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 September 30, 2014	Reis Services		Discontinued Operations (A)		Other (B)		Consolidated

Assets
Current assets:
Cash and cash equivalents	$	16,235	$	—	$	163	$	16,398
Restricted cash and investments		212		—		—		212
Accounts receivable, net		6,966		—		—		6,966
Prepaid and other assets		302		—		2,825		3,127
Assets attributable to discontinued operations		—		—		4		4

Total current assets		23,715		—		2,992		26,707
Furniture, fixtures and equipment, net		791		—		17		808
Intangible assets, net		15,041		—		—		15,041
Deferred tax asset, net		285		—		19,653		19,938
Goodwill		57,203		—		(2,378)		54,825
Other assets		161		—		—		161

Total assets	$	97,196	$	—	$	20,284	$	117,480


Liabilities and stockholders’ equity
Current liabilities:
Current portion of debt	$	—	$	—	$	—	$	—
Accrued expenses and other liabilities		2,715		—		1,065		3,780
Liability for option cancellations		—		—		173		173
Deferred revenue		18,188		—		—		18,188
Liabilities attributable to discontinued operations		—		271		18		289

Total current liabilities		20,903		271		1,256		22,430
Other long-term liabilities		464		—		—		464
Deferred tax liability, net		22,224		—		(22,224)		—

Total liabilities		43,591		271		(20,968)		22,894
Total stockholders’ equity		53,605		(271)		41,252		94,586

Total liabilities and stockholders’ equity	$	97,196	$	—	$	20,284	$	117,480

(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 Balance Sheet Data December 31, 2013	Reis Services		Discontinued Operations (A)		Other (B)		Consolidated

Assets
Current assets:
Cash and cash equivalents	$	10,347	$	—	$	213	$	10,560
Restricted cash and investments		217		—		—		217
Accounts receivable, net		11,386		—		—		11,386
Prepaid and other assets		187		—		2,601		2,788
Assets attributable to discontinued operations		—		—		9		9

Total current assets		22,137		—		2,823		24,960
Furniture, fixtures and equipment, net		829		—		24		853
Intangible assets, net		15,687		—		—		15,687
Deferred tax asset, net		285		—		21,032		21,317
Goodwill		57,203		—		(2,378)		54,825
Other assets		225		—		—		225

Total assets	$	96,366	$	—	$	21,501	$	117,867


Liabilities and stockholders’ equity
Current liabilities:
Current portion of debt	$	—	$	—	$	—	$	—
Accrued expenses and other liabilities		2,623		—		956		3,579
Liability for option cancellations		—		—		268		268
Deferred revenue		20,284		—		—		20,284
Liabilities attributable to discontinued operations		—		271		71		342

Total current liabilities		22,907		271		1,295		24,473
Other long-term liabilities		523		—		—		523
Deferred tax liability, net		18,957		—		(18,957)		—

Total liabilities		42,387		271		(17,662)		24,996
Total stockholders’ equity		53,979		(271)		39,163		92,871

Total liabilities and stockholders’ equity	$	96,366	$	—	$	21,501	$	117,867

(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 Three Months Ended September 30, 2014	Reis Services		Discontinued Operations (A)		Other (B)		Consolidated

Subscription revenue	$	10,469	$	—	$	—	$	10,469
Cost of sales of subscription revenue		2,073		—		—		2,073

Gross profit		8,396		—		—		8,396

Operating expenses:
Sales and marketing		2,573		—		—		2,573
Product development		946		—		—		946
General and administrative expenses		1,931		—		1,051		2,982

Total operating expenses		5,450		—		1,051		6,501
Other income (expenses):
Interest and other income		6		—		—		6
Interest expense		(28)		—		—		(28)

Total other income (expenses)		(22)		—		—		(22)

Income (loss) before income taxes and discontinued operations	$	2,924	$	—	$	(1,051)	$	1,873


(Loss) from discontinued operations, before income taxes	$	—	$	(3)	$	(81)	$	(84)


Condensed Operating Data for the Three Months Ended September 30, 2013	Reis Services		Discontinued Operations (A)		Other (B)		Consolidated

Subscription revenue	$	8,780	$	—	$	—	$	8,780
Cost of sales of subscription revenue		1,755		—		—		1,755

Gross profit		7,025		—		—		7,025

Operating expenses:
Sales and marketing		2,097		—		—		2,097
Product development		836		—		—		836
General and administrative expenses		1,686		—		1,207		2,893

Total operating expenses		4,619		—		1,207		5,826
Other income (expenses):
Interest and other income		3		—		—		3
Interest expense		(28)		—		—		(28)

Total other income (expenses)		(25)		—		—		(25)

Income (loss) before income taxes and discontinued operations	$	2,381	$	—	$	(1,207)	$	1,174


(Loss) from discontinued operations, before income taxes	$	—	$	(8)	$	(84)	$	(92)

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


(amounts in thousands)

