UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549

FORM 10-K

ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934

For the Fiscal Year Ended December 31, 2008

Commission File Number 0-25779

THESTREET.COM, INC.

(Exact Name of Registrant as Specified in Its Charter)


Delaware		06-1515824
(State or Other Jurisdiction of Incorporation or Organization)		(I.R.S. Employer Identification No.)


14 Wall Street, 15th Floor New York, New York		10005
(Address of Principal Executive Offices)		(Zip Code)

(212) 321-5000

(Registrant’s Telephone Number, Including Area Code)

Securities registered pursuant to Section 12(b) of the Act:


Title of Each Class		Name of Each Exchange on Which the Securities are Registered
Common Stock, par value $0.01 per share		Nasdaq Global Market

Securities registered pursuant to Section 12(g) of the Act: None

Indicate by check mark if the registrant is a well-known seasoned issuer, as defined in Rule 405 of the Securities Act. Yes o No x

Indicate by check mark if the registrant is not required to file reports pursuant to Section 13 or Section 15(d) of the Exchange Act. Yes o No x

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

Indicate by check mark if disclosure of delinquent filers pursuant to Item 405 of Regulation S-K is not contained herein, and will not be contained, to the best of the Registrant’s knowledge, in definitive proxy or information statements incorporated by reference in Part III of this Form 10-K or any amendment to this Form 10-K. 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 x		Non-accelerated filer o		Smaller reporting company o

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

The aggregate market value of the Registrant’s common stock held by non-affiliates of the Registrant (assuming, for the sole purpose of this calculation, that all directors and executive officers of the Registrant are “affiliates”), based upon the closing price of the Registrant’s common stock on June 30, 2008 as reported by Nasdaq, was approximately $157.0 million.

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


Title of Each Class		Number of Shares Outstanding at March 9, 2009
Common Stock, $0.01 par value		30,524,147

DOCUMENTS INCORPORATED BY REFERENCE

Part III of this Form 10-K incorporates by reference certain information from the Registrant’s Definitive Proxy Statement for its Annual Meeting of Stockholders to be held on May 28, 2009, to be filed with the Securities and Exchange Commission within 120 days after the end of the fiscal year covered by this Report.

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THESTREET.COM, INC.
2008 ANNUAL REPORT ON FORM 10-K


	Page
PART I
Item 1. Business		1
Item 1A. Risk Factors		10
Item 1B. Unresolved Staff Comments		17
Item 2. Properties		17
Item 3. Legal Proceedings		17
Item 4. Submission of Matters to a Vote of Security Holders		18
PART II
Item 5. Market for Registrant’s Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities		19
Item 6. Selected Financial Data		22
Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations		23
Item 7A. Quantitative and Qualitative Disclosures About Market Risk		40
Item 8. Financial Statements and Supplementary Data		40
Item 9. Changes in and Disagreements With Accountants on Accounting and Financial Disclosure		40
Item 9A. Controls and Procedures		40
Item 9B. Other Information		41
PART III
Item 10. Directors and Executive Officers of the Registrant		42
Item 11. Executive Compensation		42
Item 12. Security Ownership of Certain Beneficial Owners and Management		42
Item 13. Certain Relationships and Related Transactions		43
Item 14. Principal Accounting Fees and Services		43
PART IV
Item 15. Exhibits, Financial Statement Schedules		44
Signatures		47

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THESTREET.COM, INC.

2008 ANNUAL REPORT ON FORM 10-K

PART I

Item 1. Business

TheStreet.com, Inc., together with its wholly owned subsidiaries (collectively, the “Company,” “our,” “we” or “us”) is a leading financial media company. We distribute our content through proprietary properties, including our network of Web sites, email services, mobile devices, podcasts and video programming. We also syndicate our content for distribution by other media companies and print publications. Our goal is to provide information and services that empower a growing audience of investors and consumers, through our expanding network of properties, to become the leading independent online destination where issues and topics related to life and money intersect.

The Company pioneered the electronic publishing of business and investment information on the Internet through our creation of TheStreet.com, which launched in 1996 as a paid subscription news and commentary Web site. The Company generates its revenue from (i) paid services, which includes subscription revenue, syndication and licensing fees, and information services revenue, and (ii) marketing services, which includes advertising and interactive marketing services revenue. In 2008, the Company’s revenue from paid services and marketing services was 57% and 43%, respectively, of total revenue, compared to 59% and 41%, respectively, in 2007.

