| | | | | | | | | | | | | |
| | Shares
Underlying
Awards | | Weighted
Average
Exercise
Price | | Aggregate
Intrinsic
Value
($000) | | Weighted
Average
Remaining
Contractual
Life (In Years) | |
| |
| |
| |
| |
| |
Awards outstanding, December 31, 2010 | | | 1,928,393 | | $ | — | | | | | | | |
Restricted stock units granted | | | 1,170,341 | | $ | — | | | | | | | |
Restricted stock units settled by delivery of common stock upon vesting | | | (327,100 | ) | $ | — | | | | | | | |
Restricted stock units cancelled | | | (2,500 | ) | $ | — | | | | | | | |
| |
|
| | | | | | | | | | |
Awards outstanding, March 31, 2011 | | | 2,769,134 | | $ | — | | | | | | | |
Restricted stock units granted | | | 30,000 | | $ | — | | | | | | | |
Restricted stock units settled by delivery of common stock upon vesting | | | (68,370 | ) | $ | — | | | | | | | |
Restricted stock units cancelled | | | — | | $ | — | | | | | | | |
| |
|
| | | | | | | | | | |
Awards outstanding, June 30, 2011 | | | 2,730,764 | | $ | — | | | | | | | |
Restricted stock units granted | | | 40,000 | | $ | — | | | | | | | |
Restricted stock units settled by delivery of common stock upon vesting | | | (67,477 | ) | $ | — | | | | | | | |
Restricted stock units cancelled | | | (16,667 | ) | $ | — | | | | | | | |
| |
|
| | | | | | | | | | |
Awards outstanding, September 30, 2011 | | | 2,686,620 | | $ | — | | $ | 5,320 | | | 2.53 | |
| |
|
| | | | |
|
| |
|
| |
Awards vested and expected to vest at September 30, 2011 | | | 2,305,808 | | $ | — | | $ | 4,565 | | | 2.44 | |
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|
| | | | |
|
| |
|
| |
Awards exercisable at September 30, 2011 | | | — | | $ | — | | $ | — | | | — | |
| |
|
| | | | |
|
| |
|
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A summary of the status of the Company’s unvested share-based payment awards as of September 30, 2011 and changes in the nine-month period then ended, is as follows:
For the nine months ended September 30, 2011 and 2010, the total fair value of share-based awards vested was $1.6 million and $1.3 million, respectively. For the nine months ended September 30, 2011 and
2010, the total intrinsic value of options exercised was $0 and $0, respectively (no options were exercised in either period). For the nine months ended September 30, 2011 and 2010, 550,250 and 334,000 stock options, respectively, and 1,240,341 and 565,916 restricted stock units, respectively, were granted to employees of the Company. Additionally, for the nine months ended September 30, 2011 and 2010, zero and zero stock options, respectively, were exercised, and 462,947 and 542,209 shares were issued under restricted stock unit grants, respectively, yielding approximately $0 and $0, respectively, to the Company.
Treasury Stock
In December 2000, the Company’s Board of Directors authorized the repurchase of up to $10 million worth of the Company’s common stock, from time to time, in private purchases or in the open market. In February 2004, the Company’s Board of Directors approved the resumption of the stock repurchase program (the “Program”) under new price and volume parameters, leaving unchanged the maximum amount available for repurchase under the Program. However, the affirmative vote of the holders of a majority of the outstanding shares of Series B Preferred Stock, voting separately as a single class, is necessary for the Company to repurchase its stock. During the nine-month periods ended September 30, 2011 and 2010, the Company did not purchase any shares of common stock under the Program. Since inception of the Program, the Company has purchased a total of 5,453,416 shares of common stock at an aggregate cost of $7.3 million. In addition, pursuant to the terms of the Company’s 1998 Plan and 2007 Plan, and certain procedures adopted by the Compensation Committee of the Board of Directors, in connection with the exercise of stock options by certain of the Company’s employees, and the issuance of shares of common stock in settlement of vested restricted stock units, the Company may withhold shares in lieu of payment of the exercise price and/or the minimum amount of applicable withholding taxes then due. Through September 30, 2011, the Company had withheld an aggregate of 565,251 shares which have been recorded as treasury stock. In addition, the Company received an aggregate of 208,270 shares as partial settlement of the working capital and debt adjustment from the acquisition of Corsis Technology Group II LLC, 104,055 of which were received in December 2008 and 104,215 of which were received in September 2009, and 3,338 shares as partial settlement of the working capital adjustment from the acquisition of Kikucall, Inc., which were received in March 2011. These shares have been recorded as treasury stock.
Dividends
On September 30, 2011, the Company paid its quarterly cash dividend of $0.025 per share on its common stock and its convertible preferred stock on a converted common share basis, to stockholders of record at the close of business on September 15, 2011. These dividends totaled approximately $1.0 million. When combined with the quarterly cash dividend paid on March 31, 2011 and June 30, 2011, year-to-date dividend payments totaled approximately $2.9 million. The Company’s Board of Directors reviews the dividend payment each quarter and there can be no assurance that we will continue to pay this cash dividend in the future.
As previously disclosed, in 2001, the Company, certain of its current or former officers and directors and certain underwriters were named in a securities class action related to the Company’s initial public offering (“IPO”). Similar suits were filed against approximately 300 other issuers and their underwriters, all of which are included in a single coordinated proceeding in the district court (the “IPO Litigations”). The complaints allege that the prospectus and the registration statement for the IPO failed to disclose that the underwriters allegedly solicited and received “excessive” commissions from investors and that some investors in the IPO allegedly agreed with the underwriters to buy additional shares in the aftermarket in order to inflate the price of the Company’s stock. The complaints seek unspecified damages, attorney and expert fees, and other unspecified litigation costs. In 2003, the district court granted the Company’s motion to dismiss the claims against it under Rule 10b-5 but motions to dismiss the claims under Section 11 of the Securities Act of 1933 were denied as to virtually all of the defendants in the consolidated cases, including the Company. In addition, some of the individual defendants in the IPO Litigations signed a tolling agreement and were dismissed from the action
10
without prejudice on October 9, 2002. In 2003, a proposed collective partial settlement of this litigation was structured between the plaintiffs, the issuer defendants in the consolidated actions, the issuer officers and directors named as defendants, and the issuers’ insurance companies. The court granted preliminary approval of the settlement in 2005 but in 2007 the settlement was terminated, in light of a ruling by the appellate court in related litigation in 2006 that reversed the trial court’s certification of classes in that related litigation. In 2009, another settlement was entered into and approved by the trial court. Under the settlement, the Company’s obligation of approximately $339,000 would be paid by the issuers’ insurance companies. The settlement was appealed; in May 2011, the Second Circuit Court of Appeals dismissed one appeal and remanded another appeal to the District Court to determine whether the appellant has standing; in August 2011, the District Court determined that the applicable appellant did not have standing, which decision is being appealed. There can be no assurance that the approval of the settlement will not be reversed on appeal and that the settlement will be implemented in its current form, or at all. Due to the inherent uncertainties of litigation, the ultimate outcome of the matter is uncertain.
