UNITED STATES SECURITIES AND EXCHANGE COMMISSION

Washington, DC 20549

FORM 10-Q


þ		QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

~~For the quarterly period ended June 30, 2014~~

		For the quarterly period ended September 30, 2014
or
¨		TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
		For the transition period fromto.

~~For the transition period from~~to.

Commission File Number001-12917


						REIS, INC.
						(Exact Name of Registrant as Specified in Its Charter)


Maryland				13-3926898
~~13-3926898~~
(State or Other Jurisdiction of Incorporation or Organization)				(I.R.S. Employer Identification No.)

530 Fifth Avenue, New York, NY				10036
~~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)~~

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 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 þ No ¨

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

Indicate by check mark whether the Registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller reporting company. See the definitions of “large accelerated filer,” “accelerated filer” and “smaller reporting company” in Rule 12b-2 of the Exchange Act. (Check one):


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

Indicate by check mark whether the Registrant is a shell company (as defined in Rule 12b-2 of the Act). Yes ¨ No þ

The number of the Registrant’s shares of common stock outstanding was ~~11,101,665~~11,136,665 as of ~~July 28,~~October 27, 2014.

TABLE OF CONTENTS


		Page Number

PART I. FINANCIAL INFORMATION:

Item 1.	Financial Statements

	Consolidated Balance Sheets at ~~June~~September 30, 2014 (unaudited) and December 31, 2013	3
	Consolidated Statements of Operations (unaudited) For the Three and ~~Six~~Nine Months Ended ~~June~~September 30, 2014 and 2013	4
	Consolidated Statement of Changes in Stockholders’ Equity (unaudited) For the ~~Six~~Nine Months Ended ~~June~~September 30, 2014	5
	Consolidated Statements of Cash Flows (unaudited) For the ~~Six~~Nine Months Ended ~~June~~September 30, 2014 and 2013	6
	Notes to Consolidated Financial Statements (unaudited)	7

Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	21
Item 3.	Quantitative and Qualitative Disclosures About Market Risk	35
Item 4.	Controls and Procedures	35

PART II. OTHER INFORMATION:

Item 1.	Legal Proceedings	36
Item 1A.	Risk Factors	36
Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds	36
Item 3.	Defaults Upon Senior Securities	36
Item 4.	Mine Safety Disclosures	36
Item 5.	Other Information	36
Item 6.	Exhibits	36

Signatures		37

Part I. Financial Information

Item 1. Financial Statements.

REIS, INC. AND SUBSIDIARIES

CONSOLIDATED BALANCE SHEETS


					September 30,		December 31,
					2014		2013
	June 30, 2014		December 31, 2013		(Unaudited)
	(Unaudited)
ASSETS
Current assets:
Cash and cash equivalents	$	16,403,254	$	10,559,899	$	16,397,608	$	10,559,899
Restricted cash and investments		212,358		216,702		212,492		216,702
Accounts receivable, net		4,469,457		11,386,584		6,966,014		11,386,584
Prepaid and other assets		2,462,463		2,787,909		3,127,905		2,787,909
Assets attributable to discontinued operations		4,650		8,500		3,500		8,500

Total current assets		23,552,182		24,959,594		26,707,519		24,959,594
Furniture, fixtures and equipment, net of accumulated depreciation of $2,040,032 and $1,905,933, respectively		850,932		853,377
Intangible assets, net of accumulated amortization of $31,126,598 and $28,764,189, respectively		15,374,659		15,687,117
Furniture, fixtures and equipment, net of accumulated depreciation of $2,070,840 and $1,905,933, respectively						808,835		853,377
Intangible assets, net of accumulated amortization of $32,375,201 and $28,764,189, respectively						15,040,746		15,687,117
Deferred tax asset, non-current portion, net		20,829,520		21,316,520		19,937,520		21,316,520
Goodwill		54,824,648		54,824,648		54,824,648		54,824,648
Other assets		182,662		225,528		161,230		225,528

Total assets	$	115,614,603	$	117,866,784	$	117,480,498	$	117,866,784


LIABILITIES AND STOCKHOLDERS’ EQUITY
Current liabilities:
Current portion of debt	$	—	$	—	$	—	$	—
Accrued expenses and other liabilities		2,970,294		3,578,227		3,780,047		3,578,227
Liability for option cancellations		150,565		268,341		172,809		268,341
Deferred revenue		17,692,794		20,284,178		18,187,918		20,284,178
Liabilities attributable to discontinued operations		311,323		342,138		289,063		342,138

Total current liabilities		21,124,976		24,472,884		22,429,837		24,472,884
Other long-term liabilities		500,407		522,941		464,358		522,941

Total liabilities		21,625,383		24,995,825		22,894,195		24,995,825

Commitments and contingencies
Stockholders’ equity:
Common stock, $0.02 par value per share, 101,000,000 shares authorized, 11,101,665 and 10,916,441 shares issued and outstanding, respectively		222,032		218,328
Common stock, $0.02 par value per share, 101,000,000 shares authorized, 11,136,665 and 10,916,441 shares issued and outstanding, respectively						222,733		218,328
Additional paid in capital		103,570,408		102,717,693		104,319,777		102,717,693
Retained earnings (deficit)		(9,803,220)		(10,065,062)		(9,956,207)		(10,065,062)

Total stockholders’ equity		93,989,220		92,870,959		94,586,303		92,870,959

Total liabilities and stockholders’ equity	$	115,614,603	$	117,866,784	$	117,480,498	$	117,866,784

See Notes to Consolidated Financial Statements

REIS, INC. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF OPERATIONS

(Unaudited)


	For the Three Months Ended September 30,				For the Nine Months Ended September 30,
	2014		2013		2014		2013

Subscription revenue	$	10,468,941	$	8,780,212	$	30,609,361	$	25,512,849
Cost of sales of subscription revenue		2,072,977		1,755,020		5,963,564		5,111,217

Gross profit		8,395,964		7,025,192		24,645,797		20,401,632

Operating expenses:
Sales and marketing		2,573,236		2,096,965		7,666,463		6,097,549
Product development		945,444		835,811		2,522,572		2,349,576
General and administrative expenses		2,981,806		2,893,109		9,221,399		9,167,171

Total operating expenses		6,500,486		5,825,885		19,410,434		17,614,296

Other income (expenses):
Interest and other income		6,262		2,943		15,391		7,472
Interest expense		(28,352)		(28,352)		(84,848)		(84,848)

Total other income (expenses)		(22,090)		(25,409)		(69,457)		(77,376)

Income before income taxes and discontinued operations		1,873,388		1,173,898		5,165,906		2,709,960
Income tax expense		743,000		469,000		2,074,000		1,081,000

Income from continuing operations		1,130,388		704,898		3,091,906		1,628,960
(Loss) from discontinued operations, net of income tax (benefit) of $(34,000), $(36,000), $(351,000) and $(159,000), respectively		(50,287)		(55,947)		(520,904)		(245,869)

Net income	$	1,080,101	$	648,951	$	2,571,002	$	1,383,091


Per share amounts – basic:
Income from continuing operations	$	0.10	$	0.06	$	0.28	$	0.15

Net income	$	0.10	$	0.06	$	0.23	$	0.13


Per share amounts – diluted:
Income from continuing operations	$	0.10	$	0.05	$	0.27	$	0.14

Net income	$	0.09	$	0.05	$	0.22	$	0.12


Weighted average number of common shares outstanding:
Basic		11,119,165		10,907,579		11,067,030		10,876,279

Diluted		11,653,268		11,445,326		11,556,333		11,382,774


Dividends declared per common share	$	0.11	$	—	$	0.22	$	—

See Notes to Consolidated Financial Statements

REIS, INC. AND SUBSIDIARIES

CONSOLIDATED STATEMENT OF CHANGES IN STOCKHOLDERS’ EQUITY

FOR THE NINE MONTHS ENDED SEPTEMBER 30, 2014

(Unaudited)


							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		35,000		700		334,300		—		335,000
Stock based compensation		—		—		1,271,489		—		1,271,489
Dividends		—		—		—		(2,462,147)		(2,462,147)
Net income		—		—		—		2,571,002		2,571,002

Balance, September 30, 2014		11,136,665	$	222,733	$	104,319,777	$	(9,956,207)	$	94,586,303

See Notes to Consolidated Financial Statements

REIS, INC. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF ~~OPERATIONS~~CASH FLOWS

(Unaudited)

For the Three Months Ended
June 30, For the Six Months Ended
June 30,
2014 2013 2014 2013
Subscription revenue
$    10,194,375      $ 8,498,309        $    20,140,420      $ 16,732,637
Cost of sales of subscription revenue
1,974,242      1,674,793        3,890,587      3,356,197

Gross profit
8,220,133      6,823,516        16,249,833      13,376,440

Operating expenses:

Sales and marketing
2,541,207      2,031,618        5,093,227      4,000,584
Product development
814,025      792,199        1,577,128      1,513,765
General and administrative expenses
3,202,151      3,104,751        6,239,593      6,274,062

Total operating expenses
6,557,383      5,928,568        12,909,948      11,788,411

Other income (expenses):

Interest and other income
6,071      2,331        9,129      4,529
Interest expense
(28,283)    (28,283)       (56,496)    (56,496)

Total other income (expenses)
(22,212)    (25,952)       (47,367)    (51,967)

Income before income taxes and discontinued operations
1,640,538      868,996        3,292,518      1,536,062
Income tax expense
726,000      347,000        1,331,000      612,000

Income from continuing operations
914,538      521,996        1,961,518      924,062
(Loss) from discontinued operations, net of income tax (benefit) of $(82,000), $(24,000), $(317,000) and $(123,000), respectively
(92,739)    (38,290)       (470,617)    (189,922)

Net income
$ 821,799      $ 483,706        $ 1,490,901      $ 734,140

Per share amounts – basic:

Income from continuing operations
$ 0.08      $ 0.05        $ 0.18      $ 0.09

Net income
$ 0.07      $ 0.04        $ 0.14      $ 0.07

Per share amounts – diluted:

Income from continuing operations
$ 0.08      $ 0.05        $ 0.17      $ 0.08

Net income
$ 0.07      $ 0.04        $ 0.13      $ 0.06

Weighted average number of common shares outstanding:

Basic
11,101,665      10,891,993        11,040,530      10,860,370

Diluted
11,531,030         11,398,094        11,509,489          11,368,882

Dividends declared per common share
$ 0.11      $ —            $ 0.11      $ —


	For the Nine Months Ended September 30,
	2014		2013

CASH FLOWS FROM OPERATING ACTIVITIES:
Net income	$	2,571,002	$	1,383,091
Adjustments to reconcile to net cash provided by operating activities:
Deferred tax provision		1,438,000		916,000
Depreciation		282,613		240,639
Amortization of intangible assets		3,611,012		3,536,058
Stock based compensation charges		1,271,489		1,451,337
Changes in assets and liabilities:
Restricted cash and investments		4,210		(441)
Accounts receivable, net		4,420,570		6,244,687
Prepaid and other assets		(329,698)		(187,583)
Accrued expenses and other liabilities		90,162		(939,230)
Liability for option cancellations		36,246		110,597
Deferred revenue		(2,096,260)		(2,763,666)

Net cash provided by operating activities		11,299,346		9,991,489


CASH FLOWS FROM INVESTING ACTIVITIES:
Web site and database development costs		(2,964,641)		(3,063,366)
Furniture, fixtures and equipment additions		(238,071)		(366,163)

Cash (used in) investing activities		(3,202,712)		(3,429,529)


CASH FLOWS FROM FINANCING ACTIVITIES:
Dividends		(2,462,147)		—
Proceeds from option exercises		335,000		—
Payments for option cancellations and restricted stock units		(131,778)		(1,280,376)

Cash (used in) financing activities		(2,258,925)		(1,280,376)

Net increase in cash and cash equivalents		5,837,709		5,281,584
Cash and cash equivalents, beginning of period		10,559,899		4,960,850

Cash and cash equivalents, end of period	$	16,397,608	$	10,242,434


SUPPLEMENTAL INFORMATION:
Cash paid during the period for interest	$	18,958	$	17,847

Cash paid during the period for income taxes, net of refunds	$	177,051	$	681,765


SUPPLEMENTAL SCHEDULE OF NON-CASH INVESTING AND FINANCING ACTIVITIES:
Shares issued for vested employee restricted stock units	$	2,894	$	2,499

Shares issued for settlement of vested director restricted stock units	$	811

Disposal of fully depreciated furniture, fixtures and equipment	$	117,706	$	247,074

See Notes to Consolidated Financial Statements

REIS, INC. AND SUBSIDIARIES

~~CONSOLIDATED STATEMENT OF CHANGES IN STOCKHOLDERS’ EQUITY~~

~~FOR THE SIX MONTHS ENDED JUNE 30, 2014~~

~~(Unaudited)~~

Common Shares Paid in Retained
Earnings Total
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      2,893      (2,893)    —       —
Shares issued for settlement of vested director restricted stock units
40,564      811      (811)    —       —
Stock based compensation
—      —      856,419      —       856,419
Dividends
—      —      —      (1,229,059)    (1,229,059)
Net income
—      —      —      1,490,901      1,490,901

Balance, June 30, 2014
    11,101,665      $         222,032      $   103,570,408      $       (9,803,220)    $     93,989,220

~~See Notes to Consolidated Financial Statements~~

~~REIS, INC. AND SUBSIDIARIES~~

~~CONSOLIDATED STATEMENTS OF CASH FLOWS~~

~~(Unaudited)~~

           For the Six Months Ended
June 30,
   2014    2013
CASH FLOWS FROM OPERATING ACTIVITIES:

Net income
   $ 1,490,901           $ 734,140
Adjustments to reconcile to net cash provided by operating activities:

Deferred tax provision
   893,000           489,000
Depreciation
   190,796           159,890
Amortization of intangible assets
   2,362,409           2,341,884
Stock based compensation charges
   856,419           1,039,143
Changes in assets and liabilities:

Restricted cash and investments
   4,344           (305)
Accounts receivable, net
   6,917,127           5,090,222
Prepaid and other assets
   (33,838)          40,829
Accrued expenses and other liabilities
   (661,282)          (1,443,719)
Liability for option cancellations
   14,002           193,546
Deferred revenue
   (2,591,384)          (2,056,702)




Net cash provided by operating activities
   9,442,494           6,587,928




CASH FLOWS FROM INVESTING ACTIVITIES:

Web site and database development costs
   (2,049,951)          (2,131,408)
Furniture, fixtures and equipment additions
   (188,351)          (208,372)




Cash (used in) investing activities
   (2,238,302)          (2,339,780)




CASH FLOWS FROM FINANCING ACTIVITIES:

Dividends
   (1,229,059)          —
Payments for option cancellations and restricted stock units
   (131,778)          (1,109,475)




Cash (used in) financing activities
   (1,360,837)          (1,109,475)




Net increase in cash and cash equivalents
   5,843,355           3,138,673
Cash and cash equivalents, beginning of period
   10,559,899           4,960,850




Cash and cash equivalents, end of period
   $ 16,403,254           $ 8,099,523




SUPPLEMENTAL INFORMATION:

Cash paid during the period for interest
   $ 12,639           $ —




Cash paid during the period for income taxes, net of refunds
   $ 143,121           $ 485,377




SUPPLEMENTAL SCHEDULE OF NON-CASH INVESTING AND FINANCING ACTIVITIES:

Shares issued for vested employee restricted stock units
   $ 2,893           $ 2,499


��


Shares issued for settlement of vested director restricted stock units
   $ 811



Disposal of fully depreciated furniture, fixtures and equipment
   $ 56,697           $ 229,406

~~See Notes to Consolidated Financial Statements~~

~~REIS, INC. AND SUBSIDIARIES~~

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(Unaudited)

1.	*Organization and Business*

Reis, Inc. is a Maryland corporation. Reis, Inc. and its consolidated subsidiaries (“Reis” or 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.

