UNITED STATES SECURITIES AND EXCHANGE COMMISSION

Washington, DC 20549

FORM 10-K10-K/A

(Amendment No. 1)

 

  ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
  For the fiscal year ended December 31, 2016
2017
  or
  TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
  For the transition period from     to     .

Commission File Number001-12917

REIS, INC.

Maryland

  

13-3926898

(State or Other Jurisdiction of Incorporation or Organization)  (I.R.S. Employer Identification No.)

1185 Avenue of the Americas, New York, NY

  

10036

(Address of Principal Executive Offices)  (Zip Code)

                                                 (212) 921-1122                                                 

(212) 921-1122

(Registrant’s Telephone Number, Including Area Code)

(Registrant’s Telephone Number, Including Area Code)

 

Securities registered pursuant to Section 12(b) of the Act:

Title of Each Class

  Name of Each Exchange on Which Registered
Common Stock, $0.02 par value per share  The NASDAQ Stock Market

Securities registered pursuant to Section 12(g) of the Act:

None

Indicate by check mark if the Registrant is a well-known seasoned issuer, as defined in Rule 405 of the Securities Act. Yes ☐    No ☑

Indicate by check mark if the Registrant is not required to file reports pursuant to Section 13 or Section 15(d) of the Act. Yes ☐    No ☑

Indicate by check mark whether the Registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 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 ☑    No ☐

Indicate by check mark whether the Registrant has submitted electronically and posted on its corporate website,web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of RegulationS-T during the preceding 12 months (or for such shorter period that the Registrant was required to submit and post such files). Yes ☑    No ☐

Indicate by check mark if disclosure of delinquent filers pursuant to Item 405 ofRegulation S-K is not contained herein, and will not be contained, to the best of Registrant’s knowledge, in definitive proxy or information statements incorporated by reference in Part III of thisForm 10-K or any amendment to thisForm 10-K. ☑

Indicate by check mark whether the Registrant is a large accelerated filer, an accelerated filer, anon-accelerated filer, or a smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer” andfiler,” “smaller reporting company” and emerging growth company in Rule12b-2 of the Exchange Act. (Check one):

 

Large accelerated filer ☐  Accelerated filer ☑  Non-accelerated filer ☐  Smaller reporting company ☐
(Do                                                 (Do not check if a smaller reporting company)

Emerging growth company ☐

If an emerging growth company, indicate by check mark if the Registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐

Indicate by check mark whether the Registrant is a shell company (as defined inRule 12b-2 of the Act). Yes ☐    No ☑

The aggregate market value of the voting andnon-voting common equity held bynon-affiliates of the Registrant was approximately $228,000,000$196,000,000 based on the closing price on the NASDAQ Global Market for such shares on June 30, 2016.2017. (Please see “Calculation of Aggregate Market Value ofNon-Affiliate Shares” within Item 5 of this report for a statement of assumptions upon which this calculation is based.)

The number of the Registrant’s shares of common stock outstanding was 11,482,69711,569,692 as of February 24, 2017.April 20, 2018.

DOCUMENTS INCORPORATED BY REFERENCE

Portions of the Registrant’s definitive proxy statement for the 2017 annual stockholders’ meeting are incorporated by reference into Part III of this annual report on Form10-K.

 

 


EXPLANATORY NOTE

The annual report (the “Original Report”) on Form10-K of Reis, Inc. (“Reis” or the “Company”) for the year ended December 31, 2017 was originally filed with the Securities and Exchange Commission (the “SEC”) on March 8, 2018. In the Original Report, portions of Part III were indicated as incorporated by reference to the Company’s definitive 2018 proxy statement. This Amendment No. 1 is being filed solely to include responses to the items required by Part III, because the Company’s definitive 2018 proxy statement will not be filed on or before April 30, 2018 (i.e., within 120 days after the end of 2017) pursuant to the SEC’s Regulation 14A. On March 8, 2018, the Company announced that the Board of Directors is considering strategic alternatives; as a result, it has been determined that it would be appropriate to delay the 2018 annual meeting of stockholders until such strategic alternative review has been completed.

This Amendment No. 1 consists of a cover page, this explanatory note, a table of contents, Part III, Part IV (Items 15(a)(3) and Item 15(b) only), the signature page and the amended certifications of the principal executive officer and principal financial officer (Exhibits 31.1 and 31.2). Part III and Items 15(a)(3) and 15(b) are hereby amended and restated in their entirety. This Amendment No. 1 does not amend or restate any other information contained in the Original Report. In addition, it does not update the Original Report to reflect any events or circumstances occurring since its filing date, except that, where specifically noted in this Amendment No. 1, certain information may be provided as of a later date.

TABLE OF CONTENTS

 

    Item    

No.

             Page          
No.

PART I

1. 

Business

 3
1A. 

Risk Factors

 11
1B. 

Unresolved Staff Comments

 22
2. 

Properties

 22
3. 

Legal Proceedings

 22
4. 

Mine Safety Disclosures

 22

PART II

5. 

Market for Registrant’s Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities

 23
6. 

Selected Financial Data

 25
7. 

Management’s Discussion and Analysis of Financial Condition and Results of Operations

 26
7A. 

Quantitative and Qualitative Disclosures About Market Risk

 42
8. 

Financial Statements and Supplementary Data

 42
9. 

Changes in and Disagreements With Accountants on Accounting and Financial Disclosure

 43
9A. 

Controls and Procedures

 43
9B. 

Other Information

 43

PART III

10. 

Directors, Executive Officers and Corporate Governance

 44
11. 

Executive Compensation

 44
12. 

Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters

 44
13. 

Certain Relationships and Related Transactions, and Director Independence

 44
14. 

Principal Accountant Fees and Services

 44

PART IV

15. 

Exhibits and Financial Statement Schedules

 45
 

Signatures

 47

FINANCIAL STATEMENTS

 

Reports of Independent Registered Public Accounting Firm

 F-2
 

Consolidated Balance Sheets at December 31, 2016 and 2015

 F-4
 

Consolidated Statements of Operations for the Years Ended December  31, 2016, 2015 and 2014

 F-5
 

Consolidated Statements of Changes in Stockholders’ Equity for the Years Ended December 31, 2016, 2015 and 2014

 F-6
 

Consolidated Statements of Cash Flows for the Years Ended December  31, 2016, 2015 and 2014

 F-7
 

Notes to Consolidated Financial Statements

 F-8

FINANCIAL STATEMENT SCHEDULES

All schedules have been omitted because the required information for such schedules is not present, is not present in amounts sufficient to require submission of the schedule or because the required information is included in the consolidated financial statements.

        Item        

No.

                Page            
No.
PART III

10.

 Directors, Executive Officers and Corporate Governance  3

11.

 Executive Compensation  10

12.

 Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters  29

13.

 Certain Relationships and Related Transactions, and Director Independence  32

14.

 Principal Accountant Fees and Services  32
PART IV

15.

 Exhibits and Financial Statement Schedules ((a)(3) and (b) only)  33
 Signatures  34


PART I

Item 1. Business.

Organization

Reis, Inc. is a Maryland corporation. When we refer to “Reis” or the “Company,” we are referring to Reis, Inc. and its consolidated subsidiaries. The Company provides commercial real estate market information and analytical tools to real estate professionals, through its Reis Services subsidiary. For disclosure and financial reporting purposes, this business is referred to as the Reis Services segment.

Business

Reis Services

Reis Services, including its predecessors, was founded in 1980. Reis maintains a proprietary database containing detailed information on commercial properties in metropolitan markets and neighborhoods throughout the U.S. The database contains information on apartment, office, retail, warehouse/distribution, flex/research & development, self storage, seniors housing, student housing and affordable housing properties, and is used by real estate investors, lenders and other professionals to make informed buying, selling and financing decisions. In addition, Reis data is used by debt and equity investors to assess, quantify and manage the risks of default and loss associated with individual mortgages, properties, portfolios and real estate backed securities. Reis currently provides its information services to many of the nation’s leading lending institutions, equity investors, brokers and appraisers.

Product Overview

The Company’s product portfolio features:Reis SE, its flagship delivery platform aimed at larger andmid-sized enterprises;ReisReports, aimed at prosumers and smaller enterprises; andReis Portfolio CREand other portfolio support products and services,aimed primarily at risk managers and credit administrators at banks andnon-bank lending institutions. It is through these products that Reisprovides online access to a proprietary database of commercial real estate information and analytical tools designed to facilitate debt and equity transactions as well as ongoing asset and portfolio evaluations. Depending on the product or level of entitlement, users have access to market trends and forecasts at metropolitan and neighborhood levels throughout the U.S. and/or detailed building-specific information such as rents, vacancy rates, lease terms, property sales, new construction listings and property valuation estimates. Reis’s products are designed to meet the demand for timely and accurate information to support the decision making of property owners, developers, builders, banks andnon-bank lenders, equity investors and service providers. These real estate professionals require access to timely information on both the performance and pricing of assets, including detailed data on market transactions, supply, absorption, rents and sale prices. This information is critical to all aspects of valuing assets and financing their acquisition, development and construction.

Industry Dynamics

The U.S. commercial real estate market (“CRE”) is a multi-trillion dollar asset class; most forecasters expect a relatively healthy outlook for 2017 and beyond.1 Unrest in global economics and politics have strengthened investor preferences for the U.S. CRE market as a relatively safe haven. The Brexit vote in June 2016 caused uncertainty in Europe, and major Asian markets like China and Japan are still dealing with relatively slow economic growth. U.S.10-year Treasury yields experienced volatility throughout the year, reaching a low of 1.37% in early July following the turmoil of Brexit, but spiked to as high as 2.6% in the month following the November 8, 2016 election. We believe global and political uncertainty should continue to drive international capital flows into the U.S., and as both foreign and domestic investors seek yield that they will consider income producing real estate as an attractive alternative.

The International Monetary Fund expects the global economy to grow faster over the next two years, relative to the “lackluster outturn in 2016.”2 While there is uncertainty around whether the incoming U.S. administration will implement new policies, following the election, equity markets reacted positively to the expectation of business-friendly changes to tax, trade and infrastructure policies. As of the first half of 2016, Chinese investment in U.S. CRE grew by 19 percent year-over-year. If this is considered a harbinger of how other foreign countries will view the asset class, then 2017 could potentially attract at least as much foreign capital as the prior year.

1 “Emerging Trends in Real Estate: United States and Canada,” Urban Land Institute, 2017.

2http://www.imf.org/external/pubs/ft/weo/2017/update/01/

Institutions are preparing for possible cyclical weakness in selected multifamily, office and retail markets. As a result, investors have begun to allocate funds to CRE asset classes such as self-storage, student housing, seniors housing, and manufactured housing.1 The mixed economic outlook going forward and uncertainty with regard to the new U.S. administration’s economic policies suggest that CRE professionals will have a heightened need to monitor market conditions for both portfolio and transactional purposes. Reis’s suite of products and services are uniquely positioned to be responsive to this increased focus on market trends and forecasts.

Demand for Data and Analytical Tools

CRE professionals have historically lacked the data and analytical tools available to their peers in other asset classes. With changes in the regulatory climate and other post-recession reforms, as well as the continuing need to make well informed decisions, the demand for thorough and accurate CRE data has increased rapidly.

The regulatory requirements (such asmark-to-market policies, Basel II and Basel III capital requirements), Federal Reserve and FDIC guidelines and other measures have increased the need for market and portfolio monitoring for CRE professionals. For example:

the Federal Reserve conducts an annual exercise known as the Comprehensive Capital Analysis and Review (“CCAR”) in which financial institutions conduct stress tests using downside economic and market scenarios from which they develop capital allocations and reserves;

increasing interest among REITs and other equity investors is critical to monitor and update the net asset values of the commercial real estate in their portfolios; and

corporations, in response to increasing concentrations of commercial real estate assets on their balance sheets, must meet additional disclosure requirements that may be imposed by the FASB and IASB.

These requirements have generated demand for accurate and timely information, as well as access to valuation tools to evaluate the underlying collateral supporting mortgages and mortgage-related securities.

CRE professionals demand relevant market and transaction data to support effective decision-making and financial reporting throughout all stages of the commercial real estate transaction lifecycle. Access to information on supply, demand, asking and effective rents, lease terms, sales prices, new construction, cap rates and other detailed data across large and small metro areas is sought by property owners, developers, banks,non-bank lenders, brokers and asset managers across the country. To meet the growing demand for data and custom analytics, Reis has designed a suite of products and/or customized reports.

Operations

As commercial real estate markets grow in size and complexity, Reis continues to invest in the databases, technologies, intellectual capital and personnel critical to supporting the information needs of commercial real estate professionals. Specifically, Reis has:

developed expertise in data collection across multiple markets and property types;

invested in the analytical expertise to develop decision support systems that generate market trends and forecasts, property valuations, credit analytics, transaction support and risk management;

created product development expertise to collect market feedback and translate it into new products and reports; and

invested in a robust technology infrastructure to disseminate these tools to the wide variety of market participants.

These investments have established Reis as a leading provider of commercial real estate information and analytical tools to the investment community. Reis continues to develop and introduce new products, expand and add new markets and data, and find new ways to deliver existing information to meet client demand, as more fully described below under “— Products and Services.” The depth and breadth of Reis’s data and expertise are critical in allowing Reis to grow its business.

Proprietary Databases

Reis develops and maintains three highly curated, proprietary databases which include information on (1) property performance, (2) new construction and (3) sales transactions. The significant characteristics of the Reis databases include:

1https://www.pwc.com/us/en/asset-management/real-estate/assets/pwc-emerging-trends-in-real-estate-2017.pdf

Breadth - coverage of nine property types, including apartment, office, retail, warehouse/distribution, flex/research & development, self storage, seniors housing, student housing and affordable housing properties;

Geography - national coverage of up to 275 of the largest U.S. metropolitan CRE markets, approximately 7,600 discrete market areas and segments with submarket boundaries proprietary to Reis;

Depth - captures critical information such as occupancies, rents, rent discounts, tenant improvement allowances, lease terms, expenses, buyer, seller, purchase price, capitalization rate, financing details and other key factors;

History - up to 37 years of data through multiple cycles of economic/market peaks and troughs; and

Frequency - market and submarket reports available quarterly, monthly, or for certain apartment reports, daily, and sales comparables and new construction information updated on daily and weekly schedules.

The following table lists the number of metropolitan markets for each of the nine types of commercial real estate covered by Reis in the property performance database and new construction database:

     December 31,      December 31,  
   2016  2015

Apartment (A)

    275    275

Office (A)

    190    190

Retail

    190    190

Warehouse/distribution

    47    47

Flex/research & development

    47    47

Self storage

    50    50

Seniors housing

    110    110

Student housing

    200    200

Affordable housing (B)

    45    
       

(A)       In March and June 2016, Reis enhanced its apartment and office coverage, respectively, with market reports that include new features, structural details and comparative performance analytics.

(B)       In February 2017, the number of affordable housing markets was expanded by 65 to 110 markets.

Reis’s long-standing relationships with thousands of data sources, including building owners, property managers and agents, represent a unique and highly valuable asset that benefits from decades of investment. The Company is recognized by the industry and the business and trade press as the premier source of objective, timely and granular market information, a reputation attributable to two key factors: (1) Reis is viewed as independent as it does not compete as a broker in the listings space; and (2) Reis information is used by owners and managers in the underwriting, due diligence and marketing of properties, mortgages and real estate backed securities at both the single asset and portfolio levels.

Property Performance Dababase

Reis is continually expanding its property level and market coverage by geography and property type. In August 2016, Reis introduced coverage on its ninth property type, affordable housing, with information on 176 counties in 45 metropolitan areas and as of February 2017, expanded coverage of this property type to include information on 256 counties in 110 metropolitan areas. In addition, in 2017, Reis expects to enhance its market reports in all sectors consistent with many of the enhancements made in March 2016 to its apartment market reports and in June 2016 to its office market reports. These enhancements include licensed photographs, sector-specific details, contact information, effective rent at the property level, sales transaction history, and numerous illustrative charts and graphs, all to fortify Reis’s position as the preferred source for comparables information among all real estate professionals involved in buying, selling, leasing, or managing real estate assets. Reis expects to add similar details to property level reports in other sectors, while also introducing high level analytical modules that take a broader perspective across markets and geographies. In July 2016, Reis moved to daily reporting of apartment rent and other property information in its popular “Apartment Rent Comparables” report. Further development plans for 2017 include a module that will allow portfolio managers andC-level executives to look for market opportunities based on Reis’s forecasts at the market and submarket level.

Reis’s core property performance database contains information on competitive, income-producing properties in the U.S. apartment, office, retail, warehouse/distribution, flex/research & development, self storage, seniors housing, student housing and affordable

housing sectors. On an ongoing basis, Reis surveys and receives data downloads from building owners, leasing agents and managers which include key building performance statistics including, among others: occupancy rates; rents; rent discounts and other concessions; tenant improvement allowances; lease terms; and operating expenses. In addition, Reis processes multiple data sources on commercial real estate, including: public filings databases; tax assessor records; deed transfers; planning boards; and numerous local, regional and national publications and commercial real estate websites. Reis screens and assembles large volumes of data into integrated supply and demand trends on a monthly basis at the neighborhood (submarket) and metropolitan market levels. All collected data are subjected to a rigorous quality assurance and validation process developed over many years. At the property level, surveyors compare the data collected in the current period with data previously collected on that property and similar properties. If any unusual changes in rents and vacancies are identified,follow-up procedures are performed for verification or clarification of the results. All aggregate market data at the submarket and market levels are also subjected to comprehensive quality controls.

New Construction Database

In addition to its core property database, Reis develops and maintains a new construction database that identifies and monitors projects that are being added to our covered markets. Detailed tracking of the supply side of the commercial real estate market is critical to projecting performance changes at the market and submarket levels. This database is updated weekly and reports relevant information such as project size, property type, location, status, and estimated completion dates for projects that are planned, proposed or under construction.

Sales Transactions Database

In September 2016, Reis expanded its commercial real estate sales transactions database including virtually all U.S. markets and property types, regardless of geography or sector. The new offering is expected to appeal to mortgage and property originators and underwriters, brokers and appraisers, and any other real estate professionals seeking the most comprehensive database of CRE transactions to source deals, search for related business, or conduct due diligence. Reis’s sales transactions database includes key structural data points, including but not limited to address, land use code, parcel number, and lot size, in addition to key transactional data points, such as buyer and seller name, sale price, sale date, deed reference, and financing details when available, as well as other desirable datapoints and licensed photographs.

Products and Services

Reis has invested in a robust technology infrastructure to disseminate a number of market information products to meet the demands of a wide variety of commercial real estate professionals, from large financial institutions seeking an integrated commercial real estate portfolio management platform, to a single access user seeking local market intelligence. Reis is committed to consistently upgrading and expanding its product offering to reach new markets and new types of consumers of commercial real estate information.

Reis SE

Reis SE (or sometimes referred to as “Reis Subscriber Edition”), available atwww.reis.com, is the Company’s flagship product, designed to assist in market research, due diligence and support of commercial real estate transactions, including loan originations, underwriting, acquisitions, risk assessment (such as loan loss reserves and impairment analyses), portfolio monitoring, asset management and appraisal. Reports are retrievable by street address, property type (apartment, office, retail, warehouse/distribution, flex/research & development, self storage, seniors housing, student housing and affordable housing) or on the market/submarket level and are available as full color, presentation quality documents or in spreadsheet formats.

Key features ofReis SEinclude:

Market Reports - On a monthly basis, Reis provides updated trends and forecasts of rent, vacancy, and inventory for apartment, office, retail, warehouse/distribution, flex/research & development, self storage, seniors housing and student housing property types in up to 275 metropolitan areas and approximately 7,600 discrete market areas and segments.

Rent Comparables - Based on a user specified area, Reis supplies property level performance data such as rents and vacancies, as well as comparable group summary statistics, including concessions, operating expenses and lease terms.

Sales Comparables -Reis maintains a sales transactions database including virtually all U.S. markets and property types. The database captures key information on each transaction, such as buyer, seller, purchase price, capitalization rate and financing details, where available.

Construction Comparables - Reis monitors new projects from the planning stages to opening day to stabilization, capturing the anticipated effect of new competitive inventory on local supply and demand dynamics.

Single Property Valuation -Designed to help clients quantify the value and risk associated with their commercial real estate holdings, the valuation module utilizes three valuation methods – discounted cash flow, direct capitalization and sales price per square foot – supported by comparable transactions in the local market.

Executive Briefings - Comprehensive summaries that take the form of an analyst’swrite-up for hundreds of metropolitan areas, thousands of submarkets, and tens of thousands of individual properties. What a real estate analyst could take days preparing, Reis can generate in seconds.

“First Glance” Reports -Quarterly narrative reports provide an early assessment of the apartment, office, retail and industrial sectors across the U.S. and commentary on new construction activity.

Quarterly Briefings - Two conference calls each quarter attended by hundreds of Reis subscribers, plus members of the media, during which Reis economists provide an overview of the latest high-level findings and forecasts for the commercial real estate space and capital markets.

Real Estate News and Commentary - The Reis “Observer” and news stories selected by Reis analysts from among hundreds of sources to provide news relevant to a particular market and property type.

Email Alerts -Customizable email alerts that let users receive proactive updates on markets of interest.

Access toReis SEis by secure password and can be customized to accommodate the geographic coverage, property type and analytical needs of subscribers. For example, the product can be tailored to provide access to all or only selected markets, property types and report combinations.

ReisReports

ReisReports is a product tailored to meet the needs of smaller enterprises and individuals, professional investors, brokers and appraisers, available atwww.ReisReports.com. Although providing subscribers with less content and a more limited number of reports,ReisReports utilizes the same proprietary database that supportsReis SE.ReisReports is available on a monthly or annual subscription basis at affordable price points.

Theaddressable subscriber market forReisReports includes hundreds of thousands of prosumers and small enterprises. To expand the total user base ofReisReports, the Company markets through various traditional and online media channels to CRE professionals active in individual metropolitan areas.

Reis Portfolio CRE and Other Portfolio Support Products and Services

Reis Portfolio CREenables clients to quickly and thoroughly assess portfolio risks and opportunities by integrating client loan and property information with Reis property and submarket data which is processed through a credit model. The solution is delivered in aweb-based, visually engaging interface.Reis Portfolio CREis targeted to both debt and equity capital providers active in U.S. commercial real estate and, specifically, to banks with significant CRE loan exposure.

As a loan-level analysis and surveillance platform,Reis Portfolio CREenables property valuation, credit analysis, stress testing, benchmarking and portfolio pricing. In addition to providing credit default metrics such as expected losses and probabilities of default at the loan and portfolio levels, outputs include forecasted collateral operating incomes and values under multiple economic scenarios. These features allow clients to integrate internal data to create customizable scenario forecasts to meet regulatory stress testing requirements, set loan loss reserves and monitor their collateral.

TheReis Portfolio CREplatform is intended for both large and small lending institutions, Commercial Mortgage Backed Security, or CMBS, investors and equity investors, among others.Reis Portfolio CREhas been designed in a modular fashion that allows banks of varying asset sizes to select the applications and price points most appropriate to the scale of their CRE portfolios.

The Company has been able to assist financial institutions (during 2016 and in prior years) in the evaluation of their CRE loan portfolios through other means besidesReis Portfolio CRE,including custom data deliverables and providing dataclean-up, advisory and other consulting services. Reis stands ready to assist all client andnon-client financial services firms and other real estate professionals however they need information or services.

Data Redistribution / Marketing Alliances

The Company has established data redistribution agreements with information service providers as part of a strategy designed to raise brand awareness and generate sales leads for Reis’s information and services. Over time, third party users may enter into agreements with Reis directly in order to gain access to the full suite of reports and analytical modules. The Company’s data redistribution agreements are typically multi-year contracts in length, do not afford access to Reis’s proprietary database and provide limited views of Reis’s market data. Reis has also established marketing alliances to promoteReisReports to its alliance partners’ members through discounts, email outreach, website advertising and newsletter ads.

Cost of Service

Reis’s data is made available in six ways, with price points that are reflective of the level of content being made available:

annual and multi-year subscriptions toReis SE ranging in price from $1,000 to in excess of $1,000,000, depending upon the subscriber’s line of business and the combination of markets, property types and reports subscribed to; renewals forReis SE are negotiated in advance of the expiration of an existing contract based on factors such as a subscriber’s historical and projected report consumption;

annual and multi-year subscriptions toReis Portfolio CREtypically ranging in price from the low tens of thousands of dollars into the hundreds of thousands of dollars;

cappedReis SEsubscriptions typically ranging in price from $1,000 to $25,000, allowing clients to download a fixed retail value of reports over a period of up to twelve months;

subscriptions toReisReports, which are charged to a credit card, having a retail price in the low hundreds of dollars per month, depending on the level of service subscribed to (monthly or annual pricing options are available);

custom data deliverables ranging in price from $1,000 for a specific data element to hundreds of thousands or millions of dollars for custom data deliveries, portfolio valuation and credit analysis; and

individual reports, which can be purchased with a credit card, having retail prices up to $999 per report, are available to anyone who visits Reis’s retail website or contacts Reis via telephone, fax or email; however, certain reports are only available with an annual subscription or capped subscription account.

Reis’s revenue model is based primarily on annual subscriptions that are paid in accordance with contractual billing terms. Reis recognizes revenue from its subscription contracts on a ratable basis; for example,one-twelfth of the value of aone-year contract is recognized monthly. In the case of custom data deliverables, revenue is recognized upon completion and delivery to the customers, provided that no significant Company obligations remain.

Subscribers

Reis enters into contracts with customers for all of its subscription based products and services. A subscribing entity may have one or many users entitled to accessReis SE. Nearly all of ourReis Portfolio CREsubscribers are alsoReis SE subscribers. These numbers do not include users who pay for individual reports by credit card or users of information available on third party platforms through our data redistribution relationships.

The vast majority of the Company’s largest subscribers have utilized Reis’s core product for many years and have represented a stable user and revenue base. Subscribers include banking institutions, property owners, brokers, lessors, builders, REITs, pension funds, insurance companies, developers, commercial banks,non-bank lenders, equity investors, appraisers, accountants, consultants, academia, and government institutions. At December 31, 2016, approximately 83% ofReis SE customers (based on total customer dollars) are debt and equity capital providers, with banks and other financial institutions comprising approximately 56% and investment funds and equity owners comprising approximately 27%; service providers account for the remaining 17%.

Customer Service and Training

Reis focuses intensively on proactive training and customer support. Reis’s customer service team offers customizedon-site training andweb-based and telephonic support, as well as weeklyweb-based training seminars open to allReis SEsubscribers. The corporate training team also visits with a large proportion ofReis SE subscribers on an ongoing basis. Additional points of subscriber contact

includemid-year service reviews, aweb-based subscriber feedback program and account manager visits. All of these contacts are used to assist subscribers with their utilization ofReis SEand identify opportunities for product adoption and increased usage and to solicit subscriber input for future product enhancements. Similarly, support and training are available to ourReisReports andReis Portfolio CREsubscribers.

Proprietary Rights

To protect our proprietary rights, we rely upon a combination of:

trade secret, copyright, trademark, database protection and other laws at the Federal, state and local levels;

non-disclosure,non-competition and other contractual provisions with employees, vendors and consultants;

restrictive license agreements with subscribers; and

other technical measures.

We protect our software’s source code and our databases as either trade secrets or under copyright law. We license our services under license agreements that restrict the disclosure and use of our proprietary information and prohibit the unauthorized reproduction,re-engineering or transfer of the information in our products and services.

We also protect the secrecy of our proprietary databases, our trade secrets and our proprietary information through confidentiality andnon-competition agreements with our employees, vendors and consultants. Our services also include technical measures designed to detect unauthorized copying of our intellectual property. The Company’s compliance department monitors usage to ensure that all client usage is consistent with the terms of its contract and has created analytic and other forensic tools to identify unauthorized access toReis SE as a result of password migration and sharing. From time to time the Company has and may take legal action to enforce our intellectual property and proprietary rights.

We have registered the trademarks for “Reis,” “Reis Reports,” the Reis logo and “Your Window Onto the Real Estate Market.”

Competition

Despite its multi-trillion dollar size, the commercial real estate industry continues to be underserved by information resources. Compared to equity and fixed income professionals, CRE practitioners have fewer options in meeting their market information and analytical needs. The disparity in available information resources is due, in part, to the limited reporting requirements imposed on private CRE firms which represent the majority of the industry. However, real estate transactions involve multiple participants who all require accurate historical and current market information. Therefore, in order to provide comprehensive and value-added products for all CRE practitioners, a database of commercial properties must be largely built from proprietary sources over many years. Key factors that influence the competitive position of commercial real estate information vendors include: the depth and breadth of underlying databases; ease of use; flexibility and functionality of the customer interface; the ability to keep the dataup-to-date and accurate; frequency of reporting; scope of coverage by geography and property type; customer training and support; adoption of the service by industry leaders; consistent product innovation; recognition by general business and trade media; and price.

Reis’s senior management believes that, on a national level, only a small number of firms serve the market information needs of U.S. commercial real estate investors and lenders. Reis competes directly and indirectly for subscribers with online services or websites targeted to commercial real estate professionals such as CoStar Group, Inc. (or “CoStar”) (including its Apartments.com, Property and Portfolio Research and LoopNet businesses), Real Capital Analytics, Inc., Xceligent, CBRE Econometric Advisors, and Moody’s Analytics, Inc., as well as with various local and regional data providers covering selected markets andin-house real estate research departments. Another source of information has been market reports published by brokerage firms, although the promotional nature of many of these publications and their irregular publishing schedule make them less reliable as an ongoing resource for many CRE practitioners.

Discontinued Operations – Residential Development Activities

Prior to May 2007, the name of the Company was Wellsford Real Properties, Inc. (“Wellsford”). Wellsford, which was originally formed on January 8, 1997, acquired the Reis Services business by merger in May 2007 (the “Merger”). Wellsford’s primary operating activities immediately prior to the Merger, and conducted through its subsidiaries, were the development, construction and sale of three residential projects and its approximate 23% ownership interest in the Reis Services business. The Company completed the sale of the remaining residential units and homes at its projects or divested of the remaining residential projects in bulk sales by

April 2011. In 2012, the Company settled construction defect litigation at its Colorado project, and in 2015 finalized its efforts to recover funds from other responsible parties as more fully described in Note 3 of the consolidated financial statements, included in this annual report on Form10-K.

The Residential Development Activities, including certain general and administrative costs that supported the related operations, were presented as a discontinued operation for 2015 and 2014 and are presented in the Other segment. Discontinued operations were completed as of December 31, 2015; therefore there were no discontinued operations activities during the year ended December 31, 2016.

Corporate Information

The Company’s executive offices are located at 1185 Avenue of the Americas, 30th Floor, New York, New York 10036; telephone: (212)921-1122; website:www.reis.com; email:investorrelations@reis.com. Please note that information on the Company’s website is not part of this annual report on Form10-K.

The reports we file with or furnish to the Securities and Exchange Commission, or SEC, including our annual report, quarterly reports and current reports, are available free of charge on our investor relations website (www.reis.com/investors) as soon as reasonably practicable after we electronically file such material with, or furnish it to, the SEC. You may review and copy any of the information we file with the SEC at the SEC’s Public Reference Room at 100 F Street, NE, Washington, DC 20549. You may obtain information regarding the operation of the Public Reference Room by calling the SEC at1-800-SEC-0330. The SEC also maintains a website (www.sec.gov) that contains reports, proxy and information statements, and other information regarding issuers that file electronically with the SEC.

The Company had 289 full-time employees as of December 31, 2016.

The Company is a Federal government contractor and an equal opportunity employer. All qualified applicants will receive consideration for employment and will not be discriminated against on the basis of race, color, religion, sex, sexual orientation, national origin, age, disability, or protected veteran status. Reis takes affirmative action in support of its policy to employ and advance in employment individuals who are minorities, women, protected veterans, and individuals with disabilities.

Cautionary Statement Regarding Forward-Looking Statements

This annual report on Form10-K contains “forward-looking statements” within the meaning of the U.S. Private Securities Litigation Reform Act of 1995. These forward-looking statements may relate to the Company’s or management’s outlook or expectations for earnings, revenues, expenses, margins, asset quality, or other future financial or business performance, strategies, prospects or expectations, or the impact of legal, regulatory or supervisory matters on our business, operations or performance. Specifically, forward-looking statements may include:

statements relating to future services and product development of the Reis Services segment;

statements relating to business prospects, potential acquisitions, sources and uses of cash, revenue, expenses, margins, income (loss) from continuing or discontinued operations, cash flows, renewal rates, valuation of assets and liabilities and other business metrics of the Company and its businesses, including EBITDA (as defined below), Adjusted EBITDA (as defined below) and Aggregate Revenue Under Contract (as defined below); and

statements preceded by, followed by or that include the words “estimate,” “plan,” “project,” “intend,” “expect,” “anticipate,” “believe,” “seek,” “target” or similar expressions relating to future periods.

Forward-looking statements reflect management’s judgment based on currently available information and involve a number of risks and uncertainties that could cause actual results to differ materially from those in the forward-looking statements. With respect to these forward-looking statements, management has made certain assumptions. Future performance cannot be assured. Actual results may differ materially from those contemplated by the forward-looking statements. Some factors that could cause actual results to differ include:

lower than expected revenues and other performance measures such as income from continuing operations, EBITDA and Adjusted EBITDA;

inability to retain and increase the Company’s subscriber base;

inability to execute properly on new products and services, or failure of subscribers to accept these products and services;

competition;

inability to attract and retain sales and senior management personnel;

inability to access adequate capital to fund operations and investments in the Company’s business;

difficulties in protecting the security, confidentiality, integrity and reliability of the Company’s data;

changes in accounting policies or practices;

legal and regulatory issues;

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the results of pending, threatening or future litigation; and

the risk factors listed under “Item 1A. Risk Factors” of this annual report on Form10-K.

You are cautioned not to place undue reliance on any forward-looking statements, which speak only as of the date of this annual report onForm 10-K. Except as required by law, the Company undertakes no obligation to publicly update or release any revisions to these forward-looking statements to reflect any events or circumstances after the date of this annual report onForm 10-K or to reflect the occurrence of unanticipated events.

Item 1A. Risk Factors.

The following is a discussion of the risk factors that Reis’s management believes are material to Reis at this time. These risks and uncertainties are not the only ones facing Reis and there may be additional matters that Reis is unaware of or that Reis currently considers immaterial. Any or all of these could adversely affect Reis’s business, results of operations, profitability, financial condition and cash flows.

Risks Related to the Reis Services Business and the Information Services Industry Generally

A failure to attract and retain subscribers could harm our business.

We must acquire new subscribers and expand our business with our current subscribers in order to grow our business.Our ability to grow our business will be adversely impacted to the extent that current subscribers reduce or discontinue the use of our products and websites, includingReis SE, Reis Portfolio CREandReisReports, or if we are unable to locate and have prospects subscribe toReis SE, Reis Portfolio CRE and ReisReports. This may occur due to budgetary constraints or if our product offering is less competitive with those of other companies in our industry.

Our base renewal rates (renewal rates, excluding price increases) were 81.6% and 87.5% for the trailing twelve months (“TTM”) ended December 31, 2016 and 2015, respectively, and the renewal rate, including price increases, was 85.7% and 91.9% for the TTM ended December 31, 2016 and 2015, respectively. Reis’s 2016 TTM renewal rates were negatively impacted by the cancellation of contracts (most significantly in the 2016 second quarter) signed in 2014 and 2015 associated with Reis’s intellectual property (“IP”) compliance initiatives, from customer losses from subscribers that exited the CRE business and from aggressive repricing on contract expirations. Operationally, management has taken steps to reverse this downward renewal rate trend, including revising pricing policies, increasing sales resources for maintaining existing customer relationships in local markets and improving the onboarding process for newly contracted IP infringement related accounts (see Item 7 for more information on renewal rates).

There can be no assurance that we will be successful in continuing to identify and sell to additional subscribers, expand business from our existing subscribers, regainnon-renewing customers, or adopt policies or operational practices that will either maintain or increase our renewal rates.

Our revenues are concentrated among certain key subscribers.

The largest individual subscriber accounted for 6.3% and 10.6% of our total revenue for the years ended December 31, 2016 and 2015, respectively. The 2016 and 2015 revenue from our largest individual subscriber atypically included significant amounts of revenue from custom data deliverables, dataclean-up and advisory and consulting services, as more fully described elsewhere in this annual report on Form10-K. If we were to experience a reduction or loss of business from a number of our largest subscribers, it could have a material adverse effect on our revenues and, depending on the significance of the loss, our profitability, financial

condition and cash flows. In addition, although we generally impose contractual restrictions limiting our immediate exposure to revenue reductions due to mergers and consolidations among our subscribers and potential subscribers and our pricing model is based on actual and projected usage, we may be impacted by consolidation among our subscribers and potential subscribers, as a result of their reduced usage on a combined basis or greater bargaining power.

We may be unable to compete successfully with our current or future competitors.

The market for information, analytics and decision support services in general is highly competitive and rapidly changing. We compete with (1) local companies that offer commercial real estate research with respect to their specific geographic areas and (2) national companies that offer national commercial real estate research. Specifically, certain of our products compete with those of CoStar (including its Apartments.com, Property and Portfolio Research and LoopNet businesses), Real Capital Analytics, Xceligent, CBRE Econometric Advisors and Moody’s. Some of our competitors, either alone or with affiliated entities, may have greater name recognition, larger subscriber bases or greater financial, technical or marketing resources than we have. Future competition may come from large digital enterprises seeking to enter the CRE information space. These enterprises could have access to significantly more capital and technical expertise than Reis. At the same time, current and future competitors may seek to employ new technologies and approaches. Such innovations could potentially reduce the cost of data collection and analytics and improve the frequency and accuracy of CRE market information. Reis is also currently developing and completing emerging technologies to advance its data collection programs, improve products, and reduce costs; however, there can be no assurance that these efforts will be successful. In addition, some current or future competitors may be able to undertake more effective marketing campaigns, adopt more aggressive pricing policies, and make more attractive offers to potential employees and business partners. Competition could negatively impact our revenues, profitability, financial condition and cash flows.

We may not be able to maintain Reis Services’s historical rates of growth in revenues or EBITDA. In addition, multi-year contracts may negatively impact our growth rates.

During 2016, Reis Services did not have total revenue or EBITDA growth on an annual basis over 2015. However, historically, Reis Services has experienced revenue and EBITDA growth (we define EBITDA as earnings (income (loss) from continuing operations), before interest, taxes, depreciation and amortization). Annual total revenue grew by 11.2% from 2012 to 2013, by 19.0% from 2013 to 2014, and by 23.1% from 2014 to 2015. The fourth quarter and annual 2015 total revenue was the highest quarterly and annual revenue in the Company’s history. There can be no assurance that our revenues will continue to grow at or in excess of the actual growth pace from 2012 to 2015, on a consecutive quarter basis, on a year-over-year basis, or at all in the future.

Reis Services’s annual EBITDA grew by 12.1% from 2012 to 2013, by 17.8% from 2013 to 2014, and by 31.0% from 2014 to 2015. Expenses will increase in the future, including expenses for content maintenance, sales, marketing and product development, with the expectation that these expense increases will drive future revenue growth; however, such additional expenses could result in reduced margins or profitability, or negatively impact liquidity in the near term, and if not successful, may negatively impact margins, profitability and liquidity in the long term. There can be no assurance that future EBITDA or Adjusted EBITDA for the Reis Services segment, or on a consolidated basis will continue to grow at or in excess of the actual growth pace from 2012 to 2015, on a consecutive quarter basis, on a year-over-year basis, or at all. There can be no assurance that we will be able to maintain or expand our EBITDA or EBITDA margins for the Reis Services segment, or on a consolidated basis, in the future. EBITDA and Adjusted EBITDA arenon-GAAP financial measures within the meaning of the rules and regulations of the SEC. See Item 7 for reconciliations of EBITDA and Adjusted EBITDA to the most comparable GAAP measure, income from continuing operations, for both the Reis Services segment and on a consolidated basis.

Management has disaggregated total revenue into two components: “Subscription” and “Other.” Other revenue specifically includes revenue related to contracts forone-time custom data deliverables andone-time fees for settlements of previous unauthorized usage of Reis data. The Company recognized significant revenue in the second and fourth quarters of 2015 for custom data deliverables, as well as custom portfolio and advisory services, for one of our existingReis SEsubscribers aggregating approximately $4,519,000 in 2015 (which is included in other revenue for 2015). These contracts called for a substantial volume of highly granular market, submarket and comparables data, as well as aone-time custom analysis of the institution’s commercial real estate portfolio. An additional delivery was made to this customer in February 2016 for which the Company recognized $1,200,000 as other revenue, positively impacting results for the first quarter of 2016. Although the Company believes that there could be additional opportunities to assist client andnon-client financial services firms and other real estate investors with evaluating the health of their real estate portfolios, there can be no assurance that subscribers will have demand forone-time custom data deliverables, and portfolio and advisory services.

Over the past few years, Reis has made a concerted effort to encourage multi-year contracts, when appropriate, with terms of two or three years, and in some cases, four years. Securing customers into contracts greater than 12 months allows for a stable revenue base

and increased revenue visibility (as measured by our level of reported deferred revenue and a relatednon-GAAP metric management utilizes which is referred to as Aggregate Revenue Under Contract (see Item 7 for more information on this performance metric)) and increased cash flow visibility, positively impacts our renewal rates and allows for a better allocation of account management and other personnel resources. However, multi-year subscriptions mute our revenue growth rates after the first year of the subscription. For our subscription products we recognize revenue ratably over the related contractual period. Therefore any increases in the price of the subscription after the first year of a multi-year contract are considered in the total amount being straight-lined over the contract term. On any given multi-year contract, the biggest revenue growth will be reflected in the 12 month period following a negotiated renewal, with no further revenue growth generated from that contract after the first year. Although our cash collection increases year-over-year, multi-year contracts have a flattening effect on our overall revenue growth rate. This would also similarly impact our EBITDA growth rates. As of December 31, 2016, approximately 38% of our customers are signed to a multi-year deal.

If our growth rates decline, or if revenue and/or EBITDA decline, investors’ perceptions of our business may be adversely affected and the market price of our common stock could decline.

We must continue to obtain information from multiple sources.

The quality of our databases supporting our products depends substantially on information provided by a large number of sources, including commercial real estate brokers, agents and property owners, as well as from public sources, such as tax assessors, deed recorders, planning and zoning boards, corporate websites, the business and trade press, and selected third party vendors of business information. If we are unable to collect information from a significant number of these sources, or if the cost of collecting information becomes too expensive, our products could be negatively affected, potentially resulting in an increase in subscriber cancellations and a failure to acquire new subscribers.

Our revenues, expenses and operating results could be affected by general economic conditions or by changes in commercial real estate markets, which are cyclical.