Paid services revenue includes revenue from our subscription Web sites and newsletters (“Subscriptions Services”), as well as syndication, licensing and information services revenue.

Our Subscription Services are generally targeted at more experienced investors, as compared to the content on our free, advertising supported network of Web sites. Our two subscription Web sites are RealMoney.com, which provides actionable investing ideas, trading strategies, technical analysis and expert market commentary from more than 60 analysts and traders, and RealMoney Silver, a compilation of three email subscription services and the commentary from RealMoney. Our subscription email newsletters, which target a wide variety of investing strategies, includes: Action Alerts PLUS, the stock picks and portfolio strategies of well-known markets commentator James J. Cramer; TheStreet.com Stocks Under $10, which focuses on stocks priced below $10 a share; TheStreet.com Options Alerts, which focuses on the options market; TheStreet.com Top Stocks, which contains stock ideas and technical analysis; TheStreet.com Value Investor, which covers value stocks; BioTech Select which is sector specific; and The Dividend Stock Advisor, a model portfolio and analysis of high yield stocks and funds.

Syndication and licensing fees include revenue from the licensing and syndication of content from TheStreet.com Ratings, which tracks the risk-adjusted performance of more than 16,000 mutual funds and ETFs and more than 5,000 stocks. TheStreet.com Ratings also uses proprietary quantitative computer models to evaluate the financial strength of more than 13,000 financial institutions, including life, health and annuity insurers, property and casualty insurers, HMOs, Blue Cross Blue Shield plans, banks and savings and loans. In addition to generating revenue from the licensing and syndication of content from TheStreet.com Ratings, the stock, ETF and mutual fund ratings have been incorporated into our network of Web sites, including on the stock quote pages of TheStreet.com, as well as through online screening tools and regularly published stories.

Paid services also includes information services revenue from RateWatch, which offers competitive rate, fee and financial data, including data about CDs, IRAs, money market accounts, savings accounts, checking accounts, home mortgages, home equity loans, credit cards and auto loans. The information is obtained from more than 70,000 financial institutions (including branches), providing a comprehensive collection of rate information that also serves as the foundation for the data available on BankingMyWay.com, a free advertising supported Web site that enables consumers to search for the most competitive local and national rates from the RateWatch data.

We seek to grow our paid services business through ongoing tailoring and enhancement of our product offerings, external marketing and promotion, and promotion on our expanding network of Web sites.

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Marketing services revenue includes advertising revenue and interactive marketing services revenue from our Promotions.com business. Through our growing network of online Web sites — which include TheStreet.com, Stockpickr.com, MainStreet.com and BankingMyWay.com, along with the recently acquired minority interest in Geezeo.com — our goal is to meet our audience and advertiser demands while becoming the leading independent online network where issues and topics related to life and money intersect. We plan to accomplish this goal by providing:

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A broader range of content to our audience, including personal finance, real estate, entrepreneurship, small business, and luxury living across a growing network of Web sites; and

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Innovative, interactive solutions for our advertisers, across our full-range of distribution platforms.

As a result of expanded content offerings and implementation of marketing relationships with other high-traffic Web sites, we experienced increases in the number of average monthly unique visitors to our network of Web sites. In 2008, our network attracted an average of 7.4 million unique visitors per month, an increase of 29% over the prior year. The growth in our unique audience attracted new advertisers to the site and allowed us to expand our relationships with a number of our existing advertisers. See “Risk Factors — We May Have Difficulty Maintaining or Increasing Our Advertising Revenue, a Significant Portion of Which Is Concentrated Among Our Top Advertisers and Subject to Industry and Other Factors.”

We generate advertising revenue from our content through the sale of the following types of advertising placements:

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Banner, tile, contextual, performance based and interactive advertisement and sponsorship placements in our advertising-supported Web sites, TheStreet.com, Stockpickr.com, BankingMyWay.com and MainStreet.com, as well as on our paid subscription site, RealMoney.com;

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Advertisement placements in our free email newsletters;

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Stand-alone emails sent on behalf of our advertisers to our registered users; and

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Advertisements in TheStreet.com TV, TheStreet.com Mobile and in our podcasts.

