Statements of Operations - Unaudited

(Dollars in Thousands, except share amounts and earnings per share amounts)

Six Months Ended June 30, Three Months Ended June 30,
2009 2008 2009 2008

Revenues:
Manufacturing/Distribution $ 5,459 $ 9,605 $ 1,936 $ 3,993
Retail 21,397 22,240 10,164 9,474
Other 181 322 92 183

Total Revenues $ 27,037 $ 32,167 $ 12,192 $ 13,650
Expenses:
Cost of sales-mfg/distribution $ 2,513 $ 5,464 $ 933 $ 2,477
Cost of sales-retail 11,587 12,185 5,343 5,206
Operating expenses 15,078 15,804 7,041 7,301
Depreciation and amortization 912 541 453 332

Total Expenses $ 30,090 $ 33,994 $ 13,770 $ 15,316

(Loss) before interest and taxes (3,053 ) (1,827 ) (1,578 ) (1,666 )
Interest expense, net 371 372 197 224
Other expense 8 70 8 32

(Loss) before income taxes (3,432 ) (2,269 ) (1,783 ) (1,922 )
Income tax benefit 1,370 870 710 763

Net (loss) $ (2,062 ) $ (1,399 ) $ (1,073 ) $ (1,159 )

(Loss) per share:
Basic: (Loss) per share $ (0.05 ) $ (0.04 ) $ (0.03 ) $ (.03 )
Weighted average shares outstanding - Basic 37,528,214 37,560,590 37,528,214 37,556,376
Diluted: (Loss) per share $ (0.05 ) $ (0.04 ) $ (0.03 ) $ (.03 )
Weighted average shares outstanding - Diluted 37,528,214 37,728,136 37,528,214 37,718,100

*EBITDA is a non-GAAP financial measurement that is defined as earnings before
interest, tax, depreciation and amortization. We use this non-GAAP financial
measure for financial and operational decision making and as a means to evaluate
our performance. In our opinion, this non-GAAP measure provides meaningful
supplemental information regarding our performance. We believe that both
management and investors benefit from referring to this non-GAAP financial
measure in assessing our performance and analyzing future periods. This non-GAAP
financial measure also facilitates management`s internal comparisons to our
historical performance. We believe this non-GAAP financial measures is useful to
investors both because (1) they allow for greater transparency with respect to
key metrics used by management in its financial and operational decision making
and (2) they are used by institutional investors and the analyst community to
help them analyze the health of our business.

Statements contained in this press release, which are not historical facts, are
forward looking statements.The forward-looking statements in this press release
are made pursuant to the safe harbor provisions of the Private Securities
Litigation Reform Act of 1995.Such forward-looking statements involve known and
unknown risks, uncertainties and other factors which may cause the actual
results, performance or achievements of the Company to be materially different
from any future results, performance or achievements expressed or implied by
such forward-looking statements. Such statements are indicated by words or
phrases such as "anticipates," "projects," "management believes," "Dreams
believes," "intends," "expects," and similar words or phrases. Such factors
include, among others, the following: competition; seasonality; success of
operating initiatives; new product development and introduction schedules;
acceptance of new product offerings; franchise sales; advertising and
promotional efforts; adverse publicity; expansion of the franchise chain;
availability, locations and terms of sites for franchise development; changes in
business strategy or development plans; availability and terms of capital
including the continuing availability of our credit facility with Comerica Bank
or a similar facility with another financial institution; labor and employee
benefit costs; changes in government regulations; and other factors particular
to the Company.

Dreams, Inc., Plantation
Investor Relations:
David M. Greene, Senior Vice-President, 954-377-0002
Fax: 954-475-8785
dgreene@dreamscorp.com
or
Public Relations:
Boardroom Communications
Jennifer Clarin and/or Caren Berg, 954-370-8999
Fax: 954-370-8892
cberg@boardroompr.com

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