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, ~~2017~~2018

Commission File Number 000-25779

THESTREET, INC.

(Exact name of Registrant as specified in its charter)

Delaware		06-1515824
(State or other jurisdiction of incorporation or organization)		(I.R.S. Employer Identification Number)

14 Wall Street

New York, New York 10005

(Address of principal executive offices, including zip code)

(212) 321-5000

(Registrant’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. Yes ☒ 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). Yes ☒ 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, or an emerging growth company. See the definitions of “large accelerated filer”, “accelerated filer”, “smaller reporting company” and ~~“smaller reporting~~“emerging growth company” in Rule 12b-2 of the Exchange Act.

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

Emerging growth company ☐

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

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes ☐ No ☒

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

		Number of Shares Outstanding
Title of Class	~~Number of Shares Outstanding~~	as of November ~~10, 2017~~9, 2018
Common Stock, par value $0.01 per share	~~49,013,925~~	49,612,180

TheStreet, Inc.

Form 10-Q

As of and for the Three and Nine Months Ended September 30, ~~2017~~2018


Part I - FINANCIAL INFORMATION		3
Item 1.	Interim Condensed Consolidated Financial Statements	3
	Condensed Consolidated Balance Sheets	3
	Condensed Consolidated Statements of Operations	4
	Condensed Consolidated Statements of Comprehensive (Loss) Income ~~(Loss)~~	5
	Condensed Consolidated Statements of Cash Flows	6
	Notes to Condensed Consolidated Financial Statements	7
Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	2119
Item 3.	Quantitative and Qualitative Disclosures About Market Risk	3528
Item 4.	Controls and Procedures	3629

PART II - OTHER INFORMATION		3629
Item 1.	Legal Proceedings	3629
Item 1A.	Risk Factors	3629
Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds	3629
Item 3.	Defaults Upon Senior Securities	3629
Item 4.	Mine Safety Disclosures	3730
Item 5.	Other Information	3730
3Item 6.	Exhibits	3831
SIGNATURES		3932

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” in Item 1A of our Annual Report on Form 10-K for the year ended December 31, ~~2016.~~2017. 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, specifically, references in this Quarterly Report to “TheStreet,” the “Company,” “we,” “us” and “our” refer to TheStreet, Inc. and its consolidated subsidiaries.

Part I – FINANCIAL INFORMATION

Item 1. Interim Condensed Consolidated Financial Statements.

THESTREET, INC.

CONDENSED CONSOLIDATED BALANCE SHEETS

							September 30, 2018			December 31, 2017
	September 30, 2017			December 31, 2016			(unaudited)			Revised See Note #4
assets	(unaudited)
Current Assets:
Cash and cash equivalents	$	23,990,179		$	21,371,122		$	40,833,954		$	11,684,817
Accounts receivable, net of allowance for doubtful accounts of $331,793 as of September 30, 2017 and $316,204 as of December 31, 2016		4,809,393			5,119,959
Accounts receivable, net of allowance for doubtful accounts of $296,243 as of September 30, 2018 and $278,977 as of December 31, 2017								4,572,216			4,546,308
Other receivables, net		309,832			358,266			3,616,486			389,353
Prepaid expenses and other current assets		2,014,597			1,416,956			1,615,839			1,615,720
Current assets of discontinued operations								—			230,116
Total current assets		31,124,001			28,266,303			50,638,495			18,466,314

Noncurrent Assets:
Property and equipment, net of accumulated depreciation and amortization of $5,420,056 as of September 30, 2017 and $5,682,286 as of December 31, 2016		2,834,366			3,550,007
Property and equipment, net of accumulated depreciation and amortization of $6,026,109 as of September 30, 2018 and $5,475,077 as of December 31, 2017								1,602,024			2,092,669
Marketable securities		1,600,250			1,550,000			1,833,535			1,680,000
Other assets		302,091			285,843			1,123,862			306,465
Goodwill		29,408,292			29,183,141			23,515,608			23,568,472
Other intangible assets, net of accumulated amortization of $22,545,755 as of September 30, 2017 and $20,134,178 as of December 31, 2016		14,399,003			15,127,818
Other intangible assets, net of accumulated amortization of $18,370,335 as of September 30, 2018 and $15,702,665 as of December 31, 2017								12,608,512			12,966,569
Deferred tax asset								1,514,854			1,865,453
Restricted cash		500,000			500,000			500,000			500,000
Total Assets	$	80,168,003		$	78,463,112
Noncurrent assets of discontinued operations								—			7,564,606
Total assets							$	93,336,890		$	69,010,548

liabilities and stockholders’ equity
Current Liabilities:
Accounts payable	$	2,189,424		$	2,526,034		$	1,867,612		$	1,999,772
Accrued expenses		3,563,019			5,115,558			3,999,779			3,690,337
Deferred revenue		24,338,054			22,476,962			21,863,890			19,201,693
Other current liabilities		1,906,511			983,799			793,794			1,835,679
Current liabilities of discontinued operations								—			4,246,891
Total current liabilities		31,997,008			31,102,353			28,525,075			30,974,372
Noncurrent Liabilities:
Deferred tax liability		2,481,303			2,036,487			1,046,387			803,917
Other noncurrent liabilities		2,146,454			3,274,816			1,744,652			1,543,602
Noncurrent liabilities of discontinued operations								—			741,856
Total liabilities		36,624,765			36,413,656			31,316,114			34,063,747

Stockholders’ Equity:
Preferred stock; $0.01 par value; 10,000,000 shares authorized; 5,500 issued and outstanding as of September 30, 2017 and December 31, 2016; the aggregate liquidation preference totals $55,000,000 as of September 30, 2017 and December 31, 2016		55			55
Common stock; $0.01 par value; 100,000,000 shares authorized; 43,404,372 shares issued and 35,872,589 shares outstanding as of September 30, 2017, and 42,936,906 shares issued and 35,421,217 shares outstanding as of December 31, 2016		434,044			429,369
Common Stock; $0.01 par value; 100,000,000 shares authorized; 57,330,389 shares issued and 49,609,152 shares outstanding as of September 30, 2018, and 56,891,551 shares issued and 49,181,462 shares outstanding as of December 31, 2017								573,304			568,916
Additional paid-in capital		272,345,333			271,143,445			261,281,003			259,569,737
Accumulated other comprehensive loss		(5,005,790	)		(5,898,305	)		(5,264,875	)		(4,845,650	)
Treasury stock at cost; 7,531,783 shares as of September 30, 2017 and 7,515,689 shares as of December 31, 2016		(13,223,610	)		(13,211,141	)
Treasury stock at cost; 7,721,237 shares as of September 30, 2018 and 7,710,089 shares as of December 31, 2017								(13,503,567	)		(13,484,924	)
Accumulated deficit		(211,006,794	)		(210,413,967	)		(181,065,089	)		(206,861,278	)
Total stockholders’ equity		43,543,238			42,049,456			62,020,776			34,946,801
Total liabilities and stockholders’ equity	$	80,168,003		$	78,463,112		$	93,336,890		$	69,010,548

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

THESTREET, INC.

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS

(unaudited)

												For the Three Months Ended September 30,						For the Nine Months Ended September 30,
	For the Three Months Ended September 30,					For the Nine Months Ended September 30,
	2017		2016			2017			2016			2018			2017			2018			2017
Revenue:
Business to business	$	7,870,124	$	7,215,910		$	23,112,310		$	21,879,869		$	6,274,824		$	5,951,581		$	18,866,397		$	17,418,252
Business to consumer		7,382,672		7,997,944			23,380,528			25,695,944			6,732,404			7,382,672			20,305,251			23,380,528
Total revenue		15,252,796		15,213,854			46,492,838			47,575,813			13,007,228			13,334,253			39,171,648			40,798,780

Operating expense:
Cost of services (exclusive of depreciation and amortization shown separately below)		6,645,804		7,924,852			20,631,855			23,956,285
Cost of services													5,770,422			6,185,753			16,977,154			19,261,777
Sales and marketing		3,077,783		3,736,815			10,198,956			11,634,402			3,639,704			2,782,596			11,017,781			9,265,547
General and administrative		3,882,898		3,937,226			11,761,402			12,930,523			4,368,148			3,718,094			12,687,396			11,268,698
Depreciation and amortization		1,352,760		1,080,651			3,834,785			2,996,121			1,166,717			1,115,035			3,424,630			3,189,538
Restructuring and other charges		—		(582,519	)		198,979			960,491			—			—			—			198,979
Total operating expense		14,959,245		16,097,025			46,625,977			52,477,822			14,944,991			13,801,478			44,106,961			43,184,539
Operating income (loss)		293,551		(883,171	)		(133,139	)		(4,902,009	)
Net interest income (expense)		8,168		(12,179	)		26,224			(24,273	)
Net income (loss) before income taxes		301,719		(895,350	)		(106,915	)		(4,926,282	)
Provision for income taxes		111,850		325,781			485,912			949,657
Net income (loss)	$	189,869	$	(1,221,131	)	$	(592,827	)	$	(5,875,939	)
Operating loss													(1,937,763	)		(467,225	)		(4,935,313	)		(2,385,759	)
Net interest income													32,359			8,168			81,167			26,224
Loss before income taxes from continuing operations													(1,905,404	)		(459,057	)		(4,854,146	)		(2,359,535	)
(Loss) income from discontinued operations													(129,809	)		842,588			1,725,646			2,568,957
(Loss) gain on sale of business, net of tax													(551,752	)		—			27,067,071			—
(Loss) income before income taxes													(2,586,965	)		383,531			23,938,571			209,422
(Provision) benefit for income taxes													775,014			(193,662	)		1,083,763			(802,249	)
Net (loss) income attributable to common stockholders												$	(1,811,951	)	$	189,869		$	25,022,334		$	(592,827	)

Net income (loss) per share:
Basic net income (loss) attributable to common stockholders	$	0.01	$	(0.03	)	$	(0.02	)	$	(0.17	)
Diluted net income (loss) attributable to common stockholders	$	0.01	$	(0.03	)	$	(0.02	)	$	(0.17	)
Net (loss) income per share:
Basic net (loss) income attributable to common stockholders:
Continuing operations												$	(0.02	)	$	(0.02	)	$	(0.08	)	$	(0.09	)
Discontinued operations													(0.02	)		0.03			0.59			0.07
Basic net (loss) income per share												$	(0.04	)	$	0.01		$	0.51		$	(0.02	)

Diluted net (loss) income attributable to common stockholders:
Continuing operations												$	(0.02	)	$	(0.02	)	$	(0.08	)	$	(0.09	)
Discontinued operations													(0.02	)		0.03			0.57			0.07
Diluted net (loss) income per share												$	(0.04	)	$	0.01		$	0.49		$	(0.02	)

Weighted average basic shares outstanding		35,869,751		35,253,930			35,710,049			35,228,863			49,600,837			35,869,751			49,362,018			35,710,049
Weighted average diluted shares outstanding		36,142,548		35,253,930			35,710,049			35,228,863			49,600,837			36,142,548			50,695,450			35,710,049

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

THESTREET, INC.

CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE (LOSS) INCOME

(unaudited)

For the Three Months Ended For the Nine Months Ended
September 30, September 30,
2018 2017 2018 2017
Net (loss) income $ (1,811,951 ) $ 189,869 $ 25,022,334 $ (592,827 )
Foreign currency translation (loss) gain (243,556 ) (158,076 ) (572,760 ) 842,265
Unrealized gain on marketable securities 83,509 55,500 153,535 50,250
Comprehensive (loss) income $ (1,971,998 ) $ 87,293 $ 24,603,109 $ 299,688

The accompanying Notes to Condensed Consolidated Financial Statements are an integral part of these financial statements
4

THESTREET, INC.
CONDENSED CONSOLIDATED STATEMENTS OF ~~COMPREHENSIVE INCOME (LOSS)~~CASH FLOWS
(unaudited)

For the Three Months Ended
September 30, For the Nine Months Ended
September 30,
2017 2016 2017 2016
Net income (loss) $ 189,869 $ (1,221,131 ) $ (592,827 ) $ (5,875,939 )
Foreign currency translation (loss) gain (158,076 ) (630,567 ) 842,265 (2,835,673 )
Unrealized gain (loss) on marketable securities 55,500 20,000 50,250 (100,000 )
Comprehensive income (loss) $ 87,293 $ (1,831,698 ) $ 299,688 $ (8,811,612 )
For the Nine Months Ended September 30,
2018 2017
Cash Flows from Operating Activities:
Net income (loss) $ 25,022,334 $ (592,827 )
Adjustments to reconcile net loss to net cash provided by operating activities:
Gain on sale of business, net of tax (27,067,071 ) —
Stock-based compensation expense 1,715,731 1,205,978
Provision for doubtful accounts 55,109 69,260
Depreciation and amortization 3,584,922 3,834,785
Deferred taxes (1,108,994 ) 444,816
Deferred rent (203,659 ) (394,839 )
Changes in operating assets and liabilities:
    Accounts receivable (178,173 ) 332,707
    Other receivables 122,867 49,336
    Prepaid expenses and other current assets 246,411 (582,693 )
    Other assets (356,060 ) (4,417 )
    Accounts payable (141,116 ) (344,356 )
    Accrued expenses (42,772 ) (1,573,044 )
    Deferred revenue 3,386,141 1,719,817
    Other current liabilities (73,126 ) (540 )
    Other liabilities 137,610 —
Net cash provided by operating activities 5,100,154 4,163,983

Cash Flows from Investing Activities:
Proceeds from sale of business, net 28,232,100 —
Capital expenditures (2,870,300 ) (1,832,925 )
Net cash provided by (used in) investing activities 25,361,800 (1,832,925 )

Cash Flows from Financing Activities:
Cash dividends paid on Common Stock (68,162 ) (68,245 )
Earnout payment for prior acquisition (951,867 ) —
Shares withheld on RSU vesting to pay for withholding taxes (17,228 ) (12,469 )
Share repurchase (1,415 ) —
Net cash used in financing activities (1,038,672 ) (80,714 )

Effect of foreign exchange rate changes on cash and cash equivalents (274,145 ) 368,713

Net increase in cash, cash equivalents and restricted cash 29,149,137 2,619,057
Cash, cash equivalents and restricted cash beginning of period 12,184,817 21,871,122
Cash, cash equivalents and restricted cash end of period $ 41,333,954 $ 24,490,179

The accompanying Notes to Condensed Consolidated Financial Statements are an integral part of these financial statements
5

~~THESTREET, INC.~~
~~CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS~~
~~(unaudited)~~
For the Nine Months Ended September 30,
2017 2016
Cash Flows from Operating Activities:
Net loss $ (592,827 ) $ (5,875,939 )
Adjustments to reconcile net loss to net cash provided by (used in) operating activities:
Stock-based compensation expense 1,205,978 1,152,025
Provision for (recovery of) doubtful accounts 69,260 (13,892 )
Depreciation and amortization 3,834,785 2,996,121
Deferred taxes 444,816 842,176
Restructuring and other charges — 105,113
Deferred rent (394,839 ) (547,350 )
Changes in operating assets and liabilities:
Accounts receivable 332,707 1,465,800
Other receivables 49,336 266,451
Prepaid expenses and other current assets (582,693 ) (393,861 )
Other assets (4,417 ) 3,999
Accounts payable (344,356 ) 40,502
Accrued expenses (1,573,044 ) (38,541 )
Deferred revenue 1,719,817 (1,404,244 )
Other current liabilities (540 ) (208,328 )
Other liabilities — 99,475
Net cash provided by (used in) operating activities 4,163,983 (1,510,493 )

Cash Flows from Investing Activities:
Restricted cash — 161,250
Capital expenditures (1,832,925 ) (2,707,638 )
Net cash used in investing activities (1,832,925 ) (2,546,388 )

Cash Flows from Financing Activities:
Cash dividends paid on common stock (68,245 ) (12,492 )
Shares withheld on RSU vesting to pay for withholding taxes (12,469 ) (5,057 )
Net cash used in financing activities (80,714 ) (17,549 )

Effect of foreign exchange rate changes on cash and cash equivalents 368,713 (425,091 )

Net increase (decrease) in cash and cash equivalents 2,619,057 (4,499,521 )
Cash and cash equivalents, beginning of period 21,371,122 28,445,416
Cash and cash equivalents, end of period $ 23,990,179 $ 23,945,895
~~The accompanying Notes to Condensed Consolidated Financial Statements are an integral part of these financial statements~~
6
TheStreet, Inc.
Notes to Condensed Consolidated Financial Statements
(unaudited)

1.      DESCRIPTION OF THE BUSINESS AND BASIS OF PRESENTATION

TheStreet, Inc. isa leading financial news and information provider. Our business-to-business (B2B) and business-to-consumer (B2C) content and products provide individual and institutional investors, 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 Deal delivers sophisticated news and analysis on changes in corporate control including mergers and acquisitions, private equity, corporate activism and restructuring. BoardEx is an institutional relationship capital management 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 from 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 retail investing public. Our B2C business primarily generates revenue from premium subscription products and advertising revenue.

