10-Q

UNITED STATES SECURITIES AND EXCHANGE COMMISSION

Washington, DC 20549

FORM 10-Q

þ	QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
	For the quarterly period ended September 30, 2011
or
o	TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
	For the transition period from                     to                      .

Commission File Number 001-12917

REIS, INC.

(Exact Name of Registrant as Specified in Its Charter)

Maryland	13-3926898
(State or Other Jurisdiction of Incorporation or Organization)	(I.R.S. Employer Identification No.)
530 Fifth Avenue, New York, NY	10036
(Address of Principal Executive Offices)	(Zip Code)

(212) 921-1122

(Registrant’s Telephone Number, Including Area Code)

     Indicate by check mark whether the Registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or 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 þ No o

     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 during the preceding 12 months (or for such shorter period that the Registrant was required to submit and post such files). Yes þ No o

     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. (Check one):

Large accelerated filer o	Accelerated filer o	Non-accelerated filer o	Smaller reporting company þ
		(Do not check if a smaller reporting company)

     Indicate by check mark whether the Registrant is a shell company (as defined in Rule 12b-2 of the Act).  Yes o    No þ

     The number of the Registrant’s shares of common stock outstanding was 10,556,570 as of November 1, 2011.

TABLE OF CONTENTS

		Page
		Number
PART I. FINANCIAL INFORMATION:
Item 1.	Financial Statements
	Consolidated Balance Sheets (unaudited) at September 30, 2011 and December 31, 2010		3
	Consolidated Statements of Operations (unaudited) For the Three and Nine Months Ended September 30, 2011 and 2010		4
	Consolidated Statement of Changes in Stockholders’ Equity (unaudited) For the Nine Months Ended September 30, 2011		5
	Consolidated Statements of Cash Flows (unaudited) For the Nine Months Ended September 30, 2011 and 2010		6
	Notes to Consolidated Financial Statements (unaudited)		7
Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations		20
Item 3.	Quantitative and Qualitative Disclosures About Market Risk		33
Item 4.	Controls and Procedures		34
PART II. OTHER INFORMATION:
Item 1.	Legal Proceedings		34
Item 1A.	Risk Factors		34
Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds		35
Item 3.	Defaults Upon Senior Securities		35
Item 4.	Reserved		35
Item 5.	Other Information		35
Item 6.	Exhibits		35
	Signatures		36
EX-31.1
EX-31.2
EX-32.1
EX-101 INSTANCE DOCUMENT
EX-101 SCHEMA DOCUMENT
EX-101 CALCULATION LINKBASE DOCUMENT
EX-101 LABELS LINKBASE DOCUMENT
EX-101 PRESENTATION LINKBASE DOCUMENT
EX-101 DEFINITION LINKBASE DOCUMENT

2

Part I. Financial Information

Item 1. Financial Statements.

REIS, INC.
CONSOLIDATED BALANCE SHEETS
(Unaudited)

	September 30,			December 31,
	2011			2010
ASSETS
Current assets:
Cash and cash equivalents	$	22,267,925		$	20,163,787
Restricted cash and investments		215,190			214,298
Accounts receivable, net		4,489,892			8,961,623
Prepaid and other assets		443,937			384,384
Assets attributable to discontinued operations		—			2,438,240
Total current assets		27,416,944			32,162,332
Furniture, fixtures and equipment, net		945,938			958,505
Intangible assets, net of accumulated amortization of $18,198,744 and $14,891,406, respectively		17,625,641			18,576,606
Goodwill		54,824,648			54,824,648
Other assets		123,478			165,868
Total assets	$	100,936,649		$	106,687,959
LIABILITIES AND STOCKHOLDERS’ EQUITY
Current liabilities:
Current portion of Bank Loan	$	7,073,703		$	5,531,050
Current portion of other debt		6,055			27,851
Accrued expenses and other liabilities		2,770,188			2,818,496
Liability for option cancellations		287,483			157,744
Deferred revenue		12,368,132			15,446,248
Liabilities attributable to discontinued operations		845,753			1,963,530
Total current liabilities		23,351,314			25,944,919
Non-current portion of Bank Loan		—			5,690,940
Other long-term liabilities		686,656			693,092
Deferred tax liability, net		66,580			66,580
Total liabilities		24,104,550			32,395,531
Commitments and contingencies
Stockholders’ equity:
Common stock, $0.02 par value per share, 101,000,000 shares authorized, 10,562,570 and 10,472,010 shares issued and outstanding, respectively		211,251			209,440
Additional paid in capital		100,143,091			99,347,837
Retained earnings (deficit)		(23,522,243	)		(25,264,849	)
Total stockholders’ equity		76,832,099			74,292,428
Total liabilities and stockholders’ equity	$	100,936,649		$	106,687,959

See Notes to Consolidated Financial Statements

3

REIS, INC.
CONSOLIDATED STATEMENTS OF OPERATIONS
(Unaudited)

	For the Three Months Ended						For the Nine Months Ended
	September 30,						September 30,
	2011			2010			2011			2010
Subscription revenue	$	6,747,585		$	6,013,122		$	20,201,463		$	18,031,664
Cost of sales of subscription revenue		1,550,435			1,402,455			4,623,673			4,402,204
Gross profit		5,197,150			4,610,667			15,577,790			13,629,460
Operating expenses:
Sales and marketing		1,656,187			1,369,201			4,988,681			4,360,152
Product development		574,066			419,015			1,562,224			1,353,046
General and administrative expenses		2,632,106			2,560,233			8,384,599			7,861,733
Total operating expenses		4,862,359			4,348,449			14,935,504			13,574,931
Other income (expenses):
Interest and other income		19,321			28,132			61,646			101,400
Interest expense		(65,145	)		(95,993	)		(214,807	)		(317,801	)
Total other income (expenses)		(45,824	)		(67,861	)		(153,161	)		(216,401	)
Income (loss) before income taxes and discontinued operations		288,967			194,357			489,125			(161,872	)
Income tax expense (benefit)		—			79,000			—			(63,000	)
Income (loss) from continuing operations		288,967			115,357			489,125			(98,872	)
Income (loss) from discontinued operations, net of income tax expense of $—, $—, $—, and $97,000, respectively		1,231			(319	)		1,253,481			143,237
Net income	$	290,198		$	115,038		$	1,742,606		$	44,365
Per share amounts – basic:
Income (loss) from continuing operations	$	0.03		$	0.01		$	0.05		$	(0.01	)
Net income	$	0.03		$	0.01		$	0.16		$	—
Per share amounts – diluted:
Income (loss) from continuing operations	$	0.02		$	0.01		$	0.05		$	(0.01	)
Net income	$	0.02		$	0.01		$	0.16		$	—
Weighted average number of common shares outstanding:
Basic		10,599,031			10,594,443			10,572,288			10,504,098
Diluted		10,997,157			10,815,890			10,835,602			10,504,098

See Notes to Consolidated Financial Statements

4

REIS, INC.
CONSOLIDATED STATEMENT OF CHANGES IN STOCKHOLDERS’ EQUITY
FOR THE NINE MONTHS ENDED SEPTEMBER 30, 2011

(Unaudited)

										Retained			Total
	Common Shares						Paid in			Earnings			Stockholders’
	Shares			Amount			Capital			(Deficit)			Equity
Balance, January 1, 2011		10,472,010		$	209,440		$	99,347,837		$	(25,264,849	)	$	74,292,428
Shares issued for vested employees restricted stock units		133,809			2,676			(2,676	)		—			—
Stock based compensation, net		—			—			1,185,454			—			1,185,454
Stock repurchases		(43,249	)		(865	)		(387,524	)		—			(388,389	)
Net income		—			—			—			1,742,606			1,742,606
Balance, September 30, 2011		10,562,570		$	211,251		$	100,143,091		$	(23,522,243	)	$	76,832,099

See Notes to Consolidated Financial Statements

5

REIS, INC.
CONSOLIDATED STATEMENTS OF CASH FLOWS
(Unaudited)

	For the Nine Months Ended
	September 30,
	2011			2010
cash flows from operating activities:
Net income	$	1,742,606		$	44,365
Adjustments to reconcile to net cash provided by operating activities:
Deferred tax (benefit) provision		—			34,000
Depreciation		254,624			277,818
Amortization of intangible assets		3,549,062			3,297,599
Stock based compensation charges		1,537,074			1,180,434
Changes in assets and liabilities:
Restricted cash and investments		790,293			52,771
Accounts receivable, net		4,471,731			1,948,854
Prepaid and other assets		332,647			52,792
Real estate assets		1,297,245			2,184,015
Accrued expenses and other liabilities		(1,172,521	)		(1,170,109	)
Liability for option cancellations		129,739			21,269
Deferred revenue		(3,078,116	)		(1,917,878	)
Net cash provided by operating activities		9,854,384			6,005,930
cash flows from investing activities:
Web site and database development costs		(2,598,097	)		(1,885,204	)
Furniture, fixtures and equipment additions		(242,057	)		(43,879	)
Furniture, fixtures and equipment disposition		—			9,906
Net cash (used in) investing activities		(2,840,154	)		(1,919,177	)
cash flows from financing activities:
Repayment of Bank Loan		(4,148,287	)		(6,506,354	)
Repayments on capitalized equipment leases		(21,796	)		(158,998	)
Payments for restricted stock units		(351,620	)		(217,878	)
Stock repurchases		(388,389	)		(307,574	)
Net cash (used in) financing activities		(4,910,092	)		(7,190,804	)
Net increase (decrease) in cash and cash equivalents		2,104,138			(3,104,051	)
Cash and cash equivalents, beginning of period		20,163,787			22,735,240
Cash and cash equivalents, end of period	$	22,267,925		$	19,631,189
supplemental information:
Cash paid during the period for interest	$	134,517		$	237,637
Cash paid during the period for income taxes, net of refunds	$	39,434		$	26,071
supplemental schedule of non-cash investing and financing activities:
Shares issued for vested employees restricted stock units	$	2,676		$	4,801
Disposal of fully amortized intangible assets	$	241,724
Disposal of fully depreciated furniture, fixtures and equipment	$	45,988
Release of accrued remediation liability obligation upon sale of real estate	$	1,000,000
Mortgage receivable on sale of real estate				$	450,000

See Notes to Consolidated Financial Statements

6

REIS, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)

1.	Organization and Business
	Reis, Inc. (the “Company” or “Reis”) is a Maryland corporation. The Company’s primary business is providing commercial real estate market information and analytical tools for its subscribers, through its Reis Services subsidiary. For disclosure and financial reporting purposes, this business is referred to as the Reis Services segment.
	Reis Services
	Reis Services, including its predecessors, was founded in 1980. Reis maintains a proprietary database containing detailed information on commercial properties in metropolitan markets and neighborhoods throughout the U.S. The database contains information on apartment, office, retail, warehouse/distribution and flex/research & development properties and is used by real estate investors, lenders and other professionals to make informed buying, selling and financing decisions. In addition, Reis data is used by debt and equity investors to assess, quantify and manage the risks of default and loss associated with individual mortgages, properties, portfolios and real estate backed securities. Reis currently provides its information services to many of the nation’s leading lending institutions, equity investors, brokers and appraisers.
	Reis, through its flagship institutional product, Reis SE, and through its new small business product, ReisReports, provides online access to a proprietary database of commercial real estate information and analytical tools designed to facilitate debt and equity transactions as well as ongoing evaluations. Depending on the product, users have access to trend and forecast analysis at metropolitan and neighborhood levels throughout the U.S. and/or detailed building-specific information such as rents, vacancy rates, lease terms, property sales, new construction listings and property valuation estimates. Reis’s products are designed to meet the demand for timely and accurate information to support the decision-making of property owners, developers, builders, banks and non-bank lenders, and equity investors. These real estate professionals require access to timely information on both the performance and pricing of assets, including detailed data on market transactions, supply, absorption, rents and sale prices. This information is critical to all aspects of valuing assets and financing their acquisition, development and construction.
	Reis’s revenue model is based primarily on annual subscriptions that are paid in accordance with contractual billing terms. Reis recognizes revenue from its contracts on a ratable basis; for example, one-twelfth of the value of a one-year contract is recognized monthly.
	Discontinued Operations – Residential Development Activities
	The Company was originally formed on January 8, 1997. Reis acquired the Reis Services business by merger in May 2007 (the “Merger”). Prior to May 2007, Reis operated as Wellsford Real Properties, Inc. (“Wellsford”). Wellsford’s primary operating activities immediately prior to the Merger were the development, construction and sale of its three residential projects and its approximate 23% ownership interest in the Reis Services business. The Company completed the sale of the remaining units at its Colorado project in September 2009, sold its Claverack, New York project in bulk in February 2010 and sold its remaining project in East Lyme, Connecticut in bulk in April 2011.
	See Note 3 for additional information regarding the Company’s segments.

2.	Summary of Significant Accounting Policies
	Basis of Presentation
	Principles of Consolidation
	The accompanying consolidated financial statements include the accounts of the Company and its majority-owned and controlled subsidiaries. Investments in entities where the Company does not have a controlling interest are accounted for under the equity method of accounting. These investments were initially recorded at cost and were subsequently adjusted for the Company’s proportionate share of the investment’s income (loss) and additional contributions or distributions. All significant inter-company accounts and transactions among the Company and its subsidiaries have been eliminated in consolidation.

7

REIS, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited) (continued)

Summary of Significant Accounting Policies (continued)

Quarterly Reporting

The accompanying consolidated financial statements and notes of the Company have been prepared in accordance with the instructions to Form 10-Q and Rule 10-01 of Regulation S-X promulgated by the Securities and Exchange Commission (“SEC”). Accordingly, certain information and footnote disclosures normally included in financial statements prepared under Generally Accepted Accounting Principles in the United States (“GAAP”) have been condensed or omitted pursuant to such rules. In the opinion of management, all adjustments considered necessary for a fair presentation of the Company’s balance sheets, statements of operations, statement of changes in stockholders’ equity and statements of cash flows have been included and are of a normal and recurring nature. These consolidated financial statements should be read in conjunction with the consolidated financial statements and notes thereto included in the Company’s annual report on Form 10-K for the year ended December 31, 2010, as filed with the SEC on March 11, 2011. The consolidated statements of operations for the three and nine months ended September 30, 2011 and 2010 and consolidated statements of changes in cash flows for the nine months ended September 30, 2011 and 2010 are not necessarily indicative of full year results.

Discontinued Operations

The Company has determined, as a result of the April 2011 sale of property in East Lyme, Connecticut, that the Residential Development Activities segment, including certain general and administrative costs that supported that segment’s operations, should be presented as a discontinued operation. As a result of this determination and the fact that the historic operations and cash flows can be clearly distinguished, the operating results of the Residential Development Activities segment and related general and administrative costs are aggregated for separate presentation apart from continuing operating results of the Company in the consolidated financial statements.

Estimates

The preparation of financial statements in conformity with GAAP 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 revenues and expenses during the reporting period. Actual results could differ from those estimates.

From time to time, the Company has been, is or may in the future be a defendant in various legal actions arising in the normal course of business. The Company records a provision for a liability when it is both probable that a liability has been incurred and the amount of loss can be reasonably estimated. Although the outcome of any litigation is uncertain, management does not believe that any legal actions to which the Company is a party, or which are proposed or threatened, will have a material adverse effect on the consolidated financial statements.

Reclassification

Amounts in certain accounts, as presented in the consolidated financial statements and footnotes, have been reclassified to reflect discontinued operations. These reclassifications do not result in a change to the previously reported net income for any of the periods presented to conform to the current period presentation; however, the computation of the denominator for determining net income per common share on a fully diluted basis for the nine months ended September 30, 2010 is different than previously presented. This difference, in conformity with existing accounting literature for the computation of earnings per share, is based upon the utilization of a different number of diluted shares as dictated by the loss from continuing operations.

8

REIS, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited) (continued)

3.	Segment Information
	The Company is organized into two separately managed segments: the Reis Services segment and the discontinued Residential Development Activities segment. The following tables present condensed balance sheet and operating data for these segments:

(amounts in thousands)
Condensed Balance Sheet Data	Reis		Discontinued
September 30, 2011	Services		Operations (A)			Other (B)			Consolidated
Assets
Current assets:
Cash and cash equivalents	$	18,227	$	—		$	4,041		$	22,268
Restricted cash and investments		215		—			—			215
Receivables, prepaid and other assets		4,777		—			157			4,934
Assets attributable to discontinued operations		—		—			—			—
Total current assets		23,219		—			4,198			27,417
Furniture, fixtures and equipment, net		901		—			45			946
Intangible assets, net		17,626		—			—			17,626
Goodwill		57,203		—			(2,378	)		54,825
Other assets		123		—			—			123
Total assets	$	99,072	$	—		$	1,865		$	100,937
Liabilities and stockholders’ equity
Current liabilities:
Current portion of Bank Loan and other debt	$	7,080	$	—		$	—		$	7,080
Accrued expenses and other liabilities		1,837		—			1,221			3,058
Deferred revenue		12,368		—			—			12,368
Liabilities attributable to discontinued operations		—		846			—			846
Total current liabilities		21,285		846			1,221			23,352
Other long-term liabilities		687		—			—			687
Deferred tax liability, net		13,450		—			(13,384	)		66
Total liabilities		35,422		846			(12,163	)		24,105
Total stockholders’ equity		63,650		(846	)		14,028			76,832
Total liabilities and stockholders’ equity	$	99,072	$	—		$	1,865		$	100,937
Condensed Balance Sheet Data	Reis		Discontinued
December 31, 2010	Services		Operations (A)			Other (B)			Consolidated
Assets
Current assets:
Cash and cash equivalents	$	15,912	$	21		$	4,231		$	20,164
Restricted cash and investments		214		—			—			214
Receivables, prepaid and other assets		9,230		—			116			9,346
Assets attributable to discontinued operations		—		2,438			—			2,438
Total current assets		25,356		2,459			4,347			32,162
Furniture, fixtures and equipment, net		957		—			1			958
Intangible assets, net		18,577		—			—			18,577
Goodwill		57,203		—			(2,378	)		54,825
Other assets		166		—			—			166
Total assets	$	102,259	$	2,459		$	1,970		$	106,688
Liabilities and stockholders’ equity
Current liabilities:
Current portion of Bank Loan and other debt	$	5,559	$	—		$	—		$	5,559
Accrued expenses and other liabilities		1,900		—			1,077			2,977
Deferred revenue		15,446		—			—			15,446
Liabilities attributable to discontinued operations		—		1,964			—			1,964
Total current liabilities		22,905		1,964			1,077			25,946
Non-current portion of Bank Loan		5,691		—			—			5,691
Other long-term liabilities		693		—			—			693
Deferred tax liability, net		11,785		—			(11,719	)		66
Total liabilities		41,074		1,964			(10,642	)		32,396
Total stockholders’ equity		61,185		495			12,612			74,292
Total liabilities and stockholders’ equity	$	102,259	$	2,459		$	1,970		$	106,688

(A)	Includes the assets and liabilities of the Company’s discontinued Residential Development Activities segment, to the extent that such assets and liabilities existed at the date presented.
(B)	Includes cash, other assets and liabilities not specifically attributable to or allocable to a specific operating segment.

