TheStreet, Inc.
THESTREET, INC. (Form: 10-Q, Received: 11/05/2015 13:52:32)

 

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

  

 

 

FORM 10-Q

 

QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d)

OF THE SECURITIES EXCHANGE ACT OF 1934

 

For the quarterly period ended September 30, 2015

 

Commission File Number 000-25779

 

THESTREET, 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)

 

Indicate by a check mark whether the Registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the Registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes x No ¨

 

Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant as required to submit and post such files). Yes x No ¨

 

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

 

Large accelerated filer ¨ Accelerated filer x Non-accelerated filer ¨ Smaller reporting company ¨

 

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

 

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

 

    Number of Shares Outstanding
Title of Class   as of November 3, 2015
Common Stock, par value $0.01 per share   34,870,290

 

 

 

 

TheStreet, Inc.

Form 10-Q

 

As of and for the Three and Nine Months Ended September 30, 2015

 

Part I - FINANCIAL INFORMATION 1
Item 1. Interim Condensed Consolidated Financial Statements 1
  Condensed Consolidated Balance Sheets 1
  Condensed Consolidated Statements of Operations 2
  Condensed Consolidated Statements of Comprehensive Loss 3
  Condensed Consolidated Statements of Cash Flows 4
  Notes to Condensed Consolidated Financial Statements 5
Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations 15
Item 3. Quantitative and Qualitative Disclosures About Market Risk 24
Item 4. Controls and Procedures 25
     
PART II - OTHER INFORMATION 25
Item 1. Legal Proceedings 25
Item 1A. Risk Factors 25
Item 2. Unregistered Sales of Equity Securities and Use of Proceeds 25
Item 3. Defaults Upon Senior Securities 25
Item 4. Mine Safety Disclosures 26
Item 5. Other Information 26
Item 6. Exhibits 26
SIGNATURES 27

 

  ii  

 

 

Part I – FINANCIAL INFORMATION

  

Item 1.    Interim Condensed Consolidated Financial Statements.

 

 

THESTREET, INC.
CONDENSED CONSOLIDATED BALANCE SHEETS

 

    September 30, 2015     December 31, 2014  
    (unaudited)        
ASSETS                
Current Assets:                
Cash and cash equivalents   $ 27,541,808     $ 32,459,009  
Accounts receivable, net of allowance for doubtful accounts of $346,728 as of September 30, 2015 and $318,141 as of December 31, 2014     4,735,914       5,103,899  
Marketable securities     -       2,009,240  
Other receivables, net     566,514       549,933  
Prepaid expenses and other current assets     1,414,437       987,693  
Restricted cash     661,250       639,750  
Total current assets     34,919,923       41,749,524  
                 
Property and equipment, net of accumulated depreciation and amortization of $4,640,057 as of September 30, 2015 and $4,003,538 as of December 31, 2014     2,969,084       2,926,825  
Marketable securities     1,580,000       1,560,000  
Other assets     325,034       77,052  
Goodwill     43,693,372       44,810,467  
Other intangibles, net of accumulated amortization of $15,073,211 as of September 30, 2015 and $12,896,782 as of December 31, 2014     19,120,275       20,147,209  
Restricted cash     500,000       661,250  
Total assets   $ 103,107,688     $ 111,932,327  
                 
LIABILITIES AND STOCKHOLDERS’ EQUITY                
Current Liabilities:                
Accounts payable   $ 2,236,400     $ 2,474,737  
Accrued expenses     4,365,929       6,279,082  
Deferred revenue     25,306,339       26,427,816  
Other current liabilities     1,003,249       1,241,508  
Total current liabilities     32,911,917       36,423,143  
Deferred tax liability     1,270,222       728,899  
Other liabilities     5,475,120       6,910,175  
Total liabilities     39,657,259       44,062,217  
                 
Stockholders’ Equity                
Preferred stock; $0.01 par value; 10,000,000 shares authorized; 5,500 issued and outstanding as of September 30, 2015 and December 31, 2014; the aggregate liquidation preference totals $55,000,000 as of September 30, 2015 and December 31, 2014     55       55  
Common stock; $0.01 par value; 100,000,000 shares authorized; 42,101,098 shares issued and 34,856,369 shares outstanding as of September 30, 2015, and 41,967,369 shares issued and 34,727,641 shares outstanding as of December 31, 2014     421,011       419,674  
Additional paid-in capital     270,084,013       271,943,049  
Accumulated other comprehensive loss     (1,484,501 )     (227,476 )
Treasury stock at cost; 7,244,729 shares as of September 30, 2015 and 7,239,728 shares as of December 31, 2014     (12,920,154 )     (12,908,943 )
Accumulated deficit     (192,649,995 )     (191,356,249 )
Total stockholders’ equity     63,450,429       67,870,110  
Total liabilities and stockholders’ equity   $ 103,107,688     $ 111,932,327  

 

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

 

  1  

 

 

THESTREET, INC.

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS

(unaudited)

 

    For the Three Months Ended
September 30,
    For the Nine Months Ended
September 30,
 
    2015     2014     2015     2014  
Net revenue:                                
Subscription services   $ 13,709,870     $ 11,715,504     $ 41,790,803     $ 34,722,784  
Media     2,951,774       2,903,571       8,897,809       9,047,623  
Total net revenue     16,661,644       14,619,075       50,688,612       43,770,407  
                                 
Operating expense:                                
Cost of services     8,707,353       7,483,414       25,617,022       22,897,998  
Sales and marketing     3,703,463       3,343,017       12,328,229       11,202,886  
General and administrative     3,773,790       3,564,887       11,245,280       9,821,941  
Depreciation and amortization     1,069,161       721,536       3,184,839       2,178,908  
Restructuring and other charges     (1,221,224 )     -       (1,221,224 )     -  
Total operating expense     16,032,543       15,112,854       51,154,146       46,101,733  
Operating income (loss)     629,101       (493,779 )     (465,534 )     (2,331,326 )
Net interest (expense) income     (30,891 )     26,850       (97,296 )     96,785  
Net income (loss) before income taxes     598,210       (466,929 )     (562,830 )     (2,234,541 )
Provision for income taxes     243,884       -       730,916       -  
Net income (loss)     354,326       (466,929 )     (1,293,746 )     (2,234,541 )
Preferred stock cash dividends     96,424       96,424       289,272       289,272  
Net income (loss) attributable to common stockholders   $ 257,902     $ (563,353 )   $ (1,583,018 )   $ (2,523,813 )
                                 
Basic net income (loss) per share                                
Net income (loss) attributable to common stockholders   $ 0.01     $ (0.02 )   $ (0.05 )   $ (0.07 )
                                 
Diluted net income (loss) per share                                
Net income (loss) attributable to common stockholders   $ 0.01     $ (0.02 )   $ (0.05 )   $ (0.07 )
                                 
Cash dividends declared and paid per common share   $ 0.025     $ 0.025     $ 0.075     $ 0.075  
                                 
Weighted average basic shares outstanding     34,854,472       34,436,335       34,827,678       34,337,597  
Weighted average effect of dilutive securities:                                
Employee stock options and restricted stock units     231,281       -       -       -  
Weighted average diluted shares outstanding     35,085,753       34,436,335       34,827,678       34,337,597  

 

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

 

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THESTREET, INC.

CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE LOSS

(unaudited)

 

    For the Three Months Ended
September 30,
    For the Nine Months Ended
September 30,
 
    2015     2014     2015     2014  
Net income (loss)   $ 354,326     $ (466,929 )   $ (1,293,746 )   $ (2,234,541 )
Foreign currency translation loss     (798,960 )     -       (1,280,067 )     -  
Unrealized gain (loss) on marketable securities     85,992       29,642       23,042       (104,984 )
Comprehensive loss   $ (358,642 )   $ (437,287 )   $ (2,550,771 )   $ (2,339,525 )

 

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

 

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THESTREET, INC.

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

(unaudited)

 

    For the Nine Months Ended September 30,  
    2015     2014  
Cash Flows from Operating Activities:                
Net loss   $ (1,293,746 )   $ (2,234,541 )
Adjustments to reconcile net loss to net cash
(used in) provided by operating activities:
               
Stock-based compensation expense     1,129,257       1,354,722  
Provision for doubtful accounts     172,066       36,201  
Depreciation and amortization     3,184,839       2,178,908  
Deferred taxes     541,323       -  
Deferred rent     (245,849 )     (243,859 )
Changes in operating assets and liabilities:                
Accounts receivable     185,448       565,016  
Other receivables     (16,581 )     (107,053 )
Prepaid expenses and other current assets     (430,655 )     (114,847 )
Other assets     (57,629 )     13,672  
Accounts payable     (235,941 )     (69,159 )
Accrued expenses     (1,881,059 )     (340,598 )
Deferred revenue     (772,343 )     742,186  
Other current liabilities     (377,494 )     (155,302 )
Other liabilities     (1,401,092 )     -  
Net cash (used in) provided by operating activities     (1,499,456 )     1,625,346  
                 
Cash Flows from Investing Activities:                
Sale and maturity of marketable securities     2,005,484       5,398,811  
Adjustment to purchase of Management Diagnostics Limited     50,494       -  
Capital expenditures     (2,688,194 )     (1,323,403 )
Net cash (used in) provided by investing activities     (632,216 )     4,075,408  
                 
Cash Flows from Financing Activities:                
Cash dividends paid on common stock     (2,663,771 )     (2,613,116 )
Cash dividends paid on preferred stock     (289,272 )     (289,272 )
Proceeds from the exercise of stock options     839       149,952  
Restricted cash     139,750       -  
Shares withheld on RSU vesting to pay for withholding taxes     (11,211 )     (116,108 )
Net cash used in financing activities     (2,823,665 )     (2,868,544 )
                 
Effect of exchange rate changes on cash and cash equivalents     38,136       -  
                 
Net (decrease) increase in cash and cash equivalents     (4,917,201 )     2,832,210  
Cash and cash equivalents, beginning of period     32,459,009       45,443,759  
Cash and cash equivalents, end of period   $ 27,541,808     $ 48,275,969  

 

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

 

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TheStreet, Inc.

Notes to Condensed Consolidated Financial Statements

(unaudited)

 

1. DESCRIPTION OF THE BUSINESS AND BASIS OF PRESENTATION

 

Business

 

TheStreet, Inc., together with its wholly owned subsidiaries (“TheStreet”, “we”, “us” or the “Company”), is a leading digital financial media company focused on the financial and mergers and acquisitions environment. The Company’s collection of digital services provides users, subscribers and advertisers with a variety of content and tools through a range of online, social media, tablet and mobile channels.  Our mission is to provide investors and advisors with actionable ideas from the world of investing, finance and business, and dealmakers with sophisticated analysis of the mergers and acquisitions environment, in order to break down information barriers, level the playing field and help all individuals and organizations grow their wealth. With a robust suite of digital services, TheStreet offers the tools and insights needed to make informed decisions about earning, investing, saving and spending money. Since its inception in 1996, TheStreet believes it has distinguished itself from other financial media companies with its journalistic excellence, unbiased approach and interactive multimedia coverage of the financial markets, economy, industry trends, investment and financial planning.

 

Basis of Presentation

 

The accompanying unaudited condensed consolidated financial statements of the Company have been prepared in accordance with U.S. generally accepted accounting principles (“GAAP”) for interim financial information and with the instructions to the Securities Exchange Act of 1934, as amended (the “Exchange Act”) and for quarterly reports on Form 10-Q and Article 10 of Regulation S-X. Accordingly, they do not include all of the information and notes required by GAAP 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. The financial statements require the use of management estimates and include the accounts of the Company as required by GAAP.   Operating results for the nine month period ended September 30, 2015 is not necessarily indicative of the results that may be expected for the year ending December 31, 2015.

 

The consolidated balance sheet at December 31, 2014 has been derived from the audited financial statements at that date, but does not include all of the information and notes required by GAAP for complete financial statements.

 

For further information, refer to the consolidated financial statements and accompanying notes included in the Company’s annual report on Form 10-K for the year ended December 31, 2014, filed with the Securities and Exchange Commission (“SEC”) on March 5, 2015 (“2014 Form 10-K”).