As previously disclosed, we conducted a review of the accounting in our former Promotions.com subsidiary, which subsidiary we sold in December 2009. As a result of this review, in February 2010 we filed a Form 10-K/A for the year ended December 31, 2008 and a Form 10-Q/A for the quarter ended March 31, 2009, respectively, to restate and correct certain previously-reported financial information as well as filed Forms 10-Q for the quarters ended June 30, 2009 and September 30, 2009, respectively. The SEC commenced an investigation in March 2010 into the facts surrounding our restatement of previously issued financial statements and related matters. We are cooperating fully with the SEC. The investigation could result in the SEC seeking various penalties and relief including, without limitation, civil injunctive relief and/or civil monetary penalties or administrative relief. The nature of the relief or remedies the SEC may seek, if any, cannot be predicted at this time. The Company has incurred legal defense costs that are reimbursable under its D&O insurance plan and that the insurer has indicated would pay. The Company has recorded the insurance recoveries totaling $0.5 million as a benefit within General and administrative expenses on its statement of operations and $0.5 million in Other receivables, net on its balance sheet as insurance recoveries receivable.
As previously disclosed, in April 2010, we and one of our reporters were named in a lawsuit captionedGenerex Biotechnology Corporation v. Feuerstein et al. (N.Y. Supreme Court, County of New York, Index No. 10104433), in which plaintiff alleges that certain articles we published concerning plaintiff were libelous. In May 2010 we filed an answer denying all claims. We intend to vigorously defend ourselves in this matter and believe we have meritorious defenses. Due to the preliminary stage of this matter and the inherent uncertainties of litigation, the ultimate outcome of the matter is uncertain.
In December 2010, the Company was named as one of several defendants in a lawsuit captionedEIT Holdings LLC v. WebMD, LLC et al., (U.S.D.C., D. Del.), on the same day that plaintiff filed a substantially identical suit against a different group of defendants in a lawsuit captionedEIT Holdings LLC v. Yelp!, Inc. et al., (U.S.D.C., N. D. Cal.). In February 2011, by agreement of plaintiff and the Company, the Company was dismissed from the Delaware action without prejudice and named as a defendant in the California action. In May 2011, the action against the Company and all but one defendant were dismissed for misjoinder and plaintiff filed separate cases against the dismissed defendants; the action against the Company is captionedEIT Holdings LLC v. TheStreet.com, Inc., (U.S.D.C., N. D. Cal.). The complaints allege that defendants infringe U.S. Patent No. 5,828,837, putatively owned by plaintiff, related to a certain method of displaying information to an Internet-accessible device. The Company intends to vigorously defend itself and believes it has meritorious defenses. Due to the early stage of this matter and the inherent uncertainties of litigation, the ultimate outcome of this matter is uncertain.
The Company is party to other legal proceedings arising in the ordinary course of business or otherwise, none of which other proceedings is deemed material.
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7. | NET LOSS PER SHARE OF COMMON STOCK |
Basic net loss per share is computed using the weighted average number of common shares outstanding during the period. Diluted net loss per share is computed using the weighted average number of common shares
11
and, if dilutive, potential common shares outstanding during the period. Potential common shares consist of restricted stock units (using the treasury stock method), the incremental common shares issuable upon the exercise of stock options (using the treasury stock method), and the conversion of the Company’s convertible preferred stock and warrants (using the if-converted method). For the three months ended September 30, 2011 and 2010, approximately 5.0 million and 4.0 million unvested restricted stock units, vested and unvested options and warrants to purchase common stock, respectively, were excluded from the calculation, as their effect would be anti-dilutive because the exercise prices were greater than the average market price of the common stock during the respective periods and because the Company recorded a net loss. For the nine months ended September 30, 2011 and 2010, approximately 4.8 million and 3.8 million unvested restricted stock units, vested and unvested options and warrants to purchase common stock, respectively, were excluded from the calculation, as their effect would be anti-dilutive because the exercise prices were greater than the average market price of the common stock during the respective periods and because the Company recorded a net loss.
The following table reconciles the numerator and denominator for the calculation.
| | | | | | | | | | | | | |
| | For the Three Months Ended September 30, | | For the Nine Months Ended September 30, | |
| |
| |
| |
| | 2011 | | 2010 | | 2011 | | 2010 | |
| |
| |
| |
| |
| |
Basic and diluted net loss per share: | | | | | | | | | | | | | |
Numerator: | | | | | | | | | | | | | |
Loss from continuing operations | | $ | (1,496,394 | ) | $ | (1,827,841 | ) | $ | (5,789,898 | ) | $ | (3,564,010 | ) |
Loss from discontinued operations | | | (46 | ) | | (2,257 | ) | | (1,798 | ) | | (23,430 | ) |
Preferred stock cash dividends | | | (96,424 | ) | | (96,424 | ) | | (289,272 | ) | | (289,272 | ) |
| |
|
| |
|
| |
|
| |
|
| |
Numerator for basic and diluted earnings per share - | | | | | | | | | | | | | |
Net loss available to common stockholders | | $ | (1,592,864 | ) | $ | (1,926,522 | ) | $ | (6,080,968 | ) | $ | (3,876,712 | ) |
| |
|
| |
|
| |
|
| |
|
| |
| | | | | | | | | | | | | |
Denominator: | | | | | | | | | | | | | |
Weighted average basic and diluted shares outstanding | | | 31,994,227 | | | 31,653,337 | | | 31,933,296 | | | 31,570,624 | |
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|
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|
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|
| |
|
| |
| | | | | | | | | | | | | |
Basic and diluted net loss per share: | | | | | | | | | | | | | |
Loss from continuing operations | | $ | (0.05 | ) | $ | (0.06 | ) | $ | (0.18 | ) | $ | (0.11 | ) |
Loss from discontinued operations | | | (0.00 | ) | | (0.00 | ) | | (0.00 | ) | | (0.00 | ) |
Preferred stock cash dividends | | | (0.00 | ) | | (0.00 | ) | | (0.01 | ) | | (0.01 | ) |
| |
|
| |
|
| |
|
| |
|
| |
Net loss available to common stockholders | | $ | (0.05 | ) | $ | (0.06 | ) | $ | (0.19 | ) | $ | (0.12 | ) |
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|
| |
|
| |
|
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The Company accounts for its income taxes in accordance with ASC 740. Under ASC 740, 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 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.
As of December 31, 2010, the Company had approximately $136 million of federal and state net operating loss carryforwards, which are available through 2030. Based on operating results for the nine months ended September 30, 2011 and three month projections, management expects to generate a tax loss in 2011 and no tax benefit has been recorded. The Company has a full valuation allowance against its 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.