9

REIS, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited) (continued)

Segment Information (continued)

(amounts in thousands)
Condensed Operating Data for the	Reis			Discontinued
Three Months Ended September 30, 2011	Services			Operations (A)		Other (B)			Consolidated
Subscription revenue	$	6,747		$	—	$	—		$	6,747
Cost of sales of subscription revenue		1,550			—		—			1,550
Gross profit		5,197			—		—			5,197
Operating expenses:
Sales and marketing		1,656			—		—			1,656
Product development		574			—		—			574
General and administrative expenses		1,563			—		1,070			2,633
Total operating expenses		3,793			—		1,070			4,863
Other income (expenses):
Interest and other income		18			—		2			20
Interest expense		(65	)		—		—			(65	)
Total other income (expenses)		(47	)		—		2			(45	)
Income (loss) before income taxes and discontinued operations	$	1,357		$	—	$	(1,068	)	$	289
Income from discontinued operations, before income taxes	$	—		$	1	$	—		$	1
Condensed Operating Data for the	Reis			Discontinued
Three Months Ended September 30, 2010	Services			Operations (A)		Other (B)			Consolidated
Subscription revenue	$	6,013		$	—	$	—		$	6,013
Cost of sales of subscription revenue		1,403			—		—			1,403
Gross profit		4,610			—		—			4,610
Operating expenses:
Sales and marketing		1,369			—		—			1,369
Product development		419			—		—			419
General and administrative expenses		1,496			—		1,064			2,560
Total operating expenses		3,284			—		1,064			4,348
Other income (expenses):
Interest and other income		24			—		5			29
Interest expense		(96	)		—		—			(96	)
Total other income (expenses)		(72	)		—		5			(67	)
Income (loss) before income taxes and discontinued operations	$	1,254		$	—	$	(1,059	)	$	195
Income (loss) from discontinued operations, before income taxes	$	—		$	1	$	(2	)	$	(1	)

(A)	Includes the results of the Company’s discontinued Residential Development Activities segment, to the extent that such operations existed during the period presented.
(B)	Includes interest and other income, depreciation expense and general and administrative expenses that have not been allocated to the operating segments.

10

REIS, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited) (continued)

Segment Information (continued)

(amounts in thousands)
Condensed Operating Data for the	Reis			Discontinued
Nine Months Ended September 30, 2011	Services			Operations (A)		Other (B)			Consolidated
Subscription revenue	$	20,201		$	—	$	—		$	20,201
Cost of sales of subscription revenue		4,623			—		—			4,623
Gross profit		15,578			—		—			15,578
Operating expenses:
Sales and marketing		4,989			—		—			4,989
Product development		1,562			—		—			1,562
General and administrative expenses		4,739			—		3,646			8,385
Total operating expenses		11,290			—		3,646			14,936
Other income (expenses):
Interest and other income		57			—		5			62
Interest expense		(215	)		—		—			(215	)
Total other income (expenses)		(158	)		—		5			(153	)
Income (loss) before income taxes and discontinued operations	$	4,130		$	—	$	(3,641	)	$	489
Income from discontinued operations, before income taxes	$	—		$	1,253	$	—		$	1,253
Condensed Operating Data for the	Reis			Discontinued
Nine Months Ended September 30, 2010	Services			Operations (A)		Other (B)			Consolidated
Subscription revenue	$	18,031		$	—	$	—		$	18,031
Cost of sales of subscription revenue		4,402			—		—			4,402
Gross profit		13,629			—		—			13,629
Operating expenses:
Sales and marketing		4,360			—		—			4,360
Product development		1,353			—		—			1,353
General and administrative expenses		4,369			—		3,493			7,862
Total operating expenses		10,082			—		3,493			13,575
Other income (expenses):
Interest and other income		87			—		15			102
Interest expense		(318	)		—		—			(318	)
Total other income (expenses)		(231	)		—		15			(216	)
Income (loss) before income taxes and discontinued operations	$	3,316		$	—	$	(3,478	)	$	(162	)
Income (loss) from discontinued operations, before income taxes	$	—		$	512	$	(272	)	$	240

(A)	Includes the results of the Company’s discontinued Residential Development Activities segment, to the extent that such operations existed during the period presented.
(B)	Includes interest and other income, depreciation expense and general and administrative expenses that have not been allocated to the operating segments.

Reis Services

See Note 1 for a description of Reis Services’s business and products at September 30, 2011.

No individual customer accounted for more than 4.9% and 2.5% of Reis Services’s revenues for the nine months ended September 30, 2011 and 2010, respectively.

11

REIS, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited) (continued)

Segment Information (continued)

The balance of outstanding accounts receivable of Reis Services at September 30, 2011 and December 31, 2010, follows:

	September 30,			December 31,
	2011			2010
Accounts receivable	$	4,534,000		$	9,065,000
Allowance for doubtful accounts		(44,000	)		(103,000	)
Accounts receivable, net	$	4,490,000		$	8,962,000

Eight subscribers accounted for an aggregate of approximately 40.8% of Reis Services’s accounts receivable at September 30, 2011, with the largest representing 13.0%. As of October 31, 2011, the Company had received payments of approximately $1,307,000, or 28.8%, against the September 30, 2011 accounts receivable balance.

At September 30, 2011, no subscriber accounted for more than 4.4% of deferred revenue.

Discontinued Operations – Residential Development Activities

Income (loss) from discontinued operations is comprised of the following:

(amounts in thousands)

	For the Three Months Ended					For the Nine Months Ended
	September 30,					September 30,
	2011		2010			2011			2010
Revenue from sales of real estate	$	—	$	160		$	1,800		$	3,378
Cost of sales of real estate		—		(96	)		(558	)		(3,051	)
Other income (expense), net		1		(65	)		11			(87	)
Income (loss) from discontinued operations before income tax		1		(1	)		1,253			240
Income tax expense on discontinued operations		—		—			—			97
Income (loss) from discontinued operations, net of income tax expense	$	1	$	(1	)	$	1,253		$	143

East Lyme

Prior to its sale in April 2011, the Company’s last remaining residential development was The Orchards, a single family home development in East Lyme, Connecticut, zoned for 161 single family homes on 224 acres (“East Lyme”).

The East Lyme project was sold in a bulk transaction for a gross sales price of $1,800,000 for the remaining 119 lots in inventory, plus the release of approximately $792,000 of project-related deposits and escrows held as restricted cash. Net cash received at closing, after selling expenses and closing adjustments, and including the cash received upon release of the deposits and escrows, aggregated approximately $2,600,000. As a result of this transaction, the Company recorded a gain in the second quarter of 2011 of approximately $1,242,000, which is included in income from discontinued operations. The Company sold two lots during the three months ended September 30, 2010 and sold two lots and one home during the nine months ended September 30, 2010.

Certain of the lots at East Lyme required remediation of pesticides which were used on the property when it was an apple orchard. Remediation would have been required prior to the development of those lots. The remediation plan, the cost of which was estimated by management to be approximately $1,000,000, had been approved by the health inspector for the municipality and the town planner. The estimated remediation cost was recognized in prior years and was reflected in liabilities attributable to discontinued operations in the December 31, 2010 consolidated balance sheet. As a result of the sale, the Company was indemnified from any financial obligation related to the environmental remediation and reversed this liability, which amount is included in the gain reported in the second quarter of 2011, as referred to above.

12

REIS, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited) (continued)

Segment Information (continued)

Claverack

Prior to its sale in February 2010, the Company owned approximately 235 acres in Claverack, New York, which was subdivided into 48 developable single family home lots. In February 2010, the Company sold the Claverack project in a bulk transaction for a gross sales price of $2,750,000, which included two model homes, amenities, 46 additional lots and $450,000 of cash collateralizing certain road completion obligations. Net cash received at closing, after expenses, aggregated approximately $2,187,000. The remaining $450,000 of the purchase price was payable by the purchaser in February 2011 and had been secured by the outstanding road bond and a mortgage on the property. As a result of this transaction, the Company recorded a gain of approximately $263,000 in the first quarter of 2010, which is included in income from discontinued operations. In February 2011, the Company received cash of approximately $455,000 in full satisfaction of the mortgage note and accrued interest thereon.

Real Estate Contingencies

Reis has purchased insurance with respect to construction defect and completed operations at its past real estate projects, including those projects described above. Reis is, from time to time, exposed to various claims associated with the development, construction and sale of condominium units, single family homes or lots. The impact of these claims on the Company has not been material to date. However, claims related to dissatisfaction by homeowners and homeowners’ associations with the construction of condominiums, homes and amenities by us and/or our developer partners in any condominium or subdivision development, or other matters, may result in litigation costs, remediation costs, warranty expenses or settlement costs which could be material to the Company’s reportable discontinued operating income (loss), or its consolidated financial position or cash flows. It would not have any effect on the Company’s income from continuing operations.

In October 2010, the homeowners’ association at the Company’s former Gold Peak condominium project (located outside of Denver, Colorado), brought suit against the Company, two of its subsidiaries, and other contractors and individuals alleging design and construction defects. In October 2011, experts for the plaintiff delivered a report alleging a cost to repair of approximately $19 million. Trial is scheduled for February 2012. In connection with the development of Gold Peak, the Company purchased a commercial general liability “wrap” insurance policy covering the Company, the general contractor and the subcontractors. The Company is taking action to ensure that all applicable insurance policies maintained by co-defendants or others are brought into the case. The Company believes that it and its co-defendants have valid defenses to some or all of the plaintiff’s allegations, that insurance (subject to limited self insurance retainage/deductibles (“SIRs”)) will cover some or all of any eventual settlement or judgment, and that the defendants other than the Company will likely be liable for some or all of any remaining settlement judgment amount.

At this time, based on advice of counsel and the Company’s experience with similar prior actions, the low end of the expected range of exposure is believed to be equal to the amount of the Company’s SIRs plus other costs. Accordingly, the Company is maintaining a reserve of approximately $280,000, which liability is included in liabilities attributable to discontinued operations on the September 30, 2011 balance sheet. Although the Company does not believe that it will be required to pay any amount above the reserved amount, it is possible that a settlement or judgment in this matter could involve the payment by the Company of an amount that could be material to the Company’s reportable discontinued operating income (loss), its consolidated financial position or cash flows. It would not have any effect on the Company’s income from continuing operations.

4. Restricted Cash and Investments

Restricted cash and investments represents a security deposit for the 530 Fifth Avenue corporate office space. The Company provided the lessor a bank-issued letter of credit, which is fully collateralized by a certificate of deposit issued by that bank. The balance of the restricted cash was approximately $215,000 and $214,000 at September 30, 2011 and December 31, 2010, respectively.

In addition, the Company had approximately $791,000 of deposits and escrows related to residential development activities at December 31, 2010, which amount was included in assets attributable to discontinued operations in the consolidated balance sheet at that date. As a result of the April 2011 sale of the East Lyme project, the balance of deposits and escrows related to residential development activities was released and converted to cash, and accordingly, there was no balance at September 30, 2011.

13

REIS, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited) (continued)

5. Intangible Assets

The amount of identified intangible assets, including the respective amounts of accumulated amortization, are as follows:

	September 30,			December 31,
	2011			2010
Database	$	12,822,000		$	11,395,000
Accumulated amortization		(9,152,000	)		(7,374,000	)
Database, net		3,670,000			4,021,000
Customer relationships		14,100,000			14,100,000
Accumulated amortization		(4,214,000	)		(3,470,000	)
Customer relationships, net		9,886,000			10,630,000
Web site		6,102,000			5,173,000
Accumulated amortization		(3,499,000	)		(2,941,000	)
Web site, net		2,603,000			2,232,000
Acquired below market lease		2,800,000			2,800,000
Accumulated amortization		(1,333,000	)		(1,106,000	)
Acquired below market lease, net		1,467,000			1,694,000
Intangible assets, net	$	17,626,000		$	18,577,000

The Company capitalized approximately $512,000 and $383,000 during the three months ended September 30, 2011 and 2010, respectively, and $1,427,000 and $949,000 during the nine months ended September 30, 2011 and 2010, respectively, to the database intangible asset. The Company capitalized approximately $421,000 and $351,000 during the three months ended September 30, 2011 and 2010, respectively, and $1,171,000 and $936,000 during the nine months ended September 30, 2011 and 2010, respectively, to the web site intangible asset.

Amortization expense for intangible assets aggregated approximately $1,232,000 and $3,549,000 for the three and nine months ended September 30, 2011, of which approximately $601,000 and $1,778,000 related to the database, which is charged to cost of sales, approximately $247,000 and $744,000 related to customer relationships, which is charged to sales and marketing expense, approximately $308,000 and $800,000 related to web site development, which is charged to product development expense, and approximately $76,000 and $227,000 related to the value ascribed to the below market terms of the office lease, which is charged to general and administrative expense, all in the Reis Services segment. Amortization expense for intangible assets aggregated approximately $1,030,000 and $3,297,000 for the three and nine months ended September 30, 2010, of which approximately $526,000 and $1,681,000 related to the database, approximately $250,000 and $751,000 related to customer relationships, approximately $178,000 and $638,000 related to web site development, and approximately $76,000 and $227,000 related to the value ascribed to the below market terms of the office lease.

6. Debt

At September 30, 2011 and December 31, 2010, the Company’s debt consisted of the following:

		Stated Interest Rate at	September 30,		December 31,
	Maturity Date	September 30, 2011	2011		2010
Reis Services Bank Loan	September 2012	LIBOR + 1.50%	$	7,074,000	$	11,222,000
Other Reis Services debt	Various	Fixed/Various		6,000		28,000
Total debt			$	7,080,000	$	11,250,000
Total assets of Reis Services as a security interest for the Bank Loan			$	99,072,000	$	102,259,000

14

REIS, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited) (continued)

Debt (continued)

Reis Services Bank Loan

In connection with the Merger agreement, Private Reis entered into a credit agreement, dated October 11, 2006, with the Bank of Montreal, Chicago Branch, as administrative agent, and BMO Capital Markets, as lead arranger, which provided for a term loan of up to an aggregate of $20,000,000 and revolving loans up to an aggregate of $7,000,000. Loan proceeds were used to finance $25,000,000 of the cash portion of the Merger consideration. The interest rate was LIBOR + 1.50% at September 30, 2011 and December 31, 2010 (LIBOR was 0.24% and 0.26% at September 30, 2011 and December 31, 2010, respectively).

Reis Services is required to (1) make principal payments on the term loan on a quarterly basis commencing on June 30, 2007 in increasing amounts pursuant to the payment schedule provided in the credit agreement and (2) permanently reduce the revolving loan commitments on a quarterly basis, which commenced on March 31, 2010. Additional principal payments are payable if Reis Services’s annual cash flow exceeds certain amounts, or if certain defined operating ratios are not met, all of which are defined in the credit agreement. The final maturity date of all amounts borrowed pursuant to the credit agreement is September 30, 2012. At September 30, 2011 and December 31, 2010, the Company did not have the ability to borrow any additional amounts under the Bank Loan.

In accordance with the terms of the credit agreement, beginning January 1, 2010 and through the maturity of the Bank Loan, the required leverage ratio was reduced to a maximum of 2.00 to 1.00 from a maximum of 2.50 to 1.00. In order to be in compliance with the leverage ratio test, management made a payment of $3,000,000 at March 31, 2010 in addition to the contractual minimum repayment of $1,000,000 due at that time. Although not required to do so, the Company made additional prepayments of $500,000 at the end of the second, third and fourth quarters of 2010 (aggregating $1,500,000), each of which was in excess of the minimum repayments due at such dates. All of the 2010 prepayments ratably reduced Reis Services’s future quarterly contractual minimum payments through maturity. No additional prepayments, in excess of minimum repayments, were made during the nine months ended September 30, 2011.

7. Income Taxes

The components of the income tax expense (benefit) are as follows:

	For the Three Months Ended				For the Nine Months Ended
	September 30,				September 30,
	2011		2010		2011		2010
Current state and local tax expense	$	—	$	—	$	—	$	—
Deferred Federal tax expense		—		63,000		—		27,000
Deferred state and local tax expense		—		16,000		—		7,000
Income tax expense, including taxes attributable to discontinued operations		—		79,000		—		34,000
Less income tax expense attributable to discontinued operations (A)		—		—		—		(97,000	)
Income tax expense (benefit) (B)	$	—	$	79,000	$	—	$	(63,000	)

(A)	Represents the impact of income taxes attributable to income from discontinued operations.
(B)	This amount reflects the tax expense (benefit) from continuing operations as reported on the consolidated statement of operations for the periods presented.

Deferred income taxes reflect the net tax effects of temporary differences between the carrying amount of assets and liabilities for financial reporting purposes and the amounts used for income tax purposes. The net deferred tax liability was approximately $67,000 at September 30, 2011 and December 31, 2010, respectively, and is reflected as a non-current liability in the accompanying consolidated balance sheets. The significant portion of the deferred tax items relates to: (1) the tax benefit of impairment charges before allowances at December 31, 2010; (2) net operating loss (“NOL”) carryforwards; (3) Federal alternative minimum tax (“AMT”) credit carryforwards; and (4) stock based compensation, all as they relate to deferred tax assets; and (5) the deferred tax liability resulting from the intangible assets recorded at the time of the Merger as it relates to deferred tax liabilities.

15

REIS, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited) (continued)

Income Taxes (continued)

A valuation allowance is required to reduce the deferred tax assets if, based on the weight of the evidence, it is more-likely-than-not that some portion or all of the deferred tax assets will not be realized. Accordingly, management has determined that a valuation allowance of approximately $7,550,000 and $8,254,000 at September 30, 2011 and December 31, 2010, respectively, was necessary. The allowance at September 30, 2011 and December 31, 2010 relates primarily to AMT credits and existing and expected NOL carryforwards, and in 2010, the excess of a portion of the tax basis of certain real estate development assets over their respective financial statement basis. The reduction in the allowance during the nine months ended September 30, 2011 results from the realization of a portion of the excess tax basis upon the sale of the East Lyme project, which was used to offset the Company’s pre-tax income in this period.

8.    Stockholders’ Equity

Between December 2008 and June 2010, the Board authorized the repurchase of up to an aggregate amount of $4,000,000 of the Company’s common stock, which authorizations were fully utilized by December 2010. In August 2011, the Board authorized an additional $1,000,000 to make stock repurchases (of which $612,000 remained available as of September 30, 2011). The stock repurchases are permitted from time to time in the open market or through privately negotiated transactions. Depending on market conditions, financial developments and other factors, additional amounts may be authorized by the Board whereby future purchases could be commenced or suspended at any time, or from time to time, without prior notice. The Company may make purchases pursuant to a trading plan under Securities Exchange Act Rule 10b5-1, permitting open market purchases of common stock during blackout periods consistent with the Company’s “Policies for Transactions in Reis Stock and Insider Trading and Tipping.”

