SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
---------------
FORM 10-Q
(Mark One)
[X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
For the quarterly period ended March 31, 2002
OR
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the transition period from _________ to __________
Commission File Number 0-25779
TheStreet.com, Inc.
-------------------
(Exact name of Registrant as specified in its charter)
Delaware 06-1515824
-------- ----------
(State or other jurisdiction of (I.R.S. Employer Identification Number)
incorporation or organization)
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)
Not Applicable
--------------
(Former name, former address and former fiscal year, if changed, since last
report.)
Indicate by check mark whether the registrant: (1) has filed all
reports required to be filed by Section 13 or 15(d) of the Securities
Exchange Act of 1934 during the preceding 12 months (or for such shorter
period that the registrant was required to file such reports) and (2) has
been subject to such filing requirements for the past 90 days. YES X . NO .
Indicate the number of shares outstanding of each of the issuer's
classes of common stock outstanding as of the latest practicable date.
(Number of Shares Outstanding
(Title of Class) as of May 10, 2002)
---------------- -------------------
Common Stock, par value $0.01 per share 23,594,984
TheStreet.com, Inc.
Form 10-Q
For the Three Months Ended March 31, 2002
Part I - FINANCIAL INFORMATION (UNAUDITED).........................................................................1
Item 1. Condensed Consolidated Financial Statements......................................................1
Condensed Consolidated Balance Sheets............................................................1
Condensed Consolidated Statements of Operations..................................................2
Condensed Consolidated Statements of Cash Flows..................................................3
Notes to Condensed Consolidated Financial Statements.............................................4
Item 2. Management's Discussion and Analysis of Financial Condition
and Results of Operations........................................................................8
Item 3. Quantitative and Qualitative Disclosures About Market Risk......................................14
PART II - OTHER INFORMATION.......................................................................................23
Item 1. Legal Proceedings...............................................................................23
Item 2. Changes in Securities and Use of Proceeds.......................................................24
Item 3. Defaults Upon Senior Securities.................................................................24
Item 4. Submission of Matters to a Vote of Security Holders.............................................24
Item 5. Other Information...............................................................................24
Item 6. Exhibits and Reports on Form 8-K................................................................24
SIGNATURES........................................................................................................25
ii
Part I - FINANCIAL INFORMATION
Item 1. Condensed Consolidated Financial Statements
THESTREET.COM, INC.
CONDENSED CONSOLIDATED BALANCE SHEETS
March 31, 2002 December 31, 2001
-------------------- -------------------
(unaudited) (Note 1)
ASSETS
Current Assets:
Cash and cash equivalents $ 15,654,630 $ 26,740,508
Restricted cash 1,450,000 1,450,000
Short-term investments 4,163,518 5,548,499
Accounts receivable, net of allowance for doubtful
accounts of $463,001 as of March 31, 2002 and
$490,263 as of December 31, 2001 1,159,723 1,003,927
Other receivables 153,841 114,374
Receivable from related party 105,101 101,994
Prepaid expenses and other current assets 684,366 1,085,332
Net current assets of discontinued operations 43,035 45,480
-------------------- -------------------
Total current assets 23,414,214 36,090,114
Property and equipment, net of accumulated depreciation
and amortization of $7,237,224 as of March 31, 2002
and $6,280,703 as of December 31, 2001 5,150,526 5,948,863
Other assets 1,321,289 1,426,051
Goodwill and intangibles, net of accumulated
amortization of $1,963,880 as of March 31, 2002
and $1,786,380 as of December 31, 2001 3,896,485 3,422,759
Investment in held to maturity security 9,920,636 -
-------------------- -------------------
Total assets $ 43,703,150 $ 46,887,787
==================== ===================
LIABILITIES AND STOCKHOLDERS' EQUITY
Current Liabilities:
Accounts payable $ 840,486 $ 1,104,498
Accrued expenses 3,515,648 3,938,856
Restructuring reserve 19,899 1,366,775
Deferred revenue 5,259,357 3,165,276
Note payable - current portion 59,378 78,510
Other current liabilities 30,335 27,239
-------------------- -------------------
Total current liabilities 9,725,103 9,681,154
Note payable 395,174 395,174
-------------------- -------------------
Total liabilities 10,120,277 10,076,328
-------------------- -------------------
Stockholders' Equity
Preferred stock; $0.01 par value; 10,000,000 shares
authorized; none issued and outstanding - -
Common stock; $0.01 par value; 100,000,000 shares
authorized; 28,836,325 shares issued and 23,521,725
shares outstanding at March 31, 2002, and 28,331,883
shares issued and 23,506,927 shares outstanding at
December 31, 2001 288,363 283,319
Additional paid-in capital 183,708,408 183,022,780
Deferred compensation (847,274) (1,060,315)
Accumulated deficit (142,570,005) (138,868,593)
Treasury stock at cost; 5,314,600 shares at
March 31, 002 and 4,824,956 shares at December 31, 2001 (6,996,619) (6,565,732)
-------------------- -------------------
Total stockholders' equity 33,582,873 36,811,459
-------------------- -------------------
Total liabilities and stockholders' equity $ 43,703,150 $ 46,887,787
==================== ===================
The accompanying notes to condensed consolidated financial statements are
an integral part of these condensed consolidated statements
1
THESTREET.COM, INC.
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
For the Three Months Ended March 31,
-------------------------------------------
2002 2001
---- ----
(unaudited) (unaudited)
Net revenues:
Advertising & e-commerce revenues $ 710,070 $ 1,943,465
Subscription revenues 3,001,000 2,038,289
Other revenues 361,950 409,278
------------------- --------------------
Total net revenues 4,073,020 4,391,032
Cost of revenues 1,807,360 2,979,004
------------------- --------------------
Gross profit 2,265,660 1,412,028
------------------- --------------------
Operating expenses:
Product development expenses 2,242,917 2,717,833
Sales and marketing expenses 1,655,169 3,513,654
General and administrative expenses 2,277,914 3,065,814
Noncash compensation expense 243,288 229,482
Restructuring expenses (31,442) (524,124)
Severance expense - 551,940
------------------- --------------------
Total operating expenses 6,387,846 9,554,599
------------------- --------------------
Loss from continuing operations (4,122,186) (8,142,571)
Interest income 227,845 940,004
------------------- --------------------
Net loss from continuing operations (3,894,341) (7,202,567)
Gain on disposal of discontinued operations 192,929 -
------------------- --------------------
Net loss $ (3,701,412) $ (7,202,567)
=================== ====================
Net (loss) gain per share - basic and diluted:
Continuing operations $ (0.17) $ (0.26)
Discontinued operations 0.01 -
------------------- --------------------
Net loss $ (0.16) $ (0.26)
=================== ====================
Weighted average basic and diluted shares outstanding 23,527,407 27,856,293
=================== ====================
The accompanying notes to condensed consolidated financial statements are
an integral part of these condensed consolidated statements
2
THESTREET.COM, INC.
CONSOLIDATED STATEMENTS OF CASH FLOWS
For the Three Months Ended March 31,
-----------------------------------------
2002 2001
-----------------------------------------
(unaudited) (unaudited)
Cash Flows from Operating Activities:
Net loss $ (3,701,412) $ (7,202,567)
Adjustments to reconcile net loss to cash used in
operating activities, net of acquired businesses:
Noncash compensation expense 243,288 229,482
Noncash advertising expense 71,442 -
Gain on sale of investments (119,582) (172,621)
Provision for doubtful accounts 3,404 71,602
Depreciation and amortization 1,228,848 1,262,467
(Increase) decrease in accounts receivable (159,200) 1,726,275
Increase in other receivables (39,467) (30,672)
(Increase) decrease in receivable from related party (3,107) 60,000
Decrease (increase) in prepaid expenses and other current assets 400,966 (636,378)
Decrease in net current assets of discontinued operations 2,445 1,829,128
Decrease (increase) in other assets 9,935 (78,380)
Decrease in non-current assets of discontinued operations - 426,218
Decrease in accounts payable and accrued expenses (687,220) (2,485,132)
Decrease in restructuring reserve (1,418,318) (1,054,504)
Increase in deferred revenue 2,094,081 250,809
Increase (decrease) in other current liabilities 3,096 (858,091)
---------------------- -------------
Net cash used in operating activities (2,070,801) (6,662,364)
---------------------- -------------
Cash Flows from Investing Activities:
Purchase of short-term investments (2,028,700) -
Sale of short-term investments 3,524,278 24,500,000
Loan to BusinessNet Online Ltd. - (312,500)
Purchase of investment in held to maturity securities (9,911,651) -
Capital expenditures (158,184) (448,670)
Purchase of minority interest in discontinued operations - (5,400,000)
---------------------- -------------
Net cash (used in) provided by investing activities (8,574,257) 18,338,830
---------------------- -------------
Cash Flows from Financing Activities:
Proceeds from issuance of common stock 9,199 9,440
Decrease in note payable - current portion (19,132) -
Purchase of treasury stock (430,887) (1,036,875)
---------------------- -------------
Net cash used in financing activities (440,820) (1,027,435)
---------------------- -------------
Net (decrease) increase in cash (11,085,878) 10,649,031
Cash and cash equivalents, beginning of period 26,740,508 46,339,561
---------------------- -------------
Cash and cash equivalents, end of period $ 15,654,630 $ 56,988,592
====================== ===============
Supplemental Disclosure of Noncash Investing Activities:
During 2002, the Company issued 489,644 shares of common stock in
connection with its purchase of SmartPortfolio.com, Inc. The shares were
valued at $651,226.