Unaudited Interim Financial Statements

The interim condensed consolidated balance sheet as of September 30, ~~2017,~~2018, the condensed consolidated statements of operations and comprehensive (loss) income ~~(loss)~~ for the three and nine months ended September 30, ~~2017~~2018 and ~~2016,~~2017, and the condensed statements of cash flows for the nine months ended September 30, ~~2017~~2018 and ~~2016~~2017 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, ~~2017,~~2018, its results of consolidated operations and comprehensive (loss) income ~~(loss)~~ for the three and nine months ended September 30, ~~2017~~2018 and ~~2016,~~2017, and cash flows for the nine months ended September 30, ~~2017~~2018 and ~~2016.~~2017. The financial data and 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, ~~2017~~2018 are not necessarily indicative of the results to be expected for the fiscal year ending December 31, ~~2017~~2018 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, ~~2016~~2017 filed with the SEC on March ~~20, 2017.~~13, 2018. These financial statements should also be read in conjunction with the audited consolidated financial statements and notes thereto for the year ended December 31, ~~2016.~~2017. 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, ~~2016~~2017 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.

7
Recently 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-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). The Company will adopt this guidance on January 1, 2018.
The Company is currently evaluating the overall impact that ASU 2014-09 will have on the Company’s consolidated financial statements, as well as the expected timing and method 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 recognizing 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. The Company is in the process of evaluating the effect the standard will have on its financial statements, however the Company does not lease any office equipment and our office space leases are the only leases with a term longer than 12 months.
8

In June 2016, the FASB issued ASU No. 2016-13,“Financial Instruments-Credit Losses (Topic 326): Measurement of Credit Losses on Financial Instruments” (“ASU 2016-13”). ASU 2016-13 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~~the Company’s financial receivables, past loss activity and current known activity regarding our outstanding receivables, ~~we do~~the Company does not expect that the adoption of this new standard will have a material impact on ~~our~~its consolidated financial statements.

~~In August 2016,~~2.       DIVESTITURE
On June 20, 2018, the ~~FASB issued ASU No. 2016-15,~~~~Classification~~Company entered into an asset purchase agreement (the “Purchase Agreement”) with S&P Global Market Intelligence Inc., an affiliate of ~~Certain Cash Receipts~~S&P Global Inc.(“S&P”), pursuant to which the Company agreed to sell the assets comprising its RateWatch business to S&P. The Purchase Agreement provides that S&P will pay an aggregate consideration of $33.5 million in cash to acquire the business, subject to working capital and ~~Cash Payments(“ASU 2016-15”). ASU 2016-15 is intended to add or clarify guidance on~~certain other closing adjustments.
Operating results for the ~~classification of certain cash receipts and payments~~RateWatch business, which have been previously included in the ~~statement~~Business to Business Segment, have now been reclassified as discontinued operations for all periods presented.
Gain on sale of ~~cash flows and~~RateWatch amounting to ~~eliminate~~$27.1 million, net of a tax expense of $1.6 million, was calculated as the ~~diversity~~selling price less direct costs to complete the transaction. Included in ~~practice related~~such costs is approximately $568 thousand pertaining to ~~such classifications.~~ certain employee costs that were assumed by the Company as part of the transaction.
The ~~guidance~~following table presents the discontinued operations of RateWatch in ~~ASU 2016-15 is required~~the Condensed Consolidated Balance Sheets:
ASSETS December 31, 2017
Current Assets:
Accounts Receivable, net $ 138,262
Prepaid Expenses and Other Current Assets 91,854
Total Current Assets 230,116
Noncurrent Assets:
Property and Equipment, net 659,143
Goodwill 5,851,050
Other Intangibles, net 1,054,413
Total Assets $ 7,794,722

LIABILITIES
Current Liabilities:
Accounts Payable $ 14,026
Accrued Expenses 75,458
Deferred Revenue 4,106,985
Other Current Liabilities 50,422
Total Current Liabilities 4,246,891
Noncurrent Liabilities:
Noncurrent Deferred Rent 462,183
Noncurrent Deferred Revenue 58,323
Deferred Tax Liability 221,350
Total Liabilities $ 4,988,747

The following table presents the discontinued operations of RateWatch in the Condensed Consolidated Statement of Operations:
Three Months Three Months Nine Months Nine Months
Ended Ended Ended Ended
September 30, 2018 September 30, 2017 September 30, 2018 September 30, 2017
Net revenue $ — $ 1,918,543 $ 3,944,302 $ 5,694,057
Operating expense:
Cost of services (24 ) 460,051 870,519 1,370,077
Sales and marketing 1,793 295,187 718,299 933,409
General and administrative 96,717 164,804 365,753 492,704
Depreciation and amortization — 237,725 160,293 645,247
     Total operating expense 98,486 1,157,767 2,114,864 3,441,437
     Operating (loss) income (98,486 ) 760,776 1,829,438 2,252,620
(Provision) benefit for income taxes (31,323 ) 81,812 (103,792 ) 316,337
Net (loss) income $ (129,809 ) $ 842,588 $ 1,725,646 $ 2,568,957
The following table presents the discontinued operations of RateWatch in the Condensed Consolidated Statements of Cash Flows:
Nine Months Ended Nine Months Ended
September 30, 2018 September 30, 2017
Net cash provided by operating activities $ 2,103,406 $ 3,375,137
Net cash used in investing activities (37,006 ) (10,538 )
Net cash used in financing activities — —
Effect of foreign exchange rate changes on cash and cash equivalents — —
Net increase in cash, cash equivalents and restricted cash $ 2,066,400 $ 3,364,599
3.            REVENUES
Adoption of ASC Topic 606, “Revenue from Contracts with Customers”
On January 1, 2018, we adopted Topic 606 using the modified retrospective method applied to those contracts which were not completed as of January 1, 2018. Results for ~~annual~~ reporting periods beginning after ~~December 15, 2017,~~January 1, 2018 are presented under Topic 606, while prior period amounts are not adjusted and continue to be reported in accordance with ~~early adoption permitted.~~ our historic accounting under Topic 605.
The ~~pending~~Company recorded an adjustment to opening accumulated deficit of approximately $774 thousand due to the cumulative impact of adopting Topic 606, with the impact primarily related to sales commissions.
Nature of our Services
Business to business subscription revenue is primarily comprised of subscriptions that provide access to director and officer profiles, relationship capital management services and transactional information pertaining to the mergers and acquisitions environment. Business to consumer subscription revenue is primarily comprised of subscriptions that provide access to securities investment information and stock market commentary. Advertising revenue is comprised of fees charged for the placement of advertising and sponsorships, primarily withinTheStreet.com website. Other revenue is primarily composed of events/conferences, information services and other miscellaneous revenue.
We provide subscription and advertising services on a global basis to a broad range of clients. Our principal source of revenue is derived from fees for subscription services that is sold on an annual or monthly basis. We measure revenue based upon the consideration specified in the client arrangement, and revenue is recognized when the performance obligations in the client arrangement are satisfied. A performance obligation is a promise in a contract to transfer a distinct service to the customer. The transaction price of a contract is allocated to each distinct performance obligation and recognized as revenue when or as, the customer receives the benefit of the performance obligation. Clients typically receive the benefit of our services as they are performed. Under ASC 606, revenue is recognized when a customer obtains control of promised services in an amount that reflects the consideration we expect to receive in exchange for those services. To achieve this core principal, the Company applies the following five steps:

1)           Identify the contract with a customer
A contract with a customer exists when (i) the Company enters into an enforceable contract with a customer that defines each party’s rights regarding the services to be transferred and identifies the payment terms related to these services, (ii) the contract has commercial substance and, (iii) the Company determines that collection of substantially all consideration for services that are transferred is probable based on the customer’s intent and ability to pay the promised consideration. The Company applies judgment in determining the customer’s ability and intention to pay, which is based on a variety of factors including the customer’s historical payment experience or, in the case of a new customer, published credit and financial information pertaining to the customer.
2)         Identify the performance obligations in the contract
Performance obligations promised in a contract are identified based on the services that will be transferred to the customer that are both capable of being distinct, whereby the customer can benefit from the service either on its own or together with other resources that are readily available from third parties or from the Company, and are distinct in the context of the contract, whereby the transfer of the services is separately identifiable from other promises in the contract. To the extent a contract includes multiple promised services, the Company must apply judgment to determine whether promised services are capable of being distinct in the context of the contract. If these criteria are not met the promised services are accounted for as a combined performance obligation.
3)           Determine the transaction price
The transaction price is determined based on the consideration to which the Company will be entitled in exchange for transferring services to the customer.
4)            Allocate the transaction price to performance obligations in the contract
If the contract contains a single performance obligation, the entire transaction price is allocated to the single performance obligation. However, if a series of distinct services that are substantially the same qualifies as a single performance obligation in a contract with variable consideration, the Company must determine if the variable consideration is attributable to the entire contract or to a specific part of the contract. Contracts that contain multiple performance obligations require an allocation of the transaction price to each performance obligation based on a relative standalone selling price basis unless the transaction price is variable and meets the criteria to be allocated entirely to a performance obligation or to a distinct service that forms part of a single performance obligation. The Company determines standalone selling price based on the price at which the performance obligation is sold separately. If the standalone selling price is not observable through past transactions, the Company estimates the standalone selling price taking into account available information such as market conditions and internally approved pricing guidelines related to the performance obligations.
5)           Recognize revenue when or as the Company satisfies a performance obligation
The Company satisfies performance obligations either over time or at a point in time. Revenue is recognized at the time the related performance obligation is satisfied by transferring a promised service to a customer.
Substantially all of our revenue is recognized over time, as the services are performed. For subscriptions, revenue is recognized ratably over the subscription period. For advertising, revenue is recognized as the advertisement is displayed provided that collection of the resulting receivable is reasonably assured.

The following table presents our revenues disaggregated by revenue discipline.
For the Three Months Ended For the Nine Months Ended
September 30, September 30,
2018 2017 2018 2017
Subscription $ 10,934,315 $ 10,619,614 $ 32,061,595 $ 31,276,063
Advertising 1,507,231 2,168,434 4,823,978 7,324,198
Other 565,682 546,205 2,286,075 2,198,519
Total Revenue $ 13,007,228 $ 13,334,253 $ 39,171,648 $ 40,798,780
Deferred Revenues
We record deferred revenues when cash payments are received in advance of our performance, primarily for subscription revenues. The increase in deferred revenues for the nine months ended September 30, 2018 is primarily driven by cash payments received in advance of satisfying our performance obligations.
Contract Costs
As of September 30, 2018, the Company has a total of $998 thousand in assets relating to costs incurred to obtain or fulfill contracts, consisting predominantly of prepaid commissions. Prepaid commissions are amortized over the average customer relationship period. The amortization expense recognized during the nine months ended September 30, 2018 was $102 thousand. There was no impairment loss recognized during the period.
Practical Expedients and Exemptions
The Company did not apply any practical expedients during the adoption of ~~this new standard is not expected~~ASC 606. The Company elected to use the portfolio method in the calculation of the deferred contract costs.
4. REVISION OF PRIOR PERIOD FINANCIAL STATEMENTS
In connection with the preparation of our condensed consolidated financial statements for the quarter ended March 31, 2018, we identified an error as of December 31, 2017 in our recognition of a deferred tax asset related to the change in the tax law, which causes net operating losses (NOL) generated in taxable years ending after December 31, 2017 to have an indefinite carryforward period. This means that a deferred tax liability that has an indefinite reversal pattern may serve as a source of taxable income for those NOLs. The correction of this error requires a reduction to the valuation allowance with a corresponding adjustment to the opening equity balance as this error existed as of December 31, 2017.
In accordance with Staff Accounting Bulletin (“SAB”) No. 99, Materiality, and SAB No. 108, Considering the Effects of Prior Year Misstatements when Quantifying Misstatements in Current Year Financial Statements, we evaluated the error and determined that the related impact was not material to our results of operations or financial position for any prior annual or interim period, but that correcting the $926 thousand cumulative impact onof the error would be material to our results of operations for the three months ended March 31, 2018. Accordingly, we have corrected the consolidated balance sheets and consolidated statement of operations as of December 31, 2017. There was no impact to 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 changes in restricted cash are presented and classified~~provided by operations in the statement of cash flows. The guidance requires that a statement of cash flows explain the change during the period in the total of cash, cash equivalents, and amounts generally described as restricted cash or restricted cash equivalents. Therefore, amounts generally described as restricted cash and restricted 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~~This error had no impact on ~~our~~the three months ended March 31, 2018. The impact to the consolidated ~~financial statements.~~balance sheets and consolidated statements of operations as of December 31, 2017 is as follows:

~~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.
As of December 31, 2017
Consolidated Balance Sheets As Reported Adjustment As Revised
Deferred tax liability $ 1,932,606 $ (925,852 ) $ 1,006,754
Total liabilities 34,989,599 (925,852 ) 34,063,747
Accumulated deficit (207,787,130 ) 925,852 (206,861,278 )
Total stockholders’ equity 34,020,949 925,852 34,946,801

Consolidated Statements of Operations
Benefit for income taxes $ 1,882,310 $ 925,852 $ 2,808,162
Net income 2,626,837 925,852 3,552,689

~~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, 2017, with early adoption permitted. The pending adoption of this standard is not expected to have a material impact on our consolidated financial statements.

9
2.5. CASH AND CASH EQUIVALENTS, MARKETABLE SECURITIES AND RESTRICTED CASH

The Company’s cash and cash equivalents and restricted cash primarily consist of checking accounts and money market funds. As of September 30, ~~2017~~2018 and December 31, ~~2016,~~2017, 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 ~~$1.6~~$1.8 million and ~~$1.6~~$1.7 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~~income and excluded from net income ~~(loss)~~ as they are deemed temporary. Additionally, as of September 30, ~~2017~~2018 and December 31, ~~2016,~~2017, the Company has a total of ~~approximately~~ $500 thousand of cash that serves as collateral for an outstanding letter of credit, and which cash is therefore restricted. The letter of credit serves as a security deposit for the Company’s office space in New York City.

September 30,
2017

December 31,
2016

September 30,
2018

December 31,
2017

Cash and cash equivalents $ 23,990,179 $ 21,371,122 $ 40,833,954 $ 11,684,817
Marketable securities 1,600,250 1,550,000 1,833,535 1,680,000
Restricted cash 500,000 500,000 500,000 500,000
Total cash and cash equivalents, marketable securities and restricted cash $ 26,090,429 $ 23,421,122 $ 43,167,489 $ 13,864,817

3.6. FAIR VALUE MEASUREMENTS

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:

~~Level 1: Inputs are quoted market prices in active markets for identical assets or liabilities (these are observable market inputs).~~
● Level 1: Inputs are quoted market prices in active markets for identical assets or liabilities (these are observable market inputs).

Level 2: Inputs other than quoted market prices included within Level 1 that are observable for the asset or liability (includes quoted market prices for similar assets or identical or similar assets in markets in which there are few transactions, prices that are not current or vary substantially).
● Level 2: Inputs other than quoted market prices included within Level 1 that are observable for the asset or liability (includes quoted market prices for similar assets or identical or similar assets in markets in which there are few transactions, prices that are not current or vary substantially).

~~Level 3: Inputs are unobservable inputs that reflect the entity’s own assumptions in pricing the asset or liability (used when little or no market data is available).~~
10 ● Level 3: Inputs are unobservable inputs that reflect the entity’s own assumptions in pricing the asset or liability (used when little or no market data is available).