During the three and nine months ended September 30, 2011, the Company repurchased 43,249 shares of common stock at an average price of $8.98 per share. During the three and nine months ended September 30, 2010, the Company purchased an aggregate of 20,250 and 49,191 shares of common stock, respectively, at an average price of $6.50 and $6.25 per share, respectively. From the inception of the share repurchase programs in December 2008 through September 30, 2011, the Company purchased an aggregate of 881,325 shares of common stock at an average price of $4.98 per share, for an aggregate of $4,388,000. Cumulatively, the Company repurchased approximately 8.02% of the common shares outstanding at the time of the Board’s initial authorization in December 2008.

9.    Stock Plans and Other Incentives

The Company has adopted certain incentive plans for the purpose of attracting and retaining the Company’s directors, officers and employees by having the ability to issue options, restricted stock units (“RSUs”) or stock awards. Awards granted under the Company’s incentive plans expire ten years from the date of grant and vest over periods ranging generally from three to five years for employees.

Option Awards

The following table presents option activity and other plan data for the nine months ended September 30, 2011 and 2010:

	For the Nine Months Ended September 30,
	2011				2010
			Weighted-				Weighted-
			Average				Average
			Exercise				Exercise
	Options		Price		Options		Price
Outstanding at beginning of period		680,896	$	8.73		473,620	$	8.91
Granted		—	$	—		225,000	$	8.03
Cancelled through cash settlement		—	$	—		—	$	—
Forfeited/cancelled/expired		—	$	—		—	$	—
Outstanding at end of period		680,896	$	8.73		698,620	$	8.63
Options exercisable at end of period		378,896	$	8.92		319,620	$	8.45
Options exercisable which can be settled in cash		70,896	$	4.81		88,620	$	4.73

16

REIS, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited) (continued)

Stock Plans and Other Incentives (continued)

Certain outstanding options allow the option holder to receive from the Company, in cancellation of the holder’s option, a cash payment with respect to each cancelled option equal to the amount, if any, by which the fair market value of the share of stock underlying the option exceeds the exercise price of such option. The Company accounts for these options as liability awards. This liability is adjusted at the end of each reporting period to reflect (1) the net cash payments to option holders made during each period, (2) the impact of the exercise and expiration of options and (3) changes in the market price of the Company’s common stock. Changes in the settlement value of option awards treated under the liability method are reflected as income or expense in the statements of operations.

At September 30, 2011, the liability for option cancellations was approximately $287,000 based upon the difference in the closing stock price of the Company at September 30, 2011 of $8.86 per share and the individual exercise prices of the outstanding 70,896 “in-the-money” options that were accounted for as liability awards at that date. At December 31, 2010, the liability for option cancellations was approximately $158,000 based upon the difference in the closing stock price of the Company at December 31, 2010 of $7.03 per share and the individual exercise prices of the outstanding 70,896 “in-the-money” options that were accounted for as liability awards at that date. The Company recorded a reduction to compensation expense of approximately $76,000 for the three months ended September 30, 2011 and compensation expense of $7,000 for the three months ended September 30, 2010, and compensation expense of $130,000 and $21,000 for the nine months ended September 30, 2011 and 2010, respectively, in general and administrative expenses in the statements of operations related to the respective changes in the amount of the liability for option cancellations.

RSU Awards

The following table presents the changes in RSUs outstanding for the nine months ended September 30, 2011 and 2010:

	For the Nine Months Ended
	September 30,
	2011			2010
Outstanding at beginning of period		523,479			507,668
Granted		243,499			283,355
Common stock delivered (A)(B)		(177,828	)		(275,559	)
Forfeited		—			(1,800	)
Outstanding at end of period		589,150			513,664
Intrinsic value at September 30, 2011 and 2010, respectively (C)	$	5,220,000		$	3,282,000

(A)	Includes (i) 33,758 shares which were used to settle minimum employee withholding tax obligations for 14 employees of approximately $251,000 in the first quarter of 2011 (ii) 9,054 shares which were used to settle minimum employee withholding tax obligations for two employees of approximately $90,000 in the second quarter of 2011 and (iii) 1,207 shares which were used to settle minimum employee withholding tax obligations for one employee of approximately $11,000 in the third quarter of 2011. A net of 2,126 and 133,809 shares of common stock were delivered in the three and nine months ended September 30, 2011, respectively.
(B)	Includes (i) 17,431 shares which were used to settle minimum employee withholding tax obligations for 12 employees of approximately $105,000 in the first quarter of 2010, (ii) 16,870 shares which were used to settle minimum employee withholding tax obligations for 63 employees of approximately $105,000 in the second quarter of 2010 and (iii) 1,207 shares which were used to settle minimum employee withholding tax obligations for one employee of approximately $8,000 in the third quarter of 2010. A net of 2,126 and 240,051 shares of common stock were delivered in the three and nine months ended September 30, 2010, respectively.
(C)	For purposes of this calculation, the Company’s closing stock prices were $8.86 and $6.39 per share on September 30, 2011 and 2010, respectively.

17

REIS, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited) (continued)

Stock Plans and Other Incentives (continued)

In March 2011, an aggregate of 214,135 RSUs were granted to employees, which RSUs vest one-third a year over three years and had a weighted average grant date fair value of $7.41 per RSU (which was determined based on the closing stock price of the Company’s common stock on the applicable date of grant). In February and July 2010, an aggregate of 185,500 RSUs and 75,000 RSUs respectively, were granted to employees which vest one-third a year over three years and have a grant date fair value of $5.97 and $6.52 respectively, per RSU (which was determined based on the closing price of the Company’s common stock on the applicable date of grant). The awards granted in 2011 and 2010 are treated as equity awards and the grant date fair value is charged to compensation expense at the corporate level on a straight-line basis over the vesting periods.

During the nine months ended September 30, 2011, an aggregate of 29,364 RSUs were granted to non-employee directors (with an average grant date fair value of $8.09 per RSU) related to the equity component of their compensation for the three months ended December 31, 2010, March 31, 2011 and June 30, 2011. During the nine months ended September 30, 2010, an aggregate of 23,355 RSUs were granted to non-employee directors (with an average grant date fair value of $6.07 per RSU) related to the equity component of their compensation for the three months ended December 31, 2009, March 31, 2010 and June 30, 2010. In each case, the grant date fair value was determined as of the last trading day of the quarter for which the RSUs were being received as compensation. The RSUs are immediately vested, but are not deliverable to non-employee directors until six months after termination of their service as a director.

Option and RSU Expense Information

The Company recorded non-cash compensation expense of approximately $522,000 and $409,000, including approximately $69,000 and $63,000 related to non-employee director equity compensation, for the three months ended September 30, 2011 and 2010, respectively, related to all stock options and RSUs accounted for as equity awards, as a component of general and administrative expenses in the statement of operations. For the nine months ended September 30, 2011 and 2010, the Company recorded non-cash compensation expense of approximately $1,537,000 and $1,180,000, respectively, including approximately $226,000 and $159,000, respectively, related to non-employee director equity compensation.

10.   Earnings Per Common Share

Basic earnings per common share are computed based upon the weighted average number of common shares outstanding during the period. Diluted earnings per common share are based upon the increased number of common shares that would be outstanding assuming the exercise of dilutive common share options and the consideration of restricted stock awards. The following table details the computation of earnings per common share, basic and diluted:

18

REIS, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited) (continued)

     Earnings Per Common Share (continued)

	For the Three Months Ended						For the Nine Months Ended
	September 30,						September 30,
	2011			2010			2011		2010
Numerator for basic per share calculation:
Income (loss) from continuing operations for basic calculation	$	288,967		$	115,357		$	489,125	$	(98,872	)
Income (loss) from discontinued operations, net of income tax expense		1,231			(319	)		1,253,481		143,237
Net income for basic calculation	$	290,198		$	115,038		$	1,742,606	$	44,365
Numerator for diluted per share calculation
Income (loss) from continuing operations	$	288,967		$	115,357		$	489,125	$	(98,872	)
Adjustments to income (loss) from continuing operations for the income statement impact of dilutive securities		(75,859	)		—			—		—
Income (loss) from continuing operations for dilution calculation		213,108			115,357			489,125		(98,872	)
Income (loss) from discontinued operations, net of income tax expense		1,231			(319	)		1,253,481		143,237
Net income for dilution calculation	$	214,339		$	115,038		$	1,742,606	$	44,365
Denominator:
Weighted average common shares – basic		10,599,031			10,594,443			10,572,288		10,504,098
Effect of dilutive securities:
RSUs		351,274			221,447			259,561		—
Stock options		46,852			—			3,753		—
Weighted average common shares – diluted		10,997,157			10,815,890			10,835,602		10,504,098
Per common share amounts – basic:
Income (loss) from continuing operations	$	0.03		$	0.01		$	0.05	$	(0.01	)
Income (loss) from discontinued operations		—			—			0.11		0.01
Net income	$	0.03		$	0.01		$	0.16	$	—
Per common share amounts – diluted:
Income (loss) from continuing operations	$	0.02		$	0.01		$	0.05	$	(0.01	)
Income (loss) from discontinued operations		—			—			0.11		0.01
Net income	$	0.02		$	0.01		$	0.16	$	—

Potentially dilutive securities include all stock based awards. For the three months ended September 30, 2011, only certain equity awards were antidilutive. For the nine months ended September 30, 2011 and the three and nine months ended September 30, 2010, certain equity awards, in addition to the option awards accounted for under the liability method, were antidilutive.

11.   Fair Value of Financial Instruments

At September 30, 2011 and December 31, 2010, the Company’s financial instruments included receivables, payables, accrued expenses, other liabilities and debt. The fair values of these financial instruments, excluding the Bank Loan, were not materially different from their recorded values at September 30, 2011 and December 31, 2010. Other than capital leases, all of the Company’s debt at September 30, 2011 and December 31, 2010 was floating rate based. Regarding the Bank Loan, the fair value of this debt is estimated to be approximately $6,960,000 and $10,905,000 at September 30, 2011 and December 31, 2010, respectively, which is lower than the recorded amounts of $7,074,000 and $11,222,000 at September 30, 2011 and December 31, 2010, respectively. The estimated fair value reflects the effect of higher interest rate spreads on debt being issued under current market conditions, as compared to the conditions that existed when the Bank Loan was obtained. See Note 6 for more information about the Company’s debt.

19

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

The following discussion should be read in conjunction with the consolidated financial statements and notes thereto appearing elsewhere in this quarterly report on Form 10-Q.

Organization and Business

Reis, Inc., which we refer to as either the Company or Reis, is a Maryland corporation. The Company’s primary business is providing commercial real estate market information and analytical tools for its subscribers, through its Reis Services subsidiary. For disclosure and financial reporting purposes, this business is referred to as the Reis Services segment.

Reis Services

Reis Services, including its predecessors, was founded in 1980. Reis maintains a proprietary database containing detailed information on commercial properties in metropolitan markets and neighborhoods throughout the U.S. The database contains information on apartment, office, retail, warehouse/distribution and flex/research & development properties and is used by real estate investors, lenders and other professionals to make informed buying, selling and financing decisions. In addition, Reis data is used by debt and equity investors to assess, quantify and manage the risks of default and loss associated with individual mortgages, properties, portfolios and real estate backed securities. Reis currently provides its information services to many of the nation’s leading lending institutions, equity investors, brokers and appraisers.

Reis, through its flagship institutional product, Reis SE, and through its new small business product, ReisReports, provides online access to a proprietary database of commercial real estate information and analytical tools designed to facilitate debt and equity transactions as well as ongoing evaluations. Depending on the product, users have access to trend and forecast analysis at metropolitan and neighborhood levels throughout the U.S. and/or detailed building-specific information such as rents, vacancy rates, lease terms, property sales, new construction listings and property valuation estimates. Reis’s products are designed to meet the demand for timely and accurate information to support the decision-making of property owners, developers, builders, banks and non-bank lenders, and equity investors. These real estate professionals require access to timely information on both the performance and pricing of assets, including detailed data on market transactions, supply, absorption, rents and sale prices. This information is critical to all aspects of valuing assets and financing their acquisition, development and construction.

Reis’s revenue model is based primarily on annual subscriptions that are paid in accordance with contractual billing terms. Reis recognizes revenue from its contracts on a ratable basis; for example, one-twelfth of the value of a one-year contract is recognized monthly.

Operations

As commercial real estate markets have grown in size and complexity, Reis, over the last 30 years, has invested in the areas critical to supporting the information needs of real estate professionals in both the asset market and the space leasing market. In particular, Reis has:

• developed expertise in data collection across multiple markets and property types;

• invested in the analytical expertise to develop decision support systems around property valuation, credit analytics, transaction support and risk management;

• created product development expertise to collect market feedback and translate it into new products and reports; and

• invested in a robust technology infrastructure to disseminate these tools to the wide variety of market participants.

These investments have established Reis as a leading provider of commercial real estate information and analytical tools to the investment community. Reis continues to develop and introduce new products, expand and add new markets and data, and find new ways to deliver existing information to meet and anticipate client demand, as more fully described below under “— Products and Services.” The depth and breadth of Reis’s data and expertise are critical in allowing Reis to grow its business.

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Proprietary Databases

Reis’s commercial real estate databases contain information on competitive, income-producing properties in the U.S. apartment, retail, office, warehouse/distribution and flex/research & development sectors. On an ongoing basis, Reis surveys and receives data downloads from building owners, leasing agents and managers which include key building performance statistics including, among others: occupancy rates; rents; rent discounts and other concessions; tenant improvement allowances; lease terms; and operating expenses. In addition, Reis processes multiple data sources on commercial real estate, including: public filings databases; tax assessor records; deed transfers; planning boards; and numerous local, regional and national publications and commercial real estate web sites. Reis screens and assembles large volumes of data into integrated supply and demand trends on a monthly basis at the neighborhood (submarket) and metropolitan market levels. All collected data are subjected to a rigorous quality assurance and validation process developed over many years. At the property level, surveyors compare the data collected in the current period with data previously collected on that property and similar properties. If any unusual changes in rents and vacancies are identified, follow-up procedures are performed for verification or clarification of the results. All aggregate market data at the submarket and market levels are also subjected to comprehensive quality controls. The following table lists the number of metropolitan markets covered by Reis for each of the five types of commercial real estate (after the announced expansion of coverage in October 2011):

Number of metropolitan markets:
Apartment	200
Retail	190
Office	132
Warehouse/distribution	47
Flex/research & development	47

Including its programmatic expansion by geography and property type, most recently of retail shopping centers, warehouse/distribution and flex/research & development coverage, Reis monitors over 6,300 market areas and segments.

In June 2011, Reis entered into an exclusive market data agreement with the Self Storage Association and will introduce coverage of the U.S. self storage market in 2012. This will be the sixth major property type for which Reis will provide market data and analytics.

In addition to the core property database, Reis develops and maintains a new construction database that identifies and monitors projects that are being added to our covered markets. Detailed tracking of the supply side of the commercial real estate market is critical to projecting performance changes at the market and submarket levels. This database is updated weekly and reports relevant criteria such as project size, property type and location for projects that are planned, proposed or under construction.

Reis also maintains a sales comparables database containing transactions in 204 of our covered markets. The database captures key information on each transaction such as buyer, seller, purchase price, capitalization rate and financing details, where available. Prior to March 31, 2011, this database included transactions valued at $2,000,000 or greater. Beginning in April 2011, we have expanded the coverage to include transactions valued at greater than $250,000 in our covered markets. Additionally, during March 2011, we added hotel transactions to our sales comparables coverage.

In October 2011, Reis introduced a new suite of reports focusing on two industrial property types: warehouse/distribution and flex/research & development. This launch disaggregates our industrial product offering to cover nearly 350 submarkets in 47 of the top metropolitan centers for each of these property types. For each metropolitan area, Reis provides a full suite of metro and submarket reports, including forecasts, and property-level rent, sales and construction comparables.

Products and Services

Reis SE, available through the www.reis.com web site, serves as a delivery platform for the thousands of reports containing Reis’s primary research data and forecasts, as well as a number of analytical tools. Access to Reis SE is by secure password only and can be customized to accommodate the needs of subscribers. For example, the product can be tailored to provide access to all or only selected markets, property types and report combinations. The Reis SE interface has been refined over the past several years to accommodate real estate professionals who need to perform market-based trend analysis, property specific research, comparable property analysis, and valuation and credit analysis estimates at the single property and portfolio levels.

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On a monthly and quarterly basis, Reis updates thousands of neighborhood and city level reports that cover historical trends and current conditions. In all of the primary markets, five year forecasts are updated quarterly on all key real estate market indicators. Monthly and quarterly updates are supported by property, neighborhood and city data collected during the prior periods.

Reports are retrievable by street address, property type (apartment, office, retail, warehouse/distribution and flex/research & development) or market/submarket and are available as full color, presentation quality documents or in spreadsheet formats. These reports are used by Reis’s subscribers to assist in due diligence and to support commercial real estate transactions, including loan originations, underwriting, acquisitions, risk assessment (such as loan loss reserves and impairment analyses), portfolio monitoring and management, asset management, appraisal and market analysis.

Other significant elements of Reis SE include:

• property comparables that allow users to identify buildings or new construction projects with similar characteristics (such as square footage, rents or sales price);

• quarterly “First Glance” reports that provide an early assessment of the apartment, office and retail sectors across the U.S. and preliminary commentary on new construction activity;

• “Quarterly Briefings” — two conference calls each quarter attended by hundreds of subscribers, during which Reis provides an overview of its latest high-level findings and forecasts for the commercial real estate space and capital markets;

• real estate news stories chosen by Reis analysts to provide information relevant to a particular market and property type; and

• customizable email alerts that let users receive proactive updates on only those reports and markets that they designate.

During 2010, Reis completed the development of and launched a product tailored to the needs of smaller enterprises and individuals, professional investors, brokers and appraisers, which we refer to as ReisReports, available at www.ReisReports.com. ReisReports utilizes the same proprietary database of information that supports our Reis SE subscribers. Depending on the package chosen by the ReisReports subscriber, a set number of market reports is available on a monthly basis at an affordable price point.

Reis continues to develop new products and applications. Current initiatives include the further expansion of both our geographic market coverage and property types and broadening our data redistribution relationships with other business information vendors. During 2011, data redistribution agreements were executed with FactSet, Capital IQ and Thomson Reuters.

Cost of Service

Reis’s data is made available in five primary ways: (1) annual and multi-year subscriptions to Reis SE, (2) capped subscriptions allowing subscribers to download a limited retail value of reports, (3) online single report credit card purchases, (4) custom data requests and (5) monthly subscriptions to ReisReports, charged to a credit card. Annual subscription fees for Reis SE range from $1,000 to over $1,000,000 depending upon the subscriber’s line of business, and the combination of markets, property types and reports subscribed to, for which the subscriber is typically allowed to download an unlimited number of reports over a twelve month period. Capped subscriptions generally range from $1,000 to $25,000 and allow clients to download a fixed retail value of reports over a twelve month period. Sales of individual reports typically range from $150 to $695 per report and are available to anyone who visits Reis’s retail web site or contacts Reis via telephone, fax or email. However, certain reports are only available by a subscription or capped subscription account. Custom data deliverables range in price from $1,000 for a specific data element to hundreds of thousands of dollars for custom portfolio valuation and credit analysis. Renewals are negotiated in advance of the expiration of an existing contract. Important factors in determining contract renewal rates include a subscriber’s historical and projected report consumption. The monthly fee for ReisReports is currently $75 or $125 depending on the package chosen by the subscriber.

