TheStreet Reports Second Quarter 2012 Results
Reduces Net Loss from Ongoing Operations by 51%
NEW YORK (August 2, 2012) – TheStreet (NASDAQ: TST), a leading digital financial media company, today reported financial results for the second quarter of 2012. The Company reported revenue of $12.5 million, a net loss of $1.9 million and Adjusted EBITDA(1) of $0.8 million for the quarter.
Revenue for the second quarter decreased 17% compared to the same period last year. Subscription Services (previously referred to as Premium Services) revenue was $8.8 million for the second quarter of 2012, a decrease of 12% compared to the prior year period. Media (previously referred to as Marketing Services) revenue was $3.6 million for the second quarter of 2012, a decrease of 27% compared to the prior year period.
“During the quarter we made great progress on the expense side of the business. By realizing more efficiencies and right-sizing our cost structure, we were able to decrease total operating expenses from ongoing operations by 20% year over year. However, on the revenue side, the macro-environment continues to be challenging for our businesses, but I remain just as excited as when I joined about the assets we have to grow our business and create value for our shareholders,” said Elisabeth DeMarse, Chairman, President and Chief Executive Officer.
Selected Operating Results of Second Quarter 2012
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Average monthly unique visitors to the Company’s network of sites, as measured internally, increased approximately 25% as compared to the prior year period.
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Subscription Services bookings decreased 15% as compared to the prior year period.
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The average number of paid subscriptions was 78,032 compared to an average of 93,125 in the second quarter of 2011.
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Average monthly churn(2) was 3.9% compared to 3.6% in the second quarter of 2011 and 5.1% in the first quarter of 2012.
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Average revenue per subscription increased 7% as compared to the prior year period.
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TheStreet Business Desk service has been successfully implemented in approximately 310 of the approximately 400 newspapers under contract.
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Operating expenses in the second quarter of 2012 were $14.5 million, a decrease of 14% as compared to the prior year period. Excluding the restructuring charge of $1.3 million and the gain on disposition of assets of $0.2 million, operating expenses decreased 20% compared to the prior year period.
The Company’s net loss was $1.9 million in the second quarter of 2012 as compared to a net loss of $1.7 million in the second quarter of 2011. Excluding the restructuring charge of $1.3 million and the gain on disposition of assets of $0.2 million, net loss from ongoing operations was $0.8 million, a decrease of 51% compared to the prior year period. The Company reported diluted net loss per share attributable to common stockholders of $0.06 in the second quarter of 2012, as compared to $0.05 in the second quarter of 2011.
Adjusted EBITDA was $0.8 million in the second quarter of 2012, as compared to $0.7 million in the same period last year.
The Company ended the quarter with cash and cash equivalents, restricted cash and marketable securities of $69.0 million, a decrease of $2.0 million as compared to March 31, 2012. The Company paid a dividend of 2.5 cents per share during the quarter.
Additionally, the Company announced today that it will suspend the third quarter 2012 dividend. On a quarterly basis, this will result in cash savings of approximately $0.9 million, improving the Company’s cash flow which will be used to support the Company’s growth initiatives.
Conference Call Information
TheStreet will discuss its financial results for the second quarter today at 4:30 p.m. ET.
To participate in the call, please dial 800-649-5127 (domestic) or 914-495-8549 (international). The passcode for the call is 11386485. This call is being webcast and can be accessed in the Investor Relations section of TheStreet website at http://investor-relations.thestreet.com/events.cfm.
A replay of the webcast will be available approximately two hours after the conclusion of the call and remain available for approximately ninety calendar days.
About TheStreet
TheStreet, Inc. is a leading digital financial media company that distributes its content through online, social media, tablet and mobile channels. The Company's network of brands include: TheStreet, RealMoney, RealMoney Pro, Stockpickr, Action Alerts PLUS, Options Profits, Chat on TheStreet, MainStreet and Rate-Watch. For more information on TheStreet's business, visit www.t.st. For financial and business news, actionable trading ideas, stock quotes and more, visit TheStreet.com via your web browser, follow TheStreet on Facebook and Twitter, visit TheStreet.mobi from your mobile device and access TheStreet through all major tablet platforms.