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 and seniors 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; andMobiuss Portfolio CRE,or Mobiuss,launched in early 2013 and 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 units at its Colorado project in September 2009, sold its Claverack, New York project in bulk in February 2010, sold its remaining project in East Lyme, Connecticut in bulk in April 2011, and settled construction defect litigation at the aforementioned Colorado project in 2012.

See Note 3 for additional information regarding the Company’s segments.

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

(Unaudited) (continued)

Summary of Significant Accounting Policies (continued)

Quarterly Reporting

The accompanying consolidated financial statements and notes of the Company have been prepared in accordance with the instructions to Form 10-Q and Rule 10-01 of Regulation S-X promulgated by the Securities and Exchange Commission (“SEC”). Accordingly, certain information and footnote disclosures normally included in financial statements prepared under Generally Accepted Accounting Principles in the United States (“GAAP”) have been condensed or omitted pursuant to such rules. In the opinion of management, all adjustments considered necessary for a fair presentation of the Company’s balance sheets, statements of operations, statement of changes in stockholders’ equity and statements of cash flows have been included and are of a normal and recurring nature. These consolidated financial statements should be read in conjunction with the consolidated financial statements and notes thereto included in the Company’s annual report on Form 10-K for the year ended December 31, 2013, as filed with the SEC on March 6, 2014. The consolidated statements of operations for the three and ~~six~~nine months ended ~~June~~September 30, 2014 and 2013 and changes in cash flows for the ~~six~~nine months ended ~~June~~September 30, 2014 and 2013 are not necessarily indicative of full year results.

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 11.

REIS, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(Unaudited) (continued)

3.	*Segment Information*

The Company is organized into two separately managed segments: the Reis Services segment and the discontinued Residential Development Activities segment. The following tables present condensed balance sheet and operating data for these segments:

(amounts in thousands)
Condensed Balance Sheet Data
June 30, 2014
   Reis
        Services            Discontinued
    Operations (A)                Other (B)                  Consolidated
Assets

Current assets:

Cash and cash equivalents
   $ 16,241         $ —          $ 162          $ 16,403
Restricted cash and investments
   212         —          —          212
Accounts receivable, net
   4,469         —          —          4,469
Prepaid and other assets
   225         —          2,237          2,462
Assets attributable to discontinued operations
   —         —          5          5








Total current assets
   21,147         —          2,404          23,551
Furniture, fixtures and equipment, net
   831         —          20          851
Intangible assets, net
   15,375         —          —          15,375
Deferred tax asset, net
   285         —          20,545          20,830
Goodwill
   57,203         —          (2,378)         54,825
Other assets
   183         —          —          183








Total assets
   $ 95,024         $ —          $ 20,591          $ 115,615








Liabilities and stockholders’ equity

Current liabilities:

Current portion of debt
   $ —         $ —          $ —          $ —
Accrued expenses and other liabilities
   2,278         —          692          2,970
Liability for option cancellations
   —         —          151          151
Deferred revenue
   17,693         —          —          17,693
Liabilities attributable to discontinued operations
   —         271          40          311








Total current liabilities
   19,971         271          883          21,125
Other long-term liabilities
   500         —          —          500
Deferred tax liability, net
   21,098         —          (21,098)         —








Total liabilities
   41,569         271          (20,215)         21,625
Total stockholders’ equity
   53,455         (271)         40,806          93,990








Total liabilities and stockholders’ equity
   $ 95,024         $ —          $ 20,591          $ 115,615


(amounts in thousands)

Condensed Balance Sheet Data September 30, 2014	Reis Services		Discontinued Operations (A)		Other (B)		Consolidated

Assets
Current assets:
Cash and cash equivalents	$	16,235	$	—	$	163	$	16,398
Restricted cash and investments		212		—		—		212
Accounts receivable, net		6,966		—		—		6,966
Prepaid and other assets		302		—		2,825		3,127
Assets attributable to discontinued operations		—		—		4		4

Total current assets		23,715		—		2,992		26,707
Furniture, fixtures and equipment, net		791		—		17		808
Intangible assets, net		15,041		—		—		15,041
Deferred tax asset, net		285		—		19,653		19,938
Goodwill		57,203		—		(2,378)		54,825
Other assets		161		—		—		161

Total assets	$	97,196	$	—	$	20,284	$	117,480


Liabilities and stockholders’ equity
Current liabilities:
Current portion of debt	$	—	$	—	$	—	$	—
Accrued expenses and other liabilities		2,715		—		1,065		3,780
Liability for option cancellations		—		—		173		173
Deferred revenue		18,188		—		—		18,188
Liabilities attributable to discontinued operations		—		271		18		289

Total current liabilities		20,903		271		1,256		22,430
Other long-term liabilities		464		—		—		464
Deferred tax liability, net		22,224		—		(22,224)		—

Total liabilities		43,591		271		(20,968)		22,894
Total stockholders’ equity		53,605		(271)		41,252		94,586

Total liabilities and stockholders’ equity	$	97,196	$	—	$	20,284	$	117,480

(A)

Includes the assets and liabilities of the Company’s discontinued Residential Development Activities segment, to the extent that such assets and liabilities existed at the date presented.

(B)

Includes cash, other assets and liabilities not specifically attributable to or allocable to a specific operating segment.

REIS, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(Unaudited) (continued)

Segment Information (continued)

(amounts in thousands)
Condensed Balance Sheet Data
December 31, 2013
   Reis
        Services            Discontinued
    Operations (A)                Other (B)                  Consolidated
Assets

Current assets:

Cash and cash equivalents
   $ 10,347         $ —         $ 213          $ 10,560
Restricted cash and investments
   217         —         —          217
Accounts receivable, net
   11,386         —         —          11,386
Prepaid and other assets
   187         —         2,601          2,788
Assets attributable to discontinued operations
   —         —         9          9








Total current assets
   22,137         —         2,823          24,960
Furniture, fixtures and equipment, net
   829         —         24          853
Intangible assets, net
   15,687         —         —          15,687
Deferred tax asset, net
   285         —         21,032          21,317
Goodwill
   57,203         —         (2,378)         54,825
Other assets
   225         —         —          225








Total assets
   $ 96,366         $ —         $ 21,501          $ 117,867








Liabilities and stockholders’ equity

Current liabilities:

Current portion of debt
   $ —         $ —         $ —          $ —
Accrued expenses and other liabilities
   2,623         —         956          3,579
Liability for option cancellations
   —         —         268          268
Deferred revenue
   20,284         —         —          20,284
Liabilities attributable to discontinued operations
   —         271         71          342








Total current liabilities
   22,907         271         1,295          24,473
Other long-term liabilities
   523         —         —          523
Deferred tax liability, net
   18,957         —         (18,957)         —








Total liabilities
   42,387         271         (17,662)         24,996
Total stockholders’ equity
   53,979         (271)       39,163          92,871








Total liabilities and stockholders’ equity
   $ 96,366         $ —         $ 21,501          $ 117,867

~~(A)~~

~~Includes the assets and liabilities of the Company’s discontinued Residential Development Activities segment, to the extent that such assets and liabilities existed at the date presented.~~

~~(B)~~

~~Includes cash, other assets and liabilities not specifically attributable to or allocable to a specific operating segment.~~


(amounts in thousands)
Condensed Balance Sheet Data December 31, 2013	Reis Services		Discontinued Operations (A)		Other (B)		Consolidated

Assets
Current assets:
Cash and cash equivalents	$	10,347	$	—	$	213	$	10,560
Restricted cash and investments		217		—		—		217
Accounts receivable, net		11,386		—		—		11,386
Prepaid and other assets		187		—		2,601		2,788
Assets attributable to discontinued operations		—		—		9		9

Total current assets		22,137		—		2,823		24,960
Furniture, fixtures and equipment, net		829		—		24		853
Intangible assets, net		15,687		—		—		15,687
Deferred tax asset, net		285		—		21,032		21,317
Goodwill		57,203		—		(2,378)		54,825
Other assets		225		—		—		225

Total assets	$	96,366	$	—	$	21,501	$	117,867


Liabilities and stockholders’ equity
Current liabilities:
Current portion of debt	$	—	$	—	$	—	$	—
Accrued expenses and other liabilities		2,623		—		956		3,579
Liability for option cancellations		—		—		268		268
Deferred revenue		20,284		—		—		20,284
Liabilities attributable to discontinued operations		—		271		71		342

Total current liabilities		22,907		271		1,295		24,473
Other long-term liabilities		523		—		—		523
Deferred tax liability, net		18,957		—		(18,957)		—

Total liabilities		42,387		271		(17,662)		24,996
Total stockholders’ equity		53,979		(271)		39,163		92,871

Total liabilities and stockholders’ equity	$	96,366	$	—	$	21,501	$	117,867

(A) Includes the assets and liabilities of the Company’s discontinued Residential Development Activities segment, to the extent that such assets and liabilities existed at the date presented. (B) Includes cash, other assets and liabilities not specifically attributable to or allocable to a specific operating segment.

REIS, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(Unaudited) (continued)

Segment Information (continued)

(amounts in thousands)
Condensed Operating Data for the
Three Months Ended June 30, 2014
   Reis
          Services              Discontinued
    Operations (A)                Other (B)                  Consolidated
Subscription revenue
   $ 10,194         $ —           $ —           $ 10,194
Cost of sales of subscription revenue
   1,974         —           —           1,974








Gross profit
   8,220         —           —           8,220








Operating expenses:

Sales and marketing
   2,541         —           —           2,541
Product development
   814         —           —           814
General and administrative expenses
   2,079         —           1,123           3,202








Total operating expenses
   5,434         —           1,123           6,557
Other income (expenses):

Interest and other income
   6         —           —           6
Interest expense
   (28)       —           —           (28)








Total other income (expenses)
   (22)       —           —           (22)








Income (loss) before income taxes and discontinued operations
   $ 2,764         $ —           $ (1,123)         $ 1,641








(Loss) from discontinued operations, before income taxes
   $ —         $ —           $ (175)         $ (175)

Condensed Operating Data for the
Three Months Ended June 30, 2013
   Reis
          Services              Discontinued
    Operations (A)                Other (B)                  Consolidated
Subscription revenue
   $ 8,498         $ —           $ —           $ 8,498
Cost of sales of subscription revenue
   1,675         —           —           1,675








Gross profit
   6,823         —           —           6,823








Operating expenses:

Sales and marketing
   2,032         —           —           2,032
Product development
   791         —           —           791
General and administrative expenses
   1,723         —           1,382           3,105








Total operating expenses
   4,546         —           1,382           5,928
Other income (expenses):

Interest and other income
   2         —           —           2
Interest expense
   (28)       —           —           (28)








Total other income (expenses)
   (26)       —           —           (26)








Income (loss) before income taxes and discontinued operations
   $   2,251         $ —           $ (1,382)          $ 869








(Loss) from discontinued operations, before income taxes
   $ —         $ —           $ (62)          $ (62)

~~(A)~~

~~Includes the results of the Company’s discontinued Residential Development Activities segment, to the extent that such operations existed during the periods presented.~~

~~(B)~~

~~Includes interest and other income, depreciation expense and general and administrative expenses that have not been allocated to the operating segments.~~


(amounts in thousands)

Condensed Operating Data for the Three Months Ended September 30, 2014	Reis Services		Discontinued Operations (A)		Other (B)		Consolidated

Subscription revenue	$	10,469	$	—	$	—	$	10,469
Cost of sales of subscription revenue		2,073		—		—		2,073

Gross profit		8,396		—		—		8,396

Operating expenses:
Sales and marketing		2,573		—		—		2,573
Product development		946		—		—		946
General and administrative expenses		1,931		—		1,051		2,982

Total operating expenses		5,450		—		1,051		6,501
Other income (expenses):
Interest and other income		6		—		—		6
Interest expense		(28)		—		—		(28)

Total other income (expenses)		(22)		—		—		(22)

Income (loss) before income taxes and discontinued operations	$	2,924	$	—	$	(1,051)	$	1,873


(Loss) from discontinued operations, before income taxes	$	—	$	(3)	$	(81)	$	(84)


Condensed Operating Data for the Three Months Ended September 30, 2013	Reis Services		Discontinued Operations (A)		Other (B)		Consolidated

Subscription revenue	$	8,780	$	—	$	—	$	8,780
Cost of sales of subscription revenue		1,755		—		—		1,755

Gross profit		7,025		—		—		7,025

Operating expenses:
Sales and marketing		2,097		—		—		2,097
Product development		836		—		—		836
General and administrative expenses		1,686		—		1,207		2,893

Total operating expenses		4,619		—		1,207		5,826
Other income (expenses):
Interest and other income		3		—		—		3
Interest expense		(28)		—		—		(28)

Total other income (expenses)		(25)		—		—		(25)

Income (loss) before income taxes and discontinued operations	$	2,381	$	—	$	(1,207)	$	1,174


(Loss) from discontinued operations, before income taxes	$	—	$	(8)	$	(84)	$	(92)

(A) Includes the results of the Company’s discontinued Residential Development Activities segment, to the extent that such operations existed during the periods presented. (B) Includes interest and other income, depreciation expense and general and administrative expenses that have not been allocated to the operating segments.