In accordance with Section 382 of the Internal Revenue Code, the ability to utilize the Company’s net operating loss carryforwards could be limited in the event of a change in ownership and as such a portion of the existing net operating loss carryforwards may be subject to limitation. Such an ownership change would create an annual limitation on the usage of the Company’s net operating loss carryforward. The ultimate realization of
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net operating loss carryforwards is dependent upon the generation of future taxable income during the periods following an ownership change. As such, a portion of the existing net operating loss carryforwards may be subject to limitation. During the year ended December 31, 2009, the Company acquired approximately $3 million of net operating loss carryforwards when it acquired the stock of Kikucall, Inc. In accordance with Section 382 of the Internal Revenue Code, the usage of the Kikucall, Inc. net operating loss carryforward could be limited.
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9. | 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 six domestic financial institutions. The Company performs periodic evaluations of the relative credit standing of these institutions. As of September 30, 2011, the Company’s cash and cash equivalents primarily consisted of money market funds and checking accounts.
For the three and nine months ended September 30, 2011 and 2010, no individual client accounted for 10% or more of consolidated revenue. As of September 30, 2011, no client accounted for more than 10% of our gross accounts receivable balance. As of December 31, 2010, one client accounted for more than 10% of our gross accounts receivable balance.
The Company’s customers are primarily concentrated in the United States. 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. | RESTRUCTURING AND OTHER CHARGES |
In March 2009, the Company announced and implemented a reorganization plan, including an approximate 8% reduction in the Company’s workforce, to align the Company’s resources with its strategic business objectives. Additionally, effective March 21, 2009, the Company’s then Chief Executive Officer tendered his resignation, effective May 8, 2009, the Company’s then Chief Financial Officer tendered his resignation, and in December 2009, the Company sold its Promotions.com subsidiary and entered into negotiations to sublease certain office space maintained by Promotions.com. As a result of these activities, the Company incurred restructuring and other charges from continuing operations of approximately $3.5 million during the year ended December 31, 2009.
The following tables display the activity of the restructuring and other charges reserve account during the nine months ended September 30, 2011 and 2010:
| | | | | | | |
| | For the Nine Months Ended September 30, | |
| |
| |
| | 2011 | | 2010 | |
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| |
| |
Beginning balance | | $ | 844,761 | | $ | 1,230,056 | |
Payments | | | 142,014 | | | 356,913 | |
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|
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|
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Ending balance | | $ | 702,747 | | $ | 873,143 | |
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|
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11. | COMPREHENSIVE LOSS |
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| Comprehensive loss consists of the following: |
| | | | | | | | | | | | | |
| | For the Three Months Ended
September 30, | | For the Nine Months Ended
September 30, | |
| |
| |
| |
| | 2011 | | 2010 | | 2011 | | 2010 | |
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| |
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Net loss | | $ | (1,496,440 | ) | $ | (1,830,098 | ) | $ | (5,791,696 | ) | $ | (3,587,440 | ) |
Unrealized (loss) gain on marketable securities | | | (150,558 | ) | | 180,487 | | | (276,453 | ) | | 8,630 | |
(Increase) decrease of temporary impairment of ARS | | | (290,000 | ) | | (25,000 | ) | | (380,000 | ) | | 15,000 | |
Reclass from accumulated other comprehensive income to earnings due to sale | | | — | | | — | | | — | | | 226 | |
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Comprehensive loss | | $ | (1,936,998 | ) | $ | (1,674,611 | ) | $ | (6,448,149 | ) | $ | (3,563,584 | ) |
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12. | DISCONTINUED OPERATIONS |
In June 2005, the Company committed to a plan to discontinue the operations of the Company’s securities research and brokerage segment. Accordingly, the operating results relating to this segment, which are limited to certain professional fees, have been segregated from continuing operations and reported as a separate line item in the accompanying condensed consolidated statements of operations and cash flows. There were no cash flows from discontinued operations from investing or financing activities for the periods presented.
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13. | OTHER LIABILITIES |
| |
| Other liabilities consist of the following: |
| | | | | | | |
| | September 30, 2011 | | December 31, 2010 | |
| |
| |
| |
Deferred rent | | $ | 3,357,539 | | $ | 2,933,014 | |
Other liabilities | | | 874,661 | | | 15,167 | |
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|
| |
|
| |
Total other liabilities | | $ | 4,232,200 | | $ | 2,948,181 | |
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|
| |
|
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During the three months ended June 30, 2010, the Company determined it necessary to record an impairment charge approximating $0.6 million, writing the value of its investment in Debtfolio, Inc. to zero. This was deemed necessary by management based upon their consideration of Debtfolio, Inc.’s continued negative cash flow from operations, current financial position and lack of current liquidity.
On May 4, 2010, the Company sold certain assets of TheStreet Ratings business (those pertaining to banking and insurance ratings) for an aggregate price of approximately $1.7 million, subject to adjustment as provided in the agreement. The purchaser is an entity under the same control as was the entity from which the Company had purchased TheStreet Ratings business in August 2006. In connection with the sale, the purchaser assumed a net $0.3 million of liabilities ($0.4 million of deferred revenue liabilities offset in part by working capital items) and paid the Company $1.3 million in cash, subject to adjustment. Gain on disposition of assets approximated $1.3 million.
14
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Item 2. | Management’s Discussion and Analysis of Financial Condition and Results of Operations. |
Special Note Regarding Forward-Looking Statements – all statements contained in this quarterly report on Form 10-Q (the “Report”) that are not descriptions of historical facts are forward-looking statements within the meaning of Section 27A of the Securities Act of 1933, as amended (the “Securities Act”), and Section 21E of the Securities Exchange Act of 1934, as amended (the “Exchange Act”). Forward-looking statements are inherently subject to risks and uncertainties, and actual results could differ materially from those reflected in the forward-looking statements due to a number of factors, which include, but are not limited to, the factors set forth under the heading “Risk Factors” and elsewhere in this Report, and in other documents we file with the Securities and Exchange Commission from time to time, including, without limitation, the Company’s annual report on Form 10-K for the year ended December 31, 2010 (“2010 Form 10-K”). Certain forward-looking statements may be identified by terms such as “may,” “will,” “should,” “could,” “expects,” “plans,” “intends,” “anticipates,” “believes,” “estimates,” “predicts,” “forecasts,” “potential,” or “continue” or similar terms or the negative of these terms. All statements relating to our plans, strategies and objectives are deemed forward-looking statements. Although we believe that the expectations reflected in the forward-looking statements are reasonable, we cannot guarantee future results, levels of activity, performance or achievements. The forward-looking statements speak only as of the date of the filing of this Report; we have no obligation to update these forward-looking statements, whether as a result of new information, future developments or otherwise.
The following discussion and analysis should be read in conjunction with the Company’s unaudited condensed consolidated financial statements and notes thereto.