During 2001, the Company issued 77,984 shares of common stock in connection
with its purchase of SmartPortfolio.com, Inc. The shares were valued at
$155,968.
The accompanying notes to consolidated financial statements are an integral
part of these consolidated statements.
3
TheStreet.com, Inc.
Notes to Condensed Consolidated Financial Statements
1. DESCRIPTION OF THE BUSINESS AND BASIS OF PRESENTATION
Business
TheStreet.com, Inc. (the "Company" or "TheStreet.com") is a leading
multimedia provider of original, timely, insightful and trustworthy
financial commentary, analysis and news. The Company's content is available
across diverse media platforms, including the Internet, print media, radio
and conferences, giving it more opportunities to generate revenue from the
content it produces. The Company's strategic relationships with leading
companies in the media, technology and financial services sectors help it
create brand awareness and increase its subscription and advertising
revenues.
Since the Company's inception in 1996, the Company has developed a
loyal audience of individual investors at various experience levels who
turn to its content for their financial and investing information needs. In
the past year, the Company has successfully created new subscription
products to meet the specialized needs of different segments of the broader
investing community, including, with the introduction of the Company's most
recent products, the institutional market, a segment historically oriented
to paying for content. This growing audience of professional investors uses
the Company's products to help them make better investing and trading
decisions for themselves and their clients.
The Company believes that its ability to produce original, timely,
insightful and trustworthy content, and to distribute it by utilizing the
Internet and other real-time delivery systems, gives it a competitive
advantage. TheStreet.com's editorial staff consists of more than 45
professional reporters and editors who, together with approximately 40
financial analysts, traders and money managers who contribute to its
products from outside the Company, produce more than 60 original
commentary, analysis, research and news pieces each business day for the
Company's Internet web sites. TheStreet.com's editorial staff and outside
contributors have broken numerous important stories, many of which have
been cited by other publications such as The Wall Street Journal and The
New York Times. The Company also produces several other subscription
products for use by individual investors and market enthusiasts, each
designed to help a specific segment of the investing public make
better-informed investing and trading decisions. And the Company's growing
roster of professional products helps brokers, financial planners and money
managers make better decisions for themselves and their clients.
To ensure impartiality and prevent any conflict-of-interest or
appearance of conflict, the Company's editorial staff and outside
contributors are required to abide by its strict investment policy.
According to this policy, TheStreet.com editorial staffers are not
permitted to own individual stocks (though they may, and many do, own
equity in TheStreet.com, Inc.). Outside contributors are permitted to own
individual stocks, but must disclose their current positions in any of the
stocks they write about.
Basis of Presentation
The accompanying unaudited condensed consolidated financial
statements of TheStreet.com have been prepared in accordance with generally
accepted accounting principles for interim financial information and with
the instructions to Form 10-Q and Article 10 of Regulation S-X.
Accordingly, they do not include all of the information and footnotes
required by generally accepted accounting principles for complete financial
statements. In the opinion of management, all adjustments (consisting of
normal recurring accruals) considered necessary for a fair presentation
have been included. Operating results for the three month period ended
March 31, 2002 are not necessarily indicative of the results that may be
expected for the year ended December 31, 2002.
4
The balance sheet at December 31, 2001 has been derived from the
audited financial statements at that date but does not include all of the
information and footnotes required by generally accepted accounting
principles for complete financial statements.
For further information, refer to the consolidated financial
statements and footnotes thereto included in the Company's annual report on
Form 10-K for the year ended December 31, 2001, filed with the Securities
and Exchange Commission on April 1, 2002.
The consolidated financial statements include the accounts of
TheStreet.com, Inc. and its subsidiary TheStreet.com (UK) Limited, whose
operations were discontinued in November 2000. All intercompany balances
and transactions have been eliminated in consolidation.
Certain prior period amounts have been reclassified to conform to
current period presentation.
2. NET LOSS PER SHARE OF COMMON STOCK
The Company computes net loss per share in accordance with
Statement of Financial Accounting Standards No. 128, "Earnings Per Share"
("SFAS No. 128"). Under the provisions of SFAS No. 128, basic net loss per
common share ("Basic EPS") is computed by dividing net loss by the weighted
average number of common shares outstanding. Diluted net loss per common
share ("Diluted EPS") is computed by dividing net loss by the weighted
average number of common shares and dilutive common share equivalents then
outstanding. Diluted net loss per share is identical to basic net loss per
share since all outstanding stock options and warrants were excluded from
the calculation, as their effect is antidilutive.
3. INVESTMENT IN HELD TO MATURITY SECURITIES
As of March 31, 2002, the Company owns a U.S. Treasury Note valued
at $9,920,636, bearing interest at the rate of 3.00%, with a maturity date
of February 29, 2004. Management's intention is to hold this security until
maturity. Held to maturity securities are stated at amortized cost,
adjusted for amortization of premiums and accretion of discounts to
maturity.
4. 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, in
private purchases or in the open market. Under this program, the Company
has purchased 489,644 shares of common stock at an aggregate cost of
$430,887 during the three months ended March 31, 2002. Since the inception
of this program, the Company has purchased 5,314,600 shares of common stock
at an aggregate cost of $6,996,619 as of March 31, 2002.
5. RESTRUCTURING
During the year ended December 31, 2000, the Company recorded
restructuring expenses of $17,575,522. These restructuring charges were
taken to align the cost structure with changing market conditions and
decreased dependence on the advertising market to create a more flexible
and efficient organization. The plan resulted in approximately a 20%
headcount reduction, or about 40 full-time employees, throughout the
organization.
The following table displays the activity and balances of the
restructuring reserve account from December 31, 2001 to March 31, 2002:
5
1 Qtr 2002 Activity
Initial Balance --------------------------------- Balance
Charge 12/31/01 Deductions Adjustments 03/31/02
------------------------------------------------------------------------------------
Headcount reductions $ 478,278 $ 0 $ 0 $ 0 $ 0
Consolidation of facilities
and reduction in
non-performing assets 3,695,648 10,000 41,341 (31,442) 19,899
Extinguishment of
marketing and technology
related contracts 13,401,596 1,356,775 (1,356,775) 0 0
-------------------------------------------------------------------------------------
$17,575,522 $1,366,775 $(1,315,434) $(31,442) $19,899
=====================================================================================
The above deductions from the reserve primarily represent cash
payments. The above adjustments primarily represent revisions to the
Company's original estimates.
6. DISCONTINUED OPERATIONS
In November 2000, the Company's Board of Directors decided to
discontinue the Company's U.K. operations and entered into an agreement
with the other shareholders in TheStreet.com (Europe) Limited pursuant to
which the Company purchased the minority interest for an aggregate
consideration of $3 million in cash and 1,250,000 shares of the Company's
common stock. As a result, the operation's assets and liabilities have been
substantially liquidated. In accordance with British law, the operation
went into Members Voluntary Liquidation in May 2001. On April 30, 2002, the
final meeting of the members was held to bring the liquidation to a close.
A final return in the liquidation will be prepared and filed in order to
formally dissolve the U.K. operations, which should be effective in three
months.
As of March 31, 2002, the fair market value of the remaining
assets was $43,035, consisting of a VAT tax refund receivable.
7. NONCASH COMPENSATION EXPENSE
In January 2002, the Company issued options to purchase a total of
50,000 shares of common stock to a non-employee in connection with his
outside contributor agreement with the Company. The options vested
immediately and have an exercise period of the lesser of five years, or 90
days after the termination of his services. The value of the options was
approximately $72,000, which is being amortized over the service period of
two years. During the three months ended March 31, 2002, the Company
recorded noncash compensation expense of approximately $9,000.
In January 2002, the Company issued options to purchase a total of
100,000 shares of common stock to a non-employee in connection with his
outside contributor agreement with the Company. One-half of the options
vested immediately and the other half will vest in January 2003. The
options have an exercise period of the lesser of five years, or 90 days
after the termination of his services. The value of the options was
approximately $170,000 at March 31, 2002. During the three months ended
March 31, 2002, the Company recorded noncash compensation expense of
approximately $21,000. Due to the variable accounting methodology, it is
difficult to predict the amount of additional noncash compensation expense
the Company will occur in connection with these options. The Company will
continue to remeasure the fair value of these options on an ongoing basis.
8. ACQUISITION
On December 20, 2000, the Company acquired substantially all the
assets and certain liabilities of SmartPortfolio.com, Inc. The Company paid
initial consideration in January 2001 of $5,400,000 cash and 77,984 shares
of the Company's common stock, having a value on the payment date of
approximately $156,000. In January 2002, in connection with the purchase
agreement, the Company paid additional consideration of 489,644 shares of
the Company's common stock to the former owners of SmartPortfolio.com, Inc,
which was valued at approximately $651,000. This represents the final
consideration to be paid in connection with the acquisition.
6
9. GOODWILL AND INTANGIBLE ASSETS
In July 2001, the FASB issued Statements of Financial
Accounting Standards ("Statement") No. 141, "Business Combinations" and No.
142, "Goodwill and Other Intangible Assets" ("FAS 142"). These standards
change the accounting for business combinations by, among other things,
prohibiting the prospective use of pooling-of-interests accounting and
requiring companies to stop amortizing goodwill and certain intangible
assets with an indefinite useful life. Instead, goodwill and intangible
assets deemed to have an indefinite useful life will be subject to an
annual review for impairment.
Upon the adoption of FAS 142 in the first quarter of 2002, the
Company stopped the amortization of goodwill and certain intangible assets
with an indefinite life. Instead, goodwill and intangible assets with an
indefinite useful life will be subject to an annual review for impairment.
