Delaware
|
06-1515824
|
(State
or other jurisdiction of
|
(I.R.S.
Employer Identification Number)
|
incorporation
or organization)
|
(Number
of Shares Outstanding
|
||
(Title of Class)
|
as of February 11, 2010)
|
|
Common
Stock, par value $0.01 per share
|
31,538,727
|
Part
I - FINANCIAL INFORMATION
|
1
|
|
Item
1.
|
Interim
Condensed Consolidated Financial Statements
|
1
|
Condensed
Consolidated Balance Sheets
|
1
|
|
Condensed
Consolidated Statements of Operations
|
2
|
|
Condensed
Consolidated Statements of Cash Flows
|
3
|
|
Notes
to Condensed Consolidated Financial Statements
|
4
|
|
Item
2.
|
Management’s
Discussion and Analysis of Financial Condition
|
|
and
Results of Operations
|
18
|
|
Item
3.
|
Quantitative
and Qualitative Disclosures About Market Risk
|
27
|
Item
4.
|
Controls
and Procedures
|
27
|
PART
II - OTHER INFORMATION
|
28
|
|
Item
1.
|
Legal
Proceedings
|
28
|
Item
1A.
|
Risk
Factors
|
29
|
Item
2.
|
Unregistered
Sales of Equity Securities and Use of Proceeds
|
31
|
Item
3.
|
Defaults
Upon Senior Securities
|
31
|
Item
4.
|
Submission
of Matters to a Vote of Security Holders
|
31
|
Item
5.
|
Other
Information
|
31
|
Item
6.
|
Exhibits
|
32
|
SIGNATURES
|
33
|
March 31, 2009
|
December 31, 2008
|
|||||||
(Unaudited)
|
(As Restated – Note 1)
|
|||||||
assets
|
||||||||
Current
Assets:
|
||||||||
Cash
and cash equivalents
|
$ | 64,523,771 | $ | 72,441,294 | ||||
Restricted
cash
|
516,951 | 516,951 | ||||||
Accounts
receivable, net of allowance for doubtful accounts of $403,343 as of March
31, 2009 and $531,092 as of December 31, 2008
|
7,159,381 | 11,167,297 | ||||||
Other
receivables
|
535,221 | 647,596 | ||||||
Deferred
taxes
|
- | 2,546,743 | ||||||
Prepaid
expenses and other current assets
|
1,852,152 | 1,884,247 | ||||||
Total
current assets
|
74,587,476 | 89,204,128 | ||||||
Property
and equipment, net of accumulated depreciation and amortization of
$12,055,343 as of March 31, 2009 and $11,250,569 as of December 31,
2008
|
9,214,182 | 9,672,779 | ||||||
Marketable
securities
|
13,249,652 | 1,658,178 | ||||||
Long
term investment
|
555,000 | 2,042,970 | ||||||
Other
assets
|
133,118 | 122,197 | ||||||
Goodwill
|
20,181,000 | 40,024,076 | ||||||
Other
intangibles, net
|
10,213,454 | 13,630,900 | ||||||
Deferred
taxes
|
- | 13,570,047 | ||||||
Restricted
cash
|
1,762,079 | 1,762,079 | ||||||
Total
assets
|
$ | 129,895,961 | $ | 171,687,354 | ||||
liabilities
and stockholders’ equity
|
||||||||
Current
Liabilities:
|
||||||||
Accounts
payable
|
$ | 930,977 | $ | 280,469 | ||||
Accrued
expenses
|
4,718,313 | 2,784,902 | ||||||
Deferred
revenue
|
17,304,992 | 16,495,712 | ||||||
Other
current liabilities
|
431,800 | 205,838 | ||||||
Current
liabilities of discontinued operations
|
222,424 | 225,925 | ||||||
Total
current liabilities
|
23,608,506 | 19,992,846 | ||||||
Other
liabilities
|
265,939 | 79,896 | ||||||
Total
liabilities
|
23,874,445 | 20,072,742 | ||||||
Stockholders’
Equity
|
||||||||
Preferred
stock; $0.01 par value; 10,000,000 shares authorized; 5,500 issued and
outstanding as of March 31, 2009 and December 31, 2008; the aggregate
liquidation preference totals $55,000,000 as of March 31, 2009 and
December 31, 2008
|
55 | 55 | ||||||
Common
stock; $0.01 par value; 100,000,000 shares authorized; 36,595,091 shares
issued and 30,617,572 shares outstanding as of March 31, 2009, and
36,262,546 shares issued and 30,378,894 shares outstanding as of December
31, 2008
|
365,951 | 362,625 | ||||||
Additional
paid-in capital
|
271,504,084 | 271,271,574 | ||||||
Accumulated
other comprehensive income
|
(190,140 | ) | (290,000 | ) | ||||
Treasury
stock at cost; 5,977,519 shares as of March 31, 2009 and 5,883,652 shares
as of December 31, 2008
|
(10,130,571 | ) | (9,900,284 | ) | ||||
Accumulated
deficit
|
(155,527,863 | ) | (109,829,358 | ) | ||||
Total
stockholders’ equity
|
106,021,516 | 151,614,612 | ||||||
Total
liabilities and stockholders’ equity
|
$ | 129,895,961 | $ | 171,687,354 |