(1) To supplement the Company's financial statements presented in accordance with generally accepted accounting principles ("GAAP"), the Company uses non-GAAP measures of certain components of financial performance, including "EBITDA," "Adjusted EBITDA" and "free cash flow." EBITDA is adjusted from results based on GAAP to exclude interest, income taxes, depreciation and amortization. This non-GAAP measure is provided to enhance investors' overall understanding of the Company's current financial performance and its prospects for the future. Specifically, the Company believes that the non-GAAP EBITDA results are an important indicator of the operational strength of the Company's business and provide an indication of the Company's ability to service debt and fund capital expenditures. EBITDA eliminates the uneven effect of considerable amounts of noncash depreciation of tangible assets and amortization of certain intangible assets that were recognized in business combinations. Adjusted EBITDA further eliminates the impact of noncash stock compensation and other items affecting comparability. A limitation of these measures, however, is that they do not reflect the periodic costs of certain capitalized tangible and intangible assets used in generating revenues in the Company's businesses. Management evaluates the investments in such tangible and intangible assets through other financial measures, such as capital expenditure budgets and investment spending levels. "Free cash flow" means net loss plus non-cash expenses net of gains/losses on dispositions of assets, less changes in operating assets and liabilities and capital expenditures. The Company believes that this non-GAAP financial measure is an important indicator of the Company's financial results because it gives investors a view of the Company's ability to generate cash.
(2) Average monthly churn rate is defined as subscriber terminations/expirations in the quarter divided by the sum of the beginning subscribers and gross subscriber additions for the quarter, then divided by three. Subscriptions that are on a free-trial basis are not regarded as added or terminated unless the subscription is active at the end of the free-trial period.
All statements contained in this press release other than statements of historical facts are deemed forward-looking statements as that term is defined in the Private Securities Litigation Reform Act of 1995. Such forward-looking statements are subject to risks and uncertainties, including those described in the Company's filings with the Securities and Exchange Commission that could cause actual results to differ materially from those reflected in the forward-looking statements. All forward-looking statements contained herein are made as of the date of this press release. Although the Company believes that the expectations reflected in the forward-looking statements are reasonable, the Company cannot guarantee future results or occurrences. The Company disclaims any obligation to update these forward-looking statements, whether as a result of new information, future developments or otherwise.
Contacts:
Thomas Etergino
Executive Vice President, Chief Financial Officer
TheStreet, Inc.
212-321-5234
ir@thestreet.com
Erica Mannion
Investor Relations
Sapphire Investor Relations, LLC
415-471-2700
ir@thestreet.com
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THESTREET, INC.
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CONSOLIDATED BALANCE SHEETS
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ASSETS
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June 30, 2012
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December 31,2011
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Current Assets:
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Cash and cash equivalents
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$ | 20,535,644 | $ | 44,865,191 | ||||
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Marketable securities
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20,182,450 | 20,895,238 | ||||||
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Accounts receivable, net of allowance for doubtful
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accounts of $140,027 at June 30, 2012 and $158,870 at
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December 31, 2011
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4,732,132 | 6,225,424 | ||||||
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Other receivables
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824,280 | 356,219 | ||||||
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Prepaid expenses and other current assets
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1,791,938 | 1,421,955 | ||||||
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Restricted cash
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660,370 | 660,370 | ||||||
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Total current assets
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48,726,814 | 74,424,397 | ||||||
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Property and equipment, net of accumulated depreciation
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and amortization of $15,036,740 at June 30, 2012
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and $13,466,365 at December 31, 2011
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6,666,870 | 8,494,648 | ||||||
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Marketable securities
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26,644,072 | 7,894,365 | ||||||
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Other assets
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125,312 | 172,055 | ||||||
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Goodwill
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24,057,616 | 24,057,616 | ||||||
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Other intangibles, net of accumulated amortization of $5,852,290
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at June 30, 2012 and $5,529,730 at December 31, 2011
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4,509,575 | 5,370,135 | ||||||
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Restricted cash
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1,000,000 | 1,000,000 | ||||||
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Total assets
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$ | 111,730,259 | $ | 121,413,216 | ||||
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LIABILITIES AND STOCKHOLDERS' EQUITY
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Current Liabilities:
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Accounts payable
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$ | 2,403,355 | $ | 2,305,589 | ||||
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Accrued expenses
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5,489,694 | 7,970,802 | ||||||
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Deferred revenue
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18,306,929 | 17,625,666 | ||||||
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Other current liabilities
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537,723 | 509,214 | ||||||
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Total current liabilities
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26,737,701 | 28,411,271 | ||||||
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Deferred tax liability
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288,000 | 288,000 | ||||||
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Other liabilities
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3,922,943 | 4,569,497 | ||||||
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Total liabilities
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30,948,644 | 33,268,768 | ||||||
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Stockholders' Equity:
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Preferred stock; $0.01 par value; 10,000,000 shares
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authorized; 5,500 shares issued and 5,500 shares
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outstanding at June 30, 2012 and December 31, 2011;
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the aggregate liquidation preference totals $55,000,000 as of
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June 30, 2012 and December 31, 2011
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55 | 55 | ||||||
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Common stock; $0.01 par value; 100,000,000 shares
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authorized; 39,441,933 shares issued and 32,755,904
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shares outstanding at June 30, 2012, and 38,461,595
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shares issued and 32,131,188 shares outstanding at
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December 31, 2011
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394,419 | 384,616 | ||||||
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Additional paid-in capital
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269,809,193 | 270,230,246 | ||||||
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Accumulated other comprehensive income
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(293,820 | ) | (394,600 | ) | ||||
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Treasury stock at cost; 6,686,029 shares at June 30, 2012
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and 6,330,407 shares at December 31, 2011
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(11,750,434 | ) | (11,010,149 | ) | ||||
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Accumulated deficit
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(177,377,798 | ) | (171,065,720 | ) | ||||
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Total stockholders' equity
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80,781,615 | 88,144,448 | ||||||
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Total liabilities and stockholders' equity
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$ | 111,730,259 | $ | 121,413,216 | ||||
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THESTREET, INC.