REIS, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(Unaudited) (continued)

Segment Information (continued)

(amounts in thousands)
Condensed Operating Data for the
Six Months Ended June 30, 2014
   Reis
          Services              Discontinued
    Operations (A)                Other (B)                  Consolidated
Subscription revenue
   $ 20,140         $ —           $ —           $ 20,140
Cost of sales of subscription revenue
   3,890         —           —           3,890








Gross profit
   16,250         —           —           16,250








Operating expenses:

Sales and marketing
   5,093         —           —           5,093
Product development
   1,577         —           —           1,577
General and administrative expenses
   3,971         —           2,269           6,240








Total operating expenses
   10,641         —           2,269           12,910
Other income (expenses):

Interest and other income
   9         —           —           9
Interest expense
   (56)       —           —           (56)








Total other income (expenses)
   (47)       —           —           (47)








Income (loss) before income taxes and discontinued operations
   $ 5,562         $ —           $ (2,269)         $ 3,293








(Loss) from discontinued operations, before income taxes
   $ —         $ (28)         $ (760)         $ (788)

Condensed Operating Data for the
Six Months Ended June 30, 2013
   Reis
          Services              Discontinued
    Operations (A)                Other (B)                  Consolidated
Subscription revenue
   $ 16,732         $ —           $ —           $ 16,732
Cost of sales of subscription revenue
   3,356         —           —           3,356








Gross profit
   13,376         —           —           13,376








Operating expenses:

Sales and marketing
   4,001         —           —           4,001
Product development
   1,513         —           —           1,513
General and administrative expenses
   3,519         —           2,755           6,274








Total operating expenses
   9,033         —           2,755           11,788
Other income (expenses):

Interest and other income
   4         —           —           4
Interest expense
   (56)       —           —           (56)








Total other income (expenses)
   (52)       —           —           (52)








Income (loss) before income taxes and discontinued operations
   $ 4,291         $ —           $ (2,755)         $ 1,536








(Loss) from discontinued operations, before income taxes
   $ —         $ —           $ (313)         $ (313)

~~(A)~~

~~Includes the results of the Company’s discontinued Residential Development Activities segment, to the extent that such operations existed during the periods presented.~~

~~(B)~~

~~Includes interest and other income, depreciation expense and general and administrative expenses that have not been allocated to the operating segments.~~


(amounts in thousands)

Condensed Operating Data for the Nine Months Ended September 30, 2014	Reis Services		Discontinued Operations (A)		Other (B)		Consolidated

Subscription revenue	$	30,609	$	—	$	—	$	30,609
Cost of sales of subscription revenue		5,963		—		—		5,963

Gross profit		24,646		—		—		24,646

Operating expenses:
Sales and marketing		7,666		—		—		7,666
Product development		2,523		—		—		2,523
General and administrative expenses		5,902		—		3,320		9,222

Total operating expenses		16,091		—		3,320		19,411
Other income (expenses):
Interest and other income		15		—		—		15
Interest expense		(84)		—		—		(84)

Total other income (expenses)		(69)		—		—		(69)

Income (loss) before income taxes and discontinued operations	$	8,486	$	—	$	(3,320)	$	5,166


(Loss) from discontinued operations, before income taxes	$	—	$	(31)	$	(841)	$	(872)


Condensed Operating Data for the Nine Months Ended September 30, 2013	Reis Services		Discontinued Operations (A)		Other (B)		Consolidated

Subscription revenue	$	25,512	$	—	$	—	$	25,512
Cost of sales of subscription revenue		5,111		—		—		5,111

Gross profit		20,401		—		—		20,401

Operating expenses:
Sales and marketing		6,098		—		—		6,098
Product development		2,349		—		—		2,349
General and administrative expenses		5,205		—		3,962		9,167

Total operating expenses		13,652		—		3,962		17,614
Other income (expenses):
Interest and other income		7		—		—		7
Interest expense		(84)		—		—		(84)

Total other income (expenses)		(77)		—		—		(77)

Income (loss) before income taxes and discontinued operations	$	6,672	$	—	$	(3,962)	$	2,710


(Loss) from discontinued operations, before income taxes	$	—	$	(8)	$	(397)	$	(405)

(A) Includes the results of the Company’s discontinued Residential Development Activities segment, to the extent that such operations existed during the periods presented. (B) Includes interest and other income, depreciation expense and general and administrative expenses that have not been allocated to the operating segments.

REIS, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(Unaudited) (continued)

Segment Information (continued)

Reis Services

See Note 1 for a description of Reis Services’s business and products at ~~June~~September 30, 2014.

The Company’s largest individual subscriber accounted for ~~3.0%~~2.9% and ~~3.6%~~3.5% of Reis Services’s revenue for the ~~six~~nine months ended ~~June~~September 30, 2014 and 2013, respectively.

The balance of outstanding accounts receivables of Reis Services at ~~June~~September 30, 2014 and December 31, 2013 follows:


	June 30, 2014		December 31, 2013		September 30, 2014		December 31, 2013

Accounts receivables	$	4,546,000	$	11,465,000	$	7,019,000	$	11,465,000
Allowance for doubtful accounts		(77,000)		(79,000)		(53,000)		(79,000)

Accounts receivables, net	$	4,469,000	$	11,386,000	$	6,966,000	$	11,386,000

~~Five~~Seven subscribers accounted for an aggregate of approximately ~~30.1%~~36.5% of Reis Services’s accounts receivable at ~~June~~September 30, 2014, with the largest representing ~~16.5%~~10.2%. Through ~~July 28,~~October 24, 2014, the Company received payments of approximately ~~$2,189,000~~$2,389,000 or ~~48.1%~~34.0% against the ~~June~~September 30, 2014 accounts receivable balance.

At ~~June~~September 30, 2014, the largest individual subscriber accounted for ~~4.0%~~3.3% of deferred revenue.

Discontinued Operations – Residential Development Activities

(Loss) from discontinued operations is comprised of the following:


	For the Three Months Ended June 30,				For the Six Months Ended June 30,				For the Three Months Ended September 30,				For the Nine Months Ended September 30,
	2014		2013		2014		2013		2014		2013		2014		2013

Litigation recoveries (see Note 11)	$	16,000	$	80,000	$	16,000	$	80,000	$	10,000	$	—	$	26,000	$	80,000
Other income (expense), net		(191,000)		(142,000)		(804,000)		(393,000)		(94,000)		(92,000)		(898,000)		(485,000)

(Loss) from discontinued operations before income tax		(175,000)		(62,000)		(788,000)		(313,000)		(84,000)		(92,000)		(872,000)		(405,000)
Income tax (benefit) from discontinued operations		(82,000)		(24,000)		(317,000)		(123,000)		(34,000)		(36,000)		(351,000)		(159,000)

(Loss) from discontinued operations, net of income tax (benefit)	$	(93,000)	$	(38,000)	$	(471,000)	$	(190,000)	$	(50,000)	$	(56,000)	$	(521,000)	$	(246,000)

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, 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. ~~During the three and six months ended June 30, 2014 and 2013, the~~The Company’s efforts resulted in cash recoveries of ~~$16,000, $80,000, $16,000~~$10,000 during the three months ended September 30, 2014 and $26,000 and $80,000 during the nine months ended September 30, 2014 and 2013, respectively. No recoveries occurred during the three months ended September 30, 2013. For additional information pertaining to the Gold Peak litigation, see Note 11.

REIS, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(Unaudited) (continued)

4.	*Restricted Cash and Investments*

Restricted cash and investments represents a security deposit for the 530 Fifth Avenue corporate office space. The Company provided the lessor a bank-issued letter of credit, which is fully collateralized by a certificate of deposit issued by that bank. The restricted cash balance was approximately $212,000 and $217,000 at ~~June~~September 30, 2014 and December 31, 2013, respectively.

~~REIS, INC. AND SUBSIDIARIES~~

~~NOTES TO CONSOLIDATED FINANCIAL STATEMENTS~~

~~(Unaudited) (continued)~~

5.	*Intangible Assets*

The amount of identified intangible assets, including the respective amounts of accumulated amortization, are as follows:


	June 30, 2014		December 31, 2013		September 30, 2014		December 31, 2013

Database	$	18,307,000	$	17,149,000	$	18,868,000	$	17,149,000
Accumulated amortization		(14,090,000)		(13,238,000)		(14,548,000)		(13,238,000)

Database, net		4,217,000		3,911,000		4,320,000		3,911,000

Customer relationships		14,100,000		14,100,000		14,100,000		14,100,000
Accumulated amortization		(6,899,000)		(6,417,000)		(7,139,000)		(6,417,000)

Customer relationships, net		7,201,000		7,683,000		6,961,000		7,683,000

Web site		11,294,000		10,402,000		11,648,000		10,402,000
Accumulated amortization		(7,971,000)		(7,095,000)		(8,447,000)		(7,095,000)

Web site, net		3,323,000		3,307,000		3,201,000		3,307,000

Acquired below market lease		2,800,000		2,800,000		2,800,000		2,800,000
Accumulated amortization		(2,166,000)		(2,014,000)		(2,241,000)		(2,014,000)

Acquired below market lease, net		634,000		786,000		559,000		786,000

Intangibles, net	$	15,375,000	$	15,687,000	$	15,041,000	$	15,687,000

The Company capitalized approximately ~~$562,000~~$561,000 and ~~$496,000~~$464,000 during the three months ended ~~June~~September 30, 2014 and 2013, respectively, and approximately ~~$1,158,000~~$1,719,000 and ~~$1,024,000~~$1,488,000 during the ~~six~~nine months ended ~~June~~September 30, 2014 and 2013, respectively, to the database intangible asset. The Company capitalized approximately ~~$410,000~~$354,000 and ~~$549,000~~$468,000 during the three months ended ~~June~~September 30, 2014 and 2013, respectively, and approximately ~~$892,000~~$1,246,000 and ~~$1,107,000~~$1,575,000 during the ~~six~~nine months ended ~~June~~September 30, 2014 and 2013, respectively, to the web site intangible asset.

Amortization expense for intangible assets aggregated approximately ~~$1,209,000~~$1,249,000 and ~~$2,362,000~~$3,611,000 for the three and ~~six~~nine months ended ~~June~~September 30, 2014, of which approximately ~~$439,000~~$458,000 and ~~$852,000~~$1,310,000 related to the database, which is charged to cost of sales, approximately ~~$241,000~~$240,000 and ~~$482,000~~$722,000 related to customer relationships, which is charged to sales and marketing expense, approximately ~~$453,000~~$476,000 and ~~$876,000~~$1,352,000 related to web site development, which is charged to product development expense, and approximately ~~$76,000~~$75,000 and ~~$152,000~~$227,000 related to the value ascribed to the below market terms of the office lease, which is charged to general and administrative expense, all in the Reis Services segment. Amortization expense for intangible assets aggregated approximately ~~$1,207,000~~$1,194,000 and ~~$2,342,000~~$3,536,000 for the three and ~~six~~nine months ended ~~June~~September 30, 2013, of which approximately ~~$383,000~~$395,000 and ~~$749,000~~$1,144,000 related to the database, approximately ~~$244,000~~$243,000 and ~~$488,000~~$731,000 related to customer relationships, approximately ~~$505,000~~$480,000 and ~~$954,000~~$1,434,000 related to web site development, and approximately ~~$75,000~~$76,000 and ~~$151,000~~$227,000 related to the value ascribed to the below market terms of the office lease.

6.	*Debt*

The Company had no debt outstanding at ~~June~~September 30, 2014 and December 31, 2013.

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 (the “Revolver”). The Revolver has a three year term expiring on October 16, 2015, and any borrowings 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. The Company paid a commitment fee of $50,000 in connection with the closing. The Revolver is secured by a security interest in substantially all of the tangible and intangible assets of Reis Services and a pledge by the Company of its membership interests in Reis Services. The Revolver also contains customary affirmative and negative

REIS, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(Unaudited) (continued)

Debt (continued)

covenants, including minimum financial covenants, as defined in the agreement; all of the covenants were met at ~~June~~September 30, 2014 and December 31, 2013. No borrowings were made on the Revolver during the three and ~~six~~nine months ended ~~June~~September 30, 2014 or the year ended December 31, 2013.

~~REIS, INC. AND SUBSIDIARIES~~

~~NOTES TO CONSOLIDATED FINANCIAL STATEMENTS~~

~~(Unaudited) (continued)~~

7.	*Income Taxes*

The components of the income tax expense (benefit) are as follows:

For the Three Months Ended
June 30, For the Six Months Ended
June 30,
            2014                         2013                         2014                         2013
Current Federal alternative minimum tax (“AMT”) expense
$ 12,000         $ —         $ 12,000         $ —
Current state and local tax expense
34,000         —         34,000         —
Deferred Federal tax expense
480,000         268,000         846,000         406,000
Deferred state and local tax expense
118,000         55,000         122,000         83,000

Consolidated income tax expense, including taxes attributable to discontinued operations (A)
644,000         323,000         1,014,000         489,000
Less income tax (benefit) attributable to discontinued operations
(82,000)        (24,000)        (317,000)        (123,000)

Income tax expense (B)
$ 726,000         $ 347,000         $ 1,331,000         $ 612,000


	For the Three Months Ended September 30,				For the Nine Months Ended September 30,
	2014		2013		2014		2013

Current Federal alternative minimum tax (“AMT”) expense	$	39,000	$	6,000	$	51,000	$	6,000
Current state and local tax expense		106,000		—		140,000		—
Deferred Federal tax expense		557,000		354,000		1,403,000		760,000
Deferred state and local tax expense		7,000		73,000		129,000		156,000

Consolidated income tax expense, including taxes attributable to discontinued operations (A)		709,000		433,000		1,723,000		922,000
Less income tax (benefit) attributable to discontinued operations		(34,000)		(36,000)		(351,000)		(159,000)

Income tax expense (B)	$	743,000	$	469,000	$	2,074,000	$	1,081,000

(A) Includes income taxes attributable to income (loss) from discontinued operations.