We generate interactive marketing services revenue from Promotions.com, which we acquired in August 2007. Promotions.com implements online and mobile interactive promotions — including sweepstakes, instant win games and customer loyalty programs — for some of the world’s largest brands, and provides the Company with the capabilities to deliver these promotions for our advertisers on campaigns that run across our network of Web sites.

Our goal is to be a trusted resource to our audience, helping our readers to understand financial alternatives and providing them with the tools necessary for sound and informed financial decision-making. During 2008, we have received the following awards and distinctions:

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New York Press Club Journalism Award in the Business Internet category;

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New York Press Club Journalism Award in the Political Coverage Internet category;

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Webby Award nomination for the Company's recently launched personal finance Web site MainStreet.com (www.mainstreet.com) for the Best Business Blog of 2008;

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Society of American Editors and Writers Award for Enterprise Reporting;

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Society of American Editors and Writers Award for Commentary;

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Media Industry Newsletter (min) nomination for Best Premium Web site — RealMoney Silver;

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Media Industry Newsletter (min) nomination for Best Mobile Platform; and

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Media Industry Newsletter (min) Award for Editor of the Year — David Morrow, editor-in-chief.

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Our strategy is to continue to expand our network, content offerings and distribution channels to attract a wider consumer audience to our online network where issues and topics related to life and money intersect by:

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Providing a broader range of content to our audience, including real estate, entrepreneurship, small business, and luxury living across a growing network of Web sites; and

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Providing innovative, interactive solutions for our advertisers, across our full range of distribution platforms.

2008 Highlights

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In February, the Company announced the launch of its redesigned flagship Web site, TheStreet.com (www.thestreet.com). The site’s completely new design creates a dynamic environment for readers and advertisers and provides multimedia financial news, education and tools in an easy-to-use and engaging environment. Visitors to the site have better access to the company's award-winning content, authors, and guest commentators as the redesign provides a more streamlined flow between content, quote data and financial tools.

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In the same month the Company announced the launch of MainStreet (www.mainstreet.com), a Web site devoted to making personal finance entertaining. Geared to the everyday reader, MainStreet offers free personal finance information and advice on a range of money-oriented topics, as well as original videos, a community rating system for articles, email alerts, and more. MainStreet represents another innovative push by TheStreet.com to expand its audience and create additional advertising and sponsorship opportunities. In April, MainStreet.com was nominated by the 23^rd Annual Webby Awards for the Best Business Blog of 2008.

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The Company’s BankingMyWay.com Web site was also re-designed in February. BankingMyWay.com provides consumers with the largest collection of banking rates online. It offers the most effective and efficient way to search and compare rates locally, allowing consumers to search for rates by zip code, city or state; and provides rates for more than 53,000 financial institutions.

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In April, the Company made a strategic investment in Geezeo, a Web-based personal finance Web site, as we continue our expansion in the money category. Geezeo combines free, easy-to-use online personal finance and budgeting tools with the power of social networking to provide the resources, experts and motivation consumers need to achieve their financial goals. Since going live in 2007, Geezeo has been recognized by CNN, The Wall Street Journal, Newsweek and The Washington Post for its innovation in combining social networking and personal finance.

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In early June, “Nails on the Numbers” was launched via a partnership with long-time and popular contributor Lenny “Nails” Dykstra. As the exclusive home of Dykstra’s “deep in the money calls,” the product’s trading strategy focuses on undervalued option prices for large, blue-chip companies.

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Later that same month, TheStreet.com InsiderInsights was also launched. Researched and written by Jonathan Moreland, who has been tracking insider activity for nearly 15 years, this newsletter focuses on bullish and bearish stock recommendations based on insider buying and selling.

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In September, TheStreet.com further expanded its library of premium subscription products with the launch of Biotech Select, a newsletter devoted to providing key insights into the biotechnology sector. Written by senior correspondent Adam Feuerstein, formerly a buy-side analyst and now the portfolio manager of Biotech Select, it leverages his long-time experience in analyzing the biotech space.

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In September, TheStreet.com began providing BlackBerry® smartphone users with automatic and free access to the latest stock market news, investing advice, stock picks and quotes. The application, developed by mobile technology leader Polar Mobile, is available for download on a range of BlackBerry smartphones from Research In Motion.

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In October, leading mobile TV service provider MobiTV selected TheStreet.com TV to join its new business video product, Mobi4Biz, which combines live TV and Video-on-Demand content. Mobi4Biz also features user-driven programming, where the consumer creates a watch list. All of the consumer’s content discovery within the application is related to the watch list.

