UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

_______________

FORM 10-Q

QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d)

OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended September 30, 20162017

Commission File Number 000-25779

THESTREET, INC.

(Exact name of Registrant as specified in its charter)

14 Wall Street

New York, New York 10005

(Address of principal executive offices, including zip code)

(212) 321-5000

(Registrant'sRegistrant’s telephone number, including area code)

Indicate by a check mark whether the Registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the Registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yesx ☒  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 (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant as required to submit and post such files). Yesx ☒  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.

Large accelerated filer¨   ☐    Accelerated filerx   ☐    Non-accelerated filer¨   ☐    Smaller reporting company¨ ☒

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes¨ ☐ Nox ☒

Indicate the number of shares outstanding of each of the issuer’s classes of common stock as of the latest practicable date.

TheStreet, Inc.

Form 10-Q

TheStreet, Inc.

Form 10-Q

As of and for the Three and Nine Months Ended September 30, 20162017

SPECIAL NOTE ON FORWARD-LOOKING STATEMENTS

This Quarterly Report on Form 10-Q contains forward-looking statements within the meaning of Section 27A of the Securities Act of 1933 and Section 21E of the Securities Exchange Act of 1934, which reflect our current views with respect to, among other things, our operations and financial performance. You can identify these forward-looking statements by the use of words such as “outlook,” “believes,” “expects,” “potential,” “continues,” “may,” “will,” “should,” “seeks,” “approximately,” “predicts,” “intends,” “plans,” “estimates,” “anticipates” or the negative version of these words or other comparable words. Such forward-looking statements are subject to various risks and uncertainties. Accordingly, there are or will be important factors that could cause actual outcomes or results to differ materially from those indicated in these statements. We believe these factors include but are not limited to those described under "Risk Factors"“Risk Factors” in Item 1A of our Annual Report on Form 10-K for the year ended December 31, 2015 and as updated in this Quarterly Report.2016. Additional risk factors may be described from time to time in our future filings with the Securities and Exchange Commission. We undertake no obligation to publicly update or review any forward-looking statement, whether as a result of new information, future developments or otherwise, except as required by law.

Unless the context suggests otherwise, indicates,specifically, references in this reportQuarterly Report to the terms “TheStreet,” the “Company,” “we,” “our”“us” and “us”“our” refer to TheStreet, Inc. and its subsidiaries.consolidated subsidiaries.

Part I – FINANCIAL INFORMATION

Item 1.           Interim Condensed Consolidated Financial Statements.

THESTREET, INC.
CONDENSED CONSOLIDATED BALANCE SHEETS

The accompanying Notes to Condensed Consolidated Financial Statements are an integral part of these financial statements

THESTREET, INC.

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS

(unaudited)

The accompanying Notes to Condensed Consolidated Financial Statements are an integral part of these financial statements

THESTREET, INC.

CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE LOSSINCOME (LOSS)

(unaudited)

Notes to Condensed Consolidated Financial Statements

(unaudited)

Business

TheStreet, Inc., together with its wholly owned subsidiaries ("TheStreet", "we", "us" or the "Company"), isa leading financial news and information company providing businessprovider. Our business-to-business (B2B) and financial news, market data, investing ideasbusiness-to-consumer (B2C) content and analysis to personalproducts provide individual and institutional investors, worldwide.advisors and dealmakers with actionable information from the worlds of finance and business.

Our B2B business products have helped diversify our business from primarily serving retail investors to also providing an indispensable source of business intelligence for both high net worth individuals and executives in the top firms in the world. The Company's collection of digital services provides users, subscribers and advertisers with a variety of content and tools through a range of online, social media, tablet and mobile channels. The Company's portfolio of consumer focused brands includes TheStreet, RealMoney and Action Alerts PLUS, providing personal business and financialDeal delivers sophisticated news and information. The Company's portfolio of institutional focused brands includes The Deal, providing intraday coverage of mergers and acquisitions and all otheranalysis on changes in corporate control including mergers and acquisitions, private equity, corporate activism and restructuring. BoardEx providing dealmakers, advisers andis an institutional investors with director and officer profiles and relationship capital management services,database and platform which holds in-depth profiles of over 1 million of the world’s most important business leaders. Our third B2B business product, RateWatch, publishes bank rate market information including competitive deposit, loan and fee rate data. Our B2B business derives revenue primarily utilizedfrom subscription products, events/conferences and information services.

Our B2C business is led by our namesake website, TheStreet.com, and includes free content and houses our premium subscription products, such as RealMoney, RealMoney Pro and Actions Alerts PLUS, that target varying segments of the banking industry providing up-to-date rate information in several key price-setting areas, including deposits, loansretail investing public. Our B2C business primarily generates revenue from subscription products and fees.advertising revenue.

Unaudited Interim Financial Statements

The interim condensed consolidated balance sheet as of September 30, 2016,2017, the condensed consolidated statements of operations and comprehensive income (loss) for the three and nine months ended September 30, 2017 and 2016, and 2015 and the consolidatedcondensed statements of cash flows for the nine months ended September 30, 20162017 and 20152016 are unaudited. The unaudited interim financial statements have been prepared on a basis consistent with the Company’s annual financial statements and, in the opinion of management, reflect all adjustments, which include only normal recurring adjustments necessary to state fairly the Company’s financial position as of September 30, 2016 and2017, its results of consolidated operations and comprehensive income and cash flows(loss) for the three and nine months ended September 30, 2017 and 2016, and 2015.cash flows for the nine months ended September 30, 2017 and 2016. The financial data and the other financial information disclosed in the notes to the financial statements related to these periods are also unaudited. The results of operations for the three and nine months ended September 30, 20162017 are not necessarily indicative of the results to be expected for the fiscal year ending December 31, 20162017 or for any other future annual or interim period.

There have been no material changes in the significant accounting policies from those that were disclosed in the Company’s Annual Report on Form 10-K for the fiscal year ended December 31, 2015filed2016 filed with the SEC on March 9, 2016.20, 2017. These financial statements should also be read in conjunction with the audited consolidated financial statements and notes thereto for the year ended December 31, 2015.2016. Certain information and note disclosures normally included in the financial statements prepared in accordance with accounting principles generally accepted in the United States of America (“GAAP”) have been omitted pursuant to such rules and regulations. The consolidated balance sheet as of December 31, 20152016 included herein was derived from the audited financial statements as of that date, but does not include all disclosures required by GAAP.

The Company has evaluated subsequent events for recognition or disclosure.

Revenue Presentation on Condensed Consolidated Statements of Operations

During the three months ended March 31, 2016, the Company began to report revenue within Business to business and Business to consumer categories rather than Subscription services and Media.Prior period amounts have been reclassified to conform to current period presentation.

Business to business revenue is primarily comprised of subscriptions, licenses and fees for access to the Company’s institutional products, including director and officer profiles, relationship capital management services, and transactional information pertaining to the mergers and acquisitions environment, rate services, events and other miscellaneous revenue.

Business to consumer revenue is primarily comprised of subscriptions, licenses and fees for access to the Company’s personal finance products, including securities investment information and stock market commentary, as well as the fees charged for the purchase and placement of advertising and sponsorships across the Company’s digital network and events along with other miscellaneous revenue.