(B) Reflects the tax expense from continuing operations as reported on the consolidated statements of income for the period presented.

During March 2014, New York State enacted a law to reduce corporate tax rates, effective in future years. As a consequence, the Company evaluated all elements affecting the balance of its net deferred tax assets, including the availability of New York State and New York City net operating loss (“NOL”) carryforwards and this change in the law in New York State. The impact of this evaluation resulted in a net increase in the deferred tax asset of $29,000 during 2014.

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 ~~$22,896,000~~$22,351,000 and $23,789,000 at ~~June~~September 30, 2014 and December 31, 2013, respectively, of which ~~$2,066,000~~$2,413,000 and $2,472,000 is reflected as a net current asset in prepaid and other assets and ~~$20,830,000~~$19,938,000 and $21,317,000 is reflected separately as a net non-current asset in the accompanying consolidated balance sheets. 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 has aggregate Federal, state and local NOL carryforwards aggregating approximately ~~$65,955,000~~$65,984,000 at December 31, 2013. These NOLs include NOLs generated subsequent to the Merger, losses from the Reis Services business prior to the Merger, losses obtained from the Company’s 1998 merger with Value Property Trust (“VLP”) and the Company’s operating losses prior to the Merger. Approximately ~~$25,107,000~~$25,136,000 of these Federal NOLs are subject to an annual limitation, whereas the remaining balance of approximately $40,848,000 is not subject to such a limitation. There is an annual limitation on the use of NOLs after an ownership change, pursuant to Section 382 of the Internal Revenue Code. As a result of the Merger, the Company experienced such an ownership change which resulted in a new annual limitation of $2,779,000. However, because of the accumulation of annual limitations, it is expected that the use of NOLs will not be limited by expiration. The New York State law discussed above limits the amount of existing ~~NOL’s~~NOLs which could be used each year in that state; however, all such losses are expected to be utilized in the future.

A valuation allowance is required to reduce deferred tax assets if, based on the weight of the 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 current evaluation of the Company’s future operations, it has been determined that no valuation allowance was necessary at ~~June~~September 30, 2014 or December 31, 2013.

REIS, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(Unaudited) (continued)

8.	*Stockholders’ Equity*

Between December 2008 and August 2011, the Company’s Board of Directors (the “Board”) authorized the repurchase of up to an aggregate amount of $5,000,000 of the Company’s common stock, of which approximately $551,000 remained available for repurchases as of ~~June~~September 30, 2014 and December 31, 2013. Although the Company has remaining availability under a prior authorization, such authorization was at a time when the Company’s stock price and cash position were significantly different than where they were at ~~June~~September 30, 2014. As a result, management would probably seek a new authorization from the Board if the

~~REIS, INC. AND SUBSIDIARIES~~

~~NOTES TO CONSOLIDATED FINANCIAL STATEMENTS~~

~~(Unaudited) (continued)~~

~~Stockholders’ Equity (continued)~~

Company were to consider stock repurchases in the future. During the three and ~~six~~nine months ended ~~June~~September 30, 2014 and 2013, the Company did not repurchase any shares of common stock.

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 ~~or approximately $1,229,000 in the aggregate,~~ to common shareholders of record during the second quarter of 2014. In the third quarter of 2014, the Company declared and paid a quarterly cash dividend of $0.11 per common share to common stockholders of record at the close of business on ~~June 11,~~September 10, 2014. Aggregate dividends paid during the three and nine months ended September 30, 2014 ~~which amounts~~ were ~~paid on June 18, 2014.~~$1,233,000 and $2,462,000, respectively. Although the Company anticipates paying a quarterly dividend hereafter, future dividends are subject to approval by the Board. The Company did not declare or distribute any dividends during the three and nine months ~~and six~~ ended ~~June~~September 30, 2013.

9.	*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.

Option Awards

The following table presents option activity and other plan data for the ~~six~~nine months ended ~~June~~September 30, 2014 and 2013:


	For the Six Months Ended June 30,								For the Nine Months Ended September 30,
	2014				2013				2014				2013
	Options		Weighted- Average Exercise Price		Options		Weighted- Average Exercise Price		Options		Weighted- Average Exercise Price		Options		Weighted- Average Exercise Price

Outstanding at beginning of period		627,724	$	9.05		645,448	$	8.94		627,724	$	9.05		645,448	$	8.94
Granted		20,000	$	18.52		—	$	—		20,000	$	18.52		—	$	—
Exercised		—	$	—		—	$	—		(35,000)	$	(9.57)		—	$	—
Cancelled through cash settlement		(8,862)	$	(4.09)		—	$	—		(8,862)	$	(4.09)		—	$	—
Forfeited/cancelled/expired		—	$	—		—	$	—		—	$	—		—	$	—

Outstanding at end of period		638,862	$	9.41		645,448	$	8.94		603,862	$	9.40		645,448	$	8.94

Options exercisable at end of period		618,862	$	9.12		645,448	$	8.94		583,862	$	9.09		645,448	$	8.94

Options exercisable which can be settled in cash		8,862	$	4.09		35,448	$	4.67		8,862	$	4.09		35,448	$	4.67

Certain outstanding options allow the option holder to receive from the Company, in cancellation of the holder’s option, a cash payment with respect to each cancelled option equal to the amount, if any, by which the fair market value of the share of stock underlying the option exceeds the exercise price of such option. The Company accounts for these options as liability awards. This liability is adjusted at the end of each reporting period to reflect: (1) the net cash payments to option holders made during each period; (2) the impact of the exercise and expiration of options; and (3) changes in the market price of the Company’s common stock. Changes in the settlement value of option awards treated under the liability method are reflected as income or expense in the statements of operations.

REIS, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(Unaudited) (continued)

Stock Plans and Other Incentives (continued)

In May 2014, the Company granted 20,000 options to one employee. These options, which are accounted for as an equity award, vest 20% per year 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.

~~REIS, INC. AND SUBSIDIARIES~~

~~NOTES TO CONSOLIDATED FINANCIAL STATEMENTS~~

~~(Unaudited) (continued)~~

~~Stock Plans and Other Incentives (continued)~~

At ~~June~~September 30, 2014, the liability for option cancellations was approximately ~~$151,000~~$173,000 based upon the difference in the closing stock price of the Company’s common stock at ~~June~~September 30, 2014 of ~~$21.08~~$23.59 per share and the exercise price of the outstanding 8,862 “in-the-money” options that were accounted for as a liability award at that date. At December 31, 2013, the liability for option cancellations was approximately $268,000 based upon the difference in the closing stock price of the Company at December 31, 2013 of $19.23 per share and the exercise price of the outstanding 17,724 “in-the-money” options that were accounted for as a liability award at that date. The Company recorded compensation expense of approximately ~~$27,000~~$22,000 and ~~$105,000~~a compensation benefit of approximately $83,000 for the three months ended ~~June~~September 30, 2014 and 2013, respectively, and compensation expense of ~~$14,000~~$36,000 and ~~$194,000~~$111,000 for the ~~six~~nine months ended ~~June~~September 30, 2014 and 2013, respectively, in general and administrative expenses in the consolidated statements of operations related to the respective changes in the amount of the liability for option cancellations.

RSU Awards

The following table presents the changes in RSUs outstanding for the ~~six~~nine months ended ~~June~~September 30, 2014 and 2013:

For the Six Months Ended
June 30,
            2014                         2013
Outstanding at beginning of period
365,686      469,848
Granted
95,136      97,844
Common stock delivered (A)
(185,224)    (205,075)
Forfeited
(7,345)    (1,800)

Outstanding at end of period
268,253      360,817

Intrinsic value (B)
$ 5,655,000      $ 6,672,000

~~(A)~~

In the 2014 period, all of the vested RSUs were issued as shares. The 2013 period includes 9,242 and 80,139 shares which were used to settle minimum employee withholding tax obligations for two and 16 employees of approximately $171,000 and $1,280,000 in the three and six months ended June 30, 2013, respectively. A net of 15,759 and 124,936 shares of common stock were delivered in the three and six months ended June 30, 2013, respectively.

~~(B)~~

~~For purposes of this calculation, the Company’s closing stock prices were $21.08 and $18.49 per share on June 30, 2014 and 2013, respectively.~~


	For the Nine Months Ended September 30,
	2014		2013

Outstanding at beginning of period		365,686		469,848
Granted		96,771		100,328
Common stock delivered (A)		(185,224)		(205,075)
Forfeited		(7,345)		(2,263)

Outstanding at end of period		269,888		362,838

Intrinsic value (B)	$	6,367,000	$	5,860,000



(A) In the 2014 period, all of the vested RSUs were issued as shares. The 2013 period includes 80,139 shares which were used to settle minimum employee withholding tax obligations for 16 employees of approximately $1,280,000 in the nine months ended September 30, 2013. A net of 124,936 shares of common stock were delivered in the nine months ended September 30, 2013.
(B) For purposes of this calculation, the Company’s closing stock prices were $23.59 and $16.15 per share on September 30, 2014 and 2013, respectively.

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 (which was determined based on the closing stock price of the Company’s common stock on the applicable date of grant). In February 2013, an aggregate of 91,356 RSUs were granted to employees, which RSUs vest one-third a year over three years and had a grant date fair value of $16.20 per RSU (which was determined based on the closing stock price of the Company’s common stock on the applicable date of grant). The awards granted to employees in the first quarter of 2014 and 2013 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 ~~six~~nine months ended ~~June~~September 30, 2014, an aggregate of ~~3,705~~5,340 RSUs were granted to non-employee directors (with an average grant date fair value of ~~$18.62~~$19.37 per RSU) related to the equity component of their compensation. During the ~~six~~nine months ended ~~June~~September 30, 2013, an aggregate of ~~6,488~~8,972 RSUs were granted to non-employee directors (with an average grant date fair value of ~~$14.18~~$15.37 per RSU) related to the equity component of their compensation. In each case, the grant date fair value was

REIS, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(Unaudited) (continued)

Stock Plans and Other Incentives (continued)

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 non-employee directors until six months after termination of their service as a director. Dividends are paid on RSUs granted to non-employee directors.

~~REIS, INC. AND SUBSIDIARIES~~

~~NOTES TO CONSOLIDATED FINANCIAL STATEMENTS~~

~~(Unaudited) (continued)~~

~~Stock Plans and Other Incentives (continued)~~

Option and RSU Expense Information

The Company recorded non-cash compensation expense of approximately ~~$408,000~~$415,000 and ~~$547,000,~~$412,000, including $34,500 and $46,000 related to non-employee director equity compensation, for the three months ended ~~June~~September 30, 2014 and 2013, 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. For the ~~six~~nine months ended ~~June~~September 30, 2014 and 2013, the Company recorded non-cash compensation expense of approximately ~~$856,000~~$1,271,000 and ~~$1,039,000,~~$1,451,000, respectively, including ~~$69,000~~$103,500 and ~~$92,000,~~$138,000, respectively, related to non-employee director equity compensation.

10.

Earnings Per Common Share

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 Three Months Ended September 30,				For the Nine Months Ended September 30,
	For the Three Months Ended June 30,				For the Six Months Ended June 30,				2014		2013		2014		2013
	2014		2013		2014		2013
Numerator for basic per share calculation:
Income from continuing operations for basic calculation	$	914,538	$	521,996	$	1,961,518	$	924,062	$	1,130,388	$	704,898	$	3,091,906	$	1,628,960
(Loss) from discontinued operations, net of income tax (benefit)		(92,739)		(38,290)		(470,617)		(189,922)		(50,287)		(55,947)		(520,904)		(245,869)

Net income for basic calculation	$	821,799	$	483,706	$	1,490,901	$	734,140	$	1,080,101	$	648,951	$	2,571,002	$	1,383,091


Numerator for diluted per share calculation:
Income from continuing operations	$	914,538	$	521,996	$	1,961,518	$	924,062	$	1,130,388	$	704,898	$	3,091,906	$	1,628,960
Adjustments to income from continuing operations for the statement of operations impact of dilutive securities		—		—		—		—		—		(82,948)		—		—

Income from continuing operations for dilution calculation		914,538		521,996		1,961,518		924,062		1,130,388		621,950		3,091,906		1,628,960
(Loss) from discontinued operations, net of income tax (benefit)		(92,739)		(38,290)		(470,617)		(189,922)		(50,287)		(55,947)		(520,904)		(245,869)

Net income for dilution calculation	$	821,799	$	483,706	$	1,490,901	$	734,140	$	1,080,101	$	566,003	$	2,571,002	$	1,383,091


Denominator:
Weighted average common shares – basic		11,101,665		10,891,993		11,040,530		10,860,370		11,119,165		10,907,579		11,067,030		10,876,279
Effect of dilutive securities:
RSUs		124,134		231,663		163,397		255,835		169,949		238,391		160,817		241,632
Stock options		305,231		274,438		305,562		252,677		364,154		299,356		328,486		264,863

Weighted average common shares – diluted		11,531,030		11,398,094		11,509,489		11,368,882		11,653,268		11,445,326		11,556,333		11,382,774


Per common share amounts – basic:
Income from continuing operations	$	0.08	$	0.05	$	0.18	$	0.09	$	0.10	$	0.06	$	0.28	$	0.15
(Loss) from discontinued operations		(0.01)		(0.01)		(0.04)		(0.02)		—		—		(0.05)		(0.02)

Net income	$	0.07	$	0.04	$	0.14	$	0.07	$	0.10	$	0.06	$	0.23	$	0.13


Per common share amounts – diluted:
Income from continuing operations	$	0.08	$	0.05	$	0.17	$	0.08	$	0.10	$	0.05	$	0.27	$	0.14
(Loss) from discontinued operations		(0.01)		(0.01)		(0.04)		(0.02)		(0.01)		—		(0.05)		(0.02)

Net income	$	0.07	$	0.04	$	0.13	$	0.06	$	0.09	$	0.05	$	0.22	$	0.12

REIS, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(Unaudited) (continued)

Earnings Per Common Share (continued)

Potentially dilutive securities include all stock based awards. For the three months ended ~~June~~September 30, 2014 and for the ~~six~~nine months ended ~~June~~September 30, 2014 and 2013, certain equity awards and option awards accounted for under the liability method, were antidilutive. ~~For the three months ended June 30, 2013, only option awards accounted for under the liability method were antidilutive.~~

~~REIS, INC. AND SUBSIDIARIES~~

~~NOTES TO CONSOLIDATED FINANCIAL STATEMENTS~~

~~(Unaudited) (continued)~~

11.