Overview
TheStreet, Inc., together with its wholly owned subsidiaries (“we”, “us” or the “Company”), is a digital financial media company. Our goal is to be the primary independent online-only source of reliable and actionable investing ideas, news and analysis, markets and rate data and analytical tools for a large audience of active self-directed investors, as well as to assist advertisers desiring to connect with our affluent audience. We distribute our fee-based premium content and advertising-supported content through a network of proprietary electronic services including: Web sites, blogs, social media, widgets, email services, mobile devices and tablets, podcasts and online video channels. We also syndicate our content for distribution by financial institutions and other media organizations.
We report revenue in two categories: premium services and marketing services. Premium services revenue is comprised of subscriptions, licenses and fees for access to investment information and rate services. Marketing services revenue is comprised of fees charged for the placement of advertising and sponsorships within our services, as well as licensing fees paid by third parties to obtain the right to display the Company’s awards logos on their Web sites and marketing materials in relation to certain award designations.
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 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:
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• | incentive cash compensation, |
15
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• | 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, and |
• | certain estimates and assumptions used in the calculation of the fair value of equity compensation issued to employees. |
The Company accrues quarterly expenses related to its full year cash incentive compensation on a straight-line basis based on the Company’s estimate of expected full year cash incentive compensation.
A summary of our critical accounting policies and estimates can be found in our 2010 Form 10-K.
Results of Operations
Comparison of Three Months Ended September 30, 2011 and September 30, 2010
Revenue
| | | | | | | | | | | | | | | | |
| | For the Three Months Ended September 30, | | | | |
| |
| | | | |
| | 2011 | | Percent
of Total
Revenue | | 2010 | | Percent
of Total
Revenue | | Percent
Change | |
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| |
| |
| |
| |
| |
Revenue: | | | | | | | | | | | | | | | | |
Premium services | | $ | 9,994,184 | | | 70 | % | $ | 9,645,939 | | | 67 | % | | 4 | % |
Marketing services | | | 4,346,907 | | | 30 | % | | 4,691,007 | | | 33 | % | | -7 | % |
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| | | |
Total revenue | | $ | 14,341,091 | | | 100 | % | $ | 14,336,946 | | | 100 | % | | 0 | % |
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Premium services. Premium service revenue is comprised of subscriptions, licenses and fees for access to securities investment information and rate services. Revenue is recognized ratably over the contract period.
Premium services revenue for the three months ended September 30, 2011 increased by 4% when compared to the three months ended September 30, 2010, primarily attributable to a 5% increase in revenue from subscriptions to our products. This increase is primarily the result of a 4% increase in the average revenue recognized per subscription during the three months ended September 30, 2011 as compared to the three months ended September 30, 2010, combined with a 1% increase in the weighted-average number of subscriptions during the three months ended September 30, 2011 as compared to the three months ended September 30, 2010. The increase in the average revenue recognized per subscription during the three months ended September 30, 2011 as compared to the three months ended September 30, 2010 is primarily the result of both the mix of products sold and higher average selling prices for a number of our subscription products. The increase in the weighted-average number of subscriptions during the period is primarily a result of increased subscriber acquisition and renewal efforts.
Marketing services. Marketing services revenue is comprised of fees charged for the placement of advertising and sponsorships within our services, as well as licensing fees paid by third parties to obtain the right to display the Company’s awards logos on their Web sites and marketing materials in relation to certain award designations.
Marketing services revenue for the three months ended September 30, 2011 decreased by 7% when compared to the three months ended September 30, 2010. The decrease in marketing services revenue was primarily the result of reduced demand from new advertisers, partially offset by higher demand from repeat advertisers. Marketing services revenue includes $0.1 million and $0.1 million of barter revenue in the three
16
months ended September 30, 2011 and 2010, respectively.
Operating Expense
| | | | | | | | | | | | | | | | |
| | For the Three Months Ended September 30, | | | | |
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| | | | |
| | 2011 | | Percent
of Total
Revenue | | 2010 | | Percent
of Total
Revenue | | Percent
Change | |
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| |
| |
| |
| |
Operating expense: | | | | | | | | | | | | | | | | |
Cost of services | | $ | 6,274,741 | | | 44 | % | $ | 6,466,484 | | | 45 | % | | -3 | % |
Sales and marketing | | | 4,640,908 | | | 32 | % | | 4,202,380 | | | 29 | % | | 10 | % |
General and administrative | | | 3,750,475 | | | 26 | % | | 4,648,992 | | | 32 | % | | -19 | % |
Depreciation and amortization | | | 1,326,484 | | | 9 | % | | 1,087,009 | | | 8 | % | | 22 | % |
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Total operating expense | | $ | 15,992,608 | | | | | $ | 16,404,865 | | | | | | -3 | % |
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Cost of services. Cost of services expense includes compensation, benefits, outside contributor costs related to the creation of our content, licensed data and the technology required to publish our content.
Cost of services expense decreased by approximately $0.2 million, or 3%, over the periods. The decrease was primarily the result of reduced incentive compensation accruals and a higher amount of salaries capitalized for internal developed software and Web site development projects, combined with lower recruiting fees, and costs related to nonemployee content providers, the aggregate of which decreased by approximately $0.5 million. These cost decreases were partially offset by higher base salary and stock-based compensation costs related to a 1% increase in headcount, combined with higher consulting fees and computer service and supply costs, the aggregate of which increased by approximately $0.3 million. As a percentage of revenue, cost of services expense decreased to 44% in the three months ended September 30, 2011, from 45% in the prior year period.
Sales and marketing. Sales and marketing expense consists primarily of advertising and promotion, promotional materials, credit card processing fees, and compensation expense for the direct sales force, marketing services, and customer service departments.
Sales and marketing expense increased by approximately $0.4 million, or 10%, over the periods. The increase was primarily the result of an investment in the sales and marketing of our premium subscription-based products, including a 13% increase in headcount, as well as higher costs associated with recruiting, investor and public relations, advertisement serving, and travel and entertainment expense, the aggregate sum of which increased by approximately $0.6 million. These cost increases were partially offset by reduced advertising and promotion, consulting and credit card processing fees, the aggregate sum of which decreased by approximating $0.2 million. Sales and marketing expense includes $0.1 million and $0.2 million of barter expense in the three months ended September 30, 2011 and 2010, respectively. As a percentage of revenue, sales and marketing expense increased to 32% in the three months ended September 30, 2011, from 29% in the prior year period.
General and administrative. General and administrative expense consists primarily of compensation for general management, finance and administrative personnel, occupancy costs, professional fees, insurance and other office expenses.
General and administrative expense decreased by approximately $0.9 million, or 19%, over the periods. The decrease was primarily the result of reduced professional, recruiting and consulting fees, combined with lower compensation and related, tax, occupancy, insurance, and employee training costs, the aggregate sum of which decreased by approximately $0.8 million. Professional fees incurred have been reduced by approximately $0.5 million for costs related to the previously-disclosed SEC investigation concerning our restatement in 2010 of certain previously issued financial statements and related matters (“SEC Matter”), which costs the Company anticipates will be reimbursed through its insurance coverage. As a percentage of revenue, general and
17
administrative expense decreased to 26% in the three months ended September 30, 2011, from 32% in the prior year period.