For the Three Months Ended March 31,
|
||||||||
2009
|
2008
|
|||||||
(As restated –
Note 1)
|
||||||||
(unaudited)
|
||||||||
Net
revenue:
|
||||||||
Paid
services
|
$ | 9,507,441 | $ | 10,759,469 | ||||
Marketing
services
|
3,993,022 | 7,232,557 | ||||||
Total
net revenue
|
13,500,463 | 17,992,026 | ||||||
Operating
expense:
|
||||||||
Cost
of services
|
8,245,710 | 7,610,688 | ||||||
Sales
and marketing
|
2,976,907 | 3,763,595 | ||||||
General
and administrative
|
4,541,678 | 4,355,545 | ||||||
Depreciation
and amortization
|
1,470,737 | 1,263,604 | ||||||
Impairment
charges
|
24,137,069 | - | ||||||
Restructuring
and other charge
|
1,984,529 | - | ||||||
Total
operating expense
|
43,356,630 | 16,993,432 | ||||||
Operating
(loss) income
|
(29,856,167 | ) | 998,594 | |||||
Net
interest income
|
230,137 | 686,194 | ||||||
Other
income
|
153,677 | - | ||||||
(Loss)
income from continuing operations before income taxes
|
(29,472,353 | ) | 1,684,788 | |||||
Provision
for income taxes
|
(16,227,077 | ) | (145,928 | ) | ||||
(Loss)
income from continuing operations
|
(45,699,430 | ) | 1,538,860 | |||||
Discontinued
operations:
|
||||||||
Income
(loss) from discontinued operations
|
925 | (2,731 | ) | |||||
Net
(loss) income
|
(45,698,505 | ) | 1,536,129 | |||||
Preferred
stock cash dividends
|
96,424 | 96,424 | ||||||
Net
(loss) income attributable to common stockholders
|
$ | (45,794,929 | ) | $ | 1,439,705 | |||
Basic
net (loss) income per share
|
||||||||
(Loss)
income from continuing operations
|
$ | (1.50 | ) | $ | 0.05 | |||
Income
(loss) from discontinued operations
|
0.00 | (0.00 | ) | |||||
Net
(loss) income
|
(1.50 | ) | 0.05 | |||||
Preferred
stock cash dividends
|
(0.00 | ) | (0.00 | ) | ||||
Net
(loss) income attributable to common stockholders
|
$ | (1.50 | ) | $ | 0.05 | |||
Diluted
net (loss) income per share
|
||||||||
(Loss)
income from continuing operations
|
$ | (1.50 | ) | $ | 0.04 | |||
Income
(loss) from discontinued operations
|
0.00 | (0.00 | ) | |||||
Net
(loss) income
|
(1.50 | ) | 0.04 | |||||
Preferred
stock cash dividends
|
(0.00 | ) | - | |||||
Net
(loss) income attributable to common stockholders
|
$ | (1.50 | ) | $ | 0.04 | |||
Weighted
average basic shares outstanding
|
30,495,300 | 30,392,980 | ||||||
Weighted
average diluted shares outstanding
|
30,495,300 | 34,615,221 |
For the Three Months Ended March 31,
|
||||||||
2009
|
2008
|
|||||||
(As restated –
Note 1)
|
||||||||
(unaudited)
|
||||||||
Cash
Flows from Operating Activities:
|
||||||||
Net
(loss) income
|
$ | (45,698,505 | ) | $ | 1,536,129 | |||
(Income)
loss from discontinued operations
|
(925 | ) | 2,731 | |||||
(Loss)
income from continuing operations
|
(45,699,430 | ) | 1,538,860 | |||||
Adjustments
to reconcile income from continuing operations to net cash provided by
operating activities:
|
||||||||
Stock-based
compensation expense
|
1,243,613 | 701,097 | ||||||
Provision
for doubtful accounts
|
72,858 | - | ||||||
Depreciation
and amortization
|
1,470,737 | 1,263,604 | ||||||
Valuation
allowance on deferred taxes
|
16,116,790 | - | ||||||
Noncash
impairment charges
|
24,137,069 | - | ||||||
Noncash
restructuring and other charge
|
428,868 | - | ||||||
Deferred
rent
|
352,320 | 81,113 | ||||||
Changes
in operating assets and liabilities:
|
||||||||
Accounts
receivable
|
3,935,057 | 844,357 | ||||||
Other
receivables
|
112,375 | 21,456 | ||||||
Prepaid
expenses and other current assets
|
(26,789 | ) | (233,669 | ) | ||||
Other
assets
|
(14,821 | ) | 30,841 | |||||
Accounts
payable
|
650,508 | (167,086 | ) | |||||
Accrued
expenses
|
1,600,411 | (683,955 | ) | |||||
Deferred
revenue
|
809,280 | 1,428,356 | ||||||
Other
current liabilities
|
165,628 | 75,566 | ||||||
Other
liabilities
|
(15,877 | ) | (11,248 | ) | ||||
Net
cash provided by continuing operations
|
5,338,597 | 4,889,292 | ||||||
Net
cash used in discontinued operations
|
(2,576 | ) | (8,939 | ) | ||||
Net
cash provided by operating activities
|
5,336,021 | 4,880,353 | ||||||