As of March 31, 2002 and December 31, 2001, the Company's goodwill
and intangible assets and related accumulated amortization consisted of the
following:
March 31, December 31,
2002 2001
------------------ --------------------
Goodwill and intangible assets subject to amortization:
SmartPortfolio.com, Inc. customer list........................................ $1,250,000 $1,250,000
SmartPortfolio.com, Inc. technology........................................... 730,000 730,000
ipoPros.com, Inc. non-compete agreement....................................... 150,000 150,000
------------------ --------------------
2,130,000 2,130,000
Less accumulated amortization................................................... (937,500) (760,000)
------------------ --------------------
1,192,500 1,370,000
------------------ --------------------
Goodwill and intangible assets not subject to amortization:
SmartPortfolio.com, Inc. goodwill............................................. 2,210,652 1,559,426
SmartPortfolio.com, Inc. trade name........................................... 493,333 493,333
------------------ --------------------
2,703,985 2,052,759
------------------ --------------------
Total goodwill and intangible assets $3,896,485 $3,422,759
================== ====================
The Company recorded amortization expense of $177,500 during the
first quarter of 2002, compared to $177,500 on a proforma basis during the
first quarter of 2001. Based on the current amount of intangible assets
subject to amortization, the remaining value would be expensed as $532,500
during the remaining nine months of 2002, and $660,000 would be expensed in
the year 2003. Should acquisitions or dispositions occur in the future,
these amounts may vary.
The 2001 historical results do not reflect the provisions of FAS
142. Had the Company adopted FAS 142 on January 1, 2001, the historical net
loss and basic and diluted net loss per common share for the three months
ended March 31, 2001 would have been changed to the adjusted amounts
indicated below:
Net loss as reported - historical basis $ (7,202,567)
Add: Goodwill amortization 194,201
Add: Intangible amortization 61,667
--------------------
Adjusted net loss $ (6,946,700)
====================
Proforma net loss per share $ (0.25)
====================
7
10. LEGAL PROCEEDINGS
On December 5, 2001, a class action complaint alleging violations
of the federal securities laws was filed in the United States District
Court for the Southern District of New York naming as defendants
TheStreet.com, Inc., certain of its former officers and directors and a
current director, and certain underwriters of the company's initial public
offering (The Goldman Sachs Group, Inc., Chase H&Q, Thomas Weisel Partners
LLC, FleetBoston Robertson Stephens, and Merrill Lynch Pierce Fenner &
Smith, Inc.). The complaint alleges, among other things, that the
underwriters of TheStreet.com's initial public offering violated the
securities laws by failing to disclose certain alleged compensation
arrangements (such as undisclosed commissions or stock stabilization
practices) in the offering's registration statement. TheStreet.com and
certain of its former officers and directors and a current director are
named in the complaint pursuant to Section 11 of the Securities Act of
1933, and Section 10(b) of the Securities Exchange Act of 1934. The
plaintiffs seek damages and statutory compensation against each defendant
in an amount to be determined at trial, plus pre-judgment interest thereon,
together with costs and expenses, including attorneys' fees. Similar
complaints have been filed against over 300 other issuers that have had
initial public offerings since 1998 and all such actions have been included
in a single coordinated proceeding. TheStreet.com intends to defend these
actions vigorously. However, due to the inherent uncertainties of
litigation, the Company cannot accurately predict the ultimate outcome of
the litigation. Any unfavorable outcome of this litigation could have an
adverse impact on the Company's business, financial condition and results
of operations.
11. SIGNIFICANT CUSTOMERS
For the three months ended March 31, 2002, the Company's top five
advertisers accounted for approximately 52% of its total advertising and
e-commerce revenues, as compared to approximately 41% for the three months
ended March 31, 2001.
12. NEW ACCOUNTING PRONOUNCEMENTS
In July 2001, the FASB issued SFAS 144 "Accounting for the
"Impairment or Disposal of Long-Lived Assets" ("SFAS 144"), which is
effective for fiscal years beginning after December 15, 2001. The
provisions of this statement provide a single accounting model for
impairment of long-lived assets. The Company has adopted FAS 144 and the
impact of this new standard has no affect on its financial position and
results of operations.
Item 2. Management's Discussion and Analysis of Financial Condition and
Results of Operations
The following discussion contains forward-looking statements
within the meaning of Section 27(a) of the Securities Act of 1933, as
amended (the "Securities Act"), and Section 21(E) of the Securities
Exchange Act of 1934, as amended, including, without limitation, statements
regarding the Company's expectations, beliefs, intentions or future
strategies that are signified by the words "expects", "anticipates",
"intends", "believes", or similar language. All forward-looking statements
included in this quarterly report on Form 10-Q are based on information
available to the Company on the date hereof, and the Company assumes no
obligation to update any such forward-looking statements. These
forward-looking statements are subject to risks and uncertainties which
could cause actual results to differ.
The following discussion and analysis should be read in
conjunction with the unaudited condensed consolidated financial statements
and notes thereto.
Overview
TheStreet.com was organized as a limited liability company in June
1996. In May 1998, the Company converted to a C corporation, incorporated
in Delaware, and in May 1999, TheStreet.com completed its initial public
offering. The Company is a leading multimedia provider of original, timely,
insightful and trustworthy financial commentary, analysis and news. The
Company's content is available across diverse media platforms, including
the Internet, print media, radio and conferences, giving it more
opportunities to generate revenue from the content it produces. The
Company's strategic relationships with leading companies in the media,
technology and financial services sectors help it create brand awareness
and increase subscription and advertising revenues.
8
Since TheStreet.com's inception in 1996, it has developed a loyal
audience of individual investors at various experience levels who turn to
its content for their financial and investing information needs. In the
past year, the Company has successfully created new subscription products
to meet the specialized needs of different segments of the broader
investing community, including, with the introduction of the Company's most
recent products, the institutional market - a segment historically oriented
to paying for content. This growing audience of professional investors uses
the Company's products to help them make better investing and trading
decisions for their clients.
Results of Operations
In November 2000, the Company's Board of Directors decided to
discontinue its U.K. operations. As a result, the assets and liabilities of
such discontinued operations are in liquidation. The following information
has been presented on a basis consistent with discontinued operations
treatment. Accordingly, the operating results relating to the U.K.
operations have been segregated from continuing operations and reported as
a separate line item on the statement of operations.
Recent Developments
During the quarter ended March 31, 2002, the Company launched the
following subscription-based products:
o RealMoney Pro - a subscription site that contains exclusive,
real-time macro and micro information on the flow of funds
that move markets. Contributors include hedge fund managers,
money managers and other professional traders, who contribute
real-time commentary about stocks, trading, strategy, market
movements and the options and currency markets. The audience
for this product consists of investment professionals who
manage money. To ensure impartiality and prevent any
conflict-of-interest or appearance of conflict,
TheStreet.com's editorial staff and outside contributors are
required to abide by the Company's strict investment policy.
According to this policy, the Company's editorial staffers
are not permitted to own individual stocks (though they may,
and many do, own equity in TheStreet.com, Inc.). Outside
contributors are permitted to own individual stocks, but must
disclose their current positions in any of the stocks they
write about.
o The Daily Swing Trade - a nightly email service that contains
stock analysis and trading education based on the stock
trading methodology known as swing trading, written by
RealMoney columnist Alan Farley, an innovator of that trading
style. The audience for this product consists of traders
seeking to predict brief price swings in stocks.
o The Telecom Connection - a weekly email report that contains
critical research and in-depth analysis on both individual
companies and macroeconomic trends in the telecommunications
industry, written by RealMoney columnist Cody Willard, a
consultant and telecom industry analyst. The audience for
this product consists of active investors in telecom
companies and executives in the telecom industry.
On April 9, 2002, the Company announced a one-year promotional
agreement with The Motley Fool, Inc. to offer consumers selected premium
headlines and content from TheStreet.com's RealMoney and its subscription
products via The Motley Fool site (http://www.motleyfool.com).
On January 9, 2002, the Company announced an expanded one-year
agreement with Yahoo! Inc. to offer premium financial commentary on Yahoo!
Finance (http://finance.yahoo.com). Under the agreement, Yahoo! Finance
Premium News offers consumers selected commentary and analysis from
TheStreet.com's RealMoney. Users can choose between two subscription
packages, RealCommentary Gold or Silver, which contain select stories from
leading RealMoney writers. The content is integrated throughout Yahoo!
Finance, including news headlines and quote result pages.
9
On January 3, 2002, the Company announced a six-month strategic
alliance with MarketWatch.com, Inc. designed to broaden the exposure of
TheStreet.com's premium products. Under the terms of the two-part
agreement, MarketWatch.com (http://cbs.marketwatch.com) will feature
selected premium headlines from TheStreet.com's RealMoney throughout
MarketWatch.com's web properties. Additionally, TheStreet.com's
subscription-based products will be offered for opt-in registration in
MarketWatch.com's "Membership Center."
Results Of Operations
Three Months Ended March 31, 2002 And March 31, 2001
Net Revenues
Advertising & E-Commerce Revenues. Advertising and e-commerce
revenues are derived from Internet sponsorship arrangements and from the
delivery of banner and e-mail advertisements, as well as from conference
sponsorships. Advertising and e-commerce revenues decreased to $710,070 for
the three months ended March 31, 2002, as compared to $1,943,465 for the
three months ended March 31, 2001. This decrease is primarily due to the
continued significant slowdown in the overall online advertising market,
resulting in reduced sales of Internet sponsorship, banner and e-mail
advertisements, which contributed to a 36% reduction in the revenue per
1,000 page views. For the three months ended March 31, 2002, 62% of the
Company's advertising and e-commerce revenues were derived from sponsorship
contracts, as compared to 33% for the three months ended March 31, 2001.