Marketing Services

Marketing services includes advertising revenue generated from our free, advertising supported network of Web sites, and interactive marketing services revenue from our Promotions.com business.

Advertising Sales

In 2008, our network generated an average of approximately 7.4 million unique visitors per month. We monetize this traffic through the sale of the following types of advertising placements:

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Advertisement placements in our free email newsletters;

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Stand-alone emails sent on behalf of our advertisers to our registered users; and

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Advertisements on TheStreet.com TV, TheStreet.com Mobile and in our podcasts.

Our roster of free consumer properties includes the following:

TheStreet.com

Our flagship site, TheStreet.com, was launched in 1996 as a paid subscription news and commentary Web site and re-launched in 2000 as a free, advertising-supported site. TheStreet.com provides high-quality financial commentary, analysis and news with financial coverage to individual investors of all experience levels and professional investors. Updated throughout the trading day, TheStreet.com’s articles put readers on the trading floor with some of the leading commentators and journalists in the business. TheStreet.com provides investigative journalism, commentary on market trends, specific stock and mutual fund analysis, and has recently expanded its personal finance and lifestyle sections. In early 2008, TheStreet.com was relaunched after an extensive redesign. Engaging and user friendly, the redesigned site delivers an optimal experience for visitors accessing the company’s award-winning content, authors, guest commentators, enhanced quote data and financial tools, as well as advertisers who seek more efficient content targeting and custom content sponsorship opportunities.

TheStreet.com TV is a free online video network providing a daily menu of original business news and short-form feature programs. The programs are filmed in the Company’s studio at its principal offices at 14 Wall Street in New York City and on location, including The NASDAQ Stock Market. TheStreet.com TV offers continuous programming each day to keep investors informed of important changes in daily market conditions as well as information regarding personal finance and other topics that are important to investors. Aside from business news updates delivered during the trading day, TheStreet.com TV offers feature programs that include “Extreme Stocks,” a three-minute long segment on stocks over $100 and under $10; “Random Acts of Fashion,” the latest on retail and retail stocks, and “Wall Street Confidential,” a daily mid-day analysis of the issues and trends affecting that day’s trading. TheStreet.com TV is available on both the flagship Web site and the RealMoney Web site.

TheStreet.com Mobile offers BlackBerry smart phone users a full array of TheStreet.com content using Research in Motion’s “push” technology. Developed in partnership with Polar Mobile of Toronto, Canada, the application delivers full text stories to BlackBerry’s automatically. The application allows users to read stories even when not connected to a wireless signal.

TheStreet.com Ratings tracks the risk adjusted performance of more than 16,000 mutual funds and ETFs and more than 5,000 stocks. In addition, Ratings uses proprietary quantitative computer models to evaluate the financial strength of more than 13,000 financial institutions, including life, health and annuity insurers, property and casualty insurers, HMOs, Blue Cross Blue Shield plans, banks and savings and loans. The stock, ETF

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and mutual fund ratings have been incorporated into our free Web site, TheStreet.com, and links to a company’s Ratings page can be found in all published stories.

Stockpickr.com

Stockpickr.com, a free advertising supported site, debuted in February 2007 as one of the first Web sites to combine financial content and social networking. The site boasts Web 2.0 capabilities and seamless content integration with TheStreet.com, delivering the premiere online community for sharing stock ideas and information about investing. Time.com, the online site of Time Magazine, named Stockpickr.com one of the top Web sites in 2007.

BankingMyWay.com

BankingMyWay.com, a free advertising supported site, is a Web site that helps Web users find the most competitive rates locally and nationally for a myriad of banking products, including CDs, checking and money market accounts, savings accounts, mortgages, home equity, credit card rates and auto loans. BankingMyWay.com also contains original content articles that highlight the latest in banking and savings trends, as well as a wide menu of calculators that readers find useful and engaging. The calculators on BankingMyWay.com assist readers with a wide range of financial challenges and questions, from figuring the maximum monthly mortgage payment they can afford, to estimating the amount of monthly income their retirement account is likely to provide.