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:

As of September 30, 2017 As of September 30, 2018
Description: Total Level 1 Level 2 Level 3 Total Level 1 Level 2 Level 3
Cash and cash equivalents (1) $ 23,990,179 $ 23,990,179 $ — $ — $ 40,833,954 $ 40,833,954 $ — $ —
Restricted cash (1) 500,000 500,000 — — 500,000 500,000 — —
Marketable securities (2) 1,600,250 — — 1,600,250 1,833,535 — — 1,833,535
Contingent earn-out (3) 940,815 — — 940,815
Total at fair value $ 27,031,244 $ 24,490,179 $ — $ 2,541,065 $ 43,167,489 $ 41,333,954 $ — $ 1,833,535

As of December 31, 2016
Description: Total Level 1 Level 2 Level 3
Cash and cash equivalents (1) $ 21,371,122 $ 21,371,122 $ — $ —
Restricted cash (1) 500,000 500,000 — —
Marketable securities (2) 1,550,000 — — 1,550,000
Contingent earn-out (3) 907,657 — — 907,657
Total at fair value $ 24,328,779 $ 21,871,122 $ — $ 2,457,657
As of December 31, 2017
Description: Total Level 1 Level 2 Level 3
Cash and cash equivalents (1) $ 11,684,817 $ 11,684,817 $ — $ ��
Restricted cash (1) 500,000 500,000 — —
Marketable securities (2) 1,680,000 — — 1,680,000
Contingent earn-out (3) 951,867 — — 951,867
Total at fair value $ 14,816,684 $ 12,184,817 $ — $ 2,631,867

(1) Cash, ~~and~~ cash equivalents and restricted cash, totaling approximately ~~$24.5~~$41.3 million and ~~$21.9~~$12.2 million as of September 30, ~~2017~~2018 and December 31, ~~2016,~~2017, respectively, consist primarily of checking accounts and money market funds for which we determine fair value through quoted market prices.
(2) Marketable securities include two municipal ARS issued by the District of Columbia having a fair value totaling approximately ~~$1.6~~$1.8 million and ~~$1.6~~$1.7 million as of September 30, ~~2017~~2018 and December 31, ~~2016,~~2017, respectively. Historically, the fair value of ARS investments approximated par value due to the frequent resets through the auction process. Due to events in credit markets, the auction events, which historically have provided liquidity for these securities, have been unsuccessful. The result of a failed auction is that these ARS holdings will continue to pay interest in accordance with their terms at each respective auction date; however, liquidity of the securities will be limited until there is a successful auction, the issuer redeems the securities, the securities mature or until such time as other markets for these ARS holdings develop. For each of our ARS, we evaluate the risks related to the structure, collateral and liquidity of the investment, and forecast the probability of issuer default, auction failure and a successful auction at par, or a redemption at par, for each future auction period. Temporary impairment charges are recorded in accumulated other comprehensive loss, whereas other-than-temporary impairment charges are recorded in our consolidated statement of operations. As of September 30, ~~2017,~~2018, the Company determined there was a cumulative decline in the fair value of its ARS investments of approximately ~~$250~~$16 thousand from its cost basis, which was deemed temporary and was included within accumulated other comprehensive ~~loss.~~
(loss) income.
(3) Contingent earn-out ~~represents~~represented additional purchase consideration payable to the former shareholders of Management Diagnostics Limited based upon the achievement of specific 2017 audited revenue benchmarks.  The ~~probability of achieving each benchmark is based on Management’s assessment of the projected 2017 revenue. The present value of each probability weighted payment~~balance was ~~calculated by discounting the probability weighted payment by the corresponding present value factor.~~paid in May 2018.

11

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):

Marketable
Securities
Balance December 31, 2016 $ 1,550,000
Change in fair value of investment 50,250
Balance September 30, 2017 $ 1,600,250
Marketable Securities
Balance December 31, 2017 $ 1,680,000
Change in fair value of investment 153,535
Balance September 30, 2018 $ 1,833,535

Contingent
Earn-Out
Balance December 31, 2016 $ 907,657
Accretion to net present value 33,158
Balance September 30, 2017 $ 940,815
Contingent Earn-Out
Balance December 31, 2017 $ 951,867
Payment made May 2018 (951,867 )
Balance September 30, 2018 $ —

4.7. STOCK-BASED COMPENSATION

Stock-based compensation expense recognized in the Company’s consolidated statements of operations for the three and nine months ended September 30, ~~2017~~2018 and ~~2016~~2017 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 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 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 assumption 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, 2018 and 2017 was $0.42 and ~~2016 was~~ $0.27, ~~and $0.37,~~ respectively, using the Black-Scholes model with the following weighted-average assumptions:

For the Nine Months Ended
September 30,
2017 2016
Expected option lives 3.7 years 4.5 years
Expected volatility 37.64% 34.78%
Risk-free interest rate 1.55% 1.11%
Expected dividend yield 0.00% 0.00%
12
For the Nine Months Ended
September 30,
2018 2017
Expected option lives 1.78 years 3.7 years
Expected volatility 47.28% 37.64%
Risk-free interest rate 2.47% 1.55%
Expected dividend yield 0.00% 0.00%

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 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, 2018 and 2017 was $1.68 and ~~2016 was~~ $0.90, ~~and $1.30,~~ respectively.

At the Company’s May 2018 Board meeting, the number of shares available for grant was increased by 5.2 million shares. As of September 30, ~~2017,~~2018, there remained approximately ~~1.2~~3.3 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~~$797 thousand and ~~$1.2~~$1.7 million of ~~noncash~~ stock-based compensation for the three and nine month periods ended September 30, ~~2017,~~2018, respectively, as compared to ~~$407~~approximately $401 thousand and ~~$1.3~~$1.2 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,~~2017, respectively.

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:

Shares
Underlying
Awards Weighted
Average
Exercise
Price Aggregate
Intrinsic
Value
($000) Weighted
Average
Remaining Contractual
Life (In Years) Shares Underlying Awards Weighted Average Exercise Price Aggregate Intrinsic Value ($000) Weighted Average Remaining Contractual Life (In Years)
Awards outstanding at December 31, 2016 5,900,731 $ 1.52
Awards outstanding at December 31, 2017 5,491,928 $ 1.46
Options granted 135,000 $ 0.90 282,333 $ 2.02
Options exercised — N/A (8,000 )) $ 1.20
Options forfeited (27,923 ) $ 1.15 (182,752 ) $ 2.15
Options expired (623,714 ) $ 1.78 (1,816,502 ) $ 1.80
Awards outstanding at September 30, 2017 5,384,094 $ 1.47 $ 48 3.59
Awards vested and expected to vest at September 30, 2017 5,350,569 $ 1.47 $ 47 3.58
Awards exercisable at September 30, 2017 3,491,073 $ 1.62 $ 10 2.48
Awards outstanding at September 30, 2018 3,767,007 $ 1.30 $ 3,393 4.32
Awards outstanding, vested and expected to vest at September 30, 2018 3,758,212 $ 1.30 $ 3,383 4.31
Awards exercisable at September 30, 2018 2,891,515 $ 1.33 $ 2,535 4.10

13

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

Shares
Underlying
Awards Aggregate
Intrinsic
Value
($000) Weighted
Average
Remaining Contractual
Life (In Years) Shares Underlying Awards Aggregate Intrinsic Value ($000) Weighted Average Remaining Contractual Life (In Years)
Awards outstanding at December 31, 2016 717,995
Awards outstanding at December 31, 2017 446,668
Restricted stock units granted 565,599 3,149,720
Restricted stock units settled by delivery of Common Stock upon vesting (467,466 ) (430,838 )
Restricted stock units forfeited (46,389 ) (64,722 )
Awards outstanding at September 30, 2017 769,739 $ 831 0.63
Awards expected to vest at September 30, 2017 763,739 $ 825 0.54
Awards outstanding at September 30, 2018 3,100,828 $ 6,822 2.42
Awards expected to vest at September 30, 2018 3,004,078 $ 6,609 1.62

A summary of the status of the Company’s unvested stock-based ~~payment~~ awards as of September 30, ~~2017~~2018 and changes in the nine months then ended is as follows:

Unvested Awards Number of Shares Weighted
Average Grant
Date Fair Value
Shares underlying awards unvested at December 31, 2016 3,936,427 $ 0.62
Shares underlying options granted 135,000 $ 0.27
Shares underlying restricted stock units granted 565,599 $ 0.90
Shares underlying options vested (1,432,488 ) $ 0.38
Shares underlying restricted stock units settled by delivery of Common Stock upon vesting (467,466 ) $ 1.15
Shares underlying options forfeited (27,923 ) $ 0.37
Shares underlying restricted stock units cancelled (46,389 ) $ 1.20
Shares underlying awards unvested at September 30, 2017 2,662,760 $ 0.70
Unvested Awards Number of Shares Weighted Average Grant Date Fair Value
Shares underlying awards unvested at December 31, 2017 2,131,135 $ 0.48
Shares underlying options granted 282,333 $ 0.42
Shares underlying restricted stock units granted 3,149,720 $ 1.68
Shares underlying options vested (1,087,556 ) $ 0.34
Shares underlying restricted stock units settled by delivery of Common Stock upon vesting (430,838 ) $ 0.95
Shares underlying options forfeited (3,752 ) $ 0.43
Shares underlying restricted stock units forfeited (64,722 ) $ 1.72
Shares underlying awards unvested at September 30, 2018 3,976,320 $ 1.40

For the nine months ended September 30, ~~2017~~2018 and ~~2016,~~2017, the total fair value of ~~stock-based~~stock option awards vested was approximately ~~$952~~$492 thousand and ~~$389~~$952 thousand, respectively. For the nine months ended September 30, ~~2017~~2018 and ~~2016,~~2017, the total intrinsic value of options exercised was $0$8 thousand and $0, respectively (there were no options exercised during ~~either period).~~the nine months ended September 30, 2017), yielding $10 thousand of cash proceeds to the Company. For the nine months ended September 30, 2018 and 2017, approximately 282 thousand and ~~2016, approximately~~ 135 thousand ~~and 2.9 million stock options, respectively, were granted, and no~~ stock options were ~~exercised in either period yielding $0 of cash proceeds to the Company.~~granted, respectively. Additionally, for the nine months ended September 30, 2018 and 2017, approximately 3.1 million and ~~2016, approximately~~ 566 ~~thousand and 558~~ thousand restricted stock units ~~respectively,~~ were granted, respectively, and approximately ~~467~~431 thousand and ~~136~~467 thousand shares, respectively, were issued under restricted stock unit grants. For the nine months ended September 30, ~~2017~~2018 and ~~2016,~~2017, the total intrinsic value of restricted stock units that vested was approximately ~~$409~~$773 thousand and ~~$193~~$409 thousand, respectively. As of September 30, ~~2017~~2018 and ~~2016,~~2017, the total intrinsic value of awards outstanding was approximately $10.2 million and $879 thousand, ~~and $1.3 million,~~ respectively. As of September 30, ~~2017,~~2018, there was approximately ~~$1.1~~$4.4 million of unrecognized stock-based compensation expense remaining to be recognized over a weighted-average period of ~~1.18~~2.31 years.

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5.8. STOCKHOLDERS’ EQUITY

Treasury Stock

In ~~December 2000, the Company’s~~November 2017, our Board of Directors ~~authorized~~approved a new share buyback program authorizing the repurchase of up to ~~$10~~five million shares of the Company’s Common Stock ~~from time to time, in private purchases or~~(the “Program”). Purchases may be made in the open ~~market. In February 2004,~~market or in privately negotiated transactions as deemed appropriate by management. The Company may, among other things, utilize existing cash reserves and cash flows from operations to fund any repurchases. The timing and amount of any repurchases will be determined by the Company’s ~~Board of Directors approved the resumption~~management based upon its evaluation 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~~trading prices of the ~~holders of a majority of the outstanding shares of Series B Preferred Stock, voting separately as a single class, is necessary for~~security, market conditions and other factors. The Program does not obligate the Company to repurchase ~~its Common Stock (except for the purchase~~any dollar amount 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~~and may be extended, modified, suspended or discontinued at ~~the time such dividend is paid by the liquidation preference.~~ any time.

During the ~~nine~~three months ended September 30, ~~2017 and 2016,~~2018, the Company did not purchase any shares of Common Stock under the Program. ~~Since~~During the nine months ended September 30, 2018, and since the Program’s inception ofin November 2017, the ~~Program, the~~ Company ~~has~~ purchased a total of ~~5,453,416~~1,105 shares of Common Stock under the Program at an aggregate cost of approximately ~~$7.3 million.~~$1,415, inclusive of commissions.

In addition, pursuant to the terms of the Company’s 2007 Plan, and certain procedures ~~adopted~~approved 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. During the nine months ended September 30, 2018, 10,043 shares were withheld in settlement of the exercise of stock options and vested restricted stock units. Through September 30, ~~2017,~~2018, the Company had withheld an aggregate of ~~1,866,759~~2,055,108 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

~~During~~Beginning with the ~~nine months ended September 30, 2017 and~~first quarter of 2016, ~~we did not declare any cash dividends on our Common Stock or Series B Preferred Stock.~~
~~We do not expect to declare dividends in~~ the foreseeable future. The declaration, amount and payment 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, ourCompany’s 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 onsuspended the payment of ~~dividends by us~~a quarterly dividend and will continue to ~~our stockholders, and such other factors as our Board~~evaluate the uses of ~~Directors may deem relevant. The Certificate of Designations for~~its cash in connection with planned investments in the ~~Series B Preferred Stock currently prohibits the Company from paying cash dividends in excess of $0.10 per share per annum without the prior approval of the holder of the Series B Preferred Stock.~~business.

6.9. LEGAL PROCEEDINGS

The Company is party to legal proceedings arising in the ordinary course of business or otherwise, none of which is deemed material.

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7.10. NET (LOSS) INCOME ~~(LOSS)~~ PER SHARE OF COMMON STOCK

Basic net ~~income (loss)~~loss per share is computed using the weighted average number of common shares outstanding during the period. Diluted net ~~income (loss)~~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), and 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,~~2018, approximately ~~1.4~~6.7 million ~~unvested~~ restricted stock units and vested and unvested stock options ~~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 1.2 million~~ unvested restricted stock units and vested and unvested stock options ~~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.

For the Three Months Ended For the Nine Months Ended
September 30, September 30,
2017 2016 2017 2016
Basic and diluted net income (loss) per share:
Numerator:
Net income (loss) attributable to common stockholders $ 189,869 $ (1,221,131 ) $ (592,827 ) $ (5,875,939 )
Denominator:

Weighted average basic shares outstanding 35,869,751 35,253,930 35,710,049 35,228,863

Weighted average diluted shares outstanding 36,142,548 35,253,930 35,710,049 35,228,863

Net income (loss) per share:
Basic net income (loss) attributable to common stockholders $ 0.01 $ (0.03 ) $ (0.02 ) $ (0.17 )
Diluted net income (loss) attributable to common stockholders $ 0.01 $ (0.03 ) $ (0.02 ) $ (0.17 )
For the Three Months Ended For the Nine Months Ended
September 30, September 30,
2018 2017 2018 2017
Basic and diluted net (loss) income per share:
Numerator:
Net (loss) income attributable to common stockholders $ (1,811,951 ) $ 189,869 $ 25,022,334 $ (592,827 )

Denominator:
Weighted average basic shares outstanding 49,600,837 35,869,751 49,362,018 35,710,049
Weighted average diluted shares outstanding 49,600,837 36,142,548 50,695,450 35,710,049

Net (loss) income per share:
Basic net (loss) income attributable to common stockholders $ (0.04 ) $ 0.01 $ 0.51 $ (0.02 )
Diluted net (loss) income attributable to common stockholders $ (0.04 ) $ 0.01 $ 0.49 $ (0.02 )

8.11. INCOME TAXES

~~Income~~The income tax benefit from continuing operations for the three months ended September 30, 2018 was approximately $775 thousand and income tax benefit for the nine months ended September 30, 2018 was approximately $1.1 million, and reflects an effective tax rate of 40.7% and 22.3%, respectively, as compared to an expense of approximately $194 thousand and $802 thousand for the three and nine months ended September 30, 2017, respectively, reflecting an effective tax rate of approximately -42.2% and -34.0%, respectively. The Company’s effective tax rate (ETR) for the three and nine months ended September 30, 2018 was primarily impacted by the mix of domestic and foreign earnings, the election to treat the UK as a disregarded entity for US tax purposes, certain foreign taxes and the movement in the deferred tax liability related to the tax amortization of goodwill. During the three months ended June 30, 2018, the Company made certain adjustments to the beginning balance of the state deferred tax liability which resulted in a $272 thousand discrete tax benefit for domestic losses, as the US taxable income from discontinued operations is treated as a source of income to realize such losses under the intra-period allocation guidance. The Company’s ETR for the three and nine months ended September 30, 2017 was ~~approximately $112 thousand~~primarily impacted by the mix of domestic and ~~$486 thousand, respectively,~~foreign earnings, the election to treat the UK as a disregarded entity for US tax purposes and ~~reflects an effective tax rate of 37% and -454%, respectively, as compared to approximately $326 thousand and $950 thousand, respectively, for~~ the ~~three and nine months ended September 30, 2016, reflecting an effective tax rate of -36% and -19%, respectively. Income tax expense for~~movement in 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 relatesrelated to the ~~recognition~~tax amortization 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.goodwill.
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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~~is required to file U.S. ~~Federal, State~~federal, U.S. state and ~~Foreign~~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 ~~$160~~$173 million of federal and state net operating loss carryforwards (“NOL”) as of December 31, ~~2016, which results in deferred tax assets of approximately $75 million.~~2017. The Company has a full valuation allowance against its U.S. deferred tax assets as management concluded that it was more likely than not that the Company would not realize the benefit of its deferred tax assets by generating sufficient taxable income in future years. The Company expects to continue to provide a full valuation allowance until, or unless, it can sustain a level of profitability that demonstrates its 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”).~~1986. 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, the federal losses are available to offset future taxable income through ~~2036~~2037 and expire from 2019 through ~~2036.~~2037. 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 through ~~2036.~~2037. The company also has approximately $10.5 million in U.K. NOLs as of December 31, 2017. During the fourth quarter ended December 31, 2017, the Company released its U.K. valuation allowance as it was concluded that this entity has cumulative income over the last three years and Management believes it is more likely than not that the deferred tax asset will be utilized.