RecentRecently Issued Accounting Pronouncements

In May 2014, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update (“ASU”) No. 2014-09, “Revenue from Contracts with Customers” (“ASU 2014-09”), which supersedes nearly all existing revenue recognition guidance under GAAP. The core principle of ASU 2014-09 is to recognize revenues when promised goods or services are transferred to customers in an amount that reflects the consideration to which an entity expects to be entitled for those goods or services. ASU 2014-09 defines a five stepfive-step process to achieve this core principle and, in doing so, more judgment and estimates may be required within the revenue recognition process than are required under existing GAAP. In addition, this guidance requires new or expanded disclosures related to the judgments made by companies when following this framework and additional quantitative disclosures regarding contract balances and remaining performance obligations. On July 9, 2015, the FASB voted to defer the effective date by one year to December 15, 2017 for interim and annual reporting periods beginning after that date. Early adoption of ASU 2014-09 is permitted but not before the original effective date (annual periods beginning after December 15, 2016). When effective, ASU 2014-09 prescribes either of the following transition methods: (i) a full retrospective approach reflecting the application of the standard in each prior reporting period with the option to elect certain practical expedients; or (ii) a retrospective approach with the cumulative effect of initially adopting ASU 2014-09 recognized at the date of adoption (which includes additional footnote disclosures). We areThe Company will adopt this guidance on January 1, 2018.

The Company is currently evaluating the overall impact of our pending adoption ofthat ASU 2014-09 will have on ourthe Company’s consolidated financial statements, as well as the expected timing and have not yet determinedmethod of adoption. The Company has established an implementation team, including external advisers, and has commenced the review of the Company’s revenue portfolio and related contracts across its various business units and geographies. Discussions regarding changes to the Company’s current accounting policies and practices remain ongoing and preliminary conclusions are subject to change.

Upon adoption, the Company will recognize revenue from contracts with customers as each performance obligation is satisfied, either at a point in time or over a period of time, based on when control transfers to customers.

The Company plans to adopt the new revenue recognition standard under the modified retrospective transition method by which we will adoptrecognizing the cumulative effect of applying the standard as an adjustment to the Company’s Balance Sheet. Until the Company completes testing of the new revenue recognition standard, the Company does not anticipate being able to provide the impact of the new standard on the Balance Sheets or Statements of Operations however from the initial review and assessment of a sample of contracts with customers the Company does not anticipate the new accounting pronouncement to have a material impact on the Company’s financial statements, except enhanced disclosure regarding revenue recognition, including disclosures of revenue streams, performance obligations, variable consideration and the related judgments and estimates necessary to apply the new standard.

In February 2016, the FASB issued ASU No. 2016-02,Leases(“ASU 2016-02”). ASU 2016-02 establishes a right-of-use (ROU) model that requires a lessee to record a ROU asset and a lease liability on the balance sheet for all leases with terms longer than 12 months. Leases will be classified as either finance or operating, with classification affecting the pattern of expense recognition in the income statement. The new standard is effective for fiscal years beginning after December 15, 2018, including interim periods within those fiscal years. A modified retrospective transition approach is required for lessees for capital and operating leases existing at, or entered into after, the beginning of the earliest comparative period presented in the financial statements, with certain practical expedients available. We are currentlyThe Company is in the process of evaluating the impact ofeffect the standard will have on its financial statements, however the Company does not lease any office equipment and our pending adoption ofoffice space leases are the new standard on our consolidated financial statements.only leases with a term longer than 12 months.

In MarchJune 2016, the FASB issued ASU No. 2016-09,2016-13,Improvements to Employee Share-Based Payment Accounting“Financial Instruments-Credit Losses (Topic 326): Measurement of Credit Losses on Financial Instruments ("” (“ASU No. 2016-09"2016-13”). ASU 2016-09 simplifies various aspects2016-13 requires the measurement and recognition of expected credit losses for financial assets held at amortized cost. ASU 2016-13 is effective for interim and annual reporting periods beginning after December 15, 2019, with early adoption permitted for interim and annual reporting periods beginning after December 15, 2018. ASU 2016-13 is required to be adopted using the modified retrospective basis, with a cumulative-effect adjustment to retained earnings as of the beginning of the first reporting period in which the guidance is effective. Based upon the level and makeup of our financial receivables, past loss activity and current known activity regarding our outstanding receivables, we do not expect that the adoption of this new standard will have a material impact on our consolidated financial statements.

In August 2016, the FASB issued ASU No. 2016-15,Classification of Certain Cash Receipts and Cash Payments(“ASU 2016-15”). ASU 2016-15 is intended to add or clarify guidance on the classification of certain cash receipts and payments in the statement of cash flows and to eliminate the diversity in practice related to such classifications. The guidance in ASU 2016-15 is required for annual reporting periods beginning after December 15, 2017, with early adoption permitted. The pending adoption of this new standard is not expected to have a material impact on our consolidated statement of cash flows.

In November 2016, the FASB issued ASU No. 2016-18,Restricted Cash(ASU 2016-18). ASU 2016-18 addresses the diversity in practice as to how share-based paymentschanges in restricted cash are accounted forpresented and presentedclassified in the consolidated financial statements.statement of cash flows. The amendments include income tax consequences,guidance requires that a statement of cash flows explain the accounting for forfeitures, classificationchange during the period in the total of awardscash, cash equivalents, and amounts generally described as either equityrestricted cash or liabilities,restricted cash equivalents. Therefore, amounts generally described as restricted cash and classificationrestricted cash equivalents should be included with cash and cash equivalents when reconciling the beginning-of-period and end-of-period total amounts shown on the statement of cash flows. The guidance is effective prospectively for fiscal years beginning after December 15, 2017 and interim periods within those fiscal years. The Company currently presents changes in its restricted cash separately on its condensed consolidated statements of cash flows. The pending adoption of this standard is not expected to have a material impact on our consolidated financial statements.

In January 2017, the FASB issued ASU No. 2017-04,Intangibles — Goodwill and Other Simplifying the Test for goodwill Impairment(“ASU 2017-04”). ASU 2017-04 simplifies the subsequent measurement of goodwill by eliminating Step 2 from the goodwill impairment test. In computing the implied fair value of goodwill under step 2, an entity had to perform procedures to determine the fair value at the impairment testing date of its assets and liabilities (including unrecognized assets and liabilities) following the procedure that would be required in determining the fair value of assets acquired and liabilities assumed in a business combination. Instead, under ASU 2017-04, an entity would perform its goodwill impairment test by comparing the fair value of a reporting unit with its carrying amount. An entity would recognize an impairment charge for the amount by which the carrying amount exceeds the reporting unit’s fair value; however, the loss recognized should not exceed the total amount of goodwill allocated to that reporting unit. This guidance is effective for annual or interim goodwill impairment tests in fiscal years beginning after December 31, 2019, with early adoption permitted for interim or annual goodwill impairment tests performed after January 1, 2017. We will adopt ASU 2017-04 upon the preparation of our annual goodwill impairment test in the fourth quarter of 2017. The pending adoption of this standard is not expected to have a material impact on our consolidated financial statements.

In May 2017, the FASB issued ASU No. 2017-09,Compensation – Stock Compensation (“ASU 2017-09”). ASU 2017-09 provides an accounting framework applicable to modifications of share-based payments, and defines a modification as “a change in any of the terms or conditions of a share-based payment award.” The guidance in ASU 2017-09 is required for annual or interim reporting periods beginning after December 15, 2016, and interim periods within those annual periods. We are currently evaluating the impact of our2017, with early adoption permitted. The pending adoption of the newthis standard is not expected to have a material impact on our consolidated financial statements.