Depreciation and amortization. Depreciation and amortization expense increased by approximately $0.2 million, or 22%, over the periods. The increase is largely attributable to increased amortization expense resulting from a reduction to the estimated useful life of certain past capitalized Web site development projects together with increased leasehold improvement amortization related to a renovation of the Company’s corporate headquarters that was completed late last year. As a percentage of revenue, depreciation and amortization expense increased to 9% in the three months ended September 30, 2011, from 8% in the prior year period.
Net Interest Income
| | | | | | | | | | |
| | For the Three Months
Ended September 30, | | Percent
Change | |
| |
| | |
| | 2011 | | 2010 | | |
| |
| |
| |
| |
Net interest income | | $ | 155,123 | | $ | 240,078 | | | -35 | % |
| |
|
| |
|
| | | | |
The decrease in net interest income is primarily the result of the movement of cash balances from higher yielding marketable securities to lower yielding money market funds.
Net Loss
Net loss for the three months ended September 30, 2011 totaled $1.5 million, or $0.05 per basic and diluted share, compared to net loss totaling $1.8 million, or $0.06 per basic and diluted share, for the three months ended September 30, 2010.
Comparison of Nine Months Ended September 30, 2011 and September 30, 2010
Revenue
| | | | | | | | | | | | | | | | |
| | For the Nine Months Ended September 30, | | | | |
| |
| | | | |
| | 2011 | | Percent
of Total
Revenue | | 2010 | | Percent
of Total
Revenue | | Percent
Change | |
| |
| |
| |
| |
| |
| |
Revenue: | | | | | | | | | | | | | | | | |
Premium services | | $ | 29,678,616 | | | 68 | % | $ | 29,165,672 | | | 69 | % | | 2 | % |
Marketing services | | | 13,812,144 | | | 32 | % | | 13,335,308 | | | 31 | % | | 4 | % |
| |
|
| |
|
| |
|
| |
|
| | | | |
Total revenue | | $ | 43,490,760 | | | 100 | % | $ | 42,500,980 | | | 100 | % | | 2 | % |
| |
|
| |
|
| |
|
| |
|
| | | | |
Premium services revenue for the nine months ended September 30, 2011 increased by 2% when compared to the nine months ended September 30, 2010. The increase is primarily attributable to an increase in revenue from subscriptions to our securities investment information and RateWatch products, offset in part by reduced revenue from our TheStreet Ratings products.
The increase in revenue from subscriptions to our securities investment information and RateWatch products of 4% is primarily the result of a 4% increase in the weighted-average number of subscriptions during the nine months ended September 30, 2011 as compared to the nine months ended September 30, 2010 resulting from increased subscriber acquisition and renewal efforts.
The decline in revenue from our TheStreet Ratings products totaled $0.5 million, or 58%, and was primarily related to the sale of certain assets of TheStreet Ratings business in May 2010 which reduced the revenue of the business for the nine months ended September 30, 2011 as compared to the prior year.
18
Marketing services revenue for the nine months ended September 30, 2011 increased by 4% when compared to the nine months ended September 30, 2010. The increase in marketing services revenue was primarily the result of higher demand from new advertisers, partially offset by reduced demand from repeat advertisers. Marketing services revenue includes $0.4 million and $0.3 million of barter revenue in the nine months ended September 30, 2011 and 2010, respectively.
Operating Expense
| | | | | | | | | | | | | | | | |
| | For the Nine Months Ended September 30, | | | | |
| |
| | | | |
| | 2011 | | Percent of
Total
Revenue | | 2010 | | Percent of
Total
Revenue | | Percent
Change | |
| |
| |
| |
| |
| |
| |
Operating expense: | | | | | | | | | | | | | | | | |
Cost of services | | $ | 20,036,270 | | | 46 | % | $ | 18,972,725 | | | 45 | % | | 6 | % |
Sales and marketing | | | 13,122,182 | | | 30 | % | | 11,289,600 | | | 27 | % | | 16 | % |
General and administrative | | | 12,159,579 | | | 28 | % | | 14,003,161 | | | 33 | % | | -13 | % |
Depreciation and amortization | | | 4,492,525 | | | 10 | % | | 3,225,968 | | | 8 | % | | 39 | % |
Asset impairments | | | — | | | N/A | | | 555,000 | | | 1 | % | | -100 | % |
Gain on disposition of assets | | | — | | | N/A | | | (1,318,607 | ) | | -3 | % | | 100 | % |
| |
|
| | | | |
|
| | | | | | | |
Total operating expense | | $ | 49,810,556 | | | | | $ | 46,727,847 | | | | | | 7 | % |
| |
|
| | | | |
|
| | | | | | | |
Cost of services. Cost of services expense increased by approximately $1.1 million, or 6%, over the periods. The increase was primarily the result of higher base salary and stock-based compensation costs related to a 3% increase in headcount, combined with higher costs related to nonemployee content providers, consulting fees, and computer services and supplies, the aggregate of which increased by approximately $1.9 million. These cost increases were partially offset by reduced incentive compensation accruals, a higher amount of salaries capitalized for internal developed software and Web site development projects, and reduced usage of temporary help, the aggregate of which totaled approximately $0.9 million. As a percentage of revenue, cost of services expense increased to 46% in the nine months ended September 30, 2011, from 45% in the prior year period.
Sales and marketing. Sales and marketing expense increased by approximately $1.8 million, or 16%, over the periods. The increase was primarily the result of an investment in the sales and marketing of our premium subscription-based products, including a 10% increase in headcount, higher costs associated with investor and public relations, advertising and promotion, travel and entertainment, advertisement serving, and recruiting fees, the aggregate sum of which increased by approximately $1.7 million. Sales and marketing expense includes $0.2 million and $0.2 million of barter expense in the nine months ended September 30, 2011 and 2010, respectively. As a percentage of revenue, sales and marketing expense increased to 30% in the nine months ended September 30, 2011, from 27% in the prior year period.
General and administrative. General and administrative expense decreased by approximately $1.8 million, or 13%, over the periods. The decrease was primarily the result of reduced costs related to a review of certain accounting matters in our former Promotions.com subsidiary and to the SEC Matter, combined with reduced professional fees, consulting, recruiting and tax related costs, the aggregate of which decreased by approximately $1.9 million. Professional fees for costs related to the SEC Matter have been reduced by approximately $0.5 million, which costs the Company anticipates will be reimbursed through its insurance coverage. As a percentage of revenue, general and administrative expense decreased to 28% in the nine months ended September 30, 2011, from 33% in the prior year period.
Depreciation and amortization. Depreciation and amortization expense increased by approximately $1.3 million, or 39%, over the periods. The increase is largely attributable to increased amortization expense resulting from a reduction to the estimated useful life of certain past capitalized Web site development projects together with increased leasehold improvement amortization related to a renovation of the Company’s corporate headquarters that was completed late last year. As a percentage of revenue, depreciation and amortization
19
expense increased to 10% in the nine months ended September 30, 2011, from 8% in the prior year period.