The number of the Company's advertisers for the three months ended March
31, 2002 was 31, as compared to 65 for the three months ended March 31,
2001. For the three months ended March 31, 2002, the Company's top five
advertisers accounted for approximately 52% of its total advertising and
e-commerce revenues, as compared to approximately 41% for the three months
ended March 31, 2001.
Subscription Revenues. Subscription revenues are derived from
annual, semi-annual, quarterly and monthly subscriptions. Subscription
revenues totaled $3,001,000 for the three months ended March 31, 2002, as
compared to $2,038,289 for the three months ended March 31, 2001. This
increase is primarily the result of revenues from several new
subscription-based products, such as The Chartman's Top Stocks, RealMoney
Pro, Action Alerts PLUS and TheStreet(TM)View for Hedge Funds, launched
since the quarter ended March 31, 2001. Because the Company was entering a
new market for subscription products fulfilled via email, and had not
established the requisite technological infrastructure, it chose to
outsource such fulfillment to a third party until such infrastructure could
be developed internally. As a result, for the three months ended March 31,
2002, approximately 54% of the Company's net subscription revenue was
derived from annual subscriptions, as compared to approximately 79% for the
three months ended March 31, 2001. The decrease in the percent of annual
subscriptions is partially due to the third party lacking the technological
capability to provide annual subscriptions. The Company has since migrated
these products to its own commerce system and has begun to offer annual
subscriptions. The Company calculates net subscription revenues by
deducting refunds from gross revenues. Refunds issued during the three
months ended March 31, 2002, totaled approximately 4% of gross subscription
revenues for the period.
The Company's subscriber base has increased to approximately
79,500 annual and monthly subscribers as of March 31, 2002 (not including
free trials, but including subscribers paid for as part of bulk
subscription contracts), as compared to approximately 71,400 as of March
31, 2001. This increase is primarily the result of the launch of several
new subscription-based products, partially offset by a decrease in
RealMoney.com subscribers attributed to the increase in the subscription
price in June 2000.
Other Revenues. Other revenues are derived primarily from
syndication revenues, conference attendees, reprint revenues, barter
advertising arrangements and royalties from the Company's investing book.
Other revenues decreased to $361,950 for the three months ended March 31,
2002, as compared to $409,278 for the three months ended March 31, 2001.
This decrease is primarily the result of the absence of revenue associated
with barter advertising arrangements, which totaled $100,000 during the
three months ended March 31, 2001, as well as the
10
absence of royalties due to low sales of the Company's investing book,
partially offset by $150,000 that the Company received from the WTC
Business Recovery Grant Program as compensation for revenue lost as a
result of the September 11th attacks, as well as increased syndication
revenue. Barter advertising transactions in 2001 were recognized at the
fair value as determined by the comparable advertising market rates at the
time of placement.
Cost Of Revenues
Cost of revenues includes compensation and benefits for editorial
staff, fees paid to outside contributors and content licensing fees payable
to content providers. Cost of revenues decreased to $1,807,360 for three
months ended March 31, 2002, as compared to $2,979,004 for the three months
ended March 31, 2001. This decrease is primarily the result of reductions
within the Company's editorial staff to 48 employees as of March 31, 2002,
as compared to 78 as of March 31, 2001, resulting in reduced compensation
and related expenses, as well as decreased costs associated with content
licensing fees and the use of outside contributors.
Product Development Expenses
Product development expenses include compensation and benefits for
software developers and graphic designers, expenses for contract
programmers and developers, communication lines and other technology costs.
Product development expenses decreased to $2,242,917 for the three months
ended March 31, 2002, as compared to $2,717,833 for the three months ended
March 31, 2001. This decrease is primarily the result of reductions within
the Company's technology and product development staff to 30 employees as
of March 31, 2002, as compared to 41 employees as of March 31, 2001,
resulting in reduced compensation and related expenses, lower hosting fees
as a result of renegotiated and/or terminated agreements and reduced
consulting fees, partially offset by higher depreciation and amortization
expenses related to equipment purchased.
Sales And Marketing Expenses
Sales and marketing expenses consist primarily of advertising and
promotion, advertising agency fees, promotional materials, content
distribution fees, and compensation expenses for the Company's direct sales
force and customer service department. Sales and marketing expenses
decreased to $1,655,169 for the three months ended March 31, 2002, as
compared to $3,513,654 for the three months ended March 31, 2001. This
decrease is primarily the result of reduced advertising and promotion
expenses resulting from the Company's strategy of decreasing non-web based
advertising, lower distribution and advertisement serving expenses due to
renegotiated agreements and reductions in the number of advertisements
served, reduced compensation and related expenses resulting from a
reduction in the Company's sales and marketing staff to 28 employees as of
March 31, 2002, as compared to 48 as of March 31, 2001, as well as the
absence of expense associated with barter advertising arrangements with
online and print media companies, which totaled $100,000 during the three
months ended March 31, 2001.
General And Administrative Expenses
General and administrative expenses consist primarily of
compensation for general management, finance and administrative personnel,
occupancy costs, professional fees, equipment rental and other office
expenses. General and administrative costs decreased to $2,277,914 for the
three months ended March 31, 2002, as compared to $3,065,814 for the three
months ended March 31, 2001. This change is primarily the result of the
elimination of goodwill amortization in accordance with the Company's
adoption of the Financial Accounting Standards Board Statement of Financial
Accounting Standards No. 142 "Goodwill and Other Intangible Assets",
together with reductions in equipment lease expense, occupancy costs,
professional fees, and bad debt expense, partially offset by increased
compensation and related expenses.
11
Noncash Compensation Expense
In 1998 and the first three months of 1999, the Company granted
options to purchase shares of its common stock at exercise prices that were
less than the fair market value of the underlying shares of common stock on
the dates of grant. This resulted in noncash compensation expense incurred
over the period that these specific options vest.
In January 2002, the Company issued options to purchase a total of
50,000 shares of common stock to a non-employee in connection with his
outside contributor agreement with the Company. The options vested
immediately and have an exercise period of the lesser of five years, or 90
days after the termination of his services. The value of the options was
approximately $72,000, which is being amortized over the service period of
two years. During the three months ended March 31, 2002, the Company
recorded noncash compensation expense of approximately $9,000.
In January 2002, the Company issued options to purchase a total of
100,000 shares of common stock to a non-employee in connection with his
outside contributor agreement with the Company. One-half of the options
vested immediately and the other half will vest in January 2003. The
options have an exercise period of the lesser of five years, or 90 days
after the termination of his services. The value of the options was
approximately $170,000 at March 31, 2002. During the three months ended
March 31, 2002, the Company recorded noncash compensation expense of
approximately $21,000. Due to the variable accounting methodology, it is
difficult to predict the amount of additional noncash compensation expense
the Company will occur in connection with these options. The Company will
continue to remeasure the fair value of these options on an ongoing basis.
Noncash compensation expense increased to $243,288 for the three
months ended March 31, 2002, as compared to $229,482 for the three months
ended March 31, 2001. This increase was primarily the result of the
additional charges related to the stock options issued to a non-employee,
totaling $30,247. As a portion of the options require variable expense
accounting, the associated expense will differ in future periods. This
increase was partially offset by the departure of certain individuals from
the Company during the past year. The remaining noncash compensation
expense for 2002 is currently estimated to be approximately $730,000.
Restructuring Expenses
During the year ended December 31, 2000, the Company recorded
restructuring expenses to align its cost structure with changing market
conditions and decreased dependence on the advertising market, to create a
more flexible and efficient organization. The restructuring expense of
($31,442) for the three months ended March 31, 2002 primarily represents
adjustments to the Company's original estimates related to the
consolidation of facilities and reduction in non-performing assets.
Interest Income
For the three months ended March 31, 2002, interest income was
$227,845, as compared to $940,004 for the three months ended March 31,
2001. This decrease is the result of reduced cash balances and lower
interest rates.
Gain on Disposal of Discontinued Operations
In November 2000, the Company's Board of Directors decided to
discontinue the Company's U.K. operations. As a result, the assets and
liabilities of the discontinued operations are in liquidation. On April 30,
2002, the final meeting of the members was held to bring the liquidation to
a close. A final return in the liquidation will be prepared and filed in
order to formally dissolve the U.K. operations, which should be effective
in three months.
For the three months ended March 31, 2002, the Company recorded a
gain on disposal of discontinued operations of $192,929, as compared to
none for the three months ended March 31, 2001. The current period gain
represents an adjustment to the Company's original estimate related to
costs to be incurred in completing the liquidation process.
12
As of March 31, 2002, the book value of the remaining current
assets of the discontinued operations was $43,035, consisting of a VAT tax
receivable. There were no remaining non-current assets.
Liquidity and Capital Resources
The Company currently invests in money market funds and other
short-term, investment grade instruments that are highly liquid, of
high-quality, and have maturities of up to two years, with the intent that
such funds easily be made available for operating purposes. As of March 31,
2002, the Company's cash and cash equivalents, restricted cash, short-term
investments and investment in held-to-maturity securities amounted to
$31,188,784, representing 71% of total assets.
Net cash used in operating activities of $2,070,801 for the three
months ended March 31, 2002 was primarily due to a net loss of $3,701,412,
an increase in accounts receivable and decreases in accounts payable and
accrued expenses and restructuring reserve, partially offset by noncash
charges, a decrease in prepaid expenses and other current assets, and an
increase in deferred revenue.