Commitments and Contingencies

Reis has purchased insurance with respect to construction defect and completed operations at its past real estate projects. Reis has, from time to time, been exposed to various claims associated with the development, construction and sale of condominium units, single family homes or lots. Claims related to dissatisfaction by homeowners and homeowners associations with the construction of condominiums, homes and amenities by us and/or our developer partners in any condominium or subdivision development, or other matters, may result in litigation costs, remediation costs, warranty expenses or settlement costs which could be material to the Company’s reportable discontinued operating income (loss), or its consolidated financial position or cash flows. It would not have any effect on the Company’s income from continuing operations.

Reis, Inc. and two of its subsidiaries (GP LLC and Wellsford Park Highlands Corp. (“WPHC”)) were the subject of a suit brought by the homeowners association at the Company’s former ~~259-unit~~259 unit Gold Peak condominium project outside of Denver, Colorado. This suit was filed in District Court in Douglas County, Colorado on October 19, 2010, seeking monetary damages (not quantified at the time) relating to design and construction defects at the Gold Peak project. Tri-Star, the construction manager/general contractor for the project (not affiliated with Reis) and two former senior officers of Reis, Inc. (Jeffrey H. Lynford, who was also previously a director of the Company, and David M. Strong) were also named as defendants in the suit. In October 2011, experts for the plaintiff delivered a report alleging a cost to repair of approximately $19,000,000. Trial commenced on February 21, 2012 and a jury rendered its verdict on March 13, 2012 finding Reis, GP LLC and Tri-Star jointly and severally liable for an aggregate of $18,200,000, plus other costs of approximately $756,000.

As of December 31, 2011, based on the best available information at that time, the Company recorded a charge of approximately $4,460,000 in discontinued operations, representing the low end of the Company’s expected range of net exposure. This amount reflected an aggregate minimum liability of approximately $7,740,000, less the then minimum expected insurance recovery of $3,000,000 and other previously reserved amounts. At March 31, 2012, as a result of the verdict, the Company recorded an additional charge of $14,216,000 in discontinued operations in the first quarter of 2012, to bring the Company’s liability up to the $18,200,000 judgment, plus other costs of approximately $756,000. As of March 31, 2012, the Company, in accordance with the applicable accounting literature, could no longer conclude that $3,000,000 of insurance was probable of being recovered. These charges were reflected in discontinued operations and negatively impacted consolidated net income (loss), but did not impact income from continuing operations.

On June 20, 2012, following denial of all of the defendants’ post-trial motions, Reis, GP LLC and WPHC reached a settlement with the plaintiff, the Gold Peak homeowners association, 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. In reaching the decision to settle, Reis’s management and Board considered, among other factors: (1) the amount of the settlement versus the potential for an ultimately greater judgment after appeal, including additional costs and post-judgment interest; (2) the benefits of the clarity of settling the case at this time versus continuing uncertainty; and (3) the strong cash flow generation of Reis Services’s core business. As a result of the settlement, in the second quarter of 2012 the Company reversed $1,956,000 of the previously recorded charge. In December 2012, the Company recovered $712,500, which offset a portion of the previously recorded charge, resulting in the net litigation charge for the year ended December 31, 2012 of approximately $11,547,000. During the year ended December 31, 2013, the Company recovered $80,000. During the three and ~~six~~nine months ended ~~June~~September 30, 2014, the Company recovered ~~$16,000.~~$10,000 and $26,000, respectively.

REIS, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(Unaudited) (continued)

Commitments and Contingencies (continued)

In connection with the development of Gold Peak, the Company purchased a commercial general liability “WRAP” insurance policy from a predecessor of ACE Westchester (“ACE”) covering the Company (including its subsidiaries) and its former officers, Tri-Star and Tri-Star’s subcontractors. The Company, upon advice of counsel and based on a reading of the policy, has taken the position that a total of $9,000,000 (and possibly $12,000,000) of coverage is available for this claim. ACE has taken the position that only $3,000,000 of coverage (including defense costs) was provided. The Company has filed suit against ACE in District Court in Douglas County, Colorado on January 18, 2012, alleging failure to cover this claim, bad faith and other related causes of action. In particular, the Gold Peak litigation could have been settled for $12,000,000 or less prior to the trial.

~~REIS, INC. AND SUBSIDIARIES~~

~~NOTES TO CONSOLIDATED FINANCIAL STATEMENTS~~

~~(Unaudited) (continued)~~

~~Commitments and Contingencies (continued)~~

The Company takes the position that ACE is liable for all damages stemming from this failure to engage and settle. Additionally, the Company has claims against multiple additional insurance companies under policies maintained by the Company, including Reis’s directors’ and officers’ insurance policy, and against Reis’s former insurance broker. Trial in this comprehensive insurance action was scheduled for June 2014; however, at the request of the defendants, the court granted a continuance on April 14, 2014 and a new trial date has been scheduled for July 2015. The Company has also brought separate claims against Tri-Star, the subcontractors, the architect and a third party inspector engaged at Gold Peak, relating to those parties’ actions on the project. A trial for these actions is scheduled for October 2015.

Reis continues to consider its options with respect to contribution or other actions against potentially responsible third parties and/or co-defendants in the lawsuit, and will pursue all reasonable efforts to mitigate the effects of this settlement. There is no assurance that the Company will be successful in these additional recovery efforts.

The Company is not a party to any other litigation that could reasonably be foreseen to be material to the Company.

12.

Fair Value of Financial Instruments

At ~~June~~September 30, 2014 and December 31, 2013, the Company’s financial instruments included receivables, payables, accrued expenses, other liabilities and debt. The fair values of these financial instruments, excluding debt, were not materially different from their recorded values at ~~June~~September 30, 2014 and December 31, 2013. The Company had no debt outstanding at ~~June~~September 30, 2014 and December 31, 2013. See Note 6 for additional information about the Company’s debt.

Item 2. 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 quarterly report on Form 10-Q.

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 the Reis Services segment.

Reis Services

Product Overview

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 property performance, new construction and sales comparables. The significant characteristics of the Reis databases include:

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

Geography - national coverage of up to 275 of the largest U.S. metropolitan CRE markets, over 7,000 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 34 years of data through multiple cycles of economic/market peaks and troughs; and

Frequency - market and submarket reports available monthly or quarterly 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 seven types of commercial real estate covered by Reis at ~~June~~September 30, 2014 and December 31, 2013:


	June 30, 2014		December 31, 2013		September 30, 2014	December 31, 2013

Apartment		275		275	275	275
Retail		190		190	190	190
Office		190		190	190	190
Warehouse/distribution		47		47	47	47
Flex/research & development		47		47	47	47
Self storage		50		50	50	50
Seniors housing		57		—	57	—

Reis programmatically expands its property level and market coverage by geography and property type. On May 1, 2014, Reis introduced coverage on its seventh property type, seniors housing, in 57 metropolitan markets.

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

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 and location for projects that are planned, proposed or under construction.

Reis also maintains a sales comparables database containing transactions in up to 277 metropolitan markets. The database captures key information on each transaction, such as buyer, seller, purchase price, capitalization rate and financing details, where available, for transactions valued at greater than $250,000 in each market we cover, for our seven property types, as well as for hotel properties.

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 has required 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 several 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.

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 a financial institution seeking an integrated commercial real estate portfolio management platform, to a single access user seeking local market intelligence throughReisReports. Reis is continually upgrading and expanding its product offering to reach new markets and new types of consumers of commercial real estate information.

Reis SE

Reis SE (“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 and seniors 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 and seniors housing property types in up to 275 metropolitan areas and more than 7,000 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 comp group summary statistics, including concessions, operating expenses and lease terms.

Sales Comparables - Reis maintains a sales comparables database containing transactions in up to 277 metropolitan areas. The database captures key information on each transaction, such as buyer, seller, purchase price, capitalization rate and financing details, where available, for transactions valued at greater than $250,000, for eight property types including hotel properties.

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.

“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 - “Executive Briefings,” 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 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. Depending on the package chosen by theReisReports subscriber, content is available on a monthly or annual subscription basis at affordable price points.

The addressable 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. Management believes that there is a significant opportunity to market monthly and annual subscriptions to CRE professionals active in individual metropolitan areas.

Mobiuss Portfolio CRE

Launched in the first quarter of 2013 and developed in partnership with Opera Solutions LLC,Mobiussenables clients to quickly and thoroughly assess portfolio risks and opportunities by integrating client loan and property information with Reis property and submarket data and Opera Solutions’ credit analytics. Opera Solutions is a leader in “Big Data” science, predictive analytics and technological innovations. The solution is delivered in a web-based, visually engaging interface.Mobiussis 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,Mobiussenables 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.

TheMobiussplatform is intended for both large and small lending institutions, Commercial Mortgage Backed Security, or CMBS, investors and equity investors, among others.Mobiusshas 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.

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 with the Appraisal Institute, the Certified Commercial Investment Member Institute (“CCIM”) and Building Owners and Managers Association (BOMA) International to promoteReisReports to its members through discounts, e-mail outreach, website advertising and newsletter ads.

As an example, our data redistribution arrangement with Bloomberg allows for Bloomberg Professional subscribers to have access to Reis’s market information at {REIS < GO > } which is also integrated across property and credit valuation tools on Bloomberg’s Commercial Mortgage Backed Security (CMBS) product. Bloomberg subscribers can access Reis’s proprietary supply, demand and price data for the nation’s largest metropolitan apartment, office, retail and industrial markets.

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 over $1,000,000, depending upon the subscriber’s line of business and the combination of markets, property types and reports subscribed to, for which the subscriber is typically allowed to download an unlimited number of reports over the subscription period; 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 toMobiuss typically ranging in price from the low tens of thousands of dollars into the hundreds of thousands of dollars;

•

cappedReis SEsubscriptions 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 ranging up to $150 per month (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 of dollars for custom 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 web site or contacts Reis via telephone, fax or email; however, certain reports are only available with an annual subscription or capped subscription account.

Other Reis Services Information

For additional information on the Reis Services business, refer to the Company’s ~~Annual Report~~annual report on Form 10-K for the year ended December 31, 2013, which was filed with the Securities and Exchange Commission on March 6, 2014.

Additional Segment Financial Information

See Note 3 of the Company’s consolidated financial statements included in this filing for additional information regarding all of the Company’s segments, including Discontinued Operations – Residential Development Activities.

Selected Significant Accounting Policies

For a description of our selected significant accounting policies and estimates, see our Annual Report on Form 10-K for the year ended December 31, 2013.

Critical Business Metrics of the Reis Services Business

Management considers certain metrics in evaluating the performance of the Reis Services business. 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 and EBITDA margin. Other important metrics that management considers include the cash flow generation of the Reis Services business as well as the visibility into future performance as supported by our deferred revenue and other related metrics discussed in this Item 2.

Following is a presentation of revenue, EBITDA and EBITDA margin for the Reis Services business (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)	(amounts in thousands, excluding percentages)											(amounts in thousands, excluding percentages)
													For the Three Months Ended September 30,								Increase				Percentage Increase
													2014				2013								Percentage Increase
Revenue													$	10,469			$	8,780			Increase	$	1,689				19.2%
EBITDA													$	4,285			$	3,679			$	606				16.5%
EBITDA margin														40.9%				41.9%
		For the Three Months Ended June 30,				Increase			Percentage Increase
		2014		2013					Percentage Increase			For the Nine Months Ended September 30,								Increase				Percentage Increase
													2014				2013			Increase
Revenue		$	10,194	$	8,498	Increase	$	1,696			20.0%			$	30,609			$	25,512			$	5,097	Percentage Increase				20.0%
EBITDA		$	4,091	$	3,563	$	528			14.8%			$	12,442			$	10,519			$	1,923				18.3%
EBITDA margin			40.1%		41.9%									40.6%				41.2%

		For the Six Months Ended June 30,				Increase			Percentage Increase				For the Three Months Ended								Increase				Percentage Increase
		2014		2013					Percentage Increase			September 30, 2014				June 30, 2014					Increase				Percentage Increase

Revenue		$	20,140	$	16,732	Increase	$	3,408			20.4%			$	10,469			$	10,194			$	275				2.7%
EBITDA		$	8,157	$	6,840	$	1,317			19.3%			$	4,285			$	4,091			$	194				4.7%
EBITDA margin			40.5%		40.9%									40.9%				40.1%

		For the Three Months Ended				Increase			Percentage Increase
		June 30, 2014		March 31, 2014

Revenue		$	10,194	$	9,946	Increase	$	248	Percentage Increase					2.5%
EBITDA		$	4,091	$	4,066	$	25			0.6%
EBITDA margin			40.1%		40.9%

Reis Services’s revenue increased by approximately ~~$1,696,000,~~$1,689,000, or ~~20.0%~~19.2%, from the ~~second~~third quarter of 2013 to the ~~second~~third quarter of 2014 and increased approximately ~~$3,408,000,~~$5,097,000, or ~~20.4%~~20.0%, from the ~~six~~nine months ended ~~June~~September 30, 2013 to the 2014 comparable ~~six~~nine month period. The revenue increase over the corresponding prior quarterly period is the 1718^th consecutive quarterly increase in subscription revenue over the prior year’s quarter. In addition, revenue increased by approximately ~~$248,000,~~$275,000, or ~~2.5%~~2.7%, from the ~~first~~second quarter of 2014 to the ~~second~~third quarter of 2014. In general, these revenue increases in 2014 reflect: (1) additional newReis SE business; (2) revenue growth from~~ReisReports~~Mobiuss; and (3) revenue growth from~~Mobiuss~~ReisReports ~~in the 2014 period.~~. The Company’s revenue growth reflects not just a single strong quarter, but also the momentum created by sustained contract growth during 2013 and through the first ~~half~~three quarters of 2014. InThe Company continues to post record bookings performance with respect to both the number and dollar value of contracts. Fiscal 2013, ~~the Company had its best booking year and~~as well as the fourth quarter of 2013, ~~was the best booking quarter in Reis’s history. Both new business and total bookings for the second quarter of 2014 and the~~represented unprecedented contract signings, surpassed again by 2014’s year to date ~~2014 period were at record levels compared~~and third quarter results. The Company was able to ~~those specific periods historically.~~achieve the revenue growth rates reported above while its renewal rates have been modestly trending lower over the past few quarters. The Company’s overall renewal rates were ~~90%~~88% and 91% for the trailing twelve months ended ~~June~~September 30, 2014 and 2013, respectively (for institutional subscribers, the renewal rates were ~~each~~90% and 92% for the trailing twelve months ended ~~June~~September 30, 2014 and ~~2013)~~2013, respectively). ~~Total~~The decline in the renewal rates reflects the Company’s decision to be more aggressive on renewal pricing, particularly in instances where customer usage levels are significantly greater than what was initially estimated as annual usage for that customer. The Company believes that aligning client report consumption with appropriate annual fees, while remaining respectful of subscriber need for Reis SE ~~subscribers increased to 1,024 at June 30, 2014 from 994 at December 31, 2013.~~information, is more important in the long-term, than a modest decline in the current renewal rate. Also, based upon past experience, management believes that many non-renewing customers ultimately renew with Reis as their information and analytic needs may not be fully addressed by competitive offerings.