MainStreet.com

Launched in early 2008, MainStreet.com, a free advertising supported site, is a Web site that provides personal finance advice in the context of life events and stages. The site features a variety of channels, many of which address life situations: Smart Spending, Money/Investing, Family, Career, Retirement, Small Business, and Lifestyle. MainStreet dispenses advice on how to “save, spend and borrow smart” and our readers will thus find content on everything from budgeting/bargains to college financing to 401(k)s, and advertisers seeking to connect with an audience interested in personal finance will find numerous sponsorship opportunities on the site. MainStreet also features MainStreet.com TV, which contains original segments on personal finance.

Email Newsletters

We offer several free newsletters, including daily and weekly market bulletins, recaps from TheStreet.com TV and more. These newsletters are available by email to customers who register as members of our Web sites.

Podcasts

TheStreet.com’s first podcast, “The Real Story,” debuted September 1, 2006. A 20-minute podcast hosted by TheStreet.com research analyst Frank Curzio, “The Real Story” covers the top stories of the trading day, often featuring market experts as guests to provide additional analysis of the day’s events. “The Real Story” is available for download on the TheStreet.com and RealMoney.com Web sites and through Apple, Inc.’s iTunes store.

Interactive Marketing Services

Promotions.com is a leading provider of online and mobile custom interactive solutions for advertisers, marketers and content publishers. Promotions.com creates and develops Web sites, digital commerce solutions, and implements interactive promotions for some of the world’s largest brands. Promotions.com is a full-service agency that delivers services on a fixed fee, retainer and time & materials basis. Promotions.com also provides the Company with the capabilities to deliver advertising solutions that are increasingly sought by our advertisers.

Paid Services

Subscription Services

The Company offers a variety of paid subscription services through two platforms: Web sites and email newsletters.

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Our two subscription Web sites are RealMoney.com, which provides actionable investing ideas, trading strategies, technical analysis and expert market commentary from more than 60 analysts and traders, and RealMoney Silver, a compilation of three email subscription services and the commentary from RealMoney. The three services included in RealMoney Silver are Action Alerts PLUS, TheStreet.com Stocks Under $10, and TheStreet.com Value Investor. RealMoney Silver also contains the exclusive commentary of Doug Kass, a long-time contributor to TheStreet.com and a hedge fund manager and exclusive coverage of earnings calls by our contributors.

The company produces additional subscription email newsletters. These include: Action Alerts PLUS, the stock picks and portfolio strategies of well-known markets commentator James J. Cramer; TheStreet.com Stocks Under $10, which focuses on stocks priced below $10 a share; TheStreet.com Breakout Stocks, which identifies little-known stocks that appear likely to have sharp, sustained increases in their share prices; TheStreet.com Options Alerts, which focuses on the options market; TheStreet.com Top Stocks, which contains stock ideas and technical analysis; TheStreet.com Value Investor, which covers value stocks; The Daily Swing Trade, which contains daily stock trading ideas based upon technical swing trading; BioTech Select which is sector specific; The Dividend Stock Advisor, a model portfolio and analysis of high yield stocks and funds; ETF Shark Alerts, a model portfolio and analysis of exchange traded funds; and InsiderInsights, which focuses on bullish and bearish stock recommendations based on insider buying and selling.

Syndication & Licensing & Information Services Revenue

Syndication and licensing revenue is derived from the syndication and licensing of our content to third parties, including the syndication of content from TheStreet.com Ratings, which tracks the risk adjusted performance of more than 16,000 mutual funds and ETFs and more than 5,000 stocks. In addition, Ratings uses proprietary quantitative computer models to evaluate the financial strength of more than 13,000 financial institutions, including life, health and annuity insurers, property and casualty insurers, HMOs, Blue Cross Blue Shield plans, banks and savings and loans. TheStreet.com Ratings generates syndication revenue by providing ratings and research on more than 5,000 publicly traded companies to a number of large investment banking and brokerage firms that distribute independent research to their retail customers as part of the Global Analyst Research Settlement, which is in place through July 2009. In addition, TheStreet.com Ratings also licenses its content to Grey House Publishing, a leading independent reference publishing house to print, publish, distribute, market and sell certain TheStreet.com Ratings branded directories.

Information services revenue comes from our RateWatch business, which offers competitive rate, fee and financial data, including data about certificates of deposit, IRAs, money market accounts, savings accounts, checking accounts, home mortgages, home equity loans, credit cards and auto loans. The information is obtained from more than 70,000 financial institutions (including branches). This information is sold to banks and financial institutions on an annual subscription basis, in the form of standard and custom reports that outline the competitive landscape for our clients.