Cash
Flows from Investing Activities:
|
||||||||
Purchase
of marketable securities
|
(11,491,614 | ) | - | |||||
Business
combinations, net of cash received
|
- | (106,252 | ) | |||||
Capital
expenditures
|
(647,948 | ) | (1,390,341 | ) | ||||
Proceeds
from the sale of fixed assets
|
- | 28,153 | ||||||
Net
cash used in investing activities
|
(12,139,562 | ) | (1,468,440 | ) | ||||
Cash
Flows from Financing Activities:
|
||||||||
Proceeds
from the exercise of stock options
|
- | 449,486 | ||||||
Costs
associated with the sale of preferred stock
|
- | (125,000 | ) | |||||
Cash
dividends paid on common stock
|
(787,271 | ) | (766,231 | ) | ||||
Cash
dividends paid on preferred stock
|
(96,424 | ) | (192,848 | ) | ||||
Purchase
of treasury stock
|
(230,287 | ) | (325,729 | ) | ||||
Restricted
cash
|
- | (41,709 | ) | |||||
Net
cash used in financing activities
|
(1,113,982 | ) | (1,002,031 | ) | ||||
Net
(decrease) increase in cash and cash equivalents
|
(7,917,523 | ) | 2,409,882 | |||||
Cash
and cash equivalents, beginning of period
|
72,441,294 | 77,262,521 | ||||||
Cash
and cash equivalents, end of period
|
$ | 64,523,771 | $ | 79,672,403 | ||||
Supplemental disclosures of cash flow
information:
|
||||||||
Cash
payments made for interest
|
$ | 2,446 | $ | 10,306 | ||||
Cash
payments made for income taxes
|
$ | 146,658 | $ | 314,436 |
Unaudited
|
||||||||||||
For the Three Months Ended March 31, 2008
|
||||||||||||
As Filed
|
Adjustment
|
As Restated
|
||||||||||
Net
revenue:
|
||||||||||||
Paid
services
|
$ | 10,759,469 | $ | - | $ | 10,759,469 | ||||||
Marketing
services
|
8,188,516 | (955,959 | ) | 7,232,557 | ||||||||
Total
net revenue
|
18,947,985 | (955,959 | ) | 17,992,026 | ||||||||
Operating
expense:
|
||||||||||||
Cost
of services
|
7,656,127 | (45,439 | ) | 7,610,688 | ||||||||
Sales
and marketing
|
3,763,595 | - | 3,763,595 | |||||||||
General
and administrative
|
4,355,545 | - | 4,355,545 | |||||||||
Intangible
asset impairment
|
- | - | - | |||||||||
Depreciation
and amortization
|
1,263,604 | - | 1,263,604 | |||||||||
Total
operating expense
|
17,038,871 | (45,439 | ) | 16,993,432 | ||||||||
Operating
income (loss)
|
1,909,114 | (910,520 | ) | 998,594 | ||||||||
Net
interest income
|
686,194 | - | 686,194 | |||||||||
Gain
on sale of marketable security
|
- | - | - | |||||||||
Income
(loss) from continuing operations before income taxes
|
2,595,308 | (910,520 | ) | 1,684,788 | ||||||||
(Provision)
benefit for income taxes
|
(145,928 | ) | - | (145,928 | ) | |||||||
Income
(loss) from continuing operations
|
2,449,380 | (910,520 | ) | 1,538,860 | ||||||||
Discontinued
operations:
|
||||||||||||
Loss
on disposal of discontinued operations
|
2,731 | - | 2,731 | |||||||||
Loss
from discontinued operations
|
2,731 | - | 2,731 | |||||||||
Net
income (loss)
|
2,446,649 | (910,520 | ) | 1,536,129 | ||||||||
Preferred
stock cash dividends
|
96,424 | - | 96,424 | |||||||||
Net
income (loss) attributable to common stockholders
|
$ | 2,350,225 | $ | (910,520 | ) | $ | 1,439,705 | |||||
Basic
net income (loss) per share:
|
||||||||||||
Income
(loss) from continuing operations
|
$ | 0.08 | $ | 0.05 | ||||||||
Loss
on disposal of discontinued operations
|
(0.00 | ) | (0.00 | ) | ||||||||
Net
income (loss)
|
0.08 | 0.05 | ||||||||||
Preferred
stock dividends
|
(0.00 | ) | (0.00 | ) | ||||||||
Net
income (loss) attributable to common stockholders
|
$ | 0.08 | $ | 0.05 | ||||||||
Diluted
net income (loss) per share:
|
||||||||||||
Income
(loss) from continuing operations
|
$ | 0.07 | $ | 0.04 | ||||||||
Loss
on disposal of discontinued operations
|
(0.00 | ) | (0.00 | ) | ||||||||
Net
income (loss)
|
0.07 | 0.04 | ||||||||||
Preferred
stock dividends
|
- | - | ||||||||||
Net
income (loss) attributable to common stockholders
|
$ | 0.07 | $ | 0.04 | ||||||||
Weighted
average basic shares outstanding
|
30,392,980 | 30,392,980 | ||||||||||
Weighted
average diluted shares outstanding
|
34,615,221 | 34,615,221 |
2.