Our business and the commercial real estate industry are sensitive to trends in the general economy and trends in local, regional and national commercial real estate markets, which are unpredictable. Therefore, our operating results, to the extent they reflect changes in the broader commercial real estate industry, may be subject to significant fluctuations. A number of factors could have an effect on our revenue, expenses, profitability or cash flows, such as:

periods of economic slowdown or recession in the U.S., locally or globally;

budgetary and financial burdens on our subscribers and potential subscribers;

mergers, acquisitions, failures or government takeovers of our subscribers and potential subscribers;

governmental intervention in economic policy;

inflation or deflation;

flows of capital into or out of real estate investment in the U.S. or various regions of the U.S.;

changes to the manner in which transactions are financed;

changes in the risk profile of real estate assets and collateral for financings;

changes or consolidation in the real estate industry;

changes in levels of rent, absorption, leasing activity or appreciation of asset values;

changes in interest rates;

changes in, and the potential reform of, tax and accounting policies;

changes in the cost and availability of capital;

changes in regulatory requirements, laws, policies and other regulatory developments;

lower consumer confidence;

wage and salary levels;

war, terrorist attacks or natural disasters; or

the public perception that any of these events or conditions may occur.

If our subscribers choose not to useReis SE, Reis Portfolio CRE orReisReports because of any of these factors, and we are not successful in attracting new subscribers, our revenues, expenses, EBITDA, margins, profitability, cash flows and/or stock price could be negatively affected.

Our success depends on our ability to introduce new or upgraded services or products.

To continue to attract new subscribers and renew our existing subscribers, we may need to introduce new products or services. The need for new products and services may be in response to, or in anticipation of, changing or developing customer needs or preferences as well as to remain competitive with other providers of market information. We may choose to develop new products and services independently or to license or otherwise integrate content and data from or with third parties. The introduction of new products and services could impose costs on our business and require the use of resources, and there is no guarantee that we will continue to be able to access new content and technologies on commercially reasonable terms or at all. If subscribers or potential subscribers do not recognize the value of our new services or enhancements to existing services, our operating results could be negatively affected. We may incur significant costs and experience difficulties in developing and delivering these new or upgraded services or products.

Efforts to enhance and improve the ease of use, responsiveness, functionality and features of our existing and newly developed products and services have inherent risks, and we may not be able to manage these product developments and enhancements successfully or in a cost effective manner. If we are unable to continue to develop new or upgraded services or products, then subscribers may choose not to use our products and services. Our growth and results of operations would be negatively impacted if we were unable to successfully market and sell any new services or upgrades.

During September 2015, Reis purchased the IP associated with theReis Portfolio CRE platform. Revenue fromReis Portfolio CRE for contracts entered into after September 16, 2015 represents the Company’s 100% share of the value of the subscription, compared to the Company’s 50% share of subscription value prior to the purchase of theReis Portfolio CREIP. After completion of the transaction, Reis owns all of theReis Portfolio CRE IP, and will be solely responsible for any new functionality development, maintenance of the system and marketing and sales initiatives. Our operating results could be negatively affected if any of these efforts are not successful.

Our ReisReports and Reis Portfolio CRE offerings, or other future products, may not be successful or may not result in increased revenues, which may negatively impact our business, results of operations and financial position.

During 2017, we expect to continue our sales and marketing efforts in connection with certain initiatives, including ourReisReportsandReis Portfolio CRE product offerings, as well as potential new products expected to be introduced in 2017, which could result in increased expenses. If our costs for these efforts exceed our expectations, our profitability and financial position could be adversely affected. In addition, if we incur additional costs to expand these products and we are not successful in marketing or selling these expanded services, this could have an adverse effect on our financial position by increasing our expenses without increasing our revenues, impacting margins, profitability and cash flows.

If we fail to protect confidential information against security breaches, or if subscribers are reluctant to use our products because of privacy concerns, we might experience a loss in profitability.

Pursuant to the terms and conditions of use on our websites, as part of our subscriber registration process, we collect and use personally identifiable information. Industry-wide incidents or incidents with respect to our websites, including theft, alteration, deletion or misappropriation of information, security breaches, malevolent activities by computer hackers, viruses (or anything else that may contaminate or cause destruction to our systems), or changes in industry standards, regulations or laws could deter people from using the Internet or our websites to conduct transactions that involve the transmission of confidential information, which could harm our business. Under the laws of certain jurisdictions, if there is a breach of our computer systems and we know or suspect that unencrypted personal subscriber data has been stolen, we may be required to inform any subscribers whose data was stolen and we may be subjected to liability, which could harm our reputation and business.

Certain state laws require businesses that maintain personal information in electronic databases to implement reasonable measures to keep that information secure. Various states have enacted different and sometimes contradictory requirements for protecting personal information collected and maintained electronically. We may face adverse publicity if we are not able to comply with laws requiring us to take adequate measures to assure the confidentiality of the personally identifiable information that our subscribers have given to us. This could result in a loss of customers and revenue. Even if we are in full compliance with all relevant laws and regulations, we still may face liability or disruption to our business if we do not comply in every instance or if the security of the customer data that we collect is compromised, regardless of whether our practices comply or not.

Our business could be harmed if we are unable to maintain the integrity and reliability of our data and forecasts.

Our success depends on our subscribers’ confidence in the comprehensiveness, accuracy, and reliability of the data and forecasts we provide. We believe that we take adequate precautions to safeguard the completeness and accuracy of our data and that the information is generally current, comprehensive and accurate. Nevertheless, we depend to a large degree on information provided to us by third parties, including commercial real estate brokers, agents and property owners. Further, data is susceptible to electronic malfeasance including theft, alteration, deletion, viruses and malevolent activities by computer hackers. In addition, our reports and conference calls for the benefit of our subscribers may contain forecasts with respect to real estate trends. Although our contracts contain language limiting our liability if any of our data or forecasts are inaccurate or are later not borne out by actual results, for any of the above reasons, demand for our services could diminish and we may be exposed to lawsuits claiming damages resulting from inaccurate data and forecasts.

We may be unable to enforce or defend our ownership or use of intellectual property.

Our business depends in large measure on the intellectual property utilized in our methodologies, software and databases. We rely on a combination of trademark, trade secret, database protection and copyright laws, registered domain names,non-disclosure,non-competition and other contractual provisions with employees, vendors and consultants,work-for-hire provisions, restrictive license agreements with subscribers and technical security measures to protect our proprietary intellectual property rights. However, we do not hold Federal registrations covering all of our trademarks and copyrightable materials. We also do not own any patents or patent applications. In addition, current law may not adequately protect our databases and data, and legal standards relating to the validity, enforceability and scope of protection of proprietary rights in online businesses are uncertain and evolving. Our business could be significantly harmed if we do not continue to protect our intellectual property.

In addition, notwithstanding our efforts to protect our intellectual property, third parties may misappropriate our data through website scraping, robots or other means and aggregate this data on their websites with data from other companies. In addition, copycat websites may misappropriate data on our website and attempt to imitate the functionality of our website. We may not be able to detect all such websites in a timely manner and, even if we could, technological and legal measures may be insufficient to stop their operations.

In protecting our intellectual property, we will enforce our rights against people and businesses that infringe our intellectual property, including through legal action. Taking such action may cause the Company to expend significant financial resources, and we cannot ensure that such actions will be successful. Any unlawful use of our intellectual property, and subsequent legal action, could make it more expensive for us to do business and negatively impact Reis’s results of operations and financial condition.

We also could be significantly harmed if claims are made against us alleging infringement of the intellectual property rights of others. Any intellectual property claims, regardless of merit, could be expensive to litigate or settle, and could require the expenditure of substantial amounts of time and/or money.

If our websites or other services experience system failures or malicious attacks, our subscribers may be dissatisfied and our operations could be impaired.

Our business depends upon the satisfactory performance, reliability and availability of our websites. Problems with the websites could result in reduced demand for our services. Furthermore, the software underlying our services is complex and may contain undetected errors. Despite testing, we cannot be certain that errors will not be found in our software. Any errors could result in adverse publicity, impaired use of our services, loss of revenues, cost increases or legal claims by subscribers.

Additionally, our services substantially depend on systems provided by third party vendors and service providers, over whom we have little or no control. Interruptions in service could result from the failure of data providers, telecommunications providers, or other third parties, includingbreak-ins, unauthorized access, computer viruses, vandalism, fire, floods, severe weather, earthquakes, power loss,

telecommunications failures, terrorism, acts of war, and other similarly damaging events. We depend on these third party providers of Internet communication services to provide continuous and uninterrupted service. We also depend on Internet service providers that provide access to our services. Any disruption in the Internet access provided by third party providers or any failure of third party providers to handle higher volumes of user traffic could harm our business.

Our internal network infrastructure could be disrupted or penetrated, which could materially impact both our ability to provide services and subscribers’ confidence in our services.

Our operations depend upon our ability to maintain and protect our computer systems. While we believe that our systems, most of which are redundant and independent systems in separate locations, are adequate to support our operations, our systems may be vulnerable to damage frombreak-ins, unauthorized access, computer viruses, vandalism, fire, floods, severe weather, earthquakes, power loss, telecommunications failures, terrorism, acts of war, and other similarly damaging events. Although we maintain insurance against fires, floods, and general business interruptions, the amount and types of coverage may not be adequate in any particular case. Furthermore, any damage or disruption could materially impair or block our ability to provide services, which could significantly impact our business.

Experienced computer programmers, or hackers, may attempt to penetrate our network security from time to time. Although we have not experienced any security breaches to date and we maintain a firewall, a hacker who penetrates network security could misappropriate proprietary information or cause interruptions in our services. We might be required to further expend significant capital and resources to protect against, or to alleviate, problems caused by hackers. We also may not have a timely remedy against a hacker who is able to penetrate our network security. In addition to purposeful security breaches, the inadvertent transmission of computer viruses or anything else manifesting contaminating or destructive properties could expose us to litigation or to a material risk of loss. Any of these incidents could materially impact our ability to provide services as well as materially impact the confidence of our subscribers in our services, either of which could significantly and adversely impact our business.

We may be subject to regulation of advertising and subscriber solicitation or other newly-adopted laws and regulations.

As part of our subscriber registration process, our subscribers agree to receive emails and other communications from us. In addition, we use email and other online marketing techniques to reach potential subscribers. We may be subject to restrictions on our ability to communicate through email and phone calls, even with existing subscribers. The U.S. and other jurisdictions have proposed or adopted laws that restrict or prohibit unsolicited email or spam. These laws may impose significant monetary penalties for violations. In addition, laws or regulations that could harm our business could be adopted, or reinterpreted so as to affect our activities, by Federal and state governments, regulatory agencies or foreign governments or agencies. This could include, for example, laws regulating the source, content or form of information provided on our websites, the information or services we provide, or our transmissions over the Internet. Violations or new interpretations of these laws or regulations may result in penalties, damage our reputation, increase our costs or make our services less attractive.

Litigation or governmental investigations in which we become involved may significantly increase our expenses and adversely affect our stock price.

From time to time, we are a party to various lawsuits. Any lawsuits, threatened lawsuits or governmental investigations in which we are involved could cost us a significant amount of time and money to defend, could distract management’s attention away from operating our business, could result in negative publicity and could adversely affect our stock price. In addition, if any claims are determined against us or if a settlement requires us to pay a large monetary amount or take other action that materially restricts our operations, our profitability could be significantly reduced and our financial position could be adversely affected. Our insurance may not be sufficient to cover any losses we incur in connection with litigation claims.

Reis develops and maintains three highly curated, proprietary databases of U.S. commercial real estate. On an ongoing basis, Reis surveys and receives data from building owners, leasing agents and managers, as well as from multiple data sources. Nonetheless, we may be subject to legal liability for collecting, displaying or distributing information. We may also be subject to claims based on the content that is accessible from our website through links to other websites or information on our website supplied by third parties. We could also be subject to claims that the collection or provision of certain information breached laws and regulations relating to privacy and data protection. Even if these claims do not result in liability to us, we could incur significant costs in investigating and defending against any claims.

Our revenue, expenses, operating results, margins, financial condition and cash flows are subject to fluctuations.

Our revenues, expenses, operating results, margins, financial condition and cash flows have fluctuated in the past and are likely to continue to do so in the future. These fluctuations could negatively affect our results of operations during that period and future periods. Our revenues, expenses, operating results, margins, financial condition and cash flows may fluctuate from quarter to quarter due to factors including, among others, those described below:

our ability to obtain new subscribers, retain existing subscribers and regainnon-renewing subscribers;

the number and dollar amount of contracts that are multi-year;

changes in our marketing or other corporate strategies;

changes in our pricing strategies;

our introduction of new products and services or changes to existing products and services;

the amount and timing of our operating expenses and capital expenditures;

changes in the volume, timing or price of custom data deliverables;

costs related to acquisitions of businesses or technologies;

competition;

changes or consolidation in the real estate industry;

changes in subscriber budgets;

changes in regulatory requirements, laws, policies and other regulatory developments;

interest rate fluctuations;

inflation;

changes in accounting policies or practices; and

other factors outside of our control.

An impairment in the carrying value of goodwill or other intangible assets could negatively impact our consolidated results of operations.

Reis has $54,825,000 of goodwill at December 31, 2016, which is not an amortizable asset and is tested for impairment at least annually, or after a triggering event has occurred, requiring such a calculation. In addition, the carrying amount of amortizable intangible assets at December 31, 2016 aggregated $17,922,000. There were no indications of impairment in any of the Company’s intangible assets or goodwill at December 31, 2016. If, in the future, a determination is made that the carrying amount of the Company’s goodwill or amortizable intangible assets is less than the fair value of the respective asset, the Company would record an impairment charge in accordance with the applicable accounting literature. Any future impairment charge could negatively impact the Company’s results of operations, net worth, or the market price of our common stock.

Our business depends on retaining and attracting capable management, operating and sales personnel.

The implementation and development of Reis’s business plan require the skills and knowledge of our senior executives, as well as our sales, technology and operational personnel. Reis may not be able to offset the impact of the loss of the services of these individuals or other key officers or employees because our business requires skilled management, as well as technical, product and technology, and sales and marketing personnel, who are in high demand and are often subject to competing offers. Competition for qualified employees is intense in the information industry, and the loss of a substantial number of qualified employees, or an inability to attract, retain and motivate additional highly skilled employees, could have a material adverse impact on Reis.

Although Reis uses various incentive programs to retain and attract key personnel, these measures may not be sufficient to either attract or retain, as applicable, the personnel required to ensure our success. In addition, grants and issuances pursuant to our equity incentive plans may result in dilution to Reis stockholders.

In order to support future revenue growth, we need to continue to expand, train and retain our sales force. Our ability to develop a strong and productive sales force may be adversely affected by: our ability to attract, retain and motivate new sales personnel; our ability to properly train our sales force; the capability of our sales force to sell an increasing number of potential new products and services while negotiating higher rates on existing services; the length of time for new sales personnel to become productive and quota carrying; competition from other companies in hiring and retaining sales personnel; and our ability to effectively structure our sales force. If we are unable to hire qualified sales personnel and develop and retain the members of our sales force, including sales management, or if our sales team is not successful, our revenues or growth rate could decline and our expenses could increase.

The loss of one or more of our senior executives, or our sales, technology or operational personnel, could have a material adverse impact on the continuing operations of Reis and could adversely affect the market price of our common stock.

We may be subject to tax audits or other procedures concerning our tax collection policies.

We do not collect sales or other similar taxes in states other than New York. However, one or more states (other than New York) may seek to impose sales tax collection obligations onout-of-state companies, such as Reis, which engage in online commerce. A successful assertion that we should collect sales, use or other taxes on the sale of our products or services into these states could subject us to liability for current or past taxes due, and could increase the effective price of our products and services, which could harm our business.

If we are not able to successfully identify or integrate future acquisitions, our business operations and financial condition could be adversely affected, and future acquisitions may divert management’s attention and consume significant resources.

We may in the future attempt to further expand our markets and services in part through acquisitions of complementary businesses, services, databases and technologies. Mergers and acquisitions are inherently risky, and we cannot assure you that future acquisitions, if any, will be successful. The successful execution of any future acquisition strategy will depend on our ability to identify, negotiate, complete and integrate such acquisitions. Acquisitions involve numerous risks and uncertainties, including the potential unavailability of financial resources necessary to consummate acquisitions, the potential inability to identify all of the risks and liabilities inherent in a target company, the diversion of management’s attention from the operations of our business and strain on our existing personnel. In addition, any acquired businesses would generally be subject to the other risks described under this “Risks Related to the Reis Services Business and the Information Services Industry Generally” section.

Failure to manage and successfully integrate acquired businesses could harm our business. Integration of acquired entities can involve significant difficulties, such as strain on our personnel, systems and operational and managerial controls and procedures, the need to modify systems or add management resources, possible adverse short-term effects on cash flows or operating results, diversion of management’s attention from the operations of our business and failure to obtain and retain key personnel of an acquired business. In addition, if we finance acquisitions by incurring additional debt, our financial condition or liquidity could be adversely impacted. If we finance or otherwise complete acquisitions by issuing equity or convertible debt securities, existing stockholders’ ownership may be diluted.

Changes in accounting and reporting policies or practices may impact our financial results or presentation of results, which may adversely affect our stock price.

Any potential changes in accounting and reporting policies or practices (such as changes in revenue recognition or lease accounting rules) could impact the timing of the recording of revenue or expenses, could increase expenses, and could reduce our revenue, income from continuing operations, net income, EBITDA and Adjusted EBITDA, which results may be independent of changes in our operations. These increases in expenses, in conjunction with reductions in reported revenue, income from continuing operations, net income, EBITDA and Adjusted EBITDA could cause our stock price to decline. The changes in accounting policies could also impact the Company’s balance sheet and certain balance sheet ratios.

Risks Related to Ownership of Our Common Stock, Our Capital Structure and Reis Generally

Our common stock is thinly traded; there may be little or no liquidity for shares of our common stock; and our Board of Directors may take actions with which you disagree, which affect the trading price of our common stock.

Historically, our common stock has been thinly traded, and a highly active trading market for our common stock may not develop. In the absence of a highly active public trading market, investors trying to sell their shares may find it difficult to find buyers for their shares at prices quoted in the market or at all.

Our Board of Directors, or Board, may authorize transactions with respect to our common stock. These transactions may include a reverse stock split orodd-lot or other share repurchase programs, or the declaration of aone-time or recurring dividend.

On August 30, 2016, the Company’s Board authorized a program to purchase up to an aggregate of $5,000,000 of the Company’s common stock. Purchases under the program may be made from time to time in the open market or through privately negotiated transactions. Depending on market conditions, financial developments and other factors, these purchases may be commenced or suspended at any time, or from time to time, without prior notice and may be expanded without prior notice. The Company may make purchases pursuant to a trading plan under Securities Exchange Act Rule10b5-1, permitting open market purchases of common stock during blackout periods.

During the year ended December 31, 2016, the Company purchased an aggregate of 54,176 shares of common stock for approximately $1,144,000, or an average price of $21.11 per share, leaving approximately $3,856,000 at December 31, 2016 that may be used to purchase additional shares under the repurchase program in the future.

All future decisions regarding additional authorizations to repurchase stock will be at the discretion of our Board, will require authorization from the Board, and will be evaluated from time to time in light of the Company’s liquidity and anticipated cash needs, the price per share of our common stock, the number of shares of our common stock outstanding, applicable NASDAQ rules, debt covenant compliance requirements, applicable law and other factors deemed relevant. Amounts may be authorized by the Board whereby future purchases could be commenced or suspended at any time, or from time to time without notice. If we effect any such repurchases in the future, the liquidity of our common stock could be adversely affected due to the reduced number of shares that would be outstanding. In addition, a share repurchase program requires the payment of cash by Reis to stockholders, which could adversely impact our liquidity. If we effect a reverse stock split, there can be no assurance that the market price per share of our common stock after the reverse stock split will rise or remain constant in proportion to the reduction in the number of shares of our common stock outstanding before the reverse stock split.

The Company commenced a quarterly dividend program in the second quarter of 2014 when it declared and paid an initial quarterly cash dividend of $0.11 per common share. The Company increased the dividends declared and paid to $0.14 per common share for all four quarters of 2015 and increased the dividends declared and paid to $0.17 per share for all four quarters of 2016. Dividends paid by the Company during 2016, 2015 and 2014 aggregated approximately $7,747,000, $6,338,000 and $3,698,000, respectively. On February 13, 2017, the Company announced that the next dividend is payable on March 15, 2017 at $0.17 per common share. Although we anticipate paying a quarterly dividend hereafter, future dividends are subject to approval by the Board. If the Board were to declare a special dividend, or increase the regular quarterly dividend pay rate, the cash used for such a special dividend or dividend increase could adversely impact our liquidity. Conversely, if we were to reduce, or stop paying a quarterly dividend, it could result in a change in the investment profile of Reis and could cause certain stockholders with an investment criteria of investing in stocks that pay a dividend to sell our stock, potentially adversely affecting the market for and the market price of our common stock.

The Company may decide to sell shares of stock which could be dilutive to existing shareholders of Reis stock.

In order to continue to grow revenue, management may need to increase its spending to hire additional employees to build databases and improve our website functionality, or may identify the need to invest in additional or new technology or pursue an acquisition of tangible or intangible assets or a business. We may need additional cash, beyond what is generated by the business or available under existing debt arrangements, or if new credit is not available, to be able to fund certain objectives, and may decide to raise capital by selling additional shares of common stock or issuing other forms of equity in Reis. If we issue equity or convertible debt securities, existing stockholders’ ownership may be diluted. In addition, the price for which our shares trade may be reduced.

In June 2015, the Company’s shelf registration statement on FormS-3 was declared effective. The shelf registration statement permits the offering, issuance and sale of up to a maximum aggregate offering price of $75,000,000 of the Company’s stock from time to time for three years. Any determinations about the issuance of new common shares will be at the discretion of the Company’s Board and the use of proceeds, unless otherwise indicated, will be for general corporate purposes, which may include working capital, capital

expenditures or acquisitions. Management will retain broad discretion in the allocation of the net proceeds. Although the Company has no immediate plans to issue shares under the shelf registration statement, any potential equity offerings in the future could dilute the ownership interest of our existing stockholders and could cause the Company’s stock price to decline.

Certain of our executive officers and directors own a significant percentage of our stock, have significant control of our management and affairs, and may favor transactions or policies with which you disagree.

The named executive officers and directors of Reis in the aggregate beneficially owned approximately 23.2% of Reis’s outstanding common stock as of December 31, 2016. Of this total, Lloyd Lynford and Jonathan Garfield, each of whom is a founder, an executive officer and a director of the Company, beneficially owned 11.8% and 8.4%, respectively, at December 31, 2016. A significant concentration of share ownership may adversely affect the trading price of a company’s common stock because investors may perceive disadvantages in owning stock in companies where management holds a significant percentage of the voting power. A concentration of ownership may have the effect of delaying or preventing a change of control, including a merger, consolidation or other business combination involving Reis, or discouraging a potential acquirer from making a tender offer or otherwise attempting to obtain control, even if such a change of control might be seen as beneficial to other Reis stockholders.

Executive officers, directors and employees may sell shares of Reis stock.

Certain of our executive officers, directors and employees currently have in effect or may establish selling plans in accordance with the rules and regulations of the SEC. These selling plans may be utilized to provide such employees with a degree of financial diversification, estate and family planning, as well as to assist in satisfying certain tax or other financial obligations including, in connection with the vesting of restricted stock units (RSUs) or option exercises. In the fourth quarter of 2014, both Lloyd Lynford and Jonathan Garfield established selling plans under Rule10b5-1 which were designed to comply with selling limitations under Rule 144. Those plans expired in the second quarter of 2015. Mr. Garfield established a new selling plan in the fourth quarter of 2015 which expired on May 6, 2016. William Sander, the President and Chief Operating Officer of Reis Services, has had selling plans under Rule10b5-1 in place for a number of years. In connection with the June 2015 registration statement on FormS-3, Lloyd Lynford and Jonathan Garfield also registered their shares, making them eligible for inclusion in an offering by the Company or for sale in the open market, privately negotiated transactions or other transactions. As of the date of this annual report on Form10-K, neither individual has sold any shares under this registration statement. Messrs. Lynford and Garfield may also sell shares from time to time (other than pursuant to this registration statement) under Rule 144 or another exemption from the SEC’s registration requirements. The market may disfavor the adoption of Rule10b5-1 trading plans by one or more of our officers or directors, or selling under the FormS-3 by Mr. Lynford and/or Mr. Garfield, perceiving that such selling or plans to sell represent a decline in management’s confidence about our prospects or that the parameters for and trading under a Rule10b5-1 sales plan or off of the FormS-3 or other selling could cause downward pressure on our stock price.

Separately, stock options were granted to certain named executive officers and other employees in 2007, which are set to expire during 2017. The exercise of those options, like any other equity award vesting or exercise, will create dilution from the issuance of shares in settlement of the exercised options and could exert downward pressure on the Company’s stock price if the employee chooses to cover the option exercise price and income tax withholding obligations due to the Company upon exercise by selling shares.

Selling of shares by employees, especially executives, could adversely affect the demand for our stock, could negatively impact the liquidity of our stock and could result in a decrease in the market price of our stock.

Our governing documents and Maryland law contain anti-takeover provisions that may discourage acquisition bids or merger proposals, which may adversely affect the market price of our common stock.

Reis’s articles of amendment and restatement and bylaws contain provisions designed to discourage attempts to acquire control of Reis by merger, tender offer, proxy contest, or removal of incumbent management without the approval of our Board. These provisions may make it more difficult or expensive for a third party to acquire control of Reis even if a change of control might be seen as beneficial by other Reis stockholders. This could discourage potential takeover attempts and could adversely affect the market price of Reis’s common stock. Reis’s governing documents:

provide for a classified board of directors, which could discourage potential acquisition proposals and could delay or prevent a change of control;

authorize the issuance of blank check stock that could be issued by Reis’s Board to thwart a takeover attempt;

provide that directors can only be removed for cause pursuant to a vote oftwo-thirds of the shares entitled to vote for the election of directors; and

contain advance notice requirements for nominations of candidates for election to our Board or for proposing matters that can be acted upon by stockholders at stockholder meetings.

In addition, under Maryland law, certain “business combinations” (including certain issuances of equity securities) between a Maryland corporation and any person who beneficially owns 10% or more of the voting power of the corporation’s shares or an affiliate thereof are prohibited for five years after the most recent date on which the interested stockholder becomes an interested stockholder, unless waived by the then existing board. Our Board may approve certain transactions or exempt certain interested stockholders at any time prior to a party becoming an interested stockholder. At December 31, 2016 and through the date of this annual report on Form10-K, the Board has not approved any exemptions from the Maryland statute.

Increases in interest rates could increase our interest expense.

In October 2012, Reis Services, as borrower, and the Company, as guarantor, entered into a loan and security agreement with Capital One, National Association, as lender, for a $10,000,000 revolving credit facility, which we refer to as the 2012 Revolver. The 2012 Revolver had a three year term scheduled to expire on October 16, 2015; however, the expiration date was extended to January 31, 2016. In January 2016, Reis Services and Capital One executed an amended and restated loan and security agreement for a $20,000,000 revolving credit facility with terms substantially similar to the 2012 Revolver (as amended, the “2016 Revolver,” and collectively with the 2012 Revolver, the “Revolver”). The 2016 Revolver expires on January 28, 2019. Any borrowings on the Revolver bear interest at a rate of LIBOR + 2.00% per annum (for LIBOR loans) or the greater of 1.00% or the bank’s prime rate minus 0.50% per annum (for base rate loans) and is subject to an unused facility fee of 0.25% per annum.

As of December 31, 2016, we had no debt outstanding; however, we may borrow amounts under the Revolver in the future. There have been instances in the past when we purchased interest rate caps on our outstanding debt to limit our exposure to significant interest rate increases. In deciding whether to purchase interest rate caps or other hedging instruments, we may weigh the value of protection against significant increases in interest rates against the cost of such instruments. The Company does not have any interest rate caps or other hedging instruments at December 31, 2016. Therefore, if interest rates increase, our interest costs on any outstanding borrowings would also increase, which may have a material adverse effect on our results of operations, financial condition and cash flows.

Our Revolver contains covenants that restrict our operations, which may negatively affect our ability to operate our business and limit our ability to take advantage of potential business opportunities. Declines in our operational performance could cause financial covenants to be violated on our outstanding debt.

Provisions in the Revolver or a modified or replacement facility may impose restrictions on the Company’s ability to, among other things:

incur additional debt;

amend its organizational documents;

pay dividends and make distributions;

redeem or repurchase outstanding equity;

make certain investments or enter into transactions to acquire assets or businesses;

create certain liens;

enter into transactions with stockholders and affiliates;

undergo a change of control; and

make certain fundamental changes, including engaging in a merger or consolidation.

The Revolver also contains other customary covenants, including covenants which require the Company to meet specified financial ratios and financial tests. If the Company were not able to comply with these covenants in the future, the failure to do so may result in the declaration of an event of default. Furthermore, certain events, such as the voluntary or involuntary filing by Reis under any bankruptcy, insolvency or similar law (which is not stayed or dismissed within certain time periods), will cause an event of default. In addition, an event of default, if not cured or waived, may result in the acceleration of the maturity of indebtedness outstanding under

the Revolver, which would require the Company to pay all amounts outstanding. If an event of default occurs, the Company may not be able to cure it within any applicable cure period, if at all. If the maturity of this indebtedness is accelerated, Reis Services or Reis may not have the ability to borrow or obtain sufficient funds to replace the accelerated indebtedness on terms acceptable to us, or at all. Furthermore, the Revolver is secured by Reis Services’s assets and, therefore, these assets would not be available to secure additional credit.

Our ability to use our net operating loss carryforwards will be subject to limitation and the generation of taxable income in the future.

The Company has significant Federal, state and local net operating loss, or NOL, carryforwards at December 31, 2016. The aggregate Federal NOLs were approximately $38,679,000 at December 31, 2016. These NOLs include amounts generated subsequent to the Merger, losses from the Reis Services business prior to the Merger and the Company’s operating losses prior to the Merger. Approximately $5,961,000 of these Federal NOLs are subject to an annual limitation of $2,779,000 per year, whereas the remaining balance of approximately $32,718,000 is not subject to the limitation. All of these losses may be utilized against consolidated Federal taxable income in the future. The actual ability to utilize the tax benefit of any existing NOLs will be dependent upon the Company’s ability to generate taxable income in the future, if at all.

During March 2014, New York State enacted a law to (1) reduce corporate tax rates, effective in future years and (2) change the method of determining the availability and use of NOLs existing at December 31, 2014. In April 2015, New York City enacted a law which substantially conforms with the New York State changes. The Company expects, in the future, that it will be subject to cash payments for a portion of its state and local income taxes as the changed New York State and New York City laws limit the amount of existing NOLs which could be used each year. Although the amount of NOLs in New York State and New York City are limited for any particular year, we expect to fully utilize all of our NOLs in the future.

Federal, state and local tax audits may result in the payment of additional taxes, penalties and interest.

Our tax returns are subject to audit by Federal, state and local tax authorities. Currently, Reis’s Federal tax returns are open for 2013, 2014 and 2015. With few exceptions, the state and local income tax returns are open to examination for the years 2013 through 2015. However, prior year tax returns giving rise to an NOL may be reviewable in connection with the audit of a later tax year when such loss is utilized. The audit of an open tax year could result in the payment of additional tax, penalties and interest, which could negatively affect our profitability and cash flows.

Other states, besides states where physical nexus exists, may aggressively pursue Reis and its subsidiaries under the theory of economic nexus. Such claims by a state could result in the payment of additional tax in the future, as well as for prior unpaid tax, penalties and interest, which could negatively affect our profitability and cash flows.

Item 1B.  Unresolved Staff Comments.

None.

Item 2.  Properties.

At December 31, 2016, the Company leased approximately 45,000 square feet of space in New York, New York under one lease, which expires in October 2025 and approximately 48,000 square feet of space in White Plains, New York, under one lease, which expires in June 2023.

Item 3.  Legal Proceedings.

As disclosed in Note 9 to the Company’s consolidated financial statements, the Company is engaged in certain legal matters, and the disclosure set forth in Note 9 is incorporated herein by reference.

Item 4.  Mine Safety Disclosures.

Not applicable.

PART II

Item 5.  Market for Registrant’s Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities.

Market Information

The Company’s common shares trade on the NASDAQ Global Market under the symbol “REIS.” As of December 31, 2016, there were 229 holders of record of our common stock. Since certain of our shares are held by brokers and other institutions on behalf of shareholders, the foregoing number is not representative of the number of beneficial owners.

The high and low sales prices per share for our common stock for each quarter in the years ended December 31, 2016 and 2015 are as follows:

  2016  2015 

Quarter

 High  Low  High  Low 

First

  $24.78     $20.06     $27.61     $21.80   

Second

  $26.59     $21.78     $27.04     $20.00   

Third

  $26.57     $18.16     $26.00     $19.91   

Fourth

  $    23.63     $    18.43     $    25.25     $    21.12   

Common Stock Price Performance Graph

The following graph compares the cumulative total stockholder return on Reis’s common stock, which is represented below by “REIS,” for the period commencing December 31, 2011 through December 31, 2016, with the cumulative total return on the Russell 2000 Index, which we refer to as the Russell 2000, and the S&P 500 Index, which we refer to as the S&P 500, for the same period. Reis has chosen the Russell 2000 based on the market capitalization of the issuers contained in that index. Reis has not identified a peer group for stock price performance purposes, due to the limited number of issuers in businesses similar to ours. Total return values were calculated based on cumulative total return assuming (1) the investment of $100 in the Russell 2000, the S&P 500 and Reis common stock on December 31, 2011, and (2) reinvestment of dividends. The total return for Reis common stock from December 31, 2011 to December 31, 2016 was a gain of approximately 161.1% versus a gain of approximately 98.0% for the S&P 500 and a gain of approximately 96.4% for the Russell 2000.

Dividends

The Company commenced a quarterly dividend program in the second quarter of 2014 when it declared and paid an initial quarterly cash dividend of $0.11 per common share. The Company increased the dividends declared and paid to $0.14 per common share for all four quarters of 2015, and increased the dividend declared and paid to $0.17 for all four quarters of 2016. Dividends paid by the Company during 2016, 2015 and 2014 aggregated approximately $7,747,000, $6,338,000 and $3,698,000, respectively. Although the Company anticipates paying a quarterly dividend hereafter, future dividends are subject to approval by the Board.

Recent Sales of Unregistered Securities

The Company has not sold any unregistered securities within the past three years.

Issuer Purchases of Equity Securities

On August 30, 2016, the Company’s Board authorized a repurchase program of shares of the Company’s common stock up to an aggregate of $5,000,000. Purchases under the program may be made from time to time in the open market or through privately negotiated transactions. Depending on market conditions, financial developments and other factors, these purchases may be commenced or suspended at any time, or from time to time, without prior notice and may be expanded without prior notice. The Company may make purchases pursuant to a trading plan under Securities Exchange Act Rule10b5-1, permitting open market purchases of common stock during blackout periods consistent with the Company’s “Policies for Transactions in Reis Stock and Insider Trading and Tipping.”

During the fourth quarter of 2016, the Company repurchased the following common shares:

Period

 Total Number of
 Shares Purchased 
  Average Price
    Paid per Share    
  Total Number of
Shares Purchased
  as Part of Publicly  
Announced Plans
or Programs
  Maximum Dollar
Value of Shares
That May Yet Be
  Purchased Under  
the Plans or
Programs
 

October 1, 2016 to October 31, 2016

  3,472     $19.92       3,472       $4,573,000   

November 1, 2016 to November 30, 2016

  17,107     $21.52       17,107       $4,205,000   

December 1, 2016 to December 31, 2016

  15,470     $22.54       15,470       $3,856,000   

From the inception of the share repurchase program in August 2016, through December 31, 2016, the Company purchased an aggregate of 54,176 shares of common stock at an average price of $21.11 per share, for an aggregate of approximately $1,144,000. Cumulatively, the Company has repurchased approximately 0.5% of the common shares outstanding at the time of the Board’s authorization on August 30, 2016.

Other Security Information

For additional information concerning the Company’s capitalization, see Note 7 to the Company’s consolidated financial statements.

Calculation of Aggregate Market Value ofNon-Affiliate Shares

For purposes of calculating the aggregate market value of shares of common stock of the Company held bynon-affiliates, as shown on the cover page of this annual report on Form10-K, it has been assumed that all of the outstanding shares at June 30, 2016 were held bynon-affiliates except for shares held by directors and officers of the Company. However, this should not be deemed to constitute an admission that all of such directors and officers are, in fact, affiliates of the Company, or that there are not other persons who may be deemed to be affiliates of the Company. For further information concerning shareholdings of officers, directors and principal stockholders, see “Item 12. Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters.”

Item 6.  Selected Financial Data.

The following table presents selected financial data for the Company and should be read in conjunction with “Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations,” and the consolidated financial statements included herein starting at pageF-1. For the periods presented, this information conforms with the current financial statement presentation which segregates the assets and liabilities, as well as the operating results of the Company’s discontinued operations segment.

(amounts in thousands, except per share data)      
  For the Years Ended December 31, 

Consolidated Statements of Operations:

 2016  2015  2014  2013  2012 

Total revenue

  $      47,530        $      50,890        $      41,335        $      34,721        $      31,229      

Income from continuing operations (A)

  $2,781        $8,071        $4,616        $17,933        $8,013      

Net income (loss) (A)(B)

  $2,781        $10,305        $4,047        $17,597        $(4,284)     

Per share amounts – basic:

     

Income from continuing operations

  $0.25        $0.72        $0.42        $1.65        $0.75      

Net income (loss)

  $0.25        $0.92        $0.37        $1.62        $(0.40)     

Per share amounts – diluted:

     

Income from continuing operations

  $0.24        $0.69        $0.39        $1.57        $0.73      

Net income (loss)

  $0.24        $0.88        $0.34        $1.54        $(0.39)     

Cash dividends per share

  $0.68        $0.56        $0.33        $—        $—      
  December 31, 

Consolidated Balance Sheets:

 2016  2015  2014  2013  2012 

Cash (C)

  $21,491      $28,658       $17,745     $10,560     $4,961  

Total assets

  $128,144      $133,199       $123,888     $117,867     $98,034  

Debt

  $—      $—       $—     $—     $—  

Deferred revenue

  $25,031      $25,291       $22,885     $20,284     $18,230  

Total stockholders’ equity

  $97,180      $101,579       $96,113     $92,871     $74,557  
  December 31, 

Consolidated Statements of Cash Flows:

 2016  2015  2014  2013  2012 

Net cash provided by (used in):

     

Operating activities (C)

  $15,802      $24,236       $14,789       $11,442       $(6,555)   

Investing activities (D)

  $(13,325)     $(6,187)      $(4,203)      $(4,499)      $(4,037)   

Financing activities (E) (F)

  $(9,644)     $(7,136)      $(3,401)      $(1,344)      $(6,600)   

(A)

The 2013 and 2012 amounts reflect a net tax benefit of $13,670 and $5,427, respectively, in both income from continuing operations and net income (loss), primarily from the reversal of valuation allowances recorded against certain of the Company’s net operating loss carryforwards.

(B)The 2012 net (loss) and related per share amounts reflect a net litigation charge of $11,547, which was recorded in income (loss) from discontinued operations in 2012. See Note 3 to the Company’s consolidated financial statements contained elsewhere in this annual report on Form10-K.
(C)The Company’s cash balance at December 31, 2012 and cash flow from operating activities was negatively impacted by the $17,000 cash settlement paid in 2012 in connection with the Gold Peak litigation. Operating cash flow was positively impacted in 2015 by $4,779 from litigation recoveries in that period. See Note 3 to the Company’s consolidated financial statements contained elsewhere in this annual report on Form10-K.
(D)The increase in investing activities in 2016 reflects capitalized costs for increased investments in our websites and databases; such investments aggregated $8,509. The remaining $4,816 of cash used for investing activities relates primarily to space expansion and furnishing our new corporate headquarters and our operations facility.
(E)Cash flows from financing activities in 2012 included the repayment of debt of $5,691. The Company had no outstanding debt balance at December 31, 2016, 2015, 2014, 2013 and 2012.
(F)Financing activities in 2016, 2015 and 2014 reflect the use of cash for dividend payments of $7,747, $6,338 and $3,698, respectively.

Item 7.  Management’s Discussion and Analysis of Financial Condition and Results of Operations.

The following discussion should be read in conjunction with the consolidated financial statements and notes thereto appearing elsewhere in this annual report on Form10-K.

Management Summary

In order to provide insight into 2015 and 2016 relative performance, we have disaggregated total revenue into two components: “Subscription” and “Other.” Other revenue specifically includes revenue related to contracts forone-time custom data deliverables andone-time fees for settlements of previous unauthorized usage of Reis data.

The following table presents subscription revenue, other revenue and total revenue for the years ended December 31, 2016 and 2015. This same level of detail is included in the Statement of Operations in the consolidated financial statements contained elsewhere in this annual report on Form10-K.

(amounts in thousands, excluding percentages)

  2016  2015  Variance 
  $    % of Total    $    % of Total    $  % 

Subscription revenue

  $45,399       95.5%   $43,722       85.9%   $1,677      3.8% 

Other revenue (A)

  2,131       4.5%   7,168       14.1%   (5,037)              (70.3)% 
 

 

 

  

 

 

  

 

 

  

 

 

  

 

 

  

Total revenue

  $      47,530       100.0%   $      50,890       100.0%   $       (3,360)     (6.6)% 
 

 

 

  

 

 

  

 

 

  

 

 

  

 

 

  

(A)Other revenue includesnon-subscription revenue such as(1) non-subscription custom data deliverables and(2) one-time settlements.

Financial Performance

Annual 2016 financial results for Reis present a difficult comparison against our substantial revenue and financial growth of 2015. Reis’s performance in 2016 relative to the results for 2015 has been impacted by four main factors: (1) revenues associated with significant custom data deliverables in 2015; (2) a decline in our trailing twelve month (“TTM”) renewal rates; (3) a reduction in revenue from largeone-time settlements under our intellectual property (“IP”) compliance initiatives; and (4) multi-year contracts and their flattening effect on growth rates. Total revenue declined (6.6)% from the 2015 record annual revenue of $50,890,000 to $47,530,000 for the 2016 annual period, the second highest annual amount of revenue reported by Reis.

Subscription Revenue

As presented in the table above, total revenue declined (6.6)%; however, subscription revenue increased by approximately $1,677,000, or 3.8%. Although subscription revenue grew in 2016 over 2015, this annual growth rate is lower than in the immediately preceding year (a 10.1% annual growth rate for subscription revenue in 2015 over 2014) as a result of the impact of declining renewal rates and the effect of multi-year contracts.

Renewal Rates —For the TTM ended December 31, 2016, the Company’s base renewal rate was 81.6% and the renewal rate, including price increases, was 85.7% (for institutional subscribers, the base renewal rate was 83.5% and the base renewal rate, including price increases, was 87.3%). For the TTM ended December 31, 2015, the Company’s base renewal rate was 87.5% and the renewal rate, including price increases, was 91.9% (for institutional subscribers, the base renewal rate was 89.6% and the base renewal rate, including price increases, was 93.9%). Reis’s 2016 TTM renewal rates were negatively impacted by the cancellation of contracts (most significantly in the second quarter of 2016) signed in 2014 and 2015 associated with Reis’s IP compliance initiatives, from customer losses from subscribers that exited the CRE business and from aggressive repricing on contract expirations.