Net cash used in investing activities of $8,574,257 for the three
months ended March 31, 2002 consisted of the purchase of an investment in
held to maturity securities, and net purchases of capital expenditures,
partially offset by net sales of short-term investments. Capital
expenditures generally consisted of purchases of computer software and
hardware.
Net cash used in financing activities of $440,820 for the three
months ended March 31, 2002 consisted primarily of the purchase of treasury
stock.
The Company believes that its current cash and cash equivalents
and short-term investments will be sufficient to meet the Company's
anticipated cash needs for at least the next 12 months. Thereafter, if cash
generated from operations is insufficient to satisfy the Company's
liquidity requirements, the Company may need to raise additional funds
through public or private financings, strategic relationships or other
arrangements. There can be no assurance that additional funding, if needed,
will be available on terms attractive to the Company, or at all. Strategic
relationships, if necessary to raise additional funds, may require the
Company to provide rights to certain of its content. The failure to raise
capital when needed could materially adversely affect the Company's
business, results of operations and financial condition. If additional
funds are raised through the issuance of equity securities, the percentage
ownership of the Company's then-current stockholders would be reduced.
Furthermore, these equity securities might have rights, preferences or
privileges senior to those of the Company's common stock.
Commitments And Contingencies
The Company is committed under operating leases, principally for
office space, furniture and fixtures, and equipment. Certain leases are
subject to rent reviews and require payment of expenses under escalation
clauses. Rent and equipment rental expenses were $479,785 and $955,605 for
the three months ended March 31, 2002 and 2001, respectively. Minimum
payments have not been reduced by minimum sublease rentals of $53,630 due
in the future under non-cancelable subleases. Additionally, the Company has
employment agreements with certain of its employees and outside
contributors. Future minimum payments under these obligations are as
follows:
Payments Due by Period
-----------------------------------------------------------------------------
Less than After
Contractual obligations: Total 1 year 1 - 3 years 4 - 5 years 5 years
-----------------------------------------------------------------------------
Operating leases $9,561,451 $1,461,709 $2,815,258 $2,764,042 $2,520,442
Employment agreements 2,240,999 1,623,099 617,900 0 0
Outside contributor agreements 650,409 404,992 245,417 0 0
-----------------------------------------------------------------------------
Total contractual cash obligations $12,452,859 $3,489,800 $3,678,575 $2,764,042 $2,520,442
=============================================================================
13
A company controlled by a shareholder had previously guaranteed
obligations under the operating lease for the Company's office space in New
York City. During 1999, the Company released the shareholder's company of
this obligation after providing a letter of credit in the amount of
$1,450,000 to the landlord.
Item 3. Quantitative and Qualitative Disclosures About Market Risk
The Company believes that its market risk exposures are immaterial
as the Company does 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.
Risk Factors
You should carefully consider the following risks before making an
investment decision. The risks described below are all the material risks
facing TheStreet.com. The Company may also face some non-material risks
which the Company has not discussed in the following description of its
risk factors. If any of the following risks occur, the Company's business,
results of operations or financial condition could be materially adversely
affected.
The Company Has a History of Losses, and Although The Company Has
Diversified Its Sources of Revenue, Potential Fluctuations In The Company's
Quarterly Financial Results Make Financial Forecasting Difficult
As of March 31, 2002, the Company had an accumulated deficit of
$142.6 million. The Company has not achieved profitability and expects to
continue to incur net losses in 2002. The Company expects to continue to
incur significant operating expenses and, as a result, will need to
generate significant revenues to achieve profitability, which may not
occur. Even if the Company does achieve profitability, the Company may be
unable to sustain or increase profitability on a quarterly or annual basis
in the future.
TheStreet.com has developed a loyal audience of individual
investors at various experience levels who turn to its product offerings
for all their financial and investing information needs. The Company has a
growing audience of professional investors who use its products to help
them make better investing and trading decisions for their clients. In
addition, the Company has important strategic relationships with leading
companies in the media, technology and financial services sectors that also
help it create brand awareness and increase subscription and advertising
revenues. The Company's goal is to monetize and leverage its financial
content across a variety of platforms. However, the Company cannot assure
you that its initiatives will result in increases in revenues sufficient to
enable the Company to achieve profitability. In such an event, the price of
the Company's common stock is likely to decrease.
The Company's quarterly operating results may fluctuate
significantly in the future as a result of a variety of factors, many of
which are outside the Company's control. The Company believes that
advertising sales in traditional media, such as television and radio,
generally are lower in the first and third calendar quarters of each year.
Similar seasonal patterns are developing in the Company's industry. The
Company believes that quarter-to-quarter comparisons of its operating
results may not be a good indication of its future performance, nor would
its operating results for any particular quarter be indicative of future
operating results. In some future quarters the Company's operating results
may be below the expectations of public market analysts and investors. In
such an event, the price of the Company's common stock is likely to
decrease.
The Company May Have Difficulty Selling Its Advertising Inventory, A
Significant Portion Of Which Is Concentrated Among The Company's Top
Advertisers
The market for online advertising sales has not recovered from its
severe decline. Both traditional and new media advertisers continue to
scale back their online media budgets. In addition, seasonal fluctuations
in the markets for consumer products cause advertisers to generally place
fewer advertisements during the first and third calendar quarters
14
of each year. As a result, many advertising supported web sites continue to
experience difficulty selling their available inventories and maintaining
their rate structures. Although the Company believes that its network of
sites and corresponding demographic profiles will continue to enable it to
maintain its high sell-through, the Company expects that its overall
advertising rates will decrease as a result of increased inventory and the
continued decline in the online advertising market. Additionally, the
Company has reduced the cost of several of its headline indexing and
content distribution agreements with certain Internet portals and content
providers to distribute its news and headlines to their users, thus driving
potential readers to the Company's web sites at lower cost. The Company
believes that these arrangements will continue to provide a cost-effective
way to increase its unique visitors and page view inventory. However, the
Company's actual traffic is subject to a variety of factors, including
seasonal fluctuations in financial news consumption and overall online
usage that generally cause weakness in the first and third calendar
quarters of each year, technical difficulties associated with the
implementation and ongoing delivery of the news distribution arrangements,
and editorial policy changes by the Company's partners. If the Company is
unable to attract significantly increased traffic, or if despite increased
traffic, advertising revenues continue to decrease due to continued
softness in the online advertising market, the Company's business, results
of operations and financial condition could be materially adversely
affected.
For the three months ended March 31, 2002, the Company's top five
advertisers accounted for approximately 52% of its total advertising and
e-commerce revenues, as compared to approximately 41% for the three months
ended March 31, 2001. The Company's business, results of operations and
financial condition could be materially adversely affected by the loss of a
number of its top advertisers, and such a loss could be concentrated in a
single quarter. Further, if the Company does not continue to increase its
revenue from financial-services advertisers or attract advertisers from
non-financial industries, its business, results of operations and financial
condition could be materially adversely affected. As is typical in the
advertising industry, the Company's advertising contracts have cancellation
provisions.
The Company May Have Difficulty Adding Subscribers and Retaining Current
Subscribers
The Company continues to seek to retain its current subscribers
and to attract new subscribers. As of March 31, 2002, the Company had
approximately 79,500 paid subscribers (including both retail and
subscribers paid for as part of bulk subscription contracts) to 11
subscription products, up from approximately 71,400 as of March 31, 2001.
These figures are lower than the approximately 109,000 subscribers to
TheStreet.com as of June 30, 2000, just prior to the doubling of the
subscription price in connection with TheStreet.com's relaunch as the
subscription-only RealMoney.com site, and the conversion of TheStreet.com
into a free, advertising-supported site. The Company believes it has
significantly enhanced its subscription offerings to differentiate them
from the free financial and investing information that is widely available
on the web, including on TheStreet.com site. However, given the
availability of such free financial information, the Company may not be
able to retain its current subscribers and attract additional subscribers
in a cost-effective manner. If the Company's subscription base declines
more than anticipated or the cost of subscriber acquisition increases, the
Company's business, results of operations and financial condition could be
materially adversely affected.
Difficulties In Developing New And Enhanced Products and Services Could
Harm The Company's Business
The Company has introduced additional and enhanced products and
services in the first three months of 2002 in order to retain its current
subscribers and attract new subscribers, and intends to introduce still
more in the remaining nine months of 2002. If the Company introduces a
product or service that is not favorably received, its current readers may
choose a competitive service over the Company's. The Company may also
experience difficulties that could delay or prevent it from introducing new
products and services, or the new products or services the Company
introduces could contain errors that are discovered after they are
introduced. In some cases, the Company is dependent on third parties,
including software companies, application service providers and technology
consulting firms, to help the Company develop and implement new products
and services. If these third parties are not able to fulfill their
responsibilities to the Company on schedule or if the technology developed
by them for the Company's use does not function as anticipated,
implementation may be delayed and the cost of implementation may be higher
than anticipated. Such developments could materially adversely affect the
Company's business, results of operations and financial condition.
15
Unforeseen Development Difficulties May Hinder The Company's Efforts
The Company has significantly enhanced its design and its
technological infrastructure to further improve its sites and to
accommodate increased traffic, and intends to continue such development
activities. However, unforeseen development difficulties could prevent the
Company from implementing such improvements or cause the costs to implement
such improvements, including design, technology and related costs, to be
higher than anticipated.