|
MARKETABLE
SECURITIES
|
3.
|
FAIR
VALUE MEASUREMENTS
|
•
|
Level
1: Inputs are quoted market prices in active markets for identical
assets or liabilities (these are observable market
inputs).
|
||
•
|
Level
2: Inputs are inputs other than quoted prices included within Level 1
that are observable for the asset or liability (includes quoted market
prices for similar assets or identical or similar assets in markets in
which there are few transactions, prices that are not current or vary
substantially).
|
||
•
|
Level
3: Inputs are unobservable inputs that reflect the entity’s own
assumptions in pricing the asset or liability (used when little or no
market data is available).
|
Description:
|
Total
|
Level 1
|
Level 2
|
Level 3
|
||||||||||||
Cash
and cash equivalents (1)
|
$ | 64,523,771 | $ | 64,523,771 | $ | — | $ | — | ||||||||
Marketable
securities (2)
|
13,249,652 | 11,639,652 | — | 1,610,000 | ||||||||||||
Total
at fair value
|
$ | 77,773,423 | $ | 76,163,423 | $ | — | $ | 1,610,000 |
|
(1)
|
Cash
and cash equivalents, totaling $64,523,771, consists primarily of money
market funds and checking accounts for which we determine fair value
through quoted market prices.
|
|
(2)
|
Marketable
securities consist of corporate floating rate notes for which we determine
fair value through quoted market prices. Marketable securities also
consist of two municipal auction rate securities (“ARS”) issued by the
District of Columbia. Typically, the fair value of ARS investments
approximates par value due to the frequent resets through the auction
process. Due to recent events in credit markets, the auction events, which
historically have provided liquidity for these securities, have been
unsuccessful. The result of a failed auction is that these ARS holdings
will continue to pay interest in accordance with their terms at each
respective auction date; however, liquidity of the securities will be
limited until there is a successful auction, the issuer redeems the
securities, the securities mature or until such time as other markets for
these ARS holdings develop. For each of our ARS, we evaluate the risks
related to the structure, collateral and liquidity of the investment, and
forecast the probability of issuer default, auction failure and a
successful auction at par, or a redemption at par, for each future auction
period. Temporary impairment charges are recorded in accumulated other
comprehensive income, whereas other-than-temporary impairment charges are
recorded in our statement of operations. The Company used a discounted
cash flow model to determine the estimated fair value of its investment in
ARS as of December 31, 2008. The assumptions used in preparing the
discounted cash flow model include estimates for interest rate, timing and
amount of cash flows and expected holding period of ARS. Based upon this
assessment of fair value, the Company determined there was a decline in
the fair value of its ARS investments of $290,000, which was deemed
temporary and was included within accumulated other comprehensive income
for the year ended December 31, 2008. Company management believes that the
fair value of the ARS has not materially changed from its December 31,
2008 carrying value.
|
Marketable
Securities
|
||||
Balance
at January 1, 2009
|
$ | 1,658,178 | ||
Transfers
to Level 1
|
(48,178 | ) | ||
Balance
at March 31, 2009
|
$ | 1,610,000 |
4.
|
STOCK-BASED
COMPENSATION
|
Expected
option lives
|
3.5
years
|
Expected
volatility
|
47.07%
|
Risk-free
interest rate
|
2.33%
|
Expected
dividend yield
|
0.75%
|
Shares
Underlying
Awards
|
Weighted
Average
Exercise
Price
|
Aggregate
Intrinsic
Value
($000)
|
Weighted
Average
Remaining
Contractual
Life (In Years)
|
|||||||||||||
Awards
outstanding at December 31, 2008
|
2,617,782 | $ | 6.37 | |||||||||||||
Restricted
stock units granted
|
735,021 | $ | 0.00 | |||||||||||||
Shares
issued under restricted stock units
|
(432,545 | ) | $ | 0.00 | ||||||||||||
Options
cancelled
|
(525,540 | ) | $ | 6.99 | ||||||||||||
Restricted
stock units forfeited
|
(87,857 | ) | $ | 0.00 | ||||||||||||
Awards
outstanding at March 31, 2009
|
2,306,861 | $ | 5.64 | $ | 1,570 | 2.72 | ||||||||||
Awards
vested and expected to vest at March 31, 2009
|
2,229,878 | $ | 5.70 | $ | 1,490 | 2.64 | ||||||||||
Options
exercisable at March 31, 2009
|
906,283 | $ | 8.07 | $ | 0 | 1.99 | ||||||||||
Restricted
stock units eligible to be issued at March 31, 2009
|
0 | $ | 0.00 | $ | 0 | N/A |
Unvested Awards
|
Number of
Shares
|
Weighted
Average Grant
Date Fair Value
|
||||||
Shares
underlying awards unvested at December 31, 2008
|
1,609,990 | $ | 5.70 | |||||
Shares
underlying restricted stock units granted
|
735,021 | $ | 3.28 | |||||
Shares
underlying options vested
|
(228,155 | ) | $ | 3.60 | ||||
Shares
underlying restricted stock units vested
|
(432,545 | ) | $ | 5.26 | ||||
Shares
underlying options cancelled
|
(195,872 | ) | $ | 4.14 | ||||
Shares
underlying restricted stock units forfeited
|
(87,857 | ) | $ | 4.63 | ||||
Shares
underlying awards unvested at March 31, 2009
|
1,400,582 | $ | 3.64 |
5.