Other Reis Services Information

For additional information on the Reis Services business, refer to the Company’s annual report on Form 10-K for the year ended December 31, 2010, which was filed with the Securities and Exchange Commission on March 11, 2011.

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Discontinued Operations — Residential Development Activities

The Company was originally formed on January 8, 1997. Reis acquired the Reis Services business by merger in May 2007, which we refer to as the Merger. Prior to May 2007, Reis operated as Wellsford Real Properties, Inc., which we refer to as Wellsford. Wellsford’s primary operating activities immediately prior to the Merger were the development, construction and sale of its three residential projects and its approximate 23% ownership interest in the Reis Services business. The Company completed the sale of the remaining units at its Colorado project in September 2009, sold its Claverack, New York project in bulk in February 2010 and sold its remaining project in East Lyme, Connecticut in bulk in April 2011.

Additional Segment Financial Information

See Note 3 of the consolidated financial statements included in this filing for additional information regarding the Company’s segments.

Selected Significant Accounting Policies

For a description of our selected significant accounting policies and estimates, see our Annual Report on Form 10-K for the year ended December 31, 2010 and Note 2 of the consolidated financial statements included in this filing.

Discontinued Operations

The Company has determined, as a result of the April 2011 sale of property in East Lyme, Connecticut, that the Residential Development Activities segment, including certain general and administrative costs that supported that segment’s operations, should be presented as a discontinued operation. As a result of this determination and the fact that the historic operations and cash flows can be clearly distinguished, the operating results of the Residential Development Activities segment and related general and administrative costs are aggregated for separate presentation apart from continuing operating results of the Company in the consolidated financial statements.

Critical Business Metrics of the Reis Services Business

Management considers certain metrics in evaluating the performance of the Reis Services business. These metrics are revenue, EBITDA (which is defined as earnings before interest, taxes, depreciation and amortization) and EBITDA margin. Following is a presentation of these historical metrics for the Reis Services business (for a reconciliation of income (loss) from continuing operations to EBITDA and Adjusted EBITDA for both the Reis Services segment and on a consolidated basis for each of the periods presented here, see below).

(amounts in thousands, excluding percentages)

	For the Three Months Ended
	September 30,									Percentage
	2011			2010			Increase			Increase
Revenue	$	6,747		$	6,013		$	734			12.2	%
EBITDA	$	2,722		$	2,440		$	282			11.6	%
EBITDA margin		40.3	%		40.6	%
	For the Nine Months Ended
	September 30,									Percentage
	2011			2010			Increase			Increase
Revenue	$	20,201		$	18,031		$	2,170			12.0	%
EBITDA	$	8,089		$	7,096		$	993			14.0	%
EBITDA margin		40.0	%		39.4	%
	For the Three Months Ended
	September 30,			June 30,						Percentage
	2011			2011			(Decrease)			(Decrease)
Revenue	$	6,747		$	6,837		$	(90	)		(1.3	)%
EBITDA	$	2,722		$	2,748		$	(26	)		(0.9	)%
EBITDA margin		40.3	%		40.2	%

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Reis Services’s revenue for the three months ended September 30, 2011 of $6,747,000 was achieved as a result of a strong sales environment which has supported gains in renewal rates and increased new business. Reis Services’s revenue increased by approximately $734,000, or 12.2%, from the third quarter of 2010 to the third quarter of 2011. This revenue increase over the corresponding prior quarterly period is the sixth consecutive quarterly increase in revenue over the prior year’s quarter. For the nine months ended September 30, 2011, Reis Services’s revenue was approximately $20,201,000, an increase of approximately $2,170,000, or 12.0%, from the nine months ended September 30, 2010. These revenue increases reflect: (1) positive improvements in overall renewal rates as the trailing twelve month renewal rate improved to 93% at September 30, 2011 as compared to 90% for the trailing twelve months ended September 30, 2010 and, for institutional subscribers, the renewal rates improved to 95% at September 30, 2011 from 92% at September 30, 2010; (2) additional new business; (3) sales from ReisReports; and (4) the cumulative impact of the strength of contract signings from the third and fourth quarters of 2010 and into 2011.

On a consecutive quarter basis, Reis Services had a modest revenue decrease of approximately $90,000, or 1.3%, from the second quarter of 2011 to the third quarter of 2011. Though total revenue declined, core recurring revenue, comprised of subscription fees for Reis SE and monthly credit card payments for ReisReports, grew by 1.3% in the third quarter. The total revenue decrease, on a consecutive quarter basis, was fully attributable to a below-average amount of custom revenue in the third quarter of 2011 after posting above-average custom revenue in the second quarter of 2011, accounting for a $173,000 negative swing in consecutive quarter custom revenue. While custom revenue typically only accounts for a small portion of total Reis Services revenue in a fiscal year, contracts and revenue related to custom projects are not realized in a predictable, linear fashion; by nature, they are dependent upon timing and client need. If a normalized level of custom revenue had been generated in both of these quarters, total revenue would have increased on a consecutive quarter basis by 1.3%.

Reis’s revenue model is based primarily on annual subscriptions that are paid in accordance with contractual billing terms. Reis recognizes revenue from its contracts on a ratable basis; for example, one-twelfth of the value of a one-year contract is recognized monthly. Therefore, increases in the dollar value of new contracts are spread evenly over the life of a contract, thereby moderating an immediate impact on revenue. Historically, the largest percentage of our contracts are executed in the fourth quarter of each year. As a result, in times of favorable pricing, larger consecutive quarter revenue growth occurs in the fourth and first quarters.

Our contract pricing model is based on actual and projected report consumption; we believe it is generally not as susceptible to economic downturns and personnel reductions at our subscribers as a model based upon individual user licenses. We generally impose contractual restrictions limiting our immediate exposure (during existing contract terms) to revenue reductions due to mergers and consolidations. However, we have been, and we may in the future be, impacted by consolidation among our subscribers and potential subscribers, or in the event that subscribers enter bankruptcy or otherwise go out of business.

Two additional metrics management believes are critical in understanding the business and future performance are deferred revenue and Aggregate Revenue Under Contract. Analyzing these amounts can provide additional insight into Reis Services’s financial performance. Deferred revenue, which is a GAAP basis accounting concept and is reported by the Company on the consolidated balance sheet, represents revenue from annual or longer term contracts for which we have billed and/or received payments from our subscribers related to services we will be providing over the period. It does not include future revenue under non-cancellable contracts for which we do not yet have the contractual right to bill; this aggregate number we refer to as Aggregate Revenue Under Contract. Deferred revenue will be recognized as revenue ratably over the life of a contract. The following table reconciles deferred revenue to Aggregate Revenue Under Contract at September 30, 2011 and 2010, respectively. A comparison of these balances at September 30 of each year is more meaningful than a comparison to the December 31, 2010 balances.

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	September 30,						Percentage
	2011		2010		Increase		Increase
Deferred revenue (GAAP basis)	$	12,368,000	$	10,275,000	$	2,093,000		20.4	%
Amounts under non-cancellable contracts for which the Company does not yet have the contractual right to bill at the period end (A)		12,263,000		11,681,000		582,000		5.0	%
Aggregate Revenue Under Contract (B)	$	24,631,000	$	21,956,000	$	2,675,000		12.2	%

(A)

Amounts are billable in the twelve month period subsequent to September 30 of each year and represent (i) non-cancellable contracts for subscribers with multi-year subscriptions where the future years are not yet billable, or (ii) subscribers with non-cancellable annual subscriptions with interim billing terms.

(B)

Included in Aggregate Revenue Under Contract at September 30, 2011 was approximately $18,508,000 related to amounts under contract for the forward twelve month period through September 30, 2012. The remainder reflects amounts under contract beyond September 30, 2012. The forward twelve month Aggregate Revenue Under Contract amount is approximately 70% of revenue on a trailing twelve month basis at September 30, 2011 of approximately $26,368,000.

The increases in both deferred revenue and Aggregate Revenue Under Contract are the result of an improved sales environment for renewals (by consistent improvement in renewal rates) and increased new business, as described above in the revenue discussion. As we enter our heavy renewal period for the year both deferred revenue and Aggregate Revenue Under Contract will be replenished.

EBITDA of Reis Services for the three months ended September 30, 2011 was $2,722,000, an increase of $282,000, or 11.6%, over the third quarter 2010 amount. EBITDA of Reis Services for the nine months ended September 30, 2011 was $8,089,000, an increase of $993,000, or 14.0%, over the corresponding 2010 period. These increases are directly impacted by the increases in revenue as described above while maintaining EBITDA margins for the Reis Services segment at 40%. On a consecutive quarter basis, EBITDA of Reis Services decreased $26,000, or 0.9%, in the third quarter 2011 from the second quarter 2011. This decrease is directly attributable to the $90,000 revenue decline previously described in this section.

Reconciliations of Income (Loss) from Continuing Operations to EBITDA and Adjusted EBITDA

EBITDA is defined as earnings before interest, taxes, depreciation and amortization. Adjusted EBITDA is defined as earnings before interest, taxes, depreciation, amortization and stock based compensation. Although EBITDA and Adjusted EBITDA are not measures of performance calculated in accordance with GAAP, senior management uses EBITDA and Adjusted EBITDA to measure operational and management performance. Management believes that EBITDA and Adjusted EBITDA are appropriate metrics that may be used by investors as supplemental financial measures to be considered in addition to the reported GAAP basis financial information to assist investors in evaluating and understanding (1) the performance of the Reis Services segment, the primary business of the Company and (2) the Company’s continuing consolidated results, from year to year or period to period, as applicable. Further, these measures provide the reader with the ability to understand our operational performance while isolating non-cash charges, such as depreciation and amortization expenses, as well as other non-operating items, such as interest income, interest expense and income taxes and, in the case of Adjusted EBITDA, isolates non-cash charges for stock based compensation. Management also believes that disclosing EBITDA and Adjusted EBITDA will provide better comparability to other companies in the information services sector. EBITDA and Adjusted EBITDA are presented both for the Reis Services business and on a consolidated basis. We believe that these metrics, for Reis Services, provide the reader with valuable information for evaluating the financial performance of the core Reis Services business, excluding public company costs, and to make assessments about the intrinsic value of that stand-alone business to a potential acquirer. Management primarily monitors and measures its performance, and is compensated, based on the results of the Reis Services business. EBITDA and Adjusted EBITDA, on a consolidated basis, allow the reader to make assessments about the current trading value of the Company’s common stock, including expenses related to operating as a public company. However, investors should not consider these measures in isolation or as substitutes for net income (loss), income (loss) from continuing operations, operating income (loss), or any other measure for determining operating performance that is calculated in accordance with GAAP. In addition, because EBITDA and Adjusted EBITDA are not calculated in accordance with GAAP, they may not necessarily be comparable to similarly titled measures employed by other companies.

Reconciliations of EBITDA and Adjusted EBITDA to the most comparable GAAP financial measure, income (loss) from continuing operations, follow for each identified period on a segment basis (including the Reis Services segment), as well as on a consolidated basis:

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(amounts in thousands)

Reconciliation of Income from Continuing Operations to EBITDA and	By Segment
Adjusted EBITDA for the Three Months Ended September 30, 2011	Reis Services		Other (A)			Consolidated
Income from continuing operations						$	289
Income tax expense							—
Income (loss) before income taxes	$	1,357	$	(1,068	)		289
Add back:
Depreciation and amortization expense		1,318		1			1,319
Interest expense (income), net		47		(2	)		45
EBITDA		2,722		(1,069	)		1,653
Add back:
Stock based compensation expense, net		—		446			446
Adjusted EBITDA	$	2,722	$	(623	)	$	2,099
Reconciliation of Income from Continuing Operations to EBITDA and	By Segment
Adjusted EBITDA for the Nine Months Ended September 30, 2011	Reis Services		Other (A)			Consolidated
Income from continuing operations						$	489
Income tax expense							—
Income (loss) before income taxes and discontinued operations	$	4,130	$	(3,641	)		489
Add back:
Depreciation and amortization expense		3,801		2			3,803
Interest expense, net		158		(5	)		153
EBITDA		8,089		(3,644	)		4,445
Add back:
Stock based compensation expense, net		—		1,667			1,667
Adjusted EBITDA	$	8,089	$	(1,977	)	$	6,112
Reconciliation of Income from Continuing Operations to EBITDA and	By Segment
Adjusted EBITDA for the Three Months Ended September 30, 2010	Reis Services		Other (A)			Consolidated
Income from continuing operations						$	116
Income tax expense							79
Income (loss) before income taxes	$	1,254	$	(1,059	)		195
Add back:
Depreciation and amortization expense		1,114		1			1,115
Interest expense (income), net		72		(5	)		67
EBITDA		2,440		(1,063	)		1,377
Add back:
Stock based compensation expense, net		—		416			416
Adjusted EBITDA	$	2,440	$	(647	)	$	1,793
Reconciliation of (Loss) from Continuing Operations to EBITDA and	By Segment
Adjusted EBITDA for the Nine Months Ended September 30, 2010	Reis Services		Other (A)			Consolidated
(Loss) from continuing operations						$	(99	)
Income tax (benefit)							(63	)
Income (loss) before income taxes	$	3,316	$	(3,478	)		(162	)
Add back:
Depreciation and amortization expense		3,549		4			3,553
Interest expense (income), net		231		(15	)		216
EBITDA		7,096		(3,489	)		3,607
Add back:
Stock based compensation expense, net		—		1,201			1,201
Adjusted EBITDA	$	7,096	$	(2,288	)	$	4,808

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(amounts in thousands)

Reconciliation of Income from Continuing Operations to EBITDA and	By Segment
Adjusted EBITDA for the Three Months Ended June 30, 2011	Reis Services		Other (A)			Consolidated
Income from continuing operations						$	100
Income tax expense							—
Income (loss) before income taxes	$	1,448	$	(1,348	)		100
Add back:
Depreciation and amortization expense		1,249		—			1,249
Interest expense (income), net		51		(2	)		49
EBITDA		2,748		(1,350	)		1,398
Add back:
Stock based compensation expense, net		—		675			675
Adjusted EBITDA	$	2,748	$	(675	)	$	2,073

(A) Includes interest and other income, depreciation expense and general and administrative expenses (including public company related costs) that are not associated with the Reis Services segment. Since the reconciliations start with income (loss) from continuing operations, the effects of the discontinued operations (residential development activities) are excluded from these reconciliations for all periods presented.

Results of Operations

Comparison of the Results of Operations for the Three Months Ended September 30, 2011 and 2010

Subscription revenues and related cost of sales were approximately $6,747,000 and $1,550,000, respectively, for the three months ended September 30, 2011, resulting in a gross profit for the Reis Services segment of approximately $5,197,000. Amortization expense included in cost of sales (for the database intangible asset) was approximately $601,000 during this period. Subscription revenues and related cost of sales were approximately $6,013,000 and $1,403,000, respectively, for the three months ended September 30, 2010, resulting in a gross profit for the Reis Services segment of approximately $4,610,000. Amortization expense included in cost of sales was approximately $526,000 during this period. See “— Critical Business Metrics of the Reis Services Business” for a discussion of the variances and trends in revenue and EBITDA of the Reis Services segment. The increase in cost of sales of $147,000 is a result of increased database amortization expense and higher employment related costs from hiring during 2010 and 2011, coupled with related benefits and wage increases over the 2010 period.

Sales and marketing expenses were approximately $1,656,000 and $1,369,000 for the three months ended September 30, 2011 and 2010, respectively, and solely represent costs of the Reis Services segment. Amortization expense included in sales and marketing expenses (for the customer relationships intangible asset) was approximately $247,000 and $250,000 during the three months ended September 30, 2011 and 2010, respectively. The expense increase for sales and marketing expenses between the two periods of approximately $287,000 generally reflects increased commissions and employment related costs from hiring during 2010 and 2011, coupled with related benefits and wage increases over the 2010 period.

Product development expenses were approximately $574,000 and $419,000 for the three months ended September 30, 2011 and 2010, respectively, and solely represent costs of the Reis Services segment. Amortization expense included in product development expenses (for the web site intangible asset) was approximately $308,000 and $178,000 during the three months ended September 30, 2011 and 2010, respectively. Product development costs increased $155,000, primarily due to a net increase in amortization expense of $130,000 from web site costs capitalized and amortization expense commencing in the second quarter of 2011 for the ReisReports web site and other significant product introductions and improvements in 2010 and 2011, in excess of Merger related purchase price allocations becoming fully amortized in 2010.

General and administrative expenses of $2,633,000 for the three months ended September 30, 2011 include current period expenses of $2,024,000, depreciation and amortization expense of $163,000 for lease value and furniture, fixtures and equipment, and approximately $446,000 of non-cash compensation expense. The non-cash compensation expense is comprised of compensation expense resulting from equity awards for employees and directors of approximately $522,000, offset by an approximate $76,000 decrease in the liability for option cancellations due to a decrease in the market price of the Company’s common stock from $9.93 per share at June 30, 2011 to $8.86 per share at September 30, 2011. General and administrative expenses of $2,560,000 for the three

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months ended September 30, 2010 include current period expenses of $1,985,000, depreciation and amortization expense of $159,000 for lease value and furniture, fixtures and equipment, and approximately $416,000 of net non-cash compensation expense. The net non-cash compensation expense is comprised of compensation expense resulting from equity awards for employees and directors of approximately $409,000 and an approximate $7,000 increase in the liability for option cancellations due to an increase in the market price of the Company’s common stock from $6.31 per share at June 30, 2010 to $6.39 per share at September 30, 2010. Excluding the non-cash items, the modest net increase in general and administrative expenses of $39,000 is a result of increased rent related costs for additional office space and higher benefit costs and compensation increases over the 2010 period, offset by reduced professional fees.

Interest expense of $65,000 for the three months ended September 30, 2011 primarily includes interest and cost amortization on the Reis Services debt, which we refer to as the Bank Loan. Interest expense of $96,000 for the three months ended September 30, 2010 includes interest and cost amortization on the Bank Loan of $94,000 and interest from other debt of $2,000. The lower expense in 2011 is the result of lower outstanding balances in the 2011 period.

The income tax benefit from continuing operations during the three months ended September 30, 2010 of $79,000 reflects deferred Federal tax expense of $63,000 and deferred state and local tax expense of $16,000 as a result of a pre-tax income from continuing operations in the period. No provision was recorded by the Company in 2011 as a result of the corresponding reduction in the Company’s allowance for deferred tax assets.

Comparison of the Results of Operations for the Nine Months Ended September 30, 2011 and 2010

Subscription revenues and related cost of sales were approximately $20,201,000 and $4,623,000, respectively, for the nine months ended September 30, 2011, resulting in a gross profit for the Reis Services segment of approximately $15,578,000. Amortization expense included in cost of sales (for the database intangible asset) was approximately $1,778,000 during this period. Subscription revenues and related cost of sales were approximately $18,031,000 and $4,402,000, respectively, for the nine months ended September 30, 2010, resulting in a gross profit for the Reis Services segment of approximately $13,629,000. Amortization expense included in cost of sales was approximately $1,681,000 during this period. See “— Critical Business Metrics of the Reis Services Business” for a discussion of the variances and trends in revenue and EBITDA of the Reis Services segment. The increase in cost of sales of $221,000 is primarily a result of increased database amortization expense and higher employment related costs from hiring during 2010 and 2011, coupled with related benefits and wage increases over the 2010 period.