The Company’s cash and cash equivalents and restricted cash primarily consist of checking accounts and money market funds and checking accounts.funds. As of September 30, 20162017 and December 31, 2015,2016, marketable securities consist of two municipal auction rate securities (“ARS”) issued by the District of Columbia with a cost basis of approximately $1.9 million and a fair value of approximately $1.5$1.6 million and $1.6 million, respectively. With the exception of the ARS, Company policy limits the maximum maturity for any investment to three years. The ARS mature in the year 2038. The Company accounts for its marketable securities in accordance with the provisions of ASC 320-10. The Company classifies these securities as available for sale and the securities are reported at fair value. Unrealized gains and losses are recorded as a component of accumulated other comprehensive loss and excluded from net lossincome (loss) as they are deemed temporary. Additionally, as of September 30, 20162017 and December 31, 2015,2016, the Company has a total of approximately $500 thousand and $661 thousand, respectively, of cash that serves as collateral for an outstanding lettersletter of credit, and which cash is therefore restricted. The lettersletter of credit serveserves as a security depositsdeposit for the Company’s office space in New York City.

The Company measures the fair value of its financial instruments in accordance with ASC 820-10, which refines the definition of fair value, provides a framework for measuring fair value and expands disclosures about fair value measurements. ASC 820-10 defines fair value as the price that would be received to sell an asset or paid to transfer a liability (an exit price) in an orderly transaction between market participants at the reporting date. The statement establishes consistency and comparability by providing a fair value hierarchy that prioritizes the inputs to valuation techniques into three broad levels, which are described below:

Financial assets and liabilities included in our financial statements and measured at fair value are classified based on the valuation technique level in the table below:

The following tables provide a reconciliation of the beginning and ending balance for the Company’s assets and liabilities measured at fair value using significant unobservable inputs (Level 3):

Stock-based compensation expense recognized in the Company’s consolidated statements of operations for the nine months ended September 30, 2017 and 2016 includes compensation expense for all share-based payment awards based upon the estimated grant date fair value. The Company recognizes compensation expense for share-based payment awards on a straight-line basis over the requisite service period of the award. As stock-based compensation expense is based upon awards ultimately expected to vest, it has been reduced for estimated forfeitures. The Company estimates forfeitures at the time of grant which are revised, if necessary, in subsequent periods if actual forfeitures differ from those estimates.

The Company estimates the fair value of stock option awards on the date of grant using the Black-Scholes option-pricing model. This determination is affected by the Company’s stock price as well as assumptions regarding expected volatility, risk-free interest rate, and expected dividend yields.dividends. Because option-pricing models require the use of subjective assumptions, changes in these assumptions can materially affect the fair value of the options. The assumptions presented in the table below represent the weighted-average value of the applicable assumptionsassumption used to value stock option awards at their grant date. In determining the volatility assumption, the Company used a historical analysis of the volatility of the Company’s share price for the preceding period equal to the expected option lives. The expected option lives, which represent the period of time that options granted are expected to be outstanding, were estimated based upon the “simplified” method for “plain-vanilla” options. The risk-free interest rate assumption was based upon observed interest rates appropriate for the term of the Company’s stock option awards. The dividend yield assumption was based on the history and expectation of future dividend payouts. The value of the portion of the award that is ultimately expected to vest is recognized as expense over the requisite service period. The Company’s estimate of pre-vesting forfeitures is primarily based on historical experience and is adjusted to reflect actual forfeitures as the options vest. The weighted-average grant date fair value per share of stock option awards granted during the nine months ended September 30, 2017 and 2016 was $0.27 and 2015 was $0.37, and $0.41, respectively.respectively, using the Black-Scholes model with the following weighted-average assumptions:

The value of each restricted stock unit awarded is equal to the closing price per share of the Company’s Common Stock on the date of grant. The weighted-average grant date fair value per share of restricted stock units granted during the nine months ended September 30, 2016 and 2015 was $1.30 and $2.23, respectively.

For both option and restricted stock unit awards, the value of the portion of the award that is ultimately expected to vest is recognized as expense over the requisite service periods. The weighted-average grant date fair value per share of restricted stock units granted during the nine months ended September 30, 2017 and 2016 was $0.90 and $1.30, respectively.

As of September 30, 2016,2017, there remained 1.1approximately 1.2 million shares available for future awards under the Company’s 2007 Performance Incentive Plan (the “2007 Plan”). In connection with awards under both the 2007 Plan and awards issued outside of the 2007 Plan as inducement grants to new hires, the Company recorded approximately $401 thousand and $1.2 million of noncash stock-based compensation for the three and nine month periods ended September 30, 2017, respectively, as compared to $407 thousand and $1.3 million (inclusive of approximately $105 thousand included in restructuring and other charges) of noncash stock-based compensation expense for the three and nine month periods ended September 30, 2016, respectively, as compared to approximately $388 thousand and $1.1 million of noncash stock-based compensation for the three and nine month periods ended September 30, 2015, respectively. As of September 30, 2016, there was approximately $2.4 million of unrecognized stock-based compensation expense remaining to be recognized over a weighted-average period of 1.9 years.

A summary of the activity of the 2007 Plan, and awards issued outside of the 2007 Plan pertaining to stock option grants is as follows:

A summary of the activity of the 2007 Plan pertaining to grants of restricted stock units is as follows:

A summary of the status of the Company’s unvested share-basedstock-based payment awards as of September 30, 20162017 and changes in the nine month periodmonths then ended, is as follows:

For the nine months ended September 30, 20162017 and 2015,2016, the total fair value of share-basedstock-based awards vested was approximately $389$952 thousand and $692$389 thousand, respectively. For the nine months ended September 30, 20162017 and 2015,2016, the total intrinsic value of options exercised was $0 and $373,$0, respectively (there were no options exercised during the nine months ended September 30, 2016)either period). For the nine months ended September 30, 2017 and 2016, approximately 135 thousand and 2015, approximately 2.9 million and 38 thousand stock options, respectively, were granted, and 0 and approximately 1 thousandno stock options respectively, were exercised in either period yielding $0 and approximately $1 thousand, respectively, of cash proceeds to the Company. Additionally, for the nine months ended September 30, 2017 and 2016, and 2015, approximately 558566 thousand and 96558 thousand restricted stock units, respectively, were granted, and approximately 136467 thousand and 133136 thousand shares, respectively, were issued under restricted stock unit grants. For the nine months ended September 30, 2017 and 2016, the total intrinsic value of restricted stock units that vested was approximately $409 thousand and $193 thousand, respectively. As of September 30, 2017 and 2016, the total intrinsic value of awards outstanding was approximately $879 thousand and $1.3 million, respectively. As of September 30, 2017, there was approximately $1.1 million of unrecognized stock-based compensation expense remaining to be recognized over a weighted-average period of 1.18 years.