 

The Company has evaluated subsequent events for recognition or disclosure.

 

Recent Accounting Pronouncements

 

In May 2014, the FASB issued Accounting Standards Update No. 2014-09, “Revenue from Contracts with Customers” (“ASU 2014-09”), which supersedes nearly all existing revenue recognition guidance under GAAP. The core principle of ASU 2014-09 is to recognize revenues when promised goods or services are transferred to customers in an amount that reflects the consideration to which an entity expects to be entitled for those goods or services. ASU 2014-09 defines a five step process to achieve this core principle and, in doing so, more judgment and estimates may be required within the revenue recognition process than are required under existing GAAP. On July 9, 2015, the FASB voted to defer the effective date by one year to December 15, 2017 for interim and annual reporting periods beginning after that date.  Early adoption of ASU 2014-09 is permitted but not before the original effective date (annual periods beginning after December 15, 2016). When effective, ASU 2014-09 will use either of the following transition methods: (i) a full retrospective approach reflecting the application of the standard in each prior reporting period with the option to elect certain practical expedients; or (ii) a retrospective approach with the cumulative effect of initially adopting ASU 2014-09 recognized at the date of adoption (which includes additional footnote disclosures).  We are currently evaluating the impact of our pending adoption of ASU 2014-09 on our consolidated financial statements and have not yet determined the method by which we will adopt the standard.

 

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In January 2015, the FASB issued ASU 2015-01, Income Statement — Extraordinary and Unusual Items (Subtopic 225-20): Simplifying Income Statement Presentation by Eliminating the Concept of Extraordinary Items (“ASU 2015-01”). ASU 2015-01 eliminates the concept of extraordinary items from GAAP but retains the presentation and disclosure guidance for items that are unusual in nature or occur infrequently and expands the guidance to include items that are both unusual in nature and infrequently occurring. ASU 2015-01 is effective for fiscal years, and interim periods within those years, beginning after December 15, 2015. A reporting entity may apply ASU 2015-01 prospectively. A reporting entity may also apply ASU 2015-01 retrospectively to all periods presented in the financial statements. We believe the adoption of ASU 2015-01 will not have a material effect on our consolidated financial statements.

 

2. ACQUISITION

 

On October 31, 2014, the Company acquired all of the outstanding share capital of Management Diagnostics Limited (“MDL”), a privately held company headquartered in London, England. MDL is the owner of BoardEx, an institutional relationship capital management database and platform. The Company paid cash consideration of approximately $22.1 million at closing, of which $1.5 million was placed in escrow which will be used to secure indemnity obligations for a period of 24 months. Additionally, the Company assumed net liabilities approximating $5.0 million, inclusive of a potential earn-out payable in 2018 based on 2017 net revenue of BoardEx’s existing products and services. Concurrent with the signing of the agreement, the Company also purchased warranty insurance from Pembroke Syndicate 4000 at Lloyds with a policy limit of $5 million dollars, subject to a deductible.

 

The results of operations of MDL are included in the Company’s condensed consolidated financial statements for the nine months ended September 30, 2015. Unaudited pro forma consolidated financial information is presented below as if the acquisition of MDL had occurred on January 1, 2014. The historical financial statements of MDL were prepared in accordance with United Kingdom generally accepted accounting principles and have been converted to U.S. generally accepted accounting principles for purposes of the unaudited pro forma consolidated financial information presented below. The results have been adjusted to account for the amortization of acquired intangible assets and to reclassify a defined benefit plan actuarial gain recorded by MDL within the statement of operations to accumulated other comprehensive income in accordance with U.S. generally accepted accounting principles. The pro forma information presented below does not purport to present what actual results would have been if the acquisition had occurred at the beginning of such period, nor does the information project results for any future period. The unaudited pro forma consolidated financial information should be read in conjunction with the historical financial information of the Company included in this report, as well as the historical financial information included in other reports and documents filed with the Securities and Exchange Commission. The unaudited pro forma consolidated financial information for the three and nine months ended September 30, 2014 is as follows:

 

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    For the Three
Months Ended
September 30, 2014
    For the Nine Months
Ended September 30,
 2014
 
Total revenue   $ 17,186,997     $ 51,415,504  
Net income (loss)   $ 37,653     $ (1,378,347 )
Basic and diluted net income (loss) per share   $ 0.00     $ (0.04 )

 

3. CASH AND CASH EQUIVALENTS, MARKETABLE SECURITIES AND RESTRICTED CASH

 

The Company’s cash, cash equivalents and restricted cash primarily consist of money market funds and checking accounts. As of September 30, 2015, marketable securities consist of two municipal auction rate securities (“ARS”) issued by the District of Columbia with a cost basis of approximately $1.9 million and a fair value of approximately $1.6 million. As of December 31, 2014, marketable securities also included an investment grade corporate bond, and the aggregate fair value of these marketable securities was approximately $3.6 million and the total cost basis was approximately $3.9 million. The decrease in marketable securities was due to the Company not reinvesting the proceeds as securities matured. With the exception of the ARS, the maximum maturity for any investment is three years. The ARS mature in the year 2038. The Company accounts for its marketable securities in accordance with the provisions of ASC 320-10. The Company classifies these securities as available for sale and the securities are reported at fair value. Unrealized gains and losses are recorded as a component of accumulated other comprehensive loss and excluded from net loss. Additionally, the Company has a total of approximately $1.2 million of cash that serves as collateral for outstanding letters of credit, and which cash is therefore restricted. The letters of credit serve as security deposits for the Company’s office space in New York City.

 

   

September 30,

2015

   

December 31,

2014

 
Cash and cash equivalents   $ 27,541,808     $ 32,459,009  
Current and noncurrent marketable securities     1,580,000       3,569,240  
Current and noncurrent restricted cash     1,161,250       1,301,000  
Total cash and cash equivalents, current and noncurrent marketable securities and current and noncurrent restricted cash   $ 30,283,058     $ 37,329,249  

 

4. FAIR VALUE MEASUREMENTS

 

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

 

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

 

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

 

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

 

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

 

    As of September 30, 2015  
Description:   Total     Level 1     Level 2     Level 3  
Cash and cash equivalents (1)   $ 27,541,808     $ 27,541,808     $     $  
Restricted cash (1)     1,161,250       1,161,250              
Marketable securities (2)     1,580,000                   1,580,000  
Contingent earn-out (3)     2,557,181                   2,557,181  
Total at fair value   $ 32,840,239     $ 28,703,058     $     $ 4,137,181  
                                 
    As of December 31, 2014  
Description:   Total     Level 1     Level 2     Level 3  
Cash and cash equivalents (1)   $ 32,459,009     $ 32,459,009     $     $  
Restricted cash (1)     1,301,000       1,301,000              
Marketable securities (2)     3,569,240       2,009,240             1,560,000  
Contingent earn-out (3)     2,602,105                   2,602,105  
Total at fair value   $ 39,931,354     $ 35,769,249     $     $ 4,162,105  

 

(1) Cash, cash equivalents and restricted cash, totaling approximately $28.7 million and $33.8 million as of September 30, 2015 and December 31, 2014, respectively, consist primarily of money market funds and checking accounts for which we determine fair value through quoted market prices.

 

(2) Marketable securities as of December 31, 2014 included an investment grade corporate bond for which we determined fair value through quoted market prices. Marketable securities at both periods also include two municipal ARS issued by the District of Columbia having a fair value totaling approximately $1.6 million and $1.6 million as of September 30, 2015 and December 31, 2014, respectively. Historically, the fair value of ARS investments approximated par value due to the frequent resets through the auction process. Due to events in credit markets, the auction events, which historically have provided liquidity for these securities, have been unsuccessful. The result of a failed auction is that these ARS holdings will continue to pay interest in accordance with their terms at each respective auction date; however, liquidity of the securities will be limited until there is a successful auction, the issuer redeems the securities, the securities mature or until such time as other markets for these ARS holdings develop. For each of our ARS, we evaluate the risks related to the structure, collateral and liquidity of the investment, and forecast the probability of issuer default, auction failure, a successful auction at par, or a redemption at par, for each future auction period. Temporary impairment charges are recorded in accumulated other comprehensive loss, whereas other-than-temporary impairment charges are recorded in our consolidated statement of operations. As of September 30, 2015, the Company determined that there was a decline in the fair value of its ARS investments of $270 thousand from its cost basis, which was deemed temporary and was included within accumulated other comprehensive loss. The Company used both a discounted cash flow and market approach model to determine the estimated fair value of its ARS investments. The assumptions used in preparing the discounted cash flow model include estimates for interest rate, timing and amount of cash flows and expected holding period of ARS.

 

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(3) Contingent earn-out represents additional purchase consideration payable to the former shareholders of Management Diagnostics Limited based upon the achievement of specific 2017 audited revenue benchmarks. The probability of achieving each benchmark is based on Management’s assessment of the projected 2017 revenue. The present value of each probability weighted payment was calculated by discounting the probability weighted payment by the corresponding present value factor.

 

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

 

    Marketable
Securities
    Contingent
Earn-Out
 
Balance December 31, 2014   $ 1,560,000     $ 2,602,105  
Change in fair value     20,000       -  
Purchase accounting adjustment     -       (144,398 )
Accretion of net present value     -       99,474  
Balance September 30, 2015   $ 1,580,000     $ 2,557,181  

 

5. STOCK-BASED COMPENSATION

 

The Company estimates the fair value of stock option awards on the date of grant using the Black-Scholes option-pricing model. This determination is affected by the Company’s stock price as well as assumptions regarding expected volatility, risk-free interest rate, and expected dividend yields. Because option-pricing models require the use of subjective assumptions, changes in these assumptions can materially affect the fair value of the options. The weighted-average grant date fair value per share of stock option awards granted during the nine months ended September 30, 2015 and 2014 was $0.41 and $0.46, respectively, using the Black-Scholes model with the following weighted-average assumptions:

 

    For the Nine Months Ended
September 30,
 
    2015     2014  
Expected option lives     3.0 years       3.5 years  
Expected volatility     35.66 %     35.98 %
Risk-free interest rate     0.99 %     1.04 %
Expected dividend yield     4.51 %     4.04 %

 

The value of each restricted stock unit awarded is equal to the closing price per share of the Company’s Common Stock on the date of grant. The weighted-average grant date fair value per share of restricted stock units granted during the nine months ended September 30, 2015 and 2014 was $2.23 and $2.23, respectively.

 

For both option and restricted stock unit awards, the value of the portion of the award that is ultimately expected to vest is recognized as expense over the requisite service periods.

 

As of September 30, 2015, there remained 1,807,411 shares available for future awards under the Company’s 2007 Performance Incentive Plan (the “2007 Plan”). In connection with awards under both the 2007 Plan and awards issued outside of the 2007 Plan, the Company recorded approximately $388 thousand and $1.1 million of noncash stock-based compensation for the three and nine month periods ended September 30, 2015, respectively, as compared to approximately $491 thousand and $1.4 million of noncash stock-based compensation for the three and nine month periods ended September 30, 2014, respectively. As of September 30, 2015, there was approximately $2.3 million of unrecognized stock-based compensation expense remaining to be recognized over a weighted-average period of 2.0 years.