In the past, the Company has experienced significant spikes in
traffic on its web sites when there have been important financial news
events. Accordingly, the Company's web sites must accommodate a high volume
of traffic, often at unexpected times. Although the Company has upgraded
and continues to improve its systems, the Company's web sites have in the
past, and may in the future, experience publishing problems, slower
response times than usual or other problems for a variety of reasons. These
occurrences could cause the Company's readers to perceive its web sites as
not functioning properly and, therefore, cause them to use other methods to
obtain their financial news and information. In such a case, the Company's
business, results of operations and financial condition could be materially
adversely affected.
The Company Faces A Risk Of System Failure That May Result In Reduced
Traffic, Reduced Revenue And Harm To Its Reputation
The Company's ability to provide timely information and continuous
news updates depends on the efficient and uninterrupted operation of its
computer and communications hardware and software systems. Similarly, the
Company's ability to track, measure and report the delivery of
advertisements on its site depends on the efficient and uninterrupted
operation of a third-party system. In June 2001, the Company's
Internet-hosting agreement with Exodus Communications, Inc. was renewed,
and the Company currently continues to maintain a portion of its production
servers at Exodus's New Jersey data center, with the remainder at the
Company's principal offices in New York City. In September 2001, Exodus
filed for bankruptcy. In February 2002, the assets of Exodus were acquired
by Cable & Wireless plc, a global telecommunications company headquartered
in Great Britain, which assumed the Company's hosting contract. The
Company's operations depend on the ability of Cable & Wireless to protect
its own systems and the Company's systems in its data center against damage
from fire, power loss, water damage, telecommunications failure, vandalism
and similar unexpected adverse events. Although Cable & Wireless provides
comprehensive facilities management services, including human and technical
monitoring of all production servers 24 hours per day, seven days per week,
Cable & Wireless does not guarantee that the Company's Internet access will
be uninterrupted, error-free or secure. Any disruption in the Internet
access to the Company's web sites provided by Cable & Wireless could
materially adversely affect the Company's business, results of operations
and financial condition. The Company's own internal systems and operations,
as well as those of Cable & Wireless, may be subject to damage or
interruption from human error, natural disasters, fire, water damage, power
loss, telecommunication failures, break-ins, sabotage, computer viruses,
intentional acts of vandalism and similar events. Any system failure,
including network, software or hardware failure, that causes an
interruption in the Company's service or a decrease in responsiveness of
its web sites could result in reduced traffic, reduced revenue and harm to
the Company's reputation, brand and the Company's relations with its
advertisers and e-commerce partners.
Like most web sites, the Company may be vulnerable to computer
viruses, physical or electronic break-ins and other deliberate attempts to
disrupt its technological operations, which could lead to interruptions,
delays or loss of data. In addition, unauthorized persons may improperly
access the Company's data. The Company's insurance policies may not
adequately compensate the Company for any losses that the Company may incur
because of any failures in its system or interruptions in its delivery of
content. The Company's business, results of operations and financial
condition could be materially adversely affected by any event, damage or
failure that interrupts or delays the Company's operations.
16
The Company's Future Success Depends On Its Ability To Attract And Retain
Key Personnel
The Company's future success depends upon its ability to attract
and retain key personnel, including executives, editors, writers, and
technology personnel. Certain of the Company's key employees are bound by
employment or non-competition agreements. The loss of one or more of the
Company's key personnel, or the Company's inability to attract replacements
with appropriate expertise, could materially adversely affect the Company's
business, results of operations and financial condition.
Intense Competition Could Reduce The Company's Market Share And Harm Its
Financial Performance
A number of financial news and information sources compete for
consumers' and advertisers' attention and spending. The Company competes
for advertisers, readers, staff and outside contributors with many types of
companies, including:
o online services or web sites focused on business, finance
and investing, such as CBS.MarketWatch.com, CNBC on MSN
Money, CNNfn.com, The Wall Street Journal Interactive
Edition, The New York Times on the Web, DowJones.com,
SmartMoney.com, and The Motley Fool;
o publishers and distributors of traditional media,
including print, radio and television, such as The Wall
Street Journal, Fortune, Bloomberg Business Radio and
CNBC;
o providers of terminal-based financial news and data, such
as Bloomberg Business News, Reuters News Service and Dow
Jones Markets;
o web "portal" companies, such as Yahoo! and America
Online; and
o online brokerage firms, many of which provide financial
and investment news and information, such as Charles
Schwab, E*TRADE and Merrill Lynch.
The Company's ability to compete depends on many factors,
including the originality, timeliness, insightfulness and trustworthiness
of its content and that of the Company's competitors, the ease of use of
services developed either by the Company or its competitors and the
effectiveness of the Company's sales and marketing efforts.
Many of the Company's existing competitors, as well as a number of
potential new competitors, have longer operating histories, greater name
recognition, larger customer bases and significantly greater financial,
technical and marketing resources than the Company does. This may allow
them to devote greater resources than the Company can to the development
and promotion of their services. These competitors may also engage in more
extensive research and development, undertake more far-reaching marketing
campaigns, adopt more aggressive pricing policies (including offering more
of their financial news and commentary for free) and make more attractive
offers to existing and potential employees, outside contributors, strategic
partners and advertisers. The Company's competitors may develop content
that is equal or superior to the Company's or that achieves greater market
acceptance than the Company's. It is also possible that new competitors may
emerge and rapidly acquire significant market share. The Company may not be
able to compete successfully for advertisers, readers, staff or outside
contributors, which could materially adversely affect the Company's
business, results of operations and financial condition. Increased
competition could result in price reductions, reduced margins or loss of
market share, any of which could materially adversely affect the Company's
business, results of operations and financial condition.
The Company also competes with other web sites, television, radio
and print media for a share of advertisers' total advertising budgets. If
advertisers perceive the Internet or the Company's web sites to be a
limited or an ineffective advertising medium, they may be reluctant to
devote a portion of their advertising budget to Internet advertising or to
advertising on the Company's web sites.
17
A Failure To Establish And Maintain Strategic Relationships With Other
Companies Could Decrease The Company's Subscriber And Reader Base, Which
May Harm The Company's Business
The Company depends on establishing and maintaining content
syndication and headline indexing relationships with high-traffic web sites
for a significant portion of its current subscriber and reader base. There
is intense competition for relationships with these firms and placement on
these sites, and the Company may have to pay significant fees to establish
additional content syndication and headline indexing relationships or
maintain existing relationships in the future. The Company may be unable to
enter into or successfully renew relationships with these firms or sites on
commercially reasonable terms or at all. These relationships may not
attract significant numbers of subscribers or readers.
Many companies that the Company may approach for a strategic
relationship or who already have strategic relationships with the Company
also provide financial news and information from other sources. As a
result, these companies may be reluctant to enter into or maintain
strategic relationships with the Company. The Company's business, results
of operations and financial condition could be materially adversely
affected if the Company does not establish additional, and maintain
existing, strategic relationships on commercially reasonable terms or if
any of the Company's strategic relationships do not result in an increase
in the number of subscribers or readers of its web sites.
The Company May Be Unable To Grow Through Acquisitions And Integrate Future
Acquisitions Into Its Business
The Company intends to pursue a growth strategy that may involve
acquisitions of other companies. However, the Company may be unable to
successfully pursue and complete acquisitions in a timely and
cost-effective manner. Further, the pursuit and integration of acquisitions
will require substantial attention from the Company's senior management,
which will limit the amount of time these individuals will have available
to devote to the Company's existing operations. There can be no assurance
that the Company would be able to successfully integrate these acquisitions
into its business or implement its plans without delay or substantial cost.
In addition, future acquisitions by the Company could result in the
incurrence of debt and contingent liabilities, which could have a material
adverse effect upon the Company's financial condition and results of
operations. Any failure or any inability to effectively manage and
integrate growth may have a material adverse effect on the Company's
financial condition and results of operations.
Any Failure Of The Company's Internal Security Measures Or Breach Of Its
Privacy Protections Could Cause The Company To Lose Users And Subject It To
Liability
Users who subscribe to one of the Company's subscription-based
products are required to furnish certain personal information (including
name, mailing address, phone number, email address and credit card
information), which the Company uses to administer its services.
Additionally, the Company recently implemented a registration system that
will collect certain information (although not payment information) from
users of its free flagship site who wish to gain access to certain features
of the Company's site. If the security measures that the Company uses to
protect personal information are ineffective, the Company may lose users
and the Company's business may be harmed. Additionally, the Company relies
on security and authentication technology licensed from third parties to
perform real-time credit card authorization and verification. The Company
cannot predict whether technological developments or human error could
allow these security measures to be circumvented. The Company may need to
use significant resources to prevent security breaches or to alleviate
problems caused by any security breaches. If the Company is not able to
prevent all security breaches, its business, results of operations and
financial condition could be materially adversely affected.
The Company's users depend on the Company to keep their personal
information private and to not disclose it to third parties. The Company
therefore maintains a privacy policy, under which, with certain limited
exceptions, it will not disclose to any third parties any personal
information about its subscribers or other users. The Company has retained
the ability to modify the privacy policy at any time. If the Company's
users perceive that the Company is not protecting their privacy, its
business, results of operations and financial condition could be materially
adversely affected.
18
Difficulties Associated With The Company's Brand Development May Harm Its
Ability To Attract Subscribers And Readers
The Company believes that maintaining and growing awareness about
the TheStreet.com and RealMoney brands is an important aspect of its
efforts to continue to attract users. The Company's new products do not
have widely recognized brands, and the Company will need to increase
awareness of these brands among potential users. Although the Company's
efforts to build brand awareness have been successful to date, they may not
be cost effective or successful in the future in reaching potential users,
and some potential users may not be receptive to the Company's advertising
campaign or other efforts. Accordingly, the Company cannot assure you that
such efforts will be successful in raising awareness of TheStreet.com or
RealMoney brands or in persuading potential users to subscribe to the
Company's products or visit the Company's sites.