Reis’s revenue model is based primarily on annual subscriptions that are paid in accordance with contractual billing terms. Reis recognizes revenue from its contracts on a ratable basis; for example, one-twelfth of the value of a one-year contract is recognized monthly. Therefore, increases in the dollar value of new contracts are spread evenly over the life of a contract, thereby moderating an immediate impact on revenue. Historically, the largest percentage of our contracts are executed in the fourth quarter of each ~~year.~~year and 2014 should not be an exception to that trend.

Two additional 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. It does not include future revenue under non-cancellable contracts for which we do not yet have the contractual right to bill; this aggregate number we refer to as Aggregate Revenue Under Contract. Deferred revenue will be recognized as revenue ratably over the remaining life of a contract. The following table reconciles deferred revenue to Aggregate Revenue Under Contract at ~~June~~September 30, 2014 and 2013, respectively. A comparison of these balances at ~~June~~September 30 of each year is more meaningful than a comparison to the December 31, 2013 balances, as a greater percentage of renewals occur in the fourth quarter of each year and would distort the analysis.

   June 30,
                   2014                                     2013
Deferred revenue (GAAP basis)
   $ 17,693,000       $ 16,174,000
Amounts under non-cancellable contracts for which the Company does not yet have the contractual right to bill at the period end (A)
   22,244,000       18,865,000




Aggregate Revenue Under Contract
   $ 39,937,000       $ 35,039,000

~~(A)~~

Amounts are billable subsequent to June 30 of each year and represent (1) non-cancellable contracts for subscribers with multi-year subscriptions where the future years are not yet billable, or (2) subscribers with non-cancellable annual subscriptions with interim billing terms.


	September 30,
	2014		2013

Deferred revenue (GAAP basis)	$	18,188,000	$	15,467,000
Amounts under non-cancellable contracts for which the Company does not yet have the contractual right to bill at the period end (A)		22,519,000		20,134,000

Aggregate Revenue Under Contract	$	40,707,000	$	35,601,000



(A) Amounts are billable subsequent to September 30 of each year and represent (1) non-cancellable contracts for subscribers with multi-year subscriptions where the future years are not yet billable, or (2) subscribers with non-cancellable annual subscriptions with interim billing terms.

Included in Aggregate Revenue Under Contract at ~~June~~September 30, 2014 was approximately ~~$26,278,000~~$27,318,000 related to amounts under contract for the forward twelve month period through ~~June~~September 30, 2015. The remainder reflects amounts under contract beyond ~~June~~September 30, 2015. The forward twelve month Aggregate Revenue Under Contract amount is ~~68.9%~~68.6% of revenue on a trailing twelve month basis at ~~June~~September 30, 2014 of ~~$38,129,000.~~approximately $39,818,000. For comparison purposes, at ~~June~~September 30, 2013, the forward twelve month Aggregate Revenue Under Contract of ~~$23,246,000~~$24,096,000 was ~~approximately 70.1%~~70.7% of revenue on a trailing twelve month basis at ~~June~~September 30, 2013.

Both deferred revenue and Aggregate Revenue Under Contract are 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. ~~Coupled with record~~The then-record new business and contract signings in 2013, ~~which~~exceeded by the historic level of new business contracted during the nine months ended September 30, 2014 and the increased number of multi-year contracts signed in 2014, has ~~continued into 2014, the Company continued to sign new multi-year contracts.~~had a significant positive impact on our reported amounts of deferred revenue and Aggregate Revenue Under Contract at September 30, 2014.

Reis Services EBITDA for the three months ended ~~June~~September 30, 2014 was ~~$4,091,000,~~$4,285,000, an increase of ~~$528,000,~~$606,000, or ~~14.8%~~16.5%, over the ~~second~~third quarter 2013 amount. The EBITDA increase over the corresponding prior quarterly period is the 16^th consecutive quarterly increase in EBITDA over the prior year’s quarter. For the ~~six~~nine months ended ~~June~~September 30, 2014, Reis Services EBITDA was ~~$8,157,000,~~$12,442,000, an increase of ~~$1,317,000,~~$1,923,000, or ~~19.3%~~18.3%, over the comparable 2013 ~~six~~nine month period. On a consecutive quarter basis, Reis Services EBITDA increased ~~$25,000,~~$194,000, or ~~0.6%~~4.7%, from the ~~first~~second quarter of 2014 to the ~~second~~third quarter of 2014. These increases were primarily derived from the increases in revenue, as described above. Operating expenses also continued to grow, ~~but at a slower pace than revenue growth,~~ the net effect of which resulted in the Reis Services EBITDA margins of ~~40.1%~~40.9% and ~~40.5%~~40.6% for the three and ~~six~~nine months ended ~~June~~September 30, 2014, respectively as compared to ~~the~~ 41.9% and ~~40.9% reported amounts~~41.2% in the 2013 comparable periods. The reduction in the margins was the result of increased personnel related costs and our investment in maintaining our databases and new marketing initiatives.

Investment in our business remains a priority. This includes the development of new products and functionality, ~~the expansion of our~~introducing new, or expanding existing databases, ~~and our willingness to add~~adding resources to ~~profitably~~ grow ~~both~~ our customer base and ~~revenue base.~~generate more revenue. Accordingly, we continue to hire in many departments, including in sales (both new business and account management) as well as in operations, including our data collection departments. With a growing head count, the Company leased additional space in the third quarter of 2013. The impact of this additional expense began in the fourth quarter of 2013. Separately, as Reis’s business continues to grow, we are devoting additional resources to expand our sales pipeline through marketing efforts and sales force expansion. Collectively, the effects of increased personnel costs and our investment and marketing initiatives have resulted in margin reductions to the ~~40.1% and 40.5%~~ levels for the three and ~~six~~nine months ended ~~June~~September 30, 2014, ~~respectively.~~reported above. The expectation for ~~additional~~ spending in the remainder of 2014 and into 2015 may result in margins for future quarters being at or below the ~~40.1%~~40.9% Reis Services EBITDA margin we reported for the ~~second~~third quarter of 2014.

Reconciliations of Income from Continuing Operations to EBITDA and Adjusted EBITDA (Segment and Consolidated)

We define EBITDA as earnings (defined as 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 isolating non-cash charges, such as depreciation and amortization expenses, as well as other non-operating items, such as interest income, interest expense and income taxes and, in the case of Adjusted EBITDA, isolates non-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 business 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 business. 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. ~~In addition, 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.~~ 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 June 30, 2014	By Segment
	Reis Services		Other (A)		Consolidated
Reconciliation of Income from Continuing Operations to EBITDA and Adjusted EBITDA for the Three Months Ended September 30, 2014							By Segment
							Reis Services		Other (A)		Consolidated

Income from continuing operations					$	915					$	1,130
Income tax expense						726						743

Income (loss) before income taxes and discontinued operations	$	2,764	$	(1,123)		1,641	$	2,924	$	(1,051)		1,873
Add back:
Depreciation and amortization expense		1,305		3		1,308		1,339		2		1,341
Interest expense, net		22		—		22		22		—		22

EBITDA		4,091		(1,120)		2,971		4,285		(1,049)		3,236
Add back:
Stock based compensation expense, net		—		435		435		—		437		437

Adjusted EBITDA	$	4,091	$	(685)	$	3,406	$	4,285	$	(612)	$	3,673

Adjusted EBITDA margin – Reis Services and consolidated (B)		40.1%				33.4%		40.9%				35.1%


Reconciliation of Income from Continuing Operations to EBITDA and Adjusted EBITDA for the Three Months Ended September 30, 2013							By Segment
							Reis Services		Other (A)		Consolidated

Income from continuing operations											$	705
Income tax expense												469

Income (loss) before income taxes and discontinued operations							$	2,381	$	(1,207)		1,174
Add back:
Depreciation and amortization expense								1,273		2		1,275
Interest expense, net								25		—		25

EBITDA								3,679		(1,205)		2,474
Add back:
Stock based compensation expense, net								—		329		329

Adjusted EBITDA							$	3,679	$	(876)	$	2,803

Adjusted EBITDA margin – Reis Services and consolidated (B)								41.9%				31.9%


Reconciliation of Income from Continuing Operations to EBITDA and Adjusted EBITDA for the Nine Months Ended September 30, 2014							By Segment
							Reis Services		Other (A)		Consolidated

Income from continuing operations											$	3,092
Income tax expense												2,074

Income (loss) before income taxes and discontinued operations							$	8,486	$	(3,320)		5,166
Add back:
Depreciation and amortization expense								3,887		7		3,894
Interest expense, net								69		—		69

EBITDA								12,442		(3,313)		9,129
Add back:
Stock based compensation expense, net								—		1,307		1,307

Adjusted EBITDA							$	12,442	$	(2,006)	$	10,436

Adjusted EBITDA margin – Reis Services and consolidated (B)								40.6%				34.1%

See footnotes on next page.

Reconciliation of Income from Continuing Operations to EBITDA and
Adjusted EBITDA for the Three Months Ended June 30, 2013
   By Segment
     Reis Services            Other (A)            Consolidated
Income from continuing operations
         $ 522
Income tax expense
         347


Income (loss) before income taxes and discontinued operations
   $ 2,251            $ (1,382)         869
Add back:

Depreciation and amortization expense
   1,286            3          1,289
Interest expense, net
   26            —          26






EBITDA
   3,563            (1,379)         2,184
Add back:

Stock based compensation expense, net
   —            652          652






Adjusted EBITDA
   $ 3,563            $ (727)         $ 2,836






Adjusted EBITDA margin – Reis Services and consolidated (B)
   41.9%            33.4%

Reconciliation of Income from Continuing Operations to EBITDA and
Adjusted EBITDA for the Six Months Ended June 30, 2014
   By Segment
     Reis Services            Other (A)            Consolidated
Income from continuing operations
         $ 1,962
Income tax expense
         1,331


Income (loss) before income taxes and discontinued operations
   $ 5,562            $ (2,269)         3,293
Add back:

Depreciation and amortization expense
   2,548            5         2,553
Interest expense, net
   47            —          47






EBITDA
   8,157            (2,264)         5,893
Add back:

Stock based compensation expense, net
   —            870          870






Adjusted EBITDA
   $ 8,157            $ (1,394)   ��    $ 6,763






Adjusted EBITDA margin – Reis Services and consolidated (B)
   40.5%            33.6%

~~See footnotes on next page.~~

(amounts in thousands)
Reconciliation of Income from Continuing Operations to EBITDA and
Adjusted EBITDA for the Six Months Ended June 30, 2013


By Segment

     Reis Services            Other (A)            Consolidated
Income from continuing operations
         $ 924
Income tax expense
         612


Income (loss) before income taxes and discontinued operations
   $ 4,291            $ (2,755)         1,536
Add back:

Depreciation and amortization expense
   2,497            5          2,502
Interest expense, net
   52            —          52






EBITDA
   6,840            (2,750)         4,090
Add back:

Stock based compensation expense, net
   —            1,233          1,233






Adjusted EBITDA
   $ 6,840            $ (1,517)         $ 5,323






Adjusted EBITDA margin – Reis Services and consolidated (B)
   40.9%            31.8%

Reconciliation of Income from Continuing Operations to EBITDA and
Adjusted EBITDA for the Three Months Ended March 31, 2014
   By Segment
     Reis Services            Other (A)            Consolidated
Income from continuing operations
         $ 1,047
Income tax expense
         605


Income (loss) before income taxes and discontinued operations
   $ 2,798            $ (1,146)         1,652
Add back:

Depreciation and amortization expense
   1,243            2          1,245
Interest expense, net
   25            —          25






EBITDA
   4,066            (1,144)         2,922
Add back:

Stock based compensation expense, net
   —            435          435






Adjusted EBITDA
   $ 4,066            $ (709)         $ 3,357






Adjusted EBITDA margin – Reis Services and consolidated (B)
   40.9%            33.8%


(amounts in thousands)
Reconciliation of Income from Continuing Operations to EBITDA and Adjusted EBITDA for the Nine Months Ended September 30, 2013	By Segment
	Reis Services		Other (A)		Consolidated

Income from continuing operations					$	1,629
Income tax expense						1,081

Income (loss) before income taxes and discontinued operations	$	6,672	$	(3,962)		2,710
Add back:
Depreciation and amortization expense		3,770		7		3,777
Interest expense, net		77		—		77

EBITDA		10,519		(3,955)		6,564
Add back:
Stock based compensation expense, net		—		1,562		1,562

Adjusted EBITDA	$	10,519	$	(2,393)	$	8,126

Adjusted EBITDA margin – Reis Services and consolidated (B)		41.2%				31.9%


Reconciliation of Income from Continuing Operations to EBITDA and Adjusted EBITDA for the Three Months Ended June 30, 2014	By Segment
	Reis Services		Other (A)		Consolidated

Income from continuing operations					$	915
Income tax expense						726

Income (loss) before income taxes and discontinued operations	$	2,764	$	(1,123)		1,641
Add back:
Depreciation and amortization expense		1,305		3		1,308
Interest expense, net		22		—		22

EBITDA		4,091		(1,120)		2,971
Add back:
Stock based compensation expense, net		—		435		435

Adjusted EBITDA	$	4,091	$	(685)	$	3,406

Adjusted EBITDA margin – Reis Services and consolidated (B)		40.1%				33.4%

~~(A)~~
(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 (Residential Development Activities) are excluded from these reconciliations for all periods presented.