 

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

 

    Shares
Underlying
Awards
    Weighted
Average
Exercise
Price
    Aggregate
Intrinsic
Value
($000)
    Weighted
Average
Remaining
Contractual
Life (In Years)
 
Awards outstanding at December 31, 2014     4,246,041     $ 1.90                  
Options granted     37,795     $ 2.27                  
Options exercised     (603 )   $ 1.39                  
Options forfeited     (248,217 )   $ 1.92                  
Options expired     (110,994 )   $ 2.73                
Awards outstanding at September 30, 2015     3,924,022     $ 1.88     $ 97       3.07  
Awards vested and expected to vest at September 30, 2015     3,850,444     $ 1.88     $ 96       3.07  
Awards exercisable at September 30, 2015     2,908,395     $ 1.85     $ 74       2.99  

 

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

 

    Shares
Underlying
Awards
    Aggregate
Intrinsic
Value
($000)
    Weighted
Average
Remaining
Contractual
Life (In Years)
 
Awards outstanding at December 31, 2014     1,205,343                  
Restricted stock units granted     95,637                  
Restricted stock units vested     (133,126 )                
Restricted stock units forfeited     (12,501 )                
Awards outstanding at September 30, 2015     1,155,353     $ 1,929       2.16  
Awards vested and expected to vest at September 30, 2015     1,132,853     $ 1,892       2.07  

 

A summary of the status of the Company’s unvested share-based payment awards as of September 30, 2015 and changes in the nine month period then ended, is as follows:

 

Unvested Awards   Number of Shares     Weighted
Average Grant
Date Fair Value
 
Shares underlying awards unvested at December 31, 2014     3,181,037     $ 1.16  
Shares underlying options granted     37,795     $ 0.41  
Shares underlying restricted stock units granted     95,637     $ 2.23  
Shares underlying options vested     (749,645 )   $ 0.52  
Shares underlying restricted stock units vested     (133,126 )   $ 2.19  
Shares underlying options forfeited     (248,217 )   $ 0.50  
Shares underlying restricted stock units forfeited     (12,501 )   $ 1.70  
Shares underlying awards unvested at September 30, 2015     2,170,980     $ 1.42  

 

  10  

 

 

For the nine months ended September 30, 2015 and 2014, the total fair value of share-based awards vested was approximately $692 thousand and $1.4 million, respectively. For the nine months ended September 30, 2015 and 2014, the total intrinsic value of options exercised was approximately $373 and $64 thousand, respectively. For the nine months ended September 30, 2015 and 2014, approximately 38 thousand and 126 thousand stock options, respectively, were granted, and approximately 1 thousand and 81 thousand stock options, respectively, were exercised yielding approximately $1 thousand and $150 thousand, respectively, of cash proceeds to the Company. Additionally, for the nine months ended September 30, 2015 and 2014, approximately 96 thousand and 471 thousand restricted stock units, respectively, were granted, and approximately 133 thousand and 364 thousand shares, respectively, were issued under restricted stock unit grants.

 

6. STOCKHOLDERS’ EQUITY

 

Treasury Stock

 

In December 2000, the Company’s Board of Directors authorized the repurchase of up to $10 million of the Company’s Common Stock, from time to time, in private purchases or in the open market. In February 2004, the Company’s Board of Directors approved the resumption of the stock repurchase program (the “Program”) under new price and volume parameters, leaving unchanged the maximum amount available for repurchase under the Program. However, the affirmative vote of the holders of a majority of the outstanding shares of Series B Preferred Stock, voting separately as a single class, is necessary for the Company to repurchase its Common Stock (except for the purchase or redemption from employees, directors and consultants pursuant to agreements providing us with repurchase rights upon termination of their service with us), unless after such purchase we have unrestricted cash (net of all indebtedness for borrowed money, purchase money obligations, promissory notes or bonds) equal to at least two times the product obtained by multiplying the number of shares of Series B Preferred Stock outstanding at the time such dividend is paid by the liquidation preference. During the nine-month periods ended September 30, 2015 and 2014, the Company did not purchase any shares of Common Stock under the Program. Since inception of the Program, the Company has purchased a total of 5,453,416 shares of Common Stock at an aggregate cost of approximately $7.3 million.

 

In addition, pursuant to the terms of the Company’s 2007 Plan, and certain procedures adopted by the Compensation Committee of the Board of Directors, in connection with the exercise of stock options by certain of the Company’s employees, and the issuance of shares of Common Stock in settlement of vested restricted stock units, the Company may withhold shares in lieu of payment of the exercise price and/or the minimum amount of applicable withholding taxes then due. Through September 30, 2015, the Company had withheld an aggregate of 1,579,705 shares which have been recorded as treasury stock. In addition, the Company received an aggregate of 208,270 shares as partial settlement of the working capital and debt adjustment from the acquisition of Corsis Technology Group II LLC and 3,338 shares as partial settlement of the working capital adjustment from the acquisition of Kikucall, Inc. These shares have been recorded as treasury stock.

 

Dividends

 

During the third quarter of 2015 and 2014, the Company paid a quarterly cash dividend of $0.025 per share on its Common Stock and its Series B Preferred Stock on a converted common share basis. The dividend payment totaled approximately $979 thousand and $989 thousand, respectively. When combined with the quarterly cash dividend paid during the first and second quarters of 2015 and 2014, year-to-date dividends totaled approximately $3.0 million and $2.9 million, respectively.

 

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7. LEGAL PROCEEDINGS

 

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

 

8. NET INCOME (LOSS) PER SHARE OF COMMON STOCK

 

Basic net income (loss) per share is computed using the weighted average number of common shares outstanding during the period. Diluted net income (loss) per share is computed using the weighted average number of common shares and potential common shares outstanding during the period, so long as the inclusion of potential common shares does not result in a higher net income or lower net loss per share. Potential common shares consist of restricted stock units (using the treasury stock method), the incremental common shares issuable upon the exercise of stock options (using the treasury stock method), and the conversion of the Company’s convertible preferred stock (using the if-converted method). For the three months ended September 30, 2015, approximately 1.7 million unvested restricted stock units and vested and unvested options to purchase common stock were included in the calculation, as their effect would result in a lower net income per share. For the three months ended September 30, 2014, approximately 5.9 million unvested restricted stock units and vested and unvested options to purchase Common Stock, were excluded from the calculation, as their effect would result in a lower net loss per share. For the nine months ended September 30, 2015 and 2014, approximately 3.9 million and 5.9 million unvested restricted stock units and vested and unvested options to purchase Common Stock, respectively, were excluded from the calculation, as their effect would result in a lower net loss per share.

 

The following table reconciles the numerator and denominators for the calculations for the three and nine month periods ended September 30, 2015 and 2014.

 

    For the Three Months Ended September 30,     For the Nine Months Ended September 30,  
    2015     2014     2015     2014  
Basic and diluted net income (loss) per share:                                
Numerator:                                
Net income (loss)   $ 354,326     $ (466,929 )   $ (1,293,746 )   $ (2,234,541 )
Preferred stock cash dividends     (96,424 )     (96,424 )     (289,272 )     (289,272 )
Numerator for basic and diluted earnings per share                                
Net income (loss) attributable to common stockholders   $ 257,902     $ (563,353 )   $ (1,583,018 )   $ (2,523,813 )
                                 
Denominator:                                
Weighted average basic shares outstanding     34,854,472       34,436,335       34,827,678       34,337,597  
Weighted average effect of dilutive securities:                                
Employee stock options and restricted stock units     231,281       -       -       -  
Weighted average diluted shares outstanding     35,085,753       34,436,335       34,827,678       34,337,597  
                                 
Basic net income (loss) per share:                                
Net income (loss) attributable to common stockholders   $ 0.01     $ (0.02 )   $ (0.05 )   $ (0.07 )
                                 
Diluted net income (loss) per share:                                
Net income (loss) attributable to common stockholders   $ 0.01     $ (0.02 )   $ (0.05 )   $ (0.07 )

 

9. INCOME TAXES

 

Income tax expense for the three and nine months ended September 30, 2015 was approximately $244 thousand and $731 thousand, respectively, and reflects an effective tax rate of 41% and 130%, respectively. There was no tax expense in the three or nine months ended September 30, 2014. Tax expense for the three months ended September 30, 2015 primarily relates to the recognition of approximately $180 thousand of a deferred tax liability associated with goodwill that is tax deductible but constitutes an indefinite lived intangible asset for financial reporting purposes, as well as the recognition of approximately $64 thousand of income tax expense in certain jurisdictions where there are no net operating losses available to offset taxable income. Tax expense for the nine months ended September 30, 2015 primarily relates to the recognition of approximately $541 thousand of a deferred tax liability associated with goodwill that is tax deductible but constitutes an indefinite lived intangible asset for financial reporting purposes, as well as the recognition of approximately $190 thousand of income tax expense in certain jurisdictions where there are no net operating losses available to offset taxable income.

 

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The Company accounts for its income taxes in accordance with ASC 740-10. Under ASC 740-10, deferred tax assets and liabilities are recognized for the future tax consequences attributable to differences between the financial statement carrying amounts of existing assets and liabilities and their tax bases. ASC 740-10 also requires that deferred tax assets be reduced by a valuation allowance if it is more likely than not that some or all of the deferred tax assets will not be realized based on all available positive and negative evidence.

 

The Company had approximately $149 million of federal and state net operating loss carryforwards as of December 31, 2014, which results in deferred tax assets of approximately $63 million. The Company has a full valuation allowance against its deferred tax assets as management concluded that it was more likely than not that the Company would not realize the benefit of its deferred tax assets by generating sufficient taxable income in future years. The Company expects to continue to provide a full valuation allowance until, or unless, it can sustain a level of profitability that demonstrates its ability to utilize these assets.

 

Subject to potential Section 382 limitations as discussed below, the federal losses are available to offset future taxable income through 2034 and expire from 2019 through 2034. Since the Company does business in various states and each state has its own rules with respect to the number of years losses may be carried forward, the state net operating loss carryforwards expire from 2015 through 2034. The net operating loss carryforward as of December 31, 2014 includes approximately $16 million related to windfall tax benefits for which a benefit would be recorded to additional paid in capital when realized. Based on operating results for the nine months ended September 30, 2015 and nine month projections, management expects to generate a tax loss in 2015 and no tax benefit has been recorded.

 

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

 

10. BUSINESS CONCENTRATIONS AND CREDIT RISK

 

Financial instruments that subject the Company to concentrations of credit risk consist primarily of cash, cash equivalents and restricted cash. The Company maintains all of its cash, cash equivalents and restricted cash in seven financial institutions, and performs periodic evaluations of the relative credit standing of these institutions. As of September 30, 2015, the Company’s cash, cash equivalents and restricted cash primarily consisted of money market funds and checking accounts.

 

For the three and nine months ended September 30, 2015 and 2014, no individual client accounted for 10% or more of consolidated revenue. As of September 30, 2015, one individual client accounted for more than 10% of our gross accounts receivable balance. As of December 31, 2014, no individual client accounted for more than 10% of our gross accounts receivable balance.

 

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

 

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11. RESTRUCTURING AND OTHER CHARGES

 

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

 

In August 2015, the Company received a one year notice of termination under which the landlord elected to terminate The Deal’s office space lease. As a result, the Company is no longer obligated to fulfill the original full lease term. As such, the Company recorded an adjustment to its 2012 Restructuring reserve totaling approximately $1.2 million, resulting in a restructuring and other charges credit on the Company’s Condensed Consolidated Statements of Operations. Additionally, the Company is entitled to receive a lease termination fee of approximately $583 thousand from the landlord when the office space is vacated.

 

The following table displays the activity of the 2012 Restructuring reserve account during the nine months ended September 30, 2015 and 2014. The remaining balance as of September 30, 2015 relates to the lease for The Deal’s office space which expires in August 2016.

 

    For the Nine Months Ended
September 30,
 
    2015     2014  
Beginning balance   $ 1,384,736     $ 1,281,412  
Adjustment to prior estimate     (1,196,834 )     143,115  
(Payments)/sublease income, net     (87,902 )     13,420  
Ending balance   $ 100,000     $ 1,437,947  

 

12. OTHER LIABILITIES

 

Other liabilities consist of the following:

 

    September 30,
2015
    December 31,
2014
 
Acquisition contingent earn-out   $ 2,557,181     $ 2,602,105  
Deferred rent     1,993,348       2,301,999  
Restructuring charge     -       1,384,736  
Deferred revenue     923,471       619,443  
Other     1,120       1,892  
Total other liabilities   $ 5,475,120     $ 6,910,175  

 

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

 

Special Note Regarding Forward-Looking Statements – all statements contained in this quarterly report on Form 10-Q (the “Report”) that are not descriptions of historical facts are forward-looking statements within the meaning of Section 27A of the Securities Act of 1933, as amended (the “Securities Act”), and Section 21E of the Securities Exchange Act of 1934, as amended (the “Exchange Act”). Forward-looking statements are inherently subject to risks and uncertainties, and actual results could differ materially from those reflected in the forward-looking statements due to a number of factors, which include, but are not limited to, the factors set forth under the heading “Risk Factors” and elsewhere in this Report, and in other documents we file with the Securities and Exchange Commission from time to time, including, without limitation, the Company’s annual report on Form 10-K for the year ended December 31, 2014 (the “2014 Form 10-K”). Certain forward-looking statements may be identified by terms such as “may,” “will,” “should,” “could,” “expects,” “plans,” “intends,” “anticipates,” “believes,” “estimates,” “predicts,” “forecasts,” “potential,” or “continue” or similar terms or the negative of these terms. All statements relating to our plans, strategies and objectives are deemed forward-looking statements. Although we believe that the expectations reflected in the forward-looking statements are reasonable, we cannot guarantee future results, levels of activity, performance or achievements. The forward-looking statements speak only as of the date of the filing of this Report; we have no obligation to update these forward-looking statements, whether as a result of new information, future developments or otherwise.