Failure To Maintain The Company's Reputation For Trustworthiness May Reduce
The Number Of Its Readers, Which May Harm Its Business
It is very important that the Company maintains its reputation as
a trustworthy news organization. The occurrence of events, including the
Company's misreporting a news story or the non-disclosure of a stock
ownership position by one or more of the Company's writers, or other breach
of the Company's compliance policies, could harm the Company's reputation
for trustworthiness. These events could result in a significant reduction
in the number of the Company's readers, which could materially adversely
affect its business, results of operations and financial condition.
Potential Liability For Information Displayed On The Company's Web Sites
May Require It To Defend Against Legal Claims, Which May Cause Significant
Operational Expenditures
The Company may be subject to claims for defamation, libel,
copyright or trademark infringement or based on other theories relating to
the information the Company publishes on its web sites or in other media.
These types of claims have been brought, sometimes successfully, against
online services as well as other print publications in the past. The
Company could also be subject to claims based upon the content that is
accessible from its web sites through links to other web sites. The Company
has stock ticker-based message boards that allow users to post comments
about individual stocks. The Company undertakes no obligation to moderate
these message boards, and potential liability for providers of message
board services has not yet been well established. The Company may choose to
allow its editorial staffers or outside contributors to post on its boards,
thus increasing the Company's potential liability. The Company's insurance
may not adequately protect it against these claims.
Failure To Protect The Company's Intellectual Property Rights Could Harm
Its Brand-Building Efforts And Ability To Compete Effectively
To protect the Company's rights to its intellectual property, the
Company relies on a combination of trademark and copyright law, trade
secret protection, confidentiality agreements and other contractual
arrangements with its employees, affiliates, customers, strategic partners
and others. The protective steps the Company has taken may be inadequate to
deter misappropriation of its proprietary information. The Company may be
unable to detect the unauthorized use of, or take appropriate steps to
enforce, its intellectual property rights. The Company has registered its
trademarks in the United States and also has pending U.S. and foreign
applications for other trademarks. Effective trademark, copyright and trade
secret protection may not be available in every country in which the
Company offers or intends to offer its services. Failure to adequately
protect the Company's intellectual property could harm its brand, devalue
its proprietary content and affect its ability to compete effectively.
Further, defending the Company's intellectual property rights could result
in the expenditure of significant financial and managerial resources, which
could materially adversely affect the Company's business, results of
operations and financial condition.
19
The Company May Have To Defend Against Intellectual Property Infringement
Claims, Which May Cause Significant Operational Expenditures
Although the Company believes that its proprietary rights do not
infringe on the intellectual property rights of others, other parties may
assert infringement claims against the Company or claims that the Company
has violated a patent or infringed a copyright, trademark or other
proprietary right belonging to them. The Company incorporates licensed
third-party technology in some of its services. In these license
agreements, the licensors have generally agreed to defend, indemnify and
hold the Company harmless with respect to any claim by a third party that
the licensed software infringes any patent or other proprietary right. The
Company cannot assure you that these provisions will be adequate to protect
it from infringement claims. Any infringement claims, even if not
meritorious, could result in the expenditure of significant financial and
managerial resources on the Company's part, which could materially
adversely affect the Company's business, results of operations and
financial condition.
The Company's Ability To Maintain And Increase Its Readership Depends On
The Continued Growth In Use And Efficient Operation Of The Web
The web-based information market is new and rapidly evolving. The
Company's business would be materially adversely affected if web usage does
not continue to grow or grows slowly. Web usage may be inhibited for a
number of reasons, such as:
o inadequate network infrastructure;
o security and privacy concerns;
o inconsistent quality of service; and
o unavailability of cost-effective, high-speed access to
the Internet.
The Company's readers depend on Internet service providers, online
service providers and other web site operators for access to its web sites.
Many of these companies providing such services have filed for bankruptcy.
Many have experienced significant service outages in the past and could
experience service outages, delays and other difficulties due to system
failures unrelated to the Company's systems. These occurrences could cause
the Company's readers to perceive the web in general or the Company's web
sites in particular as an unreliable medium and, therefore, cause them to
use other media to obtain their financial news and information. The Company
also depends on a number of information providers to deliver information
and data feeds to it on a timely basis. The Company's web sites could
experience disruptions or interruptions in service due to the failure or
delay in the transmission or receipt of this information, which could
materially adversely affect the Company's business, results of operations
and financial condition.
A General Decline In Online Advertising Could Harm The Company's Business
The Company's future success is dependent in part on the use of
the Internet as an advertising medium. The Internet advertising industry is
still evolving, and it cannot yet be compared with traditional advertising
media to gauge its effectiveness. As a result, demand and market acceptance
for Internet advertising solutions is uncertain and in recent months its
growth has slowed significantly. Many of the Company's current or potential
advertising customers have little or no experience using the Internet for
advertising purposes and they have allocated only a limited portion of
their advertising budgets to Internet advertising. The adoption of Internet
advertising, particularly by those entities that have historically relied
upon traditional media for advertising, requires the acceptance of a new
way of conducting business, exchanging information and advertising products
and services. These customers may find Internet advertising to be less
effective for promoting their products and services relative to traditional
advertising media. In addition, most of the Company's current and potential
web publisher customers have little experience in generating revenue from
the sale of advertising space on their web sites. The Company cannot assure
you that current or potential advertising customers
20
will continue to allocate a portion of their advertising budget to Internet
advertising or that the demand for Internet advertising will continue to
develop to sufficiently support Internet advertising as a significant
advertising medium. If the demand for Internet advertising develops more
slowly than the Company expects, then its business, results of operations
and financial condition could be materially and adversely affected.
No standards have been widely accepted to measure the
effectiveness of web advertising. If standards do not develop, existing
advertisers may not continue or increase their levels of web advertising.
If standards develop and the Company is unable to meet these standards,
advertisers may not continue advertising on the Company's site.
Furthermore, advertisers that have traditionally relied upon other
advertising media may be reluctant to advertise on the web. The Company's
business, results of operations and financial condition could be materially
adversely affected if the market for web advertising declines or develops
more slowly than expected.
Different pricing models are used to sell advertising on the web.
It is difficult to predict which, if any, will emerge as the industry
standard. This uncertainty makes it difficult to project the Company's
future advertising rates and revenues. The Company cannot assure you that
it will be successful under alternative pricing models that may emerge.
Moreover, "filter" software programs that limit or prevent advertising from
being delivered to a web user's computer are available. Widespread adoption
of this software could materially adversely affect the commercial viability
of web advertising, which could materially adversely affect the Company's
advertising revenues. In addition, some Internet commentators, privacy
advocates and federal and state officials have recently suggested that
legislation may be needed to better safeguard online privacy, by the
limitation or elimination of the use of cookies or by other methods. If
such legislation is passed, it is likely to restrict the ability of online
advertisers to target their ads, which may result in a decrease in online
advertising rates or online advertising spending generally. Such a decrease
could materially adversely affect the Company's advertising revenues.
The Company also derives advertising revenues from email services,
which exposes it to potential liabilities or claims resulting from
unsolicited email, lost or misdirected messages, illegal or fraudulent use
of email, privacy violations or interruptions or delays in email service.
Any allegation of impropriety or any successful claim could materially
adversely affect the Company's business, results of operations and
financial condition.
The Company competes with other web sites, television, radio and
print media for a share of advertisers' total advertising budgets. If
advertisers perceive the web in general or the Company's web sites in
particular to be a limited or an ineffective advertising medium, they may
be reluctant to devote a portion of their advertising budget to online
advertising or to advertising on the Company's web sites.
Government Regulation And Legal Uncertainties Relating To The Web Could
Increase The Company's Costs Of Transmitting Data And Increase Its Legal
And Regulatory Expenditures And Could Decrease Its Readership
Existing domestic and international laws or regulations and
private industry guidelines specifically regulate communications or
commerce on the web. Further, laws and regulations that address issues such
as user privacy, pricing, online content regulation, taxation of e-commerce
transactions and the characteristics and quality of online products and
services are under consideration by federal, state, local and foreign
governments and agencies and by private industry groups. Several
telecommunications companies have petitioned the Federal Communications
Commission to regulate Internet service providers and online services
providers in a manner similar to the regulation of long distance telephone
carriers and to impose access fees on such companies. The governments of
other states or foreign countries might attempt to regulate the Company's
transmissions or levy sales or other taxes relating to the Company's
activities. These regulations, if imposed, could increase the cost of
transmitting data over the web.
In addition, the growth and development of the market for Internet
commerce may prompt calls for more stringent consumer protection laws, both
in the United States and abroad, that may impose additional burdens on
companies conducting business over the Internet. The Company's business,
results of operations and financial condition could be materially and
adversely affected by the adoption or modification of laws or regulations
relating to the Internet.
21
The interpretation and application of existing securities laws to
web-based financial information providers, including laws governing
investment advisors, investment companies and broker-dealers, by the
Securities and Exchange Commission and state securities regulators, is a
developing area. If, as this area matures, the Company's activity is
interpreted as subjecting it to regulation, the Company could be subject to
liability, and its business, results of operations and financial condition
could be materially and adversely affected.