|
STOCKHOLDERS’
EQUITY
|
6.
|
LEGAL
PROCEEDINGS
|
7.
|
NET
(LOSS) INCOME PER SHARE OF COMMON
STOCK
|
For the Three Months Ended March 31,
|
||||||||
2009
|
2008
|
|||||||
(As Restated –
Note 1)
|
||||||||
Basic
net (loss) income per share Numerator:
|
||||||||
(Loss)
income from continuing operations
|
$ | (45,699,430 | ) | $ | 1,538,860 | |||
Income
(loss) on disposal of discontinued operations
|
925 | (2,731 | ) | |||||
Preferred
stock cash dividends
|
(96,424 | ) | (96,424 | ) | ||||
Numerator
for basic earnings per share -
|
||||||||
Net
(loss) income attributable to common stockholders
|
$ | (45,794,929 | ) | $ | 1,439,705 | |||
Denominator:
|
||||||||
Weighted
average basic shares outstanding
|
30,495,300 | 30,392,980 | ||||||
Net
(loss) income per basic share:
|
||||||||
(Loss)
income from continuing operations
|
$ | (1.50 | ) | $ | 0.05 | |||
Income
(loss) on disposal of discontinued operations
|
0.00 | (0.00 | ) | |||||
Preferred
stock cash dividends
|
(0.00 | ) | (0.00 | ) | ||||
Net
(loss) income attributable to common stockholders
|
$ | (1.50 | ) | $ | 0.05 | |||
Dilutive
net income (loss) per share Numerator:
|
||||||||
(Loss)
income from continuing operations
|
$ | (45,699,430 | ) | $ | 1,538,860 | |||
Income
(loss) on disposal of discontinued operations
|
925 | (2,731 | ) | |||||
Preferred
stock cash dividends
|
(96,424 | ) | - | |||||
Numerator
for diluted earnings per share -
Net
(loss) income attributable to common stockholders
|
$ | (45,794,929 | ) | $ | 1,536,129 | |||
Denominator:
|
||||||||
Weighted
average basic shares outstanding
|
30,495,300 | 30,392,980 | ||||||
Weighted
average effect of dilutive securities:
|
||||||||
Employee
stock options and restricted stock units
|
- | 365,299 | ||||||
Convertible
preferred stock
|
- | 3,856,942 | ||||||
Weighted
average diluted shares outstanding
|
30,495,300 | 34,615,221 | ||||||
Net
(loss) income per diluted share:
|
||||||||
(Loss)
income from continuing operations
|
$ | (1.50 | ) | $ | 0.04 | |||
Income
(loss) on disposal of discontinued operations
|
0.00 | (0.00 | ) | |||||
Preferred
stock cash dividends
|
(0.00 | ) | - | |||||
Net
(loss) income attributable to common stockholders
|
$ | (1.50 | ) | $ | 0.04 |
8.
|
INCOME
TAXES
|
9.
|
BUSINESS
CONCENTRATIONS AND CREDIT RISK
|
10.
|
LONG
TERM INVESTMENT
|
11.
|
IMPAIRMENT
CHARGES
|
12.
|
RESTRUCTURING
AND OTHER CHARGE
|
Initial Charge
|
Deductions
|
Balance
March 31, 2009
|
||||||||||
Workforce
reduction
|
$ | 1,741,752 | $ | (429,689 | ) | $ | 1,312,063 | |||||
Asset
write-off
|
242,777 | (242,777 | ) | - | ||||||||
$ | 1,984,529 | $ | (672,466 | ) | $ | 1,312,063 |
13.
|
COMPREHENSIVE
INCOME
|
For the Three Month Ended March 31,
|
||||||||
2009
|
2008
|
|||||||
(As Restated –
Note 1)
|
||||||||
Net
(loss) income
|
$ | (45,698,505 | ) | $ | 1,536,129 | |||
Unrealized
gain on marketable securities
|
99,860 | - | ||||||
Total
comprehensive income
|
$ | (45,598,645 | ) | $ | 1,536,129 |
14.
|
SUBSEQUENT
EVENT
|
Item
2.
|
Management’s
Discussion and Analysis of Financial Condition and Results of
Operations.