 

The following discussion and analysis should be read in conjunction with the Company’s unaudited condensed consolidated financial statements and notes thereto.

 

Overview

 

TheStreet, Inc., together with its wholly owned subsidiaries (“TheStreet”, “we”, “us” or the “Company”), is a leading digital financial media company focused on the financial and mergers and acquisitions environment. The Company’s collection of digital services provides users, subscribers and advertisers with a variety of content and tools through a range of online, social media, tablet and mobile channels.  Our mission is to provide investors and advisors with actionable ideas from the world of investing, finance and business, and dealmakers with sophisticated analysis of the mergers and acquisitions environment, in order to break down information barriers, level the playing field and help all individuals and organizations grow their wealth. With a robust suite of digital services, TheStreet offers the tools and insights needed to make informed decisions about earning, investing, saving and spending money. Since its inception in 1996, TheStreet believes it has distinguished itself from other financial media companies with its journalistic excellence, unbiased approach and interactive multimedia coverage of the financial markets, economy, industry trends, investment and financial planning.

 

We report revenue in two categories: subscription services and media. Subscription services is comprised of subscriptions, licenses and fees for access to securities investment information, stock market commentary, rate services, director and officer profiles, relationship capital management services, and transactional information pertaining to the mergers and acquisitions environment. Media is comprised of fees charged for the placement of advertising and sponsorships within TheStreet and our affiliated properties, our subscription and institutional services, and other miscellaneous revenue.

 

Critical Accounting Estimates

 

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

 

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· useful lives of intangible assets,
· useful lives of fixed assets,
· the carrying value of goodwill, intangible assets and marketable securities,
· allowances for doubtful accounts and deferred tax assets,
· accrued expense estimates,
· reserves for estimated tax liabilities,
· estimates in connection with the allocation of the purchase price of Management Diagnostics Limited, The Deal, LLC and certain assets acquired from DealFlow Media, Inc. to the fair value of the assets acquired and liabilities assumed,
· certain estimates and assumptions used in the calculation of the fair value of equity compensation issued to employees,
· accrued restructuring charges, and
· the calculation of a contingent earn-out payment from the acquisition of Management Diagnostics Limited.

 

During the year ended December 31, 2014, we performed our annual impairment test of goodwill and indefinite-lived intangible assets as of September 30. For the year ending December 31, 2015, we have changed the date of our annual impairment test of goodwill and indefinite-lived intangible assets to October 1 in order to allow for a more comprehensive review. The change in the testing date does not represent a material change in the method of applying the accounting policy and such change is not expected to have an effect on the financial statements. We will continue to review for impairment of our goodwill and indefinite-lived intangible assets between annual tests whenever circumstances arise that indicate a possible impairment might exist.

 

In conducting our annual 2014 goodwill impairment test through our independent appraisal firm, we used the market approach for the valuation of our common stock and the income approach for our preferred shares. We also performed an income approach by using the discounted cash flow (“DCF”) method to confirm the reasonableness of the results of the common stock market approach. Based on these approaches, we determined the Company’s business enterprise value (common equity plus preferred equity) exceeded its book value. The fair value of our outstanding Preferred Shares requires significant judgments, including the estimation of the amount of time until a liquidation event occurs as well as an appropriate cash flow discount rate. Further, in assigning a fair value to our Preferred Stock, we also considered that the preferred shareholders are entitled to receive a $55 million liquidation preference upon liquidation or dissolution of the Company or upon any change of control event. Additionally, the holders of the Preferred Shares are entitled to receive dividends and to vote as a single class together with the holders of the Common Stock on an as-converted basis and, provided certain preferred share ownership levels are maintained, are entitled to representation on our board of directors and may unilaterally block issuance of certain classes of capital stock, the purchase or redemption of certain classes of capital stock, including Common Stock (with certain exceptions) and any increases in the per-share amount of dividends payable to the holders of the Common Stock.

 

In conducting our 2014 annual indefinite-lived intangible asset impairment test through our independent appraisal firm, we determined its fair value using the relief-from-royalty method. This analysis calculated the fair value as the present value of the future expenses avoided by owning the indefinite-lived trade name rather than having to license its use. We selected an appropriate royalty rate by reviewing licensing transactions for similar trade names and by considering the profitability associated with its operations. Based upon the analysis, we concluded that the book value of the indefinite-lived trade name was not impaired as of the valuation date.

 

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

 

A summary of our critical accounting policies and estimates can be found in our 2014 Form 10-K.

 

Contingencies

 

Accounting for contingencies, including those matters described in the Commitments and Contingencies section of Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations of the Company’s 2014 Form 10-K, is highly subjective and requires the use of judgments and estimates in assessing their magnitude and likely outcome. In many cases, the outcomes of such matters will be determined by third parties, including governmental or judicial bodies. The provisions made in the consolidated financial statements, as well as the related disclosures, represent management’s best estimate of the then current status of such matters and their potential outcome based on a review of the facts and in consultation with outside legal counsel where deemed appropriate. The Company would record a material loss contingency in its consolidated financial statements if the loss is both probable of occurring and reasonably estimated. The Company regularly reviews contingencies and as new information becomes available may, in the future, adjust its associated liabilities.

 

Results of Operations

 

Comparison of Three Months Ended September 30, 2015 and September 30, 2014

 

Net Revenue

 

    For the Three Months Ended September 30,        
Net revenue:   2015     Percent
of Total
Revenue
    2014     Percent
of Total
Revenue
    Percent
Change
 
Subscription services   $ 13,709,870       82 %   $ 11,715,504       80 %     17 %
Media     2,951,774       18 %     2,903,571       20 %     2 %
Total net revenue   $ 16,661,644       100 %   $ 14,619,075       100 %     14 %

 

Subscription services . Subscription services revenue is comprised of subscriptions, licenses and fees for access to securities investment information, stock market commentary, rate services, director and officer profiles, relationship capital management services, and transactional information pertaining to the mergers and acquisitions environment. Revenue is recognized ratably over the contract period.

 

Subscription services revenue increased by approximately $2.0 million, or 17%, over the periods. The increase was the result of approximately $2.4 million of additional revenue related to the operations of Management Diagnostics Limited (“MDL”), which was acquired on October 31, 2014 and therefore did not contribute any revenue in the prior year period. Excluding MDL, revenue for the three months ended September 30, 2015 decreased by approximately $448 thousand, or 4%, when compared to the three months ended September 30, 2014. The decrease was primarily related to a 4% decrease in the weighted-average number of subscriptions, while the average revenue recognized per subscription remained flat over the periods. The decrease in the weighted-average number of subscriptions resulted from a book promotion that was run in the prior year period. There was no such promotion this year.

 

Media . Media revenue is comprised of fees charged for the placement of advertising and sponsorships within TheStreet and its affiliated properties, our subscription and institutional services, and other miscellaneous revenue.

 

  17  

 

  

Media revenue increased by approximately $48 thousand, or 2%, over the periods. The increase was the result of de minimis changes in advertising, sponsorship and other miscellaneous revenue categories.

 

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Operating Expense

 

    For the Three Months Ended September 30,  
Operating expense:   2015     Percent
of Total
Revenue
    2014     Percent
of Total
Revenue
    Percent
Change
 
Cost of services   $ 8,707,353       52 %   $ 7,483,414       51 %     16 %
Sales and marketing     3,703,463       22 %     3,343,017       23 %     11 %
General and administrative     3,773,790       23 %     3,564,887       24 %     6 %
Depreciation and amortization     1,069,161       6 %     721,536       5 %     48 %
Restructuring and other charges     (1,221,224 )     -7 %     -       -       N/A  
Total operating expense   $ 16,032,543             $ 15,112,854               6 %

 

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

 

Cost of services expense increased by approximately $1.2 million, or 16%, over the periods. The increase was the result of approximately $1.0 million of additional cost related to the operations of MDL, which was acquired on October 31, 2014 and therefore did not contribute any expense in the prior year period. Excluding MDL, cost of services expense for the three months ended September 30, 2015 increased by approximately $174 thousand, or 2%, when compared to the three months ended September 30, 2014. The increase was primarily the result of higher consulting, third-party data, hosting, internet and compensation and related expenses (excluding the impact of headcount of MDL), the aggregate of which increased by approximately $243 thousand.

 

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

 

Sales and marketing expense increased by approximately $360 thousand, or 11%, over the periods. The increase was the result of approximately $302 thousand of additional cost related to the operations of MDL, which was acquired on October 31, 2014 and therefore did not contribute any expense in the prior year period. Excluding MDL, sales and marketing expense for the three months ended September 30, 2015 increased by approximately $58 thousand, or 2%, when compared when compared to the three months ended September 30, 2014. The increase was primarily the result of higher compensation and related expenses totaling approximately $105 thousand due to a 3% increase in average headcount (excluding the impact of headcount of MDL). This cost increase was partially offset by reduced consulting and public relations costs, the aggregate of which decreased by $59 thousand.

 

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

 

General and administrative expense increased by approximately $209 thousand, or 6%, over the periods. The increase was the result of approximately $640 thousand of additional cost related to the operations of MDL, which was acquired on October 31, 2014 and therefore did not contribute any expense in the prior year period. Excluding MDL, general and administrative expense for the three months ended September 30, 2015 decreased by approximately $431 thousand, or 12%, when compared to the three months ended September 30, 2014. The decrease was primarily the result of reduced contributions to TheStreet Foundation and the absence of costs related to the MDL acquisition which were incurred in the prior year period, the aggregate of which decreased by approximately $598 thousand. These cost decreases were partially offset by higher professional fees and compensation and related expenses due to a 6% increase in average headcount (excluding the impact of headcount of MDL), the aggregate of which increased by approximately $137 thousand.

 

  19  

 

  

Depreciation and amortization. Depreciation and amortization expense increased by approximately $348 thousand, or 48%, over the periods. The increase was the result of approximately $351 thousand of additional cost related to the operations of MDL, which was acquired on October 31, 2014 and therefore did not contribute any expense in the prior year period.

 

Restructuring and other charges. In August 2015, the Company received a one year notice of termination under which the landlord elected to terminate The Deal’s office space lease. As a result, the Company is no longer obligated to fulfill the original full lease term. As such, the Company recorded an adjustment to its 2012 Restructuring reserve totaling approximately $1.2 million, resulting in a restructuring and other charges credit on the Company’s Condensed Consolidated Statements of Operations. Additionally, the Company is entitled to receive a lease termination fee of approximately $583 thousand from the landlord when the office space is vacated.

 

Net Interest (Expense) Income

 

    For the Three Months Ended
September 30,
    Percent  
    2015     2014     Change  
Net interest (expense) income   $ (30,891 )   $ 26,850       -215 %

 

The change in net interest (expense) income was the result of higher interest expense related to the accretion of certain accrued expenses that were recorded in connection with prior acquisitions and lower interest income due to reduced marketable security and cash balances.

 

Provision for Income Taxes

 

Income tax expense for the three months ended September 30, 2015 totaled approximately $244 thousand and reflects an effective tax rate of 41%. There was no tax expense for the three months ended September 30, 2014. Income tax expense primarily relates to the recognition of approximately $181 thousand of a deferred tax liability related to goodwill that is amortized for income tax but not amortized for financial reporting purposes, as well as the recognition of approximately $63 thousand of income tax expense related to the operations of MDL in certain jurisdictions where there are no net operating losses available to offset taxable income.