The Company is also subject to various federal and state
regulations concerning the collection and use of information regarding
individuals. These laws include the Children's Online Privacy Protection
Act, and state laws that limit or preclude the use of voter registration
and drivers license information, as well as other laws that govern the
collection and use of consumer credit and financial information, including
the Gramm-Leach-Bliley Act. Although the Company's compliance with
applicable federal and state laws, regulations and industry guidelines has
not had a material adverse effect on it, governments, trade associations
and industry self-regulatory groups may enact more burdensome laws,
regulations and guidelines, including antitrust and consumer privacy laws,
affecting the Company and its customers. The U.S. federal and various state
governments have been investigating certain Internet companies regarding
their use of personal information and have recently proposed limitations on
the collection and use of information regarding Internet users. The
European Union has enacted its own privacy regulations that has resulted in
limits on the collection and use of certain information from users in
Europe. Other jurisdictions may follow. The Company could incur additional
expenses if any new regulations regarding the use of personal information
are introduced or if these agencies chose to investigate the Company's
privacy practices. Also, as a consequence of governmental legislation or
regulation or enforcement efforts or evolving standards of fair information
collection practices, the Company may be required to make changes to its
products or services in ways that could diminish the effectiveness of the
product or service or its attractiveness to potential customers, which
could materially and adversely affect the Company's business, financial
condition or results of operations. Any new laws or regulations relating to
the delivery of the Company's products and services, or certain application
or interpretation of existing laws, could decrease the growth in the use of
the Internet, decrease the demand for the Company's products and services,
or otherwise materially adversely affect its business.
Laws and regulations directly applicable to Internet
communications, commerce and advertising are becoming more prevalent, and
new laws and regulations are under consideration by the U.S. Congress and
state legislatures. Any legislation enacted or restrictions arising from
current or future government investigations or policy could dampen the
growth in use of the Internet generally and decrease the acceptance of the
Internet as a communications, commercial and advertising medium. The laws
governing the Internet remain largely unsettled, even in areas where there
has been some legislative action. Moreover, it may take years to determine
the extent to which existing laws relating to issues such as intellectual
property ownership and infringement, libel, obscenity and personal privacy
apply to the Internet, Internet publishing and Internet advertising.
Concerns About Web Security Could Reduce The Company's Advertising
Revenues, Decrease Its Reader Base And Increase Its Web Security
Expenditures
Concern about the transmission of confidential information over
the Internet has been a significant barrier to electronic commerce and
communications over the web. Any well-publicized compromise of security
could deter more people from using the web or from using it to conduct
transactions that involve the transmission of confidential information,
such as signing up for a paid subscription, executing stock trades or
purchasing goods or services. Because many of the Company's advertisers
seek to advertise on its web sites to encourage people to use the web to
purchase goods or services, the Company's business, results of operations
and financial condition could be materially adversely affected if Internet
users significantly reduce their use of the web because of security
concerns. The Company may also incur significant costs to protect it
against the threat of security breaches or to alleviate problems caused by
these breaches.
22
Control By Principal Stockholders, Officers And Directors Could Adversely
Affect The Company's Stockholders
The Company's officers, directors and greater-than-five-percent
stockholders (and their affiliates), acting together, have the ability to
control substantially all matters submitted to its stockholders for
approval (including the election and removal of directors and any merger,
consolidation or sale of all or substantially all of the Company's assets)
and to control its management and affairs. Accordingly, this concentration
of ownership may have the effect of delaying, deferring or preventing a
change in control of the Company, impeding a merger, consolidation,
takeover or other business combination involving the Company or
discouraging a potential acquirer from making a tender offer or otherwise
attempting to obtain control of the Company, which in turn could materially
adversely affect the market price of the common stock.
Volatility Of The Company's Stock Price Could Adversely Affect The
Company's Stockholders
The stock market has experienced significant price and volume
fluctuations and the market prices of securities of technology companies,
particularly Internet-related companies, have been highly volatile. The
trading price of the Company's stock has been and may continue to be
subject to wide fluctuations. From January 1 through March 31, 2002, the
closing sale price of the Company's common stock on the Nasdaq National
Market ranged from $2.71 to $1.32. As of May 10, 2002, the closing sale
price was $3.50. The Company's stock price may fluctuate in response to a
number of events and factors, such as quarterly variations in operating
results, announcements of technological innovations or new products and
media properties by the Company or its competitors, changes in financial
estimates and recommendations by securities analysts, the operating and
stock price performance of other companies that investors may deem
comparable, and news reports relating to trends in the Company's markets.
In addition, the stock market in general, and the market prices for
Internet-related companies in particular, have experienced extreme
volatility that often has been unrelated to the operating performance of
such companies. These broad market and industry fluctuations may adversely
affect the price of the Company's common stock, regardless of its operating
performance.
Anti-Takeover Provisions Could Prevent Or Delay A Change Of Control
Provisions of the Company's amended and restated certificate of
incorporation and amended and restated bylaws and Delaware law could make
it more difficult for a third party to acquire the Company, even if doing
so would be beneficial to the Company's stockholders.
The Company Does Not Intend To Pay Dividends
The Company has never declared or paid any cash dividends on its
common stock. The Company currently intends to retain any future earnings
for funding growth and, therefore, does not expect to pay any dividends in
the foreseeable future.
PART II - OTHER INFORMATION
Item 1. Legal Proceedings
On December 5, 2001, a class action complaint alleging violations
of the federal securities laws was filed in the United States District
Court for the Southern District of New York naming as defendants
TheStreet.com, Inc., certain of its former officers and directors and a
current director, and certain underwriters of the company's initial public
offering (The Goldman Sachs Group, Inc., Chase H&Q, Thomas Weisel Partners
LLC, FleetBoston Robertson Stephens, and Merrill Lynch Pierce Fenner &
Smith, Inc.). The complaint alleges, among other things, that the
underwriters of TheStreet.com's initial public offering violated the
securities laws by failing to disclose certain alleged compensation
arrangements (such as undisclosed commissions or stock stabilization
practices) in the offering's registration statement. TheStreet.com and
certain of its former officers and directors and a current director are
named in the complaint pursuant to Section 11 of the Securities Act of
1933, and Section 10(b) of the Securities Exchange Act of 1934. The plaintiffs
23
seek damages and statutory compensation against each defendant in an amount
to be determined at trial, plus pre-judgment interest thereon, together
with costs and expenses, including attorneys' fees. Similar complaints have
been filed against over 300 other issuers that have had initial public
offerings since 1998 and all such actions have been included in a single
coordinated proceeding. TheStreet.com intends to defend these actions
vigorously. However, due to the inherent uncertainties of litigation, the
Company cannot accurately predict the ultimate outcome of the litigation.
Any unfavorable outcome of this litigation could have an adverse impact on
the Company's business, financial condition and results of operations.
Item 2. Changes in Securities and Use of Proceeds
Not applicable.
Item 3. Defaults Upon Senior Securities
Not applicable.
Item 4. Submission of Matters to Vote of Security Holders
Not applicable.
Item 5. Other Information.
Not applicable.
Item 6. Exhibits and Reports on Form 8-K.
(a) Exhibits
Exhibit
Number Description
------- -----------
*3.1 Amended and Restated Certificate of Incorporation
**3.2 Amended and Restated Bylaws
*4.1 Amended and Restated Registration Rights
Agreement, dated as of December 21, 1998, among
TheStreet.com and the stockholders named therein
*4.2 TheStreet.com Rights Agreement
+4.3 Amendment No. 1, dated as of August 7, 2000, to
Rights Agreement
+4.4 Amended and Restated 1998 Stock Incentive Plan,
dated as of July 12, 2000
* Incorporated by reference to Exhibits to the Company's
Registration Statement on Form S-1 dated February 23,
1999 (File No. 333-72799).
** Incorporated by reference to Exhibits to the Company's
Annual Report on Form 10-K dated March 30, 2000.
+ Incorporated by reference to Exhibits to the Company's
Annual Report on Form 10-K dated April 2, 2001.
(b) Reports on Form 8-K
The Company filed a Current Report on Form 8-K, dated
March 5, 2002 (amended April 9, 2002) reporting under
Item 4 a change in the Company's independent accountants
from Arthur Andersen LLP to Ernst & Young LLP. The
appointment of Ernst & Young LLP is subject to
ratification by the Company's stockholders at the 2002
annual meeting scheduled for May 29, 2002.
24
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.COM, INC.
(Registrant)
Date: May 15, 2002 By: /s/ Thomas J. Clarke, Jr.
-------------------------
Thomas J. Clarke, Jr.
Chairman of the Board and
Chief Executive Officer
Date: May 15, 2002 By: /s/ Lisa A. Mogensen
--------------------
Lisa A. Mogensen
Chief Financial Officer
25
EXHIBIT INDEX
Exhibit
Number Description
------- -----------
*3.1 Amended and Restated Certificate of Incorporation
**3.2 Amended and Restated Bylaws
*4.1 Amended and Restated Registration Rights
Agreement, dated as of December 21, 1998, among
TheStreet.com and the stockholders named therein
*4.2 TheStreet.com Rights Agreement
+4.3 Amendment No. 1, dated as of August 7, 2000, to
Rights Agreement
+4.4 Amended and Restated 1998 Stock Incentive Plan,
dated as of July 12, 2000
* Incorporated by reference to Exhibits to the Company's
Registration Statement on Form S-1 dated February 23, 1999 (File
No. 333-72799).
** Incorporated by reference to Exhibits to the Company's Annual
Report on Form 10-K dated March 30, 2000.
+ Incorporated by reference to Exhibits to the Company's Annual
Report on Form 10-K dated April 2, 2001.
26