Marketing

Consumer Services Sales and Marketing

We pursue a variety of sales and marketing initiatives to sell subscriptions to our premium services, increase traffic to our sites, license our content, expose our brands, and build our customer databases. These initiatives include promoting our services using online and email marketing, establishing content syndication and subscription distribution relationships with leading companies, and engaging in an ongoing public awareness campaign. See “Risk Factors — Difficulties Associated With Our Brand Development May Harm Our Ability to Attract Subscribers to Our Paid Services and Users to Our Advertising Supported Services.”

Online and Email Marketing

We engage in extensive online and email marketing to increase the number of subscribers to our premium services, increase traffic to our Web sites and grow our customer databases. Our in-house online marketing and creative design teams create a variety of marketing campaigns, which are then implemented by our technical and operations team and by third party service providers. We also have a reporting and analysis group that analyzes traffic and subscription data to determine the effectiveness of the campaigns. In 2008, these programs consisted primarily of promotional advertising campaigns on search engines, online media networks, financial portals and smaller niche Web sites, and email marketing campaigns.

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Content Syndication and Subscription Distribution

We use content syndication and subscription distribution arrangements to capitalize on the cost efficiencies of online delivery and create additional value from content we have already produced for our own publication. By syndicating our content for other leading Web sites to host on their own sites, we expose our brands and top-quality writing to millions of potential users. We also syndicate our content to other leading Web sites that index our headlines on their stock quote result pages, which generates additional traffic to our sites, offering the opportunity for increased advertising revenue and subscription sales.

We also use subscription distribution arrangements with online financial services firms and other companies. These agreements allow their customers to receive discounts on certain of our premium subscription services or to access our free and premium content, thereby exposing our brands and content to new audiences. See “Risk Factors — Failure to Establish and Maintain Successful Strategic Relationships with Other Companies Could Decrease Our Subscriber and Reader Base.”

Public Awareness

We seek to raise our visibility and enhance the brand recognition of our services. In March 2005, the CNBC cable television network introduced “Mad Money,” a stock market commentary program hosted by James J. Cramer, markets commentator for TheStreet.com, as well as our co-founder and Chairman of the Board. Mr. Cramer’s presence on Mad Money has enabled TheStreet.com to increase awareness of our subscription services and introduced our content to a new audience of readers. For example, when Mr. Cramer mentions a stock on Mad Money that is part of the portfolio of Action Alerts Plus, a premium service managed by Mr. Cramer and sold exclusively by TheStreet.com, a graphic appears on the screen that notifies the reader of the charitable trust that is associated with the Action Alerts Plus service. In addition, the staff of TheStreet.com writes a nightly recap of the Mad Money show, which has become a popular feature for viewers of the show. The broad reach of our brand promotion through these endeavors has exposed our services to new audiences, helping to increase traffic and subscription opportunities. See “Risk Factors — Failure to Establish and Maintain Successful Strategic Relationships with Other Companies Could Decrease our Subscriber and Reader Base.”

In 2008, our writers and our stories were mentioned or featured in numerous reports by major news outlets, including The Wall Street Journal, Bloomberg, The New York Times, The New York Post, Reuters, Dow Jones Newswires, Investor’s Business Daily, The Washington Post, The San Francisco Chronicle, Seattle Times, Newsday, the Associated Press and the Detroit Free Press. Additionally, some of our writers appear on television and radio, including CNBC, CNN, NBC, CBS, MSNBC and Fox Business News. Furthermore, maintaining relationships with such companies as Microsoft, Yahoo!, AOL and Google to distribute our content helps increase visibility of our brand and our individual contributors.

Competition

Our services face intense competition from other providers of business, personal finance, investing and ratings content, including:

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online services or Web sites focused on business, personal finance, or investing, such as The Wall Street Journal Online (www.wsj.com), Forbes.com, SmartMoney.com, MarketWatch.com (Dow Jones), The Motley Fool, BankRate.com and CNBC.com, as well as financial portals such as Yahoo! Finance and Google Finance;

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publishers and distributors of traditional media focused on business, personal finance or investing, including print and radio, such as The Wall Street Journal and financial talk radio programs, and business television networks such as CNBC and the Fox Business Channel;

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investment newsletter publishers, such as Investormedia and Agora Publishing; and

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established ratings services, such as Standard & Poors, Morningstar, Inc., Lipper and A.M. Best.