 

Net Income (Loss) Attributable to Common Stockholders

 

Net income attributable to common stockholders for the three months ended September 30, 2015 totaled approximately $258 thousand, or $0.01 per basic and diluted share, compared to net loss attributable to common stockholders totaling approximately $563 thousand, or $0.02 per basic and diluted share for the three months ended September 30, 2014. The positive net income in the current quarter was the result of the reversal of the restructuring charge noted earlier.

 

  20  

 

 

Comparison of Nine Months Ended September 30, 2015 and September 30, 2014

 

Net Revenue

 

    For the Nine Months Ended September 30,        
Net revenue:   2015     Percent
of Total
Revenue
    2014     Percent
of Total
Revenue
    Percent
Change
 
Subscription services   $ 41,790,803       82 %   $ 34,722,784       79 %     20 %
Media     8,897,809       18 %     9,047,623       21 %     -2 %
Total net revenue   $ 50,688,612       100 %   $ 43,770,407       100 %     16 %

 

Subscription services . Subscription services revenue increased by approximately $7.1 million, or 20%, over the periods. The increase was the result of approximately $7.3 million of additional revenue related to the operations of MDL, which was acquired on October 31, 2014 and therefore did not contribute any revenue in the prior year period. Excluding MDL, revenue for the nine months ended September 30, 2015 decreased by approximately $197 thousand, or 1%, when compared to the nine months ended September 30, 2014. The decrease was primarily related to a 1% decrease in the weighted-average number of subscriptions, while the average revenue recognized per subscription remained flat over the periods. The decrease in the weighted-average number of subscriptions resulted from a book promotion that was run in the prior year period. There was no such promotion this year.

 

Media . Media revenue decreased by approximately $150 thousand, or 2%, over the periods. The decrease in advertising revenue was expected since the Company reduced available inventory for advertising as we focus on enhancing user experience on our free sites.

 

Operating Expense

 

    For the Nine Months Ended September 30,        
Operating expense:   2015     Percent
of Total
Revenue
    2014     Percent
of Total
Revenue
    Percent
Change
 
Cost of services   $ 25,617,022       51 %   $ 22,897,998       52 %     12 %
Sales and marketing     12,328,229       24 %     11,202,886       26 %     10 %
General and administrative     11,245,280       22 %     9,821,941       22 %     14 %
Depreciation and amortization     3,184,839       6 %     2,178,908       5 %     46 %
Restructuring and other charges     (1,221,224 )     -2 %     -       -       N/A  
Total operating expense   $ 51,154,146             $ 46,101,733               11 %

 

Cost of services. Cost of services expense increased by approximately $2.7 million, or 12%, over the periods. The increase was the result of approximately $2.9 million of additional cost related to the operations of MDL, which was acquired on October 31, 2014 and therefore did not contribute any expense in the prior year period. Excluding MDL, cost of services expense for the nine months ended September 30, 2015 decreased by approximately $154 thousand, or 1%, when compared to the nine months ended September 30, 2014. The decrease was primarily the result of reduced compensation and related expense due to a 5% decrease in average headcount (excluding the impact of headcount of MDL), as well as reduced recruiting fees, the aggregate of which decreased by approximately $593 thousand. These cost decreases were partially offset by higher third-party data and consulting costs, the aggregate of which increased by approximately $557 thousand.

 

Sales and marketing. Sales and marketing expense increased by approximately $1.1 million, or 10%, over the periods. The increase was the result of approximately $1.1 million of additional cost related to the operations of MDL, which was acquired on October 31, 2014 and therefore did not contribute any expense in the prior year period. Excluding MDL, sales and marketing expense for the nine months ended September 30, 2015 was essentially flat when compared to the nine months ended September 30, 2014. Significant year-over-year changes include lower advertising and promotion, public relations and consulting costs, the aggregate of which decreased by approximately $443 thousand. These cost decreases were partially offset by higher compensation and related expense due to a 4% increase in average headcount (excluding the impact of headcount of MDL) and advertisement serving costs, the aggregate of which increased by approximately $441 thousand.

 

  21  

 

  

General and administrative . General and administrative expense increased by approximately $1.4 million, or 14%, over the periods. The increase was the result of approximately $1.9 million of additional cost related to the operations of MDL, which was acquired on October 31, 2014 and therefore did not contribute any expense in the prior year period. Excluding MDL, general and administrative expense for the nine months ended September 30, 2015 decreased by approximately $444 thousand, or 5%, when compared to the nine months ended September 30, 2014. The decrease was primarily the result of the absence of costs in the current year related to the MDL acquisition which were incurred in the prior year period, reduced contributions to TheStreet Foundation, the absence of costs in the current year related to a conference that the Company hosted in the prior year period and reduced consulting fees, the aggregate of which decreased by approximately $1.0 million. These cost decreases were offset by higher professional, bad debt, tax and compensation and related expense due to a 3% increase in average headcount (excluding the impact of headcount of MDL), the aggregate of which increased by approximately $647 thousand.

 

Depreciation and amortization. Depreciation and amortization expense increased by approximately $1.0 million, or 46%, over the periods. The increase was the result of approximately $826 thousand of additional cost related to the operations of MDL, which was acquired on October 31, 2014 and therefore did not contribute any expense in the prior year period, combined with increased expense resulting from accelerating and fully depreciating the remaining book value of fixed assets acquired from The Deal.

 

Restructuring and other charges. In August 2015, the Company received a one year notice of termination under which the landlord elected to terminate The Deal’s office space lease. As a result, the Company is no longer obligated to fulfill the original full lease term. As such, the Company recorded an adjustment to its 2012 Restructuring reserve totaling approximately $1.2 million, resulting in a restructuring and other charges credit on the Company’s Condensed Consolidated Statements of Operations. Additionally, the Company is entitled to receive a lease termination fee of approximately $583 thousand from the landlord when the office space is vacated.

 

Net Interest (Expense) Income

 

    For the Nine Months Ended
September 30,
    Percent  
    2015     2014     Change  
Net interest (expense) income   $ (97,296 )   $ 96,785       -201 %

 

The change in net interest (expense) income was the result of higher interest expense related to the accretion of certain accrued expenses that were recorded in connection with prior acquisitions and lower interest income due to reduced marketable security and cash balances.

 

Provision for Income Taxes

 

Income tax expense for the nine months ended September 30, 2015 totaled approximately $731 thousand and reflects an effective tax rate of 130%. There was no tax expense for the nine months ended September 30, 2014. Income tax expense primarily relates to the recognition of approximately $541 thousand of a deferred tax liability related to goodwill that is amortized for income tax but not amortized for financial reporting purposes, as well as the recognition of approximately $190 thousand of income tax expense related to the operations of MDL in certain jurisdictions where there are no net operating losses available to offset taxable income.

 

  22  

 

  

Net Loss Attributable to Common Stockholders

 

Net loss attributable to common stockholders for the nine months ended September 30, 2015 totaled approximately $1.6 million, or $0.05 per basic and diluted share, compared to net loss attributable to common stockholders totaling approximately $2.5 million, or $0.07 per basic and diluted share for the nine months ended September 30, 2014.

 

Liquidity and Capital Resources

 

Our current assets as of September 30, 2015 consisted primarily of cash and cash equivalents and accounts receivable. Our current liabilities as of September 30, 2015 consisted primarily of deferred revenue, accrued expenses and accounts payable. As of September 30, 2015, our current assets totaled approximately $34.9 million, 6% greater than our current liabilities.

 

We generally have invested in money market funds and other short-term, investment grade instruments that are highly liquid and of high quality, with the intent that such funds are available for sale for acquisition and operating purposes. As of September 30, 2015, our cash, cash equivalents, marketable securities and restricted cash totaled approximately $30.3 million, representing 29% of total assets. Our cash, cash equivalents and restricted cash primarily consisted of money market funds and checking accounts. Our marketable securities consisted of two municipal auction rate securities issued by the District of Columbia with a par value of approximately $1.9 million and a fair value of approximately $1.6 million that mature in the year 2038. Our total cash-related position is as follows:

 

    September 30,
2015
    December 31,
2014
 
Cash and cash equivalents   $ 27,541,808     $ 32,459,009  
Current and noncurrent marketable securities     1,580,000       3,569,240  
Current and noncurrent restricted cash     1,161,250       1,301,000  
Total cash and cash equivalents, current and noncurrent marketable securities and current and noncurrent restricted cash   $ 30,283,058     $ 37,329,249  

 

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

 

    For the Nine Months Ended
September 30,
 
    2015     2014  
Net cash (used in) provided by operating activities   $ (1,499,456 )   $ 1,625,346  
Net cash (used in) provided by investing activities     (632,216 )     4,075,408  
Net cash used in financing activities     (2,823,665 )     (2,868,544 )
Effect of exchange rate changes on cash and cash equivalents     38,136       -  
Net (decrease) increase in cash and cash equivalents   $ (4,917,201 )   $ 2,832,210  

 

Net cash used in operating activities for the nine-month period ended September 30, 2015 totaled approximately $1.5 million, as compared to net cash provided by operating activities totaling approximately $1.6 million for the nine-month period ended September 30, 2014. The reduction in net cash provided by operating activities was primarily the result of changes in the balances of deferred revenue, accrued expenses and other liabilities over the periods. These declines were partially offset by increased noncash expenses and the reduction in the Company’s net loss over the periods.

 

  23  

 

  

Net cash used in investing activities for the nine-month period ended September 30, 2015 totaled approximately $632 thousand, as compared to net cash provided by investing activities totaling approximately $4.1 million for the nine-month period ended September 30, 2014. The reduction in net cash provided by investing activities was primarily the result of fewer maturities of marketable securities as well as increased capital expenditures.

 

Net cash used in financing activities for the nine-month period ended September 30, 2015 totaled approximately $2.8 million, essentially flat when compared to net cash used in financing activities for the nine-month period ended September 30, 2014.

 

We have a total of approximately $1.2 million of cash that serves as collateral for outstanding letters of credit, which cash is classified as restricted. The letters of credit serve as security deposits for office space in New York City.

 

We believe that our current cash and cash equivalents will be sufficient to meet our anticipated cash needs for at least the next 12 months. We are committed to cash expenditures in an aggregate amount of approximately $5.1 million through September 30, 2016, primarily related to operating leases and minimum payments due under an employment agreement.

 

As of December 31, 2014, we had approximately $149 million of federal and state net operating loss carryforwards, which results in deferred tax assets of approximately $63 million. Based on operating results for the nine months ended September 30, 2015 and three month projections, management expects to generate a tax loss in 2015 and no tax benefit has been recorded. We maintain a full valuation allowance against our deferred tax assets as management concluded that it is more likely than not that we will not realize the benefit of our deferred tax assets by generating sufficient taxable income in future years. We expect to continue to maintain a full valuation allowance until, or unless, we can sustain a level of profitability that demonstrates our ability to utilize these assets.

 

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

 

Treasury Stock

 

Pursuant to the terms of the Company’s 2007 Performance Incentive Plan, and certain procedures adopted by the Compensation Committee of our Board of Directors, in connection with the exercise of stock options by certain of our employees, and the issuance of shares of Common Stock in settlement of vested restricted stock units, we may withhold shares in lieu of payment of the exercise price and/or the minimum amount of applicable withholding taxes then due. Through September 30, 2015, we have withheld an aggregate of 1,579,705 shares which have been recorded as treasury stock. In addition, we received an aggregate of 208,270 shares as partial settlement of the working capital and debt adjustment from the acquisition of Corsis Technology Group II LLC and 3,338 shares as partial settlement of the working capital adjustment from the acquisition of Kikucall, Inc. These shares have also been recorded as treasury stock.

 

Item 3. Quantitative and Qualitative Disclosures About Market Risk.

 

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

 

  24  

 

 

We maintain all of our cash, cash equivalents and restricted cash in seven financial institutions, and we perform periodic evaluations of the relative credit standing of these institutions. However, no assurances can be given that the third party institutions will retain acceptable credit ratings or investment practices.

 

Following our acquisition of MDL, we expect that fluctuations in foreign currency exchange rates will have an effect on our operating results.

 

Item 4. Controls and Procedures.