In June 2018, the U.S. Supreme Court decided the South Dakota v. Wayfair, Inc. sales tax nexus case. As a result of the Supreme Court ruling, states now have the ability to require taxpayers to collect and remit sales tax on a basis of economic nexus. While the impact of this ruling is uncertain, we are currently in the process of evaluating the future impact of the ruling on our financial position, results of operations and cash flows. New taxes could also create significant increases in internal costs necessary to capture data and collect and remit taxes. These events could have an adverse effect on our business and results of operations.
At September 30, 2018, the Company has no uncertain tax positions or interest and penalties accrued pursuant to ASC 740-10.

9.12. BUSINESS CONCENTRATIONS AND CREDIT RISK

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 federally insured financial institutions and performs periodic evaluations of the relative credit standing of these institutions. As of September 30, ~~2017~~2018 and ~~December 31, 2016,~~2017, the Company’s cash, cash equivalents and restricted cash primarily consisted of checking accounts and money market funds.

For the three and nine months ended September 30, ~~2017~~2018 and ~~2016,~~2017, no individual client accounted for 10% or more of consolidated revenue. As of September 30, ~~2017~~2018, and December 31, ~~2016, no~~2017, one 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.

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~~10.~~13. RESTRUCTURING AND OTHER CHARGES

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 $1.4 million.
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 and recorded an adjustment to its restructuring reserve totaling approximately $1.2 million during the three months ended September 30, 2015 and a lease termination credit of approximately $583 thousand when the office space was vacated in August 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.~~
Lease Termination
Balance December 31, 2015 $ 99,309
Payments net of sublease receipts (77,609 )
Balance September 30, 2016 $ 21,700
~~11.~~14. OTHER LIABILITIES

Other liabilities consist of the following:

September 30, 2017 December 31, 2016
Deferred rent $ 1,506,965 $ 1,904,319
Acquisition contingent earn-out — 907,657
Deferred revenue 581,313 460,748
Other 58,176 2,092
Total other liabilities $ 2,146,454 $ 3,274,816
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September 30, 2018 December 31, 2017
Deferred revenue $ 1,033,812 $ 629,309
Deferred rent 710,840 912,201
Other — 2,092
Total other liabilities $ 1,744,652 $ 1,543,602

~~12.~~ ~~STATE AND MUNICIPAL SALES TAX~~
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, except that we historically complied with New York sales tax. As such, we recorded a reserve totaling approximately $1.4 million during the six months ended June 30, 2016 as our best estimate of the potential tax exposure for any 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.
~~13.~~15. SEGMENT AND GEOGRAPHIC DATA

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~~two segments: (i) ~~The Deal / BoardEx and (ii) RateWatch, which comprise our~~ business to business, ~~segment,~~which is primarily comprised of The Deal and ~~(iii)~~BoardEx, and (ii) 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.~~Results were as follows:

For the Three Months Ended For the Nine Months Ended
September 30, September 30,
Revenue: 2017 2016 2017 2016
- The Deal / BoardEx $ 5,951,582 $ 5,429,641 $ 17,418,253 $ 16,463,193
- RateWatch 1,918,542 1,786,269 5,694,057 5,416,676
Total business to business 7,870,124 7,215,910 23,112,310 21,879,869
- Business to consumer 7,382,672 7,997,944 23,380,528 25,695,944
Total $ 15,252,796 $ 15,213,854 $ 46,492,838 $ 47,575,813

Operating income (loss):
- The Deal / BoardEx $ (356,519 ) $ (315,527 ) $ (1,344,469 ) $ (3,482,414 )
- RateWatch 212,600 151,288 540,441 (215,843 )
Total business to business (143,919 ) (164,239 ) (804,028 ) (3,698,257 )
- Business to consumer 437,470 (718,932 ) 670,889 (1,203,752 )
Total $ 293,551 $ (883,171 ) $ (133,139 ) $ (4,902,009 )
For the Three Months Ended For the Nine Months Ended
September 30, September 30,
Revenue: 2018 2017 2018 2017
- Business to business $ 6,274,824 $ 5,951,581 $ 18,866,397 $ 17,418,252
- Business to consumer 6,732,404 7,382,672 20,305,251 23,380,528
Total $ 13,007,228 $ 13,334,253 $ 39,171,648 $ 40,798,780

Operating (loss) income:
- Business to business $ (766,477 ) $ (613,860 ) $ (1,820,414 ) $ (2,157,859 )
- Business to consumer (1,171,286 ) 146,635 (3,114,899 ) (227,900 )
Total $ (1,937,763 ) $ (467,225 ) $ (4,935,313 ) $ (2,385,759 )

Due to the nature of the Company’s operations, a majority of its assets are utilized across ~~all~~both 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~~2018 and ~~2016,~~2017, 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.

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~~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.
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~~Item 2.~~ Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations.

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, ~~2016.~~2017.

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. isa leading financial news and information provider. Our business-to-business and business-to-consumer content and products provide individual and institutional investors, advisors and dealmakers with actionable information from the worlds of finance and business.

Business-to-Business

Our business-to-business, or B2B, products provide dealmakers, their advisers, institutional investors and corporate executives with news, data and analysis of mergers and acquisitions and changes in corporate control, and relationship mapping ~~services, and competitive bank rate data.~~services. 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.

Our B2B business derives revenue primarily from subscription products, events/conferences and information services. For the nine months ended September 30, ~~2017~~2018 and ~~2016,~~2017, our B2B businesses generated ~~50%~~48% and ~~46%~~43%, 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~~2018 and ~~2016,~~2017, our B2C business generated ~~50%~~52% and ~~54%~~57%, respectively, of our total revenue.

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~~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 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.
22
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:

● useful lives of intangible assets,
● useful lives of fixed assets,
● the carrying value of goodwill, intangible assets and marketable securities,
● allowances for doubtful accounts and deferred tax assets,
● accrued expense estimates,
● reserves for estimated tax liabilities,
● certain estimates and assumptions used in the calculation of the fair value of equity compensation issued to employees, and
● restructuring ~~charges, and~~
● ~~the calculation of a contingent earn-out payment from the acquisition of Management Diagnostics Limited.~~charges.

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~~The Company tests goodwill for impairment using a quantitative analysis consisting of a comparison of the carrying value of each of our ~~2016 annual~~reporting units, including goodwill, ~~impairment test, we first used~~to the estimated enterprise value of each of our reporting units using a market approach for the valuation of ~~our~~the Company’s Common Stock ~~and~~based upon actual prices of the Company’s Common Stock. As the Company’s Preferred Shares were retired in November 2017, the retirement value was used. As a result, we determined that the Company’s business enterprise value (common equity plus preferred equity) was $76.9 million as of the valuation date. The Company also performed an income approach ~~for our Preferred Shares. We then confirmed~~to confirm the reasonableness of ~~the outcome of~~ these ~~two tests by performing an income approach~~results using the discounted cash flow ~~method. The fair value~~(“DCF”) methodology. Our use of ~~our outstanding Preferred Shares required significant judgments, including~~a DCF methodology includes estimates of future revenue based upon budgeted projections and growth rates which take into account estimated inflation rates.  We also developed estimates for future levels of gross and operating profits and projected capital expenditures.  Our methodology also included the ~~estimation~~use of ~~the amount of time until a liquidation event occurs~~estimated discount rates based upon industry and competitor analysis as well as other factors. The estimates that we use in our DCF methodology involve many assumptions by management that are based upon future growth projections. Our assumptions include a continued recovery of our B2C business, which began in the fall of 2017. The DCF methodology resulted in an ~~appropriate cash flow discount rate. Further,~~indicated value of $70.7 million. We then concluded the enterprise value analysis for the Company on an aggregated basis by taking the average of the $76.9 million enterprise value derived from the first test and the $70.7 million value derived from the second test, resulting in ~~assigning a fair~~an enterprise value ~~to our Preferred Stock,~~for the Company of $74.0 million. Once we ~~also considered that~~determined the ~~preferred shareholders are entitled to receive a $55 million liquidation preference upon liquidation or dissolution~~enterprise value of the Company, ~~or upon any change~~the enterprise value of ~~control event (as defined in the Certificate of Designation of Series B Preferred Stock). Additionally, the holders~~each of the ~~Preferred Shares are entitled~~three reporting units was based on the proportion of each reporting unit’s indicated enterprise value to ~~receive dividends and to vote as a single class together with~~ the ~~holders~~indicated enterprise value of the Common 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 Stock (with certain exceptions), and any increases in the per-share amount of dividends payable to the holders of the Common Stock. Company.
Based on our analysis, we concluded that ~~The Deal / BoardEx~~none of the reporting ~~unit~~units goodwill was impaired as of the valuation date, ~~by approximately $11.6 million, while the RateWatch~~with Business to Business and Business to Consumer reporting ~~units’ goodwill were not impaired~~units exceeding the amount recorded by approximately ~~16%~~93% and ~~33%~~35%, respectively.

~~In conducting our 2016 annual indefinite lived intangible asset impairment test, we determined its fair value using~~To the ~~relief-from-royalty method. The application of the relief-from-royalty method requires the estimation of future income~~extent actual 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 lived trade name, thereby avoiding royalty payments to use the trade nameprojected cash flows decline in the ~~absence~~future, or if market conditions deteriorate significantly, we may be required to perform an interim impairment analysis that could result in an impairment 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; and (iii) a discount rate to reduce future after-tax royalty savings to present value. We selected an appropriate royalty rate by searching various transaction databases for publicly disclosed transactions to license similar assets between service businesses, with a focus on companies that operate in industries similar to RateWatch. Based upon the analysis, we concluded that the book value of the indefinite lived trade name was not impaired as of the October 1, 2016 valuation date by approximately 29%.goodwill.

A decrease in the price of our 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, which could be material to our financial position and results of operations.

Additionally, we evaluate the remaining useful lives of intangible assets each year to determine whether events or circumstances continue to support their useful life.  There have been no changes in useful lives of intangible assets for each period presented.
A summary of our critical accounting policies and estimates can be found in our ~~2016~~2017 Form 10-K.
23

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 ~~2016~~2017 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, ~~2017~~2018 and September 30, ~~2016~~2017

Revenue

For the Three Months Ended September 30, For the Three Months Ended September 30,
Revenue: 2017 Percent
of Total Revenue 2016 Percent
of Total Revenue Percent
Change 2018 Percent
of Total
Revenue 2017 Percent
of Total
Revenue Percent
Change
The Deal / BoardEx $ 5,951,582 39 % $ 5,429,641 35 % 9 %
RateWatch 1,918,542 13 % 1,786,269 12 % 7 %
Total Business to business 7,870,124 52 % 7,215,910 47 % 9 %
Business to business $ 6,274,824 48 % $ 5,951,581 45 % 5 %
Business to consumer 7,382,672 48 % 7,997,944 53 % -8 % 6,732,404 52 % 7,382,672 55 % -9 %
Total revenue $ 15,252,796 100 % $ 15,213,854 100 % 0 % $ 13,007,228 100 % $ 13,334,253 100 % -2 %

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

B2B revenue ~~attributable to The Deal / BoardEx segment~~ increased by approximately ~~$522~~$323 thousand, or ~~10%~~5%, in the third quarter of ~~2017~~2018 as compared to the third quarter of ~~2016.~~2017. This increase was primarily due to an approximate ~~$691~~$329 thousand, or ~~29%~~11%, increase in BoardEx subscription revenue, which had a ~~10%~~9% increase in the weighted-average number of subscriptions and a 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, information 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%2% increase in the average revenue recognized per subscription, ~~partially~~as well as an approximate $50 thousand increase in The Deal events. These increases were offset by ~~a 4% decline~~an approximate $48 thousand decrease in ~~the weighted-average number of subscriptions. Additionally, information services revenue~~webinars from ~~one-time reports sold by RateWatch increased by approximate $8 thousand, or 4%.~~The Deal products.
24

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

B2C revenue decreased by approximately ~~$615~~$650 thousand, or 8%9%, in the third quarter of ~~2017~~2018 as compared to the third quarter of ~~2016.~~2017. This decrease was due to an approximate ~~$649~~$668 thousand, or ~~12%~~31%, ~~decline~~decrease in advertising revenue, ~~generated from premium~~a $66 thousand, or 22%, decrease in licensing and syndication, and a $29 thousand, or 1%, decrease in subscription ~~products,~~revenue, which had a ~~14%~~2% decrease in the weighted-average number of subscriptions partially offset by a 2%1% increase in the average revenue recognized per subscription. ~~Additionally, licensing and syndication revenue declined~~These decreases were partially offset by ~~approximately $24 thousand, or 8%. Partially offsetting these declines was~~ an increase ~~in advertising revenue~~ of ~~approximately $46~~approximate $113 thousand ~~or 2%, and approximately $12 thousand of~~in event related ~~revenue (there was no business to consumer event revenue during 2016), when compared to the prior year.~~revenue.

Operating Expense

Cost of Services

For the Three Months Ended September 30, For the Three Months Ended September 30,
Cost of services: 2017 Percent of
Segment
Revenue 2016 Percent of
Segment
Revenue Percent
Change 2018 Percent of
Segment
Revenue 2017 Percent of
Segment
Revenue Percent
Change
The Deal / BoardEx $ 2,279,089 38 % $ 2,574,548 47 % -11 %
RateWatch 478,793 25 % 512,009 29 % -6 %
Total Business to business 2,757,882 35 % 3,086,557 43 % -11 %
Business to business $ 2,376,198 38 % $ 2,289,450 38 % 4 %
Business to consumer 3,887,922 53 % 4,838,295 60 % -20 % 3,394,224 50 % 3,896,303 53 % -13 %
Total cost of services $ 6,645,804 44 % $ 7,924,852 52 % -16 % $ 5,770,422 44 % $ 6,185,753 46 % -7 %

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

~~Cost~~B2B cost of services expense ~~attributable to The Deal / BoardEx decreased~~increased by approximately ~~$295~~$87 thousand, or ~~11%~~4%, in the third quarter of ~~2017~~2018 as compared to the third quarter of ~~2016.~~2017. This ~~decrease~~increase was primarily the result of ~~reduced~~higher 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 andexpenses, 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 and event costs, the aggregate of which increased by approximately ~~$88 thousand.~~$228 thousand, partially offset by an approximate $148 thousand decrease in corporate expense allocations.