|
|
•
|
A
broader range of content to our audience, including personal finance, real
estate, politics, entrepreneurship, small business, and luxury living
across a growing network of Web sites;
and
|
|
•
|
Innovative,
interactive solutions for our advertisers, across our full range of
distribution platforms.
|
|
•
|
Banner,
tile, contextual, performance based and interactive advertisement and
sponsorship placements in our advertising-supported Web sites, TheStreet.com, Stockpickr.com, BankingMyWay.com and
MainStreet.com,
as well as on our paid subscription site, RealMoney.com;
|
|
•
|
Advertisement
placements in our free email
newsletters;
|
|
•
|
Stand-alone
emails sent on behalf of our advertisers to our registered users;
and
|
|
•
|
Advertisements
in TheStreet.com
TV, TheStreet.com
Mobile and in our
Podcasts.
|
|
•
|
New
York Press Club Journalism Award in the Business Internet
category;
|
|
•
|
New
York Press Club Journalism Award in the Political Coverage Internet
category;
|
|
•
|
TheStreet.com
Ratings was cited for “Best Stock Selection” by an IRP covering more than
1,000 names by BNY ConvergEx Group’s BNY Jaywalk’s Independent Research
Provider Performance Award Program;
|
|
•
|
Society
of American Business Editors and Writers Award for Creative Use of the
Medium;
|
|
•
|
Society
of American Business Editors and Writers Award for Enterprise
Reporting;
|
|
•
|
Society
of American Business Editors and Writers Award for
Commentary;
|
|
•
|
Media
Industry Newsletter (min) Award for Digital Hall of Fame – David Morrow,
editor-in-chief; and
|
|
•
|
Media
Industry Newsletter (min) Award for Editor of the Year – David Morrow,
editor-in-chief.
|
|
·
|
incentive
compensation,
|
|
·
|
useful
lives of intangible assets,
|
|
·
|
useful
lives of fixed assets,
|
|
·
|
the
carrying value of goodwill, intangible assets, marketable securities and
the Company’s long term investment,
|
|
·
|
allowances
for doubtful accounts,
|
|
·
|
accrued
expense estimates,
|
|
·
|
reserves
for estimated tax liabilities,
|
|
·
|
certain
estimates and assumptions used in the calculation of the fair value of
equity compensation issued to employees,
and
|
|
·
|
revenue
estimates based upon a completed contract basis related to the Company’s
Promotions.com business.
|
For the Three Months Ended March 31,
|
||||||||||||||||||||
2009
|
Percent
of Total
Revenue
|
2008 (As
Restated –
Note 1)
|
Percent
of Total
Revenue
|
Percent
Change
|
||||||||||||||||
Revenue:
|
||||||||||||||||||||
Paid
services
|
$ | 9,507,441 | 70 | % | $ | 10,759,469 | 60 | % | -12 | % | ||||||||||
Marketing
services
|
3,993,022 | 30 | % | 7,232,557 | 40 | % | -45 | % | ||||||||||||
Total
revenue
|
$ | 13,500,463 | 100 | % | $ | 17,992,026 | 100 | % | -25 | % |
For the Three Months Ended
March 31,
|
||||||||||||
2009
|
2008 (As
Restated –
Note 1)
|
Percent
Change
|
||||||||||
Paid
services:
|
||||||||||||
Subscription
|
$ | 6,766,778 | $ | 8,046,390 | -16 | % | ||||||
Syndication,
licensing and information services
|
2,740,663 | 2,713,079 | 1 | % | ||||||||
Total
|
$ | 9,507,441 | $ | 10,759,469 | -12 | % |
For the Three Months Ended
March 31,
|
||||||||||||
2009
|
2008 (As
Restated –
Note 1)
|
Percent
Change
|
||||||||||
Marketing services:
|
||||||||||||
Advertising
|
$ | 3,163,825 | $ | 5,962,745 | -47 | % | ||||||
Interactive
marketing services
|
829,197 | 1,269,812 | -35 | % | ||||||||
Total
|
$ | 3,993,022 | $ | 7,232,557 | -45 | % |
For the Three Months Ended March 31,
|
||||||||||||||||||||
2009
|
Percent
of Total
Revenue
|
2008 (As
Restated –
Note 1)
|
Percent
of Total
Revenue
|
Percent
Change
|
||||||||||||||||
Operating expense:
|
||||||||||||||||||||
Cost
of services
|
$ | 8,245,710 | 61.1 | % | $ | 7,610,688 | 42.3 | % | 8 | % | ||||||||||
Sales
and marketing
|
2,976,907 | 22.1 | % | 3,763,595 | 20.9 | % | -21 | % | ||||||||||||
General
and administrative
|
4,541,678 | 33.6 | % | 4,355,545 | 24.2 | % | 4 | % | ||||||||||||
Depreciation
and amortization
|
1,470,737 | 10.9 | % | 1,263,604 | 7.0 | % | 16 | % | ||||||||||||
Impairment
charges
|
24,137,069 | 178.8 | % | - | N/A | N/A | ||||||||||||||
Restructuring
and other charge
|
1,984,529 | 14.7 | % | - | N/A | N/A | ||||||||||||||
Total
operating expense
|
$ | 43,356,630 | $ | 16,993,432 | 155 | % |
For the Three Months Ended
March 31,
|
Percent
|
|||||||||||
2009
|
2008
|
Change
|
||||||||||
Net
interest income
|
$ | 230,137 | $ | 686,194 | -66 | % |
For the Three Months Ended
March 31,
|
||||||||||||
2009
|
2008
|
Change
|
||||||||||
Provision
for income taxes
|
$ | 16,227,077 | $ | 145,928 | 11,020 | % |
|
·
|
A decrease in the growth of
receivables in the three months ended March 31, 2009, as compared to the
three months ended March 31, 2008, primarily related to improved
collection efforts and decreased
revenue;
|
|
·
|
An
increase in the growth of accrued expenses in the three months ended March
31, 2009, as compared to the three months ended March 31, 2008, primarily
related to the Company’s restructuring and incentive compensation
accruals; and
|
|
·
|
An increase in the growth
of accounts payable in the
three months ended March 31, 2009, as compared to the three months ended
March 31, 2008, primarily related to the accelerated timing of
payments.