 

Evaluation of Disclosure Controls and Procedures: The Company carried out an evaluation, as required by Rule 13a-15(b) under the Exchange Act, under the supervision and with the participation of the Company’s management, including the Company’s Chief Executive Officer and Interim Chief Financial Officer, of the effectiveness of the design and operation of the Company’s disclosure controls and procedures, as defined in Rule 13a-15(e) of the Exchange Act, as of the end of the period covered by this report (the “Evaluation Date”). Based on such evaluation, such officers have concluded that, as of the Evaluation Date, the Company’s disclosure controls and procedures were effective to provide reasonable assurance that information required to be disclosed by the Company in reports that it files or submits under the Exchange Act is recorded, processed, summarized and reported within the time periods specified in the Securities and Exchange Commission’s rules and forms and to provide reasonable assurance that such information is accumulated and communicated to the Company’s management, including the Company’s Chief Executive Officer and Interim Chief Financial Officer, as appropriate to allow timely decisions regarding required disclosure.

 

Changes in Internal Control Over Financial Reporting: In October of 2014, the Company completed the acquisition of MDL. See Note 2 to the Condensed Consolidated Financial Statements (Acquisition) for additional information. As permitted by applicable guidelines established by the SEC, our management excluded the MDL operations from its assessment of internal control over financial reporting as of September 30, 2015.

 

The Company’s management, including the Company’s Chief Executive Officer and Interim Chief Financial Officer, has determined that during the period covered by this report, there were no changes in the Company’s internal control over financial reporting that have materially affected, or are reasonably likely to materially affect, these internal controls over financial reporting.

 

PART II - OTHER INFORMATION

 

Item 1. Legal Proceedings.

 

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

 

Item 1A. Risk Factors.

 

In addition to the other information set forth in this report, you should carefully consider the information set forth in Part I, Item 1A. “Risk Factors” in our Form 10-K for the year ended December 31, 2014, which we filed with the Securities and Exchange Commission on March 5, 2015.

 

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

 

Not applicable.

 

Item 3. Defaults Upon Senior Securities.

 

Not applicable.

 

  25  

 

 

Item 4. Mine Safety Disclosures.

 

Not applicable.

 

Item 5. Other Information.

 

On November 2, the Company entered into a separation agreement with Mr. Ferrara, its former Chief Financial Officer, whereby the Company agreed to pay Mr. Ferrara the quarterly cash incentive bonus he would have received for the third quarter of fiscal year 2015 had he remained employed until the date such quarterly bonuses are paid to employees in exchange for Mr. Ferrara providing the Company with a general release of claims.

 

Item 6. Exhibits.

 

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

 

Exhibit       Incorporated by Reference
Number   Description   Form   File No.   Exhibit   Filing Date
10.1   Separation Agreement and General Release dated as of September 22 between the Company and Vanessa J. Soman.                
                     
10.2   Separation Agreement and General Release dated as of November 2 between the Company and John Ferrara.                
                     
31.1   Certification of Chief Executive Officer pursuant to Exchange Act Rules 13a-14(a) and 15d-14(a), as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002                
                     
31.2   Certification of Interim Chief Financial Officer pursuant to Exchange Act Rules 13a-14(a) and 15d-14(a), as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002                
                     
32.1   Certifications of Chief Executive Officer pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002                
                     
32.2   Certifications of Interim Chief Financial Officer pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002                
                     
101.INS*   XBRL Instance Document                
                     
101.SCH*   XBRL Taxonomy Extension Schema Document                
                     
101.CAL*   XBRL Taxonomy Extension Calculation Document                
                     
101.DEF*   XBRL Taxonomy Extension Definitions Document                
                     
101.LAB*   XBRL Taxonomy Extension Labels Document                
                     
101.PRE*   XBRL Taxonomy Extension Presentation Document                

 

 

 

* Pursuant to Rule 406T of Regulation S-T, this interactive data file is deemed not filed or part of a registration statement or prospectus for purposes of Sections 11 or 12 of the Securities Act of 1933, is deemed not filed for purposes of Section 18 of the Securities Exchange Act of 1934, and otherwise is not subject to liability under these sections.

 

  26  

 

   

SIGNATURES

 

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

 

THESTREET, INC.  
       
Date: November 5, 2015 By: /s/ Elisabeth DeMarse  
  Name: Elisabeth DeMarse  
  Title: Chief Executive Officer (principal executive officer)  
       
       
Date: November 5, 2015 By: /s/ Richard Broitman  
  Name: Richard Broitman  
  Title: Chief Accounting Officer and Interim Chief Financial Officer  

 

  27  

 

  

EXHIBIT INDEX

 

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

 

 

Exhibit       Incorporated by Reference
Number   Description   Form   File No.   Exhibit   Filing Date
10.1   Separation Agreement and General Release dated as of September 22 between the Company and Vanessa J. Soman.                
                     
10.2   Separation Agreement and General Release dated as of November 2 between the Company and John Ferrara.                
                     
31.1   Certification of Chief Executive Officer pursuant to Exchange Act Rules 13a-14(a) and 15d-14(a), as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002                
                     
31.2   Certification of Interim Chief Financial Officer pursuant to Exchange Act Rules 13a-14(a) and 15d-14(a), as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002                
                     
32.1   Certifications of Chief Executive Officer pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002                
                     
32.2   Certifications of Interim Chief Financial Officer pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002                
                     
101.INS*   XBRL Instance Document                
                     
101.SCH*   XBRL Taxonomy Extension Schema Document                
                     
101.CAL*   XBRL Taxonomy Extension Calculation Document                
                     
101.DEF*   XBRL Taxonomy Extension Definitions Document                
                     
101.LAB*   XBRL Taxonomy Extension Labels Document                
                     
101.PRE*   XBRL Taxonomy Extension Presentation Document                

 

 

 

* Pursuant to Rule 406T of Regulation S-T, this interactive data file is deemed not filed or part of a registration statement or prospectus for purposes of Sections 11 or 12 of the Securities Act of 1933, is deemed not filed for purposes of Section 18 of the Securities Exchange Act of 1934, and otherwise is not subject to liability under these sections.

 

 

  

 

Exhibit 10.1

 

September 21, 2015

 

Vanessa Soman

25 Gail Drive

New Rochelle, NY 10805

 

Dear Vanessa,

 

This letter agreement (the "Agreement") sets forth the terms and conditions of your separation from employment with TheStreet, Inc. (together with its subsidiaries and affiliates, the "Company") and constitutes an agreement between the Company and you regarding such separation.

 

1. Unless the Company terminates your employment earlier pursuant to Paragraph 2 of this Agreement, the Company will continue to employ you on the terms and subject to the conditions of this Agreement for a term that commences on the date of this Agreement and ends on December 31, 2015 (the "Transition Period").

 

2. Unless the Company terminates your employment earlier pursuant to this Paragraph 2 of this Agreement, your employment with the Company will terminate effective December 31, 2015. The Company has the right to terminate your employment at any time and for any reason, including without limitation, at any time and for any reason before December 31, 2015, subject to the terms of this Agreement. The period during which you are employed by the Company following the Effective Date of this Agreement shall be referred to as the "Employment Period."

 

3. You agree that during the Employment Period, you will continue to: (a) carry out all duties and responsibilities of your position with the Company as General Counsel and Corporate Secretary; (b) cooperate with the full transition of your duties and responsibilities; (c) devote all of your skill, knowledge, commercial efforts and working time to the conscientious and faithful performance of your duties and responsibilities for the Company; (d) perform such other duties and responsibilities reasonably specified by management of the Company; (e) adhere to the Company's procedures and policies in place from time-to-time; and (f) have a complete duty of loyalty to the Company. You will retain your title of General Counsel and Corporate Secretary during the Employment Period.

 

4. During the Employment Period, you (a) will be paid your regular base salary, less applicable withholdings and deductions according to the Company's regular payroll practices; and (b) will be eligible to continue to participate in the Company's medical, dental, vision and similar benefit plans maintained by the Company on the same terms as you currently participate in such plans.

 

 

 

  

5. You acknowledge and agree that, pursuant to the Agreement for Grant of Incentive Stock Option Pursuant to the Company's 2007 Performance Incentive Plan between you and the Company dated August 12, 2013 (the "Option Agreement"), the Company granted you an option to purchase 10,000 shares of the Company's Common Stock (the "Option") in accordance with the Company's 2007 Performance Incentive Plan (the "Plan"). Subject to, and in consideration for, your execution of this Agreement (without revocation), in the event your employment with the Company is terminated prior to December 31, 2015, the Company will accelerate the vesting of the number of shares that equal the number of shares that would have vested had your employment with the Company terminated on December 31, 2015 (the "Vested Shares") such that the Vested Shares will be vested and exercisable upon termination of your employment with the Company. For the avoidance of doubt, under no circumstances will the amount of the Vested Shares exceed 625 shares. Other than the terms of this Paragraph 5 of this Agreement, the Option and any shares acquired pursuant to the exercise of the Option will remain subject to the terms and conditions of the Option Agreement and the Plan, including the termination provisions set forth therein. Further, you acknowledge and agree that, other than the Option described in this Paragraph, you do not have any right, title, claim or interest in or to any of the Company's securities, including, without limitation, any shares of the Company's capital stock or any options or other rights to purchase or receive shares of Company capital stock.

 

6. Any entitlement to severance benefits resulting from the termination of your employment on or before December 31 , 2015, will be controlled by the terms of the Severance Agreement dated January 26, 2015 between you and the Company attached hereto as Exhibit B.

 

7. In consideration of the payments and benefits provided to you under this Agreement, to which you would not otherwise be entitled, you, on your own behalf and on behalf of each of your heirs, executors, administrators, representatives, agents, successors and assigns (collectively, the "Soman Parties") hereby irrevocably and unconditionally release and forever discharge the Company and its subsidiaries and affiliates and each of their respective past and present officers, employees, directors, members, managers, partners, shareholders, representatives and agents (collectively, the "Company Parties"), from any and all claims, actions, causes of action, rights, judgments, fees and costs (including attorneys' fees), obligations, damages, demands, accountings or liabilities of whatever kind or character (collectively, "Claims"), including, without limitation, any Claims based upon contract, tort, or under any federal, state, local or foreign law, including but not limited to, any Claims under the Age Discrimination in Employment Act, as amended, the Older Worker Benefit Protection Act, as amended, Title VII of the Civil Rights Act of 1964, as amended, 42 U.S.C. Section 1981, as amended, the Americans with Disabilities Act, as amended, the Family and Medical Leave Act, as amended, the Employee Retirement Income Security Act of 1974, as amended, the Civil Rights Act of 1991, as amended, the Fair Labor Standards Act, as amended, the Equal Pay Act, as amended, the Occupational Safety and Health Act, as amended, the Consolidated Omnibus Budget Reconciliation Act, as amended (COBRA), the New York State Human Rights Law, as amended, New York Labor Law, as amended, New York City Human Rights Law, as amended, and the Administrative Code of the City of New York, and/or any other federal, state or local statute, ordinance, regulation, constitutional provision or law, or the common law of the United States or of any state, that the Soman Parties may have, or in the future may possess, that occurred, existed or arose on or prior to your execution of this Agreement; provided, however, that you do not release, discharge or waive any rights to payments and benefits provided under this Agreement. Nothing in this Release shall affect your rights to any vested benefits under any Company pension plan, if any, or to enforce your rights under this Agreement. Additionally, you covenant that none of the Soman Parties shall bring any action or proceeding against any of the Company Parties related to any Claim released hereby. Notwithstanding the foregoing, this Agreement (i) does not extend to those rights which as a matter of law cannot be waived and (ii) does not limit any right any of the Soman Parties may have to file a charge or complaint with any state or federal agency or to participate or cooperate in such a matter (but you do pursuant to this Agreement waive the right of any of the Soman Parties to obtain any monetary damages resulting from any action or proceeding that may be brought by any state or federal agency). You represent and warrant that you are the sole and lawful owner of all rights, title and interest in and to every Claim and other matters that are being released hereby and that no other party has received any assignment or other right of substitution or subrogation to any such Claim or matter. You also represent that you have the full power and authority to execute this Agreement on behalf of the Soman Parties.