Treasury Stock

In December 2000, the Company’s Board of Directors authorized the repurchase of up to $10 million of the Company’s Common Stock, from time to time, in private purchases or in the open market. In February 2004, the Company’s Board of Directors approved the resumption of the stock repurchase program (the “Program”) under new price and volume parameters, leaving unchanged the maximum amount available for repurchase under the Program. However, the affirmative vote of the holders of a majority of the outstanding shares of Series B Preferred Stock, voting separately as a single class, is necessary for the Company to repurchase its Common Stock (except for the purchase or redemption from employees, directors and consultants pursuant to agreements providing us with repurchase rights upon termination of their service with us), unless after such purchase we have unrestricted cash (net of all indebtedness for borrowed money, purchase money obligations, promissory notes or bonds) equal to at least two times the product obtained by multiplying the number of shares of Series B Preferred Stock outstanding at the time such dividend is paid by the liquidation preference. During the nine-month periodsnine months ended September 30, 20162017 and 2015,2016, the Company did not purchase any shares of Common Stock under the Program. Since inception of the Program, the Company has purchased a total of 5,453,416 shares of Common Stock at an aggregate cost of approximately $7.3 million.

In addition, pursuant to the terms of the Company’s 2007 Plan, and certain procedures approvedadopted by the Compensation Committee of the Board of Directors, in connection with the exercise of stock options by certain of the Company’s employees, and the issuance of shares of Common Stock in settlement of vested restricted stock units, the Company may withhold shares in lieu of payment of the exercise price and/or the minimum amount of applicable withholding taxes then due. Through September 30, 2016,2017, the Company had withheld an aggregate of 1,674,7601,866,759 shares which have been recorded as treasury stock. In addition, the Company received an aggregate of 211,608 shares in treasury stock resulting from prior acquisitions. These shares have also been recorded as treasury stock.

Dividends

Beginning with the first quarter of 2016, the Company’s Board of Directors suspended the payment of a quarterly dividend and will continue to evaluate the uses of its cash in connection with planned investments in the business. During the threenine months ended September 30, 2015, the Company paid a quarterly2017 and 2016, we did not declare any cash dividend of $0.025 per sharedividends on itsour Common Stock or Series B Preferred Stock.

We do not expect to declare dividends in the foreseeable future. The declaration, amount and itspayment of any future dividends will be at the sole discretion of our Board of Directors. When determining whether to declare a dividend in the future, our Board of Directors may take into account general and economic conditions, our financial condition and operating results, our available cash and current and anticipated cash needs, capital requirements, contractual, legal, tax and regulatory restrictions and implications on the payment of dividends by us to our stockholders, and such other factors as our Board of Directors may deem relevant. The Certificate of Designations for the Series B Preferred Stock on a converted commoncurrently prohibits the Company from paying cash dividends in excess of $0.10 per share basis. The dividend payment totaled approximately $979 thousand. When combined withper annum without the quarterly cash dividend paid duringprior approval of the first and second quartersholder of 2015, dividend payments totaled approximately $3.0 million.the Series B Preferred Stock.

Currently, we are not aThe Company is party to any material active litigation. Inlegal proceedings arising in the ordinary course of our business we are subject to periodic threatsor otherwise, none of lawsuits, investigations and claims. Regardless of the outcome, litigation can have an adverse impact on us because of defense and settlement costs, diversion of management resources and other factors.which is deemed material.

Basic net lossincome (loss) per share is computed using the weighted average number of common shares outstanding during the period. Diluted net lossincome (loss) per share is computed using the weighted average number of common shares and potential common shares outstanding during the period, so long as the inclusion of potential common shares does not result in a lower net loss per share. Potential common shares consist of restricted stock units (using the treasury stock method), the incremental common shares issuable upon the exercise of stock options (using the treasury stock method), and the conversion of the Company’s convertible preferred stock (using the if-converted method). For the three months ended September 30, 2016, and 2015, approximately 1.4 million and 1.7 million unvested restricted stock units and vested and unvested stock options, to purchase Common Stock, respectively, were excluded from the calculation, as their effect would result in a lower net loss per share. For the nine months ended September 30, 2017 and 2016, approximately 569 thousand and 2015, approximately 1.2 million and 3.9 million unvested restricted stock units and vested and unvested stock options, to purchase Common Stock, respectively, were excluded from the calculation, as their effect would result in a lower net loss per share.

The following table reconciles the numerator and denominator for the calculation.

Income tax expense for the three and nine months ended September 30, 20162017 was approximately $326$112 thousand and $950$486 thousand, respectively, and reflects an effective tax rate of -36%37% and -19%-454%, respectively, as compared to approximately $244$326 thousand and $731$950 thousand, respectively, for the three and nine months ended September 30, 2015,2016, reflecting an effective tax rate of 41%-36% and -130%-19%, respectively. Income tax expense for the three and nine months ended September 30, 2017 primarily relates to the recognition of $148 thousand and $445 thousand, respectively, of a deferred tax liability associated with goodwill that is tax deductible but constitutes an indefinite lived intangible asset for financial reporting purposes, as well as the recognition of a $36 thousand credit and $41 thousand expense, respectively, of income tax in certain jurisdictions where there are no net operating losses available to offset taxable income. Income tax expense for the three and nine months ended September 30, 2016 primarily relates to the recognition of $281 thousand and $842 thousand, respectively, of a deferred tax liability associated with goodwill that is tax deductible but constitutes an indefinite lived intangible asset for financial reporting purposes, as well as the recognition of $45 thousand and $108 thousand, respectively, of income tax expense in certain jurisdictions where there are no net operating losses available to offset taxable income. Income tax expense for the three and nine months ended September 30, 2015 primarily relates to the recognition of $180 thousand and $541 thousand, respectively, of a deferred tax liability associated with goodwill that is tax deductible but constitutes an indefinite lived intangible asset for financial reporting purposes, as well as the recognition of $64 thousand and $190 thousand, respectively, of income tax expense in certain jurisdictions where there are no net operating losses available to offset taxable income.

The Company accounts for its income taxes in accordance with ASC 740-10,Income Taxes (“ASC 740-10”). Under ASC 740-10, deferred tax assets and liabilities are recognized for the future tax consequences attributable to differences between the financial statement carrying amounts of existing assets and liabilities and their tax bases. ASC 740-10 also requires that deferred tax assets be reduced by a valuation allowance if it is more likely than not that some or all of the deferred tax assets will not be realized based on all available positive and negative evidence. The Company has determined that it files U.S. Federal, State and Foreign tax returns and has determined that its major tax jurisdictions are the United States, India and the United Kingdom. Tax years through 2016 remain open due to net operating loss carryforwards and are subject to examination by appropriate taxing authorities.

The Company had approximately $154$160 million of federal and state net operating loss carryforwards (“NOL”) as of December 31, 2015,2016, which results in deferred tax assets of approximately $69$75 million. As of September 30, 2016 and 2015, we maintainThe Company has a full valuation allowance against ourits deferred tax assets due to our prior historyas management concluded that it was more likely than not that the Company would not realize the benefit of pre-tax losses and uncertainty about the timing of and ability to generateits deferred tax assets by generating sufficient taxable income in the future and our assessment that the realization of the deferred tax assets did not meet the “more likely than not” criterion under ASC 740-10. We expectyears. The Company expects to continue to maintainprovide a full valuation allowance until, or unless, weit can sustain a level of profitability that demonstrates ourits ability to utilize these assets. The ability of the Company to utilize its NOL in full to reduce future taxable income may become subject to various limitations under Section 382 of the Internal Revenue Code of 1986 (“IRC”). The utilization of such carryforwards may be limited upon the occurrence of certain ownership changes, including the purchase and sale of stock by 5% shareholders and the offering of stock by the Company during any three-year period resulting in an aggregate change of more than 50% of the beneficial ownership of the Company. In the event of an ownership change, Section 382 imposes an annual limitation on the amount of these carryforwards that can reduce future taxable income.