|
|
·
|
A
decrease in income from continuing operations, partially offset by
increased noncash expenses; and
|
|
·
|
A slowdown in the overall growth
of deferred revenue in the three months ended March 31, 2009, as compared
to the three months ended March 31, 2008, primarily related to a reduced
subscriber base and subscription
revenue.
|
Item
3.
|
Quantitative
and Qualitative Disclosures About Market
Risk.
|
Item
4.
|
Controls
and Procedures.
|
Item
1.
|
Legal
Proceedings.
|
Item
2.
|
Unregistered
Sales of Equity Securities and Use of
Proceeds.
|
Period
|
(a) Total
Number
of Shares
(or Units)
Purchased
|
(b)
Average
Price
Paid per
Share (or
Unit)
|
(c) Total Number
of Shares (or
Units) Purchased
as Part of Publicly
Announced Plans
or Programs
|
(d) Maximum Number
(or Approximate Dollar
Value) of Shares (or
Units) that May Yet Be
Purchased Under the
Plans or Programs *
|
||||||||||||
January
1 – 31, 2009
|
- | $ | - | - | $ | 2,678,878 | ||||||||||
February
1 – 28, 2009
|
- | $ | - | - | $ | 2,678,878 | ||||||||||
March
1 – 31, 2009
|
- | $ | - | - | $ | 2,678,878 | ||||||||||
Total
|
- | $ | - | - | $ | 2,678,878 |
*
|
In
December 2000, the Company’s Board of Directors authorized the repurchase
of up to $10 million worth of the Company’s Common Stock, from time to
time, in private purchases or in the open market. In February 2004, the
Company’s Board approved the resumption of this program under new price
and volume parameters, leaving unchanged the maximum amount available for
repurchase under the program. The program does not have a specified
expiration date and is subject to certain
limitations.
|
Item
3.
|
Defaults
Upon Senior Securities.
|
Item
4.
|
Submission
of Matters to a Vote of Security
Holders.
|
Item
5.
|
Other
Information.
|
Item
6.
|
Exhibits.
|
Exhibit
Number
|
Description
|
|
*3.1
|
Amended
and Restated Certificate of Incorporation of the Company, incorporated by
reference to the Exhibits to the Company’s Registration Statement on Form
S-1 filed February 23, 1999.
|
|
*3.2
|
Certificate
of Designation of the Company’s Series B Preferred Stock, as filed with
the Secretary of State of the State of Delaware on November 15, 2007,
incorporated by reference to the Exhibits to the Company’s Current Report
on Form 8-K filed November 20, 2007.
|
|
*3.3
|
Amended
and Restated Bylaws of the Company, incorporated by reference to the
Exhibits to the Company’s Annual Report on Form 10-K filed March 30,
2000.
|
|
*4.1
|
Amended
and Restated Registration Rights Agreement dated December 21, 1998, by and
among the Company and the stockholders named therein, incorporated by
reference to the Exhibits to the Company’s Registration Statement on Form
S-1 filed February 23, 1999.
|
|
*4.2
|
Form
of Rights Agreement incorporated by reference to the Exhibits to the
Company’s Registration Statement on Form S-1 filed February 23,
1999.
|
|
*4.3
|
Amendment
No. 1 to the Rights Agreement dated August 7, 2000, incorporated by
reference to the Exhibits to the Company’s Annual Report on Form 10-K
filed April 2, 2001.
|
|
*4.4
|
Amendment
No. 2 to the Rights Agreement dated November 15, 2007 by and between the
Company and American Stock Transfer & Trust Company, as Rights Agent,
incorporated by reference to the Exhibits to the Company’s Current Report
on Form 8-K filed November 20, 2007.
|
|
*4.5
|
Option
to Purchase Common Stock dated November 1, 2007, incorporated by reference
to the Company’s Current Report on Form 8-K filed November 6,
2007.
|
|
*4.6
|
Investor
Rights Agreement dated November 15, 2007 by and among the Company, TCV VI,
L.P. and TCV Member Fund, L.P., incorporated by reference to the Exhibits
to the Company’s Current Report on Form 8-K filed November 20,
2007.