~~Cost~~B2C cost of services expense ~~attributable to RateWatch~~ decreased by ~~$33~~approximately $502 thousand, or 6%13%, in the third quarter of ~~2017~~2018 as compared to the third quarter of ~~2016.~~2017. The 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, the aggregate of which decreased by $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 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 outside contributor, traffic acquisition, editorial data services and ~~temporary help~~employee compensation costs, the aggregate of which decreased by ~~approximately $966~~$332 thousand. These decreases were partially offset by higher consulting and hosting and internet access costs, the aggregate of which increased by $219 thousand. Also contributing to the ~~decline~~decrease was a reduction in corporate expense allocations totaling ~~approximately $73~~$403 thousand. ~~These cost decreases were partially offset by increases in hosting, internet access and data costs, the aggregate of which increased by approximately $169 thousand.~~
25

Sales and Marketing

For the Three Months Ended September 30, For the Three Months Ended September 30,
Sales and marketing: 2017 Percent of
Segment
Revenue 2016 Percent of
Segment
Revenue Percent
Change 2018 Percent of
Segment
Revenue 2017 Percent of
Segment
Revenue Percent
Change
The Deal / BoardEx $ 1,388,471 23 % $ 1,298,428 24 % 7 %
RateWatch 330,909 17 % 313,231 18 % 6 %
Total Business to business 1,719,380 22 % 1,611,659 22 % 7 %
Business to business $ 1,727,071 28 % $ 1,403,610 24 % 23 %
Business to consumer 1,358,403 18 % 2,125,156 27 % -36 % 1,912,633 28 % 1,378,986 19 % 39 %
Total sales and marketing $ 3,077,783 20 % $ 3,736,815 25 % -18 % $ 3,639,704 28 % $ 2,782,596 21 % 31 %

Sales and marketing. Sales and marketing expense consists primarily of employee compensation ~~expense~~related expenses for the direct sales force, marketing services and customer service departments, advertising and promotion expenses and credit card processing fees.

~~Sales~~B2B sales and marketing expense ~~attributable to The Deal / BoardEx~~ increased by approximately ~~$90~~$323 thousand, or 7%23%, in the third quarter of ~~2017~~2018 as compared to the third quarter of ~~2016.~~2017. The increase was primarily the result of higher employee compensation costs combined with increased advertising and promotion expense, the aggregate of which increased by approximately $220 thousand. This cost increase was compounded by an approximate ~~$73~~$104 thousand increase in corporate expense allocations.

~~Sales~~B2C sales and marketing expense ~~attributable to our RateWatch business~~ increased by approximately ~~$18~~$534 thousand, or 6%39%, in the third quarter of ~~2017~~2018 as compared to the third quarter of ~~2016.~~2017. The increase was primarily the result of ~~an approximate $29 thousand increase in corporate expense allocations.~~
Sales and marketing expense attributable to our business to consumer business unit decreased by approximately $767 thousand, or 36%, in the third quarter of 2017 as compared to the third quarter of 2016. The decrease was primarily the result of reducedhigher employee compensation ~~and related payroll taxes, lower employee benefit~~ costs ~~due to~~combined with increased ~~employee contributions towards health benefit plans and a reduction in the Company’s matching portion of employee contributions to 401-K plans, reduced~~ advertising and promotion ~~advertisement serving, consulting and travel and entertainment costs,~~expense, the aggregate of which ~~decreased~~increased by approximately ~~$831~~$414 thousand. ~~The decrease~~This cost increase was ~~partially offset~~compounded by an approximate ~~$45~~$84 thousand increase in corporate expense allocations.

General and Administrative

For the Three Months Ended September 30, For the Three Months Ended September 30,
General and administrative: 2017 Percent of
Segment
Revenue 2016 Percent of
Segment
Revenue Percent
Change 2018 Percent of
Segment
Revenue 2017 Percent of
Segment
Revenue Percent
Change
The Deal / BoardEx $ 1,898,341 32 % $ 1,727,770 32 % 10 %
RateWatch 509,855 27 % 554,741 31 % -8 %
Total Business to business 2,408,196 31 % 2,282,511 32 % 6 %
Business to business $ 2,230,395 36 % $ 2,078,657 35 % 7 %
Business to consumer 1,474,702 20 % 1,654,715 21 % -11 % 2,137,753 32 % 1,639,437 22 % 30 %
Total general and administrative $ 3,882,898 25 % $ 3,937,226 26 % -1 % $ 4,368,148 34 % $ 3,718,094 28 % 17 %

General and administrative. General and administrative expense consists primarily of employee compensation related costs for general management, finance, technology, legal and administrative personnel, occupancy costs, professional fees, insurance and other office expenses.

26
~~General~~B2B general and administrative expense ~~attributable to The Deal / BoardEx business~~ increased by approximately ~~$171~~$152 thousand, or ~~10%~~7%, in the third quarter of ~~2017~~2018 as compared to the third quarter of ~~2016.~~2017. The increase was primarily the result of transaction losses caused by the fluctuation in foreign currency exchange rates and higher recruiting fees, the aggregate of which increased by $215 thousand, partially offset by reduced employee compensation costs, which decreased by approximately $88 thousand. Also contributing to the increase was an approximate ~~$45~~$346 thousand increase in corporate expense ~~allocations.~~allocations, offset by exchange rate gains totaling approximately $176 thousand.

~~General~~B2C general and administrative expense ~~attributable to our RateWatch business decreased~~increased by approximately ~~$45~~$498 thousand, or 8%30%, in the third quarter of ~~2017~~2018 as compared to the third quarter of ~~2016.~~2017. The ~~decrease~~increase was primarily the result of ~~an approximate $24 thousand reduction in~~higher employee compensation ~~costs.~~
~~General~~ and administrative expense attributable to our business to consumer business decreased by approximately $180 thousand, or 11%, in the third quarter of 2017 as compared to the third quarter of 2016. The decrease was primarily the result of an approximate $160 thousand reduction in corporate expense allocations combined with lower employee compensation and reduced occupancy costs, the aggregate of which ~~decreased~~increased by ~~approximately $94~~$351 thousand. ~~These~~Also contributing to the cost ~~decreases were partially offset by~~increase was an approximate ~~$86~~$140 thousand ~~cost~~ increase ~~related to an expanded business analytics group designed to provide management with information needed to improve business results.~~in corporate expense allocations.

Depreciation and Amortization

For the Three Months Ended September 30, For the Three Months Ended September 30,
Depreciation and amortization: 2017 Percent of
Segment
Revenue 2016 Percent of
Segment
Revenue Percent
Change 2018 Percent of
Segment
Revenue 2017 Percent of
Segment
Revenue Percent
Change
The Deal / BoardEx $ 742,200 12 % $ 726,941 13 % 2 %
RateWatch 386,385 20 % 255,000 14 % 52 %
Total Business to business 1,128,585 14 % 981,941 14 % 15 %
Business to business $ 707,565 11 % $ 827,215 14 % -14 %
Business to consumer 224,175 3 % 98,710 1 % 127 % 459,152 7 % 287,820 4 % 60 %
Total depreciation and amortization $ 1,352,760 9 % $ 1,080,651 7 % 25 % $ 1,166,717 9 % $ 1,115,035 8 % 5 %

Depreciation and amortization. Depreciation and amortization expense increased by approximately ~~$272~~$52 thousand, or ~~25%~~5%, in the third quarter of ~~2017~~2018 as compared to the third quarter of ~~2016.~~2017. The increase was primarily the result of increased amortization expense related to capitalized software and website development projects. Cost allocations among segments were changed as of January 2018 to better reflect where the assets are utilized.
Net Interest Income
For the Three Months Ended September 30, Percent
2018 2017 Change
Net interest income $ 32,359 $ 8,168 296 %
Net interest income totaled approximately $32 thousand in the third quarter of 2018 as compared to net interest income approximating $8 thousand in the third quarter of 2017. The increase was primarily the result of increased cash balances.
(Loss) Income from Discontinued Operations
For the Three Months Ended September 30, Percent
2018 2017 Change
(Loss) income from discontinued operations $ (129,809 ) $ 842,588 N/A
(Loss) income from discontinued operations represents the activity from our former RateWatch subsidiary, which was sold in June 2018.
Benefit (Provision) for Income Taxes
For the Three Months Ended September 30, Percent
2018 2017 Change
Benefit (provision) for income taxes $ 775,014 $ (193,662 ) N/A
The income tax benefit from continuing operations for the three months ended September 30, 2018 was approximately $775 thousand and reflects an effective tax rate of 40.7%, as compared to an expense of approximately $194 thousand for the three months ended September 30, 2017, reflecting an effective tax rate of approximately -42.2%. The Company’s effective tax rate (ETR) for the three months ended September 30, 2018 was primarily impacted by the mix of domestic and foreign earnings, the election to treat the UK as a disregarded entity for US tax purposes, certain foreign taxes and the movement in the deferred tax liability related to the tax amortization of goodwill. During the three months ended June 30, 2018, the Company made certain adjustments to the beginning balance of the state deferred tax liability which resulted in a $272 thousand discrete tax benefit for domestic losses, as the US taxable income from discontinued operations is treated as a source of income to realize such losses under the intra-period allocation guidance. The Company’s ETR for the three months ended September 30, 2017 was primarily impacted by the mix of domestic and foreign earnings, the election to treat the UK as a disregarded entity for US tax purposes and the movement in the deferred tax liability related to the tax amortization of goodwill.

Net Income Attributable to Common Stockholders
Net loss attributable to common stockholders for the three months ended September 30, 2018 totaled approximately $1.8 million, or $0.04 per basic and diluted share, compared to net income attributable to common stockholders totaling approximately $190 thousand, or $0.01 per basic and diluted share, for the three months ended September 30, 2017.
Comparison of Nine Months Ended September 30, 2018 and September 30, 2017
Revenue
For the Nine Months Ended September 30,
Revenue: 2018 Percent
of Total
Revenue 2017 Percent
of Total
Revenue Percent
Change
   Business to business $ 18,866,397 48 % $ 17,418,252 43 % 8 %
   Business to consumer 20,305,251 52 % 23,380,528 57 % -13 %
Total revenue $ 39,171,648 100 % $ 40,798,780 100 % -4 %
B2B revenue increased by approximately $1.4 million, or 8%, in the nine months ended September 30, 2018 as compared to the nine months ended September 30, 2017. This increase was primarily due to an approximate $1.5 million, or 18%, increase in BoardEx subscription revenue, which had a 12% increase in the weighted-average number of subscriptions and a 6% increase in the average revenue recognized per subscription, as well as an approximate $409 thousand dollar increase in event related revenue. The $1.4 million increase was offset by an approximate $236 thousand decrease in webinar revenue, a decline of approximately $104 thousand related to BoardEx one-time reports, and a $74 thousand, or 1%, decline in The Deal subscription products, which had a 7% decline in the weighted-average number of subscriptions, partially offset by a 6% increase in the average revenue recognized per subscription.
B2C revenue decreased by approximately $3.1 million, or 13%, in the nine months ended September 30, 2018 as compared to the nine months ended September 30, 2017. This decrease was due to an approximate $2.5 million decrease in advertising revenue, an approximate $629 thousand, or 4%, decline in revenue generated from premium subscription products, which had a 6% decrease in the weighted-average number of subscriptions, partially offset by a 2% increase in the average revenue recognized per subscription, and an approximate $236 thousand decrease in licensing and syndication revenue. These declines were partially offset by a $272 thousand increase in event related revenue.
Operating Expense
Cost of Services
For the Nine Months Ended September 30,
Cost of services: 2018 Percent of
Segment
Revenue 2017 Percent of
Segment
Revenue Percent
Change
   Business to business $ 7,023,613 37 % $ 6,800,346 39 % 3 %
   Business to consumer 9,953,541 49 % 12,461,431 53 % -20 %
Total cost of services $ 16,977,154 43 % $ 19,261,777 47 % -12 %
B2B cost of services expense increased by approximately $223 thousand, or 3%, in the nine months ended September 30, 2018 as compared to the nine months ended September 30, 2017. This increase was primarily the result of higher employee compensation, outside contributor and event related costs, the total of which increased by approximately $420 thousand. This cost reduction was partially offset by an approximate $191 thousand decrease in corporate expense allocations.

B2C cost of services expense decreased by approximately $2.5 million, or 20%, in the nine months ended September 30, 2018 as compared to the nine months ended September 30, 2017. The decrease was primarily the result of reduced traffic acquisition, outside contributor and employee compensation related costs, the aggregate of which decreased by $2.0 million, partially offset by increased consulting and computer services and supplies costs, the aggregate of which increased by $435 thousand. Also contributing to the decrease was a reduction in corporate allocations totaling $832 thousand.
Sales and Marketing
For the Nine Months Ended September 30,
Sales and marketing: 2018 Percent of
Segment
Revenue 2017 Percent of
Segment
Revenue Percent
Change
   Business to business $ 4,999,421 26 % $ 4,145,430 24 % 21 %
   Business to consumer 6,018,360 30 % 5,120,117 22 % 18 %
Total sales and marketing $ 11,017,781 28 % $ 9,265,547 23 % 19 %
B2B sales and marketing expense increased by approximately $854 thousand, or 21%, in the nine months ended September 30, 2018 as compared to the nine months ended September 30, 2017. The increase was primarily the result of increased employee compensation and advertising related expenses, the aggregate of which increased by approximately $639 thousand. Also contributing to the increase was an approximate $228 thousand increase in corporate expense allocations.
B2C sales and marketing expense increased by approximately $898 thousand, or 18%, in the nine months ended September 30, 2018 as compared to the nine months ended September 30, 2017. The increase was primarily the result of higher employee compensation related costs, increased advertising and promotion and data platform expenses, the aggregate of which increased by approximately $675 thousand. Also impacting sales and marketing cost was an approximate $181 thousand increase in corporate expense allocations.
General and Administrative
For the Nine Months Ended September 30,
General and administrative: 2018 Percent of Segment Revenue 2017 Percent of Segment Revenue Percent Change
    Business to business $ 6,589,519 35 % $ 6,288,431 36 % 5 %
    Business to consumer 6,097,877 30 % 4,980,267 21 % 22 %
Total general and administrative $ 12,687,396 32 % $ 11,268,698 28 % 13 %
B2B general and administrative expense increased by approximately $302 thousand, or 5%, in the nine months ended September 30, 2018 as compared to the nine months ended September 30, 2017. The increase was primarily the result of higher occupancy and recruiting costs, the aggregate of which increased by $190 thousand, offset by a foreign exchange rate gain and decreased employee compensation and related costs, the aggregate of which increased by $487 thousand. Also contributing to the increase was an approximate $677 thousand increase in corporate expense allocations.
B2C general and administrative expense increased by approximately $1.1 million, or 22%, in the nine months ended September 30, 2018 as compared to the nine months ended September 30, 2017. The increase was primarily the result of higher employee compensation related costs, occupancy, data platforms and recruiting fees, the aggregate of which increased by $1.1 million.
Depreciation and Amortization
For the Nine Months Ended September 30,
Depreciation and amortization: 2018 Percent of
Segment
Revenue 2017 Percent of
Segment
Revenue Percent
Change
    Business to business $ 2,074,181 11 % $ 2,401,760 14 % -14 %
    Business to consumer 1,350,449 7 % 787,778 3 % 71 %
Total depreciation and amortization $ 3,424,630 9 % $ 3,189,538 8 % 7 %

Depreciation and amortization. Depreciation and amortization expense increased by approximately $235 thousand, or 7%, in the nine months ended September 30, 2018 as compared to the nine months ended September 30, 2017. The increase was primarily the result of increased amortization expense related to capitalized software and website development projects. Cost allocations among segments were changed as of January 2018 to better reflect where the assets are utilized.

Restructuring and Other Charges

For the Three Months Ended September 30,
Restructuring and other charges: 2017 Percent of
Segment
Revenue 2016 Percent of
Segment
Revenue Percent
Change
The Deal / BoardEx $ — N/A $ (582,519 ) -11 % 100 %
RateWatch — N/A — N/A N/A
Total Business to business — N/A (582,519 ) -8 % 100 %
Business to consumer — N/A — N/A N/A
Total restructuring and other charges $ — N/A $ (582,519 ) -4 % 100 %
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For the Nine Months Ended September 30,
Restructuring and other charges: 2018 Percent of
Segment
Revenue 2017 Percent of
Segment
Revenue Percent
Change
    Business to business $ — N/A $ 46,845 0 % 100 %
    Business to consumer — N/A 152,134 1 % 100 %
Total restructuring and other charges $ — N/A $ 198,979 0 % 100 %

Restructuring and other charges. ~~In August 2015,~~During the nine months ended September 30, 2017, the Company ~~received~~implemented a ~~one year notice of termination under~~targeted reduction in force 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~~resulted in restructuring and ~~received a lease termination credit~~other charges of approximately ~~$583 thousand from the landlord when the office space was vacated in August 2016.~~$199 thousand.