Subject to potential Section 382 limitations, as discussed below, the federal losses are available to offset future taxable income through 20352036 and expire from 2019 through 2035.2036. Since the Company does business in various states and each state has its own rules with respect to the number of years losses may be carried forward, the state net operating loss carryforwards expire from 2016 through 2035. The net operating loss carryforward as of December 31, 2015 includes approximately $16 million related to windfall tax benefits for which a benefit would be recorded to additional paid in capital when realized. Based on operating results for the nine months ended September 30, 2016 and three month projections, management expects to generate a tax loss in 2016 and no tax benefit has been recorded.

In accordance with Section 382 of the Internal Revenue Code, the ability to utilize the Company’s net operating loss carryforwards could be limited in the event of a change in ownership and as such a portion of the existing net operating loss carryforwards may be subject to limitation.2036.

Financial instruments that subject the Company to concentrations of credit risk consist primarily of cash, cash equivalents and restricted cash. The Company maintains all of its cash, cash equivalents and restricted cash in sevenfederally insured financial institutions, and performs periodic evaluations of the relative credit standing of these institutions. As of September 30, 2017 and December 31, 2016, the Company’s cash, cash equivalents and restricted cash primarily consisted of checking accounts and money market funds and checking accounts.funds.

For the three and nine months ended September 30, 20162017 and 2015,2016, no individual client accounted for 10% or more of consolidated revenue. As of September 30, 20162017 and December 31, 2015,2016, no individual client accounted for more than 10% of our gross accounts receivable balance.

The Company’s customers are primarily concentrated in the United States and Europe, and we carry accounts receivable balances. The Company performs ongoing credit evaluations, generally does not require collateral, and establishes an allowance for doubtful accounts based upon factors surrounding the credit risk of customers, historical trends and other information. To date, actual losses have been within management’s expectations.

During the three months ended March 31, 2017, the Company implemented a targeted reduction in force which resulted in restructuring and other charges of approximately $199 thousand.

During the three months ended March 31, 2016, the Company announced the resignation of the Company’s President and Chief Executive Officer, who was also a member of the Company’s Board of Directors. In connection with this resignation, the Company paid severance, will provide continuing medical coverage for 18 months, and incurred recruiting fees, resulting in restructuring and other charges of approximately $1.5$1.4 million.

The following table displays the activity of the restructuring reserve account during the nine months ended September 30, 2016.

During the year ended December 31, 2012, the Company implemented a targeted reduction in force. Additionally, in assessing the ongoing needs of the organization, the Company elected to discontinue using certain software as a service, consulting and data providers, and elected to write-off certain previously capitalized software development projects. The actions were taken after a review of the Company’s cost structure with the goal of better aligning the cost structure with the Company’s revenue base. These restructuring efforts resulted in restructuring and other charges of approximately $3.4 million during the year ended December 31, 2012. Additionally, as a result of the Company’s acquisition of The Deal, LLC (“The Deal”) in September 2012, the Company discontinued the use of The Deal’s office space and implemented a reduction in force to eliminate redundant positions, resulting in restructuring and other charges of approximately $3.5 million during the year ended December 31, 2012.

In August 2015, the Company received a one year notice of termination under which the landlord elected to terminate The Deal’s office space lease. As a result, the Company was no longer obligated to fulfill the original full lease term. As such, the Companyterm and recorded an adjustment to its restructuring reserve totaling approximately $1.2 million during the three months ended September 30, 2015 respectively, and also received a lease termination feecredit of approximately $583 thousand from the landlord when the office space was vacated in August 2016, resulting in a restructuring and other charges credit on the Company’s Condensed Consolidated Statements of Operations.2016. Collectively, these activities are referred to as the “2012 Restructuring”. As of December 31, 2016, there was no remaining balance in the 2012 Restructuring reserve account.

The following table displays the activity of the 2012 Restructuring reserve account during the nine months ended September 30, 2016 and 2015.2016.

Other liabilities consist of the following:

In accordance with generally accepted accounting principles, we make a provision for a liability for taxes when it is both probable that a liability has been incurred and the amount of the liability can be reasonably estimated. These provisions are reviewed at least quarterly and adjusted to reflect the impacts of negotiations, settlements, rulings, advice of legal counsel, and other information and events pertaining to a particular case. For a period of time, we did not collect or remit state or municipal sales tax on the charges to our customers for our services in certain states, which may be required, except that we historically complied with New York sales tax. As such, we are currently conducting a review of these matters, and we haverecorded a reserve of $1.2totaling approximately $1.4 million included within accrued expenses as of Septemberduring the six months ended June 30, 2016 as our best estimate of the potential tax exposure for any unresolved retroactive assessment. The Company concluded its review of sales tax exposure during the fourth quarter of 2016 which resulted in a reduction to that estimate totaling $700 thousand. As of September 30, 2017, no provision remains.

Segments

Effective October 1, 2016 as a result of organizational changes related to our new management team, we changed our financial reporting to better reflect how we gather and analyze business and financial information about our businesses. We now report our results in three segments: (i) The Deal / BoardEx and (ii) RateWatch, which comprise our business to business segment, and (iii) business to consumer, which is primarily comprised of the Company’s premium subscription newsletter products and website advertising. We have revised our financial results for the three and nine months ended September 30, 2016 to conform to the current segment presentation.

Due to the nature of the Company’s operations, a majority of its assets are utilized across all segments. In addition, segment assets are not reported to, or used by, the Chief Operating Decision Maker to allocate resources or assess performance of the Company’s segments. Accordingly, the Company has not disclosed asset information by segment.

Geographic Data

During the nine months ended September 30, 2017 and 2016, substantially all of the Company’s revenue was from customers in the United States and substantially all of our long-lived assets are located in the United States. The remainder of the Company’s revenue and its long-lived assets are a result of our BoardEx operations outside of the United States, which is headquartered in London, England.

14. SUBSEQUENT EVENTS

Exchange Agreement

On November 10, 2017, TheStreet, Inc. (the “Company”) entered into an Exchange Agreement (the “Exchange Agreement”) with TCV VI, L.P., a Delaware limited partnership (“TCV VI”), and TCV Member Fund, L.P., a Cayman Islands exempted limited partnership (“TCV Member Fund” and, together with TCV VI, the “TCV Holders”), which provided for, among other things, the exchange by the TCV Holders of all shares of Series B Preferred Stock of the Company held by them for an aggregate of (i) 6,000,000 shares of newly issued common stock, par value $0.01 per share of the Company (“Common Stock”) and (ii) cash consideration in the amount of $20,000,000 (the “Exchange Transaction”). The Exchange Transaction closed on November 10, 2017. The retirement of the Series B Preferred Stock removes, among other rights of the TCV Holders and restrictions on the Company, a $55 million liquidation preference previously held by TCV.