(B)

Reflects an Adjusted EBITDA margin on the Reis Services segment and on a consolidated basis, both of which exclude the impact of discontinued operations.

Results of Operations

Comparison of the Results of Operations for the Three Months Ended ~~June~~September 30, 2014 and 2013

Subscription revenues and related cost of sales were approximately ~~$10,194,000~~$10,469,000 and ~~$1,974,000,~~$2,073,000, respectively, for the three months ended ~~June~~September 30, 2014, which resulted in a gross profit for the Reis Services segment of approximately ~~$8,220,000.~~$8,396,000. Amortization expense included in cost of sales (for the database intangible asset) was approximately ~~$439,000~~$458,000 during this period. Subscription revenues and related cost of sales were approximately ~~$8,498,000~~$8,780,000 and ~~$1,675,000,~~$1,755,000, respectively, for the three months ended ~~June~~September 30, 2013, ~~which resulted~~resulting in a gross profit for the Reis Services segment of approximately ~~$6,823,000.~~$7,025,000. Amortization expense included in cost of sales (for the database intangible asset) was approximately ~~$383,000~~$395,000 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 ~~$299,000~~$318,000 resulted from greater employment related costs, specifically from hiring during 2013 and 2014, coupled with compensation increases and higher benefit costs than in the 2013 period of ~~$243,000~~$255,000 and a ~~$56,000~~$63,000 increase in amortization expense for database costs as a result of the addition of a new property type in 2014 (seniors housing).

Sales and marketing expenses were approximately ~~$2,541,000~~$2,573,000 and ~~$2,032,000~~$2,097,000 for the three months ended ~~June~~September 30, 2014 and 2013, 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 ~~$241,000~~$240,000 and ~~$244,000~~$243,000 during the three months ended ~~June~~September 30, 2014 and 2013, respectively. The increase in sales and marketing expenses between the two periods of approximately ~~$509,000~~$476,000 resulted from greater employment related costs from hiring during 2013 and 2014 and increased commissions expense, coupled with compensation increases and higher benefit costs than in the 2013 period.

Product development expenses were approximately ~~$814,000~~$946,000 and ~~$791,000~~$836,000 for the three months ended ~~June~~September 30, 2014 and 2013, respectively, and solely represented costs of the Reis Services segment. Amortization expense included in product development expenses (for the web site intangible asset) was approximately ~~$453,000~~$476,000 and ~~$505,000~~$480,000 during the three months ended ~~June~~September 30, 2014 and 2013, respectively. Product development costs increased ~~$23,000,~~$110,000, primarily due to increased employment related costs from hiring during 2013, coupled with compensation increases and higher benefit costs than in the 2013 period of ~~$75,000,~~$114,000, offset by a net ~~$52,000~~$4,000 decrease in amortization expense for web site costs due to the completion of amortization in the first half of 2013 related to significant prior year product releases (including the 2010 introduction ofReisReports and monthly publication of data).

General and administrative expenses of approximately ~~$3,202,000~~$2,982,000 for the three months ended ~~June~~September 30, 2014 included current period expenses of approximately ~~$2,592,000,~~$2,377,000, depreciation and amortization expense of approximately ~~$175,000~~$168,000 for lease value and furniture, fixtures and equipment, and approximately ~~$435,000~~$437,000 of net non-cash compensation expense. The net non-cash compensation expense was comprised of equity awards for employees and directors of approximately ~~$408,000,~~$415,000, and by an approximate ~~$27,000~~$22,000 increase in the liability for option cancellations due to an increase in the market price of the Company’s common stock from ~~$18.05 per share at March 31, 2014 to~~ $21.08 per share at June 30, 2014 to $23.59 per share at September 30, 2014. General and administrative expenses of approximately ~~$3,105,000~~$2,893,000 for the three months ended ~~June~~September 30, 2013 include current period expenses of approximately ~~$2,296,000,~~$2,407,000, depreciation and amortization expense of approximately $157,000 for lease value and furniture, fixtures and equipment, and approximately ~~$652,000~~$329,000 of net non-cash compensation expense. The net non-cash compensation expense is comprised of compensation expense resulting from equity awards for employees and directors of approximately ~~$547,000 and~~$412,000, offset by an approximate ~~$105,000 increase~~$83,000 decrease in the liability for option cancellations due to ~~an increase~~a decrease in the market price of the Company’s common stock from ~~$15.54 per share at March 31, 2013 to~~ $18.49 per share at June 30, 2013 to $16.15 per share at September 30, 2013. Excluding the non-cash expenses, the ~~increase~~net decrease in general and administrative expenses of ~~$296,000~~$30,000 is primarily a result of a reduction in public company segment related professional fees from 2013 to 2014, offset by increased employment related costs from hiring during 2013, coupled with compensation increases and higher benefit costs than in the 2013 period and other personnel related ~~costs.~~costs (including additional rent expense).

Interest expense of $28,000 during the three months ended ~~June~~September 30, 2014 and 2013 was comprised of unused facility fees and deferred financing cost amortization on the Company’s revolving credit facility, which we refer to as the Revolver. There was no outstanding balance on the Revolver during the three months ended ~~June~~September 30, 2014 or 2013.

The aggregate income tax expense applicable to continuing operations was ~~$726,000~~$743,000 during the three months ended ~~June~~September 30, 2014, which reflected current alternative minimum tax of ~~$27,000,~~$41,000, current state and local tax expense of ~~$43,000,~~$110,000, deferred Federal tax expense of ~~$538,000~~$585,000 and deferred state and local tax expense of ~~$118,000.~~$7,000. The aggregate income tax expense applicable to continuing operations was ~~$347,000~~$469,000 during the three months ended ~~June~~September 30, 2013, which reflected deferred Federal tax expense of ~~$288,000 and~~$384,000, deferred state and local tax expense of ~~$59,000.~~$79,000, and Federal AMT of $6,000.

The loss from discontinued operations was ~~$93,000~~$50,000 for the three months ended ~~June~~September 30, 2014 and primarily reflected legal and professional fees of ~~$191,000~~$94,000 in connection with our recovery efforts (related to the 2012 Gold Peak settlement of $17,000,000), offset by ~~$16,000~~$10,000 of recoveries during the period and an income tax benefit of ~~$82,000.~~$34,000. The loss from discontinued operations was ~~$38,000~~$56,000 for the three months ended ~~June~~September 30, 2013 and primarily reflected legal and professional fees of ~~$142,000~~$92,000 in connection with our recovery efforts related to the Gold Peak settlement, offset by ~~$80,000 of recoveries during the period and~~ an income tax benefit of ~~$24,000.~~$36,000.

Comparison of the Results of Operations for the ~~Six~~Nine Months Ended ~~June~~September 30, 2014 and 2013

Subscription revenues and related cost of sales were approximately ~~$20,140,000~~$30,609,000 and ~~$3,890,000,~~$5,963,000, respectively, for the ~~six~~nine months ended ~~June~~September 30, 2014, which resulted in a gross profit for the Reis Services segment of approximately ~~$16,250,000.~~$24,646,000. Amortization expense included in cost of sales (for the database intangible asset) was approximately ~~$852,000~~$1,310,000 during this period. Subscription revenues and related cost of sales were approximately ~~$16,732,000~~$25,512,000 and ~~$3,356,000,~~$5,111,000, respectively, for the ~~six~~nine months ended ~~June~~September 30, 2013, ~~which resulted~~resulting in a gross profit for the Reis Services segment of approximately ~~$13,376,000.~~$20,401,000. Amortization expense included in cost of sales was approximately ~~$749,000~~$1,144,000 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 ~~$534,000~~$852,000 resulted from greater employment related costs, specifically from hiring during 2013 and 2014, coupled with compensation increases and higher benefit costs than in the 2013 period of ~~$431,000~~$686,000 and a ~~$103,000~~$166,000 increase in amortization expense for database costs as a result of the addition of a new property type in 2014 (seniors housing).

Sales and marketing expenses were approximately ~~$5,093,000~~$7,666,000 and ~~$4,001,000~~$6,098,000 for the ~~six~~nine months ended ~~June~~September 30, 2014 and 2013, 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 ~~$482,000~~$722,000 and ~~$488,000~~$731,000 during the ~~six~~nine months ended ~~June~~September 30, 2014 and 2013, respectively. The increase in sales and marketing expenses between the two periods of approximately ~~$1,092,000~~$1,568,000 resulted from greater employment related costs from hiring during 2013 and 2014 and increased commissions expense, coupled with compensation increases and higher benefit costs than in the 2013 period.

Product development expenses were approximately ~~$1,577,000~~$2,523,000 and ~~$1,513,000~~$2,349,000 for the ~~six~~nine months ended ~~June~~September 30, 2014 and 2013, respectively, and solely represented costs of the Reis Services segment. Amortization expense included in product development expenses (for the web site intangible asset) was approximately ~~$876,000~~$1,352,000 and ~~$954,000~~$1,434,000 during the ~~six~~nine months ended ~~June~~September 30, 2014 and 2013, respectively. Product development costs increased ~~$64,000,~~$174,000, primarily due to increased employment related costs from hiring during 2013, coupled with compensation increases and higher benefit costs than in the 2013 period of ~~$142,000,~~$256,000, offset by a net ~~$78,000~~$82,000 decrease in amortization expense for web site costs due to the completion of amortization in the first half of 2013 related to significant prior year product releases (including the 2010 introduction of ReisReports and monthly publication of data).

General and administrative expenses of approximately ~~$6,240,000~~$9,222,000 for the ~~six~~nine months ended ~~June~~September 30, 2014 included current period expenses of approximately ~~$5,028,000,~~$7,405,000, depreciation and amortization expense of approximately ~~$342,000~~$510,000 for lease value and furniture, fixtures and equipment, and approximately ~~$870,000~~$1,307,000 of net non-cash compensation expense. The net non-cash compensation expense was comprised of equity awards for employees and directors of approximately ~~$856,000,~~$1,271,000, and by an approximate ~~$14,000~~$36,000 increase in the liability for option cancellations due to an increase in the market price of the Company’s common stock from $19.23 per share at December 31, 2013 to ~~$21.08~~$23.59 per share at ~~June~~September 30, 2014. General and administrative expenses of approximately ~~$6,274,000~~$9,167,000 for the ~~six~~nine months ended ~~June~~September 30, 2013 include current period expenses of approximately ~~$4,730,000,~~$7,137,000, depreciation and amortization expense of approximately ~~$311,000~~$468,000 for lease value and furniture, fixtures and equipment, and approximately ~~$1,233,000~~$1,562,000 of net non-cash compensation expense. The net non-cash compensation expense is comprised of compensation expense resulting from equity awards for employees and directors of approximately ~~$1,039,000~~$1,451,000 and by an approximate ~~$194,000~~$111,000 increase in the liability for option cancellations due to an increase in the market price of the Company’s common stock from $13.03 per share at December 31, 2012 to ~~$18.49~~$16.15 per share at ~~June~~September 30, 2013. Excluding the non-cash expenses, the net increase in general and administrative expenses of ~~$298,000~~$268,000 is primarily a result of increased employment related costs from hiring during 2013, coupled with compensation increases and higher benefit costs than in the 2013 period and other personnel related ~~costs.~~costs (including additional rent expense), partially offset by a reduction in public company segment related professional fees from 2013 to 2014.

Interest expense of ~~$56,000~~$84,000 during the ~~six~~nine months ended ~~June~~September 30, 2014 and 2013 was comprised of unused facility fees and deferred financing cost amortization on the Revolver. There was no outstanding balance on the Revolver during the ~~six~~nine months ended ~~June~~September 30, 2014 or 2013.

The aggregate income tax expense applicable to continuing operations was ~~$1,331,000~~$2,074,000 during the ~~six~~nine months ended ~~June~~September 30, 2014, which reflected current alternative minimum tax of ~~$27,000,~~$68,000, current state and local tax expense of ~~$75,000,~~$185,000, deferred Federal ~~tax~~

tax expense of ~~$1,107,000~~$1,692,000 and deferred state and local tax expense of ~~$122,000.~~$129,000. The aggregate income tax expense applicable to continuing operations was ~~$612,000~~$1,081,000 during the ~~six~~nine months ended ~~June~~September 30, 2013, which reflected deferred Federal tax expense of ~~$508,000~~$892,000 and deferred state and local tax expense of ~~$104,000.~~$183,000.

The loss from discontinued operations was ~~$471,000~~$521,000 for the ~~six~~nine months ended ~~June~~September 30, 2014 and primarily reflected legal and professional fees of ~~$804,000~~$898,000 in connection with our recovery efforts (related to the 2012 Gold Peak settlement of $17,000,000), offset by ~~$16,000~~$26,000 of recoveries during the period and an income tax benefit of ~~$317,000.~~$351,000. The loss from discontinued operations was ~~$190,000~~$246,000 for the ~~six~~nine months ended ~~June~~September 30, 2013 and primarily reflected legal and professional fees of ~~$393,000~~$485,000 in connection with our recovery efforts related to the Gold Peak settlement, offset by $80,000 of recoveries during the period and an income tax benefit of ~~$123,000.~~$159,000.