Net Interest Income ~~(Expense)~~

For the Three Months Ended
September 30, Percent
2017 2016 Change
Net interest income (expense) $ 8,168 $ (12,179 ) 167 %
For the Nine Months Ended September 30, Percent
2018 2017 Change
Net interest income $ 81,167 $ 26,224 210 %

Net interest income totaled approximately $8$81 thousand in the ~~third quarter of 2017~~nine months ended September 30, 2018 as compared to net interest ~~expense~~income approximating ~~$12~~$26 thousand in the ~~third quarter of 2016.~~nine months ended September 30, 2017. The change was primarily the result of ~~reduced~~the increased cash balance combined with the absence of interest expense related to the accretion of certain accrued expenses that were recorded in connection with prior acquisitions.

~~Provision~~Income from Discontinued Operations
For the Nine Months Ended September 30, Percent
2018 2017 Change
Income from discontinued operations $ 1,725,646 $ 2,568,957 -33 %
Income from discontinued operations represents the income from our former RateWatch subsidiary, which was sold in June 2018.
Benefit (Provision) for Income Taxes

For the Three Months Ended
September 30, Percent
2017 2016 Change
Provision for income taxes $ 111,850 $ 325,781 -66 %
For the Nine Months Ended September 30, Percent
2018 2017 Change
Benefit (provision) for income taxes $ 1,083,763 $ (802,249 ) N/A

~~Income~~ The income tax ~~expense~~benefit from continuing operations for the ~~three~~nine months ended September 30, ~~2017~~2018 was approximately ~~$112 thousand, as compared to approximately $326 thousand for the three months ended September 30, 2016,~~$1.1 million, and reflects an effective tax rate of ~~37% and -36%~~22.3%, ~~respectively. Income tax~~as compared to an expense of approximately $802 thousand for the ~~three~~nine months ended September 30, 2017, reflecting an effective tax rate of approximately -34.0%. The Company’s effective tax rate (ETR) for the nine months ended September 30, 2018 was primarily impacted by the mix of domestic and ~~2016 primarily relates~~foreign earnings, the election to treat the ~~recognition of $148 thousand~~UK as a disregarded entity for US tax purposes, certain foreign taxes and ~~$281 thousand, respectively, of a~~the movement in the deferred tax liability ~~associated with goodwill that is~~related to the tax ~~deductible but constitutes an indefinite lived intangible asset~~amortization of goodwill. During the three months ended June 30, 2018, the Company made certain adjustments to the beginning balance of the state deferred tax liability which resulted in a $272 thousand discrete tax benefit. The Company’s ETR for ~~financial reporting~~the nine months ended September 30, 2017 was primarily impacted by the mix of domestic and foreign earnings, the election to treat the UK as a disregarded entity for US tax purposes ~~as well as~~and the ~~recognition~~movement in the deferred tax liability related to the tax amortization of ~~a $36 thousand credit and $45 thousand expense, respectively, of income tax in certain jurisdictions where there are no net operating losses available to offset taxable income.~~goodwill.

Net Income (Loss) Attributable to Common Stockholders

Net income attributable to common stockholders for the ~~three~~nine months ended September 30, ~~2017~~2018 totaled approximately ~~$190 thousand,~~$25.0 million, or ~~$0.01~~$0.51 per basic and $0.49 per diluted share, compared to net loss attributable to common stockholders totaling approximately ~~$1.2 million, or $0.03 per basic and diluted share, for the three months ended September 30, 2016.~~
~~Comparison of Nine Months Ended September 30, 2017 and September 30, 2016~~
~~Revenue~~
For the Nine Months Ended September 30,
Revenue: 2017 Percent
of Total
Revenue 2016 Percent
of Total
Revenue Percent
Change
The Deal / BoardEx $ 17,418,253 38 % $ 16,463,193 35 % 6 %
RateWatch 5,694,057 12 % 5,416,676 11 % 5 %
Total Business to business 23,112,310 50 % 21,879,869 46 % 6 %
Business to consumer 23,380,528 50 % 25,695,944 54 % -9 %
Total revenue $ 46,492,838 100 % $ 47,575,813 100 % -2 %
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B2B revenue attributable to The Deal / BoardEx segment increased by approximately $955 thousand, or 6%, in the nine months ended September 30, 2017 as compared to the nine months ended September 30, 2016. This increase was primarily due to an approximate $1.2 million, or 16%, increase in BoardEx subscription revenue, which had an 8% increase in the weighted-average number of subscriptions and an 8% increase in the average revenue recognized per subscription. Additionally, The Deal / BoardEx revenue from one-time projects increased by approximately $138 thousand and revenue from The Deal events/conferences decreased by approximately $38 thousand. The increase in revenue attributable to The Deal / BoardEx segment was offset by an approximate $315 thousand, or 4%, decrease in subscription revenue from The Deal products, which had a 7% decline in the weighted-average number of subscriptions partially offset by a 3% increase in the average revenue recognized per subscription. Additionally, the year-over-year increase in subscription revenue attributable to BoardEx was negatively impacted by an approximate 8% reduction in the foreign exchange rate during the nine months ended September 2017 as compared to the nine months ended September 2016 resulting from the strengthening of the U.S. Dollar.
B2B revenue attributable to RateWatch increased by approximately $277 thousand, or 5%, in the nine months ended September 30, 2017 as compared to the nine months ended September 30, 2016. RateWatch subscription revenue increased by approximately $205 thousand, or 4%, due to an 8% 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 $72 thousand, or 11%.
B2C revenue decreased by approximately $2.3 million, or 9%, in the nine months ended September 30, 2017 as compared to the nine months ended September 30, 2016. This decrease was primarily due to an approximate $2.4 million, or 14%, decline in revenue generated from premium subscription products, which had a 15% decrease in the weighted-average number of subscriptions, partially offset by a 1% increase in the average revenue recognized per subscription. Additionally, licensing and syndication revenue declined by approximately $219 thousand, or 18%. Partially offsetting these declines was an increase in advertising revenue of approximately $200 thousand, or 3%, when compared to the prior year and approximately $132 thousand of event related revenue (there was no business to consumer event revenue during 2016).
~~Operating Expense~~
~~Cost of Services~~
For the Nine Months Ended September 30,
Cost of services: 2017 Percent of
Segment
Revenue 2016 Percent of
Segment
Revenue Percent
Change
The Deal / BoardEx $ 6,771,361 39 % $ 8,262,419 50 % -18 %
RateWatch 1,434,861 25 % 1,529,755 28 % -6 %
Total Business to business 8,206,222 36 % 9,792,174 45 % -16 %
Business to consumer 12,425,633 53 % 14,164,111 55 % -12 %
Total cost of services $ 20,631,855 44 % $ 23,956,285 50 % -14 %
Cost of services expense attributable to The Deal / BoardEx decreased by approximately $1.5 million, or 18%, in the nine months ended September 30, 2017 as compared to the nine months ended September 30, 2016. This decrease was primarily the result of reduced employee compensation and related payroll taxes, 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, and lower outside contributor costs, the aggregate of which decreased by approximately $1.5 million. Also contributing to the decline was an approximate $241 reduction in corporate expense allocations. These cost decreases were partially offset by an increase in hosting and internet access expenses, the aggregate of which increased by approximately $291 thousand.
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Cost of services expense attributable to RateWatch decreased by $95 thousand, or 6%, in the nine months ended September 30, 2017 as compared to the nine months ended September 30, 2016. The decrease was primarily the result of reduced employee compensation and related payroll taxes, 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, the aggregate of which decreased by $191 thousand. These cost decreases were partially offset by an approximate $64 thousand increase in corporate expense allocations and higher hosting and internet access costs totaling approximately $38 thousand.
Cost of services expense attributable to our business to consumer business decreased by approximately $1.7 million, or 12%, in the nine months ended September 30, 2017 as compared to the nine months ended September 30, 2016. The decrease was primarily the result of lower employee compensation and related payroll taxes, 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, reduced outside contributor and traffic acquisition costs, the aggregate of which decreased by approximately $1.8 million. Also contributing to the decline was an approximate $448 thousand reduction in corporate expense allocations. These cost decreases were partially offset by an increase in hosting, internet access, consulting and data fees, the aggregate of which increased by approximately $484 thousand.
~~Sales and Marketing~~
For the Nine Months Ended September 30,
Sales and marketing: 2017 Percent of
Segment
Revenue 2016 Percent of
Segment
Revenue Percent
Change
The Deal / BoardEx $ 4,066,306 23 % $ 4,006,285 24 % 1 %
RateWatch 1,063,233 19 % 970,988 18 % 10 %
Total Business to business 5,129,539 22 % 4,977,273 23 % 3 %
Business to consumer 5,069,417 22 % 6,657,129 26 % -24 %
Total sales and marketing $ 10,198,956 22 % $ 11,634,402 24 % -12 %
Sales and marketing expense attributable to The Deal / BoardEx increased by approximately $60 thousand, or 1%, in the nine months ended September 30, 2017 as compared to the nine months ended September 30, 2016. The increase was primarily the result of an approximate $224 thousand increase in corporate expense allocations, partially offset by 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 and decreased employee travel and entertainment expense, the aggregate of which decreased by approximately $141 thousand.
Sales and marketing expense attributable to our RateWatch business increased by approximately $92 thousand, or 10%, in the nine months ended September 30, 2017 as compared to the nine months ended September 30, 2016. The increase was primarily the result of an approximate $102 thousand increase in corporate expense allocations.
Sales and marketing expense attributable to our business to consumer business unit decreased by approximately $1.6 million, or 24%, in the nine months ended September 30, 2017 as compared to the nine months ended September 30, 2016. The decrease was primarily the result of reduced employee compensation and related payroll taxes, 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, reduced advertising and promotion, consulting, advertisement serving and travel and entertainment costs, the aggregate of which decreased by approximately $1.8 million. The decrease was partially offset by an approximate $123 thousand increase in corporate expense allocations.
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~~General and Administrative~~
For the Nine Months Ended September 30,
General and administrative: 2017 Percent of Segment Revenue 2016 Percent of Segment Revenue Percent
Change
The Deal / BoardEx $ 5,728,478 33 % $ 5,829,609 35 % -2 %
RateWatch 1,561,421 27 % 2,171,584 40 % -28 %
Total Business to business 7,289,899 32 % 8,001,193 37 % -9 %
Business to consumer 4,471,503 19 % 4,929,330 19 % -9 %
Total general and administrative $ 11,761,402 25 % $ 12,930,523 27 % -9 %
General and administrative expense attributable to The Deal / BoardEx business decreased by approximately $101 thousand, or 2%, in the nine months ended September 30, 2017 as compared to the nine months ended September 30, 2016. The decrease was primarily the result of an approximate $456 thousand reduction in corporate expense allocations combined with reduced employee compensation and related payroll taxes, 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, the aggregate of which decreased by approximately $279 thousand. These cost decreases were partially offset by increased expenses resulting from transaction losses caused by the fluctuation in foreign currency exchange rates and higher recruiting fees, the aggregate of which increased by $645 thousand.
General and administrative expense attributable to our RateWatch business decreased by approximately $610 thousand, or 28%, in the nine months ended September 30, 2017 as compared to the nine months ended September 30, 2016. The decrease was primarily the result of an approximate $372 thousand reduction in corporate expense allocations combined with reduced employee compensation and related payroll taxes, 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, the absence in 2017 of moving costs incurred in the first quarter of 2016 as RateWatch relocated to a new facility, and decreased recruiting fees, the aggregate of which decreased by approximately $179 thousand.
General and administrative expense attributable to our business to consumer business decreased by approximately $458 thousand, or 9%, in the nine months ended September 30, 2017 as compared to the nine months ended September 30, 2016. The decrease was primarily the result of an approximate $563 thousand reduction in corporate expense allocations combined with reduced occupancy costs and employee compensation, the aggregate of which decreased by approximately $151 thousand. These cost decreases were partially offset by increased expense related to an expanded business analytics group designed to provide management with information needed to improve business results combined with an increase in bad debt expense resulting from a cash collection during the first quarter of 2016 related to an account that had been fully reserved in a prior period, the aggregate of which increased by approximately $293 thousand.
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~~Depreciation and Amortization~~
For the Nine Months Ended September 30,
Depreciation and amortization: 2017 Percent of
Segment
Revenue 2016 Percent of
Segment
Revenue Percent
Change
The Deal / BoardEx $ 2,149,113 12 % $ 1,932,515 12 % 11 %
RateWatch 1,094,720 19 % 779,677 14 % 40 %
Total Business to business 3,243,833 14 % 2,712,192 12 % 20 %
Business to consumer 590,952 3 % 283,929 1 % 108 %
Total depreciation and amortization $ 3,834,785 8 % $ 2,996,121 6 % 28 %
Depreciation and amortization expense increased by approximately $839 thousand, or 28%, in the nine months ended September 30, 2017 as compared to the nine months ended September 30, 2016. The increase was primarily the result of increased amortization expense related to capitalized software and website development projects.
~~Restructuring and Other Charges~~
For the Nine Months Ended September 30,
Restructuring and other charges: 2017 Percent of
Segment
Revenue 2016 Percent of
Segment
Revenue Percent
Change
The Deal / BoardEx $ 47,464 0 % $ (85,221 ) -1 % -156 %
RateWatch (619 ) -0 % 180,515 3 % -100 %
Total Business to business 46,845 0 % 95,294 0 % -51 %
Business to consumer 152,134 1 % 865,197 3 % -82 %
Total restructuring and other charges $ 198,979 0 % $ 960,491 2 % -79 %
~~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, agreed to provide continuing medical coverage for 18 months, and incurred recruiting fees, resulting in restructuring and other charges of approximately $1.5 million. Additionally, 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 and received a lease termination credit of approximately $583 thousand from the landlord when the office space was vacated in August 2016.
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~~Net Interest Income (Expense)~~
For the Nine Months Ended
September 30,
Percent

2017 2016 Change
Net interest income (expense) $ 26,224 $ (24,273 ) -208 %
Net interest income totaled approximately $26 thousand in the nine months ended September 30, 2017 as compared to net interest expense approximating $24 thousand in the nine months ended September 30, 2016. The change was primarily the result of reduced interest expense related to the accretion of certain accrued expenses that were recorded in connection with prior acquisitions.
~~Provision for Income Taxes~~
For the Nine Months Ended
September 30,
Percent

2017 2016 Change
Provision for income taxes $ 485,912 $ 949,657 -49 %
Income tax expense for the nine months ended September 30, 2017 was approximately $486 thousand, as compared to approximately $950 thousand for the nine months ended September 30, 2016, and reflects an effective tax rate of -454% and -19%, respectively. Income tax expense for the nine months ended September 30, 2017 and 2016 primarily relates to the recognition of $445 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 $41 thousand and $108 thousand, respectively, of income tax expense in certain jurisdictions where there are no net operating losses available to offset taxable income.
~~Net Income (Loss) Attributable to Common Stockholders~~
~~Net loss attributable to common stockholders for the nine months ended September 30, 2017 totaled approximately~~ $593 thousand, or $0.02 ~~per basic and diluted share, compared to net loss attributable to common stockholders totaling approximately $5.9 million, or $0.17~~ per basic and diluted share, for the nine months ended September 30, ~~2016.~~2017.

Liquidity and Capital Resources

As of September 30, ~~2017,~~2018, our current assets consisted primarily of cash and cash equivalents, accounts receivable and prepaid expenses, and our current liabilities consisted primarily of deferred revenue, accrued expenses and accounts payable. We do not hold inventory. As of September 30, ~~2017,~~2018, our current assets were approximately ~~$31.1~~$50.6 million, ~~3% less~~78% greater than our current liabilities. With respect to many of our annual business to consumer newsletter subscription products, we offer the ability to receive a refund during the first 30 days but none thereafter. We do not as a general matter offer refunds for advertising that has run.