Purchase Agreement

On November 10, 2017, the Company entered into a Securities Purchase Agreement (the “Purchase Agreement”) with 180 Degree Capital Corp. (“180 Degree Capital”) and TheStreet SPV Series, a limited liability company series of 180 Degree Capital Management, LLC (the “Investors”), pursuant to which the Company sold and issued 7,136,363 shares of its Common Stock, to the Investors at a purchase price of $1.10 per Common Stock in a closing that occurred on November 10, 2017 (the “Financing Transaction”). The closing bid price of the Company’s Common Stock as reported by NASDAQ on November 9, 2017, was $0.92 per share, and the Financing Transaction closed on November 10, 2017.

Registration Rights Agreement

In connection with the Exchange and Financing Transaction, the Company agreed to register the shares for resale and the Company has agreed to prepare and file a registration statement with the Securities and Exchange Commission within 90 days of the closing. The TCV Holders and the Investors received additional registration rights as set forth in the transaction documents.

Amended and Restated Employment Agreement

On November 8, 2017, the Company and James Cramer entered into an amended and restated employment agreement with a new four-year term commencing January 1, 2018 (the “Employment Agreement”). Pursuant to the Employment Agreement, Mr. Cramer will author articles for the Company’s publications, provide online video content for the Company’s websites, participate in events and provide reasonable promotional and other services, subject to his personal and professional availability, effective January 1, 2018 through December 31, 2021.

In consideration for providing these services, Mr. Cramer will receive a royalty based on the total net revenues of the Company’s consumer subscription products as well as revenues from investor and conference programs, presentations or events offered by the Company in which Mr. Cramer is advertised or serves as a presenter, speaker, participant or panelist. The annual minimum royalty shall not be less than $2.0 million and effective January 1, 2018, the Company will pay Mr. Cramer a monthly draw against the annual royalty payment equal to $2.5 million. At the end of each year, the Company will prepare a royalty statement and calculate and pay the total royalty payable to Mr. Cramer for such year. To the extent the annual royalty amount exceeds the total monthly draw we paid during the period, then such excess amounts will be paid to Mr. Cramer, to the extent the total monthly draw paid during the period exceeds the annual royalty amount, such excess (up to a maximum of $500,000) shall be recoverable by the Company as set forth in the agreement. In addition, during the term of the Employment Agreement, the Company will pay Mr. Cramer an annual license fee in the amount of $300,000 for the use of his name and likeness, payable in four equal installments of $75,000 on each of January 1, April 1, July 1 and October 1.

Effective January 2, 2018, Mr. Cramer will be granted restricted stock units (“RSUs”) under the Company’s 2007 Performance Incentive Plan covering 1,000,000 shares of the Company’s Common Stock. The RSUs will be payable in shares of Common Stock and will vest and become payable as to 25% of the shares in four equal installments on December 31 of each of 2018, 2019, 2020 and 2021, respectively, subject to Mr. Cramer’s continued service through each such vesting date and other terms as set forth in the applicable award agreement. Upon (i) the consummation of a “change of control” of the Company, (ii) a termination of Mr. Cramer’s employment by the Company without “cause” or (iii) Mr. Cramer’s resignation for “good reason” (as such terms are defined in the Employment Agreement or the award agreement, as applicable), all of the unvested RSUs held by Mr. Cramer will become fully vested.

Mr. Cramer has agreed that, during the term of the Employment Agreement and, if, during the term of the Employment Agreement, either the Company terminates Mr. Cramer’s employment for cause or Mr. Cramer resigns without good reason, for a period of 18 months following such termination of employment, Mr. Cramer will not author articles or columns for any other digital financial publication that competes with the Company without first obtaining the Company’s consent. In addition, subject to certain exceptions, during the term of the Employment Agreement and for a period of 18 months after the cessation of his employment, he will not solicit for employment, in any business enterprise or activity, any person who was employed by the Company during the six months prior to the cessation of his employment.

The Employment Agreement may be terminated by the Company for cause, by Mr. Cramer for good reason, upon Mr. Cramer’s death, disability, upon the dissolution or liquidation of the Company, or by Mr. Cramer for specified events provided under the employment agreement.

The following discussion of our financial condition and results of operations should be read together with our interim consolidated financial statements contained elsewhere in this Quarterly Report on Form 10-Q and with information contained in our other filings, including the audited consolidated financial statements included in our Annual Report on Form 10-K for the fiscal year ended December 31, 2015.2016.

This discussion may contain forward-looking statements based upon current expectations that involve risks and uncertainties. Our actual results may differ materially from those anticipated in these forward-looking statements as a result of various factors, including those set forth under “Risk Factors” of this Quarterly Report on Form 10-Q and in other parts of this report.

Overview

TheStreet, Inc., together with its wholly owned subsidiaries ("TheStreet", "we", "us" or the "Company"), isa leading financial news and information company providing businessprovider. Our business-to-business and financial news, market data, investing ideasbusiness-to-consumer content and analysis to personalproducts provide individual and institutional investors, worldwide. The Company's collectionadvisors and dealmakers with actionable information from the worlds of digital services provides users, subscribersfinance and advertisersbusiness.

Business-to-Business

Our business-to-business, or B2B, products provide dealmakers, their advisers, institutional investors and corporate executives with a variety of contentnews, data and tools through a range of online, social media, tablet and mobile channels. The Company's portfolio of consumer focused brands includes TheStreet, RealMoney and Action Alerts PLUS, providing personal business and financial news and information. The Company's portfolio of institutional focused brands includes The Deal, providing intraday coverageanalysis of mergers and acquisitions and all other changes in corporate control, BoardEx, providing dealmakers, advisers and institutional investors with director and officer profiles and relationship capital managementmapping services, and RateWatch,competitive bank rate data. Our B2B business products have helped diversify our business from primarily utilized byserving retail investors to also providing an indispensable source of business intelligence for both high net worth individuals and executives in the banking industry providing up-to-date rate informationtop firms in several key price-setting areas, including deposits, loans and fees.the world.

Our B2B business derives revenue primarily from subscription products, events/conferences and information services. For the nine months ended September 30, 2017 and 2016, our B2B businesses generated 50% and 46%, respectively, of our total revenue.

Business-to-Consumer

Our business-to-consumer, or B2C, business is led by our namesake website,TheStreet.com, and includes free content and houses our premium subscription products that target varying segments of the retail investing public.Since our inception in 1996, we have distinguished ourselves as a trusted and reliable source for financial news and information with journalistic excellence, an unbiased approach and interactive multimedia coverage of the financial markets, economy, industry trends, investment and financial planning.

Our B2C business generates revenue primarily from premium subscription products and advertising. For the nine months ended September 30, 2017 and 2016, our B2C business generated 50% and 54%, respectively, of our total revenue.

We report revenue

Recent Transactions

Exchange Agreement

On November 10, 2017, TheStreet, Inc. (the “Company”) entered into an Exchange Agreement (the “Exchange Agreement”) with TCV VI, L.P., a Delaware limited partnership (“TCV VI”), and TCV Member Fund, L.P., a Cayman Islands exempted limited partnership (“TCV Member Fund” and, together with TCV VI, the “TCV Holders”), which provided for, among other things, the exchange by the TCV Holders of all shares of Series B Preferred Stock of the Company held by them for an aggregate of (i) 6,000,000 shares of newly issued common stock, par value $0.01 per share of the Company (“Common Stock”) and (ii) cash consideration in two categories: businessthe amount of $20,000,000 (the “Exchange Transaction”). The Exchange Transaction closed on November 10, 2017. The retirement of the Series B Preferred Stock removes, among other rights of the TCV Holders and restrictions on the Company, a $55 million liquidation preference previously held by TCV.