Many of the 2016 cancellations involved contracts which had prior long-term unauthorized access to Reis data and a substantial monetary settlement. As Reis worked through the renewal cycle of these older and more egregious cases of unauthorized usage, our renewal rates for these compliance accounts and overall renewal rates began to improve in the second half of 2016. On a going-forward basis, the prompt discovery of unauthorized usage allows for more satisfactory resolution, typically by having the non-compliant entity enter into a market-rate subscription and without requiring (except in rare cases) a monetary settlement and the attendantill-will. Operationally, Reis has allocated senior account management and customer service resources to work with these

accounts. We believe that upgrading the onboarding and account management experience will also contribute to improved renewal rates for these accounts. On a going-forward basis management believes that the reduction in compliance-related cancellations will help to restore our TTM renewal rates over time to be more in line with our historic levels.

In addition to cancellations of IP infringement-related subscribers, other factors combined to exert downward pressure on our TTM renewal rates in 2016: (1) customer losses from subscribers that exited the CRE business or were merger-related; and (2) Reis’s aggressive stance on renewal pricing to ensure that there was equitable alignment among subscribers as it relates to report consumption, number of users, property-type and geographic coverage, length of contract, and the associated subscription fee, among other factors. In 2016, there were 21 customers who accounted for approximately $1,700,000 of annual subscription revenue which did not renew as a result of leaving the business or cancelling post-merger.

Aggressive repricing on contract expirations in the circumstances noted above also placed downward pressure on renewal rates, particularly during the first half of 2016. Although many firms were successfully repriced to levels consistent with their usage and value received, price increases did lead to instances of cancellation. As always, competition is a factor, both with respect to new accounts and renewals with existing subscribers. We believe that ourtwo-pronged strategy of expanding our property type and geographic coverage and the addition of many more property records and granular property-level details has allowed Reis to consolidate its leadership position among vendors of CRE market data and analytics. This assessment is supported by the significant increase in“win-backs” we experienced in 2016, especially as contracts expired between former subscribers and competitive vendors and these firms had the opportunity to return to Reis without the expense associated with maintaining multiple vendors.

As a result of efforts focusing on the improvement of our renewal rates in the second half of 2016, we have seen an improvement. Our quarterly renewal rates hit their recent lows in the second quarter of 2016 at an overall base renewal rate of 73.5% and a renewal rate, including price increases, of 77.4%. Those renewal rates increased to an overall base renewal rate of 84.2% and a renewal rate, including price increases, of 84.6% for the third quarter of 2016, and an overall base renewal rate of 83.7% and a renewal rate, including price increases, of 89.6% for the fourth quarter of 2016, respectively; a positive and promising trend.

Multi-Year Contracts —In order to increase the predictability of fees from our subscribers and Reis’s own revenue and cash flow, we have made a concerted effort to encourage multi-year contracts when appropriate, with terms of two or three years, and in some cases, four years. At December 31, 2015, approximatelyone-third of our subscribers were in multi-year contracts. At December 31, 2016, that rate has increased to 38%. For multi-year contracts, the average life of multi-year contracts signed in each of the last three years was approximately 2.2 years. There are significant benefits, on a selective basis, of multi-year contracts, including locking in recurring subscription revenue for longer periods, thereby improving our renewal rates and increasing the predictability of future revenues. Operationally, multi-year contracts free up account management resources to focus on subscribers requiring a higher level of attention and upselling opportunities across our account base. Finally, multi-year deals also insulate us from competitive pressures and increase the likeliness that Reis data and analytics will become embedded in the work flow of our clients.

In accordance with GAAP, our revenue recognition policy is to record revenue ratably over the life of a subscriber contract. Therefore any increases in the price of the subscription after the first year of a multi-year contract are considered in the total amount being straight-lined over the contract term. If a multi-year contract includes pricing steps on and after the first anniversary, there will be increasing cash flow from the contract, but no growth in revenue during the subsequent years under that contract. There has been resulting variability in our growth rates from having such a significant segment of our subscriber base under multi-year agreements which has also negatively impacted 2016 performance.

Other Revenue

The Company’s other revenue includesnon-subscription revenue such as(1) non-subscription custom data deliverables and(2) one-time settlements. For the years ended December 31, 2016, 2015 and 2014, approximately 4.5%, 14.1% and 3.9%, respectively, of total revenue was generated from custom data deliverables andone-time settlements. A description of the revenue from custom data deliverables and Intellectual Property settlements follows.

Custom Data Deliverables —The Company recognized significant revenue in 2015 from custom data deliverables and related services for one of our existingReis SE subscribers. The revenue recorded reflected the portion of the custom data files that was delivered in June and December 2015 and February 2016, positively impacting results for the second and fourth quarters of 2015 and the first quarter of 2016. Revenue related to these deliverables aggregated $1,200,000 in 2016 (all in the first quarter of 2016) and $4,519,000 in the year ended December 31, 2015.

In 2016, Reis did not replicate similar custom data sales. Although custom data sales generally, and the 2015 contract specifically, created a higher level of volatility in our 2015 and 2016 revenue and earnings, a significant amount of cash was generated by the 2015

custom data contract. As we move forward into 2017, management hopes to be able to identify opportunities to sell custom data files, but structured as a subscription agreement with periodic quarterly updates in order to record revenue ratably, consistent with how the Company recognizes revenue forReis SE.

Intellectual Property Settlements —Reis continues to successfully resolve cases in which our intellectual property rights have been violated. In 2015 and 2016, the Company was very active in protecting its intellectual property by pursuing firms and individuals who had previously gained unauthorized access to our services. The discovery of the instances of unauthorized usage creates opportunities for Reis’s compliance team to engage in productive conversations with firms regarding ongoing access to Reis data in accordance with the terms and conditions of a subscription agreement. Reis has developed a programmatic approach to promptly resolving cases of unauthorized usage and is devoting significant client services and account management resources to increase the renewal rates of IP infringement related accounts to levels typical of all other Reis subscribers. As a result of these compliance procedures, the Company has been able to generate revenue through eitherone-time settlement payments or by signing up thenon-complying firm or individual to an annual or multi-yearReis SEsubscription.

Revenue fromone-time settlement payments aggregated $931,000, $2,649,000 and $1,608,000 in the years ended December 31, 2016, 2015 and 2014, respectively. Although identified instances ofnon-compliance remains steady, the frequency and dollar amount ofone-time settlements were lower in 2016 than in 2015. As our compliance team continues to identify instances of unauthorized access, the period of unauthorized usage is much shorter and report consumption is not as significant as cases that were settled in 2014 and 2015. Management believes that compliance resolutions will yield a continuing and significant volume of subscription contracts and recurring revenue for the foreseeable future.

Revenue Visibility into 2017

Historically, nearly all of the Company’s revenue could be characterized as subscription-based recurring revenue. As stated above, in 2015 significant opportunities arose that resulted in Reis realizing a greater amount of revenue and cash flow that was morenon-recurring in nature. When excluding the 2015 custom data deliverables andone-time settlements from intellectual property compliance cases, 85.9% of Reis’s 2015 annual revenue was of a higher-quality recurring nature. By comparison, subscription-based recurring revenue for 2016 aggregated approximately 95.5% of reported total revenue. This is comparable to the percentage of 2014 subscription revenue of 96.1% of total revenue for that year. Therefore, despite a reduction in reported total revenue during 2016, management believes that the Company will be well positioned as we enter 2017 due to the higher percentage of revenue that is of a recurring nature.

As we approach 2017, management believes that there are other positive signs, in addition to the high percentage of subscription revenue under contract, that are also indicators that Reis will return to growth over the course of 2017, including: (1) the Company’s strong pace of new customer acquisition; (2) improving renewal rates; (3) ongoing subscription opportunities created by the discovery of instances of unauthorized usage; (4) our pipeline with respect to both subscription-based data deliverables and portfolio analytics; and (5) the array of new products and enhancements that were launched in 2016 and that are expected to make our products more competitive in 2017.    

Operational Successes

Operationally in 2016, Reis continued to invest in both human capital, as well as in its databases and websites. Our capitalized spending on databases and websites increased by 46.6% in 2016 to approximately $8,509,000 which allowed us to move into new property types and geographic markets and provide even more granular information at the property level. We added additional management talent primarily in operations and sales. New technologies were implemented to advance our sales enablement function, allowing us more visibility and real time metrics with respect to both our existing customers and prospects. Management views all of these investments as important to support the pace of improved revenue growth in 2017 and beyond.

Database and Websites —In 2016 and continuing into 2017, Reis is making the critical investments necessary to further expand our competitive position. Two of the biggest expected contributors to sales growth in 2017 include the launch of coverage on the affordable housing sector and the significant enhancements to our sales transaction database. In August 2016, Reis introduced its ninth property type, affordable housing, with information on 176 counties in 45 metropolitan areas. In February 2017, Reis expanded coverage of this property type to include information on 256 counties in 110 metropolitan areas. We gained significant traction in the fourth quarter of 2016 selling this sector to existing banking customers and directly to affordable housing investors, and will focus on building upon those successes in 2017.

A potentially larger revenue opportunity relates to the September 2016 expansion of Reis’s commercial real estate sales transactions database which now includes virtually all U.S. markets and property types, regardless of geography or sector. The new offering is

expected to appeal to mortgage and property originators and underwriters, brokers and appraisers, tax assessors, and any other real estate professionals seeking the most comprehensive database of CRE transactions to source deals, search for related business, or conduct due diligence. Reis’s sales transactions database includes key structural data points, including but not limited to address, land use code, parcel number, and lot size, in addition to key transactional data points, such as buyer and seller name, sale price, sale date, deed reference, and financing details when available, as well as other critical data points and licensed photographs. We expect that these enhancements will result in increased new sales opportunities in 2017.

Sales —Other operational investments and management level hiring occurred in 2016 in our sales organization. With the introduction of additional management talent, a thorough strategic review of our sales processes, the implementation of a regional sales focus, the newly added benefits of a sales enablement function, all coupled with the strength of ourReis SE platform and all of its capabilities, management believes that the Reis sales team is well-positioned for a successful 2017.

Although the Company has invested significantly in hiring and database expansion in 2016, we will continue to make the investments necessary in 2017 to sustain Reis’s competitive position as a leader in the CRE market for data and analytics.

Please read the remainder of this Item 7 for additional detail about our critical business metrics, reconciliations of income from continuing operations to EBITDA and Adjusted EBITDA and reconciliations of deferred revenue to Aggregate Revenue Under Contract, results of operations, our liquidity and capital resources, changes in cash flows and selected significant accounting policies.

Critical Business Metrics

Management considers certain metrics in evaluating its consolidated results and the performance of the Reis Services segment. These metrics are revenue, revenue growth, EBITDA (which is earnings (defined as income (loss) from continuing operations) before interest, taxes, depreciation and amortization), EBITDA growth, EBITDA margin, Adjusted EBITDA (which is earnings before interest, taxes, depreciation, amortization and stock based compensation), Adjusted EBITDA growth and Adjusted EBITDA margin. Other important metrics that management considers include the cash flow generation as well as the visibility into future performance as supported by our deferred revenue and other related metrics discussed in this Item 7.

Following is a presentation of revenue, EBITDA and EBITDA margin for the Reis Services segment and revenue, EBITDA, Adjusted EBITDA and the related margins on a consolidated basis (excluding discontinued operations) (see below for a reconciliation of income from continuing operations to EBITDA and Adjusted EBITDA for both the Reis Services segment and on a consolidated basis for each of the periods presented here).

(amounts in thousands, excluding percentages)         
   For the Three Months Ended
December 31,
       Percentage 
   2016   2015   (Decrease)   (Decrease) 

Reis Services segment:

        

Total revenue

   $                11,554          $                14,206          $                    (2,652)                 (18.7)%       

EBITDA (A)

   $2,665          $6,477          $(3,812)     (58.9)%       

EBITDA margin (A)

   23.1%      45.6%       

Consolidated, excluding discontinued operations:

        

Total revenue

   $11,554          $14,206          $(2,652)     (18.7)%       

EBITDA (A)

   $1,791          $5,494          $(3,703)     (67.4)%       

EBITDA margin (A)

   15.5%      38.7%       

Adjusted EBITDA (A)

   $2,310          $5,929          $(3,619)     (61.0)%       

Adjusted EBITDA margin (A)

   20.0%      41.7%       

(A)

The 2016 periods are impacted by $135,000 and $721,000 for the three months and year ended December 31, 2016, respectively, from the effects of overlapping leases and $118,000 from move related costs for the three months and year ended December 31, 2016 as further discussed elsewhere in this Item 7.

(amounts in thousands, excluding percentages)     
   For the Years Ended
December 31,
       Percentage 
   2016   2015   (Decrease)   (Decrease) 

Reis Services segment:

      

Total revenue

   $                47,530          $                50,890          $(3,360)     (6.6)%         

EBITDA (A)

   $15,537          $22,074          $(6,537)                 (29.6)%         

EBITDA margin (A)

   32.7%      43.4%       

Consolidated, excluding discontinued operations:

        

Total revenue

   $47,530          $50,890          $(3,360)     (6.6)%         

EBITDA (A)

   $11,450          $17,708          $(6,258)     (35.3)%         

EBITDA margin (A)

   24.1%      34.8%       

Adjusted EBITDA (A)

   $13,549          $19,481          $                    (5,932)     (30.5)%         

Adjusted EBITDA margin (A)

   28.5%      38.3%       
   For the Years Ended
December 31,
       Percentage 
   2015   2014   Increase   Increase 

Reis Services segment:

      

Total revenue

   $50,890          $41,335          $9,555      23.1%       

EBITDA

   $22,074          $16,852          $5,222      31.0%       

EBITDA margin

   43.4%      40.8%       

Consolidated, excluding discontinued operations:

        

Total revenue

   $50,890          $41,335          $9,555      23.1%       

EBITDA

   $17,708          $12,760          $4,948      38.8%       

EBITDA margin

   34.8%      30.9%       

Adjusted EBITDA

   $19,481          $14,325          $5,156              36.0%       

Adjusted EBITDA margin

   38.3%      34.7%       

(A)

The 2016 periods are impacted by $135,000 and $721,000 for the three months and year ended December 31, 2016, respectively, from the effects of overlapping leases and $118,000 from move related costs for the three months and year ended December 31, 2016 as further discussed elsewhere in this Item 7.

2016 Revenue Performance

All of the Company’s revenue is generated by the Reis Services segment. Total revenue decreased by approximately $(2,652,000), or (18.7)%, from the fourth quarter of 2015 to the fourth quarter of 2016 and $(3,360,000), or (6.6)%, in the year ended December 31, 2016 from the comparable 2015 period. Reis’s fourth quarter and year ended December 31, 2016 represent challenging comparable reporting periods due to the difficulty of replicating the significant revenue successes of 2015. As presented in the Management Summary section above, although total revenue declined (6.6)%, subscription revenue in 2016 grew 3.8% over the 2015 annual period. For the fourth quarter of 2016, total revenue declined (18.7)%, but subscription revenue during that period grew 0.7%.

In the Management Summary section above, we provide insight into both the Company’s reported results as well as how Reis’s core recurring business performed, including the impact of custom data deliverables, IP settlements, renewal rates and multi-year contracts on the reported results.

2015 Revenue Performance

Reis Services’s total revenue increased by approximately $9,555,000 or 23.1% for the year ended December 31, 2015 over the comparable 2014 annual period. In general, these revenue increases reflected: (1) significant revenue related to custom data deliverables for one of our existingReis SEsubscribers; (2) the protection of our intellectual property; and (3) additional newReis SEbusiness.

The following table presents total revenue for the years ended December 31, 2015 and 2014 split into two categories: subscription revenue and other revenue. This same level of detail is included in the Statement of Operations in the consolidated financial statements contained elsewhere in this annual report on Form10-K.

(amounts in thousands, excluding percentages) 
   2015   2014   Variance 
   $     % of Total     $     % of Total     $           %         

Subscription revenue

   $43,722       85.9%    $39,727       96.1%    $3,995       10.1% 

Other revenue (A)

   7,168       14.1%    1,608       3.9%    5,560       345.8% 
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

Total revenue

   $    50,890       100.0%    $    41,335       100.0%    $      9,555       23.1% 
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

            

 (A)Other revenue includesnon-subscription revenue such as(1) non-subscription custom data deliverables and(2) one-time settlements.

As presented in the above table, subscription revenue increased 10.1% in 2015 over 2014. For the TTM ended December 31, 2015, the Company’s base renewal rate was 87.5% and the renewal rate, including price increases, was 91.9% (for institutional subscribers, the base renewal rate was 89.6% and the base renewal rate, including price increases, was 93.9%). For the TTM ended December 31, 2014, the Company’s base renewal rate was 87.2% and the renewal rate, including price increases, was 89.8% (for institutional subscribers, the base renewal rate was 89.3% and the base renewal rate including price increases, was 91.8%).

Deferred Revenue and Aggregate Revenue Under Contract

Two balance sheet-based metrics management utilizes are deferred revenue and Aggregate Revenue Under Contract. Analyzing these amounts can provide additional insight into Reis Services’s future financial performance. Deferred revenue, which is a GAAP basis accounting concept and is reported by the Company on the consolidated balance sheet, represents revenue from annual or longer term contracts for which we have billed and/or received payments from our subscribers related to services we will be providing over the remaining contract period. Aggregate Revenue Under Contract is the sum of deferred revenue and future revenue undernon-cancellable contracts for which we do not yet have the contractual right to bill and excludes any future revenues expected to be derived from subscribers currently being billed on a monthly basis.

Deferred revenue will be recognized as revenue ratably over the remaining life of a contract for subscriptions, or in the case of future custom reports or projects, will be recognized as revenue upon completion and delivery to the customer, provided no significant Company obligations remain. At any given date, both deferred revenue and Aggregate Revenue Under Contract can be either positively or negatively influenced by: (1) the timing and dollar value of contracts signed and billed; (2) the quantity and timing of contracts that are multi-year; and (3) the impact of recording revenue ratably over the life of a multi-year contract, which moderates the effect of price increases after the first year. The following table reconciles deferred revenue to Aggregate Revenue Under Contract at December 31, 2016 and 2015, respectively.

   December 31, 
  2016   2015 

Deferred revenue (GAAP basis)

   $25,031,000     $25,291,000   

Amounts undernon-cancellable contracts for which the Company does not yet have the contractual right to bill at the period end (A)

   25,928,000     22,723,000   
  

 

 

   

 

 

 

Aggregate Revenue Under Contract

   $                    50,959,000     $                    48,014,000   
  

 

 

   

 

 

 

 

    

(A)

Amounts are billable subsequent to December 31 of each year and represent(i) non-cancellable contracts for subscribers with multi-year subscriptions where the future years are not yet billable, or (ii) subscribers withnon-cancellable annual subscriptions with interim billing terms.

Included in Aggregate Revenue Under Contract at December 31, 2016 was approximately $34,778,000 related to amounts under contract for the forward twelve month period through December 31, 2017. The remainder reflects amounts under contract beyond December 31, 2017. The forward twelve month Aggregate Revenue Under Contract amount is approximately 73.2% of total revenue on a TTM basis at December 31, 2016. For comparison purposes, at December 31, 2015 and 2014, the forward twelve month Aggregate Revenue Under Contract was $33,822,000 and $30,516,000, respectively, and as a percentage of that year’s total revenue was approximately 66.5% and 73.8%, respectively.

2016 Reis Services EBITDA, Consolidated Adjusted EBITDA and Income from Continuing Operations

Reis Services EBITDA for the three months and year ended December 31, 2016 was $2,665,000 and $15,537,000, respectively. Reis Services EBITDA margins were 23.1% and 32.7% for the three months and year ended December 31, 2016 as compared to the reported Reis Services EBITDA margins of 45.6% and 43.4% for the 2015 comparable periods. The margin in the three months and year ended December 31, 2015 was positively impacted by the custom data deliverables and other revenue items described previously which had a higher margin than our historic sales ofReis SEsubscriptions. The 2016 margins were lower than historic norms as a result of the combination of expenses increasing and lower total revenue as discussed below.

The 2016 reported Reis Services EBITDA amounts resulted in a decrease of $(3,812,000), or (58.9)%, for the three months ended December 31, 2016 amount and a decrease of $(6,537,000), or (29.6)%, for the year ended December 31, 2016 amount from the comparable 2015 periods. These decreases primarily resulted from the declines in total revenue as described above. Total expenses (excluding interest, taxes, depreciation and amortization expenses) grew by 15.0% and 11.0% in the three months and year ended December 31, 2016. Expense increases are primarily due to increased employment related costs and rent related expenses. In particular, total rent expense increased $474,000 and $1,682,000 in the three months and year ended December 31, 2016, respectively, over the corresponding 2015 periods. These amounts reflect the increase in both the square footage being leased and the higher price per square foot, and includes the effect of overlapping leases from the duplication of rent and other occupancy costs (aggregating approximately $135,000 and $721,000 in the three months and year ended December 31, 2016, respectively). In addition, the Company incurred $118,000 of move related costs during the three months and year ended December 31, 2016, which, with the effect of the duplication of rent, has contributed to the reduction in our EBITDA and EBITDA margins in those periods.

Consolidated Adjusted EBITDA for the three months ended December 31, 2016 was $2,310,000, a decrease of $(3,619,000), or (61.0)%, from the fourth quarter 2015 amount. Consolidated Adjusted EBITDA for the year ended December 31, 2016 was $13,549,000, a decrease of $(5,932,000), or (30.5)%, from the comparable 2015 period. The decrease in consolidated Adjusted EBITDA reflects the revenue and Reis Services EBITDA decreases discussed above. The consolidated Adjusted EBITDA margins were 20.0% and 28.5% for the three months and year ended December 31, 2016.

Income from continuing operations was a loss of $(230,000) and income of $2,342,000 for the three months ended December 31, 2016 and 2015, respectively, and was income of $2,781,000 and $8,071,000 for the years ended December 31, 2016 and 2015, respectively. The decrease of $(2,572,000) and $(5,290,000) in the three months and year ended December 31, 2016 is a result of the revenue declines and expense increases described above, but also includes the impact of increased depreciation and amortization expense in the three months and year ended December 31, 2016 over 2015 of $439,000 and $1,052,000, respectively, from increased amortizable website and database intangible assets and increased spending on furniture, fixtures and equipment, offset by a reduction in income tax expense (from lower taxable income in the 2016 periods) of $(1,601,000) and $(2,052,000) in the three months and year ended December 31, 2016, respectively, as compared to the corresponding 2015 periods.

The Company continues to make significant investments in our business, including our coreReis SE platform and in our portfolio analytics offering. As a result of these initiatives, our employment related costs increased throughout 2016 across all departments including strategic hires in sales and operations. The pace of our database and website enhancements accelerated in 2016. Management believes that the investments it has made in 2016, and will continue to make in 2017, will further the differentiation between Reis and other U.S. commercial real estate market information providers.

2015 Reis Services EBITDA, Consolidated Adjusted EBITDA and Income from Continuing Operations

Reis Services’s EBITDA increased $5,222,000, or 31.0%, in the year ended December 31, 2015 over the comparable 2014 annual period. This increase was primarily derived from the corresponding increase in 2015 total revenue, as described above. Operating expenses also continued to grow, but at a pace which resulted in the Reis Services EBITDA margins being maintained at 43.4% and 40.8% for the years ended December 31, 2015 and 2014, respectively. See “— Results of Operations” for a discussion of the variances for specific expenses.

For the year ended December 31, 2015, consolidated Adjusted EBITDA was $19,481,000, an increase of $5,156,000, or 36.0% over the annual 2014 amount. The increase in Adjusted EBITDA reflects the total revenue and Reis Services EBITDA increases discussed above.

Income from continuing operations was $8,071,000 for the year ended December 31, 2015, an increase of $3,455,000, or 74.8% over the annual 2014 amount. The increase in income from continuing operations is primarily influenced by the total revenue and Reis Services EBITDA increases discussed above.

Reconciliations of Income from Continuing Operations to EBITDA and Adjusted EBITDA

We define EBITDA as earnings (income (loss) from continuing operations) before interest, taxes, depreciation and amortization. We define Adjusted EBITDA as earnings before interest, taxes, depreciation, amortization and stock based compensation. Although EBITDA and Adjusted EBITDA are not measures of performance calculated in accordance with GAAP, senior management uses EBITDA and Adjusted EBITDA to measure operational and management performance. Management believes that EBITDA and Adjusted EBITDA are appropriate supplemental financial measures to be considered in addition to the reported GAAP basis financial information which may assist investors in evaluating and understanding: (1) the performance of the Reis Services segment, the primary business of the Company and (2) the Company’s continuing consolidated results, from year to year or period to period, as applicable. Further, these measures provide the reader with the ability to understand our operational performance while isolatingnon-cash charges, such as depreciation and amortization expenses, as well as othernon-operating items, such as interest income, interest expense and income taxes and, in the case of Adjusted EBITDA, isolatesnon-cash charges for stock based compensation. Management also believes that disclosing EBITDA and Adjusted EBITDA will provide better comparability to other companies in the information services sector. However, because EBITDA and Adjusted EBITDA are not calculated in accordance with GAAP, they may not necessarily be comparable to similarly titled measures employed by other companies. EBITDA and Adjusted EBITDA are presented both for the Reis Services segment and on a consolidated basis. We believe that these metrics, for Reis Services, provide the reader with valuable information for evaluating the financial performance of the core Reis Services business, excluding public company costs, and for making assessments about the intrinsic value of that stand-alone business to a potential acquirer. Management primarily monitors and measures its performance, and is compensated, based on the results of the Reis Services segment. EBITDA and Adjusted EBITDA, on a consolidated basis, allow the reader to make assessments about the current trading value of the Company’s common stock, including expenses related to operating as a public company. However, investors should not consider these measures in isolation or as substitutes for net income (loss), income from continuing operations, operating income, or any other measure for determining operating performance that is calculated in accordance with GAAP. Reconciliations of EBITDA and Adjusted EBITDA to the most comparable GAAP financial measure, income from continuing operations, follow for each identified period on a segment basis (including the Reis Services segment), as well as on a consolidated basis:

(amounts in thousands)            

Reconciliation of Income from Continuing Operations to EBITDA and

Adjusted EBITDA for the Three Months Ended December 31, 2016

  By Segment     
  Reis Services   Other (A)   Consolidated 

(Loss) income from continuing operations

       $(230)     

Income tax expense

       89      
      

 

 

 

Income (loss) before income taxes and discontinued operations

   $733        $(874)        (141)     

Add back:

      

Depreciation and amortization expense

   1,905        —         1,905      

Interest expense (income), net

   27        —         27      
  

 

 

   

 

 

   

 

 

 

EBITDA

   2,665        (874)        1,791      

Add back:

      

Stock based compensation expense, net

   —        519         519      
  

 

 

   

 

 

   

 

 

 

Adjusted EBITDA

   $            2,665        $            (355)        $            2,310      
  

 

 

   

 

 

   

 

 

 

Reconciliation of Income from Continuing Operations to EBITDA and

Adjusted EBITDA for the Year Ended December 31, 2016

  By Segment     
  Reis Services   Other (A)   Consolidated 

Income from continuing operations

       $2,781      

Income tax expense

       1,953      
      

 

 

 

Income (loss) before income taxes and discontinued operations

   $8,827        $(4,093)        4,734      

Add back:

      

Depreciation and amortization expense

   6,624        6         6,630      

Interest expense (income), net

   86        —         86      
  

 

 

   

 

 

   

 

 

 

EBITDA

   15,537        (4,087)        11,450      

Add back:

      

Stock based compensation expense, net

   —        2,099         2,099      
  

 

 

   

 

 

   

 

 

 

Adjusted EBITDA

   $15,537        $(1,988)        $13,549      
  

 

 

   

 

 

   

 

 

 

 

      

See footnotes on next page.

(amounts in thousands)            

Reconciliation of Income from Continuing Operations to EBITDA and

Adjusted EBITDA for the Three Months Ended December 31, 2015

  By Segment     
  Reis Services   Other (A)   Consolidated 

Income from continuing operations

       $2,342      

Income tax expense

       1,690      
      

 

 

 

Income (loss) before income taxes and discontinued operations

   $5,017         $(985)        4,032      

Add back:

      

Depreciation and amortization expense

   1,464         2         1,466      

Interest expense (income), net

   (4)        —         (4)     
  

 

 

   

 

 

   

 

 

 

EBITDA

   6,477         (983)        5,494      

Add back:

      

Stock based compensation expense, net

   —         435         435      
  

 

 

   

 

 

   

 

 

 

Adjusted EBITDA

   $            6,477         $            (548)        $            5,929      
  

 

 

   

 

 

   

 

 

 

Reconciliation of Income from Continuing Operations to EBITDA and

Adjusted EBITDA for the Year Ended December 31, 2015

  By Segment     
  Reis Services   Other (A)   Consolidated 

Income from continuing operations

       $8,071      

Income tax expense

       4,005      
      

 

 

 

Income (loss) before income taxes and discontinued operations

   $16,451         $(4,375)        12,076      

Add back:

      

Depreciation and amortization expense

   5,569         9         5,578      

Interest expense (income), net

   54         —         54      
  

 

 

   

 

 

   

 

 

 

EBITDA

   22,074         (4,366)        17,708      

Add back:

      

Stock based compensation expense, net

   —         1,773         1,773      
  

 

 

   

 

 

   

 

 

 

Adjusted EBITDA

   $22,074         $(2,593)        $19,481      
  

 

 

   

 

 

   

 

 

 

Reconciliation of Income from Continuing Operations to EBITDA and

Adjusted EBITDA for the Year Ended December 31, 2014

  By Segment     
  

 

Reis Services

   Other (A)   Consolidated 

Income from continuing operations

       $4,616      

Income tax expense

       2,842      
      

 

 

 

Income (loss) before income taxes and discontinued operations

   $11,559         $(4,101)        7,458      

Add back:

      

Depreciation and amortization expense

   5,202         9         5,211      

Interest expense (income), net

   91         —         91      
  

 

 

   

 

 

   

 

 

 

EBITDA

   16,852         (4,092)        12,760      

Add back:

      

Stock based compensation expense, net

   —         1,565         1,565      
  

 

 

   

 

 

   

 

 

 

Adjusted EBITDA

   $16,852         $(2,527)        $14,325      
  

 

 

   

 

 

   

 

 

 
       
(A)

Includes interest and other income, depreciation expense and general and administrative expenses (including public company related costs) that are not associated with the Reis Services segment. Since the reconciliations start with income from continuing operations, the effects of the discontinued operations are excluded from these reconciliations for all periods presented.

Results of Operations

Comparison of the Results of Operations for the Years Ended December 31, 2016 and 2015

Total revenue and related cost of sales were approximately $47,530,000 and $10,999,000, respectively, for the year ended December 31, 2016, which resulted in a gross profit for the Reis Services segment of approximately $36,531,000. Amortization expense included in cost of sales (for the database intangible asset) was approximately $2,853,000 during this period. Total revenue and related cost of sales were approximately $50,890,000 and $9,081,000, respectively, for the year ended December 31, 2015, which resulted in a gross profit for the Reis Services segment of approximately $41,809,000. Amortization expense included in cost of sales was approximately $2,103,000 during this period. See “— Critical Business Metrics of the Reis Services Business” for a discussion of the variances and trends in revenue and EBITDA of the Reis Services segment. The increase in cost of sales of $1,918,000 resulted from greater employment related costs, specifically from hiring during 2015 and 2016, coupled with compensation increases and higher benefit costs than in the 2015 period of $1,168,000 and a $750,000 increase in amortization expense for database costs.

Sales and marketing expenses were approximately $11,879,000 and $11,701,000 for the years ended December 31, 2016 and 2015, respectively, and solely represented costs of the Reis Services segment. Amortization expense included in sales and marketing expenses (for the customer relationships intangible asset) was approximately $935,000 and $949,000 during the years ended December 31, 2016 and 2015, respectively. The increase in sales and marketing expenses between the two periods of approximately $178,000 resulted from increases in employment related costs due to additional headcount related to hiring in sales management, sales enablement and marketing, offset by lower commission expense from the large custom data sale in the 2015 period (with no sale of a corresponding magnitude in the 2016 period) and lower performance based bonus accruals in the 2016 period.

Product development expenses were approximately $4,167,000 and $3,711,000 for the years ended December 31, 2016 and 2015, respectively, and solely represented costs of the Reis Services segment. Amortization expense included in product development expenses (for the website intangible asset) was approximately $1,955,000 and $1,793,000 during the years ended December 31, 2016 and 2015, respectively. Product development costs increased $456,000, primarily due to increased employment related costs from hiring during 2015 and 2016, coupled with compensation increases and higher benefit costs than in the 2015 period of $294,000 and a $162,000 increase in amortization expense.

General and administrative expenses of approximately $15,665,000 for the year ended December 31, 2016 included current period expenses of approximately $12,679,000, depreciation and amortization expense of approximately $887,000 for the lease value intangible asset and furniture, fixtures and equipment, and approximately $2,099,000 of netnon-cash compensation expense. The netnon-cash compensation expense was comprised of equity awards for employees and directors. General and administrative expenses of approximately $14,267,000 for the year ended December 31, 2015 included current period expenses of approximately $11,762,000, depreciation and amortization expense of approximately $732,000 for the lease value intangible asset and furniture, fixtures and equipment, and approximately $1,773,000 of netnon-cash compensation expense. Excluding thenon-cash expenses, the net increase in general and administrative expenses of $917,000 was influenced by increased occupancy related costs from the office space expansion (approximately $1,682,000, of which $721,000 is the effect of overlapping leases and the duplication of rent expense), increases for legal fees (approximately $374,000), move related costs (approximately $118,000) and increased employment related costs and other general expenses (approximately $290,000), offset by lower performance based bonus expense in the period (approximately $1,547,000).

Interest expense of $108,000 and $92,000 for the years ended December 31, 2016 and 2015, respectively, was comprised of unused facility fees and deferred financing cost amortization on the Revolver. There was no outstanding balance on the Revolver during 2016 or 2015.

Income tax expense of $1,953,000 during the year ended December 31, 2016 reflected deferred Federal tax expense of $1,704,000, current Federal alternative minimum tax (“AMT”) of $147,000, current state and local tax expense of $40,000, and deferred state and local tax expense of $62,000. Income tax expense of $4,005,000 for continuing operations during the year ended December 31, 2015 reflected deferred Federal tax expense of $3,832,000, current state and local tax expense of $452,000 and current Federal AMT of $234,000, offset by a deferred state and local tax benefit of $513,000. The deferred state and local tax benefit reflected a change in the New York City law which resulted in a variation between the effective tax rate and the statutory tax rate in the period.

Income from discontinued operations was $2,234,000 for the year ended December 31, 2015 and primarily reflected $4,839,000 of recoveries from settlements with certain parties to the Gold Peak litigation (as more fully described in Note 3 to the Company’s consolidated financial statements contained elsewhere in this annual report on Form10-K), offset by legal and professional fees of $1,196,000 and income tax expense of $1,409,000. There were no discontinued operations activities in the 2016 period.

Comparison of the Results of Operations for the Years Ended December 31, 2015 and 2014

Total revenue and related cost of sales were approximately $50,890,000 and $9,081,000, respectively, for the year ended December 31, 2015, which resulted in a gross profit for the Reis Services segment of approximately $41,809,000. Amortization expense included in cost of sales (for the database intangible asset) was approximately $2,103,000 during this period. Total revenue and related cost of sales were approximately $41,335,000 and $8,037,000, respectively, for the year ended December 31, 2014, resulting in a gross profit for the Reis Services segment of approximately $33,298,000. Amortization expense included in cost of sales was approximately $1,780,000 during this period. See “— Critical Business Metrics of the Reis Services Segment” for a discussion of the variances and trends in revenue and EBITDA of the Reis Services segment and Adjusted EBITDA on a consolidated basis. The increase in cost of sales of $1,044,000 resulted from greater employment related costs, specifically from hiring during 2014 and 2015, coupled with compensation increases and higher benefit costs than in the 2014 period of $721,000, and a $323,000 increase in amortization expense for database costs as a result of the addition of a new property type in 2015 (student housing).

Sales and marketing expenses were approximately $11,701,000 and $10,235,000 for the years ended December 31, 2015 and 2014, respectively, and solely represented costs of the Reis Services segment. Amortization expense included in sales and marketing expenses (for the customer relationships intangible asset) was approximately $949,000 and $962,000 during the years ended December 31, 2015 and 2014, respectively. The increase in sales and marketing expenses between the two periods of approximately $1,466,000 resulted from greater employment related costs from hiring during 2014 and 2015 and increased commissions expense, coupled with compensation increases and higher benefit costs than in the 2014 period, offset by a $13,000 reduction in amortization expense.

Product development expenses were approximately $3,711,000 and $3,473,000 for the years ended December 31, 2015 and 2014, respectively, and solely represented costs of the Reis Services segment. Amortization expense included in product development expenses (for the website intangible asset) was approximately $1,793,000 and $1,784,000 during the years ended December 31, 2015 and 2014, respectively. Product development costs increased $238,000, primarily due to increased employment related costs from hiring during 2014, coupled with compensation increases and higher benefit costs than in the 2014 period of $229,000.

General and administrative expenses of approximately $14,267,000 for the year ended December 31, 2015 included current period expenses of approximately $11,762,000, depreciation and amortization expense of approximately $732,000 for the lease value intangible asset and furniture, fixtures and equipment, and approximately $1,773,000 of netnon-cash compensation expense. The netnon-cash compensation expense was comprised of equity awards for employees and directors.Non-cash compensation in the 2015 period was not impacted by liability award options as all of the options accounted for under that method were either settled in cash or exercised in the year ended December 31, 2014. General and administrative expenses of approximately $12,040,000 for the year ended December 31, 2014 included current period expenses of approximately $9,789,000, depreciation and amortization expense of approximately $686,000 for the lease value intangible asset and furniture, fixtures and equipment, and approximately $1,565,000 of netnon-cash compensation expense. The netnon-cash compensation expense was comprised of equity awards for employees and directors of approximately $1,702,000, offset by a compensation benefit of approximately $137,000 related to the liability for option cancellations due to the final settlement in 2014 of the remaining 17,724 options accounted for in this manner. Excluding thenon-cash expenses, the net increase in general and administrative expenses of $1,973,000 was primarily the result of increases for professional fees (including measures to protect our intellectual property) and compensation expense.

Interest expense of $92,000 and $113,000 during the years ended December 31, 2015 and 2014 was comprised of unused facility fees and deferred financing cost amortization on the Revolver, which the Company obtained in October 2012 and as more fully described in “— Debt” in this Item 7. There was no outstanding balance on the Revolver during 2015 or 2014.

Income tax expense of $4,005,000 for continuing operations during the year ended December 31, 2015 reflected deferred Federal tax expense of $3,832,000, current state and local tax expense of $452,000 and current Federal AMT of $234,000, offset by a deferred state and local tax benefit of $513,000. The deferred state and local tax benefit reflects a change in the New York City law which resulted in an increase in the deferred tax value of New York City net operating losses. Income tax expense of $2,842,000 for continuing operations during the year ended December 31, 2014 reflected current Federal AMT of $110,000, current state and local tax expense of $302,000 and a deferred Federal tax expense of $2,434,000, offset by a deferred state and local tax benefit of $4,000.

Income from discontinued operations was $2,234,000 for the year ended December 31, 2015 and primarily reflected $4,839,000 of recoveries from settlements with certain parties to the Gold Peak litigation (as more fully described in Note 3 to the Company’s consolidated financial statements contained elsewhere in this annual report on Form10-K), offset by legal and professional fees of $1,196,000 and income tax expense of $1,409,000. The loss from discontinued operations was $(569,000) for the year ended December 31, 2014 and primarily reflected legal and professional fees of $977,000, offset by $26,000 of recoveries in the 2014 period and an income tax benefit of $382,000.

Income Taxes

Deferred income taxes reflect the net tax effects of temporary differences between the carrying amount of assets and liabilities for financial reporting purposes and the amounts used for income tax purposes. The net deferred tax asset was approximately $16,815,000 and $18,430,000 at December 31, 2016 and 2015, respectively, all of which was classified asnon-current. The significant portion of the deferred tax items relates to deferred tax assets including NOL carryforwards, Federal AMT credit carryforwards and stock based compensation, with the remainder of the deferred tax items relating to liabilities resulting from the intangible assets recorded at the time of the Merger.

The Company had Federal NOL carryforwards aggregating approximately $38,679,000 at December 31, 2016, as well as significant state and local NOL carryforwards. These NOLs included amounts generated subsequent to the Merger (including a substantial NOL realized during the year ended December 31, 2012 as a result of the Gold Peak litigation settlement, discussed in Note 3 to the

Company’s consolidated financial statements contained elsewhere in this annual report on Form10-K), losses from the Reis Services business prior to the Merger and the Company’s operating losses prior to the Merger. Approximately $5,961,000 of these Federal NOLs are subject to an annual Internal Revenue Code Section 382 limitation of $2,779,000, whereas the remaining balance of approximately $32,718,000 is not subject to the limitation. The enactment of the 2014 New York State law and the 2015 New York City law discussed above limit the amount of existing NOLs which could be used each year in those jurisdictions; however, all such NOLs are expected to be fully utilized in the future.

The next NOL expiration for the Company is in 2024 for approximately $3,334,000 of Federal NOLs. Included in the Federal NOLs at December 31, 2016 is approximately $1,723,000 attributable to excess tax deductions on equity award activity in prior years. The tax benefits attributable to those NOLs will be credited directly to additional paid in capital when utilized to offset taxes payable. In 2017, these NOLs will be recorded on the Company’s balance sheet upon adoption of ASU2016-09.

A valuation allowance is required to reduce deferred tax assets if, based on the weight of all available evidence, it is more likely than not that some portion or all of the deferred tax assets will not be realized. As a result of management’s evaluation of the Company’s future operations, it has been determined that no valuation allowance was necessary at December 31, 2016, 2015 or 2014.

The Company’s reserve for unrecognized tax benefits, including estimated interest, was $154,000 and $159,000 at December 31, 2016 and 2015, respectively. The unrecognized tax benefits as well as related interest was included in general and administrative expenses. The Company recorded a reduction in expense of $(4,000) in 2016 and expense, including interest, of $70,000 and $43,000 in 2015 and 2014, respectively.

For additional information related to income taxes, see Note 6 to the Company’s consolidated financial statements contained elsewhere in this annual report on Form10-K.

Liquidity and Capital Resources

The core Reis Services business has traditionally generated significant cash annually; and we expect it to continue to do so. Our consolidated cash and cash equivalents balance aggregated approximately $21,491,000 at December 31, 2016, a decrease of $(7,167,000) from the December 31, 2015 balance of approximately $28,658,000. Although the Company had cash flows provided by its operating activities of $15,802,000, the Company’s cash position decreased as a result of making investments in its websites and databases of $8,509,000, spending on tenant improvements and furniture, fixtures and equipment associated with the new office spaces of approximately $4,819,000, paying aggregate dividends of approximately $7,747,000 in the year ended December 31, 2016, utilizing approximately $701,000 to settle minimum employee withholding tax obligations on vested RSUs in February 2016 and repurchasing approximately $1,144,000 of the Company’s common stock since the commencement of the repurchase program on August 30, 2016.