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CONSOLIDATED STATEMENTS OF OPERATIONS
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For the Three Months Ended June 30,
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For the Six Months Ended June 30,
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2012
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2011
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2012
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2011
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Net revenue:
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Subscription services
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$ | 8,849,822 | $ | 10,074,931 | $ | 18,039,803 | $ | 19,684,432 | ||||||||
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Media
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3,631,334 | 4,953,857 | 7,257,180 | 9,465,237 | ||||||||||||
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Total net revenue
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12,481,156 | 15,028,788 | 25,296,983 | 29,149,669 | ||||||||||||
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Operating expense:
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Cost of services
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5,699,899 | 6,802,481 | 12,135,061 | 13,761,529 | ||||||||||||
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Sales and marketing
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3,268,859 | 4,110,501 | 7,359,108 | 8,481,274 | ||||||||||||
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General and administrative
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3,277,171 | 4,400,438 | 7,099,692 | 8,409,104 | ||||||||||||
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Depreciation and amortization
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1,158,190 | 1,545,192 | 2,445,452 | 3,166,041 | ||||||||||||
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Restructuring and other charges
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1,280,195 | - | 2,993,693 | - | ||||||||||||
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Gain on disposition of assets
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(220,000 | ) | - | (220,000 | ) | - | ||||||||||
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Total operating expense
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14,464,314 | 16,858,612 | 31,813,006 | 33,817,948 | ||||||||||||
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Operating loss
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(1,983,158 | ) | (1,829,824 | ) | (6,516,023 | ) | (4,668,279 | ) | ||||||||
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Net interest income
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107,858 | 176,748 | 203,945 | 374,775 | ||||||||||||
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Loss from continuing operations before income taxes
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(1,875,300 | ) | (1,653,076 | ) | (6,312,078 | ) | (4,293,504 | ) | ||||||||
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Provision for income taxes
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- | - | - | - | ||||||||||||
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Loss from continuing operations
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(1,875,300 | ) | (1,653,076 | ) | (6,312,078 | ) | (4,293,504 | ) | ||||||||
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Discontinued operations:
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Loss from discontinued operations
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- | (136 | ) | - | (1,752 | ) | ||||||||||
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Net loss
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(1,875,300 | ) | (1,653,212 | ) | (6,312,078 | ) | (4,295,256 | ) | ||||||||
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Preferred stock cash dividends
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96,424 | 96,424 | 192,848 | 192,848 | ||||||||||||
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Net loss attributable to common stockholders
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$ | (1,971,724 | ) | $ | (1,749,636 | ) | $ | (6,504,926 | ) | $ | (4,488,104 | ) | ||||
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Basic and diluted net loss per share:
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Loss from continuing operations
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$ | (0.06 | ) | $ | (0.05 | ) | $ | (0.19 | ) | $ | (0.13 | ) | ||||
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Loss from discontinued operations
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- | (0.00 | ) | - | (0.00 | ) | ||||||||||
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Net loss
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(0.06 | ) | (0.05 | ) | (0.19 | ) | (0.13 | ) | ||||||||
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Preferred stock dividends
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(0.00 | ) | (0.00 | ) | (0.01 | ) | (0.01 | ) | ||||||||
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Net loss attributable to common stockholders
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$ | (0.06 | ) | $ | (0.05 | ) | $ | (0.20 | ) | $ | (0.14 | ) | ||||
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Weighted average basic and diluted shares outstanding
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32,752,651 | 31,923,813 | 32,547,596 | 31,902,326 | ||||||||||||
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Net loss
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$ | (1,875,300 | ) | $ | (1,653,212 | ) | $ | (6,312,078 | ) | $ | (4,295,256 | ) | ||||
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Net interest income
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(107,858 | ) | (176,748 | ) | (203,945 | ) | (374,775 | ) | ||||||||
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Depreciation and amortization
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1,158,190 | 1,545,192 | 2,445,452 | 3,166,041 | ||||||||||||
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EBITDA
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(824,968 | ) | (284,768 | ) | (4,070,571 | ) | (1,503,990 | ) | ||||||||
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Gain on disposition of assets
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(220,000 | ) | - | (220,000 | ) | - | ||||||||||
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Noncash compensation
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533,896 | 708,848 | 1,066,804 | 1,429,963 | ||||||||||||
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Restructuring and other charges
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1,280,195 | - | 2,993,693 | - | ||||||||||||
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Transaction related costs
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73,860 | 315,395 | 75,329 | 335,395 | ||||||||||||
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Adjusted EBITDA
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$ | 842,983 | $ | 739,475 | $ | (154,745 | ) | $ | 261,368 | |||||||
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THESTREET, INC.