Purchase Agreement

On November 10, 2017, the Company entered into a Securities Purchase Agreement (the “Purchase Agreement”) with 180 Degree Capital Corp. (“180 Degree Capital”) and TheStreet SPV Series, a limited liability company series of 180 Degree Capital Management, LLC (the “Investors”), pursuant to businesswhich the Company sold and business to consumer. Business to business revenue is primarily comprisedissued 7,136,363 shares of subscriptions, licenses and fees for access to director and officer profiles, relationship capital management services, and transactional information pertainingits Common Stock, to the mergersInvestors at a purchase price of $1.10 per Common Stock in a closing that occurred on November 10, 2017 (the “Financing Transaction”). The closing bid price of the Company’s Common Stock as reported by NASDAQ on November 9, 2017, was $0.92 per share, and acquisitions environment, rate services,the Financing Transaction closed on November 10, 2017.

Registration Rights Agreement

In connection with the Exchange and Financing Transaction, the Company agreed to register the shares for resale and the Company has agreed to prepare and file a registration statement with the Securities and Exchange Commission within 90 days of the closing. The TCV Holders and the Investors received additional registration rights as set forth in the transaction documents.

Amended and Restated Employment Agreement

On November 8, 2017, the Company and James Cramer entered into an amended and restated employment agreement with a new four-year term commencing January 1, 2018 (the “Employment Agreement”). Pursuant to the Employment Agreement, Mr. Cramer will author articles for the Company’s publications, provide online video content for the Company’s websites, participate in events and provide reasonable promotional and other miscellaneous revenue. Businessservices, subject to his personal and professional availability, effective January 1, 2018 through December 31, 2021.

In consideration for providing these services, Mr. Cramer will receive a royalty based on the total net revenues of the Company’s consumer revenuesubscription products as well as revenues from investor and conference programs, presentations or events offered by the Company in which Mr. Cramer is primarily comprisedadvertised or serves as a presenter, speaker, participant or panelist. The annual minimum royalty shall not be less than $2.0 million and effective January 1, 2018, the Company will pay Mr. Cramer a monthly draw against the annual royalty payment equal to $2.5 million. At the end of subscriptions, licenseseach year, the Company will prepare a royalty statement and feescalculate and pay the total royalty payable to Mr. Cramer for accesssuch year. To the extent the annual royalty amount exceeds the total monthly draw we paid during the period, then such excess amounts will be paid to securities investment information and stock market commentary, fees chargedMr. Cramer, to the extent the total monthly draw paid during the period exceeds the annual royalty amount, such excess (up to a maximum of $500,000) shall be recoverable by the Company as set forth in the agreement. In addition, during the term of the Employment Agreement, the Company will pay Mr. Cramer an annual license fee in the amount of $300,000 for the placementuse of advertisinghis name and sponsorships within TheStreetlikeness, payable in four equal installments of $75,000 on each of January 1, April 1, July 1 and its affiliated properties,October 1.

Effective January 2, 2018, Mr. Cramer will be granted restricted stock units (“RSUs”) under the Company’s 2007 Performance Incentive Plan covering 1,000,000 shares of the Company’s Common Stock. The RSUs will be payable in shares of Common Stock and will vest and become payable as to 25% of the shares in four equal installments on December 31 of each of 2018, 2019, 2020 and 2021, respectively, subject to Mr. Cramer’s continued service through each such vesting date and other miscellaneous revenue.terms as set forth in the applicable award agreement. Upon (i) the consummation of a “change of control” of the Company, (ii) a termination of Mr. Cramer’s employment by the Company without “cause” or (iii) Mr. Cramer’s resignation for “good reason” (as such terms are defined in the Employment Agreement or the award agreement, as applicable), all of the unvested RSUs held by Mr. Cramer will become fully vested.

Mr. Cramer has agreed that, during the term of the Employment Agreement and, if, during the term of the Employment Agreement, either the Company terminates Mr. Cramer’s employment for cause or Mr. Cramer resigns without good reason, for a period of 18 months following such termination of employment, Mr. Cramer will not author articles or columns for any other digital financial publication that competes with the Company without first obtaining the Company’s consent. In addition, subject to certain exceptions, during the term of the Employment Agreement and for a period of 18 months after the cessation of his employment, he will not solicit for employment, in any business enterprise or activity, any person who was employed by the Company during the six months prior to the cessation of his employment.

The Employment Agreement may be terminated by the Company for cause, by Mr. Cramer for good reason, upon Mr. Cramer’s death, disability, upon the dissolution or liquidation of the Company, or by Mr. Cramer for specified events provided under the employment agreement.

Critical Accounting Estimates

Our discussion and analysis of our financial condition and results of operations are based upon our condensed consolidated financial statements, which have been prepared in accordance with U.S. generally accepted accounting principles (“GAAP”). The preparation of these financial statements 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 revenue and expense during the reporting period. Actual results could differ from those estimates. Estimates and assumptions are reviewed periodically and the effects of revisions are reflected in the condensed consolidated financial statements in the period they are deemed to be necessary. Significant estimates made in the accompanying condensed consolidated financial statements include, but are not limited to, the following:

We perform annual impairment tests of goodwill and indefinite-lived intangible assets as of October 1 each year and between annual tests whenever circumstances arise that indicate a possible impairment might exist.

In conducting our 20152016 annual goodwill impairment test, with the assistance of our independent appraisal firm, we first used the market approach for the valuation of our common stockCommon Stock and the income approach for our preferred shares.Preferred Shares. We also performedthen confirmed the reasonableness of the outcome of these two tests by performing an income approach by using the discounted cash flow (“DCF”) method to confirm the reasonableness of the results of the common stock market approach. Based on these approaches, we determined the Company’s business enterprise value (common equity plus preferred equity) exceeded its book value.method. The fair value of our outstanding preferred shares requiresPreferred Shares required significant judgments, including the estimation of the amount of time until a liquidation event occurs as well as an appropriate cash flow discount rate. Further, in assigning a fair value to our preferred stock,Preferred Stock, we also considered that the preferred shareholders are entitled to receive a $55 million liquidation preference upon liquidation or dissolution of the Company or upon any change of control event.event (as defined in the Certificate of Designation of Series B Preferred Stock). Additionally, the holders of the preferred sharesPreferred Shares are entitled to receive dividends and to vote as a single class together with the holders of the common stockCommon Stock on an as-converted basis and, provided certain preferred share ownership levels are maintained, are entitled to representation on our board of directors and may unilaterally block issuance of certain classes of capital stock, the purchase or redemption of certain classes of capital stock, including common stockCommon Stock (with certain exceptions), and any increases in the per-share amount of dividends payable to the holders of the common stock.Common Stock. Based on our analysis, we concluded that The Deal / BoardEx reporting unit goodwill was impaired as of the valuation date by approximately $11.6 million, while the RateWatch and Business to Consumer reporting units’ goodwill were not impaired by approximately 16% and 33%, respectively.