33
We generally have invested in money market funds and other short-term, investment grade instruments that are highly liquid and of high quality, with the intent that such funds are available for sale for acquisition and operating purposes. As of September 30, ~~2017,~~2018, our cash, cash equivalents, marketable securities and restricted cash amounted to approximately ~~$26.1~~$43.2 million, representing ~~33%~~46% of total assets. Our cash, cash equivalents and restricted cash primarily consisted of checking accounts and money market funds. Our marketable securities consisted of two municipal auction rate securities issued by the District of Columbia with a fair value of approximately ~~$1.6~~$1.8 million that mature in the year 2038. Our total cash-related position is as follows:

September 30,
2017
December 31,
2016 September 30,
2018 December 31,
2017
Cash and cash equivalents $ 23,990,179 $ 21,371,122 $ 40,833,954 $ 11,684,817
Marketable securities 1,600,250 1,550,000 1,833,535 1,680,000
Restricted cash 500,000 500,000 500,000 500,000
Total cash and cash equivalents, marketable securities and restricted cash $ 26,090,429 $ 23,421,122 $ 43,167,489 $ 13,864,817

Financial instruments that subject us to concentrations of credit risk consist primarily of cash, cash equivalents and restricted cash. We maintain all of our cash, cash equivalents and restricted cash in federally insured financial institutions, and we perform periodic evaluations of the relative credit standing of these institutions.

Net cash provided by operating activities totaled approximately $5.1 million for the nine months ended September 30, 2018, as compared to net cash provided by operating activities totaling approximately $4.2 million for the nine months ended September 30, ~~2017, as compared to net cash used in operating activities totaling approximately $1.5 million for the nine months ended September 30, 2016.~~2017. The increase in net operating cash was primarily the result of the ~~change in our~~Company’s net income, ~~(loss) combined with~~offset by the gain on sale of business, as well as the change in the ~~balance~~balances of deferred revenue, ~~partially~~accrued expenses and prepaid expenses and other current assets, offset by the change in ~~the balance of accrued expenses and~~ accounts receivable.

Net cash ~~used in~~provided by investing activities totaled approximately ~~$1.8~~25.4 million for the nine months ended September 30, ~~2017,~~2018, as compared to net cash used in investing activities totaling approximately ~~$2.5~~$1.8 million for the nine months ended September 30, ~~2016.~~2017. The ~~decrease~~increase in cash ~~used in~~provided by (used in) investing activities was ~~primarily~~ the result of ~~reduced~~the sale of our RateWatch subsidiary, partially offset by increased capital expenditures.

Net cash used in financing activities totaled approximately ~~$81 thousand~~$1.0 million for the nine months ended September 30, ~~2017,~~2018, as compared to net cash used in financing activities totaling approximately ~~$18~~$81 thousand for the nine months ended September 30, ~~2016.~~2017. The increase in net cash used in financing activities was primarily the result of the ~~timing~~payment of ~~cash dividend payments by~~a deferred earn out on the ~~Company related to the vesting and issuance~~acquisition of ~~RSU shares.~~BoardEx totaling $952 thousand.

We currently have a total of $500 thousand of cash that serves as collateral for an outstanding letter of credit, which cash is classified as restricted. The letter of credit serves as a security deposit for office space in New York City.

We believe that our current cash and cash equivalents will be sufficient to meet our anticipated cash needs for at least the next 12 months. We are committed to cash expenditures in an aggregate amount of approximately ~~$3.3~~$4.8 million through September 30, ~~2018,~~2019, primarily related to operating leases and minimum payments due under an employment agreement.

As of December 31, ~~2016,~~2017, we had approximately ~~$160~~$173 million of federal and state net operating loss carryforwards. We maintain a full valuation allowance against our deferred tax assets as management concluded that it was more likely than not that we would not realize the benefit of our deferred tax assets by generating sufficient taxable income in future years. We expect to continue to maintain a full valuation allowance until, or unless, we can sustain a level of profitability that demonstrates our ability to utilize these assets.

In accordance with Section 382 of the Internal Revenue Code, the ability to utilize our 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.

Off-Balance Sheet Arrangements

As of September 30, ~~2017,~~2018, we did not have any off-balance sheet arrangements, as defined in Item 303(a)(4)(ii) of Regulation S-K, that have or are reasonably likely to have a current or future effect on our financial condition, changes in our financial condition, revenues or expenses, results of operations, liquidity, capital expenditures or capital resources that is material to investors.

34
Treasury Stock

In ~~December 2000, the Company’s~~November 2017, our Board of Directors ~~authorized~~approved a new share buyback program authorizing the repurchase of up to ~~$10~~five million shares of the Company’s ~~Common Stock,~~common stock. The repurchases are being executed from time to time in ~~private purchases~~the open market or in privately negotiated transactions, subject to management’s evaluation of the ~~open market. In February 2004,~~trading price of the security, market conditions and other factors. The Company may, among other things, utilize existing cash reserves and cash flows from operations to fund any repurchases. The timing and amount of any repurchases will be determined by the Company’s ~~Board of Directors approved the resumption~~management based upon its evaluation of the ~~stock~~trading price of the security, market conditions and other factors. The repurchase program or 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 fordoes not obligate the Company to repurchase ~~its Common Stock (except for the purchase~~any dollar amount 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~~and may be extended, modified, suspended or discontinued at ~~the time such dividend is paid by the liquidation preference.~~any time. During the ~~nine~~three months ended September 30, ~~2017 and 2016,~~2018, the Company did not purchase any shares of Common Stock under the ~~Program. Since inception of~~program. In the ~~Program,~~nine months ended September 30, 2018, the Company ~~has~~ purchased a total of ~~5,453,416~~1,105 shares of Common Stock under the Program at an aggregate cost of approximately ~~$7.3 million.~~$1,415, inclusive of commissions.

In addition, pursuant to the terms of the Company’s 2007 Plan, and certain procedures approved 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. During the nine months ended September 30, 2018, 10,043 shares were withheld in settlement of the exercise of stock options and vested restricted stock units. Through September 30, ~~2017,~~2018, the Company had withheld an aggregate of ~~1,866,759~~2,055,108 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.

Item 3. Quantitative and Qualitative Disclosures About Market Risk.

We believe that our market risk exposures are immaterial as we do not have instruments for trading purposes, and reasonable possible near-term changes in market rates or prices will not result in material near-term losses in earnings, material changes in fair values or cash flows for all instruments.

Financial instruments that subject the Company to concentrations of credit risk consist primarily of cash, cash equivalents and restricted cash. We maintain all of our cash, cash equivalents and restricted cash in federally insured financial institutions, and we perform periodic evaluations of the relative credit standing of these institutions. However, no assurances can be given that the third-party institutions will retain acceptable credit ratings or investment practices.

Following our acquisition of BoardEx, we have greater exposure to fluctuations in foreign currency exchange rates, in particular with respect to the British pound. Accordingly, our results of operations and cash flows are subject to fluctuations due to changes in exchange rates. Fluctuations in currency exchange rates could result in translation gains and losses when we consolidate our results. Because we conduct a ~~growing~~ portion of our business outside the U.S. but report our results in U.S. dollars, we face exposure to adverse movements in currency exchange rates, which may cause our revenue and operating results to differ materially from expectations. For example, if the U.S. dollar strengthens relative to the British pound, our non-U.S. revenue and operating results would be adversely affected when translated into U.S. dollars. Conversely, a decline in the U.S. dollar relative to the British pound would increase our non-U.S. revenue and operating results when translated into U.S. dollars. We do not engage in currency hedging or have any positions in derivative instruments to hedge our currency risk.

The effect of a 10% adverse change in exchange rates would have resulted in an approximate ~~$749~~$548 thousand reduction to revenue for the nine months ended September 30, ~~2017,~~2018, with an offsetting reduction to operating expenses of ~~$507~~$579 thousand for the nine months ended September 30, ~~2017,~~2018, and a decrease in the value of the Company’s assets and liabilities as of September 30, ~~2017~~2018 of approximately $1.6 million and ~~$449~~$405 thousand, respectively.

35
Item 4. Controls and Procedures.

~~Item 4.          Controls and Procedures.~~
Evaluation of Disclosure Controls and Procedures

Our management, with the participation of our Chief Executive Officer and our Chief Financial Officer, evaluated the effectiveness of our disclosure controls and procedures as of ~~September 30,~~October 1, 2017. The term “disclosure controls and procedures,” as defined in Rules 13a-15(e) and 15d-15(e) under the Securities Exchange Act of 1934, as amended (the “Exchange Act”), means controls and other procedures of a company that are designed to ensure that information required to be disclosed by a company in the reports that it files or submits under the Exchange Act is recorded, processed, summarized and reported, within the time periods specified in the SEC’s rules and forms. Disclosure controls and procedures include controls and procedures designed to ensure that information required to be disclosed by a company in the reports that it files or submits under the Exchange Act is accumulated and communicated to the company’s management, including its principal executive and principal financial officers, as appropriate to allow timely decisions regarding required disclosure. Management recognizes that any controls and procedures, no matter how well designed and operated, can provide only reasonable assurance of achieving their objectives and management necessarily applies its judgment in evaluating the cost-benefit relationship of possible controls and procedures. Based on the evaluation of our disclosure controls and procedures as of September 30, ~~2017,~~2018, our Chief Executive Officer and Chief Financial Officer concluded that, as of such date, our disclosure controls and procedures were effective at the reasonable assurance level.

Changes in Internal Control over Financial Reporting

There were no changes in our internal control over financial reporting identified in management’s evaluation pursuant to Rules 13a-15(d) or 15d-15(d) of the Exchange Act during the period covered by this Quarterly Report on Form 10-Q that materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.

PART II - OTHER INFORMATION

Item 1. Legal Proceedings.

The Company is party to legal proceedings arising in the ordinary course of business or otherwise, none of which is deemed material.

Item 1A. Risk Factors.

In addition to the other information set forth in this Quarterly Report on Form 10-Q, you should carefully consider the factors discussed in Part I, “Item 1A. Risk Factors” in our ~~2016~~2017 Form 10-K, which could materially affect our business, financial condition or future results. During the nine months ended September 30, ~~2017,~~2018, there were no material changes to the risk factors described in our ~~2016~~2017 Form 10-K.

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

~~Not applicable.~~In November 2017, our Board of Directors approved a share buyback program authorizing the repurchase of up to five million shares of the Company’s common stock. The repurchases are being executed from time to time in the open market or in privately negotiated transactions, subject to management’s evaluation of the trading prices of the security, market conditions and other factors.The repurchase program does not obligate the Company to repurchase any dollar amount or number of shares and may be extended, modified, suspended or discontinued at any time.

There were no repurchases by the Company in the quarter ended September 30, 2018.
Item 3. Defaults Upon Senior Securities.

Not applicable.

36

Item 4. Mine Safety Disclosures.

Not applicable.

Item 5. Other Information.

Not applicable.

37

Item 6. Exhibits.

The following exhibits are filed herewith or are incorporated by reference to exhibits previously filed with the Securities and Exchange Commission:

~~Exhibit~~ ~~Incorporated by Reference~~
~~Number~~ ~~Description~~ ~~Form~~ ~~File No.~~ ~~Exhibit~~ ~~Filing Date~~
~~31.1~~
~~Certification of Chief Executive Officer pursuant to Exchange Act Rules 13a-14(a) and 15d-14(a), as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002~~
~~31.2~~
~~Certification of Chief Financial Officer pursuant to Exchange Act Rules 13a-14(a) and 15d-14(a), as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002~~
~~32.1~~
~~Certifications of Chief Executive Officer pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002~~
~~32.2~~
~~Certifications of Chief Financial Officer pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002~~
101.INS*
~~XBRL Instance Document~~
101.SCH*
~~XBRL Taxonomy Extension Schema Document~~
101.CAL*
~~XBRL Taxonomy Extension Calculation Document~~
101.DEF*
~~XBRL Taxonomy Extension Definitions Document~~
101.LAB*
~~XBRL Taxonomy Extension Labels Document~~
101.PRE*
~~XBRL Taxonomy Extension Presentation Document~~
* Pursuant to Rule 406T of Regulation S-T, this interactive data file is deemed not filed or part of a registration statement or prospectus for purposes of Sections 11 or 12 of the Securities Act of 1933, is deemed not filed for purposes of Section 18 of the Securities Exchange Act of 1934, and otherwise is not subject to liability under these sections.
Incorporated by Reference
Exhibit Number Description Form File No. Exhibit Filing Date
Filed
Herewith
Furnished
2.1
Asset Purchase Agreement
8-K 000-25779 2.1 June 22, 2018

31.1 Certification of Chief Executive Officer pursuant to Exchange Act Rules 13a-14(a) and 15d-14(a), as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002 X

31.2 Certification of Chief Financial Officer pursuant to Exchange Act Rules 13a-14(a) and 15d-14(a), as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002 X

32.1 Certifications of Chief Executive Officer pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 X

32.2 Certifications of Chief Financial Officer pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 X

101.INS XBRL Instance Document X

101.SCH XBRL Taxonomy Extension Schema Document X

101.CAL XBRL Taxonomy Extension Calculation Document X

101.DEF XBRL Taxonomy Extension Definitions Document X

101.LAB XBRL Taxonomy Extension Labels Document X

101.PRE XBRL Taxonomy Extension Presentation Document X

38

SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, as amended, the Registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.
THESTREET, INC.

Date: November ~~13, 2017~~14, 2018 By: /s/ David Callaway
~~Name:~~ ~~David Callaway~~
~~Title:~~ Name:   David Callaway
Title:     President & Chief Executive Officer
~~(principal~~              (principal executive officer)

Date: November ~~13, 2017~~14, 2018 By: /s/ Eric F. Lundberg
~~Name:~~ ~~Eric F. Lundberg~~
~~Title:~~ Name:   Eric F. Lundberg
Title:   Chief Financial Officer
~~(principal~~              (principal financial officer)

39

EXHIBIT INDEX

The following exhibits are filed herewith or are incorporated by reference to exhibits previously filed with the Securities and Exchange Commission:

~~Exhibit~~ ~~Incorporated by Reference~~
~~Number~~ ~~Description~~ ~~Form~~ ~~File No.~~ ~~Exhibit~~ ~~Filing Date~~
~~31.1~~
~~Certification of Chief Executive Officer pursuant to Exchange Act Rules 13a-14(a) and 15d-14(a), as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002~~
Incorporated by Reference
Exhibit
Number
Description Form File No. Exhibit Filing Date Filed
Herewith
Furnished
2.1
Asset Purchase Agreement
8-K 000-25779 2.1 June 22, 2018

31.1 Certification of Chief Executive Officer pursuant to Exchange Act Rules 13a-14(a) and 15d-14(a), as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002 X

31.2 Certification of Chief Financial Officer pursuant to Exchange Act Rules 13a-14(a) and 15d-14(a), as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002 X

32.1 Certifications of Chief Executive Officer pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 X

32.2 Certifications of Chief Financial Officer pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 X

101.INS XBRL Instance Document X

101.SCH XBRL Taxonomy Extension Schema Document X

101.CAL XBRL Taxonomy Extension Calculation Document X

101.DEF XBRL Taxonomy Extension Definitions Document X

101.LAB XBRL Taxonomy Extension Labels Document X

101.PRE XBRL Taxonomy Extension Presentation Document X

~~31.2~~
~~Certification of Chief Financial Officer pursuant to Exchange Act Rules 13a-14(a) and 15d-14(a), as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002~~
~~32.1~~
~~Certifications of Chief Executive Officer pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002~~
~~32.2~~
~~Certifications of Chief Financial Officer pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002~~
101.INS*
~~XBRL Instance Document~~
101.SCH*
~~XBRL Taxonomy Extension Schema Document~~
101.CAL*
~~XBRL Taxonomy Extension Calculation Document~~
101.DEF*
~~XBRL Taxonomy Extension Definitions Document~~
101.LAB*
~~XBRL Taxonomy Extension Labels Document~~
101.PRE*
~~XBRL Taxonomy Extension Presentation Document~~
* Pursuant to Rule 406T of Regulation S-T, this interactive data file is deemed not filed or part of a registration statement or prospectus for purposes of Sections 11 or 12 of the Securities Act of 1933, is deemed not filed for purposes of Section 18 of the Securities Exchange Act of 1934, and otherwise is not subject to liability under these sections.
33