 

 

 

  

8. In consideration of the payments and benefits provided to you pursuant to this Agreement you agree to return to the Company on the date of your termination of employment, all Company property in your possession, including without limitation all copies of all documents, in any media (including without limitation in printed form or stored magnetically or electronically) that contain Company Information (as defined below).

 

9. The term "Company Information" as used in this Agreement means any and all confidential or proprietary information of the Company or the Company Parties and any and all confidential or proprietary information of any third party disclosed in confidence to the Company or the Company Parties, including without limitation, technical, business or financial information or trade secrets, the use or disclosure of which might reasonably be construed to be contrary to the interests of the Company and/or the Company Parties. "Company Information" shall not include such information as has been previously disclosed to the public by the Company or is disclosed by you as required by law. You acknowledge and agree that all Company Information is, as between you and the Company, the property of the Company and that you have no ownership rights in or license to use any Company Information. You represent that you have at all times maintained all Company Information in strict confidence and you have not disclosed or in any way made use of any Company Information (except on behalf of the Company in connection with your employment with the Company). You further warrant and agree that (i) you will keep all Company Information strictly confidential at all times after the termination of your employment with the Company, and (ii) you will not at any time make use of any Company Information on your own behalf, or on behalf of any third party. You represent that you will immediately return to the Company upon the termination of your employment all Company property without limitation, including your Corporate American Express Card, if any, and all copies of all documents, in any media (including without limitation in printed form or stored magnetically or electronically) that contain Company Information. After returning to the Company all such Company Information, you shall delete and destroy any copies of documents in any media that contain Company Information, within your possession or control. Without limiting the foregoing, you shall be deemed to be in possession or control of property or documents in any media if you are the owner or lessee, or the lawful designee of such owner or lessee, of any real property on which such Company property (including documents) is stored or if you are the accountholder, or the lawful designee of the accountholder, of an account with any service in which such Company property (including documents) is stored (including without limitation any online "storage locker" service or webmail, telephone or other communications service). After your termination from employment, you will remain responsible for any expenses or items billed to any Company credit card, if any. Upon your termination for employment, you shall promptly submit to the Company a reimbursement request, with appropriate supporting documentation, for any outstanding expenses that may be reimbursable in accordance with the Company's standard policies. You acknowledge that you have been instructed that after the termination of your employment you are not to utilize or access, and you agree not utilize or access, any computer or information systems owned or operated by or for the Company, without receiving the prior express written permission of the Company's Chief Financial Officer. In addition, you agree after the termination of your employment not to contact any vendors or customers of the Company purporting to act on behalf of the Company, without receiving the prior express written permission of the Company's Chief Financial Officer. You agree that after the termination of your employment, if you are contacted by any vendors or customers of the Company on matters related to the Company, you shall inform such party that you no longer are employed by the Company and shall direct them to contact the Company's Chief Financial Officer.

 

 

 

  

10. It is understood that you will have up to forty-five (45) days from the date you receive this Agreement within which to consider its terms (although you may sign it at any time during this forty-five (45) day period). During this time, you are advised to consult an attorney. Your signature indicates that you have had the opportunity to benefit from that consultation period and are entering this Agreement, at the time of your execution hereof, freely and voluntarily. You may revoke your signature on this Agreement at any time within seven (7) days of signing by providing the Company with written notice of your revocation in which case this Agreement shall be null and void. The terms of this Agreement shall not become effective or enforceable until the eighth (8th) day following the date you sign it (such date to be the "Effective Date"), provided that you have not given a timely notice of the revocation of your signature as provided above. If the Company does not receive your signature within forty-five (45) days from the date you receive this Agreement or if you give timely notice of the revocation of your signature as provided above, the offer contained in this letter shall be deemed immediately revoked. As provided for in the Older Workers Benefit Protection Act in connection with a group termination, Exhibit A contains a listing of the ages and job descriptions for employees of the Company.

 

 

 

   

11. You agree not to make or publish any disparaging statements about the Company, Company Parties, or their respective businesses, past or present employees, directors, officers, management, products or services, and not to cause or suffer others to do so on your behalf. Notwithstanding the foregoing, nothing contained in this Agreement is intended to impede, prohibit or restrict you from initiating communications directly with, or responding to any inquiry from, or providing testimony before, the Securities Exchange Commission or any other state or federal regulatory authority, regarding this Agreement or its underlying facts or circumstances, or regarding any violation of federal securities law or other law, rule, or regulation.

 

12. You agree to direct all requests for employment references or inquiries concerning your employment with and separation from the Company to Ronni Diamant, the Company's Vice President, Human Resources. You further understand and acknowledge that, consistent with the Company's policy, the Company will only provide prospective employers with your dates of employment, last position held and last salary.

 

13. You agree that the pay and benefits that you will receive as a result of signing this Agreement, in support of all of the provisions contained herein, will constitute full payment, satisfaction, discharge, compromise and release of and from all matters for which you (on behalf of each of the Soman Parties) have released the Company and the Company Parties herein. The Company's offer to you is made without prejudice to the Company and the Company Parties and is not intended to, and shall not be construed as, any admission of liability by the Company or the Company Parties to you, or of any improper conduct on the part of the Company or the Company Parties, all of which the Company and the Company Parties specifically deny.

 

14. In the event that any one or more of the provisions of this Agreement shall be held to be invalid, illegal or unenforceable, the validity, legality and enforceability of the remainder of the Agreement shall not in any way be affected or impaired thereby and any such provision or provisions shall be enforced to the fullest extent permitted by law.

 

15. This Agreement along with the Severance Agreement, attached hereto as Exhibit B, and the Option Agreement constitute a complete statement of all the agreements between us, and supersedes all prior oral or written agreements and understandings between us, concerning the subject matter hereof. Notwithstanding the foregoing, this Agreement does not amend or modify any obligations you may have (including without limitation any covenants regarding noncompetition, nonsolicitation, nondisparagement and confidentiality) under any written agreement signed by both you and the Company or any Company policy with respect to such matters. This Agreement may not be altered or modified other than in a writing signed by you and the Company. You may not assign any of your rights or obligations under this Agreement without obtaining the express written consent of the Company. Subject to the foregoing, this Agreement shall be binding upon and inure to the benefit of each party's respective successors and permitted assigns. This Agreement shall be governed by and construed in accordance with the internal laws of the State of New York applicable to contracts to be performed wholly within the state and without regard to its conflict of laws provisions. You hereby agree that the federal and state courts situated in New York County, New York will have jurisdiction over any dispute relating to this Agreement and you hereby irrevocably consent to the in personam jurisdiction of such courts; irrevocably waive any objection to the venue of such courts or the convenience of such forum with respect to any such dispute; and agree that you shall not bring any action or proceeding related to this Agreement in any court other than a court situated in New York County, New York. You also agree that the Company, by contrast, shall have the right to bring suit against you before any court or body with jurisdiction, in connection with any claim against you (including without limitation any claim seeking to enjoin the use of Company Information or to obtain redress for such use). You agree that you are not relying on any representations, whether written or oral, not set forth in this Agreement, in determining to execute this Agreement. The terms of this Agreement shall not be interpreted in favor of or against any party on account of the draftsperson, but shall be interpreted solely for the purpose of giving effect to the intent of the parties.

 

 

 

  

16. You understand and confirm that the agreements, representations, covenants and acknowledgements made by you in this Agreement will survive the execution of this Agreement and the pay and benefits provided for in this Agreement. You further understand and confirm that if you are found to have made a material misstatement in, or commit a material breach of, any term, condition, covenant, representation or acknowledgement in this Agreement, pay and benefits to be provided under this agreement will cease and you will be obligated to return to the Company any pay and benefits already paid to you by the Company. You will further be liable for any damages suffered or incurred by the Company by reason of such misstatement or breach. In addition, you will be required to return the pay and benefits to the Company if this Agreement is determined to be invalid or unenforceable, or if you claim in any forum that the Agreement is invalid or unenforceable. In the event of any actual or threatened breach by you of any term or provision of this Agreement, the Company will be entitled to recover from you all costs and expenses, including, without limitation, court costs and reasonable attorneys' fees, incurred in enforcing this Agreement.

 

17. This Agreement may be signed in counterparts, each of which shall be deemed an original, but all of which shall constitute one and the same instrument. Signatures delivered via facsimile or electronically in .pdf format shall be deemed originals for all purposes.

 

 

 

  

If the above sets forth our agreement as you understand it and consent to it, and you agree to be legally bound hereby, please so signify by executing and dating the enclosed copy of this Agreement and returning it to Ronni Diamant, Vice President, Human Resources.

 

Very truly yours,
TheStreet, Inc.

 

By:    
  John Ferrara  
  Chief Financial Officer  

 

Agreed to and Accepted:

  

   
Vanessa Soman  

 

Dated:    

 

 

 

 

 

 

Exhibit 10.2

 

November 2, 2015

 

John Ferrara

92 White Oak Shade Rd.

New Canaan, CT 06840

 

Dear John,

 

This letter agreement (the “Agreement”) sets forth the full and complete agreement concerning your separation from employment with TheStreet, Inc. (together with its subsidiaries and affiliates, the “Company”).

 

1.   Your employment with the Company, which commenced on February 25, 2013 terminated effective as of the close of business on October 15, 2015. Your current base salary of $220,000 per annum was continued in accordance with the Company’s regular payroll practices, through October 15, 2015. All applicable amounts were already withheld from you continued salary through your termination date.

 

2.   In consideration of your acceptance of this Agreement, including the Release set forth in paragraph 3 hereof, and subject to your meeting in full your obligations under this Agreement, the Company will pay you $18,816.50, which represents the amount you would have received as your third quarter bonus had you remained a fulltime employee through the bonus payment date (the “Bonus Pay”). In addition, the Company has agreed to allow you to keep your company issued laptop and iPad. The Company shall make all applicable withholdings and deductions from payments to you pursuant to paragraph 2 hereof. Such Bonus Pay will be payable within ten business days of the Effective Date (as defined in section 5 of this Agreement.) The Company will report all Bonus Pay to all appropriate taxing authorities on an Internal Revenue Service Form W-2. You hereby acknowledge and agree that, other than as specifically set forth in this Agreement, you are not due any compensation from the Company, including compensation for unpaid salary, bonus, commission, profit share, severance, accrued or unused vacation or sick time, or in connection with the exercise of stock options or unvested equity grants. You will not continue to earn vacation or other paid time off after October 15, 2015. As a condition to receiving the Bonus Pay, you must return to the Company, by no later than October 31, 2015 all Company property (other than the laptop and iPad) in your possession, including without limitation all copies of all documents, in any media (including without limitation in printed form or stored magnetically or electronically) that contain Company Information (as defined below).

 

 

 

  

3.   In consideration of the payments and benefits provided to you under this Agreement, to which you would not otherwise be entitled, you, on your own behalf and on behalf of each of your heirs, executors, administrators, representatives, agents, successors and assigns (collectively, the “Ferrara Parties”) hereby irrevocably and unconditionally release and forever discharge the Company and its subsidiaries and affiliates and each of their respective past and present officers, employees, directors, members, managers, partners, shareholders, representatives and agents (collectively, the “Company Parties”), from any and all claims, actions, causes of action, rights, judgments, fees and costs (including attorneys’ fees), obligations, damages, demands, accountings or liabilities of whatever kind or character (collectively, “Claims”), including, without limitation, any Claims based upon contract, tort, or under any federal, state, local or foreign law, including but not limited to, any Claims under the Age Discrimination in Employment Act, as amended, the Older Worker Benefit Protection Act, as amended, Title VII of the Civil Rights Act of 1964, as amended, 42 U.S.C. Section 1981, as amended, the Americans with Disabilities Act, as amended, the Family and Medical Leave Act, as amended, the Employee Retirement Income Security Act of 1974, as amended, the Civil Rights Act of 1991, as amended, the Fair Labor Standards Act, as amended, the Equal Pay Act, as amended, the Occupational Safety and Health Act, as amended, the Consolidated Omnibus Budget Reconciliation Act, as amended (COBRA), the New York State Human Rights Law, as amended, New York Labor Law, as amended, New York City Human Rights Law, as amended, and the Administrative Code of the City of New York, and/or any other federal, state or local statute, ordinance, regulation, constitutional provision or law, or the common law of the United States or of any state, that the Ferrara Parties may have, or in the future may possess, that occurred, existed or arose on or prior to your execution of this Agreement; provided, however, that you do not release, discharge or waive any rights to payments and benefits provided under this Agreement. Nothing in this Release shall affect your rights to any vested benefits under any Company pension plan, if any, or to enforce your rights under this Agreement. Additionally, you covenant that none of the Ferrara Parties shall bring any action or proceeding against any of the Company Parties related to any Claim released hereby. Notwithstanding the foregoing, this Agreement (i) does not extend to those rights which as a matter of law cannot be waived and (ii) does not limit any right any of the Ferrara Parties may have to file a charge or complaint with any state or federal agency or to participate or cooperate in such a matter (but you do pursuant to this Agreement waive the right of any of the Ferrara Parties to obtain any monetary damages resulting from any action or proceeding that may be brought by any state or federal agency). You represent and warrant that you are the sole and lawful owner of all rights, title and interest in and to every Claim and other matters that are being released hereby and that no other party has received any assignment or other right of substitution or subrogation to any such Claim or matter. You also represent that you have the full power and authority to execute this Agreement on behalf of the Ferrara Parties.