Sales and marketing expenses were approximately $4,989,000 and $4,360,000 for the nine months ended September 30, 2011 and 2010, respectively, and solely represent costs of the Reis Services segment. Amortization expense included in sales and marketing expenses (for the customer relationships intangible asset) was approximately $744,000 and $751,000 during the nine months ended September 30, 2011 and 2010, respectively. The expense increase for sales and marketing expenses between the two periods of approximately $629,000 generally reflects increased commissions and employment related costs from hiring during 2010 and 2011, coupled with related benefits and wage increases over the 2010 period.

Product development expenses were approximately $1,562,000 and $1,353,000 for the nine months ended September 30, 2011 and 2010, respectively, and solely represent costs of the Reis Services segment. Amortization expense included in product development expenses (for the web site intangible asset) was approximately $800,000 and $638,000 during the nine months ended September 30, 2011 and 2010, respectively. Product development costs increased $209,000, primarily due to a net increase in amortization expense of $162,000 from web site costs capitalized and amortization expense commencing in the period for the ReisReports web site and other significant product introductions and improvements in 2010 and 2011, in excess of Merger related purchase price allocations becoming fully amortized in 2010.

General and administrative expenses of $8,385,000 for the nine months ended September 30, 2011 include current period expenses of $6,236,000, depreciation and amortization expense of $482,000 for lease value and furniture, fixtures and equipment, and approximately $1,667,000 of non-cash compensation expense. The non-cash compensation expense is comprised of compensation expense resulting from equity awards for employees and directors of approximately $1,537,000 and by an approximate $130,000 increase in the liability for option cancellations due to an increase in the market price of the Company’s common stock from $7.03 per share at December 31, 2010 to $8.86 per share at September 30, 2011. General and administrative expenses of $7,862,000 for the nine months ended September 30, 2010 include current period expenses of $6,179,000, depreciation and amortization expense of $482,000 for lease value and furniture, fixtures and equipment, and approximately $1,201,000 of net non-cash compensation expense. The net non-cash compensation expense is comprised of compensation expense resulting from equity awards for employees and directors of approximately $1,180,000 and by an approximate $21,000 increase in the liability for option cancellations due to an increase in the market price of the Company’s common stock from $6.15 per share at December 31, 2009 to $6.39 per share at September 30, 2010.

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Excluding the non-cash items, the increase in general and administrative expenses of $57,000 is primarily a result of increased rent related costs for additional office space and higher benefit costs and compensation increases over the 2010 period.

Interest expense of $215,000 for the nine months ended September 30, 2011 includes interest and cost amortization on the Bank Loan of $213,000 and interest from other debt of $2,000. Interest expense of $318,000 for the nine months ended September 30, 2010 includes interest and cost amortization on the Bank Loan of $309,000 and interest from other debt of $9,000. The lower expense in 2011 is the result of lower outstanding balances in the 2011 period.

The income tax benefit from continuing operations during the nine months ended September 30, 2010 of $63,000 reflects a deferred Federal benefit of $51,000 and a deferred state tax benefit of $12,000 as a result of the pre-tax loss from continuing operations in the first nine months of 2010. No provision was recorded by the Company in 2011 as a result of the corresponding reduction in the Company’s allowance for deferred tax assets.

Income from discontinued operations, net of income tax expense, was approximately $1,253,000 and $143,000 during the nine months ended September 30, 2011 and 2010, respectively. The 2011 net amount includes the sale of the East Lyme project in a bulk transaction in April 2011 for a gain of $1,242,000 and net other income of $11,000. The 2010 income from discontinued operations primarily reflects the sale of the Claverack project in a bulk transaction in February 2010 for a gain of $263,000, the sale of one home and two lots at East Lyme in 2010 and the reversal of certain employment related contractual obligations for amounts less than prior period accruals, offset by operating expenses and related general and administrative expenses and a $97,000 deferred tax provision.

Income Taxes

Deferred income taxes reflect the net tax effects of temporary differences between the carrying amount of assets and liabilities for financial reporting purposes and the amounts used for income tax purposes. The net deferred tax liability was approximately $67,000 at September 30, 2011 and December 31, 2010, respectively, and is reflected as a non-current liability in the accompanying consolidated balance sheets. The significant portion of the deferred tax items relates to: (1) the tax benefit of impairment charges before allowances at December 31, 2010; (2) net operating loss, or NOL, carryforwards; (3) Federal alternative minimum tax (“AMT”) credit carryforwards; and (4) stock based compensation, all as they relate to deferred tax assets; and (5) the deferred tax liability resulting from the intangible assets recorded at the time of the Merger as it relates to deferred tax liabilities.

A valuation allowance is required to reduce the deferred tax assets if, based on the weight of the evidence, it is more-likely-than-not that some portion or all of the deferred tax assets will not be realized. Accordingly, management has determined that a valuation allowance of approximately $7,550,000 and $8,254,000 at September 30, 2011 and December 31, 2010, respectively, was necessary. The allowance at September 30, 2011 and December 31, 2010 relates primarily to AMT credits and existing and expected NOL carryforwards, and in 2010, the excess of a portion of the tax basis of certain real estate development assets over their respective financial statement basis. The reduction in the allowance during the nine months ended September 30, 2011 results from the realization of a portion of the excess tax basis upon the sale of the East Lyme project, which was used to offset the Company’s pre-tax income in this period.

Liquidity and Capital Resources

Cash and cash equivalents aggregated approximately $22,268,000 at September 30, 2011, including approximately $18,227,000 in the Reis Services segment. Management considers such amounts to be adequate and expects its cash balances to continue to be adequate to meet operating, product development and enhancement initiatives and debt service requirements in both the short and long terms at both the Reis Services segment and on a consolidated basis. At September 30, 2011, the Company, on a consolidated basis and at the Reis Services segment level, was net cash positive (defined as cash and cash equivalents, minus total debt) by approximately $15,188,000 and $11,147,000, respectively. At December 31, 2010, the Company, on a consolidated basis and at the Reis Services segment level, was net cash positive by approximately $8,914,000 and $4,662,000, respectively. Net cash on a consolidated basis and at the Reis Services level grew by approximately $6,274,000 and $6,485,000, respectively, from December 31, 2010 to September 30, 2011, which management believes is a strong indicator of the cash generation power of the Reis Services business model.

At September 30, 2011, the Company’s short-term liquidity requirements include: current operating and capitalizable costs; near-term product development and enhancement of the web site and databases; the current portion of long-term debt (comprised of scheduled principal payments of approximately $7,074,000 on the Bank Loan, payable by September 30, 2012); operating and capital leases; remaining warranty costs and insurance deductibles related to real estate construction from our discontinued operations; other costs, including public company expenses not included in the Reis Services segment; repurchases of shares of Reis common stock (of which

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$612,000 remained available at September 30, 2011 pursuant to the August 2011 Board authorization) and the potential settlement of certain outstanding stock options in cash (the liability for which was approximately $287,000 at September 30, 2011 based upon the closing stock price of the Company at September 30, 2011 of $8.86 per share). The Company expects to meet these short-term liquidity requirements generally through the use of available cash and cash generated from subscription revenue of Reis Services. The Company expects that in the short term, it will be able to utilize its NOLs and that taxes to be paid will be for alternative state and local taxes, and possibly AMT, but not for Federal income taxes.

The Company’s long-term liquidity requirements include: future operating and capitalizable costs; long-term product development and enhancements of the web site and databases; operating leases and other capital expenditures; remaining warranty costs and insurance deductibles related to real estate construction from our discontinued operations; other costs, including public company expenses not included in the Reis Services segment; and repurchases of additional shares of Reis common stock. The Company expects to meet these long-term liquidity requirements generally through the use of available cash and cash generated from subscription revenue of Reis Services. The Company has NOLs that it expects to be able to use in the next few years against future taxable income for Federal, state and local tax purposes (to the extent that taxable income is generated). Tax payments during the next few years are expected to be for alternative state and local taxes and AMT, but not for Federal income taxes.

Reis Services Bank Loan

In connection with the Merger agreement, Private Reis entered into a credit agreement, dated October 11, 2006, with the Bank of Montreal, Chicago Branch, as administrative agent, and BMO Capital Markets, as lead arranger, which provided for a term loan of up to an aggregate of $20,000,000 and revolving loans up to an aggregate of $7,000,000. Loan proceeds were used to finance $25,000,000 of the cash portion of the Merger consideration. The balance of the Bank Loan was $7,074,000 and $11,222,000 at September 30, 2011 and December 31, 2010, respectively. The interest rate was LIBOR + 1.50% at September 30, 2011 and December 31, 2010 (LIBOR was 0.24% and 0.26% at September 30, 2011 and December 31, 2010, respectively).

Reis Services is required to (1) make principal payments on the term loan on a quarterly basis commencing on June 30, 2007 in increasing amounts pursuant to the payment schedule provided in the credit agreement and (2) permanently reduce the revolving loan commitments on a quarterly basis, which commenced on March 31, 2010. Additional principal payments are payable if Reis Services’s annual cash flow exceeds certain amounts, or if certain defined operating ratios are not met, all of which are defined in the credit agreement. The final maturity date of all amounts borrowed pursuant to the credit agreement is September 30, 2012. At September 30, 2011 and December 31, 2010, the Company did not have the ability to borrow any additional amounts under the Bank Loan.

In accordance with the terms of the credit agreement, beginning January 1, 2010 and through the maturity of the Bank Loan, the required leverage ratio was reduced to a maximum of 2.00 to 1.00 from a maximum of 2.50 to 1.00. In order to be in compliance with the leverage ratio test, management made a payment of $3,000,000 at March 31, 2010 in addition to the contractual minimum repayment of $1,000,000 due at that time. Although not required to do so, the Company made additional prepayments of $500,000 at the end of the second, third and fourth quarters of 2010 (aggregating $1,500,000), each of which was in excess of the minimum repayments due at such dates. All of the 2010 prepayments ratably reduced Reis Services’s future quarterly contractual minimum payments through maturity. No additional prepayments, in excess of minimum repayments, were made during the nine months ended September 30, 2011.

Discontinued Operations Impact on Liquidity

Cash flows from discontinued operations during 2010 and in the nine months ended September 30, 2011 were primarily related to the sales of assets and the operating costs and related expenses through the dates of sales. Cash flows from discontinued operations were included in the consolidated statement of cash flows in the operating activities section in accordance with the applicable accounting literature. Future cash flows will be limited to the settlement of liabilities and real estate contingencies as described below.

East Lyme

Prior to its sale in April 2011, the Company’s last remaining residential development was The Orchards, a single family home development in East Lyme, Connecticut, zoned for 161 single family homes on 224 acres, which we refer to as East Lyme.

The East Lyme project was sold in a bulk transaction for a gross sales price of $1,800,000 for the remaining 119 lots in inventory, plus the release of approximately $792,000 of project-related deposits and escrows held as restricted cash. Net cash received at closing,

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after selling expenses and closing adjustments, and including the cash received upon release of the deposits and escrows, aggregated approximately $2,600,000. As a result of this transaction, the Company recorded a gain in the second quarter of 2011 of approximately $1,242,000, which is included in income from discontinued operations. The Company sold two lots during the three months ended September 30, 2010 and sold two lots and one home during the nine months ended September 30, 2010.

Certain of the lots at East Lyme required remediation of pesticides which were used on the property when it was an apple orchard. Remediation would have been required prior to the development of those lots. The remediation plan, the cost of which was estimated by management to be approximately $1,000,000, had been approved by the health inspector for the municipality and the town planner. The estimated remediation cost was recognized in prior years and was reflected in liabilities attributable to discontinued operations in the December 31, 2010 consolidated balance sheet. As a result of the sale, the Company was indemnified from any financial obligation related to the environmental remediation and reversed this liability, which amount is included in the gain reported in the second quarter of 2011, as referred to above.

Claverack

Prior to its sale in February 2010, the Company owned approximately 235 acres in Claverack, New York, which was subdivided into 48 developable single family home lots. In February 2010, the Company sold the Claverack project in a bulk transaction for a gross sales price of $2,750,000, which included two model homes, amenities, 46 additional lots and $450,000 of cash collateralizing certain road completion obligations. Net cash received at closing, after expenses, aggregated approximately $2,187,000. The remaining $450,000 of the purchase price was payable by the purchaser in February 2011 and had been secured by the outstanding road bond and a mortgage on the property. As a result of this transaction, the Company recorded a gain of approximately $263,000 in the first quarter of 2010, which is included in income from discontinued operations. In February 2011, the Company received cash of approximately $455,000 in full satisfaction of the mortgage note and accrued interest thereon.

Real Estate Contingencies

Reis has purchased insurance with respect to construction defect and completed operations at its past real estate projects, including those projects described above. Reis is, from time to time, exposed to various claims associated with the development, construction and sale of condominium units, single family homes or lots. The impact of these claims on the Company has not been material to date. However, claims related to dissatisfaction by homeowners and homeowners’ associations with the construction of condominiums, homes and amenities by us and/or our developer partners in any condominium or subdivision development, or other matters, may result in litigation costs, remediation costs, warranty expenses or settlement costs which could be material to the Company’s reportable discontinued operating income (loss), or its consolidated financial position or cash flows. It would not have any effect on the Company’s income from continuing operations.

In October 2010, the homeowners’ association at the Company’s former Gold Peak condominium project (located outside of Denver, Colorado), brought suit against the Company, two of its subsidiaries, and other contractors and individuals alleging design and construction defects. In October 2011, experts for the plaintiff delivered a report alleging a cost to repair of approximately $19 million. Trial is scheduled for February 2012. In connection with the development of Gold Peak, the Company purchased a commercial general liability “wrap” insurance policy covering the Company, the general contractor and the subcontractors. The Company is taking action to ensure that all applicable insurance policies maintained by co-defendants or others are brought into the case. The Company believes that it and its co-defendants have valid defenses to some or all of the plaintiff’s allegations, that insurance (subject to limited self insurance retainage/deductibles (“SIRs”)) will cover some or all of any eventual settlement or judgment, and that the defendants other than the Company will likely be liable for some or all of any remaining settlement judgment amount.

At this time, based on advice of counsel and the Company’s experience with similar prior actions, the low end of the expected range of exposure is believed to be equal to the amount of the Company’s SIRs plus other costs. Accordingly, the Company is maintaining a reserve of approximately $280,000, which liability is included in liabilities attributable to discontinued operations on the September 30, 2011 balance sheet. Although the Company does not believe that it will be required to pay any amount above the reserved amount, it is possible that a settlement or judgment in this matter could involve the payment by the Company of an amount that could be material to the Company’s reportable discontinued operating income (loss), its consolidated financial position or cash flows. It would not have any effect on the Company’s income from continuing operations.

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Changes in Cash Flows

Comparison of Cash Flows for the Nine Months Ended September 30, 2011 and 2010

Cash flows for the nine months ended September 30, 2011 and 2010 are summarized as follows:

	For the Nine Months Ended
	September 30,
	2011			2010
Net cash provided by operating activities	$	9,854,384		$	6,005,930
Net cash (used in) investing activities		(2,840,154	)		(1,919,177	)
Net cash (used in) financing activities		(4,910,092	)		(7,190,804	)
Net increase (decrease) in cash and cash equivalents	$	2,104,138		$	(3,104,051	)

Cash flows provided by operating activities increased $3,848,000 from $6,006,000 provided in the 2010 period to $9,854,000 provided in the 2011 period. The increase resulted from (1) increased cash flows from operating activities of the Reis Services segment of $2,380,000 from $6,900,000 provided in the 2010 period to $9,280,000 provided in the 2011 period, primarily due to increased collections in the 2011 period (on a higher accounts receivable balance at December 31, 2010 than the December 31, 2009 amount) and (2) cash from the sale proceeds of the East Lyme property, mortgage note receivable repayment and escrow releases in 2011 in excess of the 2010 real estate sales activities.

Cash flows used in investing activities increased $921,000 from $1,919,000 used in the 2010 period to $2,840,000 used in the 2011 period. This change primarily resulted from an increase of $713,000 for cash used in the 2011 period as compared to the 2010 period for web site and database development costs from continuing product development and enhancement initiatives and $198,000 of furniture, fixture and equipment additions in 2011 in excess of 2010 additions.

Cash flows used in financing activities decreased $2,281,000 from $7,191,000 used in the 2010 period to $4,910,000 used in the 2011 period. During the 2010 period, $6,506,000 was repaid on the Bank Loan whereas $4,148,000 was repaid in the 2011 period. In the 2010 period, the Company repurchased 49,191 shares of its outstanding common stock for approximately $308,000 as compared to 43,249 shares being repurchased in the 2011 period for approximately $388,000. Other debt repayments in the 2010 period exceeded the payments in the 2011 period by $137,000. Payments for restricted stock unit settlements were approximately $352,000 and $218,000 in the 2011 and 2010 periods, respectively.

Cautionary Statement Regarding Forward-Looking Statements

This quarterly report on Form 10-Q contains “forward-looking statements” within the meaning of the U.S. Private Securities Litigation Reform Act of 1995. These forward-looking statements may relate to the Company’s or management’s outlook or expectations for earnings, revenues, expenses, asset quality, or other future financial or business performance, strategies, prospects or expectations, or the impact of legal, regulatory or supervisory matters on our business, operations or performance. Specifically, forward-looking statements may include:

• statements relating to future services and product development of the Reis Services segment;

• statements relating to future business prospects, potential acquisitions, revenue, expenses, income (loss), cash flows, valuation of assets and liabilities and other business metrics of the Company and its businesses, including EBITDA, Adjusted EBITDA and Aggregate Revenue Under Contract; and

• statements preceded by, followed by or that include the words “estimate,” “plan,” “project,” “intend,” “expect,” “anticipate,” “believe,” “seek,” “target” or similar expressions relating to future periods.

Forward-looking statements reflect management’s judgment based on currently available information and involve a number of risks and uncertainties that could cause actual results to differ materially from those in the forward-looking statements. With respect to these forward-looking statements, management has made certain assumptions. Future performance cannot be assured. Actual results may differ materially from those contemplated by the forward-looking statements. Some factors that could cause actual results to differ include:

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• revenues may be lower than expected;

• inability to retain and increase the Company’s subscriber base;

• inability to execute properly on new product or service initiatives, or failure of subscribers to accept these products and services;

• competition;

• inability to attract and retain sales and senior management personnel;

• difficulties in protecting the security, confidentiality, integrity and reliability of the Company’s data;

• changes in accounting policies or practices;

• legal and regulatory issues; and

• the risk factors listed under “Item 1A. Risk Factors” of our annual report on Form 10-K for the year ended December 31, 2010, which was filed with the Securities and Exchange Commission on March 11, 2011.