Asset impairments. During the three months ended June 30, 2010, the Company recorded an impairment charge to its long term investment approximating $0.6 million based upon management’s consideration of Debtfolio, Inc.’s continued negative cash flow from operations, current financial position and lack of current liquidity.
Gain on disposition of assets. On May 4, 2010, the Company sold certain assets of TheStreet Ratings business (those pertaining to banking and insurance ratings) resulting in a gain approximating $1.3 million.
Net Interest Income
| | | | | | | | | | |
| | For the Nine Months Ended
September 30, | | | | |
| |
| | | | |
| | 2011 | | 2010 | | Percent
Change | |
| |
| |
| |
| |
Net interest income | | $ | 529,898 | | $ | 642,483 | | | -18 | % |
| |
|
| |
|
| | | | |
The decrease in net interest income is primarily the result of the movement of cash balances from higher yielding marketable securities to lower yielding money market funds.
Net Loss
Net loss for the nine months ended September 30, 2011 totaled $5.8 million, or $0.18 per basic and diluted share, compared to net loss totaling $3.6 million, or $0.11 per basic and diluted share, for the nine months ended September 30, 2010.
Liquidity and Capital Resources
We have generally 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 operating purposes. As of September 30, 2011, our cash, cash equivalents, marketable securities, and restricted cash amounted to $76.8 million, representing 62% of total assets. Our cash and cash equivalents primarily consisted of money market funds and checking accounts. Our marketable securities consisted of approximately $41.4 million of liquid short-term U.S. Treasuries, government agencies, certificates of deposit (insured up to FDIC limits), investment grade corporate and municipal bonds, and corporate floating rate notes, with a maximum maturity of three years, and two auction rate securities issued by the District of Columbia with a par value of $1.9 million. Our total cash-related position is as follows:
| | | | | | | |
| | September 30,
2011 | | December 31,
2010 | |
| |
| |
| |
Cash and cash equivalents | | $ | 33,709,574 | | $ | 20,089,660 | |
Current and noncurrent marketable securities | | | 41,399,463 | | | 56,805,373 | |
Restricted cash | | | 1,660,370 | | | 1,660,370 | |
| |
|
| |
|
| |
Total cash and cash equivalents, current and noncurrent marketable securities and restricted cash | | $ | 76,769,407 | | $ | 78,555,403 | |
| |
|
| |
|
| |
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 six domestic financial institutions and perform periodic evaluations of the relative credit standing of these institutions.
Cash generated from operations was sufficient to cover expenses during the nine-month period ended September 30, 2011. Net cash provided by operating activities for the nine-month period ended September 30,
20
2011 totaled $3.3 million, as compared to net cash provided by operating activities totaling $0.6 million for the nine-month period ended September 30, 2010. The increase in net cash provided by operating activities is primarily related to the following:
| | |
| Ÿ | cash collection efforts resulting in a decrease in accounts receivable; |
| Ÿ | an increase in the growth of deferred revenue resulting from stronger subscription sales; and |
| Ÿ | a decrease in the growth of prepaid expenses and other current assets. |
These increases in net cash provided by operating activities were partially offset by:
| | |
| Ÿ | a larger decrease in both accounts payable and accrued expenses during the nine months ended September 30, 2011 as compared to the prior year period; and |
| Ÿ | an increase in the loss from continuing operations, which in turn was partially offset by increased noncash expenses. |
Net cash provided by investing activities of $13.5 million for the nine-month period ended September 30, 2011 was primarily the result of the $14.7 million net sale and maturity of marketable securities, partially offset by $1.5 million of capital expenditures.
Net cash used in financing activities of $3.2 million for the nine-month period ended September 30, 2011 primarily consisted of cash dividends paid and the purchase of treasury stock by retaining shares issuable upon the vesting of restricted stock units in connection with the minimum tax withholding requirements.
We have a total of $1.7 million 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 our 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 $2.3 million through September 30, 2012, primarily related to operating leases. Additionally, our Board of Directors declared a quarterly cash dividend in the amount of $0.025 per share of common stock and convertible preferred stock (on a common share equivalent basis) during each of the first three quarters of 2011, which resulted in cash expenditures of approximately $2.9 million. Our Board of Directors reviews the dividend payment each quarter and there can be no assurance that we will continue to pay this cash dividend in the future.
As of December 31, 2010, we had approximately $136 million of federal and state net operating loss carryforwards, which are available through 2030. Based on operating results for the nine months ended September 30, 2011 and three-month projections, management expects to generate a tax loss in 2011 and no tax benefit has been recorded. 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 provide 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 the Company’s net operating loss carryforwards could be limited in the event of a change in ownership and as such a portion of the existing net operating loss carryforwards may be subject to limitation. Such an ownership change would create an annual limitation on the usage of the Company’s net operating loss carryforward. The ultimate realization of net operating loss carryforwards is dependent upon the generation of future taxable income during the periods following an ownership change. As such, a portion of the existing net operating loss carryforwards may be subject to limitation. During the year ended December 31, 2009, the Company acquired approximately $3 million of net operating loss carryforwards when it acquired the stock of Kikucall, Inc. In accordance with Section 382 of the Internal Revenue Code, the usage of the Kikucall, Inc. net operating loss carryforward could be limited.
21
Treasury Stock
In December 2000, our Board of Directors authorized the repurchase of up to $10 million worth of our common stock, from time to time, in private purchases or in the open market. In February 2004, our Board of Directors approved the resumption of the stock repurchase program under new price and volume parameters, leaving unchanged the maximum amount available for repurchase under the program. However, the affirmative vote of the holders of a majority of the outstanding shares of Series B Preferred Stock, voting separately as a single class, is necessary for us to repurchase our stock. During the nine months ended September 30, 2011 we did not purchase any shares of common stock under the program. Since inception of the program, we have purchased a total of 5,453,416 shares of common stock at an aggregate cost of $7.3 million. In addition, pursuant to the terms of the Company’s 1998 Plan and 2007 Plan, and certain procedures adopted by the Compensation Committee of our Board of Directors, in connection with the exercise of stock options by certain of our employees, and the issuance of shares of common stock in settlement of vested restricted stock units, we may withhold shares in lieu of payment of the exercise price and/or the minimum amount of applicable withholding taxes then due. Through September 30, 2011, we have withheld an aggregate of 565,251 shares which have been recorded as treasury stock. In addition, we received an aggregate of 208,270 shares as partial settlement of the working capital and debt adjustment from the acquisition of Corsis Technology Group II LLC, 104,055 of which were received in October 2008 and 104,215 of which were received in September 2009, and 3,338 shares as partial settlement of the working capital adjustment from the acquisition of Kikucall, Inc., which were received in March 2011. These shares have 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.