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subscribers, readers and viewers of our video content, for advertising revenue, and for employees and contributors to our services. Our ability to compete successfully depends on many factors, including the quality, originality, timeliness, insightfulness and trustworthiness of our content and that of our competitors, the success of our recommendations and research, our ability to introduce products and services that keep pace with new investing trends, the ease of use of services developed either by us or our competitors and the effectiveness of our sales and marketing efforts.

Our interactive marketing services face intense competition from both online and offline providers of promotions and other marketing technologies, including:

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executional promotion providers including ePrize, SCA, IC Group as well as more traditional promotion provides such as Marden Kane and D.L. Blaire;

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advertising or marketing agencies who in the past had been more focused on traditional media such as, Young & Rubicam, Wunderman and McCann; and

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digital agencies such as Digitas.

Additionally, with current trends in media spending and a general economic slowdown, more and more companies may look towards executing online promotions as a way to offer new services and fill gaps in their budgets. This may lead to an increase in the number of direct competitors. Our ability to compete successfully depends on many factors, including our ability to successfully execute projects for our current clients, maintain a competitive pricing structure, introduce services that keep pace with current trends in the interactive marketing space, and the effectiveness of our sales and marketing efforts.

Infrastructure, Operations & Technology

The Company’s main technological infrastructure consists of proprietary content-management, subscription management, Ratings models, and eCommerce systems, which are hosted primarily at a facility of Savvis Communications Corporation (“Savvis”) in Jersey City, New Jersey. The Company’s Promotions.com business is hosted at several datacenters throughout the country, including Equinix in Newark, New Jersey, Equinix in Secaucus, New Jersey, and CoSentry in Belleview, Nebraska. Our operations are dependent in part on our ability, and that of our various hosting facilities, to protect our systems against damage from fire, earthquakes, power loss, telecommunications failure, break-ins, computer viruses, hacker attacks, terrorist attacks and other events beyond our control. See “Risk Factors — System Failure or Interruption May Result in Reduced Traffic, Reduced Revenue and Harm to Our Reputation.”

The content-management system allows our stories, videos and market journals to be prepared for publication to a large distribution audience. The system enables us to distribute and syndicate our content economically and efficiently to multiple destinations in a variety of technical formats.

Our subscription management system is based on proprietary software. This system allows us to communicate automatically with readers during their free-trial and subscription periods. The system is capable of yielding a wide variety of customized subscription offers to potential subscribers, using various communication methods and platforms.

The eCommerce platform controls user access to a wide array of service offerings. The system automatically controls all aspects of online daily credit card billing, based upon user selected billing terms. All financial revenue recognition reports are automatically generated, providing detailed reporting on all account subscriptions. This generally allows a user to sign up and pay for an online service for his or her selected subscription term (annual or monthly) without any manual staff intervention at the Company.

Our Ratings business is based on a set of proprietary statistical models that use key financial metrics and indicators to rate stocks, mutual funds, ETFs, banks, insurance and other financial institutions. The data and output from these models are managed and stored within a content management system and updated daily based on changes in markets. The system is capable of search-based syndication of customized ratings data that can be distributed in a variety of technical formats.

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Our Promotions.com business employs a proprietary platform for running all aspects of an online sweepstake, contest, game of chance or other interactive promotions. In addition, Promotions.com provides shared and dedicated hosting services for individual client applications.

Intellectual Property

To protect our rights to intellectual property, we rely on a combination of trademark, copyright law, trade secret protection, confidentiality agreements and other contractual arrangements with our employees, affiliates, customers, and other business partners. We have registered certain of our trademarks in the United States and we have pending U.S. applications for other trademarks. Additionally, we aggressively police Internet message boards and other Web sites for copyrighted content that has been republished without our permission and aggressively pursue both the poster and any Internet service provider or other forum provider. To protect our intellectual property rights as well as protect against infringement claims in our relationships with business partners, we generally look to incorporate contractual provisions protecting our intellectual property and seeking indemnification for any third party infringement claims. Some of our services incorporate licensed third-party technology. In these license agreements, the licensors have generally agreed to defend, indemnify and hold us harmless with respect to any claim by a third party that the licensed software infringes any patent or other proprietary right. We cannot provide assurance that the foregoing provisions will be adequate to protect us from infringement claims. Any infringement claims, even if not meritorious, could result in the expenditure of significant financial and managerial resources on our part, which could materially adversely affect our business, results of operations and financial condition. See “Risk Factors — We May Not Adequately Protect Our Own Intellectual Property and May Incur Costs to Defend Against, or Face Liability for, Intellectual Property Infringement Claims of Others.”