You are cautioned not to place undue reliance on any forward-looking statements, which speak only as of the date of this quarterly report on Form 10-Q. Except as required by law, the Company undertakes no obligation to publicly update or release any revisions to these forward-looking statements to reflect any events or circumstances after the date of this quarterly report on Form 10-Q or to reflect the occurrence of unanticipated events.

Item 3. Quantitative and Qualitative Disclosures about Market Risk.

The Company’s primary market risk exposure has been to changes in interest rates. This risk is generally managed by limiting the Company’s financing exposures, to the extent possible, by purchasing interest rate caps when and if deemed appropriate.

At September 30, 2011, the Company’s only exposure to interest rates was variable rate based debt. This exposure has historically been minimized through the use of interest rate caps. The interest rate cap on the Bank Loan expired at June 30, 2010. The following table presents the effect of a 1% increase in the applicable base rates of variable rate debt at September 30, 2011:

(amounts in thousands)	Balance at		LIBOR at			Additional
	September 30,		September 30,			Interest
	2011		2011			Incurred
Variable rate debt:
Bank Loan	$	7,074		0.24	%	$	71	(A)

(A) Reflects additional interest which could be incurred annually on the loan balance amount as a result of a 1% increase in LIBOR. It does not take into consideration future periodic repayments.

Although the interest rate cap expired at June 30, 2010, our interest rate exposure on the Bank Loan will continue to diminish significantly as a result of continuing scheduled principal repayments during 2011 and through maturity at September 30, 2012.

Reis holds cash and cash equivalents at various regional and national banking institutions. Management monitors the institutions that hold our cash and cash equivalents. Management’s emphasis is primarily on safety of principal. Management, in its discretion, has diversified Reis’s cash and cash equivalents among banking institutions to potentially minimize exposure to any one of these entities. To date, we have experienced no loss or lack of access to our invested cash or cash equivalents; however, we can provide no assurances that access to invested cash and cash equivalents will not be impacted by adverse conditions in the financial markets.

Cash balances held at banking institutions with which we do business may exceed the Federal Deposit Insurance Corporation insurance limits. While management monitors the cash balances in these bank accounts, such cash balances could be impacted if the underlying banks fail or could be subject to other adverse conditions in the financial markets.

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Item 4. Controls and Procedures.

As of September 30, 2011, the Company carried out an evaluation, under the supervision and with the participation of our management, including our Chief Executive Officer and Chief Financial Officer, of the effectiveness of our disclosure controls and procedures. Based on this evaluation, our Chief Executive Officer and Chief Financial Officer have concluded that our disclosure controls and procedures as of September 30, 2011 were designed at a reasonable assurance level and were effective to ensure that information required to be disclosed by the Company in the reports that the Company files or submits under the Securities Exchange Act of 1934, as amended, is recorded, processed, summarized and reported, within the time periods specified in the SEC rules and forms, and to ensure that such information is accumulated and communicated to the Company’s management, including the Chief Executive Officer and Chief Financial Officer, as appropriate, to allow timely decisions regarding required disclosure.

There has been no change in the Company’s internal control over financial reporting during the quarter covered by this report that has materially affected, or is reasonably likely to materially affect, the Company’s internal control over financial reporting.

Part II. Other Information

Item 1. Legal Proceedings.

The Company and two of its subsidiaries are the subject of a suit brought by the homeowners’ association at the Company’s former Gold Peak condominium project outside of Denver, Colorado. This suit was filed in District Court in Douglas County, Colorado on October 19, 2010, seeking monetary damages (not quantified at the time) relating to the alleged design and construction defects at the Gold Peak project. The construction manager/general contractor, the individual owner of the construction manager/general contractor and the civil engineer for the Gold Peak project have also been named as defendants in the suit. In October 2011, experts for the plaintiff delivered a report alleging a cost to repair of approximately $19 million. Trial is scheduled for February 2012.

In connection with the development of Gold Peak, the Company purchased a commercial general liability “wrap” insurance policy covering the Company, the general contractor and the subcontractors. The Company, upon advice of counsel and based on a reading of the policy as written, has taken the position that a total of $9 million of coverage is available for this claim. The insurer has taken the position that only $3 million of coverage is provided. The Company is taking action to ensure that all applicable insurance policies maintained by co-defendants or others are brought into the case.

The Company believes that it and its co-defendants have valid defenses to some or all of the plaintiff’s allegations, that insurance (subject to limited self insurance retainage/deductibles (“SIRs”)) will cover some or all of any eventual settlement or judgment, and that the defendants other than the Company will likely be liable for some or all of any remaining settlement judgment amount.

At this time, based on advice of counsel and the Company’s experience with similar prior actions, the low end of the expected range of exposure is believed to be equal to the amount of the Company’s SIRs plus other costs. Accordingly, the Company is maintaining a reserve of approximately $280,000, which liability is included in liabilities attributable to discontinued operations on the September 30, 2011 balance sheet. Although the Company does not believe that it will be required to pay any amount above the reserved amount, it is possible that a settlement or judgment in this matter could involve the payment by the Company of an amount that could be material to the Company’s reportable discontinued operating income (loss), its consolidated financial position or cash flows. It would not have any effect on the Company’s income from continuing operations.

Neither the Company nor any of its subsidiaries is a party to any other litigation that could reasonably be foreseen to be material to the Company.

Item 1A. Risk Factors.

A wide range of risks may affect our business and financial results, now and in the future; however, we consider the risks described under “Item 1A. Risk Factors” in our annual report on Form 10-K for the year ended December 31, 2010, which was filed with the SEC on March 11, 2011, to be the most significant. There may be other currently unknown or unpredictable economic, business, competitive, governmental or other factors that could have material adverse effects on our business or future results.

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

Issuer Purchases of Equity Securities

Between December 2008 and June 2010, the Board authorized the repurchase of up to an aggregate amount of $4,000,000 of the Company’s common stock, which authorizations were fully utilized by December 2010. In August 2011, the Board authorized an additional $1,000,000 to make stock repurchases (of which $612,000 remained available as of September 30, 2011). The stock repurchases are permitted from time to time in the open market or through privately negotiated transactions. Depending on market conditions, financial developments and other factors, additional amounts may be authorized by the Board whereby future purchases could be commenced or suspended at any time, or from time to time, without prior notice. The Company may make purchases pursuant to a trading plan under Securities Exchange Act Rule 10b5-1, permitting open market purchases of common stock during blackout periods consistent with the Company’s “Policies for Transactions in Reis Stock and Insider Trading and Tipping.” During the third quarter of 2011, the Company repurchased the following common shares:

							Maximum Dollar
					Total Number of		Value of Shares
					Shares Purchased		That May Yet Be
					as Part of Publicly		Purchased Under
	Total Number of		Average Price		Announced Plans		the Plans or
Period	Shares Purchased		Paid per Share		or Programs		Programs
July 1, 2011 to July 31, 2011		—	$	—		—	$	—
August 1, 2011 to August 31, 2011		1,249	$	9.11		1,249	$	989,000
September 1, 2011 to September 30, 2011		42,000	$	8.98		42,000	$	612,000

Item 3. Defaults Upon Senior Securities.

None.

Item 4. Reserved.

Item 5. Other Information.

None.

Item 6. Exhibits.

Exhibits filed with this Form 10-Q:

Exhibit
No.		Description
	31.1	Chief Executive Officer Certification pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.
	31.2	Chief Financial Officer Certification pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.
	32.1	Chief Executive Officer and Chief Financial Officer Certifications pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.
	101	Interactive Data Files, formatted in extensible Business Reporting Language (XBRL).*

* Pursuant to Rule 406T of Regulation S-T, the Interactive Data Files included as Exhibit 101 hereto are deemed not filed or part of a registration statement or prospectus for purposes of Sections 11 or 12 of the Securities Act of 1933, as amended, are deemed not filed for purposes of Section 18 of the Securities Exchange Act of 1934, as amended, and otherwise are not subject to liability under those sections.

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SIGNATURES

Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.

REIS, INC.
By:	/s/ Mark P. Cantaluppi
	Mark P. Cantaluppi
	Vice President, Chief Financial Officer

Dated: November 3, 2011

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EX-31.1

Exhibit 31.1

CERTIFICATION PURSUANT TO
17 CFR 240.13a-14(a),
AS ADOPTED PURSUANT TO

SECTION 302 OF THE SARBANES-OXLEY ACT OF 2002

I, Lloyd Lynford, certify that:

1.	I have reviewed this quarterly report on Form 10-Q of Reis, 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 3, 2011

By:	/s/ Lloyd Lynford
	Lloyd Lynford
	Chief Executive Officer

EX-31.2

Exhibit 31.2

CERTIFICATION PURSUANT TO
17 CFR 240.13a-14(a),
AS ADOPTED PURSUANT TO

SECTION 302 OF THE SARBANES-OXLEY ACT OF 2002

I, Mark P. Cantaluppi, certify that:

1.	I have reviewed this quarterly report on Form 10-Q of Reis, 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 3, 2011

By:	/s/ Mark P. Cantaluppi
	Mark P. Cantaluppi
	Chief Financial Officer

EX-32.1

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 Reis, Inc. (the “Company”) for the period ended September 30, 2011 as filed with the Securities and Exchange Commission on the date hereof (the “Report”), we, Lloyd Lynford, Chief Executive Officer of the Company, and Mark P. Cantaluppi, Chief Financial Officer of the Company, each certify, to the best of our knowledge, pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, that:

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/ Lloyd Lynford  

Lloyd Lynford 

Chief Executive Officer
Reis, Inc. 

/s/ Mark P. Cantaluppi  

Mark P. Cantaluppi 

Chief Financial Officer
Reis, Inc. 

November 3, 2011

This certification is being furnished solely pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 and is not being filed as part of this Report.

A signed original of this written statement required by Section 906 has been provided to the Company and will be retained by the Company and furnished to the Securities and Exchange Commission or its staff upon request.

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Consolidated Balance Sheets (Unaudited) (Parenthetical) (USD $)	Sep. 30, 2011	Dec. 31, 2010
ASSETS
Accumulated amortization of intangible assets	$ 18,198,744	$ 14,891,406
Stockholders' equity:
Common stock, par value	$ 0.02	$ 0.02
Common stock, shares authorized	101,000,000	101,000,000
Common stock, shares issued	10,562,570	10,472,010
Common stock, shares outstanding	10,562,570	10,472,010

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Consolidated Statements of Operations (Unaudited) (USD $)	3 Months Ended		9 Months Ended
	Sep. 30, 2011	Sep. 30, 2010	Sep. 30, 2011	Sep. 30, 2010
Consolidated Statements of Operations [Abstract]
Subscription revenue	$ 6,747,585	$ 6,013,122	$ 20,201,463	$ 18,031,664
Cost of sales of subscription revenue	1,550,435	1,402,455	4,623,673	4,402,204
Gross profit	5,197,150	4,610,667	15,577,790	13,629,460
Operating expenses:
Sales and marketing	1,656,187	1,369,201	4,988,681	4,360,152
Product development	574,066	419,015	1,562,224	1,353,046
General and administrative expenses	2,632,106	2,560,233	8,384,599	7,861,733
Total operating expenses	4,862,359	4,348,449	14,935,504	13,574,931
Other income (expenses):
Interest and other income	19,321	28,132	61,646	101,400
Interest expense	(65,145)	(95,993)	(214,807)	(317,801)
Total other income (expenses)	(45,824)	(67,861)	(153,161)	(216,401)
Income (loss) before income taxes and discontinued operations	288,967	194,357	489,125	(161,872)
Income tax expense (benefit)		79,000		(63,000)
Income (loss) from continuing operations	288,967	115,357	489,125	(98,872)
Income (loss) from discontinued operations, net of income tax expense of $-, $-, $-, and $97,000, respectively	1,231	(319)	1,253,481	143,237
Net income	$ 290,198	$ 115,038	$ 1,742,606	$ 44,365
Per share amounts - basic:
Income (loss) from continuing operations	$ 0.03	$ 0.01	$ 0.05	$ (0.01)
Net income	$ 0.03	$ 0.01	$ 0.16
Per share amounts - diluted:
Income (loss) from continuing operations	$ 0.02	$ 0.01	$ 0.05	$ (0.01)
Net income	$ 0.02	$ 0.01	$ 0.16
Weighted average number of common shares outstanding:
Basic	10,599,031	10,594,443	10,572,288	10,504,098
Diluted	10,997,157	10,815,890	10,835,602	10,504,098

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Document and Entity Information (USD $)	9 Months Ended
	Sep. 30, 2011	Nov. 01, 2011	Jun. 30, 2010
Document and Entity Information [Abstract]
Entity Registrant Name	Reis, Inc.
Entity Central Index Key	0001038222
Document Type	10-Q
Document Period End Date	Sep. 30, 2011
Amendment Flag	false
Document Fiscal Year Focus	2011
Document Fiscal Period Focus	Q3
Current Fiscal Year End Date	--12-31
Entity Well-known Seasoned Issuer	No
Entity Voluntary Filers	No
Entity Current Reporting Status	Yes
Entity Filer Category	Smaller Reporting Company
Entity Public Float			$ 50,300,000
Entity Common Stock, Shares Outstanding		10,556,570

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Intangible Assets

9 Months Ended

Sep. 30, 2011

Intangible Assets [Abstract]

Intangible Assets

5. Intangible Assets

The amount of identified intangible assets, including the respective amounts of accumulated amortization, are as follows:

	September 30,			December 31,
	2011			2010
Database	$	12,822,000		$	11,395,000
Accumulated amortization		(9,152,000	)		(7,374,000	)
Database, net		3,670,000			4,021,000
Customer relationships		14,100,000			14,100,000
Accumulated amortization		(4,214,000	)		(3,470,000	)
Customer relationships, net		9,886,000			10,630,000
Web site		6,102,000			5,173,000
Accumulated amortization		(3,499,000	)		(2,941,000	)
Web site, net		2,603,000			2,232,000
Acquired below market lease		2,800,000			2,800,000
Accumulated amortization		(1,333,000	)		(1,106,000	)
Acquired below market lease, net		1,467,000			1,694,000
Intangible assets, net	$	17,626,000		$	18,577,000

The Company capitalized approximately $512,000 and $383,000 during the three months ended September 30, 2011 and 2010, respectively, and $1,427,000 and $949,000 during the nine months ended September 30, 2011 and 2010, respectively, to the database intangible asset. The Company capitalized approximately $421,000 and $351,000 during the three months ended September 30, 2011 and 2010, respectively, and $1,171,000 and $936,000 during the nine months ended September 30, 2011 and 2010, respectively, to the web site intangible asset.

Amortization expense for intangible assets aggregated approximately $1,232,000 and $3,549,000 for the three and nine months ended September 30, 2011, of which approximately $601,000 and $1,778,000 related to the database, which is charged to cost of sales, approximately $247,000 and $744,000 related to customer relationships, which is charged to sales and marketing expense, approximately $308,000 and $800,000 related to web site development, which is charged to product development expense, and approximately $76,000 and $227,000 related to the value ascribed to the below market terms of the office lease, which is charged to general and administrative expense, all in the Reis Services segment. Amortization expense for intangible assets aggregated approximately $1,030,000 and $3,297,000 for the three and nine months ended September 30, 2010, of which approximately $526,000 and $1,681,000 related to the database, approximately $250,000 and $751,000 related to customer relationships, approximately $178,000 and $638,000 related to web site development, and approximately $76,000 and $227,000 related to the value ascribed to the below market terms of the office lease.

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Earnings Per Common Share

9 Months Ended

Sep. 30, 2011

Earnings Per Common Share [Abstract]

Earnings Per Common Share

10.   Earnings Per Common Share

Basic earnings per common share are computed based upon the weighted average number of common shares outstanding during the period. Diluted earnings per common share are based upon the increased number of common shares that would be outstanding assuming the exercise of dilutive common share options and the consideration of restricted stock awards. The following table details the computation of earnings per common share, basic and diluted:

	For the Three Months Ended						For the Nine Months Ended
	September 30,						September 30,
	2011			2010			2011		2010
Numerator for basic per share calculation:
Income (loss) from continuing operations for basic calculation	$	288,967		$	115,357		$	489,125	$	(98,872	)
Income (loss) from discontinued operations, net of income tax expense		1,231			(319	)		1,253,481		143,237
Net income for basic calculation	$	290,198		$	115,038		$	1,742,606	$	44,365
Numerator for diluted per share calculation
Income (loss) from continuing operations	$	288,967		$	115,357		$	489,125	$	(98,872	)
Adjustments to income (loss) from continuing operations for the income statement impact of dilutive securities		(75,859	)		—			—		—
Income (loss) from continuing operations for dilution calculation		213,108			115,357			489,125		(98,872	)
Income (loss) from discontinued operations, net of income tax expense		1,231			(319	)		1,253,481		143,237
Net income for dilution calculation	$	214,339		$	115,038		$	1,742,606	$	44,365
Denominator:
Weighted average common shares – basic		10,599,031			10,594,443			10,572,288		10,504,098
Effect of dilutive securities:
RSUs		351,274			221,447			259,561		—
Stock options		46,852			—			3,753		—
Weighted average common shares – diluted		10,997,157			10,815,890			10,835,602		10,504,098
Per common share amounts – basic:
Income (loss) from continuing operations	$	0.03		$	0.01		$	0.05	$	(0.01	)
Income (loss) from discontinued operations		—			—			0.11		0.01
Net income	$	0.03		$	0.01		$	0.16	$	—
Per common share amounts – diluted:
Income (loss) from continuing operations	$	0.02		$	0.01		$	0.05	$	(0.01	)
Income (loss) from discontinued operations		—			—			0.11		0.01
Net income	$	0.02		$	0.01		$	0.16	$	—

Potentially dilutive securities include all stock based awards. For the three months ended September 30, 2011, only certain equity awards were antidilutive. For the nine months ended September 30, 2011 and the three and nine months ended September 30, 2010, certain equity awards, in addition to the option awards accounted for under the liability method, were antidilutive.