In conducting our 20152016 annual indefinite-livedindefinite lived intangible asset impairment test, with the assistance of our independent appraisal firm, we determined its fair value using the relief-from-royalty method. This analysis calculated the fair value as the present valueThe application of the relief-from-royalty method requires the estimation of future expenses avoidedincome and the conversion of that income into an estimate of value. Future income related to a trade name is measured in terms of the savings that a company realizes by owning the indefinite-livedindefinite lived trade name, rather than havingthereby avoiding royalty payments to licenseuse the trade name in the absence of ownership. To calculate the royalty savings, we estimated (i) future revenue attributable to the RateWatch trade name; (ii) a royalty rate that a hypothetical licensee would be willing to pay for its use.use; and (iii) a discount rate to reduce future after-tax royalty savings to present value. We selected an appropriate royalty rate by reviewing licensingsearching various transaction databases for publicly disclosed transactions forto license similar assets between service businesses, with a focus on companies that operate in industries similar to ours.RateWatch. Based upon the analysis, we concluded that the book value of the indefinite-livedindefinite lived trade name was not impaired as of the October 1, 20152016 valuation date.date by approximately 29%.

A decrease in the price of our common stock,Common Stock, or changes in the estimated value of our preferred shares, could materially affect the determination of the fair value of goodwill and could result in an impairment charge to reduce the carrying value, of goodwill, which could be material to our financial position and results of operations.

A summary of our critical accounting policies and estimates can be found in our 20152016 Form 10-K.

Contingencies

Accounting for contingencies, including those matters described in the Commitments and Contingencies section of Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations of the Company’s 20152016 Form 10-K, is highly subjective and requires the use of judgments and estimates in assessing their magnitude and likely outcome. In many cases, the outcomes of such matters will be determined by third parties, including governmental or judicial bodies. The provisions made in the consolidated financial statements, as well as the related disclosures, represent management’s best estimate of the then current status of such matters and their potential outcome based on a review of the facts and in consultation with outside legal counsel where deemed appropriate. The Company would record a material loss contingency in its consolidated financial statements if the loss is both probable of occurring and reasonably estimated. The Company regularly reviews contingencies and as new information becomes available may, in the future, adjust its associated liabilities.

Results of Operations

Comparison of Three Months Ended September 30, 20162017 and September 30, 20152016

Revenue

Business to business. Our B2B business derives revenue primarily from subscription products, events/conferences and information services.Business

B2B revenue attributable to business revenue is primarily comprisedThe Deal / BoardEx segment increased by approximately $522 thousand, or 10%, in the third quarter of subscriptions, licenses and fees for access to director and officer profiles, relationship capital management services, and transactional information pertaining2017 as compared to the mergers and acquisitions environment, rate services, events and other miscellaneous revenue.

Business to business revenue increased by $41 thousand, or 1%, over the periods. The increase was the resultthird quarter of an event held by The Deal that resulted in revenue totaling approximately $142 thousand. There were no events held during the same period last year.2016. This increase was partially offset by de minimis decreasesprimarily due to an approximate $691 thousand, or 29%, increase in BoardEx subscription revenue, from our The Deal, BoardEx and RateWatch products. Revenue from our BoardEx product was negatively impacted by the strengthening of the U.S. Dollar in relation to the British Pound.

Business to consumer.Business to consumer revenue is primarily comprised of subscriptions, licenses and fees for access to securities investment information and stock market commentary, fees charged for the placement of advertising and sponsorships within TheStreet and its affiliated properties, and other miscellaneous revenue.

Business to consumer revenue decreased by approximately $1.5 million, or 16%, over the periods. The decrease was primarily related towhich had a $1.1 million, or 16% decline in revenue related to TheStreet newsletter products resulting from a 15% decrease10% increase in the weighted-average number of subscriptions combined withand a 1%19% increase in the average revenue recognized per subscription. The increase in revenue attributable to The Deal / BoardEx segment was offset by an approximate $107 thousand, or 4%, decrease in subscription revenue from The Deal products, which had an 8% decline in the weighted-average number of subscriptions partially offset by a 4% increase in the average revenue recognized per subscription. Additionally, advertisinginformation services revenue from one-time reports sold by BoardEx increased by approximate $28 thousand and event/conference revenue declined by $95 thousand.

B2B revenue attributable to RateWatch increased by approximately $132 thousand, or 7%, in the third quarter of 2017 as compared to the third quarter of 2016. RateWatch subscription revenue increased by approximately $124 thousand, or 8%, due to a 12% increase in the average revenue recognized per subscription, partially offset by a 4% decline in the weighted-average number of subscriptions. Additionally, information services revenue from one-time reports sold by RateWatch increased by approximate $8 thousand, or 4%.

Business to consumer. Our B2C business generates revenue primarily from premium subscription products and advertising.

B2C revenue decreased by $337approximately $615 thousand, or 14%8%, resultingin the third quarter of 2017 as compared to the third quarter of 2016. This decrease was due to an approximate $649 thousand, or 12%, decline in revenue generated from decreased demand from repeat advertisers.premium subscription products, which had a 14% decrease in the weighted-average number of subscriptions, partially offset by a 2% increase in the average revenue recognized per subscription. Additionally, licensing and syndication revenue declined by approximately $24 thousand, or 8%. Partially offsetting these declines was an increase in advertising revenue of approximately $46 thousand, or 2%, and approximately $12 thousand of event related revenue (there was no business to consumer event revenue during 2016), when compared to the prior year.

Operating Expense

Cost of Services

Cost of services. Cost of services expense consists primarily of compensation, benefits, outside contributor costs related to the creation of our content, licensed data and the technology required to publish our content.

Cost of services expense attributable to The Deal / BoardEx decreased by approximately $783$295 thousand, or 9%11%, overin the periods.third quarter of 2017 as compared to the third quarter of 2016. This decrease was primarily the result of reduced employee compensation and related payroll taxes combined with lower employee benefit costs due to increased employee contributions towards health benefit plans and a reduction in the Company’s matching portion of employee contributions to 401-K plans, lower consulting and outside contributor costs, the aggregate of which decreased by approximately $385 thousand. These cost decreases were partially offset by an increase in hosting and internet access fees, the aggregate of which increased by approximately $88 thousand.

Cost of services expense attributable to RateWatch decreased by $33 thousand, or 6%, in the third quarter of 2017 as compared to the third quarter of 2016. The decrease was primarily the result of reduced employee compensation consulting, outside contributor, data and revenue share payments maderelated payroll taxes combined with lower employee benefit costs due to certain distribution partners,increased employee contributions towards health benefit plans and a reduction in the Company’s matching portion of employee contributions to 401-K plans, the aggregate of which decreased by approximately $840$53 thousand. These cost decreases were partially offset by an approximate $18 thousand increase in corporate expense allocations.

Cost of services expense attributable to our business to consumer business decreased by approximately $950 thousand, or 20%, in the third quarter of 2017 as compared to the third quarter of 2016. The decrease was primarily the result of reduced employee compensation and related payroll taxes, lower employee benefit costs resulting from an event helddue to increased employee contributions towards health benefit plans and a reduction in the Company’s matching portion of employee contributions to 401-K plans, lower outside contributor, traffic acquisition and temporary help costs, the aggregate of which decreased by MDLapproximately $966 thousand. Also contributing to the decline was a reduction in corporate expense allocations totaling approximately $80$73 thousand. ThereThese cost decreases were no events held duringpartially offset by increases in hosting, internet access and data costs, the same period last year.aggregate of which increased by approximately $169 thousand.

Sales and Marketing