We maintain all of our cash, cash equivalents and restricted cash in six domestic 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.
| |
Item 4. | Controls and Procedures. |
Evaluation of Disclosure Controls and Procedures: The Company carried out an evaluation, as required by Rule 13a-15(b) under the Exchange Act, under the supervision and with the participation of the Company’s management, including the Company’s Chief Executive Officer and Chief Financial Officer, of the effectiveness of the design and operation of the Company’s disclosure controls and procedures, as defined in Rule 13a-15(e) of the Exchange Act, as of the end of the period covered by this report (the “Evaluation Date”). Based on such evaluation, such officers have concluded that, as of the Evaluation Date, the Company’s disclosure controls and procedures were effective to provide reasonable assurance that information required to be disclosed by the Company in reports that it files or submits under the Exchange Act is recorded, processed, summarized and reported within the time periods specified in the Securities and Exchange Commission’s rules and forms and to provide reasonable assurance that such information is accumulated and communicated to the Company’s management, including the Company’s Chief Executive Officer and Chief Financial Officer, as appropriate to allow timely decisions regarding required disclosure.
In addition, the Company’s management, including the Company’s Chief Executive Officer and Chief Financial Officer, has determined that during the period covered by this report, that there were no changes in the Company’s internal control over financial reporting that have materially affected, or are reasonably likely to materially affect, these internal controls over financial reporting.
PART II - OTHER INFORMATION
22
| |
Item 1. | Legal Proceedings. |
As previously disclosed, in 2001, the Company, certain of its current or former officers and directors and certain underwriters were named in a securities class action related to the Company’s initial public offering (“IPO”). Similar suits were filed against approximately 300 other issuers and their underwriters, all of which are included in a single coordinated proceeding in the district court (the “IPO Litigations”). The complaints allege that the prospectus and the registration statement for the IPO failed to disclose that the underwriters allegedly solicited and received “excessive” commissions from investors and that some investors in the IPO allegedly agreed with the underwriters to buy additional shares in the aftermarket in order to inflate the price of the Company’s stock. The complaints seek unspecified damages, attorney and expert fees, and other unspecified litigation costs. In 2003, the district court granted the Company’s motion to dismiss the claims against it under Rule 10b-5 but motions to dismiss the claims under Section 11 of the Securities Act of 1933 were denied as to virtually all of the defendants in the consolidated cases, including the Company. In addition, some of the individual defendants in the IPO Litigations signed a tolling agreement and were dismissed from the action without prejudice on October 9, 2002. In 2003, a proposed collective partial settlement of this litigation was structured between the plaintiffs, the issuer defendants in the consolidated actions, the issuer officers and directors named as defendants, and the issuers’ insurance companies. The court granted preliminary approval of the settlement in 2005 but in 2007 the settlement was terminated, in light of a ruling by the appellate court in related litigation in 2006 that reversed the trial court’s certification of classes in that related litigation. In 2009, another settlement was entered into and approved by the trial court. Under the settlement, the Company’s obligation of approximately $339,000 would be paid by the issuers’ insurance companies. The settlement was appealed; in May 2011, the Second Circuit Court of Appeals dismissed one appeal and remanded another appeal to the District Court to determine whether the appellant has standing; in August 2011, the District Court determined that the applicable appellant did not have standing, which decision is being appealed. There can be no assurance that the approval of the settlement will not be reversed on appeal and that the settlement will be implemented in its current form, or at all. Due to the inherent uncertainties of litigation, the ultimate outcome of the matter is uncertain.
As previously disclosed, we conducted a review of the accounting in our former Promotions.com subsidiary, which subsidiary we sold in December 2009. As a result of this review, in February 2010 we filed a Form 10-K/A for the year ended December 31, 2008 and a Form 10-Q/A for the quarter ended March 31, 2009, respectively, to restate and correct certain previously-reported financial information as well as filed Forms 10-Q for the quarters ended June 30, 2009 and September 30, 2009, respectively. The SEC commenced an investigation in March 2010 into the facts surrounding our restatement of previously issued financial statements and related matters. We are cooperating fully with the SEC. The investigation could result in the SEC seeking various penalties and relief including, without limitation, civil injunctive relief and/or civil monetary penalties or administrative relief. The nature of the relief or remedies the SEC may seek, if any, cannot be predicted at this time.
As previously disclosed, in April 2010, we and one of our reporters were named in a lawsuit captionedGenerex Biotechnology Corporation v. Feuerstein et al. (N.Y. Supreme Court, County of New York, Index No. 10104433), in which plaintiff alleges that certain articles we published concerning plaintiff were libelous. In May 2010 we filed an answer denying all claims. We intend to vigorously defend ourselves in this matter and believe we have meritorious defenses. Due to the preliminary stage of this matter and the inherent uncertainties of litigation, the ultimate outcome of the matter is uncertain.
In December 2010, the Company was named as one of several defendants in a lawsuit captionedEIT Holdings LLC v. WebMD, LLC et al., (U.S.D.C., D. Del.), on the same day that plaintiff filed a substantially identical suit against a different group of defendants in a lawsuit captionedEIT Holdings LLC v. Yelp!, Inc. et al., (U.S.D.C., N. D. Cal.). In February 2011, by agreement of plaintiff and the Company, the Company was dismissed from the Delaware action without prejudice and named as a defendant in the California action. In May 2011, the action against the Company and all but one defendant were dismissed for misjoinder and plaintiff filed separate cases against the dismissed defendants; the action against the Company is captionedEIT Holdings LLC v. TheStreet.com, Inc., (U.S.D.C., N. D. Cal.). The complaints allege that defendants infringe U.S. Patent No. 5,828,837, putatively owned by plaintiff, related to a certain method of displaying information to an Internet-
23
accessible device. The Company intends to vigorously defend itself and believes it has meritorious defenses. Due to the early stage of this matter and the inherent uncertainties of litigation, the ultimate outcome of this matter is uncertain.
The Company is party to other legal proceedings arising in the ordinary course of business or otherwise, none of which other proceedings is deemed material.