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Organization and Business

9 Months Ended

Sep. 30, 2011

Organization and Business [Abstract]

Organization and Business

1.	Organization and Business
	Reis, Inc. (the “Company” or “Reis”) is a Maryland corporation. The Company’s primary business is providing commercial real estate market information and analytical tools for its subscribers, through its Reis Services subsidiary. For disclosure and financial reporting purposes, this business is referred to as the Reis Services segment.
	Reis Services
	Reis Services, including its predecessors, was founded in 1980. Reis maintains a proprietary database containing detailed information on commercial properties in metropolitan markets and neighborhoods throughout the U.S. The database contains information on apartment, office, retail, warehouse/distribution and flex/research & development properties and is used by real estate investors, lenders and other professionals to make informed buying, selling and financing decisions. In addition, Reis data is used by debt and equity investors to assess, quantify and manage the risks of default and loss associated with individual mortgages, properties, portfolios and real estate backed securities. Reis currently provides its information services to many of the nation’s leading lending institutions, equity investors, brokers and appraisers.
	Reis, through its flagship institutional product, Reis SE, and through its new small business product, ReisReports, provides online access to a proprietary database of commercial real estate information and analytical tools designed to facilitate debt and equity transactions as well as ongoing evaluations. Depending on the product, users have access to trend and forecast analysis at metropolitan and neighborhood levels throughout the U.S. and/or detailed building-specific information such as rents, vacancy rates, lease terms, property sales, new construction listings and property valuation estimates. Reis’s products are designed to meet the demand for timely and accurate information to support the decision-making of property owners, developers, builders, banks and non-bank lenders, and equity investors. These real estate professionals require access to timely information on both the performance and pricing of assets, including detailed data on market transactions, supply, absorption, rents and sale prices. This information is critical to all aspects of valuing assets and financing their acquisition, development and construction.
	Reis’s revenue model is based primarily on annual subscriptions that are paid in accordance with contractual billing terms. Reis recognizes revenue from its contracts on a ratable basis; for example, one-twelfth of the value of a one-year contract is recognized monthly.
	Discontinued Operations – Residential Development Activities
	The Company was originally formed on January 8, 1997. Reis acquired the Reis Services business by merger in May 2007 (the “Merger”). Prior to May 2007, Reis operated as Wellsford Real Properties, Inc. (“Wellsford”). Wellsford’s primary operating activities immediately prior to the Merger were the development, construction and sale of its three residential projects and its approximate 23% ownership interest in the Reis Services business. The Company completed the sale of the remaining units at its Colorado project in September 2009, sold its Claverack, New York project in bulk in February 2010 and sold its remaining project in East Lyme, Connecticut in bulk in April 2011.
	See Note 3 for additional information regarding the Company’s segments.

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Income Taxes

9 Months Ended

Sep. 30, 2011

Income Taxes [Abstract]

Income Taxes

7. Income Taxes

The components of the income tax expense (benefit) are as follows:

	For the Three Months Ended				For the Nine Months Ended
	September 30,				September 30,
	2011		2010		2011		2010
Current state and local tax expense	$	—	$	—	$	—	$	—
Deferred Federal tax expense		—		63,000		—		27,000
Deferred state and local tax expense		—		16,000		—		7,000
Income tax expense, including taxes attributable to discontinued operations		—		79,000		—		34,000
Less income tax expense attributable to discontinued operations (A)		—		—		—		(97,000	)
Income tax expense (benefit) (B)	$	—	$	79,000	$	—	$	(63,000	)

(A)	Represents the impact of income taxes attributable to income from discontinued operations.
(B)	This amount reflects the tax expense (benefit) from continuing operations as reported on the consolidated statement of operations for the periods presented.

Deferred income taxes reflect the net tax effects of temporary differences between the carrying amount of assets and liabilities for financial reporting purposes and the amounts used for income tax purposes. The net deferred tax liability was approximately $67,000 at September 30, 2011 and December 31, 2010, respectively, and is reflected as a non-current liability in the accompanying consolidated balance sheets. The significant portion of the deferred tax items relates to: (1) the tax benefit of impairment charges before allowances at December 31, 2010; (2) net operating loss (“NOL”) carryforwards; (3) Federal alternative minimum tax (“AMT”) credit carryforwards; and (4) stock based compensation, all as they relate to deferred tax assets; and (5) the deferred tax liability resulting from the intangible assets recorded at the time of the Merger as it relates to deferred tax liabilities.

Income Taxes (continued)

A valuation allowance is required to reduce the deferred tax assets if, based on the weight of the evidence, it is more-likely-than-not that some portion or all of the deferred tax assets will not be realized. Accordingly, management has determined that a valuation allowance of approximately $7,550,000 and $8,254,000 at September 30, 2011 and December 31, 2010, respectively, was necessary. The allowance at September 30, 2011 and December 31, 2010 relates primarily to AMT credits and existing and expected NOL carryforwards, and in 2010, the excess of a portion of the tax basis of certain real estate development assets over their respective financial statement basis. The reduction in the allowance during the nine months ended September 30, 2011 results from the realization of a portion of the excess tax basis upon the sale of the East Lyme project, which was used to offset the Company’s pre-tax income in this period.

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Stockholders' Equity

9 Months Ended

Sep. 30, 2011

Stockholders' Equity [Abstract]

Stockholders' Equity

8.    Stockholders’ Equity

Between December 2008 and June 2010, the Board authorized the repurchase of up to an aggregate amount of $4,000,000 of the Company’s common stock, which authorizations were fully utilized by December 2010. In August 2011, the Board authorized an additional $1,000,000 to make stock repurchases (of which $612,000 remained available as of September 30, 2011). The stock repurchases are permitted from time to time in the open market or through privately negotiated transactions. Depending on market conditions, financial developments and other factors, additional amounts may be authorized by the Board whereby future purchases could be commenced or suspended at any time, or from time to time, without prior notice. The Company may make purchases pursuant to a trading plan under Securities Exchange Act Rule 10b5-1, permitting open market purchases of common stock during blackout periods consistent with the Company’s “Policies for Transactions in Reis Stock and Insider Trading and Tipping.”

During the three and nine months ended September 30, 2011, the Company repurchased 43,249 shares of common stock at an average price of $8.98 per share. During the three and nine months ended September 30, 2010, the Company purchased an aggregate of 20,250 and 49,191 shares of common stock, respectively, at an average price of $6.50 and $6.25 per share, respectively. From the inception of the share repurchase programs in December 2008 through September 30, 2011, the Company purchased an aggregate of 881,325 shares of common stock at an average price of $4.98 per share, for an aggregate of $4,388,000. Cumulatively, the Company repurchased approximately 8.02% of the common shares outstanding at the time of the Board’s initial authorization in December 2008.

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Debt

9 Months Ended

Sep. 30, 2011

Debt [Abstract]

Debt

6. Debt

At September 30, 2011 and December 31, 2010, the Company’s debt consisted of the following:

		Stated Interest Rate at	September 30,		December 31,
	Maturity Date	September 30, 2011	2011		2010
Reis Services Bank Loan	September 2012	LIBOR + 1.50%	$	7,074,000	$	11,222,000
Other Reis Services debt	Various	Fixed/Various		6,000		28,000
Total debt			$	7,080,000	$	11,250,000
Total assets of Reis Services as a security interest for the Bank Loan			$	99,072,000	$	102,259,000

Debt (continued)

Reis Services Bank Loan

In connection with the Merger agreement, Private Reis entered into a credit agreement, dated October 11, 2006, with the Bank of Montreal, Chicago Branch, as administrative agent, and BMO Capital Markets, as lead arranger, which provided for a term loan of up to an aggregate of $20,000,000 and revolving loans up to an aggregate of $7,000,000. Loan proceeds were used to finance $25,000,000 of the cash portion of the Merger consideration. The interest rate was LIBOR + 1.50% at September 30, 2011 and December 31, 2010 (LIBOR was 0.24% and 0.26% at September 30, 2011 and December 31, 2010, respectively).

Reis Services is required to (1) make principal payments on the term loan on a quarterly basis commencing on June 30, 2007 in increasing amounts pursuant to the payment schedule provided in the credit agreement and (2) permanently reduce the revolving loan commitments on a quarterly basis, which commenced on March 31, 2010. Additional principal payments are payable if Reis Services’s annual cash flow exceeds certain amounts, or if certain defined operating ratios are not met, all of which are defined in the credit agreement. The final maturity date of all amounts borrowed pursuant to the credit agreement is September 30, 2012. At September 30, 2011 and December 31, 2010, the Company did not have the ability to borrow any additional amounts under the Bank Loan.

In accordance with the terms of the credit agreement, beginning January 1, 2010 and through the maturity of the Bank Loan, the required leverage ratio was reduced to a maximum of 2.00 to 1.00 from a maximum of 2.50 to 1.00. In order to be in compliance with the leverage ratio test, management made a payment of $3,000,000 at March 31, 2010 in addition to the contractual minimum repayment of $1,000,000 due at that time. Although not required to do so, the Company made additional prepayments of $500,000 at the end of the second, third and fourth quarters of 2010 (aggregating $1,500,000), each of which was in excess of the minimum repayments due at such dates. All of the 2010 prepayments ratably reduced Reis Services’s future quarterly contractual minimum payments through maturity. No additional prepayments, in excess of minimum repayments, were made during the nine months ended September 30, 2011.

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Consolidated Statement of Changes in Stockholders' Equity (Unaudited) (USD $)	Total	Common Shares	Paid in Capital	Retained Earnings (Deficit)
Balance at Dec. 31, 2010	$ 74,292,428	$ 209,440	$ 99,347,837	$ (25,264,849)
Balance, shares at Dec. 31, 2010		10,472,010
Shares issued for vested employees restricted stock units		2,676	(2,676)
Shares issued for vested employees restricted stock units, shares		133,809
Stock based compensation, net	1,185,454		1,185,454
Stock repurchases	(388,389)	(865)	(387,524)
Stock repurchases, shares		(43,249)
Net income	1,742,606			1,742,606
Balance at Sep. 30, 2011	$ 76,832,099	$ 211,251	$ 100,143,091	$ (23,522,243)
Balance, shares at Sep. 30, 2011		10,562,570

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Summary of Significant Accounting Policies

9 Months Ended

Sep. 30, 2011

Summary of Significant Accounting Policies [Abstract]

Summary of Significant Accounting Policies

2.	Summary of Significant Accounting Policies
	Basis of Presentation
	Principles of Consolidation
	The accompanying consolidated financial statements include the accounts of the Company and its majority-owned and controlled subsidiaries. Investments in entities where the Company does not have a controlling interest are accounted for under the equity method of accounting. These investments were initially recorded at cost and were subsequently adjusted for the Company’s proportionate share of the investment’s income (loss) and additional contributions or distributions. All significant inter-company accounts and transactions among the Company and its subsidiaries have been eliminated in consolidation.

Summary of Significant Accounting Policies (continued)

Quarterly Reporting

The accompanying consolidated financial statements and notes of the Company have been prepared in accordance with the instructions to Form 10-Q and Rule 10-01 of Regulation S-X promulgated by the Securities and Exchange Commission (“SEC”). Accordingly, certain information and footnote disclosures normally included in financial statements prepared under Generally Accepted Accounting Principles in the United States (“GAAP”) have been condensed or omitted pursuant to such rules. In the opinion of management, all adjustments considered necessary for a fair presentation of the Company’s balance sheets, statements of operations, statement of changes in stockholders’ equity and statements of cash flows have been included and are of a normal and recurring nature. These consolidated financial statements should be read in conjunction with the consolidated financial statements and notes thereto included in the Company’s annual report on Form 10-K for the year ended December 31, 2010, as filed with the SEC on March 11, 2011. The consolidated statements of operations for the three and nine months ended September 30, 2011 and 2010 and consolidated statements of changes in cash flows for the nine months ended September 30, 2011 and 2010 are not necessarily indicative of full year results.

Discontinued Operations

The Company has determined, as a result of the April 2011 sale of property in East Lyme, Connecticut, that the Residential Development Activities segment, including certain general and administrative costs that supported that segment’s operations, should be presented as a discontinued operation. As a result of this determination and the fact that the historic operations and cash flows can be clearly distinguished, the operating results of the Residential Development Activities segment and related general and administrative costs are aggregated for separate presentation apart from continuing operating results of the Company in the consolidated financial statements.

Estimates

The preparation of financial statements in conformity with GAAP 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 revenues and expenses during the reporting period. Actual results could differ from those estimates.

From time to time, the Company has been, is or may in the future be a defendant in various legal actions arising in the normal course of business. The Company records a provision for a liability when it is both probable that a liability has been incurred and the amount of loss can be reasonably estimated. Although the outcome of any litigation is uncertain, management does not believe that any legal actions to which the Company is a party, or which are proposed or threatened, will have a material adverse effect on the consolidated financial statements.

Reclassification

Amounts in certain accounts, as presented in the consolidated financial statements and footnotes, have been reclassified to reflect discontinued operations. These reclassifications do not result in a change to the previously reported net income for any of the periods presented to conform to the current period presentation; however, the computation of the denominator for determining net income per common share on a fully diluted basis for the nine months ended September 30, 2010 is different than previously presented. This difference, in conformity with existing accounting literature for the computation of earnings per share, is based upon the utilization of a different number of diluted shares as dictated by the loss from continuing operations.

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Segment Information

9 Months Ended

Sep. 30, 2011

Segment Information [Abstract]

Segment Information

3.	Segment Information
	The Company is organized into two separately managed segments: the Reis Services segment and the discontinued Residential Development Activities segment. The following tables present condensed balance sheet and operating data for these segments:

(amounts in thousands)
Condensed Balance Sheet Data	Reis		Discontinued
September 30, 2011	Services		Operations (A)			Other (B)			Consolidated
Assets
Current assets:
Cash and cash equivalents	$	18,227	$	—		$	4,041		$	22,268
Restricted cash and investments		215		—			—			215
Receivables, prepaid and other assets		4,777		—			157			4,934
Assets attributable to discontinued operations		—		—			—			—
Total current assets		23,219		—			4,198			27,417
Furniture, fixtures and equipment, net		901		—			45			946
Intangible assets, net		17,626		—			—			17,626
Goodwill		57,203		—			(2,378	)		54,825
Other assets		123		—			—			123
Total assets	$	99,072	$	—		$	1,865		$	100,937
Liabilities and stockholders’ equity
Current liabilities:
Current portion of Bank Loan and other debt	$	7,080	$	—		$	—		$	7,080
Accrued expenses and other liabilities		1,837		—			1,221			3,058
Deferred revenue		12,368		—			—			12,368
Liabilities attributable to discontinued operations		—		846			—			846
Total current liabilities		21,285		846			1,221			23,352
Other long-term liabilities		687		—			—			687
Deferred tax liability, net		13,450		—			(13,384	)		66
Total liabilities		35,422		846			(12,163	)		24,105
Total stockholders’ equity		63,650		(846	)		14,028			76,832
Total liabilities and stockholders’ equity	$	99,072	$	—		$	1,865		$	100,937
Condensed Balance Sheet Data	Reis		Discontinued
December 31, 2010	Services		Operations (A)			Other (B)			Consolidated
Assets
Current assets:
Cash and cash equivalents	$	15,912	$	21		$	4,231		$	20,164
Restricted cash and investments		214		—			—			214
Receivables, prepaid and other assets		9,230		—			116			9,346
Assets attributable to discontinued operations		—		2,438			—			2,438
Total current assets		25,356		2,459			4,347			32,162
Furniture, fixtures and equipment, net		957		—			1			958
Intangible assets, net		18,577		—			—			18,577
Goodwill		57,203		—			(2,378	)		54,825
Other assets		166		—			—			166
Total assets	$	102,259	$	2,459		$	1,970		$	106,688
Liabilities and stockholders’ equity
Current liabilities:
Current portion of Bank Loan and other debt	$	5,559	$	—		$	—		$	5,559
Accrued expenses and other liabilities		1,900		—			1,077			2,977
Deferred revenue		15,446		—			—			15,446
Liabilities attributable to discontinued operations		—		1,964			—			1,964
Total current liabilities		22,905		1,964			1,077			25,946
Non-current portion of Bank Loan		5,691		—			—			5,691
Other long-term liabilities		693		—			—			693
Deferred tax liability, net		11,785		—			(11,719	)		66
Total liabilities		41,074		1,964			(10,642	)		32,396
Total stockholders’ equity		61,185		495			12,612			74,292
Total liabilities and stockholders’ equity	$	102,259	$	2,459		$	1,970		$	106,688

(A)	Includes the assets and liabilities of the Company’s discontinued Residential Development Activities segment, to the extent that such assets and liabilities existed at the date presented.
(B)	Includes cash, other assets and liabilities not specifically attributable to or allocable to a specific operating segment.

(amounts in thousands)
Condensed Operating Data for the	Reis			Discontinued
Three Months Ended September 30, 2011	Services			Operations (A)		Other (B)			Consolidated
Subscription revenue	$	6,747		$	—	$	—		$	6,747
Cost of sales of subscription revenue		1,550			—		—			1,550
Gross profit		5,197			—		—			5,197
Operating expenses:
Sales and marketing		1,656			—		—			1,656
Product development		574			—		—			574
General and administrative expenses		1,563			—		1,070			2,633
Total operating expenses		3,793			—		1,070			4,863
Other income (expenses):
Interest and other income		18			—		2			20
Interest expense		(65	)		—		—			(65	)
Total other income (expenses)		(47	)		—		2			(45	)
Income (loss) before income taxes and discontinued operations	$	1,357		$	—	$	(1,068	)	$	289
Income from discontinued operations, before income taxes	$	—		$	1	$	—		$	1
Condensed Operating Data for the	Reis			Discontinued
Three Months Ended September 30, 2010	Services			Operations (A)		Other (B)			Consolidated
Subscription revenue	$	6,013		$	—	$	—		$	6,013
Cost of sales of subscription revenue		1,403			—		—			1,403
Gross profit		4,610			—		—			4,610
Operating expenses:
Sales and marketing		1,369			—		—			1,369
Product development		419			—		—			419
General and administrative expenses		1,496			—		1,064			2,560
Total operating expenses		3,284			—		1,064			4,348
Other income (expenses):
Interest and other income		24			—		5			29
Interest expense		(96	)		—		—			(96	)
Total other income (expenses)		(72	)		—		5			(67	)
Income (loss) before income taxes and discontinued operations	$	1,254		$	—	$	(1,059	)	$	195
Income (loss) from discontinued operations, before income taxes	$	—		$	1	$	(2	)	$	(1	)

(A)	Includes the results of the Company’s discontinued Residential Development Activities segment, to the extent that such operations existed during the period presented.
(B)	Includes interest and other income, depreciation expense and general and administrative expenses that have not been allocated to the operating segments.

Segment Information (continued)

(amounts in thousands)
Condensed Operating Data for the	Reis			Discontinued
Nine Months Ended September 30, 2011	Services			Operations (A)		Other (B)			Consolidated
Subscription revenue	$	20,201		$	—	$	—		$	20,201
Cost of sales of subscription revenue		4,623			—		—			4,623
Gross profit		15,578			—		—			15,578
Operating expenses:
Sales and marketing		4,989			—		—			4,989
Product development		1,562			—		—			1,562
General and administrative expenses		4,739			—		3,646			8,385
Total operating expenses		11,290			—		3,646			14,936
Other income (expenses):
Interest and other income		57			—		5			62
Interest expense		(215	)		—		—			(215	)
Total other income (expenses)		(158	)		—		5			(153	)
Income (loss) before income taxes and discontinued operations	$	4,130		$	—	$	(3,641	)	$	489
Income from discontinued operations, before income taxes	$	—		$	1,253	$	—		$	1,253
Condensed Operating Data for the	Reis			Discontinued
Nine Months Ended September 30, 2010	Services			Operations (A)		Other (B)			Consolidated
Subscription revenue	$	18,031		$	—	$	—		$	18,031
Cost of sales of subscription revenue		4,402			—		—			4,402
Gross profit		13,629			—		—			13,629
Operating expenses:
Sales and marketing		4,360			—		—			4,360
Product development		1,353			—		—			1,353
General and administrative expenses		4,369			—		3,493			7,862
Total operating expenses		10,082			—		3,493			13,575
Other income (expenses):
Interest and other income		87			—		15			102
Interest expense		(318	)		—		—			(318	)
Total other income (expenses)		(231	)		—		15			(216	)
Income (loss) before income taxes and discontinued operations	$	3,316		$	—	$	(3,478	)	$	(162	)
Income (loss) from discontinued operations, before income taxes	$	—		$	512	$	(272	)	$	240

(A)	Includes the results of the Company’s discontinued Residential Development Activities segment, to the extent that such operations existed during the period presented.
(B)	Includes interest and other income, depreciation expense and general and administrative expenses that have not been allocated to the operating segments.