At December 31, 2016, the Company’s short-term and long-term liquidity requirements include: current operating and capitalizable costs, including accounts payable and other accrued expenses; near-term product development and enhancement of the website and databases either through building with Company resources or through acquisitions; operating leases; growth in operating expenses, including a further increase in the number of Reis employees and additional resources devoted to our sales and marketing efforts; other costs, including public company expenses not included in the Reis Services segment; any open invoices for tenant improvements and related spending for new corporate headquarters space; the resolution of open tax years with state and local tax authorities; payment of employee taxes on vested equity awards, for which the employee uses shares to settle his/her minimum withholding tax obligations with the Company; the use of cash for the payment of quarterly dividends; and repurchases of shares of Reis common stock (at December 31, 2016, approximately $3,856,000 remained available to be purchased under our current authorization). The Company expects to meet these short-term and long-term liquidity requirements generally through the use of available cash and cash generated from subscription revenue of Reis Services and, if necessary, with borrowings under the Revolver, and/or proceeds from the sale of Reis stock. In 2017, the Company could receive up to $2,935,000 in proceeds associated with the potential exercise of up to 285,000 options which expire in 2017 (of which 157,500 options were exercised and the Company received $1,638,000 of proceeds through February 24, 2017).

In January 2016, Reis Services and Capital One executed an amended and restated loan and security agreement for a $20,000,000 revolving credit facility, which expires on January 28, 2019. For additional information regarding the Revolver, see Note 5 to the Company’s consolidated financial statements contained elsewhere in this annual report on Form 10-K.

In June 2015, the Company’s shelf registration statement on FormS-3 was declared effective. The shelf registration statement permits the offering, issuance and sale of up to a maximum aggregate offering price of $75,000,000 of the Company’s stock from time to time for three years. Any determinations about the issuance of new common shares will be at the discretion of the Company’s Board and the use of proceeds, unless otherwise indicated, will be for general corporate purposes, which may include working

capital, capital expenditures or acquisitions. Management will retain broad discretion in the allocation of the net proceeds. The Company has no immediate plans to issue shares under the shelf registration statement.

The Company has NOLs that it expects to utilize against future Federal, state and local taxable income. The use of certain NOLs for New York State and New York City purposes will be subject to an annual limitation and, therefore, any taxable income in excess of the limitation will be subject to tax. Tax payments related to 2017 are expected to be for state and local taxes based on income, in excess of limitation amounts, Federal AMT, and tax on capital.

The Company may determine to use its cash to: (1) acquire or invest in other databases or information companies that have logical adjacencies or complementary products or services; (2) repurchase additional shares of Reis common stock; or (3) pay a special dividend, or increase its recurring quarterly dividend. There can be no assurance that the Company will use its cash for any of these purposes during 2017, or thereafter.

Material Contractual Obligations

The following table summarizes material contractual obligations as of December 31, 2016:

(amounts in thousands)  Payments Due 
   For the Years Ending December 31,         

Contractual Obligations

  2017   2018 and 2019   2020 and 2021   Thereafter   Aggregate 

Principal and interest payments for the Revolver (A)

   $50        $50        $—        $—        $100     

Future contractual minimum operating lease payments (B)

   2,715        7,077        7,265        11,946        29,003     
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Total contractual obligations

   $                2,765        $                7,127        $                7,265        $                11,946        $                29,103     
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

 

          

  (A)    Includes unused facility fees of $50,000 for 2017 and 2018.
  (B)    For additional information related to the Company’s operating leases, see Item 2. Properties.

Off-Balance Sheet Arrangements

The Company does not have anyoff-balance sheet liabilities or obligations which are required to be disclosed by the SEC’s rules and regulations.

Discontinued Operations Impact on Liquidity

Cash flows from discontinued operations during the years ended December 31, 2015 and 2014 were included in the consolidated statements of cash flows in the operating activities section in accordance with the applicable accounting literature. Cash flows from discontinued operations during 2015 were a net inflow of approximately $3,724,000, including $4,779,000 of recoveries, offset by $1,055,000 of cash used for legal and professional fees incurred as part of our cash recovery efforts from insurance companies and other responsible parties in connection with the Gold Peak litigation. Cash flows used in discontinued operations during 2014 were a net outflow of approximately $989,000, including $1,015,000 of cash used for legal and professional fees incurred in connection with the Gold Peak litigation, offset by $26,000 of recoveries. As of December 31, 2015, the Company entered into the final settlement agreement related to its Gold Peak recovery efforts, bringing closure to this process. Therefore, there were no cash flows from discontinued operations during the year ended December 31, 2016. For additional information pertaining to our discontinued operations, see Note 3 to the Company’s consolidated financial statements contained elsewhere in this annual report on Form10-K.

Other Items Impacting Liquidity

Dividends

The Company commenced a quarterly dividend program in the second quarter of 2014 when it declared and paid an initial quarterly cash dividend of $0.11 per common share. The Company increased the dividends declared and paid to $0.14 per common share for all four quarters of 2015 and increased the dividend declared and paid to $0.17 per common share for all four quarters of 2016. Dividends paid by the Company during 2016, 2015 and 2014 aggregated approximately $7,747,000, $6,338,000 and $3,698,000, respectively. Although the Company anticipates paying a quarterly dividend hereafter, future dividends are subject to approval by the Board.

Stock Repurchase Program

On August 30, 2016, the Company’s Board authorized a repurchase program of shares of the Company’s common stock up to an aggregate of $5,000,000. Purchases under the program may be made from time to time in the open market or through privately negotiated transactions. Depending on market conditions, financial developments and other factors, these purchases may be commenced or suspended at any time, or from time to time, without prior notice and may be expanded without prior notice. The Company may make purchases pursuant to a trading plan under Securities Exchange Act Rule10b5-1, permitting open market purchases of common stock during blackout periods.

During the year ended December 31, 2016, the Company purchased an aggregate of 54,176 shares of common stock for approximately $1,144,000, or an average price of $21.11 per share, leaving approximately $3,856,000 at December 31, 2016 that may be used to purchase additional shares under the repurchase program in the future. During the years ended December 31, 2015 and 2014, the Company did not repurchase any shares of common stock. From January 1, 2017 through February 24, 2017, the Company purchased an additional 35,496 shares of common stock for approximately $721,000 or an average price of $20.32 per share.

Stock Plans

The Company has adopted certain incentive plans for the purpose of attracting and retaining the Company’s directors, officers and employees by having the ability to issue options, restricted stock units (“RSUs”), or stock awards. Awards granted under the Company’s incentive plans expire ten years from the date of grant and vest over periods ranging generally from three to five years for employees.

In 2016 and 2015, the Board authorized the use of cash to settle minimum employee withholding tax obligations on vested RSUs in the respective periods. The net effect was a reduction on the issuance of shares at those vesting dates. The Company utilized approximately $701,000 and $993,000 of cash in 2016 and 2015, respectively, in connection with RSU vestings. Unlike the RSU vestings in 2016 and 2015, for RSUs vesting in February 2017, the Company did not use cash to settle minimum employee withholding tax obligations. The Company may, in the future, decide to use cash to settle these cash obligations.

For additional information related to stock plans and other incentives, see Note 8 to the Company’s consolidated financial statements.

Changes in Cash Flows

Cash flows for the years ended December 31, 2016, 2015 and 2014 are summarized as follows:

   For the Years Ended December 31, 
   2016   2015   2014 

Net cash provided by operating activities

   $15,802,098       $24,235,648       $14,788,857    

Net cash (used in) investing activities

   (13,325,189)                      (6,187,149)                      (4,203,063)   

Net cash (used in) financing activities

   (9,644,279)      (7,135,620)      (3,400,616)   
  

 

 

   

 

 

   

 

 

 

Net (decrease) increase in cash and cash equivalents

   $                (7,167,370)      $10,912,879       $7,185,178    
  

 

 

   

 

 

   

 

 

 

Net cash provided by operating activities decreased $(8,434,000) from $24,236,000 provided in the 2015 period to $15,802,000 provided in the 2016 period. This decrease was primarily the result of decreased operating cash flow of $(4,816,000) from the Reis Services segment from $23,936,000 provided in the 2015 period to $19,120,000 provided in the 2016 period (due to declines in revenue, EBITDA and deferred revenue as described elsewhere herein), as well as the impact of net cash provided from discontinued operations due to the collection of $3,724,000 of litigation recoveries in the 2015 period with no 2016 equivalent.

Net cash used in investing activities increased $7,138,000 from $6,187,000 used in the 2015 period to $13,325,000 used in the 2016 period. This change resulted primarily from a $4,436,000 increase in spending on leasehold improvements and purchases of furniture, fixtures and equipment in the 2016 period for office space expansion, coupled with a $2,705,000 increase of cash invested primarily in our databases related to the expansion of our CRE sales transaction database, the addition of affordable housing as our ninth property type and other data expansion efforts.

Net cash used in financing activities was $9,644,000 and $7,136,000 in the 2016 and 2015 periods, respectively. The 2016 period includes approximately $7,747,000 for dividends declared and paid in the year ended December 31, 2016, $701,000 used to settle minimum employee withholding tax obligations on vested RSUs, $206,000 of deferred financing costs related to the expansion and extension of the Revolver and $1,144,000 to repurchase shares of the Company’s common stock, offset by proceeds received from

employees for option exercises of $153,000. The 2015 period includes approximately $6,338,000 for dividends declared and paid in the year ended December 31, 2015, $993,000 used to settle minimum employee withholding tax obligations on vested RSUs and $89,000 related to costs incurred in connection with the shelf registration statement filed in the second quarter of 2015, offset by proceeds received from employees for option exercises of $284,000.

Comparison of Cash Flows for the Years Ended December 31, 2015 and 2014

Net cash provided by operating activities increased $9,447,000 from $14,789,000 provided in the 2014 period to $24,236,000 provided in the 2015 period. This increase was the result of increased operating cash flow of $5,320,000 from the Reis Services segment due to growth in revenue and Reis Services EBITDA, as well as the impact of net cash provided from discontinued operations of $3,724,000 due to litigation recoveries in the 2015 period.

Cash used in investing activities increased $1,984,000 from $4,203,000 used in the 2014 period to $6,187,000 used in the 2015 period. This change resulted almost entirely from a $1,981,000 increase of cash used in the 2015 period as compared to the 2014 period for website and database development costs for continuing product development and enhancement initiatives.

Net cash used in financing activities was $7,136,000 and $3,401,000 in the 2015 and 2014 periods, respectively. In the 2015 period, this amount includes approximately $6,338,000 for dividends declared and paid in 2015 and $993,000, to settle minimum employee withholding tax obligations on vested RSUs and $89,000 related to costs incurred in connection with the shelf registration statement filed in the second quarter of 2015, offset by proceeds received from employees for option exercises in 2015 aggregating $284,000. In the 2014 period, this amount included approximately $3,698,000 for dividends declared and paid in the second, third and fourth quarters of 2014 and $132,000 for option cancellation payments, offset by proceeds received from employees for option exercises in 2014 aggregating $429,000.

Selected Significant Accounting Policies

Management has identified the following accounting policies which it believes are significant in understanding the Company’s activities, financial position and operating results.

Principles of Consolidation

The accompanying consolidated financial statements include the accounts of the Company and its majority-owned and controlled subsidiaries. Investments in entities where the Company does not have a controlling interest are accounted for under the equity method of accounting. These investments were initially recorded at cost and were subsequently adjusted for the Company’s proportionate share of the investment’s income (loss) and additional contributions or distributions. All intercompany accounts and transactions among the Company and its subsidiaries have been eliminated in consolidation.

Discontinued Operations

In April 2011, the Company determined that all operational and litigation related activities associated with the prior ownership and development of residential real estate, including certain general and administrative costs that supported the related operations, should be presented as a discontinued operation. As a result of this determination and the fact that these operations and cash flows were clearly distinguished, the operating results of the discontinued segment and related general and administrative costs were aggregated for separate presentation apart from continuing operating results of the Company in the consolidated financial statements for all periods presented. Discontinued operations were completed as of December 31, 2015, therefore there were no discontinued operations activities during the year ended December 31, 2016.

Intangible Assets, Amortization and Impairment

Website Development Costs

The Company expenses all internet website costs incurred during the preliminary project stage. Thereafter, all direct external and internal development and implementation costs are capitalized and amortized using the straight-line method over their remaining estimated useful lives, not exceeding three years. Amortization expense for all capitalized website development costs is charged to product development expense.

Database Costs

The Company capitalizes costs for the development of its database in connection with the identification and addition of new real estate properties and sale transactions which provide a future economic benefit. Amortization is calculated on a straight-line basis over a three or five year period. Costs of updating and maintaining information on existing properties in the database are expensed as incurred. Amortization expense for all capitalized database costs is charged to cost of sales.

Customer Relationships

The value ascribed to customer relationships acquired at the time of the Merger is amortized over 15 years on an accelerated basis and is charged to sales and marketing expense.

Lease Value

The value ascribed to the below market terms of the office lease existing at the time of the Merger was amortized on a straight-line basis over the remaining term of the acquired office lease. During 2016, this ascribed value was fully amortized. Amortization expense was charged to general and administrative expenses.

Goodwill and Intangible Asset Impairment

Goodwill and a major portion of the other intangible assets were recorded at the time of the Merger. As a result of the tax treatment of the Merger, goodwill and the acquired intangible assets are not deductible for income tax purposes.

Goodwill is not amortized and is tested for impairment at least annually, or after a triggering event has occurred, requiring such a calculation. A qualitative assessment can be utilized to determine if a more detailed two step calculation is required. If the qualitative assessment results in a determination that it is not more likely than not that the fair value of a reporting unit is less than its carrying amount, including goodwill, then no further evaluation would be necessary. If, after performing the qualitative assessment, the Company determined that it is more likely than not that the fair value of a reporting unit is less than its carrying amount, including goodwill, then the first step of the two step test would be necessary. The first step is a comparison of the estimated fair value of the reporting unit to which the goodwill has been assigned with the reporting unit’s carrying value. The fair values used in this evaluation would be estimates based upon market projections for the reporting unit. These market projections would utilize a number of estimates and assumptions, such as EBITDA multiples, market comparisons, and quoted market prices. If the fair value of the reporting unit were to exceed its carrying value, goodwill would not be deemed to be impaired. If the fair value of the reporting unit is less than its carrying value, a second step would be required to calculate the implied fair value of goodwill by deducting the fair value of all tangible and intangible net assets of the reporting unit from the fair value of the reporting unit. The Company utilized the qualitative assessment for its 2016, 2015 and 2014 evaluations. There was no goodwill impairment identified in 2016, 2015 or 2014.

Intangible assets, with determinable useful lives, are amortized over their respective estimated useful lives using a method of amortization that reflects the pattern in which the economic benefits of the intangible assets are consumed or otherwise used. In addition, the carrying amount of amortizable intangible assets are reviewed when indicators of impairment are present. If estimated future undiscounted net cash flows are less than the carrying amount of the asset, the asset would be considered impaired. An impairment charge would be determined by comparing the estimated fair value of the intangible asset to its carrying value, with any shortfall from fair value recognized as an expense in the current period. There was no intangible asset impairment identified in 2016, 2015 or 2014.

Revenue Recognition and Related Items

The Company’s subscription revenue is derived principally from subscriptions to itsweb-based services for itsReis SE product and is recognized as revenue ratably over the related contractual period, which is typically one year but can be as long as 48 months. Revenue fromReis Portfolio CRE for contracts entered into prior to September 16, 2015, and in 2014 represents the Company’s 50% share of the value of the subscription and is recognized as revenue ratably over the related contractual period consistent with the treatment for theReis SEproduct. Revenue fromReis Portfolio CRE contracts entered into after September 16, 2015 represents the Company’s 100% share of the value of the subscription as a result of the purchase of the intellectual property of theReis Portfolio CRE product and is recognized as revenue ratably over the related contractual period consistent with the treatment for theReis SEproduct. Multiple contracts executed with one customer are accounted for as separate arrangements. Revenues fromReisReportsare recognized monthly as billed for monthly subscribers, or recognized as revenue ratably over the related contractual period for subscriptions in excess of one month.

The Company’s other revenue includesnon-subscription revenue such as(1) non-subscription custom data deliverables or(2) one-time settlements. Revenues fromad-hoc andnon-subscription custom reports or projects are recognized upon completion and delivery to the customers, provided that no significant Company obligations remain. Revenues from settlements for prior unlicensed usage is recognized at the time of the settlement when collectability is reasonably assured.

Deferred revenue represents the portion of a subscription billed or collected in advance under the terms of the respective contract, which will be recognized in future periods. If a customer does not meet the payment obligations of a contract, any related accounts receivable and deferred revenue are written off at that time and the net amount, after considering any recovery of accounts receivable, is charged to cost of sales.

Cost of sales of subscription revenue principally consists of salaries and related expenses for the Company’s researchers who collect, analyze and maintain the commercial real estate data that is the basis for the Company’s information services. Additionally, cost of sales includes expenses from the amortization of the database intangible asset.

Interest revenue is recorded on an accrual basis.

Income Taxes

Deferred income tax assets and liabilities are determined based upon differences between the financial reporting basis and the tax basis of assets and liabilities, and are measured using the enacted tax rates and laws that are estimated to be in effect when the differences are expected to reverse. Valuation allowances with respect to deferred income tax assets are recorded when deemed appropriate and adjusted based upon periodic evaluations. There was no valuation allowance with respect to deferred income taxes at December 31, 2016, 2015 and 2014.

The Company evaluates its tax positions in accordance with applicable current accounting literature. Recognition of uncertain tax positions (step one) occurs when an enterprise concludes that a tax position, based solely on its technical merits, is more likely than not to be sustained upon examination. Measurement (step two) determines the amount of benefit that more likely than not will be realized upon settlement. Derecognition of a tax position that was previously recognized would occur when a company subsequently determines that a tax position no longer meets the more likely than not threshold of being sustained, statutes close or there is a satisfactory resolution of the tax position.

For more information regarding income taxes, see Note 6 to the Company’s consolidated financial statements included in this filing.

Item 7A.  Quantitative and Qualitative Disclosures About Market Risk.

The Company’s primary market risk exposure has been to changes in interest rates. This risk may be managed by limiting the Company’s financing exposures, to the extent possible, by purchasing interest rate caps when deemed appropriate.

At December 31, 2016 and 2015, the Company’s only potential exposure to interest rates was on variable rate based debt. This exposure has historically been minimized through the use of interest rate caps. Throughout 2016 and 2015, the Company did not have any interest rate caps. No debt was outstanding at December 31, 2016 and 2015. For more information about the Company’s debt, see Note 5 to the Company’s consolidated financial statements.

Reis holds cash and cash equivalents at various regional and national banking institutions. Management monitors the institutions that hold our cash and cash equivalents. Management’s emphasis is primarily on safety of principal. Management, in its discretion, has diversified Reis’s cash and cash equivalents among banking institutions to potentially minimize exposure to any one of these entities unless otherwise required to maintain a minimum balance at an institution in connection with its debt covenants. To date, we have experienced no loss or lack of access to our invested cash or cash equivalents; however, we can provide no assurances that access to invested cash and cash equivalents will not be impacted by adverse conditions in the financial markets.

Cash balances held at banking institutions with which we do business generally exceed the Federal Deposit Insurance Corporation insurance limits. While management monitors the cash balances in these bank accounts, such cash balances could be impacted if the underlying banks fail or could be subject to other adverse conditions in the financial markets.

Item 8.  Financial Statements and Supplementary Data.

The response to this Item 8 is included as a separate section of this annual report onForm 10-K starting atpage F-1 and is incorporated by reference herein.

Item 9.  Changes in and Disagreements With Accountants on Accounting and Financial Disclosure.

None.

Item 9A.  Controls and Procedures.

Evaluation of Disclosure Controls and Procedures

As of December 31, 2016, the Company carried out an evaluation, under the supervision and with the participation of our management, including our Chief Executive Officer and Chief Financial Officer, of the effectiveness of our disclosure controls and procedures (as defined in Rule13a-15(e) or Rule15d-15(e) under the Securities Exchange Act of 1934, as amended (the “Exchange Act”)). Based on this evaluation, our Chief Executive Officer and Chief Financial Officer have concluded that our disclosure controls and procedures as of December 31, 2016 were designed at a reasonable assurance level and were effective to ensure that information required to be disclosed by the Company in the reports that the Company files or submits under the Exchange Act is recorded, processed, summarized and reported within the time periods specified in the SEC rules and forms, and to ensure that such information is accumulated and communicated to the Company’s management, including the Chief Executive Officer and Chief Financial Officer, as appropriate, to allow timely decisions regarding required disclosure.

Changes in Internal Control Over Financial Reporting

We regularly review our system of internal control over financial reporting and make changes to our processes and systems to improve controls and increase efficiency, while ensuring that we maintain an effective internal control environment. There were no changes in our internal control over financial reporting that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting during the fourth quarter of 2016.

Management’s Report on Internal Control Over Financial Reporting

Management of the Company is responsible for establishing and maintaining adequate internal control over financial reporting and for the assessment of the effectiveness of internal control over financial reporting. Internal control over financial reporting is defined in Rules13a-15(f) and15d-15(f) under the Exchange Act as a process designed by, or under the supervision of, the Company’s principal executive and principal financial officers and effected by the Company’s Board of Directors, management and other personnel to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with U.S. generally accepted accounting principles. The Company’s internal control system was designed to provide reasonable assurance to our management and Board of Directors regarding the preparation and fair presentation of published financial statements.

All internal control systems, no matter how well designed, have inherent limitations. Therefore, even those systems determined to be effective can provide only reasonable assurance with respect to financial statement preparation and presentation.

The Company’s management assessed the effectiveness of the Company’s internal control over financial reporting as of December 31, 2016. In making this assessment, management used the criteria set forth by the Committee of Sponsoring Organizations of the Treadway Commission in “Internal Control - Integrated Framework” (2013 Framework). Based upon this assessment, management concluded that, as of December 31, 2016, our internal control over financial reporting is effective in accordance with those criteria.

The effectiveness of our internal control over financial reporting as of December 31, 2016 has been audited by Ernst & Young LLP, an independent registered public accounting firm, as stated in their report which is included on pageF-3 herein.

Item 9B.  Other Information.

None.

PART III

Item 10. Directors, Executive Officers and Corporate Governance.

Biographical Information

The executive officers and directors of the Company, their ages and their positions as of April 1, 2018 are as follows:

 

Name

      Age      

Positions and Offices Held

M. Christian Mitchell

  6263  Chairman of the Board and Director***

Lloyd Lynford

  6162  Chief Executive Officer, President and Director***

Jonathan Garfield

  6061  Executive Vice President and Director**

Mark P. Cantaluppi

  4647  Vice President, Chief Financial Officer

William Sander

  4950  Chief Operating Officer, and President, Reis Services

Thomas J. Clarke Jr.Jr

  6061  Director***

Byron C. Vielehr

 

  

53

54

 

  

Director**

 

*           Term expires during 2017.

  **    Term expires during 2018.

  ****   Term expires during 2019.

***   Term expires during 2020.

ToFollowing is biographical information regarding the extent responsiveforegoing executive officers and directors:

M. Christian Mitchell, age 63, has been a director of Reis since May 2007. Mr. Mitchell is Vice Chairman of Marshall & Stevens, Inc., a national valuation consulting firm, where he has served on the board of directors since December 2008. He has also served as a member of the board of directors of Grandpoint Capital, a bank holding company located in Los Angeles, since March 2010, where he is Chairman of the audit and risk committee and Lead Independent Director. Since May 2012, Mr. Mitchell has served as a director of Western Asset Mortgage Capital Corporation, a public mortgage REIT, where he is Chairman of the audit committee and a member of the compensation and nominating and corporate governance committees and Lead Independent Director. Beginning in 2013, Mr. Mitchell became a director of Parsons Corp., an employee stock ownership plan, or ESOP, owned engineering, construction, technical and professional services firm. At Parsons, he is Chairman of the audit committee and a member of the nominating and corporate governance and executive committees. In 2013, Mr. Mitchell also became a member of the board of directors of Stearns Holdings, LLC, a leading private independent mortgage company. At Stearns he is Chairman of the audit committee and a member of the compensation committee. Previously, Mr. Mitchell served as a member of the board of directors of two multi-billion dollar bank holding companies – one public and one private equity-sponsored. He served as Chairman of the audit committees for both companies, and as a member of various committees of each company, including the risk, planning, compliance and nominating and corporate governance committees. Mr. Mitchell was previously a member of the board of directors of Special Value Opportunities Fund, LLC, aclosed-end SEC registered investment company, from 2004 to 2015, where he was also the designated financial expert and Chairman of the audit committee, as well as a member of the transaction committee. Mr. Mitchell is Chairman Emeritus of the National Association of Corporate Directors (“NACD”), Southern California Chapter, and in 2017 was elected to the requirementsnational board of this item,directors for NACD. He is also designated as an NACD Board Leadership Fellow. In 2011 and 2012, Mr. Mitchell was named one of the “100 Most Influential People in Corporate Governance” by Directorship magazine. He was an adjunct Accounting Professor at the University of Redlands from 2006 through May 2010 and a guest lecturer from 2010 to 2017. Mr. Mitchell was with the accounting firm Deloitte & Touche LLP from 1977 to 1985 and 1987 to 2003, and served as the National Managing Partner, Mortgage Banking/Finance Companies Practice, from 2001 to 2003. Mr. Mitchell graduatedsumma cum laude from the University of Alabama. Reis’s board of directors has concluded that Mr. Mitchell should serve on the board based on his extensive accounting and finance, banking and real estate finance, and corporate governance experience.

Lloyd Lynford, age 62, has been President, Chief Executive Officer and a director of Reis since Reis’s founding by Mr. Lynford and Mr. Jonathan Garfield in 1980. Mr. Lynford served on the board of the Real Estate Research Institute from 1993 to 1997 and served as its President from 1996 to 1997. He has lectured at The Wharton School, Berkeley, MIT, New York University, Columbia University, and Cambridge University. Mr. Lynford graduatedmagna cum laudefrom Brown University. Mr. Lynford currently is on the board of directors of Paradigm Tax Group. Reis’s board of directors has concluded that Mr. Lynford should serve on the board based on his extensive expertise in commercial real estate markets and in developing and marketing analytical products to decision makers in the real estate capital markets.

Jonathan Garfield, age 61, has been Executive Vice President and a director of Reis since Reis’s founding by Mr. Lloyd Lynford and Mr. Garfield in 1980. He created the initial applications and the database which contains Reis’s time series data on the property, neighborhood and metropolitan levels. Mr. Garfield led the initial transition to electronic delivery of Reis’s information containedproducts by managing the design, production, testing and maintenance of Reis’s flagship product,Reis SE. He oversaw Reis’s corporate reporting, including legal, accounting, audit, tax and financing issues until May 2007. Mr. Garfield graduatedcum laudefrom Pomona College. Reis’s board of directors has concluded that Mr. Garfield should serve on the board based on his extensive experience in information management, database technology and analytical product development, as well as with the real estate markets, developed in his nearly 40 years with Reis.

Mark P. Cantaluppi, age 47, has been Vice President (since November 1999) and Chief Financial Officer (since March 2006) of Reis (including its public company predecessor, Wellsford Real Properties, Inc. (“Wellsford”)). Previously, Mr. Cantaluppi was Chief Accounting Officer and Director of Investor Relations of Wellsford since December 2000. He joined Wellsford in November 1999 as Vice President, Controller and Director of Investor Relations. From January 1998 to November 1999, he was the Assistant Controller of Vornado Realty Trust, a diversified REIT. From 1993 to 1998, Mr. Cantaluppi worked for Ernst & Young LLP, a public accounting firm, where he attained the level of manager. Mr. Cantaluppi is a Certified Public Accountant and a member of the American Institute of Certified Public Accountants. Mr. Cantaluppi graduatedcum laudefrom Villanova University.

William Sander, age 50, has been Chief Operating Officer of Reis Services (or its predecessor) since 2001, and President of Reis Services since March 2013. In addition to his responsibilities for theday-to-day management of the firm, Mr. Sander has been instrumental in charting the course of development for the Company’s flagship product,Reis SE, since its initial launch in 2001, introducing successive versions of comparability analysis (Rent, Sales and New Construction Comps), automated property valuations (Single Property Valuation, Value Alert andReis Portfolio CRE), and customizable, natural language analytical reports at the market, submarket, and property level. He has guided the Company through multiple expansions of coverage into new metros, and through the addition of entirely new sectors (self storage, seniors housing, student housing, flex/research & development, and warehouse/distribution). In 2007, Mr. Sander played a significant role in the Company’s definitive proxy statementsale and subsequent listing on NASDAQ. In 2014, Mr. Sander established the Company’s Intellectual Property protection group, which he continues to lead as key strategist. Prior to joining Reis, Mr. Sander was a Senior Vice President of Product Management for Primark Corporation which provided content and software to the financial services industry. At Primark, Mr. Sander was responsible for the integration of numerous data sources into the Global Access and Piranha platforms. In 2000, after Primark was acquired by Thomson Corporation for $1.1 billion, Global Access and Piranha were recast as Thomson Research and Thomson ONE Banker. Mr. Sander spent his early career as Director of Product Management at IRRC, a proxy advisory firm, where he authored the Shareholder Voting Almanac, 1991 edition. He is a graduate of Marietta College.

Thomas J. Clarke Jr., age 61, has been a director of Reis since September 2010. Mr. Clarke served as the Chief Executive Officer of Weiss Group, LLC, a leading provider of independent research, from July 2010 to January 2018. From 1999 through 2009, he served as Chief Executive Officer of TheStreet.com, Inc., a financial media company. From 2002 through 2008, Mr. Clarke also served as Chairman of TheStreet.com. From 1998 through 1999, he served as President of Thomson Financial Investor Relations, following the acquisition of Technimetrics, Inc. by Thomson Financial. From 1984 through 1998, Mr. Clarke served in executive positions of increasing responsibility at Technimetrics, a global information company, rising to Chief Executive Officer from 1992 through the company’s sale in 1998. From 1980 through 1984, he served as Operations Manager for McAuto Systems Group, Incorporated, a Medicaid billing processor. He is also a mentor to students at Columbia University involved in the Executive Masters Program focusing on technology. Mr. Clarke received a Bachelor of Science degree in marketing from St. John’s University and a Master’s degree in Business Administration from Hofstra University. Reis’s board of directors has concluded that Mr. Clarke should serve on the board based on his extensive operating and strategic experience as a senior executive in the information services industry.

Byron C. Vielehr, age 54, has been a director of Reis since September 2010. Mr. Vielehr is Chief Administrative Officer at Fiserv, Inc. In this role Mr. Vielehr oversees the company’s domestic account processing businesses, which serve banks, thrifts and credit unions. Mr. Vielehr has more than 25 years of technology and financial services experience. Prior to joining Fiserv in 2013, he served as President of International and Global Operations for Dun & Bradstreet (D&B), where he was responsible for all D&B businesses outside of North America and led operations globally. During his tenure at D&B, which began as Chief Information Officer in 2005, Mr. Vielehr held a succession of senior executive positions, including leadership of its North American business, Global Risk Management Solutions, and D&B Sales and Marketing Solutions. Prior to joining Dun & Bradstreet, Mr. Vielehr was President and Chief Operating Officer of Northstar Systems International, Inc., an enterprise wealth management technology solutions provider, and previously was Chief Technology Officer of various units of Merrill Lynch, a leading investment bank. He received a Bachelor’s degree from Drexel University and a Master’s degree in Business Administration from the University of Pennsylvania’s

Wharton School. Reis’s board of directors has concluded that Mr. Vielehr should serve on the board based on his extensive operating and strategic experience as a senior executive in the information services industry.

Section 16(a) Beneficial Ownership Reporting Compliance

Section 16(a) of the Exchange Act requires Reis’s executive officers and directors, and persons who own more than 10% of any registered class of Reis’s equity securities, to file reports of ownership and changes in ownership with the SEC. Executive officers, directors and greater than 10% stockholders are required by regulation to furnish Reis with copies of all Section 16(a) reports they file.

Based solely on its review of the copies of the reports it has received and written representations provided to Reis from the individuals required to file the reports, Reis believes that each of Reis’s executive officers and directors has complied with applicable reporting requirements for transactions in Reis’s common stock during the fiscal year ended December 31, 2017, except for the late filing by Mr. Clarke of two Form 4s required to be filed with respect to two transactions in 2017. All transactions and holdings are currently reported and reflected in this Amendment No. 1.

Corporate Governance

General

Reis periodically reviews its corporate governance policies and procedures to ensure that the Company meets the highest standards of ethical conduct, reports results with accuracy and transparency, and maintains full compliance with the laws, rules and regulations that govern Reis and its operations. As part of this periodic corporate governance review, the board of directors reviews and adopts what it believes are, at that time, the best corporate governance policies and practices for Reis.

Code of Business Conduct and Ethics

Reis has adopted a Code of Business Conduct and Ethics for Directors, Senior Financial Officers, Other Officers and All Other Employees (the “Code of Ethics”) and a Policy for Protection of Whistleblowers from Retaliation (the “Whistleblower Policy”). The Code of Ethics is a set of written standards reasonably designed to deter wrongdoing and to ensure that Reis’s directors, officers and employees meet the highest standards of ethical conduct. The Code of Ethics requires that Reis’s directors, officers and employees avoid conflicts of interest, comply with all laws and other legal requirements, not engage in insider trading, not use Reis’s resources for personal gain, conduct business in an honest and ethical manner and otherwise act with integrity and in Reis’s best interest. Under the terms of the Code of Ethics, directors, officers and employees are required to report any conduct they believe in good faith to be an actual or apparent violation of the Code of Ethics.

As a mechanism to encourage compliance with the Code of Ethics, Reis has adopted the Whistleblower Policy, which contains procedures to receive, treat and retain complaints regarding accounting, internal accounting controls, auditing matters or other matters, including violations of the Code of Ethics. These procedures ensure that individuals may submit concerns regarding questionable accounting or auditing matters in a confidential and anonymous manner. The Whistleblower Policy also prohibits Reis from retaliating against any director, officer or employee who reports actual or apparent violations of the Code of Ethics.

Copies of the Code of Ethics and the Whistleblower Policy can be found under “Corporate Governance/Documents & Charters” at the Investor Relations portion of Reis’s website (www.reis.com). Any amendment of the Code of Ethics, or any waiver under the Code of Ethics applicable to Reis’s principal executive officer, principal financial officer, principal accounting officer or controller, or persons performing similar functions, will be disclosed at the same location.

Meetings and Committees of the Board of Directors

General. The Company conducts business through meetings and activities of its board of directors and committees thereof. During 2017, the board of directors of the Company held six meetings and acted by written consent on four other occasions. No director attended fewer than 75% of the total meetings of the board of directors and the committees on which such director served.

The following table identifies the Company’s standing committees and their members at December 31, 2017 (which composition has remained the same as of the date of this Form10-K/A), and lists the number of meetings held by each committee during 2017. The members of each standing committee are appointed by the board of directors, generally on an annual basis at the

board’s meeting held immediately following the annual meeting of stockholders. All members of each committee are independent in accordance with the listing standards of the NASDAQ Stock Market. Each of the committees listed below operates under a written charter adopted by the board of directors that governs its composition, responsibilities and operations. The committee charters and Reis’s “Corporate Governance Guidelines” are available under “Corporate Governance/Documents & Charters” at the Investor Relations portion of Reis’s website (www.reis.com).

Name

  Audit
  Committee  
  Compensation
Committee
  Nominating
and
Corporate
Governance
Committee

Thomas J. Clarke Jr.

  X  *  

Jonathan Garfield

      

Lloyd Lynford

      

M. Christian Mitchell (Chairman)

  *    X

Byron C. Vielehr

 

  X

 

  X

 

  *

 

Number of formal meetings in 2017 (not including actions taken by written consent)

 

  8

 

  4

 

  3

 

*           Denotes committee chairperson.

  

Changes in Board of Directors and Committee Composition.During 2017 (and through the date of this Form10-K/A) there were no changes in the composition of the board of directors and its committees.

Audit Committee. The Audit Committee selects and retains (subject to approval or ratification by the Company’s stockholders) the independent registered public accounting firm for Reis, reviews the scope of the work of the independent registered public accounting firm and its reports, and reviews the activities and actions of Reis’s accounting staff in its preparation of financial statements and review of internal control over financial reporting. The board of directors has designated Mr. Mitchell as an “audit committee financial expert” under the rules of the Securities and Exchange Commission (the “SEC”). In addition to being independent generally, as set forth under “—Independent Directors,” Messrs. Mitchell, Clarke and Vielehr each satisfy the additional independence requirements for audit committee members under the listing standards of the NASDAQ Stock Market. The annual report of the Audit Committee required by the rules of the SEC is included in this Form10-K/A. See “Audit Committee Report.”

Compensation Committee. The Compensation Committee reviews and determines compensation arrangements, including employment agreements, salaries, bonuses and other benefits for executive officers of Reis and its subsidiaries, reviews and determines employees to whom stock options, restricted stock units (“RSUs”) and other equity-based awards are to be granted and the terms of such grants, reviews the selection of officers who participate in incentive and other compensatory plans and arrangements, reviews the Company’s compensation plans, and recommends new plans, or amendments to those plans, to the board of directors. The Compensation Committee report required by the rules of the SEC is included in this Form10-K/A under the heading “Compensation Committee Report.” The Compensation Committee may form and delegate authority to subcommittees as the Compensation Committee deems appropriate.

Nominating and Corporate Governance Committee. The Nominating and Corporate Governance Committee takes a leadership role in shaping governance policies and practices, including recommending to the board of directors the corporate governance policies and guidelines applicable to Reis and monitoring compliance with those policies and guidelines. In addition, the Nominating and Corporate Governance Committee is responsible for identifying individuals qualified to become board members and recommending the director nominees for election at the next annual meeting of stockholders. This committee also recommends director candidates for each committee for appointment by the board of directors.

Leadership Structure of the Board of Directors

The board of directors does not have a formal policy regarding the separation of the roles of Chief Executive Officer and Chairman of the board of directors, as the board believes it is in the best interests of the Company to make that determination based on the position and direction of the Company and the membership of the board, at any particular time. The board of directors has appointed M. Christian Mitchell, an independent director, to serve as the board’s independent Chairman. The Chairman presides at all meetings of the board of directors during which he is present and works with the Chief Executive Officer to establish the agendas for these meetings. Meetings of the board of directors may generally be called by the Chairman, the Chief Executive Officer, the

President or a majority of the directors then in office. The independent directors have the opportunity to meet in executive session, led by the independent Chairman, at every regularly scheduled meeting of the board.

Role of the Board of Directors in Risk Oversight

General.A fundamental part of risk management is not only understanding the risks faced by the Company, how those risks may evolve over time, and what steps management is taking to manage and mitigate those risks, but also understanding what level of risk tolerance is appropriate for the Company. Management is responsible for theday-to-day management of risk, while the board, as a whole and through its committees, has responsibility for the oversight of risk management. In its risk oversight role, the board of directors has the responsibility to satisfy itself that the risk management processes designed and implemented by management are adequate and functioning as designed. The board regularly reviews information regarding sales and marketing, operations, finance and business development as well as the risks associated with each. While the board is ultimately responsible for risk oversight, committees of the board also have been allocated responsibility for specific aspects of risk oversight. In particular, the Audit Committee assists the board in fulfilling its oversight responsibilities with respect to risk management in the areas of financial reporting and internal controls. The Compensation Committee assists the board in fulfilling its oversight responsibilities with respect to the risks arising from our compensation policies and programs. The Nominating and Corporate Governance Committee assists the board in fulfilling its oversight responsibilities with respect to the risks associated with board organization, membership and structure, ethics and compliance, succession planning for directors and executive officers, and corporate governance.

Compensation Committee Risk Oversight and Compensation Risk Assessment.The Compensation Committee is responsible for reviewing compensation policies and practices relating to our named executive officers. In executing this duty, the Compensation Committee relies on information provided by management and, from time to time, by an independent compensation consultant. The Company’s senior management, together with human resources, legal and finance personnel, as well as outside advisors, is responsible for implementing and reviewing compensation policies and practices relating to employees other than our named executive officers. Based on a review of these matters, including any mitigating controls, we believe that the mix of compensation elements and the design of those elements along with sound governance practices work together to provide compensation programs and practices that do not encourage employees to take risks that are reasonably likely to have a material adverse effect on the Company. Specifically:

the Company has strong internal financial controls that are assessed by the Company’s independent registered public accounting firm annually in addition to their audits of the Company’s financial statements;

base salaries are fixed in amount and consistent with market practice and employees’ responsibility so that employees are not motivated to take excessive risks to attain a reasonable level of financial security;

the determination of incentive awards is based on well-defined financial measures. There is a maximum cash incentive opportunity for each named executive officer, and the Compensation Committee retains discretion to adjust bonuses to eliminate anomalous or inappropriate outcomes; and

long-term incentives are designed to provide appropriate awards for successful long-term outcomes, and effectively align realized compensation with returns realized by investors.

Communications with Directors

Reis’s stockholders may wish to communicate with the board of directors and/or individual directors. Written communications may be made to the board of directors or to specific members of the board by addressing them to the intended addressee, care of: Corporate Secretary, Reis, Inc., 1185 Avenue of the Americas, 30th Floor, New York, New York 10036, or by email toinvestorrelations@reis.com. Relevant communications are distributed to the board of directors or to any individual director or directors, as appropriate, depending on the facts and circumstances outlined in the communication. In that regard, the board of directors has requested that certain items that are unrelated to the duties and responsibilities of the board of directors should be excluded, such as: business solicitations or advertisements; junk mail and mass mailings; new product or service suggestions; product or service complaints; product or service inquiries; résumés and other forms of job inquiries; spam; and surveys. In addition, material that is unduly hostile, threatening, illegal or similarly unsuitable will be excluded, with the provision that any communication that is filtered out must be made available to any director upon request.

Audit Committee Report

Notwithstanding anything to the contrary set forth in any of Reis’s previous filings under the Securities Act of 1933, as amended (the “Securities Act”), or the Exchange Act that might incorporate future filings, including this Form10-K/A, in whole or in part, this report of the Audit Committee will not be incorporated herein by reference.reference into any such filings.

Reis’s management is responsible for Reis’s internal control over financial reporting. The Audit Committee oversees Reis’s internal control over financial reporting on behalf of the board of directors. The independent registered public accounting firm is responsible for performing an independent audit of Reis’s consolidated financial statements and issuing an opinion on the conformity of those financial statements with U.S. generally accepted accounting principles (“GAAP”), as well as Reis’s internal control over financial reporting.

The Audit Committee met eight times during 2017 and held discussions with management and the independent registered public accounting firm. Management represented to the Audit Committee that Reis’s consolidated financial statements were prepared in accordance with GAAP, and the Audit Committee has reviewed and discussed the consolidated financial statements with management and the independent registered public accounting firm. The Audit Committee discussed with the independent registered public accounting firm matters required to be discussed by the statement on auditing standards No. 61, as amended (AICPA, Professional Standards, Volume 1 AU Section 388), as adopted by the Public Company Accounting Oversight Board (“PCAOB”) in Rule 3200T, including the quality, not just the acceptability, of the accounting principles, the reasonableness of significant judgments, and the clarity of the disclosures in the financial statements.