	For the Three Months Ended						For the Nine Months Ended
	September 30,						September 30,
	2018			2017			2018			2017
Net (loss) income	$	(1,811,951	)	$	189,869		$	25,022,334		$	(592,827	)
Foreign currency translation (loss) gain		(243,556	)		(158,076	)		(572,760	)		842,265
Unrealized gain on marketable securities		83,509			55,500			153,535			50,250
Comprehensive (loss) income	$	(1,971,998	)	$	87,293		$	24,603,109		$	299,688

	Three Months			Three Months		Nine Months			Nine Months
	Ended			Ended		Ended			Ended
	September 30, 2018			September 30, 2017		September 30, 2018			September 30, 2017
Net revenue	$	—		$	1,918,543	$	3,944,302		$	5,694,057
Operating expense:
Cost of services		(24	)		460,051		870,519			1,370,077
Sales and marketing		1,793			295,187		718,299			933,409
General and administrative		96,717			164,804		365,753			492,704
Depreciation and amortization		—			237,725		160,293			645,247
Total operating expense		98,486			1,157,767		2,114,864			3,441,437
Operating (loss) income		(98,486	)		760,776		1,829,438			2,252,620
(Provision) benefit for income taxes		(31,323	)		81,812		(103,792	)		316,337
Net (loss) income	$	(129,809	)	$	842,588	$	1,725,646		$	2,568,957

	Nine Months Ended			Nine Months Ended
	September 30, 2018			September 30, 2017
Net cash provided by operating activities	$	2,103,406		$	3,375,137
Net cash used in investing activities		(37,006	)		(10,538	)
Net cash used in financing activities		—			—
Effect of foreign exchange rate changes on cash and cash equivalents		—			—
Net increase in cash, cash equivalents and restricted cash	$	2,066,400		$	3,364,599

	As of December 31, 2017
Consolidated Balance Sheets	As Reported			Adjustment			As Revised
Deferred tax liability	$	1,932,606		$	(925,852	)	$	1,006,754
Total liabilities		34,989,599			(925,852	)		34,063,747
Accumulated deficit		(207,787,130	)		925,852			(206,861,278	)
Total stockholders’ equity		34,020,949			925,852			34,946,801

Consolidated Statements of Operations
Benefit for income taxes	$	1,882,310		$	925,852		$	2,808,162
Net income		2,626,837			925,852			3,552,689

	September 30, 2017		December 31, 2016		September 30, 2018		December 31, 2017
Cash and cash equivalents	$	23,990,179	$	21,371,122	$	40,833,954	$	11,684,817
Marketable securities		1,600,250		1,550,000		1,833,535		1,680,000
Restricted cash		500,000		500,000		500,000		500,000
Total cash and cash equivalents, marketable securities and restricted cash	$	26,090,429	$	23,421,122	$	43,167,489	$	13,864,817

	As of September 30, 2017								As of September 30, 2018
Description:	Total		Level 1		Level 2		Level 3		Total		Level 1		Level 2		Level 3
Cash and cash equivalents (1)	$	23,990,179	$	23,990,179	$	—	$	—	$	40,833,954	$	40,833,954	$	—	$	—
Restricted cash (1)		500,000		500,000		—		—		500,000		500,000		—		—
Marketable securities (2)		1,600,250		—		—		1,600,250		1,833,535		—		—		1,833,535
Contingent earn-out (3)		940,815		—		—		940,815
Total at fair value	$	27,031,244	$	24,490,179	$	—	$	2,541,065	$	43,167,489	$	41,333,954	$	—	$	1,833,535

	As of December 31, 2016
Description:	Total		Level 1		Level 2		Level 3
Cash and cash equivalents (1)	$	21,371,122	$	21,371,122	$	—	$	—
Restricted cash (1)		500,000		500,000		—		—
Marketable securities (2)		1,550,000		—		—		1,550,000
Contingent earn-out (3)		907,657		—		—		907,657
Total at fair value	$	24,328,779	$	21,871,122	$	—	$	2,457,657

	(1)	Cash, ~~and~~ cash equivalents and restricted cash, totaling approximately ~~$24.5~~$41.3 million and ~~$21.9~~$12.2 million as of September 30, ~~2017~~2018 and December 31, ~~2016,~~2017, respectively, consist primarily of checking accounts and money market funds for which we determine fair value through quoted market prices.

	(2)	Marketable securities include two municipal ARS issued by the District of Columbia having a fair value totaling approximately ~~$1.6~~$1.8 million and ~~$1.6~~$1.7 million as of September 30, ~~2017~~2018 and December 31, ~~2016,~~2017, respectively. Historically, the fair value of ARS investments approximated par value due to the frequent resets through the auction process. Due to events in credit markets, the auction events, which historically have provided liquidity for these securities, have been unsuccessful. The result of a failed auction is that these ARS holdings will continue to pay interest in accordance with their terms at each respective auction date; however, liquidity of the securities will be limited until there is a successful auction, the issuer redeems the securities, the securities mature or until such time as other markets for these ARS holdings develop. For each of our ARS, we evaluate the risks related to the structure, collateral and liquidity of the investment, and forecast the probability of issuer default, auction failure and a successful auction at par, or a redemption at par, for each future auction period. Temporary impairment charges are recorded in accumulated other comprehensive loss, whereas other-than-temporary impairment charges are recorded in our consolidated statement of operations. As of September 30, ~~2017,~~2018, the Company determined there was a cumulative decline in the fair value of its ARS investments of approximately ~~$250~~$16 thousand from its cost basis, which was deemed temporary and was included within accumulated other comprehensive ~~loss.~~
		(loss) income.

	Marketable Securities
Balance December 31, 2016	$	1,550,000
Change in fair value of investment		50,250
Balance September 30, 2017	$	1,600,250

	Marketable Securities
Balance December 31, 2017	$	1,680,000
Change in fair value of investment		153,535
Balance September 30, 2018	$	1,833,535

	Contingent Earn-Out
Balance December 31, 2016	$	907,657
Accretion to net present value		33,158
Balance September 30, 2017	$	940,815

	Contingent Earn-Out
Balance December 31, 2017	$	951,867
Payment made May 2018		(951,867	)
Balance September 30, 2018	$	—

	For the Nine Months Ended September 30,
	2017	2016
Expected option lives	3.7 years	4.5 years
Expected volatility	37.64%	34.78%
Risk-free interest rate	1.55%	1.11%
Expected dividend yield	0.00%	0.00%

	Shares Underlying Awards			Weighted Average Exercise Price		Aggregate Intrinsic Value ($000)		Weighted Average Remaining Contractual Life (In Years)		Shares Underlying Awards			Weighted Average Exercise Price		Aggregate Intrinsic Value ($000)		Weighted Average Remaining Contractual Life (In Years)
Awards outstanding at December 31, 2016		5,900,731		$	1.52
Awards outstanding at December 31, 2017											5,491,928		$	1.46
Options granted		135,000		$	0.90						282,333		$	2.02
Options exercised		—			N/A						(8,000	))	$	1.20
Options forfeited		(27,923	)	$	1.15						(182,752	)	$	2.15
Options expired		(623,714	)	$	1.78						(1,816,502	)	$	1.80
Awards outstanding at September 30, 2017		5,384,094		$	1.47	$	48		3.59
Awards vested and expected to vest at September 30, 2017		5,350,569		$	1.47	$	47		3.58
Awards exercisable at September 30, 2017		3,491,073		$	1.62	$	10		2.48
Awards outstanding at September 30, 2018											3,767,007		$	1.30	$	3,393		4.32
Awards outstanding, vested and expected to vest at September 30, 2018											3,758,212		$	1.30	$	3,383		4.31
Awards exercisable at September 30, 2018											2,891,515		$	1.33	$	2,535		4.10


Unvested Awards	Number of Shares			Weighted Average Grant Date Fair Value
Shares underlying awards unvested at December 31, 2016		3,936,427		$	0.62
Shares underlying options granted		135,000		$	0.27
Shares underlying restricted stock units granted		565,599		$	0.90
Shares underlying options vested		(1,432,488	)	$	0.38
Shares underlying restricted stock units settled by delivery of Common Stock upon vesting		(467,466	)	$	1.15
Shares underlying options forfeited		(27,923	)	$	0.37
Shares underlying restricted stock units cancelled		(46,389	)	$	1.20
Shares underlying awards unvested at September 30, 2017		2,662,760		$	0.70

Unvested Awards	Number of Shares			Weighted Average Grant Date Fair Value
Shares underlying awards unvested at December 31, 2017		2,131,135		$	0.48
Shares underlying options granted		282,333		$	0.42
Shares underlying restricted stock units granted		3,149,720		$	1.68
Shares underlying options vested		(1,087,556	)	$	0.34
Shares underlying restricted stock units settled by delivery of Common Stock upon vesting		(430,838	)	$	0.95
Shares underlying options forfeited		(3,752	)	$	0.43
Shares underlying restricted stock units forfeited		(64,722	)	$	1.72
Shares underlying awards unvested at September 30, 2018		3,976,320		$	1.40

	Lease Termination
Balance December 31, 2015	$	99,309
Payments net of sublease receipts		(77,609	)
Balance September 30, 2016	$	21,700

	September 30, 2017		December 31, 2016
Deferred rent	$	1,506,965	$	1,904,319
Acquisition contingent earn-out		—		907,657
Deferred revenue		581,313		460,748
Other		58,176		2,092
Total other liabilities	$	2,146,454	$	3,274,816

	For the Three Months Ended September 30,													For the Three Months Ended September 30,
Cost of services:	2017		Percent of Segment Revenue			2016		Percent of Segment Revenue			Percent Change			2018		Percent of Segment Revenue			2017		Percent of Segment Revenue			Percent Change
The Deal / BoardEx	$	2,279,089		38	%	$	2,574,548		47	%		-11	%
RateWatch		478,793		25	%		512,009		29	%		-6	%
Total Business to business		2,757,882		35	%		3,086,557		43	%		-11	%
Business to business														$	2,376,198		38	%	$	2,289,450		38	%		4	%
Business to consumer		3,887,922		53	%		4,838,295		60	%		-20	%		3,394,224		50	%		3,896,303		53	%		-13	%
Total cost of services	$	6,645,804		44	%	$	7,924,852		52	%		-16	%	$	5,770,422		44	%	$	6,185,753		46	%		-7	%

	For the Three Months Ended September 30,													For the Three Months Ended September 30,
Sales and marketing:	2017		Percent of Segment Revenue			2016		Percent of Segment Revenue			Percent Change			2018		Percent of Segment Revenue			2017		Percent of Segment Revenue			Percent Change
The Deal / BoardEx	$	1,388,471		23	%	$	1,298,428		24	%		7	%
RateWatch		330,909		17	%		313,231		18	%		6	%
Total Business to business		1,719,380		22	%		1,611,659		22	%		7	%
Business to business														$	1,727,071		28	%	$	1,403,610		24	%		23	%
Business to consumer		1,358,403		18	%		2,125,156		27	%		-36	%		1,912,633		28	%		1,378,986		19	%		39	%
Total sales and marketing	$	3,077,783		20	%	$	3,736,815		25	%		-18	%	$	3,639,704		28	%	$	2,782,596		21	%		31	%

	For the Three Months Ended September 30,													For the Three Months Ended September 30,
General and administrative:	2017		Percent of Segment Revenue			2016		Percent of Segment Revenue			Percent Change			2018		Percent of Segment Revenue			2017		Percent of Segment Revenue			Percent Change
The Deal / BoardEx	$	1,898,341		32	%	$	1,727,770		32	%		10	%
RateWatch		509,855		27	%		554,741		31	%		-8	%
Total Business to business		2,408,196		31	%		2,282,511		32	%		6	%
Business to business														$	2,230,395		36	%	$	2,078,657		35	%		7	%
Business to consumer		1,474,702		20	%		1,654,715		21	%		-11	%		2,137,753		32	%		1,639,437		22	%		30	%
Total general and administrative	$	3,882,898		25	%	$	3,937,226		26	%		-1	%	$	4,368,148		34	%	$	3,718,094		28	%		17	%

	For the Three Months Ended September 30,													For the Three Months Ended September 30,
Depreciation and amortization:	2017		Percent of Segment Revenue			2016		Percent of Segment Revenue			Percent Change			2018		Percent of Segment Revenue			2017		Percent of Segment Revenue			Percent Change
The Deal / BoardEx	$	742,200		12	%	$	726,941		13	%		2	%
RateWatch		386,385		20	%		255,000		14	%		52	%
Total Business to business		1,128,585		14	%		981,941		14	%		15	%
Business to business														$	707,565		11	%	$	827,215		14	%		-14	%
Business to consumer		224,175		3	%		98,710		1	%		127	%		459,152		7	%		287,820		4	%		60	%
Total depreciation and amortization	$	1,352,760		9	%	$	1,080,651		7	%		25	%	$	1,166,717		9	%	$	1,115,035		8	%		5	%

	For the Three Months Ended September 30,				Percent
	2018		2017		Change
Net interest income	$	32,359	$	8,168		296	%

	For the Three Months Ended September 30,
Restructuring and other charges:	2017		Percent of Segment Revenue		2016			Percent of Segment Revenue			Percent Change
The Deal / BoardEx	$	—		N/A	$	(582,519	)		-11	%		100	%
RateWatch		—		N/A		—			N/A			N/A
Total Business to business		—		N/A		(582,519	)		-8	%		100	%
Business to consumer		—		N/A		—			N/A			N/A
Total restructuring and other charges	$	—		N/A	$	(582,519	)		-4	%		100	%

	For the Three Months Ended September 30,					Percent
	2017		2016			Change
Net interest income (expense)	$	8,168	$	(12,179	)		167	%

~~Exhibit~~		~~Incorporated by Reference~~
~~Number~~	~~Description~~	~~Form~~	~~File No.~~	~~Exhibit~~	~~Filing Date~~
~~31.1~~	~~Certification of Chief Executive Officer pursuant to Exchange Act Rules 13a-14(a) and 15d-14(a), as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002~~
~~31.2~~	~~Certification of Chief Financial Officer pursuant to Exchange Act Rules 13a-14(a) and 15d-14(a), as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002~~
~~32.1~~	~~Certifications of Chief Executive Officer pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002~~
~~32.2~~	~~Certifications of Chief Financial Officer pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002~~
101.INS*	~~XBRL Instance Document~~
101.SCH*	~~XBRL Taxonomy Extension Schema Document~~
101.CAL*	~~XBRL Taxonomy Extension Calculation Document~~
101.DEF*	~~XBRL Taxonomy Extension Definitions Document~~
101.LAB*	~~XBRL Taxonomy Extension Labels Document~~
101.PRE*	~~XBRL Taxonomy Extension Presentation Document~~

		Incorporated by Reference
Exhibit Number	Description	Form	File No.	Exhibit	Filing Date	Filed Herewith	Furnished
2.1	Asset Purchase Agreement	8-K	000-25779	2.1	June 22, 2018

31.1	Certification of Chief Executive Officer pursuant to Exchange Act Rules 13a-14(a) and 15d-14(a), as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002					X

31.2	Certification of Chief Financial Officer pursuant to Exchange Act Rules 13a-14(a) and 15d-14(a), as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002					X

32.1	Certifications of Chief Executive Officer pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002						X

32.2	Certifications of Chief Financial Officer pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002						X

101.INS	XBRL Instance Document					X

101.SCH	XBRL Taxonomy Extension Schema Document					X

101.CAL	XBRL Taxonomy Extension Calculation Document					X

101.DEF	XBRL Taxonomy Extension Definitions Document					X

101.LAB	XBRL Taxonomy Extension Labels Document					X

101.PRE	XBRL Taxonomy Extension Presentation Document					X


	THESTREET, INC.

Date: November ~~13, 2017~~14, 2018	By:	/s/ David Callaway
	~~Name:~~	~~David Callaway~~
	~~Title:~~	Name: David Callaway
		Title: President & Chief Executive Officer ~~(principal~~ (principal executive officer)

Date: November ~~13, 2017~~14, 2018	By:	/s/ Eric F. Lundberg
	~~Name:~~	~~Eric F. Lundberg~~
	~~Title:~~	Name: Eric F. Lundberg
		Title: Chief Financial Officer ~~(principal~~ (principal financial officer)