Reis Services

See Note 1 for a description of Reis Services’s business and products at September 30, 2011.

No individual customer accounted for more than 4.9% and 2.5% of Reis Services’s revenues for the nine months ended September 30, 2011 and 2010, respectively.

Segment Information (continued)

The balance of outstanding accounts receivable of Reis Services at September 30, 2011 and December 31, 2010, follows:

	September 30,			December 31,
	2011			2010
Accounts receivable	$	4,534,000		$	9,065,000
Allowance for doubtful accounts		(44,000	)		(103,000	)
Accounts receivable, net	$	4,490,000		$	8,962,000

Eight subscribers accounted for an aggregate of approximately 40.8% of Reis Services’s accounts receivable at September 30, 2011, with the largest representing 13.0%. As of October 31, 2011, the Company had received payments of approximately $1,307,000, or 28.8%, against the September 30, 2011 accounts receivable balance.

At September 30, 2011, no subscriber accounted for more than 4.4% of deferred revenue.

Discontinued Operations – Residential Development Activities

Income (loss) from discontinued operations is comprised of the following:

(amounts in thousands)

	For the Three Months Ended					For the Nine Months Ended
	September 30,					September 30,
	2011		2010			2011			2010
Revenue from sales of real estate	$	—	$	160		$	1,800		$	3,378
Cost of sales of real estate		—		(96	)		(558	)		(3,051	)
Other income (expense), net		1		(65	)		11			(87	)
Income (loss) from discontinued operations before income tax		1		(1	)		1,253			240
Income tax expense on discontinued operations		—		—			—			97
Income (loss) from discontinued operations, net of income tax expense	$	1	$	(1	)	$	1,253		$	143

East Lyme

Prior to its sale in April 2011, the Company’s last remaining residential development was The Orchards, a single family home development in East Lyme, Connecticut, zoned for 161 single family homes on 224 acres (“East Lyme”).

The East Lyme project was sold in a bulk transaction for a gross sales price of $1,800,000 for the remaining 119 lots in inventory, plus the release of approximately $792,000 of project-related deposits and escrows held as restricted cash. Net cash received at closing, after selling expenses and closing adjustments, and including the cash received upon release of the deposits and escrows, aggregated approximately $2,600,000. As a result of this transaction, the Company recorded a gain in the second quarter of 2011 of approximately $1,242,000, which is included in income from discontinued operations. The Company sold two lots during the three months ended September 30, 2010 and sold two lots and one home during the nine months ended September 30, 2010.

Certain of the lots at East Lyme required remediation of pesticides which were used on the property when it was an apple orchard. Remediation would have been required prior to the development of those lots. The remediation plan, the cost of which was estimated by management to be approximately $1,000,000, had been approved by the health inspector for the municipality and the town planner. The estimated remediation cost was recognized in prior years and was reflected in liabilities attributable to discontinued operations in the December 31, 2010 consolidated balance sheet. As a result of the sale, the Company was indemnified from any financial obligation related to the environmental remediation and reversed this liability, which amount is included in the gain reported in the second quarter of 2011, as referred to above.

Segment Information (continued)

Claverack

Prior to its sale in February 2010, the Company owned approximately 235 acres in Claverack, New York, which was subdivided into 48 developable single family home lots. In February 2010, the Company sold the Claverack project in a bulk transaction for a gross sales price of $2,750,000, which included two model homes, amenities, 46 additional lots and $450,000 of cash collateralizing certain road completion obligations. Net cash received at closing, after expenses, aggregated approximately $2,187,000. The remaining $450,000 of the purchase price was payable by the purchaser in February 2011 and had been secured by the outstanding road bond and a mortgage on the property. As a result of this transaction, the Company recorded a gain of approximately $263,000 in the first quarter of 2010, which is included in income from discontinued operations. In February 2011, the Company received cash of approximately $455,000 in full satisfaction of the mortgage note and accrued interest thereon.

Real Estate Contingencies

Reis has purchased insurance with respect to construction defect and completed operations at its past real estate projects, including those projects described above. Reis is, from time to time, exposed to various claims associated with the development, construction and sale of condominium units, single family homes or lots. The impact of these claims on the Company has not been material to date. However, claims related to dissatisfaction by homeowners and homeowners’ associations with the construction of condominiums, homes and amenities by us and/or our developer partners in any condominium or subdivision development, or other matters, may result in litigation costs, remediation costs, warranty expenses or settlement costs which could be material to the Company’s reportable discontinued operating income (loss), or its consolidated financial position or cash flows. It would not have any effect on the Company’s income from continuing operations.

In October 2010, the homeowners’ association at the Company’s former Gold Peak condominium project (located outside of Denver, Colorado), brought suit against the Company, two of its subsidiaries, and other contractors and individuals alleging design and construction defects. In October 2011, experts for the plaintiff delivered a report alleging a cost to repair of approximately $19 million. Trial is scheduled for February 2012. In connection with the development of Gold Peak, the Company purchased a commercial general liability “wrap” insurance policy covering the Company, the general contractor and the subcontractors. The Company is taking action to ensure that all applicable insurance policies maintained by co-defendants or others are brought into the case. The Company believes that it and its co-defendants have valid defenses to some or all of the plaintiff’s allegations, that insurance (subject to limited self insurance retainage/deductibles (“SIRs”)) will cover some or all of any eventual settlement or judgment, and that the defendants other than the Company will likely be liable for some or all of any remaining settlement judgment amount.

At this time, based on advice of counsel and the Company’s experience with similar prior actions, the low end of the expected range of exposure is believed to be equal to the amount of the Company’s SIRs plus other costs. Accordingly, the Company is maintaining a reserve of approximately $280,000, which liability is included in liabilities attributable to discontinued operations on the September 30, 2011 balance sheet. Although the Company does not believe that it will be required to pay any amount above the reserved amount, it is possible that a settlement or judgment in this matter could involve the payment by the Company of an amount that could be material to the Company’s reportable discontinued operating income (loss), its consolidated financial position or cash flows. It would not have any effect on the Company’s income from continuing operations.

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Fair Value of Financial Instruments

9 Months Ended

Sep. 30, 2011

Fair Value of Financial Instruments [Abstract]

Fair Value of Financial Instruments

11.   Fair Value of Financial Instruments

At September 30, 2011 and December 31, 2010, the Company’s financial instruments included receivables, payables, accrued expenses, other liabilities and debt. The fair values of these financial instruments, excluding the Bank Loan, were not materially different from their recorded values at September 30, 2011 and December 31, 2010. Other than capital leases, all of the Company’s debt at September 30, 2011 and December 31, 2010 was floating rate based. Regarding the Bank Loan, the fair value of this debt is estimated to be approximately $6,960,000 and $10,905,000 at September 30, 2011 and December 31, 2010, respectively, which is lower than the recorded amounts of $7,074,000 and $11,222,000 at September 30, 2011 and December 31, 2010, respectively. The estimated fair value reflects the effect of higher interest rate spreads on debt being issued under current market conditions, as compared to the conditions that existed when the Bank Loan was obtained. See Note 6 for more information about the Company’s debt.

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Restricted Cash and Investments

9 Months Ended

Sep. 30, 2011

Restricted Cash and Investments [Abstract]

Restricted Cash and Investments

4. Restricted Cash and Investments

Restricted cash and investments represents a security deposit for the 530 Fifth Avenue corporate office space. The Company provided the lessor a bank-issued letter of credit, which is fully collateralized by a certificate of deposit issued by that bank. The balance of the restricted cash was approximately $215,000 and $214,000 at September 30, 2011 and December 31, 2010, respectively.

In addition, the Company had approximately $791,000 of deposits and escrows related to residential development activities at December 31, 2010, which amount was included in assets attributable to discontinued operations in the consolidated balance sheet at that date. As a result of the April 2011 sale of the East Lyme project, the balance of deposits and escrows related to residential development activities was released and converted to cash, and accordingly, there was no balance at September 30, 2011.

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Consolidated Statements of Operations (Unaudited) (Parenthetical) (USD $)	3 Months Ended		9 Months Ended
	Sep. 30, 2011	Sep. 30, 2010	Sep. 30, 2011	Sep. 30, 2010
Other income (expenses):
Income tax expense from discontinued operations	$ 0	$ 0	$ 0	$ 97,000

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Consolidated Statements of Cash Flows (Unaudited) (USD $)	9 Months Ended
	Sep. 30, 2011	Sep. 30, 2010
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income	$ 1,742,606	$ 44,365
Adjustments to reconcile to net cash provided by operating activities:
Deferred tax (benefit) provision		34,000
Depreciation	254,624	277,818
Amortization of intangible assets	3,549,062	3,297,599
Stock based compensation charges	1,537,074	1,180,434
Changes in assets and liabilities:
Restricted cash and investments	790,293	52,771
Accounts receivable, net	4,471,731	1,948,854
Prepaid and other assets	332,647	52,792
Real estate assets	1,297,245	2,184,015
Accrued expenses and other liabilities	(1,172,521)	(1,170,109)
Liability for option cancellations	129,739	21,269
Deferred revenue	(3,078,116)	(1,917,878)
Net cash provided by operating activities	9,854,384	6,005,930
CASH FLOWS FROM INVESTING ACTIVITIES:
Web site and database development costs	(2,598,097)	(1,885,204)
Furniture, fixtures and equipment additions	(242,057)	(43,879)
Furniture, fixtures and equipment disposition		9,906
Net cash (used in) investing activities	(2,840,154)	(1,919,177)
CASH FLOWS FROM FINANCING ACTIVITIES:
Repayment of Bank Loan	(4,148,287)	(6,506,354)
Repayments on capitalized equipment leases	(21,796)	(158,998)
Payments for restricted stock units	(351,620)	(217,878)
Stock repurchases	(388,389)	(307,574)
Net cash (used in) financing activities	(4,910,092)	(7,190,804)
Net increase (decrease) in cash and cash equivalents	2,104,138	(3,104,051)
Cash and cash equivalents, beginning of period	20,163,787	22,735,240
Cash and cash equivalents, end of period	22,267,925	19,631,189
SUPPLEMENTAL INFORMATION:
Cash paid during the period for interest	134,517	237,637
Cash paid during the period for income taxes, net of refunds	39,434	26,071
SUPPLEMENTAL SCHEDULE OF NON-CASH INVESTING AND FINANCING ACTIVITIES:
Shares issued for vested employees restricted stock units	2,676	4,801
Disposal of fully amortized intangible assets	241,724
Disposal of fully depreciated furniture, fixtures and equipment	45,988
Release of accrued remediation liability obligation upon sale of real estate	1,000,000
Mortgage receivable on sale of real estate		$ 450,000

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Stock Plans and Other Incentives

9 Months Ended

Sep. 30, 2011

Stock Plans and Other Incentives [Abstract]

Stock Plans and Other Incentives

9.    Stock Plans and Other Incentives

The Company has adopted certain incentive plans for the purpose of attracting and retaining the Company’s directors, officers and employees by having the ability to issue options, restricted stock units (“RSUs”) or stock awards. Awards granted under the Company’s incentive plans expire ten years from the date of grant and vest over periods ranging generally from three to five years for employees.

Option Awards

The following table presents option activity and other plan data for the nine months ended September 30, 2011 and 2010:

	For the Nine Months Ended September 30,
	2011				2010
			Weighted-				Weighted-
			Average				Average
			Exercise				Exercise
	Options		Price		Options		Price
Outstanding at beginning of period		680,896	$	8.73		473,620	$	8.91
Granted		—	$	—		225,000	$	8.03
Cancelled through cash settlement		—	$	—		—	$	—
Forfeited/cancelled/expired		—	$	—		—	$	—
Outstanding at end of period		680,896	$	8.73		698,620	$	8.63
Options exercisable at end of period		378,896	$	8.92		319,620	$	8.45
Options exercisable which can be settled in cash		70,896	$	4.81		88,620	$	4.73

Stock Plans and Other Incentives (continued)

Certain outstanding options allow the option holder to receive from the Company, in cancellation of the holder’s option, a cash payment with respect to each cancelled option equal to the amount, if any, by which the fair market value of the share of stock underlying the option exceeds the exercise price of such option. The Company accounts for these options as liability awards. This liability is adjusted at the end of each reporting period to reflect (1) the net cash payments to option holders made during each period, (2) the impact of the exercise and expiration of options and (3) changes in the market price of the Company’s common stock. Changes in the settlement value of option awards treated under the liability method are reflected as income or expense in the statements of operations.

At September 30, 2011, the liability for option cancellations was approximately $287,000 based upon the difference in the closing stock price of the Company at September 30, 2011 of $8.86 per share and the individual exercise prices of the outstanding 70,896 “in-the-money” options that were accounted for as liability awards at that date. At December 31, 2010, the liability for option cancellations was approximately $158,000 based upon the difference in the closing stock price of the Company at December 31, 2010 of $7.03 per share and the individual exercise prices of the outstanding 70,896 “in-the-money” options that were accounted for as liability awards at that date. The Company recorded a reduction to compensation expense of approximately $76,000 for the three months ended September 30, 2011 and compensation expense of $7,000 for the three months ended September 30, 2010, and compensation expense of $130,000 and $21,000 for the nine months ended September 30, 2011 and 2010, respectively, in general and administrative expenses in the statements of operations related to the respective changes in the amount of the liability for option cancellations.

RSU Awards

The following table presents the changes in RSUs outstanding for the nine months ended September 30, 2011 and 2010:

	For the Nine Months Ended
	September 30,
	2011			2010
Outstanding at beginning of period		523,479			507,668
Granted		243,499			283,355
Common stock delivered (A)(B)		(177,828	)		(275,559	)
Forfeited		—			(1,800	)
Outstanding at end of period		589,150			513,664
Intrinsic value at September 30, 2011 and 2010, respectively (C)	$	5,220,000		$	3,282,000

(A)	Includes (i) 33,758 shares which were used to settle minimum employee withholding tax obligations for 14 employees of approximately $251,000 in the first quarter of 2011 (ii) 9,054 shares which were used to settle minimum employee withholding tax obligations for two employees of approximately $90,000 in the second quarter of 2011 and (iii) 1,207 shares which were used to settle minimum employee withholding tax obligations for one employee of approximately $11,000 in the third quarter of 2011. A net of 2,126 and 133,809 shares of common stock were delivered in the three and nine months ended September 30, 2011, respectively.
(B)	Includes (i) 17,431 shares which were used to settle minimum employee withholding tax obligations for 12 employees of approximately $105,000 in the first quarter of 2010, (ii) 16,870 shares which were used to settle minimum employee withholding tax obligations for 63 employees of approximately $105,000 in the second quarter of 2010 and (iii) 1,207 shares which were used to settle minimum employee withholding tax obligations for one employee of approximately $8,000 in the third quarter of 2010. A net of 2,126 and 240,051 shares of common stock were delivered in the three and nine months ended September 30, 2010, respectively.
(C)	For purposes of this calculation, the Company’s closing stock prices were $8.86 and $6.39 per share on September 30, 2011 and 2010, respectively.

Stock Plans and Other Incentives (continued)

In March 2011, an aggregate of 214,135 RSUs were granted to employees, which RSUs vest one-third a year over three years and had a weighted average grant date fair value of $7.41 per RSU (which was determined based on the closing stock price of the Company’s common stock on the applicable date of grant). In February and July 2010, an aggregate of 185,500 RSUs and 75,000 RSUs respectively, were granted to employees which vest one-third a year over three years and have a grant date fair value of $5.97 and $6.52 respectively, per RSU (which was determined based on the closing price of the Company’s common stock on the applicable date of grant). The awards granted in 2011 and 2010 are treated as equity awards and the grant date fair value is charged to compensation expense at the corporate level on a straight-line basis over the vesting periods.

During the nine months ended September 30, 2011, an aggregate of 29,364 RSUs were granted to non-employee directors (with an average grant date fair value of $8.09 per RSU) related to the equity component of their compensation for the three months ended December 31, 2010, March 31, 2011 and June 30, 2011. During the nine months ended September 30, 2010, an aggregate of 23,355 RSUs were granted to non-employee directors (with an average grant date fair value of $6.07 per RSU) related to the equity component of their compensation for the three months ended December 31, 2009, March 31, 2010 and June 30, 2010. In each case, the grant date fair value was determined as of the last trading day of the quarter for which the RSUs were being received as compensation. The RSUs are immediately vested, but are not deliverable to non-employee directors until six months after termination of their service as a director.

Option and RSU Expense Information

The Company recorded non-cash compensation expense of approximately $522,000 and $409,000, including approximately $69,000 and $63,000 related to non-employee director equity compensation, for the three months ended September 30, 2011 and 2010, respectively, related to all stock options and RSUs accounted for as equity awards, as a component of general and administrative expenses in the statement of operations. For the nine months ended September 30, 2011 and 2010, the Company recorded non-cash compensation expense of approximately $1,537,000 and $1,180,000, respectively, including approximately $226,000 and $159,000, respectively, related to non-employee director equity compensation.

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Consolidated Balance Sheets (Unaudited) (USD $)	Sep. 30, 2011	Dec. 31, 2010
Current assets:
Cash and cash equivalents	$ 22,267,925	$ 20,163,787
Restricted cash and investments	215,190	214,298
Accounts receivable, net	4,489,892	8,961,623
Prepaid and other assets	443,937	384,384
Assets attributable to discontinued operations	0	2,438,240
Total current assets	27,416,944	32,162,332
Furniture, fixtures and equipment, net	945,938	958,505
Intangible assets, net of accumulated amortization of $18,198,744 and $14,891,406, respectively	17,625,641	18,576,606
Goodwill	54,824,648	54,824,648
Other assets	123,478	165,868
Total assets	100,936,649	106,687,959
Current liabilities:
Current portion of Bank Loan	7,073,703	5,531,050
Current portion of other debt	6,055	27,851
Accrued expenses and other liabilities	2,770,188	2,818,496
Liability for option cancellations	287,483	157,744
Deferred revenue	12,368,132	15,446,248
Liabilities attributable to discontinued operations	845,753	1,963,530
Total current liabilities	23,351,314	25,944,919
Non-current portion of Bank Loan	0	5,690,940
Other long-term liabilities	686,656	693,092
Deferred tax liability, net	66,580	66,580
Total liabilities	24,104,550	32,395,531
Commitments and contingencies
Stockholders' equity:
Common stock, $0.02 par value per share, 101,000,000 shares authorized, 10,562,570 and 10,472,010 shares issued and outstanding, respectively	211,251	209,440
Additional paid in capital	100,143,091	99,347,837
Retained earnings (deficit)	(23,522,243)	(25,264,849)
Total stockholders' equity	76,832,099	74,292,428
Total liabilities and stockholders' equity	$ 100,936,649	$ 106,687,959