In addition, the Audit Committee has received the written disclosures and letter from the independent registered public accounting firm required by the PCAOB’s Ethics and Independence Rule 3526, “Communication with Audit Committees Concerning Independence,” and has discussed with the independent registered public accounting firm the firm’s independence from Reis and its management.

The Audit Committee discussed with Reis’s independent registered public accounting firm the overall scope and plans for their audit. The Audit Committee meets with the independent registered public accounting firm, with and without management present, to discuss the results of their annual examination and their procedures with respect to the Company’s quarterly financial statements, their consideration of Reis’s internal control over financial reporting, and the overall quality of Reis’s financial reporting process. The Audit Committee also approved the professional (includingnon-audit) services provided by the independent registered public accounting firm, considered the range of audit andnon-audit fees, reviewed any related party transactions and reviewed and approved the issuance of the quarterly financial statements and disclosures in Reis’s quarterly reports onForm 10-Q during 2017 and the year end financial statements and disclosures in Reis’s annual report onForm 10-K for the year ended December 31, 2017, in each case before such document was filed with the SEC.

In performing all of these functions, the Audit Committee acts only in an oversight capacity. In its oversight role, the Audit Committee relies on the work and assurances of Reis’s management, which has the primary responsibility for financial statements and reports, and of the independent registered public accounting firm who, in their report, express an opinion on the conformity of Reis’s financial statements with GAAP. The Audit Committee’s oversight does not provide it with an independent basis to determine that management has maintained appropriate accounting and financial reporting principles or policies, or appropriate internal control over financial reporting designed to assure compliance with accounting standards and applicable laws and regulations. Furthermore, the Audit Committee’s considerations and discussions with management and the independent registered public accounting firm do not assure that Reis’s financial statements are presented in accordance with GAAP, that the audits of Reis’s financial statements and internal control over financial reporting have been carried out in accordance with the standards of the PCAOB or that Reis’s independent registered public accounting firm is in fact “independent.”

In reliance on the reviews and discussions referred to above, the Audit Committee recommended that the audited consolidated financial statements be included in Reis’s annual report onForm 10-K for the year ended December 31, 2017 for filing with the SEC on March 8, 2018. The annual report on Form10-K, including the financial statements recommended by the Audit Committee, was distributed to the board of directors and each director authorized filing of the annual report by executing the signature page thereto.

The Audit Committee has selected, subject to stockholder ratification, Ernst & Young LLP as Reis’s independent registered public accounting firm for the fiscal year ending December 31, 2018.

The Audit Committee of the Board of Directors of Reis, Inc.

M. Christian Mitchell, Chairperson

Thomas J. Clarke Jr.

Byron C. Vielehr

Item 11. Executive Compensation.

ToSummary Compensation Table

The following table presents compensation for the extent responsiveCompany’s named executive officers including our principal executive officer (Mr. Lynford), our principal financial officer (Mr. Cantaluppi) and our two other most highly compensated executive officers as of December 31, 2017, the most recently completed fiscal year (Messrs. Garfield and Sander).

Name and Principal
Position

     Year         Salary    
($)(A)
    Bonus  
($)(B)
  Stock
  Awards  

($)(C)
  Option
  Awards  

($)(D)
  Non-Equity
Incentive Plan
  Compensation  

($)(E)
  Change in
Pension

Value
and  Non-

Qualified
Deferred
Compensation
Earnings
($)
  All Other
Compensation
($)(F)
    Total ($)   

Lloyd Lynford 

 2017 $475,000  $163,000  $619,657  $  $104,203  $  $5,400  $1,367,260 
Chief Executive Officer & 2016 $462,500  $  $622,271  $  $  $  $5,300  $1,090,071 

President

 2015 $450,000  $  $428,786  $  $548,324  $  $5,300  $1,432,410 
 2017 $425,000  $97,000  $481,966  $  $62,602  $  $5,400  $1,071,968 

Jonathan Garfield

 2016 $420,000  $  $483,993  $  $  $  $5,300  $909,293 
Executive Vice President 2015 $415,000  $  $333,508  $  $337,118  $  $5,300  $1,090,926 

William Sander

         

President & Chief

 2017 $355,000  $90,311  $308,055  $  $65,689  $  $5,400  $824,455 

Operating Officer

 2016 $348,000  $  $276,536  $  $  $  $5,300  $629,836 

of Reis Services

 2015 $341,000  $  $190,579  $  $340,627  $  $5,300  $877,506 

Mark P. Cantaluppi

 2017 $335,000  $90,500  $177,365  $  $63,074  $  $5,400  $671,339 

Vice President,

 2016 $317,500  $  $145,208  $  $  $  $5,300  $468,008 
Chief Financial Officer 2015 $300,000  $15,000  $100,048  $  $305,940  $  $5,300  $726,288 

(A)Includes base salary for all periods presented as reflected in the respective named executive officers’ employment agreements. The 2016 amounts reflect the base salary for the period January 1 to June 30 at the annual rate as reflected in the respective named executive officers’ 2013 employment agreements and for the period July 1 to December 31 at the annual rate as reflected in the respective named executive officers’ 2016 employment agreements.
(B)Represents discretionary bonuses awarded by the Compensation Committee. Discretionary bonuses for 2017 were paid in March 2018, and discretionary bonuses for 2015 were paid in February 2016.
(C)Represents the grant date fair market value of RSUs granted to each named executive officer. The grant date fair market value of the RSUs used to calculate these amounts is the same as that used for stock-based compensation disclosure included in Reis’s consolidated financial statements filed with the SEC.
For Mr. Lynford, the 2017 amount includes 33,190 RSUs granted in February 2017, which vest ratably over three years (the “2017 Annual Grant”), the 2016 amount includes 30,889 RSUs granted in February 2016, which vest ratably over three years (the “2016 Annual Grant”) and the 2015 amount includes 19,149 RSUs granted in February 2015, which vest ratably over three years (the “2015 Annual Grant”).
For Mr. Garfield, includes 25,815 RSUs from the 2017 Annual Grant, 24,025 RSUs from the 2016 Annual Grant and 14,894 RSUs from the 2015 Annual Grant.
For Mr. Sander, includes 16,500 RSUs from the 2017 Annual Grant, 13,727 RSUs from the 2016 Annual Grant and 8,511 RSUs from the 2015 Annual Grant.
For Mr. Cantaluppi, includes 9,500 RSUs from the 2017 Annual Grant, 7,208 RSUs from the 2016 Annual Grant and 4,468 RSUs from the 2015 Annual Grant.

The fair value of Reis’s common stock on the date that the Compensation Committee authorized the respective reward was $18.67, $20.15 and $22.39 per share for the 2017, 2016 and 2015 Annual Grants, respectively.

(D)No option awards were granted to the named executive officers in any of the years presented.
(E)Includesnon-equity incentive plan compensation and/or performance-based bonuses under the executive officers’ employment agreements. The performance-based bonuses for 2017 were paid in March 2018. The performance-based bonus for 2015 was paid in February 2016. No performance-based bonuses were earned during the 2016 period for the four named executive officers,
(F)The following provides greater detail for all other compensation:
For Mr. Lynford, all other compensation is comprised of matching contributions into the Company’s 401(k) plan of $5,400 in 2017 and $5,300 in both 2016 and 2015. The amounts do not reflect any perquisites, as the aggregate amount of perquisites in each year was less than $10,000.

For Mr. Garfield, all other compensation is comprised of matching contributions into the Company’s 401(k) plan of $5,400 in 2017 and $5,300 in both 2016 and 2015. The amounts do not reflect any perquisites, as the aggregate amount of perquisites in each year was less than $10,000.

For Mr. Sander, all other compensation is comprised of matching contributions into the Company’s 401(k) plan of $5,400 in 2017 and $5,300 in both 2016 and 2015. The amounts do not reflect any perquisites, as the aggregate amount of perquisites in each year was less than $10,000.

For Mr. Cantaluppi, all other compensation is comprised of matching contributions into the Company’s 401(k) plan of $5,400 in 2017 and $5,300 in both 2016 and 2015. The amounts do not reflect any perquisites, as the aggregate amount of perquisites in each year was less than $10,000.

Compensation Committee Report

The Compensation Committee has reviewed and discussed with management the following Compensation Discussion and Analysis section of this Form10-K/A for Reis. Based on its review and discussions with management, the Compensation Committee recommended to the requirementsboard of directors that the Compensation Discussion and Analysis be included in Reis’s annual report on Form10-K/A for the year ended December 31, 2017.

The Compensation Committee of the Board of Directors of Reis, Inc.

Thomas J. Clarke Jr., Chairperson

Byron C. Vielehr

Compensation Discussion and Analysis

Compensation Philosophy and Objectives

Reis’s Compensation Committee (the “Committee”) is responsible for designing and maintaining Reis’s executive compensation program consistent with the objectives below. The Committee operates under a written charter approved by the board of directors. For additional information about the Committee’s authority and its ability to delegate its authority, see the section of this item, information containedForm10-K/A titled “Corporate Governance – Meetings and Committees of the Board of Directors – Compensation Committee.” The Committee annually establishes and reviews all forms of direct compensation, including base salaries, annual incentive bonuses, and both the terms and types of equity awards, for Reis’s named executive officers. The Committee also reviews certain aspects of compensation for other officers of Reis. Reis’s executive compensation program seeks to:

•  link executive compensation with the achievement of overall corporate goals;

•  encourage and reward superior performance; and

•  assist Reis in attracting, motivating and retaining talented executive officers.

Accordingly, executive compensation is structured so that a significant portion of compensation paid to named executive officers is directly related to Reis’s short-term and long-term performance, thereby aligning the interests of named executive officers with those of Reis’s stockholders. For example, as discussed below, a significant portion of the named executive officers’ opportunities under Reis’s annual cash incentive program is tied to the achievement of total revenue and EBITDA growth of the Reis Services segment. EBITDA is defined as earnings (net income (loss)) before discontinued operations, interest, taxes, depreciation and amortization. Throughout this Compensation Discussion & Analysis, we refer to EBITDA, which is anon-GAAP financial measure. For an explanation of how we calculate this measure, please see “Reconciliations of Net Income to EBITDA and Adjusted EBITDA,” beginning on page 33 of Reis’s annual report on Form10-K for the year ended December 31, 2017, filed with the SEC on March 8, 2018. The Committee also recognizes that the market for executives in the commercial real estate information services industry is highly competitive, and therefore seeks to provide a competitive total compensation package so that Reis may maintain its leadership position in this industry by attracting, retaining, and motivating executives capable of enhancing stockholder value.

Results of “Say on Pay” Advisory Vote.The Company provided its stockholders with the opportunity to cast an advisory vote on executive compensation (the “Say on Pay” proposal) at the Company’s definitive proxy statement for the 2017 annual meeting of stockholders. Approximately 95.6% of the votes cast on the “Say on Pay” proposal at that meeting were voted in favor of the proposal. The Committee believes that this level of support demonstrates stockholders’ support of the Company’s executive compensation program and is consistent with the Committee’s view that the current programs successfully align our named executive officers’ interests with those of stockholders. Therefore, the Committee did not significantly change its approach to the compensation programs being implemented generally, for 2017.

Determination of Executive Compensation

As part of the compensation review process, consistent with the named executive officers’ employment agreements, the Committee annually reviews and approves each element and the mix of compensation that comprises each named executive officer’s total compensation package. Our Chief Executive Officer makes recommendations to the Committee for each element of compensation awarded to the other named executive officers (including establishment of individual performance goals and broader financial and/or operational goals (“Company-specific goals”) relating to annual cash incentive compensation), but the Committee must approve each element of (and any changes to) a named executive officer’s compensation. The Committee may consider a number of factors in establishing or revising each named executive officer’s total compensation, including individual performance, Reis’s financial performance, external market and peer group practices, current compensation arrangements, certain internal pay equity considerations and long-term potential to enhance stockholder value. Particular factors considered by the Committee with respect to each element of executive compensation are discussed below.

Periodically, the Committee retains independent compensation consulting firms to assist it in gathering benchmarking data and to provide it with information about trends in compensation among comparable companies based on factors such as market capitalization, annual revenues, service offerings and potential competition for talent or business. The Committee believes that comparing the compensation of each of the named executive officers with executives in comparable positions at these peer companies supports the Committee’s goal that the total compensation provided to Reis’s named executive officers is set at an appropriate level to

reward, attract and retain top performers over the long-term. In general, the Committee currently believes that compensation is competitive if it falls between the 50th and 75th percentiles of the peer company data provided by the compensation consultant, as discussed below. The Committee assesses each element of the compensation program within the whole, however, and may target certain elements of executive compensation at different levels depending on Reis’s current goals, individual achievement and internal pay equity considerations, as discussed in more detail below. Changes to different elements may result in target compensation being higher or lower than the 50th to 75th percentile of peer company data. Where peer company data is not available, the Committee reviews individual responsibility and performance, prior compensation, external market and competitive practices, including survey data, and certain internal pay equity considerations when setting an executive officer’s compensation.

2016 Engagement of Independent Compensation Consultant. In December 2015, the Committee engaged Exequity, an independent executive compensation firm (“Exequity”), in connection with the negotiation of new three-year employment agreements with the Company’s named executive officers in 2016. Exequity had also assisted the Committee in connection with the execution of prior executive employment agreements, including agreements, which were effective starting in 2010 and expired in June 2013 and then again for the three-year term ended June 30, 2016. As part of the 2016 engagement, Exequity provided peer data, assessed the competitiveness of Reis’s executive compensation program and identified potential modifications based on market practices and trends, Reis’s business priorities, structure and growth expectations, and the views of management and the Committee. Because the named executive officers’ employment agreements were entered into in June 2016, the Committee’s 2016 compensation decisions with respect to the named executive officers took effect at that time.

Exequity reported directly to the Committee through the Committee chairperson when performing the executive compensation studies and, at the direction of the Committee chairperson, also worked directly with Reis’s management to develop materials and proposals with respect to named executive officer compensation. In the future, the Committee plans at its discretion to retain Exequity or another consulting firm, from time to time, to update or perform new studies to be used in connection with its executive compensation decisions.

The following is the list of peer companies selected and approved by the Committee in 2016, based upon the research compiled by Exequity, as comparable to Reis in terms of market capitalization, annual revenues, and growth in revenues and profitability, and in terms of service offerings and potential competition for talent or business:

•    Altus Group Limited

•    National Research Corporation

•    ARI Network Services, Inc.

•    Tech Target, Inc.

•    Autobytel Inc.

•    TheStreet, Inc.

•    Aware Inc.

•    Travelzoo Inc.

•    CoStar Group, Inc.

•    XO Group Inc.

•    DHI Group, Inc.

•    Zillow, Inc.

•    EXA Corporation

•    Zix Corporation

•    LivePerson, Inc.

Exequity’s preliminary findings and recommendations from its 2016 engagement were presented to the Committee in early 2016. This information was utilized by the Committee, in part, to determine compensation levels set forth in the named executive officers’ employment agreements entered into in June 2016, the terms of which are described in the section of this Form10-K/A titled “Other Compensation Matters — Employment Agreements.” As the June 2016 employment agreements set the compensation for each of the named executive officers through June 2019, there was no need for additional engagement of Exequity related to 2017 and 2018 compensation decisions. In addition, the Committee took into account previous equity awards to the respective named executive officers as well as internal pay equity considerations.

Elements of the Compensation Program

Reis’s executive compensation program consists primarily of base salary, annual cash bonuses and an annual equity award. Each of these components is discussed in further detail below. Overall, Reis strives to motivate its executives with straightforward, transparent and competitive compensation arrangements intended to reward excellent individual and corporate performance and enhance stockholder value. Additionally, our named executive officers are eligible to receive Company-paid matching contributions to their 401(k) plan accounts, as well as health insurance and other welfare benefits that are generally available to Reis’s employees.

In June 2016, the Company entered into new three-year employment agreements with each of the named executive officers, which became effective on July 1, 2016 and will continue through June 30, 2019. These agreements replaced prior employment

agreements entered into in June 2013. We believe that it is beneficial to have employment agreements because they set forth the terms under which the executive officers are employed and provide the Company with protection from competition and solicitation of clients or customers by our named executive officers for periods of time following termination of their employment with Reis. The employment agreements also include terms regarding annual base salary and target bonus levels, as well as severance payments in the event a termination of employment occurs under certain circumstances.

Base Salaries.Base salaries provide a minimum, fixed level of cash compensation for the named executive officers. Salary levels are reviewed annually by the Compensation Committee (the “Committee”). In establishing salary levels, the Committee considers each executive’s individual responsibilities and performance, prior base salary and total compensation, the pay levels of other executives within Reis, market data on base salary and total compensation levels (including Exequity peer group data) and current market conditions. The 2013 employment agreements set minimum base salaries for each named executive officer through June 30, 2016 and the 2016 employment agreements set minimum base salaries for each named executive officer. The following table shows the named executive officers’ 2017 annual base salaries:

Name

  

                         Title                        

        2017      
      Annual Base Salary       

Lloyd Lynford

  CEO & President  $475,000   

Jonathan Garfield

  Executive Vice President  $425,000 

William Sander

  President & COO, Reis Services  $355,000 

Mark P. Cantaluppi

  Vice President & CFO  $335,000 

Annual Cash Incentive Program.The Committee administers an annual cash incentive program under which Reis’s named executive officers may earn a cash incentive bonus. The target for the cash incentive bonus is a fixed percentage of base salary during the fiscal year, and is impacted by the degree to which individual and corporate performance objectives for the fiscal year are achieved. At the beginning of each year, the Committee establishes individual and Company-specific goals for each named executive officer, based upon recommendations from the Chief Executive Officer for the other named executive officers and by the Committee solely as it relates to the Chief Executive Officer. The Committee determines the target percentages of base pay for each named executive officer based on market and competitive conditions, peer company practices, and internal pay equity considerations. The named executive officers’ employment agreements executed in 2016 set target bonus opportunity levels for each named executive officer. The Committee also determines the weighting of the various individual and Company-specific goals, based upon position and functional accountability and responsibility, as well as, for the other named executive officers, recommendations from the Chief Executive Officer; the Committee is solely responsible for determining the weighting of the various individual and Company-specific goals for the Chief Executive Officer. The weighting of the various individual and Company-specific goals may vary among the named executive officers and are subject to change from year to year. The Committee seeks to establish performance goals that are challenging but realistic given the expected operating environment at the time they are established. These performance goals are intended to focus named executive officers on achieving such Company-specific goals. After the completion of each year, the Committee reviews individual and Company performance to determine the extent to which the goals were achieved and the actual cash bonuses to be paid to the named executive officers.

The Company’s annual cash incentive program is administered pursuant to the 2013 Annual Plan. The 2013 Annual Plan was adopted and approved by stockholders at the 2013 annual meeting and took effect with respect to annual cash incentive compensation in 2014.

In the Committee’s view, the use of annual performance-based cash incentive bonuses creates a direct link between executive compensation and individual and corporate performance. The 2017 annual cash incentive plan provided each named executive officer with the potential to earn an aggregate award up to 177.5% of his target for exceptional performance as measured againstpre-established metrics and goals, each of which is incorporated hereindiscussed below. The following table shows each named executive officer’s 2017 target cash incentive bonus and the percentage of base salary at the new annual base pay rates, as established in each respective named executive officer’s employment agreement entered into in June 2016.

Name

  

                                 Title                                

  Target %
of Base Salary Per
Contract
       2017 Target Cash      
      Incentive  Bonus Per      

      Contract      

Lloyd Lynford

  CEO & President  75% $356,250  

Jonathan Garfield

  Executive Vice President  50% $212,500 

William Sander

  President & COO, Reis Services  60% $213,000 

Mark P. Cantaluppi

  CFO & Vice President  60% $201,000 

Each named executive officer may earn an incentive bonus equal to, greater than or less than the target percentage of his base salary depending on whether the individual and Reis achieve the specified performance objectives. These objectives include Company-specific goals, as well as individual qualitative performance goals. In prior years, the Committee selected Company-specific financial goals based on: (1) total revenue; and (2) EBITDA of the Reis Services segment. These Company-specific financial goals were selected by reference.the Committee because it believed that total revenue and EBITDA of the Reis Services segment effectively measured stockholder value and therefore payments awarded as a result of positive performance would reward each of the named executive officers for increasing stockholder value and would be effective in aligning each of the named executive officer’s interests with those of our stockholders.

The individual performance goals established for the named executive officers at the beginning of each year are strategic and leadership goals tailored to the individual’s position and focused on Reis’s strategic initiatives. The individual goals assist the Committee in assessing the named executive officer’s individual performance in key areas that help drive Reis’s operating and financial results. The use of both Company-specific and individual goals advances Reis’s executive compensation philosophy that individual executives be held accountable for both Reis’s overall performance and their own individual performance.

Performance goals and the weighting given to each objective may change in the Committee’s discretion from year to year. The measures and the relative weighting of individual and Company-specific goals for each of the named executive officers are reviewed by the Committee annually at the beginning of the respective year. The Chief Executive Officer proposes to the Committee, for its consideration, changes to the measures and the weighting of the performance goals based on Reis’s current strategic initiatives and goals.

2017 Annual Cash Incentive Awards. The Committee took action within the first 90 days of the 2017 performance period to set applicable performance targets and criteria, with the intention that compensation paid under the annual cash incentive plan would be eligible to qualify as “performance-based” compensation not subject to limitations on deductibility under the Internal Revenue Code (“Code”) Section 162(m). See “Other Compensation Matters—Policy on Deductibility of Compensation.”

In March 2017, the Committee established performance metrics for each individual and utilized the target bonus levels as established for each named executive officer with their respective June 2016 employment agreements. Additionally, in March 2017, the Committee established weightings of the components of the performance criteria identical to those in place for 2016 and 2015 awards. These weightings continued to place more emphasis on the revenue objective, which reflected Reis’s continuing emphasis in 2017 on revenue growth. The relative weightings of individual performance goals for each of the named executive officers for 2017, as established in March 2017, are set forth in the table below:

    

Allocation Among Objectives

Name

 

Title

 

 

Revenue

Objective

as a % of

  Target Award  

 

EBITDA

Objective

as a % of

  Target Award  

 

Individual

Goals Objective

as a
  % of Target Award  

Lloyd Lynford

 

CEO & President

 40% 30% 30%

Jonathan Garfield

 

Executive Vice President

 40% 30% 30%

William Sander

 

President & COO, Reis Services

 40% 30% 30%

Mark P. Cantaluppi

 

Vice President & CFO

 40% 30% 30%

The following table shows each named executive officer’s annual 2017 minimum, target, and maximum awards, which are expressed as a percentage of his actual 2017 base salary. The target as a percentage of base salary used in this and the next table reflects the 2017 target cash incentive bonus amounts per contract as a percentage of the actual 2017 base salary.

                    Name                     

 

Title

 

    Minimum    

 

     Target     

 

  Maximum  

Lloyd Lynford

 

CEO & President

 0% 75% 133.1%

Jonathan Garfield

 

Executive Vice President

 0% 50% 88.8%

William Sander

 

President & COO, Reis Services

 0% 60% 106.5%

Mark P. Cantaluppi

 

Vice President & CFO

 0% 60% 106.5%

The following table shows, for each named executive officer, the 2017 target bonus as a percentage of base salary, the actual award as a percentage of target, the actual award as a percentage of base salary and the amount of the actual award. In February 2018,

the Committee reviewed each named executive officer’s individual achievements and the performance of the Company relative to the goals and targets for 2017 and approved the performance-based cash awards based upon the Committee’s previously established criteria and formulas. A description of 2017 performance compared to the individual performance and Company-specific goals follows the table.

Name

 

Title

 Target
% of Base
Salary

Per
    Contracts    
 Actual
Performance
  Based Award  
as a % of
Target
 Actual
Performance
Based Award as
a % of Base
Salary
 Actual
    Performance    
Based Cash
Award ($)
 

Lloyd Lynford

 

CEO & President

 75% 29.2% 21.9% $104,203     

Jonathan Garfield

 

Executive Vice President

 50% 29.5% 14.7% $62,602     

William Sander

 

President & COO, Reis Services

 60% 30.8% 18.5% $65,689     

Mark P. Cantaluppi

 

Vice President & CFO

 60% 31.4% 18.8% $63,074     

Revenue Objectives for 2017. The 2017 annual revenue objective for each named executive officer was $52,282,730 of total revenue (“revenue”). Named executive officers were eligible to receive between 0% and 200% credit for the revenue component of their annual cash incentive, depending upon actual revenue achieved for 2017. If revenue was equal to the objective, the named executive officers would receive 100% credit for the revenue component of the goals. If revenue was equal to 93.6% of the objective, the named executive officers would receive 75% credit for the revenue component of the goals, while the named executive officers would not receive any credit towards the revenue component of the goals if the revenue earned was below 93.6% of the objective. If revenue was equal to 109.1% of the objective, the named executive officers would receive 200% credit for the revenue component of the goals, while revenue above 109.1% of the objective would not increase the percentage credited for that component of the award above 200%. If actual revenue falls between 93.6% and 109.1% of the revenue objective, the named executive officers would receive a corresponding percentage (between 75% and 200%) of credit for the revenue component of the goals. The percent credited for the revenue component of the goals is then multiplied by the weighting applicable to the revenue component of the cash incentive award. All of these criteria and formulas were established by the Committee in March 2017.

Revenue Results for 2017.Total revenue for 2017 was $48,189,687, which was below the minimum objective, and therefore each of the named executive officers received no credit for the revenue objectives in 2017.

EBITDA Objectives for 2017. The 2017 annual EBITDA objective for each named executive officer was $17,091,015 in EBITDA for the Reis Services segment. Named executive officers are eligible to receive between 0% and 200% credit for the EBITDA component of their annual cash incentive, depending upon actual EBITDA achieved for 2017. If the EBITDA achieved was equal to the objective, the named executive officers would receive 100% credit for the EBITDA component of the goals. If EBITDA was equal to 93.6% of the objective, the named executive officers would receive 75% credit for the EBITDA component of the goals, while the named executive officers would not receive any credit towards the EBITDA component of the goals if the EBITDA earned was below 93.6% of the objective. If the EBITDA earned was equal to 109.1% of the objective, the named executive officers would receive 200% credit for the EBITDA component of the goals, while EBITDA above 109.1% of the objective would not increase the percentage credited for that component of the award above 200%. If actual EBITDA falls between 93.6% and 109.1% of the EBITDA objective, the named executive officers would receive a corresponding percentage (between 75% and 200%) of credit for the EBITDA component of the goals. The percent credited for the EBITDA component of the goals is then multiplied by the weighting applicable to the EBITDA component of the cash incentive award. All of these criteria and formulas were established by the Committee in March 2017.

EBITDA Results for 2017. EBITDA for the Reis Services segment in 2017 was $15,133,987, which was below the minimum objective, and therefore each of the named executive officers received no credit for the EBITDA objectives in 2017.

Individual Goals Objectives for 2017. Individual performance goals vary by position, functional accountability and responsibility, and may include, among other goals, department-specific financial goals, the development and release of new services, the implementation of geographic and/or service expansion plans, and the implementation of cost control initiatives. For example, as Chief Executive Officer, Mr. Lynford’s 2017 individual performance goals included evaluating strategic opportunities for 2018, the roll out of more granular building level offerings, implementing the current business plan, acting as the primary voice of Reis on real estate industry issues and promoting Reis among the investor and analyst communities. Examples of Mr. Garfield’s 2017 individual performance goals included providing strategic support for Reis’s property level and market coverage enhancements, providing guidance on custom data projects and continuing to improve the quality of Reis’s databases. Examples of Mr. Sander’s 2017 individual performance goals included, among others, managing the development and rollout of Reis’s product and content initiatives

(which in 2017 included property expansion, the API roll out and the creation of operational efficiencies) and guiding the sales organization. Examples of Mr. Cantaluppi’s 2017 individual performance goals included, among others, managing Reis’s liquidity and cash flow, meeting SEC filing deadlines, managing cost efficiencies, implementation of the new revenue recognition standard, further improving internal business processes and enhancing shareholder value by effectively communicating with Reis’s investor base and analysts. Reis is not disclosing the named executive officers’ detailed individual performance goals because they are based on key short-term operational objectives that would signal Reis’s strategic direction and could be used by competitors to gain insight into market dynamics. Individual goals could also be used by competitors to target recruitment of key personnel.

The Committee sets individual performance criteria for annual cash incentive awards that are challenging but realistic in order to motivate named executive officers to excel and perform at a high level and to focus on overall corporate objectives. Named executive officers are eligible to receive between 0% and 125% credit for the individual performance component of their annual cash incentive depending upon achievement of established goals for 2017. This percentage credit is then multiplied by the weighting applicable to the individual performance component of the cash incentive award. The Committee determines the credit earned for achievement of the individual performance criteria based upon recommendations from the Chief Executive Officer for the other named executive officers and by the Committee solely as it relates to the Chief Executive Officer. The individual performance goals objectives were established in March 2017.

The following table sets forth the percentage of individual performance goals for 2017 achieved by each of the named executive officers, as determined by the Committee in February 2018.

Name

Title

Percentage of
 Individual Performance 
  Goals
Objective Achieved

Lloyd Lynford

CEO & President97.5%

Jonathan Garfield

Executive Vice President98.2%

William Sander

President & COO, Reis Services102.8%

Mark P. Cantaluppi

Vice President & CFO104.6%

Discretionary Awards for 2017.In addition to the individual performance goals, the Committee awarded discretionary cash bonuses to the named executive officers for their efforts in relation to (i) the financial and operational progress made during each quarter of 2017, culminating with significant year-over-year EBITDA growth in the fourth quarter; (ii) continued and substantial profitability of the Company; (iii) the priority of sustaining peak engagement of the Company’s senior management team; and (iv) an unprecedented year of operational improvements, database expansion and significant product launches.

The table below sets forth 2017 discretionary bonuses awarded by the Committee.

Name

Title

     2017 Discretionary     
Bonus

Lloyd Lynford

CEO & President$                             163,000 

Jonathan Garfield

Executive Vice President$                               97,000 

William Sander

President & COO, Reis Services$                               90,311 

Mark P. Cantaluppi

CFO & Vice President$                               90,500 

Equity Incentive Plan.The Committee has designed the executive equity incentive compensation program to align executive incentives with long-term stockholder value while recognizing its value in executive retention. The Committee believes that equity-based compensation and executive ownership of Reis’s common stock help support the Committee’s goal that Reis’s named executive officers have a continuing stake in the long-term success of Reis.

Each named executive officer is eligible to receive equity awards under the Amended and Restated Reis, Inc. 2011 Omnibus Incentive Compensation Plan (the “2011 Plan”). The 2011 Plan is an amendment and restatement of the Reis, Inc. 2008 Omnibus Incentive Plan (the “2008 Plan”); references in this Form10-K/A to the 2011 Plan include the 2008 Plan prior to the amendment and restatement.As set forth in more detail below, the Committee currently makes annual grants of equity awards, primarily RSUs, as part of the executive compensation program. The amount of RSUs granted each year is based on individual and Company-specific performance during the prior year, consideration of the value of past equity incentive grants, and internal pay equity considerations. These awards are generally subject to vesting in three annual installments beginning one year after the date of grant.

The Committee has historically granted RSUs for the annual grants of equity awards because RSUs have value when they vest regardless of the stock price, so they have retention value even in volatile market conditions. The Committee believes that the use of multi-year vesting periods for equity awards (for both stock options and RSUs) emphasizes a longer-term perspective and therefore encourages executive retention. RSUs generally vest over three years from the date of grant.

Reis’s executive compensation program, including the long-term equity incentive plan, is subject to change at the Committee’s discretion. The Committee will determine the actual terms of any future grant of RSUs, stock options or other equity awards. The details of Reis’s current long-term incentive program may change in the future to reflect the impact of changes in Reis’s business, executives’ individual performance or new information about trends in compensation among Reis’s peer group.

The values of the annual RSU awards granted to our named executive officers are based on a target award dollar amount, and vary among named executive officers by position depending upon individual responsibility and performance, external market and peer group practices and certain internal pay equity considerations. Consistent with its determinations for executive compensation generally, the Committee has set equity compensation between the 50th and 75th percentile of the peer company data provided by its compensation consultant, where available.

Once the total amount of the award for each named executive officer has been determined by the Committee, the number of RSUs actually granted to a named executive officer is determined using the closing price of Reis’s common stock on the date of approval by the Committee. The grant date of the annual RSUs is the date that the Committee approves the grants. These awards are granted under the 2011 Plan and they vest in equal installments on the first three anniversaries of the date of grant. The fair market value as of the grant date of RSU awards is recognized as compensation expense by the Company over the respective vesting periods of the awards.

Reis does not currently have formal security ownership requirements or guidelines for its executive officers or directors, although the Committee has the discretion to adopt such ownership requirements in the future. As of April 1, 2018, each of the named executive officers held Reis common stock, excluding stock options and unvested RSUs, with a value that exceeded three times his 2017 annual base salary, calculated using the closing price on March 31, 2018. In addition, as of April 1, 2018, each of Messrs. Lynford and Garfield held Reis common stock, excluding stock options and unvested RSUs, with a value that exceeded twenty-five times his 2017 annual base salary, calculated using the closing price on March 31, 2018.

Reis does not have any program, plan or practice to time equity awards in coordination with the release of materialnon-public information, nor does Reis time the release of materialnon-public information for the purpose of affecting the value of executive compensation.

Annual Equity Incentive Awards Granted in 2017. The table below sets forth the annual award values for the annual RSUs granted in February 2017, that vest ratably over three years, as set forth in the Grants of Plan Based Awards Table for 2017.

Name

 

Title

 2017 Annual RSU
Award Values

Lloyd Lynford

 CEO & President $619,657 

Jonathan Garfield

 Executive Vice President $481,966 

William Sander

 President & COO, Reis Services $308,055 

Mark P. Cantaluppi

 Vice President & CFO $177,365 

Annual Equity Incentive Awards Granted in 2018.The table below sets forth the award values for the annual RSUs granted in 2018, that vest ratably over three years and which were granted in 2018 and therefore not disclosed in the Grants of Plan Based Awards Table for 2017. As indicated above, the Committee reviewed the amounts in light of Reis’s emphasis on linking executive incentives with long-term stockholder value. The actual long-term equity incentive award values granted to all named executive officers were set by the Committee.

Name

 

Title

     2018 Annual RSU    
Award Values

Lloyd Lynford

 CEO & President $611,809 

Jonathan Garfield

 Executive Vice President $475,857 

William Sander

 President & COO, Reis Services $304,151 

Mark P. Cantaluppi

 Vice President & CFO $175,111 

Grants of Plan-Based Awards in 2017

Name

    Grant  
Date
   Estimated Future Payouts
Under Non-Equity Incentive
Plan Awards (A)
   Estimated Future Payouts
Under Equity Incentive
Plan Awards
  All Other
Stock
Awards:
Number of
Shares of
Stock or
Units
(#)(B)
 All Other
Option
Awards:
Number of
Securities
Underlying
Options
(#)
  Exercise
or Base
Price of
Option
Awards
($/Share)
  Grant Date
Fair Value
of Stock
and Option
Awards

(C)
    Threshold
($)
   Target
($)
  Maximum
($)
  Threshold
(#)
  Target
(#)
  Maximum
(#)
       

Lloyd Lynford

   2/7/17    $—        $—      $—            33,190        619,657   
     $—        $ 356,250      $632,344                   —   

Jonathan Garfield

   2/7/17    $—        $—      $—            25,815       481,966   
     $—        $212,500      $ 377,188                   —   

William Sander

   2/7/17    $—        $—      $—            16,500       308,055   
     $—        $213,000      $378,075                   —   

Mark P. Cantaluppi

   2/7/17    $—        $—      $—            9,500       177,365   
     $—        $201,000      $356,775                   —   

(A)Targets for 2017 were established in the respective 2016 employment agreements. Maximum payout is equal to 177.5% of target. Performance-based bonuses for 2017 were paid in February 2018 and reflected in the “Executive Compensation — Summary Compensation Table.”
(B)Represents RSUs granted to each individual. The RSUs vest in three equal annual installments, beginning on February 7, 2018.
(C)Based on the grant date fair value of Reis common stock of $18.67 per share.

Outstanding Equity Awards at Fiscal Year End — Named Executive Officers

The following table reflects all outstanding equity awards to Reis’s named executive officers as of December 31, 2017:

                       Stock Awards 
                               Equity
   

Equity
Incentive

Plan

 
   Option Awards     Number  
of
Shares  

or
Units  of
Stock
That
Have

Not
Vested
(#)
   Market
Value of
Shares or
Units of
Stock
That
Have Not
Vested
($)(A)(B)
   Incentive
Plan
Awards:
Number of
Unearned
Shares,
Units or
Other
Rights
That Have
Not Vested
(#)
   Awards:
Market or
Payout
Value of
Unearned
Shares,
Units or
Other
Rights
That Have
Not Vested
($)(A)(B)
 

Name

  Number of
Securities
Underlying
Unexercised
Options
(#)
    Exercisable    
   Number of
Securities
Underlying
Unexercised
Options
(#)
Unexercisable
   Equity
Incentive
Plan
Awards:
Number of
Securities
Underlying
Unexercised
Unearned
Options
(#)
   Option
Exercise
Price
($)
   Option
Expiration
Date
         

Lloyd Lynford

   125,000   (C)     —          $    8.025      7/29/20         $    60,166    $    1,242,428 

Jonathan Garfield

   100,000   (C)     —          $8.025      7/29/20         $    46,797    $966,358 

William Sander

   —            —          $—      —         $    28,489    $588,298 

Mark P. Cantaluppi

   —            —          $—      —         $          —    15,796    $326,187 

(A)Based on the closing price of Reis common stock of $20.65 per share on December 31, 2017.
(B)RSUs vest ratably over three years from the date of grant. For further information see footnote C of the “Summary Compensation Table.”
(C)These stock options were granted at an exercise price of $8.025 per share, which was equal to 125% of the closing price of Reis common stock on July 29, 2010, the date of grant. The stock options fully vested on June 30, 2013.

Option Exercises and Stock Vested in 2017

The following table reflects the stock options exercised by the named executive officers and stock awards vested during 2017:

Option Awards

Stock Awards

Name

Number of
Shares
    Acquired on    

Exercise
(#)
Value
Realized
on Exercise
($)

Number
of Shares
    Acquired on    

Vesting
(#)

Value
Realized
    on Vesting    

($)

Lloyd Lynford

—   $— 10,296 (A) $206,950 (B)
—   $— 14,657 (C) $295,339 (D)

Jonathan Garfield

—   $— 8,008 (E) $160,961 (B)
—   $— 11,400 (F) $229,710 (D)

William Sander

50,000 (K) $    458,750 (Q)4,575 (G) $91,957 (B)
50,000 (L) $485,500 (R)6,514 (H) $     131,257 (D)
50,000 (M) $447,500 (S)      —       $—        

Mark P. Cantaluppi

25,000 (N) $284,375 (T)2,402 (I) $48,280 (B)
25,000 (O) $268,750 (U)3,420 (J) $68,913 (D)
25,000 (P) $276,875 (V)      —       $—        

(A)Mr. Lynford had 3,978 shares withheld in payment of tax liability and received 6,318 shares.
(B)Based on $20.10, the fair value of Reis’s common stock on February 9, 2017, the date of vesting. These RSUs were granted under the 2011 Plan.
(C)Mr. Lynford had 5,515 shares withheld in payment of tax liability and received 9,142 shares.
(D)Based on $20.15, the fair value of Reis’s common stock on February 10 and 11, 2017, the dates of vesting. These RSUs were granted under the 2011 Plan.
(E)Mr. Garfield had 3,485 shares withheld in payment of tax liability and received 4,523 shares.
(F)Mr. Garfield had 4,761 shares withheld in payment of tax liability and received 6,639 shares.
(G)Mr. Sander had 1,709 shares withheld in payment of tax liability and received 2,866 shares.
(H)Mr. Sander had 2,436 shares withheld in payment of tax liability and received 4,078 shares.
(I)Mr. Cantaluppi had 893 shares withheld in payment of tax liability and received 1,509 shares.
(J)Mr. Cantaluppi had 1,263 shares withheld in payment of tax liability and received 2,157 shares.
(K)Mr. Sander had 37,196 shares withheld in payment of exercise proceeds and tax liability and received 12,804 shares.
(L)Mr. Sander had 35,045 shares withheld in payment of exercise proceeds and tax liability and received 14,955 shares.
(M)Mr. Sander had 37,385 shares withheld in payment of exercise proceeds and tax liability and received 12,615 shares.
(N)Mr. Cantaluppi had 18,664 shares withheld in payment of exercise proceeds and tax liability and received 6,336 shares.
(O)Mr. Cantaluppi had 17,915 shares withheld in payment of exercise proceeds and tax liability and received 7,085 shares.
(P)Mr. Cantaluppi had 18,543 shares withheld in payment of exercise proceeds and tax liability and received 6,457 shares.
(Q)Based on the difference between (i) $19.58, the average of the high and low sales prices of the common stock on January 9, 2017, the last trading day prior to the date of exercise, and (ii) the exercise price of the stock options exercised.
(R)Based on the difference between (i) $20.11, the average of the high and low sales prices of the common stock on February 1, 2017, the last trading day prior to the date of exercise, and (ii) the exercise price of the stock options exercised.
(S)Based on the difference between (i) $19.35, the average of the high and low sales prices of the common stock on March 1, 2017, the last trading day prior to the date of exercise, and (ii) the exercise price of the stock options exercised.
(T)Based on the difference between (i) $21.78, the average of the high and low sales prices of the common stock on January 3, 2017, the last trading day prior to the date of exercise, and (ii) the exercise price of the stock options exercised.
(U)Based on the difference between (i) $21.15, the average of the high and low sales prices of the common stock on January 25, 2017, the last trading day prior to the date of exercise, and (ii) the exercise price of the stock options exercised.
(V)Based on the difference between (i) $21.48, the average of the high and low sales prices of the common stock on February 24, 2017, the last trading day prior to the date of exercise, and (ii) the exercise price of the stock options exercised.

Pension Benefits

Reis does not have a defined benefit pension plan. The Company has a defined contribution savings plan pursuant to Section 401 of the Code. The Company matched contributions up to 2% of employees’ salaries, as then defined, for 2017, 2016 and 2015 (calculated as 50% of the employee’s contribution, capped at 4% of the employee’s salary). The Company made contributions to this plan, for all participants of this plan, aggregating approximately $306,000, $289,000 and $259,000 for the years ended December 31, 2017, 2016 and 2015, respectively.

Other Compensation Matters

Employment Agreements - 2016

Each of the named executive officers entered into an employment agreement during June 2016 governing his compensation and related arrangements with Reis and/or Reis Services through June 30, 2019. The following summaries are not complete descriptions of the employment agreements. Each agreement is included as an exhibit to the Company’s annual report on Form10-K for the year ended December 31, 2017, filed with the SEC on March 8, 2018. The Compensation Committee engaged an independent compensation consultant to assist in the negotiation and benchmarking of the employment arrangements against appropriate peers for each individual. The following is a description of the four employment agreements. See “—Potential Payments Upon Termination or Change of Control” for additional information regarding contractual payments to the named executive officers upon termination.