 

 

 

  

4.   The term "Company Information" as used in this Agreement means any and all confidential or proprietary information of the Company or the Company Parties and any and all confidential or proprietary information of any third party disclosed in confidence to the Company or the Company Parties, including without limitation, technical, business or financial information or trade secrets, the use or disclosure of which might reasonably be construed to be contrary to the interests of the Company and/or the Company Parties. "Company Information" shall not include such information as has been previously disclosed to the public by the Company or is disclosed by you as required by law. You acknowledge and agree that all Company Information is, as between you and the Company, the property of the Company and that you have no ownership rights in or license to use any Company Information. You represent that you have at all times maintained all Company Information in strict confidence and you have not disclosed or in any way made use of any Company Information (except on behalf of the Company in connection with your employment with the Company). You further warrant and agree that (i) you will keep all Company Information strictly confidential at all times after the termination of your employment with the Company, and (ii) you will not at any time make use of any Company Information on your own behalf, or on behalf of any third party. You represent that you have returned or will immediately return to the Company all Company property without limitation, including your Corporate American Express Card, if any, and all copies of all documents, in any media (including without limitation in printed form or stored magnetically or electronically) that contain Company Information. Return of all such property is a precondition to payment of the Bonus Pay set out in paragraph 2 above. After returning to the Company all such Company Information, you shall delete and destroy any copies of documents in any media that contain Company Information, within your possession or control. Without limiting the foregoing, you shall be deemed to be in possession or control of property or documents in any media if you are the owner or lessee, or the lawful designee of such owner or lessee, of any real property on which such Company property (including documents) is stored or if you are the accountholder, or the lawful designee of the accountholder, of an account with any service in which such Company property (including documents) is stored (including without limitation any online “storage locker” service or webmail, telephone or other communications service). You will remain responsible for any expenses or items billed to any Company credit card, if any. You shall promptly submit to the Company a reimbursement request, with appropriate supporting documentation, for any outstanding expenses that may be reimbursable in accordance with the Company’s standard policies. You acknowledge that you have been instructed not to utilize or access, and you agree not utilize or access, any computer or information systems owned or operated by or for the Company, without receiving the prior express written permission of the Company’s Chief Executive Officer. In addition, you agree not to contact any vendors or customers of the Company purporting to act on behalf of the Company, without receiving the prior express written permission of the Company’s Chief Executive Officer. You agree that if you are contacted by any vendors or customers of the Company on matters related to the Company, you shall inform such party that you no longer are employed by the Company and shall direct them to contact the Company’s Chief Financial Officer.

 

 

 

  

5.   It is understood that you will have up to twenty-one (21) days from the date you receive this Agreement within which to consider its terms (although you may sign it at any time during this twenty-one (21) day period). During this time, you are advised to consult an attorney. Your signature indicates that you have had the opportunity to benefit from that consultation period and are entering this Agreement, at the time of your execution hereof, freely and voluntarily. You may revoke your signature on this Agreement at any time within seven (7) days of signing by providing the Company with written notice of your revocation in which case this Agreement shall be null and void. The terms of this Agreement shall not become effective or enforceable until the eighth (8th) day following the date you sign it (such date to be the “Effective Date”), provided that you have not given a timely notice of the revocation of your signature as provided above. The Company will not make any Bonus Payments to you prior to the Effective Date. If the Company does not receive your signature within twenty-one (21) days from the date you receive this Agreement or if you give timely notice of the revocation of your signature as provided above, the offer contained in this letter shall be deemed immediately revoked.

 

6.   You agree to keep the terms of this Agreement confidential except for discussions with your spouse and except as may be required to enforce the Agreement or to obtain legal or tax advice; provided that you shall instruct your spouse and any legal or tax advisor to maintain the terms of this Agreement in strict confidence. You agree not to make or publish any disparaging statements about the Company, Company Parties, or their respective businesses, past or present employees, directors, officers, management, products or services, and not to cause or suffer others to do so on your behalf. You agree to direct all requests for employment references or inquiries concerning your employment with and separation from the Company to Ronni Diamant, the Company's Vice President, Human Resources. You further understand and acknowledge that, consistent with the Company's policy, the Company will only provide prospective employers with your dates of employment, last position held and last salary.

 

7.   You agree that the Bonus Pay that you will receive as a result of signing this Agreement, in support of all of the provisions contained herein, will constitute full payment, satisfaction, discharge, compromise and release of and from all matters for which you (on behalf of each of the Ferrara Parties) have released the Company and the Company Parties herein. The Company's offer to you is made without prejudice to the Company and the Company Parties and is not intended to, and shall not be construed as, any admission of liability by the Company or the Company Parties to you, or of any improper conduct on the part of the Company or the Company Parties, all of which the Company and the Company Parties specifically deny.

 

8.   In the event that any one or more of the provisions of this Agreement shall be held to be invalid, illegal or unenforceable, the validity, legality and enforceability of the remainder of the Agreement shall not in any way be affected or impaired thereby and any such provision or provisions shall be enforced to the fullest extent permitted by law.

 

 

 

  

9.   This Agreement constitutes a complete statement of all the agreement between us, and supersedes all prior oral or written agreements and understandings between us, concerning the subject matter hereof. Notwithstanding the foregoing, this Agreement does not amend or modify any obligations you may have (including without limitation any covenants regarding noncompetition, nonsolicitation, nondisparagement and confidentiality) under any written agreement signed by both you and the Company or any Company policy with respect to such matters. This Agreement may not be altered or modified other than in a writing signed by you and the Company. You may not assign any of your rights or obligations under this Agreement without obtaining the express written consent of the Company. Subject to the foregoing, this Agreement shall be binding upon and inure to the benefit of each party’s respective successors and permitted assigns. This Agreement shall be governed by and construed in accordance with the internal laws of the State of New York applicable to contracts to be performed wholly within the state and without regard to its conflict of laws provisions. You hereby agree that the federal and state courts situated in New York County, New York will have jurisdiction over any dispute relating to this Agreement and you hereby irrevocably consent to the in personam jurisdiction of such courts; irrevocably waive any objection to the venue of such courts or the convenience of such forum with respect to any such dispute; and agree that you shall not bring any action or proceeding related to this Agreement in any court other than a court situated in New York County, New York. You also agree that the Company, by contrast, shall have the right to bring suit against you before any court or body with jurisdiction, in connection with any claim against you (including without limitation any claim seeking to enjoin the use of Company Information or to obtain redress for such use). You agree that you are not relying on any representations, whether written or oral, not set forth in this Agreement, in determining to execute this Agreement. The terms of this Agreement shall not be interpreted in favor of or against any party on account of the draftsperson, but shall be interpreted solely for the purpose of giving effect to the intent of the parties.

 

10.   You understand and confirm that the agreements, representations, covenants and acknowledgements made by you in this Agreement will survive the execution of this Agreement and the payment of the Bonus Pay provided for in this Agreement. You further understand and confirm that if you are found to have made a material misstatement in, or commit a material breach of, any term, condition, covenant, representation or acknowledgement in this Agreement, the payments of Bonus Pay will cease and you will be obligated to return to the Company any Bonus Pay already paid to you by the Company. You will further be liable for any damages suffered or incurred by the Company by reason of such misstatement or breach. In addition, you will be required to return the Bonus Pay to the Company if this Agreement is determined to be invalid or unenforceable, or if you claim in any forum that the Agreement is invalid or unenforceable. In the event of any actual or threatened breach by you of any term or provision of this Agreement, the Company will be entitled to recover from you all costs and expenses, including, without limitation, court costs and reasonable attorneys’ fees, incurred in enforcing this Agreement.

 

 

 

  

11.   This Agreement may be signed in counterparts, each of which shall be deemed an original, but all of which shall constitute one and the same instrument. Signatures delivered via facsimile or electronically in .pdf format shall be deemed originals for all purposes.

 

If the above sets forth our agreement as you understand it and consent to it, and you agree to be legally bound hereby, please so signify by executing and dating the enclosed copy of this Agreement and returning it to Ronni Diamant, Vice President, Human Resources.

 

Very truly yours,  
TheStreet, Inc.  
     
By:    
  Elisabeth DeMarse  
  Chairman & CEO  

 

Agreed to and Accepted:  
   
   
John Ferrara  
     
Dated:    

 

 

 

 

 

Exhibit 31.1

 

CERTIFICATION

 

I, Elisabeth DeMarse, certify that:

 

1. I have reviewed this quarterly report on Form 10-Q of TheStreet, Inc.;

 

2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

 

3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;

 

4. The registrant’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:

 

a) Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

 

b) Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;

 

c) Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and

 

d) Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and

 

5. The registrant’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):

 

a) All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and

 

b) Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.

 

Date: November 5, 2015 By: /s/ Elisabeth DeMarse
  Name: Elisabeth DeMarse
  Title: Chief Executive Officer (principal executive officer)

 

 

 

 

Exhibit 31.2

 

CERTIFICATION

 

I, Richard Broitman, certify that:

 

1. I have reviewed this quarterly report on Form 10-Q of TheStreet, Inc.;

 

2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

 

3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;

 

4. The registrant’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:

 

a) Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

 

b) Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;

 

c) Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and

 

d) Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and

 

5. The registrant’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):

 

a) All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and

 

b) Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.

 

Date: November 5, 2015 By: /s/ Richard Broitman
  Name: Richard Broitman
  Title: Chief Accounting Officer and Interim Chief Financial Officer

 

 

 

 

Exhibit 32.1

 

Certification Pursuant to

18 U.S.C. Section 1350,

As Adopted Pursuant to

Section 906 of the Sarbanes-Oxley Act of 2002

 

In connection with the Quarterly Report on Form 10-Q of TheStreet, Inc. (the "Company") for the quarterly period ended September 30, 2015, as filed with the Securities and Exchange Commission on the date hereof (the "Report"), I, Elisabeth DeMarse, Chief Executive Officer of the Company, hereby certify, pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, that to my knowledge:

 

(1) The Report fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934; and

 

(2) The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company.

 

/s/ Elisabeth DeMarse  
Name: Elisabeth DeMarse  
Title: Chief Executive Officer (principal executive officer)
November 5, 2015  

 

 

  

 

Exhibit 32.2

 

Certification Pursuant to

18 U.S.C. Section 1350,

As Adopted Pursuant to

Section 906 of the Sarbanes-Oxley Act of 2002

 

In connection with the Quarterly Report on Form 10-Q of TheStreet, Inc. (the "Company") for the quarterly period ended September 30, 2015, as filed with the Securities and Exchange Commission on the date hereof (the "Report"), I, Richard Broitman, Chief Accounting Officer and Interim Chief Financial Officer of the Company, hereby certify, pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, that to my knowledge:

 

(1)          The Report fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934; and

 

(2)          The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company.

 

/s/ Richard Broitman  
Name: Richard Broitman  
Title: Chief Accounting Officer and Interim Chief Financial Officer
November 5, 2015