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CONSOLIDATED STATEMENTS OF CASH FLOWS
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For the Six Months Ended June 30,
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2012
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2011
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Cash Flows from Operating Activities:
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Net loss
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$ | (6,312,078 | ) | $ | (4,295,256 | ) | ||
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Loss from discontinued operations
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- | 1,752 | ||||||
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Loss from continuing operations
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(6,312,078 | ) | (4,293,504 | ) | ||||
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Adjustments to reconcile loss from continuing operations
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to net cash (used in) provided by operating activities:
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Stock-based compensation expense
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1,066,804 | 1,429,963 | ||||||
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Provision for doubtful accounts
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76,382 | 80,690 | ||||||
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Depreciation and amortization
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2,445,452 | 3,166,041 | ||||||
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Restructuring and other charges
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1,396,695 | - | ||||||
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Deferred rent
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(159,979 | ) | 671,474 | |||||
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Noncash barter activity
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109,510 | - | ||||||
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Gain on disposition of assets
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(220,000 | ) | - | |||||
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Changes in operating assets and liabilities:
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Accounts receivable
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1,416,910 | 518,124 | ||||||
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Other receivables
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(468,061 | ) | 40,997 | |||||
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Prepaid expenses and other current assets
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(715,217 | ) | (218,065 | ) | ||||
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Other assets
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32,961 | 15,000 | ||||||
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Accounts payable
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97,766 | (466,223 | ) | |||||
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Accrued expenses
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(2,534,003 | ) | (2,183,027 | ) | ||||
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Deferred revenue
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280,976 | 3,275,530 | ||||||
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Other current liabilities
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27,221 | (16,172 | ) | |||||
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Net cash (used in) provided by continuing operations
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(3,458,661 | ) | 2,020,828 | |||||
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Net cash used in discontinued operations
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- | (3,577 | ) | |||||
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Net cash (used in) provided by operating activities
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(3,458,661 | ) | 2,017,251 | |||||
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Cash Flows from Investing Activities:
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Purchase of marketable securities
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(41,151,130 | ) | (16,466,052 | ) | ||||
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Sale and maturity of marketable securities
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23,214,991 | 28,452,354 | ||||||
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Capital expenditures
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(714,193 | ) | (1,012,748 | ) | ||||
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Proceeds from the disposition of assets
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220,000 | |||||||
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Sale of Promotions.com
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- | 265,000 | ||||||
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Net cash (used in) provided by investing activities
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(18,430,332 | ) | 11,238,554 | |||||
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Cash Flows from Financing Activities:
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Cash dividends paid on common stock
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(1,642,421 | ) | (1,729,303 | ) | ||||
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Cash dividends paid on preferred stock
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(192,848 | ) | (192,848 | ) | ||||
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Proceeds from the sale of common stock
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135,000 | - | ||||||
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Purchase of treasury stock
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(740,285 | ) | (321,533 | ) | ||||
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Net cash used in financing activities
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(2,440,554 | ) | (2,243,684 | ) | ||||
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Net (decrease) increase in cash and cash equivalents
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(24,329,547 | ) | 11,012,121 | |||||
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Cash and cash equivalents, beginning of period
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44,865,191 | 20,089,660 | ||||||
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Cash and cash equivalents, end of period
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$ | 20,535,644 | $ | 31,101,781 | ||||
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Supplemental disclosures of cash flow information:
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Cash payments made for interest
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$ | - | $ | - | ||||
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Cash payments made for income taxes
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$ | - | $ | - | ||||
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Net loss
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$ | (6,312,078 | ) | $ | (4,295,256 | ) | ||
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Noncash expenditures
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4,714,864 | 5,348,168 | ||||||
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Changes in operating assets and liabilities
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(1,861,447 | ) | 964,339 | |||||
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Capital expenditures
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(714,193 | ) | (1,012,748 | ) | ||||
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Free cash flow
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$ | (4,172,854 | ) | $ | 1,004,503 | |||