Lloyd Lynford. On June 17, 2016, Reis and Reis Services (the “Employers”) entered into an employment agreement with Lloyd Lynford, to be effective as of July 1, 2016 (the “Lynford Employment Agreement”). The Lynford Employment Agreement supersedes, as of July 1, 2016, Mr. Lynford’s existing employment agreement and provides for Mr. Lynford to continue to be employed as President and Chief Executive Officer of Reis and as Chief Executive Officer of Reis Services, as well as for Mr. Lynford to serve as a director of Reis. The Lynford Employment Agreement has a three-year term that expires on June 30, 2019.

During the term of his employment, Mr. Lynford is entitled to a salary of not less than $475,000 per year and a performance-based bonus, administered by the Compensation Committee of Reis’s board of directors, with a target opportunity of not less than $356,250 per year. The Employers have also agreed to maintain, during the term of the Lynford Employment Agreement, term life insurance, for the benefit of a beneficiary selected by Mr. Lynford, in the amount of $780,000. In the event that Mr. Lynford incurs a qualifying termination during the term of the Lynford Employment Agreement, the Lynford Employment Agreement provides for a lump sum severance payment equal to 1.5 times the sum of his then current base salary and target bonus (or 2.5 times, in the case of a qualifying termination that occurs in connection with or during thetwo-year period following a change of control), the accelerated vesting of his then unvested equity awards, and continuation of medical benefits for a period of 18 months following termination of his employment. Mr. Lynford has agreed to restrictions on competition and solicitation of employees or customers during the term of the Lynford Employment Agreement and for aone-year period following termination (with an extension to atwo-year period following termination in connection with a change of control). Also effective July 1, 2016, the Employers and Mr. Lynford have entered into an indemnification agreement, setting forth specific procedures for the provision of indemnification by the Employers on behalf of Mr. Lynford.

Jonathan Garfield. On June 17, 2016, the Employers entered into an employment agreement with Jonathan Garfield, to be effective as of July 1, 2016 (the “Garfield Employment Agreement”). The Garfield Employment Agreement supersedes, as of July 1, 2016, Mr. Garfield’s existing employment agreement and provides for Mr. Garfield to continue to be employed as Executive Vice President of both Reis and Reis Services, as well as for Mr. Garfield to serve as a director of Reis. The Garfield Employment Agreement has a three-year term that expires on June 30, 2019.

During the term of his employment, Mr. Garfield is entitled to a salary of not less than $425,000 per year and a performance-based bonus, administered by the Compensation Committee of Reis’s board of directors, with a target opportunity of not less than $212,500 per year. The Employers have also agreed to maintain, during the term of the Garfield Employment Agreement, term life insurance, for the benefit of a beneficiary selected by Mr. Garfield, in the amount of $625,000. In the event that Mr. Garfield incurs a qualifying termination during the term of the Garfield Employment Agreement, the Garfield Employment Agreement provides for a lump sum severance payment equal to 1.5 times the sum of his then current base salary and target bonus (or 2.5 times, in the case of a qualifying termination that occurs in connection with or during thetwo-year period following a change of control), the accelerated vesting of his then unvested equity awards, and continuation of medical benefits for a period of 18 months following termination of his employment. Mr. Garfield has agreed to restrictions on competition and solicitation of employees or customers during the term of the Garfield Employment Agreement and for aone-year period following termination (with an extension to atwo-year period following termination in connection with a change of control). Also effective July 1, 2016, the Employers and Mr. Garfield have

entered into an indemnification agreement, setting forth specific procedures for the provision of indemnification by the Employers on behalf of Mr. Garfield.

William Sander. On June 17, 2016, Reis Services entered into an employment agreement with William Sander, to be effective as of July 1, 2016 (the “Sander Employment Agreement”). Reis is a party to this agreement for limited purposes. The Sander Employment Agreement supersedes, as of July 1, 2016, Mr. Sander’s existing employment agreement and provides for Mr. Sander to continue to be employed as President and Chief Operating Officer of Reis Services for a three-year term that expires on June 30, 2019.

During the term of his employment, Mr. Sander is entitled to a salary of not less than $355,000 per year and a performance-based bonus, administered by the Compensation Committee of Reis’s board of directors, with a target opportunity of not less than $213,000 per year. Reis Services has also agreed to maintain, during the term of the Sander Employment Agreement, term life insurance, for the benefit of a beneficiary selected by Mr. Sander, in the amount of $187,500. In the event that Mr. Sander incurs a qualifying termination during the term of the Sander Employment Agreement, the Sander Employment Agreement provides for a lump sum severance payment equal to 1.5 times his then current base salary (or 2 times, in the case of a qualifying termination that occurs in connection with or during theone-year period following a change of control), the payment of his pro rata target bonus for that year, the accelerated vesting of his then unvested equity awards, and continuation of medical benefits for a period of nine months following termination of his employment. Mr. Sander has agreed to restrictions on competition and solicitation of employees or customers during the term of the Sander Employment Agreement and for periods following termination ranging from twelve months (for competition) to eighteen months (for solicitation of employees or customers).

Mark P. Cantaluppi. On June 17, 2016, the Employers entered into an employment agreement with Mark P. Cantaluppi, to be effective as of July 1, 2016 (the “Cantaluppi Employment Agreement”). The Cantaluppi Employment Agreement supersedes, as of July 1, 2016, Mr. Cantaluppi’s existing employment agreement and provides for Mr. Cantaluppi to continue to be employed as Chief Financial Officer of both Reis and Reis Services for a three-year term that expires on June 30, 2019.

During the term of his employment, Mr. Cantaluppi is entitled to a salary of not less than $335,000 per year and a performance-based bonus, administered by the Compensation Committee of Reis’s board of directors, with a target opportunity of not less than $201,000 per year. The Company has also agreed to maintain, during the term of the Cantaluppi Employment Agreement, term life insurance, for the benefit of a beneficiary selected by Mr. Cantaluppi, in the amount of $157,500. In the event that Mr. Cantaluppi incurs a qualifying termination during the term of the Cantaluppi Employment Agreement, the Cantaluppi Employment Agreement provides for a lump sum severance payment equal to 1.5 times his then current base salary (or 2 times, in the case of a qualifying termination that occurs in connection with or during theone-year period following a change of control), the payment of his pro rata target bonus for that year, the accelerated vesting of his then unvested equity awards, and continuation of medical benefits for a period of nine months following his termination of employment. Mr. Cantaluppi has agreed to restrictions on competition and solicitation of employees or customers during the term of the Cantaluppi Employment Agreement and for periods following termination ranging from twelve months (for competition and solicitation of employees) to eighteen months (for solicitation of customers).

Potential Payments Upon Termination or Change of Control

Under the employment agreements between Reis and/or Reis Services and each named executive officer, Reis and/or Reis Services may be obligated to make severance or post-termination payments to the applicable individual. The following table presents, for each named executive officer, the potential post-employment payments and payments on a change of control and assumes that the triggering event took place on December 31, 2017, under the Company’s current contractual arrangements. All cash payments set forth below would be made at or shortly following termination, except that Health Benefits (as defined below) would be paid over the duration of such Health Benefits. All equity award accelerations set forth below would vest immediately upon termination.

    No Change of Control  

Name

 

                Benefit                 

 Termination (i) by
Reis for Cause or (ii)

by Employee
Without
Good
Reason  (A)
 Death or
Disability
 Termination (i) by
Reis Without Cause or
(ii)
by Employee
with  Good
Reason (A)
 Termination
as a Result of
Change of
Control (A)

Lloyd Lynford

 Severance $                    —  $            —  $    1,246,875  $        2,078,125 
 Bonus (B)     356,250   356,250   356,250 
 Options (C)            
 RSUs (D)     1,242,428   1,242,428   1,242,428 
 Benefits (E)     832,860   52,860   52,860 
  

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

     Total     $  $      2,431,538  $2,898,413  $3,729,663 
  

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Jonathan Garfield

 Severance $  $  $956,250  $1,593,750 
 Bonus (B)     212,500   212,500   212,500 
 Options (C)            
 RSUs (D)     966,358   966,358   966,358 
 Benefits (E)     691,167   66,167   66,167 
  

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

     Total     $  $1,870,025  $2,201,275  $2,838,775 
  

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

William Sander

 Severance $  $  $532,500  $710,000 
 Bonus (B)     213,000   213,000   213,000 
 Options (C)            
 RSUs (D)     588,298   588,298   588,298 
 Benefits (E)     233,016   45,516   45,516 
  

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

     Total     $  $1,034,314  $1,379,314  $1,556,814 
  

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Mark P. Cantaluppi

 Severance $  $  $502,500  $670,000 
 Bonus (B)     201,000   201,000   201,000 
 Options (C)            
 RSUs (D)     326,187   326,187   326,187 
 Benefits (E)     203,016   45,516   45,516 
  

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

     Total     $       $730,203       $1,075,203       $1,242,703      
  

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(A)

See the discussion following this table for definitions of the terms “Cause,” “Good Reason” and “Change of Control” as they relate to each named executive officer, and for a discussion of the triggers for termination on a change of control.

(B)

Bonus payout amounts reflect target bonus levels, assuming termination prior to the end of 2017. If termination were deemed to occur following the end of 2017, each executive officer would be entitled to receive his performance-based 2017 bonus, rather than the target bonus.

(C)

Does not include options that vested prior to December 31, 2017.

(D)

Based on the $20.65 per share closing price of Reis common stock on December 31, 2017.

(E)

Represents Health Benefits (as defined below) and, under “Death or Disability,” the value of life insurance maintained by the Company pursuant to the executive officer’s employment agreement ($780,000 for Mr. Lynford, $625,000 for Mr. Garfield, $187,500 for Mr. Sander and $157,500 for Mr. Cantaluppi).

The following discussion sets forth the specific terms under which the amounts in the above table would be paid. See “—Employment Agreements—2016” for additional detail and additional information relating to the named executive officers’ employment agreements. See “—Definitions” below for definitions of capitalized terms used in this section.

Lloyd Lynford and Jonathan Garfield. Under Mr. Lynford’s and Mr. Garfield’s respective employment agreements, they may be entitled to receive certain post-termination payments, as follows:

If the executive officer is terminated for death or disability, he is entitled to receive:

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the Accrued Obligationsplus

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hisPro Rata Bonusplus

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eighteen months of Health Benefitsplus

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the Equity Acceleration.

If the executive officer is terminated with Cause or if he resigns without Good Reason, he is entitled to receive the Accrued Obligations.

If, during the Change of Control Period, (i) the executive officer is terminated for any reason (other than death, disability or with Cause) or (ii) the executive officer resigns for Good Reason, he is entitled to receive:

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the Accrued Obligationsplus

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hisPro Rata Bonusplus

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an amount equal to 2.5 multiplied by the sum of (x) his then current gross annual base salary and (y) his target bonus for the year of terminationplus

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eighteen months of Health Benefitsplus

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the Equity Acceleration.

If, other than during the Change of Control Period, the executive officer is terminated for any reason (other than his death or disability, or with Cause) or if the executive officer resigns for Good Reason, he is entitled, upon execution of a mutual release of claims with the Company in a form attached to the employment agreement, to receive:

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the Accrued Obligationsplus

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hisPro Rata Bonusplus

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an amount equal to 1.5 multiplied by the sum of (x) his then current gross annual base salary and (y) his target bonus for the year of terminationplus

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eighteen months of Health Benefitsplus

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the Equity Acceleration.

William Sander and Mark P. Cantaluppi. Under Mr. Sander’s and Mr. Cantaluppi’s respective employment agreements, they may be entitled, upon execution by the executive officer of a customary release of claims in favor of the Company, to receive certain post-termination payments, as follows:

If the executive officer is terminated for death or disability, he is entitled to receive:

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the Accrued Obligationsplus

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hisPro Rata Bonusplus

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nine months of Health Benefitsplus

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the Equity Acceleration.

If the executive officer is terminated with Cause or if he resigns without Good Reason, he is entitled to receive the Accrued Obligations.

If, during the Change of Control Period, (i) the executive officer is terminated for any reason (other than death, disability or with Cause) or (ii) the executive officer resigns for Good Reason, he is entitled to receive:

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the Accrued Obligationsplus

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hisPro Rata Bonusplus

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an amount equal to 2 multiplied by his then current gross annual base salaryplus

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nine months of Health Benefitsplus

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the Equity Acceleration.

Mr. Cantaluppi will also be entitled to payment as if a Change of Control had occurred if his employment is terminated within the twelve months prior to a Change of Control and he reasonably demonstrates that such termination: (i) was at the request of a third party who has indicated an intention or taken steps reasonably calculated to effect a Change of Control and who effectuates a Change of Control or (ii) otherwise occurred in connection with, or in anticipation of, a Change of Control which actually occurs.

If, other than during the Change of Control Period, the executive officer is terminated for any reason (other than his death or disability, or with Cause) or if the executive officer resigns for Good Reason, he is entitled to receive:

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the Accrued Obligationsplus

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hisPro Rata Bonusplus

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an amount equal to 1.5 multiplied by his then current gross annual base salaryplus

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nine months of Health Benefitsplus

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the Equity Acceleration.

Definitions. The following definitions apply to the above discussions of the named executive officers’ post-termination payments:

“Accrued Obligations” means (i) the executive officer’s base salary through the termination date, if unpaidplus (ii) any accrued vacation pay not previously paidplus (iii) all unreimbursed business expensesplus (iv) the executive officer’s bonus for the prior year if not already paid.

“Cause” means (i) a breach by the executive officer of hisnon-competition,non-solicitation or confidentiality obligations, (ii) a material breach by the executive officer of any other term of the employment agreement that is not cured within 20 days of written notice thereof, (iii) fraud or dishonesty in the course of the executive officer’s employment, (iv) for reasons other than disability, continued gross neglect of the executive officer’s duties which results in material harm to Reis or Reis Services, if not cured within 20 days of written notice thereof, (v) a material violation of Reis’s general employment policies which results in material harm to Reis or Reis Services or (vi) the executive officer’s conviction or pleading guilty ornolo contendere to any felony charge.

“Change of Control” means the occurrence of any of the following, whether directly or indirectly, voluntarily or involuntarily, whether as part of a single transaction or a series of transactions: (i) individuals who as of July 1, 2016 constitute the board of directors cease, for any reason, to constitute at least a majority of the board, unless the election or nomination for election of each new director was approved by at leasttwo-thirds of the directors then still in office who were directors as of July 1, 2016 (either by a specific vote of such directors or by the approval of Reis’s proxy statement in which each such individual is named as a nominee for a director without written objection to such nomination by such directors);provided, however, that no individual initially elected or nominated as a director as a result of an actual or threatened election contest with respect to directors or as a result of any other actual or threatened solicitation of proxies or consents by or on behalf of any person other than the board shall be deemed to be approved (solely for purposes of this definition); (ii) the sale, transfer or other disposition of all or substantially all of the assets of either Reis or Reis Services (other than to a wholly-owned direct or indirect subsidiary of either of Reis or Reis Services or a benefit plan of either of Reis or Reis Services); (iii) any person or entity or group of affiliated persons or entities (other than the employee, Lloyd Lynford, Jonathan Garfield or a group including any of them) acquiring beneficial ownership (as that term is used in Rules13d-3,13d-5 or16a-1 under the Exchange Act, whether or not applicable) of 30% or more of the shares of capital stock or other equity of either Reis or Reis Services, having by the terms thereof voting power to elect the members of the board (in the case of Reis only), or, convertible into shares of such capital stock or other equity of either Reis or Reis Services (collectively, “Voting Shares”), as the case may be; (iv) the stockholders or members of either Reis or Reis Services adopting a plan of liquidation providing for the distribution of all or substantially all of either Reis’s or Reis Services’s assets or approving the dissolution of either Reis or Reis Services; or (v) the merger, consolidation, or reorganization of either Reis or Reis Services or any similar transaction which results in (A) the beneficial owners of the Voting Shares of either Reis or Reis Services immediately prior to such merger, consolidation, reorganization or transaction beneficially owning, after giving effect to such merger, consolidation, reorganization or transaction, interests or securities of the surviving or resulting entity representing 50% or less of the shares of capital stock or other equity of the surviving or resulting entity having by the terms thereof voting power to elect the members of the board of directors (or equivalent thereof) or convertible into shares of such capital stock or other equity of such entity or (B) any person or entity or group of affiliated persons or entities (other than the employee, Lloyd Lynford, Jonathan Garfield or a group including any of them) owning, after giving effect to such merger, consolidation, reorganization or transaction, interests or securities of the surviving or resulting entity, representing 30% or more of the shares of capital stock or other equity of the surviving or resulting entity having by the terms thereof voting power to elect the members of the board of directors (or equivalent thereof) or convertible into shares of such capital stock or other equity of such entity. In addition, for Mr. Cantaluppi, Comparable Employment must be offered within 15 calendar days of the Change of Control.

“Change of Control Period” means:

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for Messrs. Lynford and Garfield, (i) during a Change of Control Protection Period or (ii) upon or within thetwo-year period following a Change of Control; and

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for Messrs. Sander and Cantaluppi, upon or within theone-year period following a Change of Control.

“Change of Control Protection Period” means a period of time when (i) either Reis or Reis Services is party to an agreement, the consummation of which would result in the occurrence of a Change of Control or (ii) the board of directors or a committee thereof is engaged in active negotiations or has commenced a process regarding a transaction, the consummation of which would result in the occurrence of a Change of Control.

“Comparable Employment,” for Mr. Cantaluppi, means that he has received an offer to continue his employment for at least the balance of the term covered by his employment agreement, and he remains the chief financial officer of a publicly-traded company pursuant to which he would perform the same type of duties he had been performing under his employment agreement for Reis and Reis Services, at a salary and target bonus not less than that provided for in his employment agreement, and the employment is at a physical location as set forth in the definition of “Good Reason,” as it relates to Mr. Cantaluppi.

“Equity Acceleration” means the immediate vesting of all of the executive officer’s outstanding equity awards.

“Good Reason” means:

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for Mr. Lynford, (i) a material diminution in his duties or responsibilities, demotion or a change for any reason in his direct reporting relationship to other than the board or a committee thereof (or, following a Change of Control, reorganization of either Reis or Reis Services, or the shares of Reis ceasing to be publicly traded, a change for any reason in his direct reporting relationship to other than the board of directors of any successor or acquiring entity (including the ultimate parent of any such successor or acquiring entity), whether such successor or acquiring entity (or its ultimate parent) is a public, private or other form of corporation, limited liability company, partnership, holding company, hedge fund, private equity firm, investment firm or other form of entity); (ii) his being removed from, not nominated forre-election to, or notre-elected to the board, other than for Cause or at his request; (iii) Reis’s or Reis Services’s (or any of their successors’ or acquiring entities’) material breach of the employment agreement which is not cured within 20 days of written notice thereof; (iv) his being required to report to an office to work on a regular basis at a location outside of a30-mile radius from 530 Fifth Avenue, New York, New York; (v) a reduction of his gross annual base salary or target bonus; (vi) any failure by Reis or Reis Services to obtain the assumption in writing of any of their obligations to perform any agreement between them and Mr. Lynford (A) by any successor to all or substantially all of the assets of either Reis or Reis Services or (B) by any successor or acquiring entity upon a Change of Control of either Reis or Reis Services, in either case whether by operation of law or contractually, as of the date of such transaction; or (vii) he is not for any reason the most senior executive officer responsible for all business units, functions and departments of either Reis or Reis Services (including, without limitation, sales, marketing, accounting/finance, legal, information technology, human resources, research & development, operations, and all divisions and product lines) (any such business unit, function or department, a “Department”) (or, following a Change of Control, reorganization of either Reis or Reis Services, or the shares of Reis ceasing to be publicly traded, he is not for any reason the most senior executive officer of any successor or acquiring entity (including the ultimate parent of any such successor or acquiring entity) responsible for all Departments of such successor or acquiring entity (or its ultimate parent), whether such successor or acquiring entity (or its ultimate parent) is a public, private or other form of corporation, limited liability company, partnership, holding company, hedge fund, private equity firm, investment firm or other form of entity).

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for Mr. Garfield, (i) a material diminution in his duties or responsibilities, demotion or a change for any reason in his direct reporting relationship to other than Mr. Lynford; (ii) his being removed from, not nominated forre-election to, or notre-elected to the board, other than for Cause or at his request; (iii) Reis’s or Reis Services’s (or any of their successors’ or acquiring entities’) material breach of the employment agreement; (iv) his being required to report to an office to work on a regular basis at a location outside of a30-mile radius from 530 Fifth Avenue, New York, New York; (v) a material reduction of his gross annual base salary or target bonus; or (vi) any failure by Reis or Reis Services to obtain the assumption in writing of any of their obligations to perform any agreement between them and Mr. Garfield (A) by any successor to all or substantially all of the assets of either Reis or Reis Services or (B) by any successor or

acquiring entity upon a Change of Control of either Reis or Reis Services, in either case whether by operation of law or contractually, as of the date of such transaction.

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for Mr. Sander, (i) a material diminution in his compensation, duties or responsibilities, or a material demotion; (ii) Reis’s or Reis Services’s material breach of the employment agreement which is not cured within 20 days of written notice thereof; or (iii) his being required to report to an office to work on a regular basis at a location outside of a30-mile radius from 530 Fifth Avenue, New York, New York;

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for Mr. Cantaluppi, (i) a material diminution in his duties or responsibilities, or a material demotion; (ii) Reis’s or Reis Services’s material breach of the employment agreement; or (iii) his being required to report to an office to work on a regular basis at a location outside of Manhattan, Northern New Jersey or outside a50-mile radius of 530 Fifth Avenue, New York, New York as long as the location is not east of the Hudson River, other than Manhattan. In the event of a Change of Control, Good Reason shall also include any deviation from Comparable Employment.

“Health Benefits” means reimbursement of the cost of COBRA health benefits for the executive officer and his spouse and eligible dependents.

Pro Rata Bonus” means the pro rata portion of the executive officer’s target bonus for the year of termination.

Policy on Deductibility of Compensation

As effective through 2017, prior to its amendment pursuant to the Tax Cuts & Jobs Act of 2017 (the “Tax Act”), Section 162(m) of the Code disallowed the deduction of compensation paid by a public company to its chief executive officer and each of the other three most highly compensated executive officers (not including Reis’s Chief Financial Officer) that exceeds $1 million, excluding compensation that was considered “performance-based” if, among other requirements, the compensation was payable only upon attainment ofpre-established, objective performance goals under a plan approved by the stockholders. Reis’s equity incentive plans have been structured so that the Compensation Committee could have granted stock options, stock appreciation rights and certain restricted stock and RSU awards intended to qualify as “performance-based” compensation under Section 162(m). However, while the Committee has historically considered tax deductibility as one of the factors in determining executive compensation, to retain maximum flexibility in designing compensation programs that meet the Committee’s stated objectives, the Committee has not necessarily limited or structure compensation so that it was deductible under Section 162(m). As amended by the Tax Act, the “performance-based” compensation exclusion from the deductibility limits of Section 162(m) were eliminated and the scope of executive officers covered by Section 162(m) was expanded, in each case, subject to grandfathering of awards granted prior to November 2, 2017 under the amendment’s transition rules. However, there are certain unresolved questions regarding how the grandfathering rules are to be implemented. As a result, certain elements of compensation granted to our executive officers prior to November 2, 2017 that were intended to be exempt from the Section 162(m) deduction limitations may no longer be exempt from the limitations beginning in 2018. In addition, while the Compensation Committee will continue to consider the impact of Section 162(m) when designing compensation programs going forward, the Compensation Committee will also continue to use its judgment to approve compensatory grants and payments that will not be deductible in light of the limitations of Section 162(m), as amended, when the Compensation Committee believes such grants and payments are appropriate and in the best interests of the Company and its stockholders.

PEO Pay Ratio Disclosure Rule

In August 2015 pursuant to a mandate of the Dodd-Frank Wall Street Reform and Consumer Protection Act (the “Dodd – Frank Act”), the Securities and Exchange Commission adopted a rule requiring annual disclosure of the ratio of the median employee’s annual total compensation to the total annual compensation of the principal executive officer (“PEO”). Registrants must comply with the pay ratio rule for the first fiscal year beginning on or after January 1, 2017. The methodology utilized by the Company in making a reasonable estimate of its median employee and the pay ratio subsequently calculated, each in accordance with the pay ratio disclosure rules, is as follows:

The Company’s PEO is Mr. Lloyd Lynford. In determining the median employee, a listing was prepared of all individuals, who were employed with the Company on a full-time, part-time, seasonal or temporary basis as of December 31, 2017, excluding the PEO. We determined the compensation of our median employee for this purpose by: (i) calculating the annual total compensation based on theW-2 Box 1 amount for each of our employees; (ii) wages and salaries were annualized for those employees that were not employed for the full year of 2017 based on their applicable work schedules; (iii) ranking the annual total compensation of all employees (excluding the PEO) from highest to lowest. The median amount was selected from the annualized list (“Median Employee”). Other than the annualization of partial-year employees, no other estimates were made regarding the compensation amounts used to calculate the Median Employee.

The annual total compensation for fiscal year 2017 for our PEO was $1,367,260, and for the Median Employee was $57,775. The resulting ratio of our PEO’s pay to the pay of our Median Employee for fiscal year 2017 is estimated to be 24 to 1.

Consistent with the determination of total compensation of our named executive officers pursuant to the Summary Compensation Table, pay elements that were included in the annual total compensation for the PEO and Median Employee are:

·Salary received in fiscal year 2017.

·Incentive payment received for performance in fiscal year 2017.

·Grant date fair value of RSU awards granted in fiscal year 2017.

·Company paid 401(k) Plan match made during fiscal year 2017.

This information is being provided for compliance purposes. In light of the various assumptions, estimates, methodologies and exclusions that may be used in accordance with the pay ratio disclosure rules, the pay ratio reported by other companies may not be comparable to the pay ratio reported above, as other companies may have different compensation practices, may have employees in different jurisdictions, and may utilize different assumptions, estimates and methodologies in calculating their own pay ratios.

Compensation of Directors

Director Compensation Generally. The following table sets forth the applicable annual retainers and fees payable tonon-employee directors in cash for their service on Reis’s board of directors (and committees thereof) during 2017:

Type of Cash Compensation

   Amount   

Annual board member retainer

$  36,800

Board meeting participation fee (for each meeting in excess of six in any calendar year)

1,000

Annual compensation fornon-executive Chairman

25,000

Audit Committee retainer (member other than chairperson)

10,000

Audit Committee retainer (chairperson)

15,000

Compensation Committee retainer (member other than chairperson)

2,000

Compensation Committee retainer (chairperson)

6,000

Nominating and Corporate Governance Committee retainer (member other than chairperson)

2,000

Nominating and Corporate Governance Committee retainer (chairperson)

6,000

In addition, eachnon-employee director receives RSU grants having an annual value of $46,000. These grants are made in four installments of $11,500 each, effective at the end of each calendar quarter, with the RSU grant agreement being delivered promptly thereafter. The number of RSUs issuable each quarter is determined by dividing the closing price for Reis common stock on the last trading day of the calendar quarter into $11,500. The RSUs are immediately vested upon grant, but directors do not receive the shares of stock underlying the RSUs until six months after termination of service as a director of Reis.

2017 Director Compensation. The following table sets forth the compensation earned or paid to the Company’snon-employee directors for their board service during 2017. As employee directors, Messrs. Lynford and Garfield did not receive any compensation for their board service during 2017 and compensation related to their employment with the Company is reported under “Executive Compensation – Summary Compensation Table.”

Name

 Fees Earned
or Paid in
Cash
($)
  Stock
Awards
($)(A)
  Total
($)
 

Thomas J. Clarke Jr.

 $                52,800        $                46,000      $                98,800      

M. Christian Mitchell

 $78,800        $46,000      $124,800      

Byron C. Vielehr

 $54,800        $46,000      $100,800      

            

         

(A)

The amounts shown in this column represent RSUs granted to eachnon-employee director in respect of the four calendar quarters of 2017. Each quarterly grant had a grant date fair market value of $11,500, which is the same as that used for stock-based compensation disclosure included in Reis’s consolidated financial statements filed with the SEC.

Outstanding Equity Awards at Fiscal Year End — Directors. The following table sets forth all outstanding stock awards held by Reis’s currentnon-employee directors as of December 31, 2017:

  Stock Awards (A) 

Name

 Number of Shares or Units of
Stock That Have Not Vested
(#)(B)
  Market Value of Shares or
Units of Stock That Have Not
Vested
($)(B)
 

Thomas J. Clarke Jr.

  22,174                  $                    457,893                  

M. Christian Mitchell

  49,075                  $1,013,399                 

Byron C. Vielehr

  22,174                  $457,893                 

 

  
(A)

Does not reflect 556 RSUs granted to eachnon-employee director on January 1, 2018 with respect to fourth quarter 2017 service on the board of directors.

(B)

Represents RSUs that are immediately vested upon grant. Directors do not receive the shares of stock underlying the RSUs until six months after termination of service as a director of Reis. The market value is based on the closing price for Reis common stock of $20.65 per share on December 31, 2017.

Director and Officer Indemnification

Reis’s bylaws provide that, to the maximum extent permitted by the Maryland General Corporation Law, Reis will indemnify, and will advance or reimburse, for expenses (including attorneys’ fees) related to a determination of liability for any individual (1) who is or was a director or officer of Reis and/or any of its subsidiaries and is subject to liability by reason of his or her service in that capacity or (2) who, while a director of Reis, serves or has served at Reis’s request as a director, officer, partner, trustee, manager or member for another entity and is subject to liability by reason of his or her service in that capacity. In addition, each named executive officer’s employment agreement with the Company provides for indemnification of the officer to the fullest extent authorized by applicable law.

Item 12. Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters.

ToSecurities Authorized for Issuance Under Equity Compensation Plans

The following table details information for each of Reis’s compensation plans at December 31, 2017:

Plan Category

  Number of
Securities to be
Issued Upon
Exercise of
Outstanding
Options, Warrants
and Rights
 

Weighted Average
Exercise Price of
Outstanding
Options, Warrants
and
Rights (A)

  Number of Securities
Remaining Available
for Future Issuance
Under Equity
Compensation  Plans
(Excluding Securities
Reflected in Column
(a))
   (a) (b)  (c)

Equity compensation plans approved by stockholders:

     

1998 Plan

   3,016 (B)  $      —    —        

2011 Plan

   560,126 (C)   $    8.88   627,655 (D) 
  

 

 

 

   

 

 

 

Total

   563,142        $    8.88   627,655       
  

 

 

 

   

 

 

 

 

     

  (A)

The weighted average exercise price does not take into account the shares issuable upon vesting or delivery of outstanding RSUs, which have no exercise price.

  (B)

Includes 3,016 shares issuable tonon-employee directors, six months after termination of service as a director of Reis.

  (C)

Includes 245,000 shares issuable upon exercise of stock options and 315,126 shares issuable upon vesting of RSUs (or, with respect to RSUs granted tonon-employee directors, six months after termination of service as a director of Reis).

  (D)

Availability reflects reductions related to grants under the 2011 Plan offset by increases related to expirations and forfeitures under the 2011 Plan and the 1998 Plan, as permitted under the 2011 Plan.

The 1998 Plan expired on March 10, 2008, and no new grants have been or may be made thereunder.

Stock Ownership

The following table sets forth information regarding the extent responsivebeneficial ownership of Reis common stock by each director of Reis, by each executive officer of Reis, by all directors and executive officers of Reis as a group and by each person known by Reis to be the requirementsbeneficial owner of this item, information containedmore than 5% of Reis’s outstanding common stock as of April 1, 2018 (except as otherwise noted). Each person named in the Company’s definitive proxy statement for the 2017 annual meetingtable has sole voting and investment power with respect to all shares of stockholders is incorporated hereinReis common stock shown as beneficially owned by reference.such person, except as otherwise noted.

                             Name and Address of Beneficial Owner (1)

         Number of        
Shares
Owned
     Percentage    
of
Class (2)

Directors and Executive Officers:

  

Lloyd Lynford (3)

  1,349,412       11.5%     

Jonathan Garfield (4)

  961,357   8.2% 

William Sander (5)

  135,495   1.2% 

Mark P. Cantaluppi (6)

  100,913   *       

M. Christian Mitchell (7)

  6,900   *       

Thomas J. Clarke Jr. (8)

  10,889   *       

Byron C. Vielehr (8)

     —     

All directors and executive officers as a group - 7 persons (9)

  2,564,966   21.7% 

5% Holders:(10)

  

Nine Ten Partners LP and affiliates (11)

  1,081,227   9.3% 

12600 Hill Country Blvd.

Suite R-230

Austin, TX 78738

  

Dimensional Fund Advisors LP (12)

  843,927   7.3% 

Palisades West, Building One, 6300 Bee Cave Road

Austin, TX 78746

  

Sammons Enterprises, Inc. Employee Stock Ownership Trust and affiliates (13)

  636,815   5.5% 

801 Warrenville Road, Suite 500

Lisle, IL 60532

or, c/o Sammons Enterprises, Inc.

5949 Sherry Lane, Suite 1900

Dallas, TX 75225-6553

  

Blackrock Inc. (14)

  598,167   5.2% 

55 East 52nd Street

New York, NY 10055

  

                \

*

Less than 1.0%

 (1)

Unless otherwise indicated, the address of each person is c/o Reis, Inc., 1185 Avenue of the Americas, 30th Floor, New York, New York 10036.

 (2)

Percentages with respect to each person or group of persons have been calculated on the basis of 11,569,692 shares of Reis common stock outstanding on April 1, 2018, plus, in each case, the number of shares of Reis common stock which such person or group of persons has the right to acquire within 60 days after April 1, 2018 by the exercise of stock options or the vesting of RSUs.

 (3)

Includes 125,000 shares of common stock issuable upon exercise of stock options that were exercisable within 60 days of April 1, 2018. Does not include 67,827 shares of common stock issuable with respect to RSUs that may vest at a later date.

 (4)

Includes 100,000 shares of common stock issuable upon exercise of stock options that were exercisable within 60 days of April 1, 2018. It also includes 36,093 shares held in the Jonathan Garfield Family Trust. The reporting person’s wife is the trustee of the trust and certain relatives of the reporting person are beneficiaries of the trust. The reporting person disclaims beneficial ownership of these securities. Does not include 52,755 shares of common stock issuable with respect to RSUs that may vest at a later date.

(5)

Does not include 33,176 shares of common stock issuable with respect to RSUs that may vest at a later date.

(6)

Does not include 18,870 shares of common stock issuable with respect to RSUs that may vest at a later date.

(7)

Does not include 50,167 shares of common stock issuable with respect to RSUs that are fully vested but are not deliverable until six months following the director’s termination of service as a director.

(8)

Does not include 23,266 shares of common stock issuable with respect to RSUs that are fully vested but are not deliverable until six months following the director’s termination of service as a director.

(9)

Includes the shares of common stock referred to in footnotes (3) through (8) above.

(10)

This information is based solely upon our review of the most recent filings of Schedule 13D or 13G and Form 3, 4 or 5.

(11)

Based on information contained in the Schedule 13G/A filed jointly on February 14, 2018 by and on behalf of Nine Ten Partners LP (“Nine Ten”), Nine Ten Capital Management LLC (“NTCM”), Brian Bares, James Bradshaw, and Russell Mollen with respect to 1,081,227 shares of common stock owned by Nine Ten as of December 31, 2017. According to the Schedule 13G/A, NTCM does not directly own any shares of common stock. However, as the investment adviser of Nine Ten, NTCM may be deemed to beneficially own the 1,081,227 shares owned by Nine Ten. In addition, Messrs. Bares, Bradshaw and Mollen are control persons of Nine Ten GP LP, the General Partner of Nine Ten. According to the Schedule 13G/A, Nine Ten and the other filers of the Schedule 13G/A referenced above have sole voting and dispositive power with respect to the 1,081,227 shares of common stock.

(12)

Based on information contained in the Schedule 13G/A filed on February 9, 2018 by and on behalf of Dimensional Fund Advisors LP (“DFA”) with respect to 843,927 shares of common stock beneficially owned by DFA as of December 31, 2017. According to the Schedule 13G/A, DFA has sole voting power with respect to 824,642 shares of common stock and sole dispositive power with respect to 843,927 shares of common stock. DFA is an investment adviser registered under Section 203 of the Investment Advisors Act of 1940, furnishes investment advice to four investment companies registered under the Investment Company Act of 1940 and serves as investment manager orsub-adviser to certain other commingled group trusts and separate accounts (such investment companies, trusts and accounts, collectively referred to as the “Funds”). In certain cases, subsidiaries of DFA may act as an adviser orsub-adviser to certain Funds. In its role as investment advisor,sub-adviser and/or manager, DFA and its subsidiaries (collectively, “Dimensional”) possess voting and/or investment power over the shares of common stock that are owned by the Funds, and may be deemed to be the beneficial owner of the shares of common stock held by the Funds. However, all securities reported in the Schedule 13G/A are owned by the Funds. Dimensional disclaims beneficial ownership of such securities.

(13)

Based on information contained in the Schedule 13G jointly filed on February 14, 2014 by and on behalf of Sammons Enterprises, Inc. Employee Stock Ownership Trust (“SEI ESOT”), Sammons Enterprises, Inc. (“SEI”), of which 100% of its outstanding capital stock is owned of record by the SEI ESOT, Consolidated Investment Services, Inc. (“CIS”), a direct wholly-owned subsidiary of SEI, Sammons Equity Alliance, Inc. (“SEA”), a direct wholly-owned subsidiary of CIS, Compatriot Capital, Inc. (“CCI”), a direct wholly-owned subsidiary of SEA, and Paul E. Rowsey, III, a director and chief executive officer of CCI, with respect to 636,815 shares of common stock directly owned by CCI and 1,254 shares of common stock directly owned by Mr. Rowsey, in each case as of December 13, 2013. SEI ESOT, SEI, CIS, SEA and CCI has shared voting and dispositive power over 636,815 shares of common stock. Mr. Rowsey has sole voting and dispositive power over 1,254 shares of common stock. Mr. Rowsey, by virtue of his positions with CCI may be deemed to beneficially own the 636,815 shares of common stock of the Company directly owned by CCI. Mr. Rowsey disclaimed beneficial ownership of 636,815 shares directly owned by SEI, SEI ESOT, CIS, SEA and CCI. SEI, SEI ESOT, CIS, SEA and CCI disclaimed beneficial ownership of 1,254 shares directly owned by Mr. Rowsey.

(14)

Based on information contained in the Schedule 13G filed on February 1, 2018 by and on behalf of Blackrock, Inc., (“Blackrock”) with respect to 598,167 shares of common stock beneficially owned by Blackrock as of December 31, 2017. According to the Schedule 13G, Blackrock has sole voting power with respect to 591,180 shares of common stock and sole dispositive power with respect to 598,167 shares of common stock. Blackrock is a parent holding company in accordance with Rule13d-1(b)(1)(ii)(G), and identified the subsidiaries which acquired the security being reported on by the parent holding company as BlackRock Advisors, LLC, BlackRock Financial Management, Inc., BlackRock Fund Advisors, BlackRock Institutional Trust Company, N.A., and BlackRock Investment Management, LLC.

Item 13. Certain Relationships and Related Transactions, and Director Independence.

ToRelated Party Transactions

Reis’s Code of Ethics provides that it is the extent responsivepolicy of the Company to avoid situations that create an actual or potential conflict between a director’s, officer’s or employee’s personal (or business) interests and the interests of Reis. Further, if a director, officer or employee (or a family member) has a financial or employment relationship with a competitor, supplier or potential supplier, the Code of Ethics requires the disclosure of such information to Reis’s general counsel and/or Chief Financial Officer. In accordance with the policies set forth in the Code of Ethics, the practice of the general counsel and the Chief Financial Officer is to bring all situations involving an actual or potential conflict of interest to the requirementsattention of the board of directors, which then reviews the matter. The standard applied by the board of directors seeks to ensure that the terms of any related party transaction are at least arm’s length and otherwise fair, reasonable and in the best interests of Reis.

The Audit Committee is responsible for reviewing and approving all related party transactions from time to time. The Company’s accounting staff is primarily responsible for identifying potential related party transactions. In 2016, a committee was formed including the Audit Committee chairperson, the Chief Financial Officer and the Controller to assess potential related party transactions and for determining whether such transactions should be brought to the Audit Committee. Any member of the Audit Committee who is a related party with respect to a transaction under review may not participate in the deliberations or vote for approval or ratification of the transaction. As required by SEC rules, we would disclose in this section any material related party transactions (none are required to be disclosed in this Form10-K/A), as well as other transactions deemed to be potentially relevant to stockholders. In addition, Reis discloses transactions with affiliates and related party transactions, as appropriate, in the footnotes to its financial statements.

Independent Directors

The Company’s board of directors was comprised of five directors at December 31, 2017. The board of directors has determined that the following directors were independent directors under the listing standards of the NASDAQ Stock Market during 2017 and remain independent as of the date of this item, information contained inForm10-K/A: Messrs. Clarke, Mitchell and Vielehr.

Compensation Committee Interlocks and Insider Participation

The Compensation Committee is currently comprised of Messrs. Clarke and Vielehr, each of whom is anon-employee director. Both Messrs. Clarke and Vielehr were Compensation Committee members for all of 2017. During 2017, neither of the Company’s definitive proxy statementmembers of the Compensation Committee were officers or employees of Reis or any of its subsidiaries. During 2017, none of Reis’s executive officers served as a director or compensation committee member of any entity for the 2017 annual meetingwhich a Compensation Committee member of stockholders is incorporated herein by reference.Reis was an executive officer or director.

Item 14. Principal Accountant Fees and Services.

ToAudit andNon-Audit Fees

The following table sets forth the extent responsivefees billed to Reis for the years ended December 31, 2017 and 2016 by Ernst & Young LLP, the Company’s independent registered public accounting firm:

                 2017                               2016               

Audit fees(A)

  $538,400   $464,200 

Audit-related fees

        

Tax fees

        

All other fees

        
  

 

 

 

  

 

 

 

  $538,400    $464,200  
  

 

 

 

  

 

 

 

 

 

(A)

Consists of fees billed for professional services, includingout-of-pocket expenses, rendered for (i) the audit of Reis’s annual financial statements for the years ended December 31, 2017 and 2016, and (ii) the reviews of the financial statements included in Reis’s quarterly reports onForm 10-Q during 2017 and 2016.

Approval of Services by the Independent Registered Public Accounting Firm

The Audit Committee has adopted a policy for approval of audit and permittednon-audit services by the Company’s independent registered public accounting firm. The Audit Committee will consider annually and approve the provision of audit services by its independent registered public accounting firm and consider and, if appropriate, approve the provision of certain defined audit andnon-audit services. The Audit Committee will also consider specific engagements on acase-by-case basis and approve them, if appropriate.

Any proposed specific engagement may be presented to the requirementsAudit Committee for consideration at its next regular meeting or, if earlier consideration is required, to one or more of this item, information contained inits members to whom authority is delegated. The member or members to whom such authority is delegated are required to report any specific approval of services at the Company’s definitive proxy statement forAudit Committee’s next regular meeting.

During the years ended December 31, 2017 annual meeting of stockholders is incorporated hereinand 2016, all fees set forth above were approved by reference.the Audit Committee.