Income Taxes

During March 2014, New York State enacted a law to reduce corporate tax rates, effective in future years. As a consequence, the Company evaluated all elements affecting the balance of its net deferred tax assets, including the availability of New York State and New York City net operating loss carryforwards and this change in the law in New York State. The impact of this evaluation resulted in a net increase in the deferred tax asset of $29,000 during 2014.

The Company has aggregate Federal, state and local NOL carryforwards aggregating approximately ~~$65,955,000~~$65,984,000 at December 31, 2013. These NOLs include NOLs generated subsequent to the Merger, losses from the Reis Services business prior to the Merger, losses obtained from the Company’s 1998 merger with Value Property Trust (“VLP”) and the Company’s operating losses prior to the Merger. Approximately ~~$25,107,000~~$25,136,000 of these Federal NOLs are subject to an annual limitation, whereas the remaining balance of approximately $40,848,000 is not subject to such a limitation. There is an annual limitation on the use of NOLs after an ownership change, pursuant to Section 382 of the Internal Revenue Code. As a result of the Merger, the Company experienced such an ownership change which resulted in a new annual limitation of $2,779,000. However, because of the accumulation of annual limitations, it is expected that the use of NOLs will not be limited by expiration. The New York State law discussed above limits the amount of existing NOLs which could be used each year in that state; however, all such losses are expected to be utilized in the future.

Liquidity and Capital Resources

The core Reis Services business has traditionally generated significant cash annually; we expect it to continue to do so. Our consolidated cash and cash equivalents balance aggregated approximately ~~$16,403,000~~$16,398,000 at ~~June~~September 30, 2014, an increase of ~~$5,843,000~~$5,838,000 over the December 31, 2013 balance of approximately $10,560,000. The cash balance at September 30, 2014 was consistent with the June 30, 2014 balance of $16,403,000. The Company was able to maintain this level of cash at the end of the third quarter while meeting all of its operational costs and obligations in addition to paying an aggregate dividend of $1,233,000 in September 2014.

Our cash balance decreased significantly during the year ended December 31, 2012 from the $17,000,000 settlement of the Gold Peak litigation and the repayment of approximately $5,691,000 of outstanding debt. Cash generation of the Reis Services business in 2013 and the first ~~six~~nine months of 2014 has been solely responsible for the replenishment of our cash balance. In addition to the cash generation of the Reis Services business, in October 2012, the Company obtained the three year $10,000,000 Revolver to provide working capital flexibility; no borrowings have been made on the Revolver since it was obtained. Separately, the Company is seeking recovery under all available insurance policies, and is pursuing appropriate additional actions against other potentially responsible parties related to Gold Peak. To date, these efforts have resulted in the recovery of approximately ~~$809,000~~$819,000 of cash by ~~June~~

September 30, 2014, including approximately ~~$16,000~~$10,000 and $26,000 recovered during the three and ~~six~~nine months ended ~~June~~September 30, 2014. There can be no assurance that the Company will recover any additional amounts in the short or long-term from these efforts.

At ~~June~~September 30, 2014, the Company’s short-term liquidity requirements include: current operating and capitalizable costs, including accounts payable and other accrued expenses; near-term product development and enhancement of the web site and databases; operating leases; growth in operating expenses from a further increase in the number of Reis employees and additional resources being devoted to our sales and marketing efforts; insurance deductibles and legal costs related to discontinued operations; other costs, including public company expenses not included in the Reis Services segment; the resolution of open tax years with state and local tax authorities; the potential settlement of certain outstanding stock options in cash (the liability for which was approximately ~~$151,000~~$173,000 at ~~June~~September 30, 2014, based upon the closing stock price of the Company at ~~June~~September 30, 2014, of ~~$21.08~~$23.59 per share); and the use of cash for the payment of quarterly dividends. The Company expects to meet these short-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. There could be additional cash inflows from insurance recoveries, or from other potentially responsible parties, related to the Gold Peak litigation; however, there can be no assurance that the Company will recover any additional amounts in the short or long-term. The Company has NOLs that it expects to be able to use over many years against future Federal, state and local taxable income, if any. Tax payments related to 2014 are expected to be for state and local taxes on income and Federal AMT, but not for Federal income taxes.

The Company’s long-term liquidity requirements, beyond 2014, may include: future operating and capitalizable costs, including accounts payable and other accrued expenses; long-term product development and enhancements of the web sites and databases; operating leases and other capital expenditures; growth in operating expenses from a further increase in the number of Reis employees and additional resources being devoted to our sales and marketing efforts; other costs, including public company expenses not included in the Reis Services segment; the resolution of open tax years with state and local tax authorities; the possible 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; and the use of cash for the payment of quarterly dividends. The Company expects to meet these 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.~~Revolver or a replacement facility. The Company may consider, based on market conditions and business needs, refinancing or otherwise amending ~~our~~or replacing the Revolver, though there can be no assurance we will do so, or be able to do so on terms acceptable to us. There could be additional cash inflows from insurance recoveries, or from other potentially responsible parties, both related to the Gold Peak litigation; however, there can be no assurance that the Company will recover any additional amounts in the short or long-term. The Company has NOLs that it expects to be able to use beyond the next few years against future Federal, state and local taxable income, if any. Tax payments related to 2014 and possibly 2015 are expected to be for state and local taxes on income and Federal AMT, but not for Federal income taxes. Subsequent to 2015, tax payments are expected to be for alternative state and local taxes and Federal AMT, but not for Federal, state or local taxes on income. In 2015 and thereafter, as a result of the new tax law enacted in New York State in March 2014, the use of certain NOLs for New York State purposes will be subject to an annual limitation and therefore, any taxes in excess of the limitation will need to be paid in those periods.

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 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 2014 or thereafter. 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 ~~or approximately $1,229,000 in the aggregate,~~ to common stockholders of record at the close of business on June 11, 2014. In the third quarter of 2014, ~~which amounts~~the Company declared and paid a quarterly cash dividend of $0.11 per common share to common stockholders of record at the close of business on September 10, 2014. Aggregate dividends paid during the three and nine months ended September 30, 2014 were ~~paid on June 18, 2014.~~$1,233,000 and $2,462,000, respectively. Although the Company anticipates paying a quarterly dividend hereafter, future dividends are subject to approval by the Board.

Changes in Cash Flows

Cash flows for the ~~six~~nine months ended ~~June~~September 30, 2014 and 2013 are summarized as follows:


	For the Six Months Ended June 30,				For the Nine Months Ended September 30,
	2014		2013		2014		2013

Net cash provided by operating activities	$	9,442,494	$	6,587,928	$	11,299,346	$	9,991,489

Cash (used in) investing activities		(2,238,302)		(2,339,780)		(3,202,712)		(3,429,529)

Cash (used in) financing activities		(1,360,837)		(1,109,475)		(2,258,925)		(1,280,376)

Net increase in cash and cash equivalents	$	5,843,355	$	3,138,673	$	5,837,709	$	5,281,584

Net cash provided by operating activities increased ~~$2,854,000~~$1,308,000 from ~~$6,588,000~~$9,991,000 provided in the 2013 period to ~~$9,442,000~~$11,299,000 provided in the 2014 period. This increase was the result of increased operating cash flow of ~~$3,158,000~~$1,260,000 from the Reis Services segment ~~from $8,918,000 provided in the 2013 period to $12,076,000 provided in the 2014 period~~ due to growth in revenue and EBITDA and the timing of accounts receivable collections.

Cash used in investing activities decreased ~~$102,000~~$228,000 from ~~$2,340,000~~$3,430,000 used in the 2013 period to ~~$2,238,000~~$3,202,000 used in the 2014 period. This change resulted from a ~~$20,000~~$128,000 decrease in furniture, fixtures and equipment purchases as the 2013 period included spending in connection with ~~the new~~additional office ~~lease~~space leased in 2013, coupled with ~~an $82,000~~a $100,000 decrease of cash used in the 2014 period as compared to the 2013 period for web site and database development costs for continuing product development and enhancement initiatives. The expectation for 2014 is that cash used for web site and database development will exceed 2013 amounts.

Cash used in financing activities was ~~$1,361,000~~$2,259,000 and ~~$1,109,000~~$1,280,000 in the 2014 and 2013 periods, respectively. In the 2014 period, this amount includes ~~$1,229,000~~$2,462,000 for dividends declared and paid in the second ~~quarter~~and third quarters of 2014 and $132,000 for option ~~cancellations.~~cancellations, offset by proceeds received from employees for option exercises in the third quarter of 2014 aggregating $335,000. In the 2013 period, cash used in financing activities was solely for restricted stock unit settlements.

Cautionary Statement Regarding Forward-Looking Statements

This quarterly report on Form 10-Q 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, 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, income (loss) from continuing or discontinued operations, cash flows, valuation of assets and liabilities and other business metrics of the Company and its businesses, including EBITDA, Adjusted EBITDA and Aggregate Revenue Under Contract; 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 our 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;

the results of pending, threatening or future litigation; and

the risk factors listed under “Item 1A. Risk Factors” in our annual report on Form 10-K for the year ended December 31, 2013, which was filed with the Securities and Exchange Commission on March 6, 2014.

You are cautioned not to place undue reliance on any forward-looking statements, which speak only as of the date of this quarterly report on Form 10-Q. 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 quarterly report on Form 10-Q or to reflect the occurrence of unanticipated events.

Item 3. 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 ~~June~~September 30, 2014 and December 31, 2013, 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. During the three and ~~six~~nine months ended ~~June~~September 30, 2014 and throughout 2013, the Company did not have any interest rate caps. No debt was outstanding at ~~June~~September 30, 2014 and December 31, 2013. For more information about the Company’s debt, see Note 6 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. 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 4. Controls and Procedures.

As of ~~June~~September 30, 2014, 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. Based on this evaluation, our Chief Executive Officer and Chief Financial Officer have concluded that our disclosure controls and procedures as of ~~June~~September 30, 2014 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 Securities Exchange Act of 1934, as amended, 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.

There has been no change in the Company’s internal control over financial reporting during the quarter covered by this report that has materially affected, or is reasonably likely to materially affect, the Company’s internal control over financial reporting.

Part II. Other Information

Item 1. Legal Proceedings.

As disclosed in Note 11 to the Company’s consolidated financial statements contained elsewhere in this Form 10-Q, the Company is engaged in certain legal matters, and the disclosure set forth in such Note 11 is incorporated herein by reference.

Item 1A. Risk Factors.

A wide range of risks may affect our business and financial results, now and in the future; however, we consider the risks described under “Item 1A. Risk Factors” in our annual report on Form 10-K for the year ended December 31, 2013, which was filed with the SEC on March 6, 2014, to be the most significant. There may be other currently unknown or unpredictable economic, business, competitive, governmental or other factors that could have material adverse effects on our business or future results. See “Part I. Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations – Cautionary Statement Regarding Forward-Looking Statements” for additional information.

Item 2. Unregistered Sales of Equity Securities and Use of Proceeds.

Issuer Purchases of Equity Securities

During the three or ~~six~~nine months ended ~~June~~September 30, 2014, the Company did not repurchase any shares of common stock.

Item 3. Defaults Upon Senior Securities.

None.

Item 4. Mine Safety Disclosures.

None.

Item 5. Other Information.

None.

Item 6. Exhibits.

Exhibits filed with this Form 10-Q:


Exhibit No.		Description
31.1		Chief Executive Officer Certification pursuant to Section 302 of the Sarbanes-Oxley Act of 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).

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.

Dated: ~~July 31,~~October 29, 2014


	Common Shares				Paid in		Retained Earnings		Total 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		2,893		(2,893)		—		—
Shares issued for settlement of vested director restricted stock units		40,564		811		(811)		—		—
Stock based compensation		—		—		856,419		—		856,419
Dividends		—		—		—		(1,229,059)		(1,229,059)
Net income		—		—		—		1,490,901		1,490,901

Balance, June 30, 2014		11,101,665	$	222,032	$	103,570,408	$	(9,803,220)	$	93,989,220


(amounts in thousands)

Condensed Balance Sheet Data June 30, 2014	Reis Services		Discontinued Operations (A)		Other (B)		Consolidated

Assets
Current assets:
Cash and cash equivalents	$	16,241	$	—	$	162	$	16,403
Restricted cash and investments		212		—		—		212
Accounts receivable, net		4,469		—		—		4,469
Prepaid and other assets		225		—		2,237		2,462
Assets attributable to discontinued operations		—		—		5		5

Total current assets		21,147		—		2,404		23,551
Furniture, fixtures and equipment, net		831		—		20		851
Intangible assets, net		15,375		—		—		15,375
Deferred tax asset, net		285		—		20,545		20,830
Goodwill		57,203		—		(2,378)		54,825
Other assets		183		—		—		183

Total assets	$	95,024	$	—	$	20,591	$	115,615


Liabilities and stockholders’ equity
Current liabilities:
Current portion of debt	$	—	$	—	$	—	$	—
Accrued expenses and other liabilities		2,278		—		692		2,970
Liability for option cancellations		—		—		151		151
Deferred revenue		17,693		—		—		17,693
Liabilities attributable to discontinued operations		—		271		40		311

Total current liabilities		19,971		271		883		21,125
Other long-term liabilities		500		—		—		500
Deferred tax liability, net		21,098		—		(21,098)		—

Total liabilities		41,569		271		(20,215)		21,625
Total stockholders’ equity		53,455		(271)		40,806		93,990

Total liabilities and stockholders’ equity	$	95,024	$	—	$	20,591	$	115,615


	June 30,
	2014		2013

Deferred revenue (GAAP basis)	$	17,693,000	$	16,174,000
Amounts under non-cancellable contracts for which the Company does not yet have the contractual right to bill at the period end (A)		22,244,000		18,865,000

Aggregate Revenue Under Contract	$	39,937,000	$	35,039,000

REIS, INC.

/s/ Mark P. Cantaluppi

Mark P. Cantaluppi

Vice President, Chief Financial Officer