|
|
*4.7
|
Warrant
dated November 15, 2007 issued by the Company to TCV VI, L.P.,
incorporated by reference to the Exhibits to the Company’s Current Report
on Form 8-K filed November 20, 2007.
|
|
*4.8
|
Warrant
dated November 15, 2007 issued by the Company to TCV Member Fund, L.P.,
incorporated by reference to the Exhibits to the Company’s Current Report
on Form 8-K filed November 20, 2007.
|
|
*4.9
|
Specimen
certificate for the Company’s shares of common stock, incorporated by
reference to the Exhibits to Amendment 3 to the Company’s Registration
Statement on Form S-1 filed April 19, 1999.
|
|
*10.1
|
Separation
Agreement and Mutual Release between the Company and Thomas J. Clarke, Jr.
dated March 13, 2009, incorporated by reference to the Company’s Current
Report on Form 8-K filed March 13, 2009.
|
|
31.1
|
Rule
13a-14(a) Certification of CEO.
|
|
31.2
|
Rule
13a-14(a) Certification of CAO.
|
|
32.1
|
Section
1350 Certification of CEO.
|
|
32.2
|
Section
1350 Certification of CAO.
|
|
*
Incorporated by Reference
|
THESTREET.COM,
INC.
|
|||
Date:
February 17, 2010
|
By:
|
/s/ Daryl Otte
|
|
Name: Daryl
Otte
|
|||
Title:
Chief Executive Officer (principal executive
officer)
|
|||
Date:
February 17, 2010
|
By:
|
/s/ Richard Broitman
|
|
Name: Richard
Broitman
|
|||
Title:
Chief Accounting Officer (principal financial
officer)
|
Exhibit
Number
|
Description
|
|
*3.1
|
Amended
and Restated Certificate of Incorporation of the Company, incorporated by
reference to the Exhibits to the Company’s Registration Statement on Form
S-1 filed February 23, 1999.
|
|
*3.2
|
Certificate
of Designation of the Company’s Series B Preferred Stock, as filed with
the Secretary of State of the State of Delaware on November 15, 2007,
incorporated by reference to the Exhibits to the Company’s Current Report
on Form 8-K filed November 20, 2007.
|
|
*3.3
|
Amended
and Restated Bylaws of the Company, incorporated by reference to the
Exhibits to the Company’s Annual Report on Form 10-K filed March 30,
2000.
|
|
*4.1
|
Amended
and Restated Registration Rights Agreement dated December 21, 1998, by and
among the Company and the stockholders named therein, incorporated by
reference to the Exhibits to the Company’s Registration Statement on Form
S-1 filed February 23, 1999.
|
|
*4.2
|
Form
of Rights Agreement incorporated by reference to the Exhibits to the
Company’s Registration Statement on Form S-1 filed February 23,
1999.
|
|
*4.3
|
Amendment
No. 1 to the Rights Agreement dated August 7, 2000, incorporated by
reference to the Exhibits to the Company’s Annual Report on Form 10-K
filed April 2, 2001.
|
|
*4.4
|
Amendment
No. 2 to the Rights Agreement dated November 15, 2007 by and between the
Company and American Stock Transfer & Trust Company, as Rights Agent,
incorporated by reference to the Exhibits to the Company’s Current Report
on Form 8-K filed November 20, 2007.
|
|
*4.5
|
Option
to Purchase Common Stock dated November 1, 2007, incorporated by reference
to the Company’s Current Report on Form 8-K filed November 6,
2007.
|
|
*4.6
|
Investor
Rights Agreement dated November 15, 2007 by and among the Company, TCV VI,
L.P. and TCV Member Fund, L.P., incorporated by reference to the Exhibits
to the Company’s Current Report on Form 8-K filed November 20,
2007.
|
|
*4.7
|
Warrant
dated November 15, 2007 issued by the Company to TCV VI, L.P.,
incorporated by reference to the Exhibits to the Company’s Current Report
on Form 8-K filed November 20, 2007.
|
|
*4.8
|
Warrant
dated November 15, 2007 issued by the Company to TCV Member Fund, L.P.,
incorporated by reference to the Exhibits to the Company’s Current Report
on Form 8-K filed November 20, 2007.
|
|
*4.9
|
Specimen
certificate for the Company’s shares of common stock, incorporated by
reference to the Exhibits to Amendment 3 to the Company’s Registration
Statement on Form S-1 filed April 19, 1999.
|
|
*10.1
|
Separation
Agreement and Mutual Release between the Company and Thomas J. Clarke, Jr.
dated March 13, 2009, incorporated by reference to the Company’s Current
Report on Form 8-K filed March 13, 2009.
|
|
31.1
|
Rule
13a-14(a) Certification of CEO.
|
|
31.2
|
Rule
13a-14(a) Certification of CAO.
|
|
32.1
|
Section
1350 Certification of CEO.
|
|
32.2
|
Section
1350 Certification of CAO.
|
|
*
Incorporated by
Reference
|