PART IV

Item 15. Exhibits and Financial Statement Schedules.

(a)  (1)Financial Statements

Consolidated Balance Sheets at December 31, 2016 and 2015

Consolidated Statements of Operations for the Years Ended December 31, 2016, 2015 and 2014

Consolidated Statements of Changes in Stockholders’ Equity for the Years Ended December 31, 2016, 2015 and 2014

Consolidated Statements of Cash Flows for the Years Ended December 31, 2016, 2015 and 2014

Notes to Consolidated Financial Statements

(2) Financial Statement Schedules

All schedules have been omitted because the required information for such schedules is not present, is not present in amounts sufficient to require submission of the schedule or because the required information is included in the consolidated financial statements.

(3) Exhibits

 

Exhibit No.

 

Description

  3.1

Articles of Amendment and Restatement filed on May 30, 1997 (incorporated by reference to Exhibit 3.1 to the Company’s Registration Statement on FormS-11 (FileNo. 333-32445) filed on July 30, 1997).

  3.2

Articles Supplementary (incorporated by reference to Exhibit 3.1 to the Company’s Current Report on Form8-K (FileNo. 1-12917) filed on December 21, 2006).

  3.3

Articles of Amendment (incorporated by reference to Exhibit 3.1 to the Company’s Current Report on Form8-K (FileNo. 1-12917) filed on June 4, 2007).

  3.4

Articles Supplementary (incorporated by reference to Exhibit 3.2 to the Company’s Current Report on Form8-K (FileNo. 1-12917) filed on June 30, 2008).

  3.5

Amended and Restated Bylaws (incorporated by reference to Exhibit 3.1 to the Company’s Current Report onForm 8-K (FileNo. 1-12917) filed on June 30, 2008).

  4.1

The rights of the Company’s equity security holders are defined in Articles V and VI of Exhibit 3.1 above.

  4.2

Specimen certificate for common stock (incorporated by reference to Exhibit 4.1 to the Company’s Registration Statement on Form8-A (FileNo. 1-12917) filed on November 29, 2007).

  4.3

Registration Rights Agreement dated as of May 30, 2007 among Wellsford, Lloyd Lynford and Jonathan Garfield (incorporated by reference to Exhibit 3 to the Schedule 13D (FileNo. 005-51221) filed by Jonathan Garfield with respect to the Company on June 8, 2007).

10.1

Amended and Restated Revolving Loan and Security Agreement, dated as of January 28, 2016, by and among Reis Services, LLC, as Borrower, Reis, Inc., as Guarantor, and Capital One, National Association, as Lender (incorporated by reference to Exhibit 10.1 to the Company’s Current Report on Form8-K (FileNo. 1-12917) filed on February 3, 2016).

10.2

First Amendment to Amended and Restated Revolving Loan and Security Agreement, dated as of November 3, 2016, by and among Reis Services, LLC, as Borrower, Reis, Inc., as Guarantor, and Capital One, National Association, as Lender (incorporated by reference to Exhibit 10.1 to the Company’s Form10-Q for the quarter ended September 30, 2016 (FileNo. 1-12917) filed on November 8, 2016).

10.3

Second Amendment to Amended and Restated Revolving Loan and Security Agreement, dated as of December 8, 2016, by and among Reis Services, LLC, as Borrower, Reis, Inc., as Guarantor, and Capital One, National Association, as Lender (incorporated by reference to Exhibit 10.1 to the Company’s Current Report on Form8-K (FileNo. 1-12917) filed on December 14, 2016).

10.4

Trademark Collateral Security Agreement, dated as of October 16, 2012, by and between Reis Services, LLC, as Borrower, and Capital One, National Association, as Lender (incorporated by reference to Exhibit 10.2 to the Company’s Current Report on Form8-K (FileNo. 1-12917) filed on October 18, 2012).

10.5

Pledge Agreement, dated as of October 16, 2012, between Capital One, National Association, as Pledgee, and Reis, Inc., as Pledgor (incorporated by reference to Exhibit 10.3 to the Company’s Current Report on Form8-K (FileNo. 1-12917) filed on October 18, 2012).

10.6

Trademark Assignment of Security, dated as of October 16, 2012, between Reis Services, LLC, as Borrower, and Capital One, National Association, as Lender (incorporated by reference to Exhibit 10.4 to the Company’s Quarterly Report on Form10-Q for the quarter ended September 30, 2012 (FileNo. 1-12917), filed on November 8, 2012).

Exhibit No.

31.1
 

Description

10.7  

Reaffirmation of Collateral Documents, dated as of January 28, 2016, by and among Reis Services, LLC, Reis, Inc., and Capital One, National Association (incorporated by reference to Exhibit 10.5 to the Company’s Current Report onForm 8-K (FileNo. 1-12917) filed on February 3, 2016).

10.8  

Amended and Restated Wellsford Real Properties, Inc. 1998 Management Incentive Plan (incorporated by reference to Exhibit 10.2 to the Company’s Annual Report on Form10-K for the year ended December 31, 2006 (FileNo. 1-12917)).*

10.9  

Amendment to Amended and Restated Wellsford Real Properties, Inc. 1998 Management Incentive Plan (incorporated by reference to pageF-13 of Annex F to the Company’s proxy statement/prospectus (FileNo. 333-139705) filed on May 2, 2007).*

10.10

Reis, Inc. 2008 Omnibus Incentive Plan (incorporated by reference to Annex A to the Company’s proxy statement filed on April 25, 2008).*

10.11

Amended and Restated Reis, Inc. 2011 Omnibus Incentive Compensation Plan (incorporated by reference to Annex A to the Company’s proxy statement (FileNo. 1-12917) filed on April 28, 2011).*

10.12

Reis, Inc. 2016 Annual Incentive Compensation Plan (incorporated by reference to Annex A to the Company’s proxy statement on Schedule 14A (FileNo. 1-12917) filed on April 27, 2016).*

10.13

Employment Agreement effective July 1, 2016, among Reis, Inc., Reis Services, LLC and Lloyd Lynford (incorporated by reference to Exhibit 10.1 to the Company’s Current Report on Form8-K (FileNo. 1-12917) filed on June 21, 2016).*

10.14

Indemnification Agreement effective July 1, 2016, among Reis, Inc., Reis Services, LLC and Lloyd Lynford (incorporated by reference to Exhibit 10.2 to the Company’s Current Report on Form8-K (FileNo. 1-12917) filed on June 21, 2016).*

10.15

Employment Agreement effective July 1, 2016, among Reis, Inc., Reis Services, LLC and Jonathan Garfield (incorporated by reference to Exhibit 10.3 to the Company’s Current Report on Form8-K (FileNo. 1-12917) filed on June 21, 2016).*

10.16

Indemnification Agreement effective July 1, 2016, among Reis, Inc., Reis Services, LLC and Jonathan Garfield (incorporated by reference to Exhibit 10.4 to the Company’s Current Report on Form8-K (FileNo. 1-12917) filed on June 21, 2016). *

10.17

Employment Agreement effective July 1, 2016, between Reis Services, LLC and William Sander (with Reis, Inc. a party thereto for limited purposes) (incorporated by reference to Exhibit 10.5 to the Company’s Current Report on Form8-K (FileNo. 1-12917) filed on June 21, 2016).*

10.18

Employment Agreement effective July 1, 2016, among Reis, Inc., Reis Services, LLC and Mark P. Cantaluppi (incorporated by reference to Exhibit 10.6 to the Company’s Current Report on Form8-K (FileNo. 1-12917) filed on June 21, 2016).*

10.19

Form of Employee Restricted Stock Unit Agreement Under Amended and Restated Reis, Inc. 2011 Omnibus Incentive Plan (incorporated by reference to Exhibit 10.2 to the Company’s Form10-Q for the quarter ended June 30, 2011 (FileNo. 1-12917), filed on August 4, 2011 (FileNo. 1-12917)).*

10.20

Form of Director Restricted Stock Unit Agreement Under Amended and Restated Reis, Inc. 2011 Omnibus Incentive Plan (incorporated by reference to Exhibit 10.11 to the Company’s Annual Report on Form10-K for the year ended December 31, 2011 (FileNo. 1-12917)).*

21.1 

Subsidiaries of the Registrant.

23.1 

Consent of Ernst & Young LLP.

31.1 

Chief Executive Officer Certification pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.

2002

31.2

 

Chief Financial Officer Certification pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.

32.1 

Chief Executive Officer and Chief Financial Officer Certifications pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.

101

Interactive Data Files, formatted in extensible Business Reporting Language (XBRL).

        *              This document is either a management contract or compensatory plan.2002

(b)  The exhibits listed in Item 15(a)(3) above are filed as exhibits to this amended report on Form10-K/A.

(b)

Those exhibits listed in Item 15(a)(3) above and not indicated as “incorporated by reference” are filed as exhibits to thisForm 10-K.

(c)Not applicable.

SIGNATURES

Pursuant to the requirements of Section 13 or 15(d) 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.

 

REIS, INC.

REIS, INC.

By:

 

/s/ Mark P. Cantaluppi

 
 

Mark P. Cantaluppi

 
 

Vice President, Chief Financial Officer

 

Dated: March 9, 2017April 23, 2018

Pursuant to the requirements of the Securities Exchange Act of 1934, this report has been signed below by the following persons on behalf of the Registrant and in the capacities and on the dates indicated.

 

Name

  

Title

 

Date

/s/ Lloyd Lynford

Lloyd Lynford

  

Chief Executive Officer, President and Director

March 9, 2017
Lloyd Lynford

(Principal Executive Officer)

 April 23, 2018

/s/ Mark P. Cantaluppi

Mark P. Cantaluppi

  

Vice President, Chief Financial Officer

March 9, 2017
Mark P. Cantaluppi

(Principal Financial and Accounting Officer)

 April 23, 2018

/s/ M. Christian Mitchell

M. Christian Mitchell

  Chairman of the Board and Director March 9, 2017
M. Christian MitchellApril 23, 2018

/s/ Thomas J. Clarke Jr.

Thomas J. Clarke Jr.

  Director March 9, 2017
Thomas J. Clarke Jr.April 23, 2018

/s/ Jonathan Garfield

Jonathan Garfield

  Director March 9, 2017
Jonathan GarfieldApril 23, 2018

/s/ Byron C. Vielehr

Byron C. Vielehr

  Director March 9, 2017
Byron C. VielehrApril 23, 2018

REIS, INC. AND SUBSIDIARIES

INDEX TO CONSOLIDATED FINANCIAL STATEMENTS34

Reports of Independent Registered Public Accounting Firm

F-2

Consolidated Balance Sheets at December 31, 2016 and 2015

F-4

Consolidated Statements of Operations for the Years Ended December  31, 2016, 2015 and 2014

F-5

Consolidated Statements of Changes in Stockholders’ Equity for the Years Ended December 31, 2016, 2015 and 2014

F-6

Consolidated Statements of Cash Flows for the Years Ended December  31, 2016, 2015 and 2014

F-7

Notes to Consolidated Financial Statements

F-8

FINANCIAL STATEMENT SCHEDULES

All schedules have been omitted because the required information for such schedules is not present, is not present in amounts sufficient to require submission of the schedule or because the required information is included in the consolidated financial statements.

REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

The Board of Directors and Stockholders of Reis, Inc. and Subsidiaries

We have audited the accompanying consolidated balance sheets of Reis, Inc. and Subsidiaries (the “Company”) as of December 31, 2016 and 2015, and the related consolidated statements of operations, changes in stockholders’ equity, and cash flows for each of the three years in the period ended December 31, 2016. These financial statements are the responsibility of the Company’s management. Our responsibility is to express an opinion on these financial statements based on our audits.

We conducted our audits in accordance with the standards of the Public Company Accounting Oversight Board (United States). Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audits provide a reasonable basis for our opinion.

In our opinion, the financial statements referred to above present fairly, in all material respects, the consolidated financial position of the Company at December 31, 2016 and 2015, and the consolidated results of its operations and its cash flows for each of the three years in the period ended December 31, 2016, in conformity with U.S. generally accepted accounting principles.

We also have audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States), the Company’s internal control over financial reporting as of December 31, 2016, based on criteria established in Internal Control —Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission (2013 Framework) and our report dated March 9, 2017 expressed an unqualified opinion thereon.

/s/ Ernst & Young LLP

Chicago, Illinois

March 9, 2017

REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

The Board of Directors and Stockholders of Reis, Inc. and Subsidiaries

We have audited Reis, Inc. and Subsidiaries’ (the “Company”) internal control over financial reporting as of December 31, 2016, based on criteria established in Internal Control—Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission (2013 Framework) (the COSO criteria). The Company’s management is responsible for maintaining effective internal control over financial reporting, and for its assessment of the effectiveness of internal control over financial reporting included in the accompanying Management’s Assessment of Internal Control over Financial Reporting. Our responsibility is to express an opinion on the Company’s internal control over financial reporting based on our audit.

We conducted our audit in accordance with the standards of the Public Company Accounting Oversight Board (United States). Those standards require that we plan and perform the audit to obtain reasonable assurance about whether effective internal control over financial reporting was maintained in all material respects. Our audit included obtaining an understanding of internal control over financial reporting, assessing the risk that a material weakness exists, testing and evaluating the design and operating effectiveness of internal control based on the assessed risk, and performing such other procedures as we considered necessary in the circumstances. We believe that our audit provides a reasonable basis for our opinion.

A company’s internal control over financial reporting is a process designed to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles. A company’s internal control over financial reporting includes those policies and procedures that (1) pertain to the maintenance of records that, in reasonable detail, accurately and fairly reflect the transactions and dispositions of the assets of the company; (2) provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance with generally accepted accounting principles, and that receipts and expenditures of the company are being made only in accordance with authorizations of management and directors of the company; and (3) provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use or disposition of the company’s assets that could have a material effect on the financial statements.

Because of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements. Also, projections of any evaluation of effectiveness to future periods are subject to the risk that controls may become inadequate because of changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate.

In our opinion, the Company maintained, in all material respects, effective internal control over financial reporting as of December 31, 2016, based on the COSO criteria.

We also have audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States), the consolidated balance sheets of the Company as of December 31, 2016 and 2015 and the related consolidated statements of operations, changes in stockholders’ equity, and cash flows for each of the three years in the period ended December 31, 2016, and our report dated March 9, 2017 expressed an unqualified opinion thereon.

/s/ Ernst & Young LLP

Chicago, Illinois

March 9, 2017

REIS, INC. AND SUBSIDIARIES

CONSOLIDATED BALANCE SHEETS

   December 31, 
  2016  2015 

ASSETS

   

Current assets:

   

Cash and cash equivalents

  $21,490,586  $28,657,956 

Restricted cash and investments

   —     212,268 

Accounts receivable, net

   10,743,505   13,741,169 

Prepaid and other assets

   792,991   670,339 
  

 

 

  

 

 

 

Total current assets

   33,027,082   43,281,732 

Furniture, fixtures and equipment, net of accumulated depreciation of $1,082,793 and $2,449,985, respectively

   5,260,443   804,427 

Intangible assets, net of accumulated amortization of $41,861,561 and $38,738,292, respectively

   17,922,282   15,686,954 

Deferred tax asset, net

   16,814,737   18,429,737 

Goodwill

   54,824,648   54,824,648 

Other assets

   295,349   171,728 
  

 

 

  

 

 

 

Total assets

  $128,144,541  $133,199,226 
  

 

 

  

 

 

 

LIABILITIES AND STOCKHOLDERS’ EQUITY

   

Current liabilities:

   

Current portion of debt

  $—    $—   

Accrued expenses and other liabilities

   4,031,444   5,898,226 

Deferred revenue

   25,031,100   25,291,499 

Liabilities attributable to discontinued operations

   —     145,737 
  

 

 

  

 

 

 

Total current liabilities

   29,062,544   31,335,462 

Other long-term liabilities

   1,902,081   284,316 
  

 

 

  

 

 

 

Total liabilities

   30,964,625   31,619,778 
  

 

 

  

 

 

 

Commitments and contingencies

   

Stockholders’ equity:

   

Common stock, $0.02 par value per share, 101,000,000 shares authorized, 11,272,150 and 11,256,405 issued and outstanding, respectively

   225,443   225,128 

Additional paid in capital

   107,668,599   107,102,433 

Retained earnings (deficit)

   (10,714,126  (5,748,113
  

 

 

  

 

 

 

Total stockholders’ equity

   97,179,916   101,579,448 
  

 

 

  

 

 

 

Total liabilities and stockholders’ equity

  $128,144,541  $133,199,226 
  

 

 

  

 

 

 

See Notes to Consolidated Financial Statements

REIS, INC. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF OPERATIONS

   For the Years Ended December 31, 
   2016  2015  2014 

Revenue:

    

Subscription revenue

  $45,398,701  $43,722,087  $39,727,112 

Other revenue

   2,131,054   7,168,351   1,608,043 
  

 

 

  

 

 

  

 

 

 

Total revenue

   47,529,755   50,890,438   41,335,155 

Cost of sales

   10,999,146   9,081,624   8,037,019 
  

 

 

  

 

 

  

 

 

 

Gross profit

   36,530,609   41,808,814   33,298,136 
  

 

 

  

 

 

  

 

 

 

Operating expenses:

    

Sales and marketing

   11,878,590   11,700,840   10,235,349 

Product development

   4,167,474   3,711,054   3,472,875 

General and administrative expenses

   15,664,495   14,267,027   12,040,343 
  

 

 

  

 

 

  

 

 

 

Total operating expenses

   31,710,559   29,678,921   25,748,567 
  

 

 

  

 

 

  

 

 

 

Other income (expenses):

    

Interest and other income

   21,937   37,857   22,016 

Interest expense

   (108,345  (91,767  (113,200
  

 

 

  

 

 

  

 

 

 

Total other income (expenses)

   (86,408  (53,910  (91,184
  

 

 

  

 

 

  

 

 

 

Income before income taxes and discontinued operations

   4,733,642   12,075,983   7,458,385 

Income tax expense

   1,953,000   4,005,000   2,842,000 
  

 

 

  

 

 

  

 

 

 

Income from continuing operations

   2,780,642   8,070,983   4,616,385 

Income (loss) from discontinued operations, net of income tax expense (benefit) of $—, $1,409,000 and $(382,000), respectively

   —     2,234,000   (569,263
  

 

 

  

 

 

  

 

 

 

Net income

  $2,780,642  $10,304,983  $4,047,122 
  

 

 

  

 

 

  

 

 

 

Per share amounts – basic:

    

Income from continuing operations

  $0.25  $0.72  $0.42 
  

 

 

  

 

 

  

 

 

 

Net income

  $0.25  $0.92  $0.37 
  

 

 

  

 

 

  

 

 

 

Per share amounts – diluted:

    

Income from continuing operations

  $0.24  $0.69  $0.39 
  

 

 

  

 

 

  

 

 

 

Net income

  $0.24  $0.88  $0.34 
  

 

 

  

 

 

  

 

 

 

Weighted average number of common shares outstanding:

    

Basic

   11,305,110   11,226,932   11,086,690 
  

 

 

  

 

 

  

 

 

 

Diluted

   11,745,516   11,706,495   11,593,079 
  

 

 

  

 

 

  

 

 

 

Dividends declared per common share

  $0.68  $0.56  $0.33 
  

 

 

  

 

 

  

 

 

 

See Notes to Consolidated Financial Statements

REIS, INC. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS’ EQUITY

FOR THE YEARS ENDED DECEMBER 31, 2016, 2015 AND 2014

         Retained  Total 
   Common Shares  Paid in  Earnings  Stockholders’ 
   Shares  Amount  Capital  (Deficit)  Equity 

Balance, January 1, 2014

   10,916,441  $218,328  $102,717,693  $(10,065,062 $92,870,959 

Shares issued for vested employees restricted stock units

   144,660   2,894   (2,894  —     —   

Shares issued for settlement of vested director restricted stock units

   40,564   811   (811  —     —   

Shares issued for option exercises

   54,906   1,098   427,652   —     428,750 

Stock based compensation, net

   —     —     2,464,163   —     2,464,163 

Dividends

   —     —     —     (3,697,588  (3,697,588

Net income

   —     —     —     4,047,122   4,047,122 
  

 

 

  

 

 

  

 

 

  

 

 

  

 

 

 

Balance, December 31, 2014

   11,156,571   223,131   105,605,803   (9,715,528  96,113,406 

Shares issued for vested employees restricted stock units

   64,834   1,297   (1,297  —     —   

Shares issued for option exercises

   35,000   700   283,550   —     284,250 

Stock based compensation, net

   —     —     1,303,708   —     1,303,708 

Registration statement costs

   —     —     (89,331  —     (89,331

Dividends

   —     —     —     (6,337,568  (6,337,568

Net income

   —     —     —     10,304,983   10,304,983 
  

 

 

  

 

 

  

 

 

  

 

 

  

 

 

 

Balance, December 31, 2015

   11,256,405   225,128   107,102,433   (5,748,113  101,579,448 

Shares issued for vested employees restricted stock units

   52,421   1,048   (1,048  —     —   

Shares issued for option exercises

   17,500   350   152,650   —     153,000 

Stock based compensation, net

   —     —     1,557,394   —     1,557,394 

Dividends

   —     —     —     (7,746,655  (7,746,655

Stock repurchases

   (54,176  (1,083  (1,142,830  —     (1,143,913

Net income

   —     —     —     2,780,642   2,780,642 
  

 

 

  

 

 

  

 

 

  

 

 

  

 

 

 

Balance, December 31, 2016

   11,272,150  $225,443  $107,668,599  $(10,714,126 $97,179,916 
  

 

 

  

 

 

  

 

 

  

 

 

  

 

 

 

See Notes to Consolidated Financial Statements

REIS, INC. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF CASH FLOWS

   For the Years Ended December 31, 
   2016  2015  2014 

CASH FLOWS FROM OPERATING ACTIVITIES:

    

Net income

  $2,780,642  $10,304,983  $4,047,122 

Adjustments to reconcile to net cash provided by operating activities:

    

Deferred tax provision

   1,766,000   4,449,000   2,113,783 

Depreciation

   706,906   429,498   382,829 

Amortization of intangible assets

   5,923,269   5,148,546   4,828,452 

Stock based compensation charges

   2,098,553   1,772,679   1,702,163 

Changes in assets and liabilities:

    

Restricted cash and investments

   212,268   357   4,077 

Accounts receivable, net

   2,997,664   (1,114,106  (1,240,479

Prepaid and other assets

   (40,721  (332,450  40,320 

Accrued expenses and other liabilities

   (382,084  1,170,929   446,044 

Liability for option cancellations

   —     —     (136,563

Deferred revenue

   (260,399  2,406,212   2,601,109 
  

 

 

  

 

 

  

 

 

 

Net cash provided by operating activities

   15,802,098   24,235,648   14,788,857 
  

 

 

  

 

 

  

 

 

 

CASH FLOWS FROM INVESTING ACTIVITIES:

    

Website and database development additions

   (8,508,597  (5,804,090  (3,822,745

Furniture, fixtures and equipment additions

   (4,818,683  (383,059  (380,318

Proceeds from sale of furniture, fixtures and equipment

   2,091   —     —   
  

 

 

  

 

 

  

 

 

 

Net cash (used in) investing activities

   (13,325,189  (6,187,149  (4,203,063
  

 

 

  

 

 

  

 

 

 

CASH FLOWS FROM FINANCING ACTIVITIES:

    

Dividends

   (7,746,655  (6,337,568  (3,697,588

Registration statement costs

   —     (89,331  —   

Proceeds from option exercises

   153,000   284,250   428,750 

Payments for option cancellations and restricted stock units

   (701,159  (992,971  (131,778

Payment of financing cost

   (205,552  —     —   

Stock repurchases

   (1,143,913  —     —   
  

 

 

  

 

 

  

 

 

 

Net cash (used in) financing activities

   (9,644,279  (7,135,620  (3,400,616
  

 

 

  

 

 

  

 

 

 

Net (decrease) increase in cash and cash equivalents

   (7,167,370  10,912,879   7,185,178 

Cash and cash equivalents, beginning of year

   28,657,956   17,745,077   10,559,899 
  

 

 

  

 

 

  

 

 

 

Cash and cash equivalents, end of year

  $21,490,586  $28,657,956  $17,745,077 
  

 

 

  

 

 

  

 

 

 

SUPPLEMENTAL INFORMATION:

    

Cash paid during the year for interest

  $42,500  $25,347  $25,347 
  

 

 

  

 

 

  

 

 

 

Cash paid during the year for income taxes, net of refunds

  $722,105  $651,502  $229,982 
  

 

 

  

 

 

  

 

 

 

SUPPLEMENTAL SCHEDULE OF NON-CASH INVESTING AND FINANCING ACTIVITIES:

    

Accrual for furniture, fixtures and equipment additions

  $346,330   
  

 

 

   

Disposal of fully depreciated furniture, fixtures and equipment

  $2,074,098  $138,160  $130,115 
  

 

 

  

 

 

  

 

 

 

Accrual for website and database development costs

   $350,000  
   

 

 

  

Disposal of fully depreciated website costs

    $2,895 
    

 

 

 

Shares issued for vested employee restricted stock units

  $1,048  $1,297  $2,894 
  

 

 

  

 

 

  

 

 

 

Shares issued for settlement of vested director restricted stock units

    $811 
    

 

 

 

Exercise of stock options through the receipt of tendered shares

    $36,246 
    

 

 

 

See Notes to Consolidated Financial Statements

REIS, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

1.Organization and Business

Reis, Inc. is a Maryland corporation. When we refer to “Reis” or the “Company,” we are referring to Reis, Inc. and its consolidated subsidiaries. The Company provides commercial real estate market information and analytical tools to real estate professionals, through its Reis Services subsidiary. For disclosure and financial reporting purposes, this business is referred to as Reis Services.

Reis Services

Reis Services, including its predecessors, was founded in 1980. Reis maintains a proprietary database containing detailed information on commercial properties in metropolitan markets and neighborhoods throughout the U.S. The database contains information on apartment, office, retail, warehouse/distribution, flex/research & development, self storage, seniors housing, student housing and affordable housing properties, and is used by real estate investors, lenders and other professionals to make informed buying, selling and financing decisions. In addition, Reis data is used by debt and equity investors to assess, quantify and manage the risks of default and loss associated with individual mortgages, properties, portfolios and real estate backed securities. Reis currently provides its information services to many of the nation’s leading lending institutions, equity investors, brokers and appraisers.

The Company’s product portfolio features:Reis SE, its flagship delivery platform aimed at larger and mid-sized enterprises;ReisReports, aimed at prosumers and smaller enterprises;Reis Portfolio CREand other portfolio support products and services,aimed primarily at risk managers and credit administrators at banks and non-bank lending institutions. It is through these products that Reis provides online access to a proprietary database of commercial real estate information and analytical tools designed to facilitate debt and equity transactions as well as ongoing asset and portfolio evaluations. Depending on the product or level of entitlement, users have access to market trends and forecasts at metropolitan and neighborhood levels throughout the U.S. and/or detailed building-specific information such as rents, vacancy rates, lease terms, property sales, new construction listings and property valuation estimates. Reis’s products are designed to meet the demand for timely and accurate information to support the decision making of property owners, developers, builders, banks and non-bank lenders, equity investors and service providers. These real estate professionals require access to timely information on both the performance and pricing of assets, including detailed data on market transactions, supply, absorption, rents and sale prices. This information is critical to all aspects of valuing assets and financing their acquisition, development and construction.

Discontinued Operations – Residential Development Activities

Prior to May 2007, the name of the Company was Wellsford Real Properties, Inc. (“Wellsford”). Wellsford, which was originally formed on January 8, 1997, acquired the Reis Services business by merger in May 2007 (the “Merger”). Wellsford’s primary operating activities immediately prior to the Merger, and conducted through its subsidiaries, were the development, construction and sale of three residential projects and its approximate 23% ownership interest in the Reis Services business. The Company completed the sale of the remaining residential units and homes at its projects or divested of the remaining residential projects in bulk sales by April 2011. In 2012, the Company settled construction defect litigation at its Colorado project and in 2015, finalized its efforts to recover funds from other responsible parties involved in the design, development, construction and supervision of the Colorado project as more fully described in Note 3.

2.Summary of Significant Accounting Policies

Basis of Presentation

Principles of Consolidation

The accompanying consolidated financial statements include the accounts of the Company and its majority-owned and controlled subsidiaries. Investments in entities where the Company does not have a controlling interest are accounted for under the equity method of accounting. These investments were initially recorded at cost and were subsequently adjusted for the Company’s proportionate share of the investment’s income (loss) and additional contributions or distributions. All inter-company accounts and transactions among the Company and its subsidiaries have been eliminated in consolidation.

REIS, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(Continued)

Summary of Significant Accounting Policies (continued)

Codification and the Hierarchy of Generally Accepted Accounting Principles

Effective July 1, 2009, the Company adopted the provisions of the Financial Accounting Standards Board (“FASB”) guidance related to the Accounting Standards Codification and the Hierarchy of Generally Accepted Accounting Principles (“GAAP”). This guidance identifies the sources of accepted accounting principles and the framework for selecting the principles used in the preparation of financial statements of nongovernmental entities that are presented in conformity with GAAP in the United States (the GAAP hierarchy).

Discontinued Operations

In April 2011, the Company determined that all operational and litigation related activities associated with the prior ownership and development of residential real estate, including certain general and administrative costs that supported the related operations, should be presented as a discontinued operation. As a result of this determination and the fact that these operations and cash flows were clearly distinguished, the operating results of the discontinued segment and related general and administrative costs were aggregated for separate presentation apart from continuing operating results of the Company in the consolidated financial statements for all periods presented. Discontinued operations were completed as of December 31, 2015, therefore there were no discontinued operations activities during the year ended December 31, 2016.

Variable Interests

The Company evaluates its investments and subsidiaries to determine if an entity is a voting interest entity or a variable interest entity (“VIE”). The Company performs this analysis on an ongoing basis, or as circumstances change. The Company does not have any VIEs in the years ended December 31, 2016, 2015 and 2014.

Cash and Cash Equivalents

The Company considers all demand and money market accounts and short term investments in government funds with a maturity of three months or less at the date of purchase to be cash and cash equivalents.

Accounts Receivable and Allowance for Doubtful Accounts

Accounts receivables are recorded at invoiced amounts and do not bear interest. The allowance for doubtful accounts reflects the Company’s assessment of collectability of outstanding receivables after consideration of the age of a receivable, customer payment history and other current events or economic factors that could affect a customer’s ability to make payments.

Furniture, Fixtures and Equipment

The Company capitalizes costs for the purchase of furniture, fixtures and equipment that have an expected useful life beyond one year. Depreciation expense is calculated on a straight-line basis over the determined useful life of the asset, generally between three and ten years. Depreciation expense is charged to general and administrative expenses and aggregated approximately $707,000, $429,000 and $383,000 for the years ended December 31, 2016, 2015 and 2014, respectively.

Intangible Assets, Amortization and Impairment

Website Development Costs

The Company expenses all internet website costs incurred during the preliminary project stage. Thereafter, all direct external and internal development and implementation costs are capitalized and amortized using the straight-line method over their remaining estimated useful lives, not exceeding three years. Amortization expense for all capitalized website development costs is charged to product development expense.

REIS, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(Continued)

Summary of Significant Accounting Policies (continued)

Database Costs

The Company capitalizes costs for the development of its database in connection with the identification and addition of new real estate properties and sale transactions which provide a future economic benefit. Amortization is calculated on a straight-line basis over a three or five year period. Costs of updating and maintaining information on existing properties in the database are expensed as incurred. Amortization expense for all capitalized database costs is charged to cost of sales.

Customer Relationships

The value ascribed to customer relationships acquired at the time of the Merger is amortized over 15 years on an accelerated basis and is charged to sales and marketing expense.

Lease Value

The value ascribed to the below market terms of the office lease existing at the time of the Merger was amortized on a straight-line basis over the remaining term of the acquired office lease. During 2016 this ascribed value was fully amortized. Amortization expense was charged to general and administrative expenses.

Goodwill and Intangible Asset Impairment

Goodwill and a major portion of the other intangible assets were recorded at the time of the Merger. As a result of the tax treatment of the Merger, goodwill and the acquired intangible assets are not deductible for income tax purposes.

Goodwill is not amortized and is tested for impairment at least annually, or after a triggering event has occurred, requiring such a calculation. A qualitative assessment can be utilized to determine if a more detailed two step calculation is required. If the qualitative assessment results in a determination that it is not more likely than not that the fair value of a reporting unit is less than its carrying amount, including goodwill, then no further evaluation would be necessary. If, after performing the qualitative assessment, the Company determined that it is more likely than not that the fair value of a reporting unit is less than its carrying amount, including goodwill, then the first step of the two step test would be necessary. The first step is a comparison of the estimated fair value of the reporting unit to which the goodwill has been assigned with the reporting unit’s carrying value. The fair values used in this evaluation would be estimates based upon market projections for the reporting unit. These market projections would utilize a number of estimates and assumptions, such as earnings before interest, taxes, depreciation and amortization (EBITDA) multiples, market comparisons, and quoted market prices. If the fair value of the reporting unit were to exceed its carrying value, goodwill would not be deemed to be impaired. If the fair value of the reporting unit is less than its carrying value, a second step would be required to calculate the implied fair value of goodwill by deducting the fair value of all tangible and intangible net assets of the reporting unit from the fair value of the reporting unit. The Company utilized the qualitative assessment for its 2016, 2015 and 2014 evaluations. There was no goodwill impairment identified in 2016, 2015 or 2014.

Intangible assets, with determinable useful lives, are amortized over their respective estimated useful lives using a method of amortization that reflects the pattern in which the economic benefits of the intangible assets are consumed or otherwise used. In addition, the carrying amount of amortizable intangible assets are reviewed when indicators of impairment are present. If estimated future undiscounted net cash flows are less than the carrying amount of the asset, the asset would be considered impaired. An impairment charge would be determined by comparing the estimated fair value of the intangible asset to its carrying value, with any shortfall from fair value recognized as an expense in the current period. There was no intangible asset impairment identified in 2016, 2015 or 2014.

Deferred Financing Costs

Deferred financing costs consist of costs incurred to obtain financing or financing commitments and are included in prepaid and other assets on the consolidated balance sheets. Such costs are amortized by the Company over the expected term of the respective agreements.

REIS, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(Continued)

Summary of Significant Accounting Policies (continued)

Fair Value Measurements

The current accounting literature provides for a three-level valuation hierarchy for disclosure of fair value measurements. The valuation hierarchy is based upon the transparency of inputs to the valuation of an asset or liability as of the measurement date. A financial instrument’s categorization within the valuation hierarchy is based upon the lowest level of input that is significant to the fair value measurement. The three levels are defined as follows:

Level 1 - inputs to the valuation methodology are quoted prices (unadjusted) for identical assets or liabilities in active markets;

Level 2 - inputs to the valuation methodology include quoted prices for similar assets and liabilities in active markets, and inputs that are observable for the asset or liability, either directly or indirectly, for substantially the full term of the financial instrument; and

Level 3 - inputs to the valuation methodology are unobservable and significant to the fair value measurement.

During the years ended December 31, 2016, 2015 and 2014, the Company had no assets or liabilities valued using the valuation hierarchy.

Revenue Recognition and Related Items

The Company’s subscription revenue is derived principally from subscriptions to its web-based services for itsReis SE product and is recognized as revenue ratably over the related contractual period, which is typically one year but can be as long as 48 months. Revenue fromReis Portfolio CRE for contracts entered into prior to September 16, 2015, and in 2014 represents the Company’s 50% share of the value of the subscription and is recognized as revenue ratably over the related contractual period consistent with the treatment for theReis SEproduct. Revenue fromReis Portfolio CRE contracts entered into after September 16, 2015 represents the Company’s 100% share of the value of the subscription as a result of the purchase of the intellectual property of theReis Portfolio CRE product and is recognized as revenue ratably over the related contractual period consistent with the treatment for theReis SEproduct. Multiple contracts executed with one customer are accounted for as separate arrangements. Revenues fromReisReportsare recognized monthly as billed for monthly subscribers, or recognized as revenue ratably over the related contractual period for subscriptions in excess of one month.

The Company’s other revenue includes non-subscription revenue such as (1) non-subscription custom data deliverables or (2) one-time settlements. Revenues from ad-hoc and non-subscription custom reports or projects are recognized upon completion and delivery to the customers, provided that no significant Company obligations remain. Revenues from settlements for prior unlicensed usage is recognized at the time of the settlement when collectability is reasonably assured.

Deferred revenue represents the portion of a subscription billed or collected in advance under the terms of the respective contract, which will be recognized in future periods. If a customer does not meet the payment obligations of a contract, any related accounts receivable and deferred revenue are written off at that time and the net amount, after considering any recovery of accounts receivable, is charged to cost of sales.

Cost of sales of subscription revenue principally consists of salaries and related expenses for the Company’s researchers who collect, analyze and maintain the commercial real estate data that is the basis for the Company’s information services. Additionally, cost of sales includes expenses from the amortization of the database intangible asset.

Interest revenue is recorded on an accrual basis.

Share Based Compensation

The fair market value as of the grant date of awards of stock, restricted stock units or stock options is recognized as compensation expense by the Company over the respective vesting periods.

See Note 8 for activity with respect to stock options and restricted stock units.

REIS, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(Continued)

Summary of Significant Accounting Policies (continued)

Income Taxes

Deferred income tax assets and liabilities are determined based upon differences between the financial reporting basis and the tax basis of assets and liabilities, and are measured using the enacted tax rates and laws that are estimated to be in effect when the differences are expected to reverse. Valuation allowances with respect to deferred income tax assets are recorded when deemed appropriate and adjusted based upon periodic evaluations.

The Company evaluates its tax positions in accordance with applicable current accounting literature. Recognition of uncertain tax positions (step one) occurs when an enterprise concludes that a tax position, based solely on its technical merits, is more likely than not to be sustained upon examination. Measurement (step two) determines the amount of benefit that more likely than not will be realized upon settlement. Derecognition of a tax position that was previously recognized would occur when a company subsequently determines that a tax position no longer meets the more likely than not threshold of being sustained, statutes close or there is a satisfactory resolution of the tax position.

See Note 6 for more information regarding income taxes.

Per Share Data

Basic earnings per common share is computed based upon the weighted average number of common shares outstanding during the period. Diluted earnings per common share is based upon the increased number of common shares that would be outstanding assuming the exercise of dilutive common share options and the consideration of restricted stock awards. The following table details the computation of earnings per common share, basic and diluted:

   For the Years Ended December 31, 
   2016   2015   2014 

Numerator for basic per share calculation:

      

Income from continuing operations for basic calculation

  $2,780,642   $8,070,983   $4,616,385 

Income (loss) from discontinued operations, net of income tax (benefit)

   —      2,234,000    (569,263
  

 

 

   

 

 

   

 

 

 

Net income for basic calculation

  $2,780,642   $10,304,983   $4,047,122 
  

 

 

   

 

 

   

 

 

 

Numerator for diluted per share calculation:

      

Income from continuing operations

  $2,780,642   $8,070,983   $4,616,385 

Adjustments to income from continuing operations for the statement of operations impact of dilutive securities

   —      —      (136,563
  

 

 

   

 

 

   

 

 

 

Income from continuing operations for dilution calculation

   2,780,642    8,070,983    4,479,822 

Income (loss) from discontinued operations, net of income tax expense (benefit)

   —      2,234,000    (569,263
  

 

 

   

 

 

   

 

 

 

Net income for dilution calculation

  $2,780,642   $10,304,983   $3,910,559 
  

 

 

   

 

 

   

 

 

 

Denominator:

      

Weighted average common shares – basic

   11,305,110    11,226,932    11,086,690 

Effect of dilutive securities:

      

RSUs

   138,077    142,949    169,813 

Stock options

   302,329    336,614    336,576 
  

 

 

   

 

 

   

 

 

 

Weighted average common shares – diluted

   11,745,516    11,706,495    11,593,079 
  

 

 

   

 

 

   

 

 

 

Per common share amounts – basic:

      

Income from continuing operations

  $0.25   $0.72   $0.42 

Income (loss) from discontinued operations

   —      0.20    (0.05
  

 

 

   

 

 

   

 

 

 

Net income

  $0.25   $0.92   $0.37 
  

 

 

   

 

 

   

 

 

 

Per common share amounts – diluted:

      

Income from continuing operations

  $0.24   $0.69   $0.39 

Income (loss) from discontinued operations

   —      0.19    (0.05
  

 

 

   

 

 

   

 

 

 

Net income

  $0.24   $0.88   $0.34 
  

 

 

   

 

 

   

 

 

 

REIS, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(Continued)

Summary of Significant Accounting Policies (continued)

Potentially dilutive securities include all stock based awards. For the years ended December 31, 2016, 2015 and 2014, certain equity awards were antidilutive.

Estimates

The preparation of financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates.

From time to time, the Company has been, is or may in the future be a defendant in various legal actions arising in the normal course of business. The Company records a provision for a liability when it is both probable that a liability has been incurred and the amount of loss can be reasonably estimated. The outcome of any litigation is uncertain; it is possible that a judgment in any legal actions to which the Company is a party, or which are proposed or threatened, will have a material adverse effect on the consolidated financial statements. See Note 9.

New Accounting Pronouncements

In May 2014, the FASB issued ASU 2014-09,Revenue from Contracts with Customers(“ASU 2014-09”). ASU 2014-09 affects any entity that either enters into contracts with customers to transfer goods or services or enters into contracts for the transfer of nonfinancial assets. Under ASU 2014-09, an entity will recognize revenue when it transfers promised goods or services to customers in an amount that reflects what it expects in exchange for the goods or services. ASU 2014-09 is effective for annual periods beginning after December 15, 2017. The Company is currently evaluating the impact the adoption of ASU 2014-09 will have on its consolidated financial statements and disclosures and as of the date of this report has not determined the method of adoption.

In August 2014, the FASB issued ASU 2014-15, Disclosure of Uncertainties about an Entity’s Ability to Continue as a Going Concern(“ASU 2014-15”). ASU 2014-15 defines management’s responsibility to evaluate whether there is substantial doubt about an organization’s ability to continue as a going concern and to provide related footnote disclosures. ASU 2014-15 is effective for annual periods ending after December 15, 2016 and interim periods within annual periods beginning after December 15, 2016. The Company adopted ASU 2014-15 in the three months ended December 31, 2016. The adoption of ASU 2014-15 did not have a material impact on the Company’s consolidated financial statements and disclosures.

In February 2015, the FASB issued ASU 2015-02,Consolidation (Topic 810), Amendments to the Consolidation Analysis(“ASU 2015-02”). ASU 2015-02 makes changes to both the variable interest model and the voting model. For public business entities, the guidance is effective for annual and interim periods beginning after December 15, 2015. The Company adopted ASU 2015-02 as of January 1, 2016. The adoption of ASU 2015-02 did not have a material impact on the Company’s financial condition, results of operations, or disclosures.