Condensed Operating Data for the Nine Months Ended September 30, 2014	Reis Services		Discontinued Operations (A)		Other (B)		Consolidated

Subscription revenue	$	30,609	$	—	$	—	$	30,609
Cost of sales of subscription revenue		5,963		—		—		5,963

Gross profit		24,646		—		—		24,646

Operating expenses:
Sales and marketing		7,666		—		—		7,666
Product development		2,523		—		—		2,523
General and administrative expenses		5,902		—		3,320		9,222

Total operating expenses		16,091		—		3,320		19,411
Other income (expenses):
Interest and other income		15		—		—		15
Interest expense		(84)		—		—		(84)

Total other income (expenses)		(69)		—		—		(69)

Income (loss) before income taxes and discontinued operations	$	8,486	$	—	$	(3,320)	$	5,166


(Loss) from discontinued operations, before income taxes	$	—	$	(31)	$	(841)	$	(872)


Condensed Operating Data for the Nine Months Ended September 30, 2013	Reis Services		Discontinued Operations (A)		Other (B)		Consolidated

Subscription revenue	$	25,512	$	—	$	—	$	25,512
Cost of sales of subscription revenue		5,111		—		—		5,111

Gross profit		20,401		—		—		20,401

Operating expenses:
Sales and marketing		6,098		—		—		6,098
Product development		2,349		—		—		2,349
General and administrative expenses		5,205		—		3,962		9,167

Total operating expenses		13,652		—		3,962		17,614
Other income (expenses):
Interest and other income		7		—		—		7
Interest expense		(84)		—		—		(84)

Total other income (expenses)		(77)		—		—		(77)

Income (loss) before income taxes and discontinued operations	$	6,672	$	—	$	(3,962)	$	2,710


(Loss) from discontinued operations, before income taxes	$	—	$	(8)	$	(397)	$	(405)

(A) Includes the results of the Company’s discontinued Residential Development Activities segment, to the extent that such operations existed during the periods 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, 2014.

The Company’s largest individual subscriber accounted for 2.9% and 3.5% of Reis Services’s revenue for the nine months ended September 30, 2014 and 2013, respectively.

The balance of outstanding accounts receivables of Reis Services at September 30, 2014 and December 31, 2013 follows:


	September 30, 2014		December 31, 2013

Accounts receivables	$	7,019,000	$	11,465,000
Allowance for doubtful accounts		(53,000)		(79,000)

Accounts receivables, net	$	6,966,000	$	11,386,000

Seven subscribers accounted for an aggregate of approximately 36.5% of Reis Services’s accounts receivable at September 30, 2014, with the largest representing 10.2%. Through October 24, 2014, the Company received payments of approximately $2,389,000 or 34.0% against the September 30, 2014 accounts receivable balance.

At September 30, 2014, the largest individual subscriber accounted for 3.3% of deferred revenue.

Discontinued Operations – Residential Development Activities

(Loss) from discontinued operations is comprised of the following:


	For the Three Months Ended September 30,				For the Nine Months Ended September 30,
	2014		2013		2014		2013

Litigation recoveries (see Note 11)	$	10,000	$	—	$	26,000	$	80,000
Other income (expense), net		(94,000)		(92,000)		(898,000)		(485,000)

(Loss) from discontinued operations before income tax		(84,000)		(92,000)		(872,000)		(405,000)
Income tax (benefit) from discontinued operations		(34,000)		(36,000)		(351,000)		(159,000)

(Loss) from discontinued operations, net of income tax (benefit)	$	(50,000)	$	(56,000)	$	(521,000)	$	(246,000)

In September 2009, the Company sold the final unit at Gold Peak, the final phase of Palomino Park, a five phase multifamily residential development in Highlands Ranch, Colorado. Gold Peak was a 259 unit condominium project on the remaining 29 acre land parcel at Palomino Park. On March 13, 2012, in connection with litigation regarding construction defects at the Gold Peak project, a jury rendered its verdict, whereby Reis, one of its subsidiaries (Gold Peak at Palomino Park LLC, the developer of the project (“GP LLC”)), and the construction manager/general contractor for the project (Tri-Star Construction West, LLC (“Tri-Star”)) were found jointly and severally liable for an aggregate of $18,200,000, plus other costs of approximately $756,000. On June 20, 2012, following denial of all of the defendants’ post-trial motions, Reis and its subsidiaries reached a settlement with the plaintiff, the Gold Peak homeowners association, providing for a total payment of $17,000,000. Of this amount, $5,000,000 was paid on August 3, 2012 and the remaining $12,000,000 was paid on October 15, 2012, in accordance with the settlement terms. The Company’s efforts resulted in cash recoveries of $10,000 during the three months ended September 30, 2014 and $26,000 and $80,000 during the nine months ended September 30, 2014 and 2013, respectively. No recoveries occurred during the three months ended September 30, 2013. For additional information pertaining to the Gold Peak litigation, see Note 11.