In addition to the other information set forth in this report, you should carefully consider the information set forth in Part 1, Item 1A. “Risk Factors” in our Form 10-K for the year ended December 31, 2010, which we filed with the SEC on March 14, 2011.
| |
Item 2. | Unregistered Sales of Equity Securities and Use of Proceeds. |
The following table presents information related to repurchases of its common stock made by the Company during the three months ended September 30, 2011.
| | | | | | | | | | | | | |
Period | | (a) Total
Number
of Shares
(or Units)
Purchased | | (b)
Average
Price
Paid per
Share (or
Unit) | | (c) Total Number
of Shares (or
Units) Purchased
as Part of Publicly
Announced Plans
or Programs | | (d) Maximum Number
(or Approximate Dollar
Value) of Shares (or
Units) that May Yet Be
Purchased Under the
Plans or Programs * | |
| |
| |
| |
| |
| |
July 1 – 31, 2011 | | | — | | $ | — | | | — | | $ | 2,678,878 | |
August 1 – 31, 2011 | | | — | | $ | — | | | — | | $ | 2,678,878 | |
September 1 – 30, 2011 | | | — | | $ | — | | | — | | $ | 2,678,878 | |
| |
|
| | | | |
|
| | | | |
Total | | | — | | $ | — | | | — | | $ | 2,678,878 | |
| |
|
| | | | |
|
| | | | |
| |
* | In December 2000, the Company’s Board of Directors authorized the repurchase of up to $10 million worth of the Company’s common stock, from time to time, in private purchases or in the open market. In February 2004, the Company’s Board approved the resumption of this program under new price and volume parameters, leaving unchanged the maximum amount available for repurchase under the program. The program does not have a specified expiration date and is subject to certain limitations. |
| |
Item 3. | Defaults Upon Senior Securities. |
Not applicable.
| |
Item 4. | [Reserved] |
| |
Item 5. | Other Information. |
Not applicable.
24
The following exhibits are filed herewith or are incorporated by reference to exhibits previously filed with the Securities and Exchange Commission:
| | |
Exhibit
Number | | Description |
| |
|
*3.1 | | Restated Certificate of Incorporation of the Company, incorporated by reference to the Exhibits to the Company’s Annual Report on Form 10-K filed March 14, 2011. |
*3.2 | | Certificate of Amendment dated May 31, 2011 to Restated Certificate of Incorporation, incorporated by reference to the Exhibit to the Company’s Current Report on Form 8-K filed June 2, 2011. |
*3.3 | | Amended and Restated Bylaws of the Company, incorporated by reference to the Exhibits to the Company’s Annual Report on Form 10-K filed March 30, 2000. |
*4.1 | | Amended and Restated Registration Rights Agreement dated December 21, 1998, by and among the Company and the stockholders named therein, incorporated by reference to the Exhibits to the Company’s Registration Statement on Form S-1 filed February 23, 1999. |
*4.2 | | Certificate of Designation of the Company’s Series A Junior Participating Preferred Stock, incorporated by reference to the Exhibits to the Company’s Registration Statement on Form S-1 filed February 23, 1999. |
*4.3 | | Certificate of Designation of the Company’s Series B Preferred Stock, as filed with the Secretary of State of the State of Delaware on November 15, 2007, incorporated by reference to the Exhibits to the Company’s Current Report on Form 8-K filed November 20, 2007. |
*4.4 | | Option to Purchase Common Stock dated November 1, 2007, incorporated by reference to the Company’s Current Report on Form 8-K filed November 6, 2007. |
*4.5 | | Investor Rights Agreement dated November 15, 2007 by and among the Company, TCV VI, L.P. and TCV Member Fund, L.P., incorporated by reference to the Exhibits to the Company’s Current Report on Form 8-K filed November 20, 2007. |
*4.6 | | Warrant dated November 15, 2007 issued by the Company to TCV VI, L.P., incorporated by reference to the Exhibits to the Company’s Current Report on Form 8-K filed November 20, 2007. |
*4.7 | | Warrant dated November 15, 2007 issued by the Company to TCV Member Fund, L.P., incorporated by reference to the Exhibits to the Company’s Current Report on Form 8-K filed November 20, 2007. |
*4.8 | | Specimen certificate for the Company’s shares of common stock, incorporated by reference to the Exhibits to Amendment 3 to the Company’s Registration Statement on Form S-1 filed April 19, 1999. |
31.1 | | Rule 13a-14(a) Certification of CEO. |
31.2 | | Rule 13a-14(a) Certification of CFO. |
32.1 | | Section 1350 Certification of CEO. |
32.2 | | Section 1350 Certification of CFO. |
**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 |
| | |
** | | 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 |
25
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 3, 2011 | By: | | /s/ Daryl Otte |
| |
|
|
| Name: | Daryl Otte |
| Title: | Chief Executive Officer (principal executive officer) |
| | | |
| | | |
Date: November 3, 2011 | By: | | /s/ Thomas Etergino |
| |
|
|
| Name: | Thomas Etergino |
| Title: | Chief Financial Officer (principal financial officer) |
EXHIBIT INDEX
The following exhibits are filed herewith or are incorporated by reference to exhibits previously filed with the Securities and Exchange Commission:
| | |
Exhibit
Number | | Description |
| |
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*3.1 | | Restated Certificate of Incorporation of the Company, incorporated by reference to the Exhibits to the Company’s Annual Report on Form 10-K filed March 14, 2011. |
*3.2 | | Certificate of Amendment dated May 31, 2011 to Restated Certificate of Incorporation, incorporated by reference to the Exhibit to the Company’s Current Report on Form 8-K filed June 2, 2011. |
*3.3 | | Amended and Restated Bylaws of the Company, incorporated by reference to the Exhibits to the Company’s Annual Report on Form 10-K filed March 30, 2000. |
*4.1 | | Amended and Restated Registration Rights Agreement dated December 21, 1998, by and among the Company and the stockholders named therein, incorporated by reference to the Exhibits to the Company’s Registration Statement on Form S-1 filed February 23, 1999. |
*4.2 | | Certificate of Designation of the Company’s Series A Junior Participating Preferred Stock, incorporated by reference to the Exhibits to the Company’s Registration Statement on Form S-1 filed February 23, 1999. |
*4.3 | | Certificate of Designation of the Company’s Series B Preferred Stock, as filed with the Secretary of State of the State of Delaware on November 15, 2007, incorporated by reference to the Exhibits to the Company’s Current Report on Form 8-K filed November 20, 2007. |
*4.4 | | Option to Purchase Common Stock dated November 1, 2007, incorporated by reference to the Company’s Current Report on Form 8-K filed November 6, 2007. |
*4.5 | | Investor Rights Agreement dated November 15, 2007 by and among the Company, TCV VI, L.P. and TCV Member Fund, L.P., incorporated by reference to the Exhibits to the Company’s Current Report on Form 8-K filed November 20, 2007. |
*4.6 | | Warrant dated November 15, 2007 issued by the Company to TCV VI, L.P., incorporated by reference to the Exhibits to the Company’s Current Report on Form 8-K filed November 20, 2007. |
*4.7 | | Warrant dated November 15, 2007 issued by the Company to TCV Member Fund, L.P., incorporated by reference to the Exhibits to the Company’s Current Report on Form 8-K filed November 20, 2007. |
*4.8 | | Specimen certificate for the Company’s shares of common stock, incorporated by reference to the Exhibits to Amendment 3 to the Company’s Registration Statement on Form S-1 filed April 19, 1999. |
31.1 | | Rule 13a-14(a) Certification of CEO. |
31.2 | | Rule 13a-14(a) Certification of CFO. |
32.1 | | Section 1350 Certification of CEO. |
32.2 | | Section 1350 Certification of CFO. |
**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 |
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* | | Incorporated by reference |
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** | | 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 |