In February 2016, the FASB issued ASU 2016-02,Leases(“ASU 2016-02”). ASU 2016-02 establishes a right-of-use (“ROU”) model that requires a lessee to record a ROU asset and a lease liability on the balance sheet for all leases with terms longer than 12 months. Leases will be classified as either finance or operating, with classification affecting the pattern of expense recognition in the income statement. ASU 2016-02 is effective for fiscal years beginning after December 15, 2018, including interim periods within those fiscal years. A modified retrospective transition approach is required for lessees for capital and operating leases existing at, or entered into after, the beginning of the earliest comparative period presented in the financial statements, with certain practical expedients available. The Company is currently evaluating the impact the pending adoption of ASU 2016-02 will have on its consolidated financial statements and disclosures.

In March 2016, the FASB issued ASU 2016-09,Compensation-Stock Compensation (“ASU 2016-09”). Under ASU 2016-09, entities will be required to recognize the income tax effects of awards in the income statement when the awards vest or are settled. The guidance on employers’ accounting for (1) an employee’s use of shares to satisfy the employer’s statutory income tax withholding obligation and (2) forfeitures is also changing. For public business entities, ASU 2016-09 is effective for fiscal years beginning after December 15, 2016, and interim periods within those years. The Company adopted ASU 2016-09 as of

REIS, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(Continued)

Summary of Significant Accounting Policies (continued)

January 1, 2017, which will include (1) recording an additional deferred tax asset on the balance sheet (as of December 31, 2016, the corresponding amount was approximately $657,000) and (2) the recording of a cumulative effect change to equity in 2017 related to the prior treatment of estimated forfeitures as the Company has elected to record forfeitures in the period in which they occur. Other than the items identified, the Company does not believe that adoption of ASU 2016-09 will have a material impact on its consolidated financial statements and disclosures.

In August 2016, the FASB issued ASU 2016-15,Statement of Cash Flows-Classification of Certain Cash Receipts and Cash Payments (“ASU 2016-15”). ASU 2016-15 clarifies how cash receipts and cash payments in certain transactions are presented in the statement of cash flows. ASU 2016-15 is effective for fiscal years, and interim periods within those fiscal years, beginning after December 15, 2017, and early adoption is permitted. The Company is currently evaluating the impact the adoption of ASU 2016-15 will have on its consolidated financial statements and disclosures.

In November 2016, the FASB issued ASU 2016-18,Statement of Cash Flows: Restricted Cash, a consensus of the FASB Emerging Issues Task Force (“ASU 2016-18”). ASU 2016-18 intends to address the diversity in practice that exists in the classification and presentation of changes in restricted cash on the statement of cash flows. The amendments require that a statement of cash flows explain the change during the period in the total of cash, cash equivalents, and amounts generally described as restricted cash or restricted cash equivalents. The amendments are effective for fiscal years, and interim periods within those fiscal years, beginning after December 15, 2017, and early adoption is permitted. The Company is currently evaluating the impact the adoption of ASU 2016-18 will have on its consolidated financial statements and disclosures.

In January 2017, the FASB issued ASU 2017-01,Business Combinations: Clarifying the Definition of a Business (“ASU 2017-01”). ASU 2017-01 provides a criteria to determine when an integrated set of assets and activities (a “set”) is not a business and narrows the definition of the term output so that it is consistent with the description of outputs in Topic 606. The amendments are effective for fiscal years, and interim periods within those fiscal years, beginning after December 15, 2017 and early adoption is only permitted for transactions that have not been reported in financial statements that have been issued or made available for issuance. The Company is evaluating the impact the adoption of ASU 2017-01 will have on its consolidated financial statements and disclosures.

Reclassification

Amounts in certain accounts, as presented in the consolidated statements of operations, the condensed balance sheet data and condensed operating data in Note 3 have been reclassified to conform to the current period presentation. In particular, the Company has (1) changed its presentation of revenue to include two categories: subscription revenue and other revenue, and (2) changed its segment presentation to combine the previously separately disclosed discontinued operations segment with the Other segment.

REIS, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(Continued)

3.Segment Information

The Company is organized into separately managed segments as follows: the Reis Services segment and the Other segment. The following tables present condensed balance sheet and operating data for these segments:

(amounts in thousands)            

Condensed Balance Sheet Data

December 31, 2016

  Reis
Services
   Other (A)   Consolidated 

Assets

      

Current assets:

      

Cash and cash equivalents

  $19,903   $1,588   $21,491 

Accounts receivable, net

   10,744    —      10,744 

Prepaid and other assets

   622    170    792 
  

 

 

   

 

 

   

 

 

 

Total current assets

   31,269    1,758    33,027 

Furniture, fixtures and equipment, net

   5,260    —      5,260 

Intangible assets, net

   17,922    —      17,922 

Deferred tax asset, net

   285    16,530    16,815 

Goodwill

   57,203    (2,378   54,825 

Other assets

   295    —      295 
  

 

 

   

 

 

   

 

 

 

Total assets

  $112,234   $15,910   $128,144 
  

 

 

   

 

 

   

 

 

 

Liabilities and stockholders’ equity

      

Current liabilities:

      

Current portion of debt

  $—     $—     $—   

Accrued expenses and other liabilities

   3,724    307    4,031 

Deferred revenue

   25,031    —      25,031 
  

 

 

   

 

 

   

 

 

 

Total current liabilities

   28,755    307    29,062 

Other long-term liabilities

   1,902    —      1,902 

Deferred tax liability, net

   32,909    (32,909   —   
  

 

 

   

 

 

   

 

 

 

Total liabilities

   63,566    (32,602   30,964 

Total stockholders’ equity

   48,668    48,512    97,180 
  

 

 

   

 

 

   

 

 

 

Total liabilities and stockholders’ equity

  $112,234   $15,910   $128,144 
  

 

 

   

 

 

   

 

 

 

Condensed Balance Sheet Data

December 31, 2015

  Reis
Services
   Other (A)   Consolidated 

Assets

      

Current assets:

      

Cash and cash equivalents

  $28,465   $193   $28,658 

Restricted cash and investments

   212    —      212 

Accounts receivable, net

   13,741    —      13,741 

Prepaid and other assets

   417    253    670 
  

 

 

   

 

 

   

 

 

 

Total current assets

   42,835    446    43,281 

Furniture, fixtures and equipment, net

   798    6    804 

Intangible assets, net

   15,687    —      15,687 

Deferred tax asset, net

   285    18,145    18,430 

Goodwill

   57,203    (2,378   54,825 

Other assets

   172    —      172 
  

 

 

   

 

 

   

 

 

 

Total assets

  $116,980   $16,219   $133,199 
  

 

 

   

 

 

   

 

 

 

Liabilities and stockholders’ equity

      

Current liabilities:

      

Current portion of debt

  $—     $—     $—   

Accrued expenses and other liabilities

   4,502    1,397    5,899 

Deferred revenue

   25,291    —      25,291 

Liabilities attributable to discontinued operations

   —      146    146 
  

 

 

   

 

 

   

 

 

 

Total current liabilities

   29,793    1,543    31,336 

Other long-term liabilities

   284    —      284 

Deferred tax liability, net

   29,498    (29,498   —   
  

 

 

   

 

 

   

 

 

 

Total liabilities

   59,575    (27,955   31,620 

Total stockholders’ equity

   57,405    44,174    101,579 
  

 

 

   

 

 

   

 

 

 

Total liabilities and stockholders’ equity

  $116,980   $16,219   $133,199 
  

 

 

   

 

 

   

 

 

 

(A)Includes the assets and liabilities of the Company’s discontinued operations at December 31, 2015, and includes cash, other assets and liabilities not specifically attributable to or allocable to the Reis Services segment for both periods presented.

REIS, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(Continued)

Segment Information (continued)

(amounts in thousands)            

Condensed Operating Data for the

Year Ended December 31, 2016

  Reis
Services
   Other (A)   Consolidated 

Revenue:

      

Subscription revenue

  $45,399   $—     $45,399 

Other revenue

   2,131    —      2,131 
  

 

 

   

 

 

   

 

 

 

Total revenue

   47,530    —      47,530 

Cost of sales

   10,999    —      10,999 
  

 

 

   

 

 

   

 

 

 

Gross profit

   36,531    —      36,531 
  

 

 

   

 

 

   

 

 

 

Operating expenses:

      

Sales and marketing

   11,879    —      11,879 

Product development

   4,167    —      4,167 

General and administrative expenses

   11,572    4,093    15,665 
  

 

 

   

 

 

   

 

 

 

Total operating expenses

   27,618    4,093    31,711 

Other income (expenses):

      

Interest and other income

   22    —      22 

Interest expense

   (108   —      (108
  

 

 

   

 

 

   

 

 

 

Total other income (expenses)

   (86   —      (86
  

 

 

   

 

 

   

 

 

 

Income (loss) before income taxes and discontinued operations

  $8,827   $(4,093  $4,734 
  

 

 

   

 

 

   

 

 

 

Income from discontinued operations, before income taxes

  $—     $—     $—   
  

 

 

   

 

 

   

 

 

 

Condensed Operating Data for the

Year Ended December 31, 2015

  Reis
Services
   Other (A)   Consolidated 

Revenue:

      

Subscription revenue

  $43,722   $—     $43,722 

Other revenue

   7,168    —      7,168 
  

 

 

   

 

 

   

 

 

 

Total revenue

   50,890    —      50,890 

Cost of sales

   9,081    —      9,081 
  

 

 

   

 

 

   

 

 

 

Gross profit

   41,809    —      41,809 
  

 

 

   

 

 

   

 

 

 

Operating expenses:

      

Sales and marketing

   11,701    —      11,701 

Product development

   3,711    —      3,711 

General and administrative expenses

   9,892    4,375    14,267 
  

 

 

   

 

 

   

 

 

 

Total operating expenses

   25,304    4,375    29,679 

Other income (expenses):

      

Interest and other income

   38    —      38 

Interest expense

   (92   —      (92
  

 

 

   

 

 

   

 

 

 

Total other income (expenses)

   (54   —      (54
  

 

 

   

 

 

   

 

 

 

Income (loss) before income taxes and discontinued operations

  $16,451   $(4,375  $12,076 
  

 

 

   

 

 

   

 

 

 

Income from discontinued operations, before income taxes

  $—     $3,643   $3,643 
  

 

 

   

 

 

   

 

 

 

(A)Includes the results of the Company’s discontinued operations for the year ended December 31, 2015 and includes interest and other income, depreciation expense and general and administrative expenses that have not been allocated to the Reis Services segment for all periods presented.

REIS, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(Continued)

Segment Information (continued)

(amounts in thousands)            

Condensed Operating Data for the

Year Ended December 31, 2014

  Reis
Services
   Other
(A)
   Consolidated 

Revenue:

      

Subscription revenue

  $39,727   $—     $39,727 

Other revenue

   1,608    —      1,608 
  

 

 

   

 

 

   

 

 

 

Total revenue

   41,335    —      41,335 

Cost of sales

   8,037    —      8,037 
  

 

 

   

 

 

   

 

 

 

Gross profit

   33,298    —      33,298 
  

 

 

   

 

 

   

 

 

 

Operating expenses:

      

Sales and marketing

   10,235    —      10,235 

Product development

   3,473    —      3,473 

General and administrative expenses

   7,940    4,101    12,041 
  

 

 

   

 

 

   

 

 

 

Total operating expenses

   21,648    4,101    25,749 

Other income (expenses):

      

Interest and other income

   22    —      22 

Interest expense

   (113   —      (113
  

 

 

   

 

 

   

 

 

 

Total other income (expenses)

   (91   —      (91
  

 

 

   

 

 

   

 

 

 

Income (loss) before income taxes and discontinued operations

  $11,559   $(4,101  $7,458 
  

 

 

   

 

 

   

 

 

 

(Loss) from discontinued operations, before income taxes

  $—     $(951  $(951
  

 

 

   

 

 

   

 

 

 

(A)Includes the results of the Company’s discontinued operations for the year ended December 31, 2014 and includes interest and other income, depreciation expense and general and administrative expenses that have not been allocated to the Reis Services segment for all periods presented.

In the first quarter of 2016, the Company changed the segment presentation to combine the previously separately disclosed discontinued operations segment with the Other segment. The reason for this change in presentation is the result of the completion of the discontinued operating activities in 2015 and to simplify the presentation on a comparable basis. Therefore, 2015 and 2014 information for the discontinued operations segment is being presented in the Other segment.

Reis Services

See Note 1 for a description of Reis Services’s business and products at December 31, 2016.

The Company’s largest individual customer accounted for 6.3%, 10.6% and 2.9% of Reis Services’s total revenue for the years ended December 31, 2016, 2015 and 2014, respectively. Included in other revenue was $1,200,000 and $4,519,000 for the years ended December 31, 2016 and 2015, respectively, associated with custom data deliverables and portfolio advisory services related to one customer.

The following table presents the accounts receivable balances of Reis Services at December 31, 2016 and 2015:

   December 31, 
   2016   2015 

Accounts receivable

  $10,862,000   $13,828,000 

Allowance for doubtful accounts

   (118,000   (87,000
  

 

 

   

 

 

 

Accounts receivable, net

  $10,744,000   $13,741,000 
  

 

 

   

 

 

 

Twenty-three subscribers accounted for an aggregate of approximately 52.4% of Reis Services’s accounts receivable at December 31, 2016, including two subscribers in excess of 4.0% and the largest representing 8.3%. Through February 24, 2017, the Company received payments of approximately $5,000,000, or 50.0%, against the December 31, 2016 accounts receivable

REIS, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(Continued)

Segment Information (continued)

balance. Twenty-three subscribers accounted for an aggregate of approximately 63.9% of Reis Services’s accounts receivable at December 31, 2015, including four subscribers in excess of 4.0% and the largest representing $2,400,000, or 17.4%, which was associated with a custom data deliverable, half of which was recorded as other revenue in December 2015 and the remainder in February 2016.

At December 31, 2016 and 2015, the largest individual subscriber accounted for 3.7% and 6.8% respectively, of deferred revenue.

Discontinued Operations – Residential Development Activities

Income from discontinued operations was comprised of the following for the years ended December 31, 2015 and 2014 (there were no discontinued operations activities for the year ended December 31, 2016):

   For the Years Ended
December 31,
 
   2015   2014 

Litigation recoveries

  $4,839,000   $26,000 

Other (expenses), net

   (1,196,000   (977,000
  

 

 

   

 

 

 

Income (loss) from discontinued operations before income tax

   3,643,000    (951,000

Income tax expense (benefit) from discontinued operations

   1,409,000    (382,000
  

 

 

   

 

 

 

Income (loss) from discontinued operations, net of income tax expense (benefit)

  $2,234,000   $(569,000
  

 

 

   

 

 

 

In September 2009, the Company sold the final unit at Gold Peak, the final phase of Palomino Park, a five phase multifamily residential development in Highlands Ranch, Colorado. Gold Peak was a 259-unit condominium project on the remaining 29 acre land parcel at Palomino Park. On March 13, 2012, in connection with litigation regarding construction defects at the Gold Peak project, a jury rendered its verdict whereby Reis, one of its subsidiaries (Gold Peak at Palomino Park LLC, the developer of the project (“GP LLC”)), and the construction manager/general contractor for the project (Tri-Star Construction West, LLC (“Tri-Star”)) were found jointly and severally liable for an aggregate of $18,200,000, plus other costs of approximately $756,000. On June 20, 2012, following denial of all of the defendants’ post-trial motions, Reis and its subsidiaries reached a settlement with the plaintiff, the Gold Peak Homeowners Association, (“GP HOA”) providing for a total payment of $17,000,000. Of this amount, $5,000,000 was paid on August 3, 2012 and the remaining $12,000,000 was paid on October 15, 2012, in accordance with the settlement terms. Subsequent to that date, the Company began recovery efforts against other responsible parties involved in the design, development, construction and supervision of the Gold Peak project.

As of December 31, 2015, the Company entered into the final settlement agreement related to its Gold Peak recovery efforts, bringing closure to this process. In summary, recovery efforts from the fourth quarter of 2012 through December 31, 2015 have resulted in cash collections aggregating approximately $5,658,000 from multiple insurance carriers, trial attorneys, an insurance broker and other responsible parties involved in the design, development, construction and supervision of the Gold Peak project. The Company recovered approximately $4,839,000 and $26,000 in the years ended December 31, 2015 and 2014, respectively. Other expenses in these periods primarily reflect legal and other professional costs incurred related to the Gold Peak litigation recovery efforts.

4.Intangible Assets

The amount of identified intangible assets, including the respective amounts of accumulated amortization, are as follows:

   December 31, 
   2016   2015 

Database

  $28,146,000   $22,790,000 

Accumulated amortization

   (19,974,000   (17,121,000
  

 

 

   

 

 

 

Database, net

   8,172,000    5,669,000 
  

 

 

   

 

 

 

Customer relationships

   14,100,000    14,100,000 

Accumulated amortization

   (9,263,000   (8,328,000
  

 

 

   

 

 

 

Customer relationships, net

   4,837,000    5,772,000 
  

 

 

   

 

 

 

Website

   17,538,000    14,735,000 

Accumulated amortization

   (12,624,000   (10,669,000
  

 

 

   

 

 

 

Website, net

   4,914,000    4,066,000 
  

 

 

   

 

 

 

Acquired below market lease

   —      2,800,000 

Accumulated amortization

   —      (2,620,000
  

 

 

   

 

 

 

Acquired below market lease, net

   —      180,000 
  

 

 

   

 

 

 

Intangibles, net

  $17,923,000   $15,687,000 
  

 

 

   

 

 

 

REIS, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(Continued)

Intangible Assets (continued)

With respect to the database intangible asset, the Company capitalized approximately $5,356,000 and $3,355,000 during the years ended December 31, 2016 and 2015, respectively. Separately, for the website intangible asset, the Company capitalized approximately $2,803,000 and $2,799,000 during the years ended December 31, 2016 and 2015, respectively. In September 2015, the Company entered into an agreement to purchase the intellectual property owned by a third party for theReis Portfolio CRE product for $700,000. Such purchase is included in the costs capitalized to the website intangible asset in 2015.

Amortization expense for intangible assets aggregated approximately $5,923,000 for the year ended December 31, 2016, of which approximately $2,853,000 related to the database, which was charged to cost of sales, approximately $935,000 related to customer relationships, which was charged to sales and marketing expense, approximately $1,955,000 related to website development, which was charged to product development expense, and approximately $180,000 related to the value ascribed to the below market terms of the office lease, which was charged to general and administrative expense, all in the Reis Services segment. The lease value intangible asset was fully amortized in 2016. Amortization expense for intangible assets aggregated approximately $5,148,000 for the year ended December 31, 2015, of which approximately $2,103,000 related to the database, approximately $949,000 related to customer relationships, approximately $1,793,000 related to website development, and approximately $303,000 related to the value ascribed to the below market terms of the office lease. Amortization expense for intangible assets aggregated approximately $4,829,000 for the year ended December 31, 2014, of which approximately $1,780,000 related to the database, approximately $962,000 related to customer relationships, approximately $1,784,000 related to website development, and approximately $303,000 related to the value ascribed to the below market terms of the office lease.

The Company’s future amortization expense related to the net intangible asset balance at December 31, 2016 follows:

For the Year Ended December 31,

  Amount 

2017

  $6,216,000 

2018

   5,033,000 

2019

   3,239,000 

2020

   1,737,000 

2021

   1,176,000 

Thereafter

   522,000 
  

 

 

 

Total

  $17,923,000 
  

 

 

 

5.Debt

The Company had no debt outstanding at December 31, 2016 and 2015.

In October 2012, Reis Services, as borrower, and the Company, as guarantor, entered into a loan and security agreement with Capital One, National Association, as lender (“Capital One”), for a $10,000,000 revolving credit facility (the “2012 Revolver”). The 2012 Revolver had a three year term scheduled to expire on October 16, 2015; however, the expiration date was extended to January 31, 2016. In January 2016, Reis Services and Capital One executed an amended and restated loan and security agreement for a $20,000,000 revolving credit facility with terms substantially similar to the 2012 Revolver (as amended, the “2016 Revolver,” and collectively with the 2012 Revolver, the “Revolver”). The 2016 Revolver expires on January 28, 2019. Any borrowings on the Revolver bear interest at a rate of LIBOR + 2.00% per annum (for LIBOR loans) or the greater of 1.00% or the bank’s prime rate minus 0.50% per annum (for base rate loans). Capital One charges an unused facility fee of 0.25% per annum. The Revolver is secured by a security interest in substantially all of the tangible and intangible assets of Reis Services, all copyrights of the Company and a pledge by the Company of its membership interests in Reis Services. The Revolver also contains customary affirmative and negative covenants, including minimum financial covenants, as defined in the amended and restated revolving loan credit agreement; all of the covenants were met at December 31, 2016 and 2015. No borrowings were made on the Revolver during the years ended December 31, 2016 and 2015.

REIS, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(Continued)

6.Income Taxes

The components of income tax expense (benefit) are as follows:

   For the Years Ended December 31, 
   2016   2015   2014 

Current Federal alternative minimum tax (“AMT”) expense

  $147,000   $303,000   $92,000 

Current state and local tax expense

   40,000    662,000    254,000 

Deferred Federal tax expense (A)

   1,704,000    4,962,000    2,118,000 

Deferred state and local tax expense (benefit)

   62,000    (513,000   (4,000
  

 

 

   

 

 

   

 

 

 

Consolidated income tax expense, including taxes attributable to discontinued operations (B)

   1,953,000    5,414,000    2,460,000 

Less income tax expense (benefit) attributable to discontinued operations

   —      1,409,000    (382,000
  

 

 

   

 

 

   

 

 

 

Income tax expense (C)

  $1,953,000   $4,005,000   $2,842,000 
  

 

 

   

 

 

   

 

 

 

(A)Includes an AMT (benefit) of $(147,000), $(303,000) and $(92,000) in 2016, 2015 and 2014, respectively.
(B)Includes income tax expense attributable to income from discontinued operations.
(C)Reflects the tax expense from continuing operations as reported on the consolidated statements of operations for the periods presented.

The reconciliation of income tax computed at the U.S. Federal statutory rate to income tax expense (benefit) on continuing operations is as follows:

   For the Years Ended December 31, 
   2016  2015  2014 
   Amount   Percent  Amount  Percent  Amount   Percent 

Tax expense (benefit) at U.S. statutory rate

  $1,657,000    35.00 $4,227,000   35.00 $2,610,000    35.00

State and local tax expense (benefit), net of Federal impact

   142,000    3.00  494,000   4.09  194,000    2.60

Impact of state and local tax rate change net of Federal impact

   7,000    0.15  (714,000  (5.90%)   27,000    0.36

Non-deductible items

   147,000    3.10  (2,000  (0.02%)   11,000    0.15
  

 

 

   

 

 

  

 

 

  

 

 

  

 

 

   

 

 

 

Income tax expense (benefit)

  $1,953,000   ��41.25 $4,005,000   33.17 $2,842,000    38.11
  

 

 

   

 

 

  

 

 

  

 

 

  

 

 

   

 

 

 

During March 2014, New York State enacted a law to (1) reduce corporate tax rates, effective in future years and (2) change the method of determining the availability and use of NOLs existing at December 31, 2014. In April 2015, New York City enacted a law which substantially conforms with the New York State changes. As a consequence, the Company evaluated all elements affecting the balance of its net deferred tax assets in the respective periods, including the availability of New York State and New York City NOL carryforwards. The changes in the New York State law were reflected in the first quarter of 2014 income tax expense and the changes in the New York City law were reflected in the second quarter of 2015 income tax expense. Given the change in the New York City law, there was a variation between the effective tax rate and the statutory tax rate for the year ended December 31, 2015.

Due to the amount of its NOL and credit carryforwards, the Company does not anticipate paying Federal income taxes for a number of years. The Company expects, in the future, that it will be subject to cash payments for Federal AMT and for a portion of its state and local income taxes as the changed New York State and New York City laws limit the amount of existing NOLs which could be used each year.

Deferred income taxes reflect the net tax effects of temporary differences between the carrying amount of assets and liabilities for financial reporting purposes and the amounts used for income tax purposes. The net deferred tax asset was approximately $16,815,000 and $18,430,000 at December 31, 2016 and 2015, respectively, all of which was classified as non-current. The significant portion of the deferred tax items relates to deferred tax assets including NOL carryforwards, Federal AMT credit carryforwards and stock based compensation, with the remainder of the deferred tax items relating to liabilities resulting from the intangible assets recorded at the time of the Merger.

REIS, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(Continued)

Income Taxes (continued)

Significant components of the Company’s deferred tax assets and liabilities are as follows:

   December 31, 
   2016  2015 

Deferred Tax Assets

       

Net operating loss carryforwards

  $14,561,655  $17,314,368 

Asset basis differences — tax amount greater than book value

      254,773 

Liability reserves

   792,075   187,253 

Stock compensation plans

   1,828,185   1,644,339 

AMT credit carryforwards

   1,717,792   1,576,737 

Other

   57,153   45,903 
  

 

 

  

 

 

 
   18,956,860   21,023,373 

Valuation allowance

   —     —   
  

 

 

  

 

 

 

Total deferred tax assets

   18,956,860   21,023,373 
  

 

 

  

 

 

 

Deferred Tax Liabilities

       

Acquired asset differences — book value greater than tax

   (1,842,450  (2,266,160

Asset basis differences — carrying amount value greater than tax

   (299,673  (327,476
  

 

 

  

 

 

 

Total deferred tax liabilities

   (2,142,123  (2,593,636
  

 

 

  

 

 

 

Net deferred tax asset (liability)

  $16,814,737  $18,429,737 
  

 

 

  

 

 

 

The Company had Federal NOL carryforwards aggregating approximately $38,679,000 at December 31, 2016, as well as significant state and local NOL carryforwards. These NOLs included amounts generated subsequent to the Merger (including a substantial NOL realized during the year ended December 31, 2012 as a result of the Gold Peak litigation settlement, discussed in Note 3), losses from the Reis Services business prior to the Merger and the Company’s operating losses prior to the Merger. Approximately $5,961,000 of these Federal NOLs are subject to an annual Internal Revenue Code Section 382 limitation of $2,779,000, whereas the remaining balance of approximately $32,718,000 is not subject to the limitation. The enactment of the 2014 New York State law and the 2015 New York City law discussed above limit the amount of existing NOLs which could be used each year in those jurisdictions; however, all such NOLs are expected to be fully utilized in the future.

The next NOL expiration for the Company is in 2024 for approximately $3,334,000 of Federal NOLs. Included in the Federal NOLs at December 31, 2016 is approximately $1,723,000 attributable to excess tax deductions on equity award activity in prior years. The tax benefits attributable to those NOLs have been credited directly to additional paid in capital when utilized to offset taxes payable. In 2017, these NOLs will be recorded on the Company’s consolidated balance sheet upon adoption of ASU 2016-09.

The Company and its subsidiaries have been audited by the Internal Revenue Service (“IRS”) for the 2012 tax year, which audit was completed in February 2015 with the IRS issuing a no change letter. The 2013, 2014 and 2015 Federal tax returns are open for examination. All prior Federal periods are closed, except to the extent that an NOL was generated in a given year and such NOL was utilized during an open tax year or will be utilized in the future.

During the third quarter of 2015, audits of the Company and its consolidated subsidiaries for tax years 2004 through 2006 were completed by New York State resulting in net payments aggregating approximately $16,000 in the period to New York State and New York City. Such amounts had been accrued in prior periods. With few exceptions, the state and local income tax returns are open to examination for the years 2013 through 2015.

The Company’s reserve for unrecognized tax benefits, including estimated interest, was $154,000 and $159,000 at December 31, 2016 and 2015, respectively. The unrecognized tax benefits as well as related interest was included in general and administrative expenses. The Company recorded a reduction in expense of $(4,000) in 2016 and additional expense, including interest, of $70,000 and $43,000 in 2015 and 2014, respectively.

REIS, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(Continued)

Income Taxes (continued)

A reconciliation of the unrecognized tax benefits for the years ended December 31, 2016, 2015 and 2014 follows:

   For the Years Ended December 31, 
   2016   2015   2014 

Balance at beginning of period

  $159,000   $105,000   $62,000 

(Reduction) additional provision and interest related to prior years, net

   (4,000   70,000    43,000 

Resolution of matters during the period

   (1,000   (16,000   —   
  

 

 

   

 

 

   

 

 

 

Balance at end of period

  $154,000   $159,000   $105,000 
  

 

 

   

 

 

   

 

 

 

The Company expects that a substantial portion of the 2016 balance could be resolved in 2017.

7.Stockholders’ Equity

On August 30, 2016, the Company’s Board of Directors (the “Board”) authorized a repurchase program of shares of the Company’s common stock up to an aggregate of $5,000,000. Purchases under the program may be made from time to time in the open market or through privately negotiated transactions. Depending on market conditions, financial developments and other factors, these purchases may be commenced or suspended at any time, or from time to time, without prior notice and may be expanded without prior notice. The Company may make purchases pursuant to a trading plan under Securities Exchange Act Rule 10b5-1, permitting open market purchases of common stock during blackout periods.

During the year ended December 31, 2016, the Company purchased an aggregate of 54,176 shares of common stock for approximately $1,144,000, or an average price of $21.11 per share, leaving approximately $3,856,000 at December 31, 2016 that may be used to purchase additional shares under the repurchase program in the future. During the years ended December 31, 2015 and 2014, the Company did not repurchase any shares of common stock. From January 1, 2017 through February 24, 2017, the Company purchased an additional 35,496 shares of common stock for approximately $721,000, or an average price of $20.32 per share.

The Company commenced a quarterly dividend program in the second quarter of 2014 when it declared and paid an initial quarterly cash dividend of $0.11 per common share. The Company increased the dividends declared and paid to $0.14 per common share for all four quarters of 2015, and increased the dividend declared and paid to $0.17 per common share for all four quarters of 2016. Dividend payments aggregated approximately $7,747,000, $6,338,000 and $3,698,000 for the years ended December 31, 2016, 2015 and 2014, respectively.

8.Stock Plans and Other Incentives

The Company has adopted certain incentive plans for the purpose of attracting and retaining the Company’s directors, officers and employees by having the ability to issue options, restricted stock units (“RSUs”), or stock awards. Awards granted under the Company’s incentive plans expire ten years from the date of grant and vest over periods ranging generally from three to five years for employees.

REIS, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(Continued)

Stock Plans and Other Incentives (continued)

Option Awards

The following table presents option activity and other plan data for the years ended December 31, 2016, 2015 and 2014:

  For the Years Ended December 31, 
  2016  2015  2014 
  Options  Weighted-
Average
Exercise Price
  Options  Weighted-
Average
Exercise Price
  Options  Weighted-
Average
Exercise Price
 

Outstanding at beginning of period

  547,500  $9.61   582,500  $9.52   627,724  $9.05 

Granted

  —    $—     —    $—     20,000  $18.52 

Exercised

  (17,500 $(8.74  (35,000 $(8.12  (56,362 $(8.25

Cancelled through cash settlement

  —    $—     —    $—     (8,862 $(4.09

Forfeited/cancelled/expired

  —    $—     —    $—     —    $—   
 

 

 

   

 

 

   

 

 

  

Outstanding at end of period

  530,000  $9.64   547,500  $9.61   582,500  $9.52 
 

 

 

  

 

 

  

 

 

  

 

 

  

 

 

  

 

 

 

Options exercisable at end of period

  518,000  $9.44   531,500  $9.35   562,500  $9.21 
 

 

 

  

 

 

  

 

 

  

 

 

  

 

 

  

 

 

 

Options exercisable which can be settled in cash

  —    $—     —    $—     —    $—   
 

 

 

  

 

 

  

 

 

  

 

 

  

 

 

  

 

 

 

Weighted average fair value of options granted per year (per option)

 $—     $—     $7.64  
 

 

 

   

 

 

   

 

 

  

Weighted average remaining contractual life at end of period

  2.0 years    3.0 years    3.9 years  

In May 2014, the Company granted 20,000 options to one employee. These options, which are accounted for as an equity award, vest ratably over a five-year period and have an exercise price of $18.52 per option, based upon the closing price of the Company’s common stock on the date of grant. For expense purposes, the Company estimated the fair value of each option granted on the date of grant using the Black-Scholes option-pricing model at $7.64 per option. The following table includes the assumptions that were made and the estimated fair value for option grants in 2014 (no option awards were granted during either 2016 or 2015):

   2014 Grant 

Stock price on grant date

  $18.52 

Exercise price

  $18.52 

Dividend yield

   2.38

Risk-free interest rate

   2.20

Expected life

   8.0 years 

Estimated volatility

   47.8

Fair value of options granted (per option)

  $7.64 

The following table presents additional option details at December 31, 2016 and 2015:

   Options Outstanding and Exercisable
at December 31, 2016
   Options Outstanding and Exercisable
at December 31, 2015
 

Range of Exercise Prices

  Outstanding   Remaining
Contractual
Life (Years)
  Weighted
Average
Exercise
Price
   Intrinsic
Value (A)
   Outstanding   Remaining
Contractual
Life (Years)
  Weighted
Average
Exercise
Price
   Intrinsic
Value (A)
 

$7.50

   10,000   0.6  $7.50   $147,500    20,000   1.6  $7.50   $324,600 

$8.03

   225,000   3.6  $8.03    3,200,625    225,000   4.6  $8.03    3,533,625 

$10.40

   275,000   0.4  $10.40    3,258,750    282,500   1.4  $10.40    3,765,725 

$18.52

   20,000   7.4  $18.52    74,600    20,000   8.4  $18.52    104,200 
  

 

 

       

 

 

   

 

 

       

 

 

 
   530,000   2.0  $9.64   $6,681,475    547,500   3.0  $9.61   $7,728,150 
  

 

 

       

 

 

   

 

 

       

 

 

 

(A)The intrinsic value is the amount by which the fair value of the Company’s stock price exceeds the exercise price of an option at December 31, 2016 and 2015, respectively. For purposes of this calculation, the Company’s closing stock prices were $22.25 and $23.73 per share on December 31, 2016 and 2015, respectively.

Dividends are not paid or accrued on unexercised options.

REIS, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(Continued)

Stock Plans and Other Incentives (continued)

RSU Awards

The following table presents the changes in RSUs outstanding for the years ended December 31, 2016, 2015 and 2014:

   For the Years Ended December 31, 
   2016   2015   2014 

Outstanding at beginning of period

   254,041    277,973    365,686 

Granted

   124,709    83,141    105,132 

Common stock delivered (A) (B) (C)

   (85,181   (105,970   (185,224

Forfeited

   (12,249   (1,103   (7,621
  

 

 

   

 

 

   

 

 

 

Outstanding at end of period

   281,320    254,041    277,973 
  

 

 

   

 

 

   

 

 

 

Intrinsic value (D)

  $6,259,000   $6,028,000   $7,275,000 
  

 

 

   

 

 

   

 

 

 

(A)The 2016 period includes 32,760 shares which were used to settle minimum employee withholding tax obligations for 29 employees of approximately $701,000 in 2016. A net of 52,421 shares of common stock were delivered in 2016.
(B)The 2015 period includes 41,136 shares which were used to settle minimum employee withholding tax obligations for 28 employees of approximately $993,000 in 2015. A net of 64,834 shares of common stock were delivered in 2015.
(C)In the 2014 period, all of the vested RSUs were issued as shares.
(D)For purposes of this calculation, the Company’s closing stock prices were $22.25, $23.73 and $26.17 per share on December 31, 2016, 2015 and 2014, respectively.

In the year ended December 31, 2016, an aggregate of 118,724 RSUs were granted to employees, which RSUs vest one-third a year over three years and had a weighted average grant date fair value of $20.22 per RSU. In the year ended December 31, 2015, an aggregate of 77,405 RSUs were granted to employees, which RSUs vest one-third a year over three years and had a weighted average grant date fair value of $22.41 per RSU. In February 2014, an aggregate of 91,431 RSUs were granted to employees, which RSUs vest one-third a year over three years and had a grant date fair value of $18.13 per RSU. In December 2014, an aggregate of 6,900 RSUs were granted, which RSUs vest upon the third anniversary of the grant date and had a grant date fair value of $20.43 per RSU. The grant date fair value was determined based on the closing stock price of the Company’s common stock on the applicable date of grant and considers the impact of dividend payments. The awards granted to employees in 2016, 2015 and 2014 are treated as equity awards and the grant date fair value is charged to compensation expense at the corporate level on a straight-line basis over the vesting periods. Dividends are not paid or accrued on unvested employee RSUs.

During the years ended December 31, 2016, 2015 and 2014, an aggregate of 5,985 RSUs, 5,736 RSUs and 6,801 RSUs, respectively, were granted to non-employee directors (with an average grant date fair value of $23.04, $24.03 and $20.28 per RSU, respectively) related to the equity component of their compensation. In each case, the grant date fair value was determined as of the last trading day of the quarter for which the RSUs were being received as compensation. The RSUs are immediately vested, but are not deliverable to the non-employee directors until six months after termination of their service as a director. Dividends are paid on RSUs granted to non-employee directors. The Company issued 40,564 shares in 2014, to satisfy the settlement of RSUs related to directors that retired from the Board six months prior.

Option and RSU Expense Information

The Company recorded non-cash compensation expense of approximately $2,099,000, $1,773,000 and $1,702,000, respectively, including approximately $138,000 in each year related to non-employee director equity compensation, for the years ended December 31, 2016, 2015 and 2014, respectively, related to all stock options and RSUs accounted for as equity awards, as a component of general and administrative expenses in the statements of operations.

At December 31, 2016, the total compensation cost related to outstanding, non-vested equity awards of options and RSUs that is expected to be recognized as compensation cost in the future aggregates approximately $2,398,000. It does not include any awards granted subsequent to December 31, 2016 and does not consider the impact of adoption of ASU 2016-09.

For the Year Ended December 31,

  Options   RSUs   Total 

2017

  $31,000   $1,432,000   $1,463,000 

2018

   31,000    827,000    858,000 

2019

   12,000    65,000    77,000 

2020

   —      —      —   
  

 

 

   

 

 

   

 

 

 
  $74,000   $2,324,000   $2,398,000 
  

 

 

   

 

 

   

 

 

 

REIS, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(Continued)

9.Commitments and Contingencies

Litigation

From time to time, the Company has been, is or may in the future be a defendant in various legal actions arising in the normal course of business. The Company records a provision for a liability when it is both probable that a liability has been incurred and the amount of loss can be reasonably estimated.

The Company is not a party to any litigation that could reasonably be foreseen to be material to the Company.

Other Operating Commitments

At December 31, 2016, the Company is a tenant under two operating leases, one for the Company’s corporate headquarters in Midtown Manhattan, New York (which expires in October 2025), and one for office space in White Plains, New York (which expires in June 2023). Rent expense was approximately $3,889,000, $2,207,000 and $2,082,000 for the years ended December 31, 2016, 2015 and 2014, respectively, which includes base rent plus other charges including, but not limited to, real estate taxes and maintenance costs in excess of base year amounts. The 2016 amount also includes the effect of overlapping leases which created a duplication of rent and other occupancy costs from June 1, 2016 to October 31, 2016.

Future minimum lease payments under operating leases at December 31, 2016 are as follows:

For the Year Ended December 31,

  Amount 

2017

  $2,715,000 

2018

   3,527,000 

2019

   3,550,000 

2020

   3,565,000 

2021

   3,700,000 

Thereafter

   11,946,000 
  

 

 

 

Total

  $29,003,000 
  

 

 

 

The Company has a defined contribution savings plans pursuant to Section 401 of the Internal Revenue Code. The Company matches contributions up to 2% of employees’ salaries, as then defined, for 2016, 2015 and 2014 (calculated as 50% of the employee’s contribution, capped at 4% of the employee’s salary). The Company made contributions to this plan of approximately $289,000, $259,000 and $231,000 for the years ended December 31, 2016, 2015 and 2014, respectively.

10.Fair Value of Financial Instruments

At December 31, 2016 and 2015, the Company’s financial instruments included receivables, payables, accrued expenses, other liabilities and debt. The fair values of these financial instruments were not materially different from their recorded values at December 31, 2016 and 2015. The Company had no debt outstanding at December 31, 2016 and 2015. See Note 5 for additional information about the Company’s debt.

REIS, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(Continued)

11.Summarized Consolidated Quarterly Information (Unaudited)

Summarized consolidated and condensed quarterly financial information is as follows:

(amounts in thousands, except per share amounts) 
   2016 
   For the Three Months
Ended March 31
   For the Three Months
Ended June 30
   For the Three Months
Ended September 30
   For the Three Months
Ended December 31
 

Total revenue

  $12,824   $11,615   $11,537   $11,554 
  

 

 

   

 

 

   

 

 

   

 

 

 

Income from continuing operations

  $1,604   $941   $466   $(230
  

 

 

   

 

 

   

 

 

   

 

 

 

Net income

  $1,604   $941   $466   $(230
  

 

 

   

 

 

   

 

 

   

 

 

 

Per share amounts – basic (A):

        

Income from continuing operations

  $0.14   $0.08   $0.04   $(0.02
  

 

 

   

 

 

   

 

 

   

 

 

 

Net income

  $0.14   $0.08   $0.04   $(0.02
  

 

 

   

 

 

   

 

 

   

 

 

 

Per share amounts – diluted (A):

        

Income from continuing operations

  $0.14   $0.08   $0.04   $(0.02
  

 

 

   

 

 

   

 

 

   

 

 

 

Net income

  $0.14   $0.08   $0.04   $(0.02
  

 

 

   

 

 

   

 

 

   

 

 

 

Weighted average number of common shares outstanding:

        

Basic

   11,284    11,322    11,321    11,294 
  

 

 

   

 

 

   

 

 

   

 

 

 

Diluted

   11,726    11,781    11,764    11,294 
  

 

 

   

 

 

   

 

 

   

 

 

 
   2015 
   For the Three Months
Ended March 31
   For the Three Months
Ended June 30
   For the Three Months
Ended September 30
   For the Three Months
Ended December 31
 

Total revenue

  $11,131   $13,416   $12,137   $14,206 
  

 

 

   

 

 

   

 

 

   

 

 

 

Income from continuing operations

  $1,293   $2,928   $1,508   $2,342 
  

 

 

   

 

 

   

 

 

   

 

 

 

Net income

  $1,222   $4,067   $1,644   $3,372 
  

 

 

   

 

 

   

 

 

   

 

 

 

Per share amounts – basic (A):

        

Income from continuing operations

  $0.12   $0.26   $0.13   $0.21 
  

 

 

   

 

 

   

 

 

   

 

 

 

Net income

  $0.11   $0.36   $0.15   $0.30 
  

 

 

   

 

 

   

 

 

   

 

 

 

Per share amounts – diluted (A):

        

Income from continuing operations

  $0.11   $0.25   $0.13   $0.20 
  

 

 

   

 

 

   

 

 

   

 

 

 

Net income

  $0.10   $0.35   $0.14   $0.29 
  

 

 

   

 

 

   

 

 

   

 

 

 

Weighted average number of common shares outstanding:

        

Basic

   11,191    11,229    11,236    11,251 
  

 

 

   

 

 

   

 

 

   

 

 

 

Diluted

   11,693    11,690    11,721    11,744 
  

 

 

   

 

 

   

 

 

   

 

 

 

(A)Aggregate quarterly per share amounts may not equal annual or period to date amounts presented elsewhere in these consolidated financial statements due to rounding differences.

F-26