Employees

As of December 31, 2008, the Company had 310 employees. The Company has never had a work stoppage and none of its employees is represented under collective bargaining agreements. The Company considers its relations with its employees to be good.

Government Regulation

We are subject to government regulation in connection with securities laws and regulations applicable to all publicly owned companies, as well as laws and regulations applicable to businesses generally. See “Risk Factors — We Face Government Regulation and Legal Uncertainties.”

We are also increasingly subject to government regulation and legislation specifically targeting Internet companies, such as privacy regulations adopted at the local, state, national and international levels and taxes levied at the state level. Due to the increasing popularity and use of the Internet, enforcement of existing laws, such as consumer protection regulations, in connection with Web-based activities has become more aggressive, and it is expected that new laws and regulations will continue to be enacted at the local, state, national and international levels. Such new legislation, alone or combined with increasingly aggressive enforcement of existing laws, could inhibit the growth in use of the Internet and decrease the acceptance of the Internet as a communications and commercial medium, which could in turn decrease the demand for our services or otherwise have a material adverse effect on our future operating performance and business. See “Risk Factors — We Face Government Regulation and Legal Uncertainties.”

Available Information

The Company’s flagship Web site is located at http://www.thestreet.com. The Company makes available free of charge, on or through its Web site, its annual, quarterly and current reports, and any amendments to those reports, as soon as reasonably practicable after electronically filing such reports with the SEC. Information contained on the Company’s Web site is not part of this report or any other report filed with the SEC.

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Item 1A. Risk Factors.

You should carefully consider the following material risks facing the Company. If any of the following risks occur, the Company’s business, results of operations or financial condition could be materially adversely affected.

Our quarterly financial results may fluctuate and our future revenue is difficult to forecast

Our quarterly operating results may fluctuate significantly in the future as a result of a variety of factors, many of which are outside our control, including:

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the level of interest and investment in the stock market by both individual and institutional investors;

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the willingness of investors to pay for content distributed over the Internet, where a large quantity of content is available for free;

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demand for advertising on our Web sites, which is affected by advertising budget cycles of our customers and the demand for advertising on the Internet generally;

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subscription price reductions attributable to decreased demand or increased competition;

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new products or services introduced by our competitors;

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content distribution fees or other costs;

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costs associated with system downtime affecting the Internet generally or our Web sites in particular; and

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general economic and market conditions.

Although we generated net income for the year of 2008, you should not rely on the results as an indication of future performance. We may not be cash flow positive or generate net income in future periods. We forecast our current and future expense levels based on expected revenue and our operating plans. Because of the above factors, as well as other material risks we face, as described elsewhere in this report, our operating results may be below the expectations of public market analysts and investors in some future quarters. In such an event, the price of our common stock is likely to decline.

Key writers, particularly James J. Cramer, are essential sources of revenue

Some of our products, particularly our newsletters, reflect the talents, efforts, personalities and reputations of their respective writers. As a result, the services of these key writers, particularly our co-founder and Chairman of the Board James J. Cramer, form an essential element of our subscription revenue. In addition, Mr. Cramer’s popularity and visibility have provided public awareness of our services and introduced our content to new audiences. Accordingly, we seek to compensate and provide incentives for these key writers through competitive salaries, stock ownership and bonus plans, and have entered into employment agreements with several of them, including Mr. Cramer. Mr. Cramer has a three-year employment agreement, which may be terminated by him as of January 15, 2010 and any year thereafter. We can give no assurances that we will be able to retain key writers or, should we lose the services of one or more of our key writers to death, disability, loss of reputation or other reason, to attract new writers acceptable to readers of our network of Web sites and newsletters. The loss of services of one or more of our key writers could have a material adverse effect on our business, results of operations and financial condition.

The loss of the services of other key employees could affect our business

Our ability to compete in the marketplace depends upon the retention of other key employees, including executives to operate our business, technology personnel to run our publishing, commerce, communications, video and other systems, and salespersons to sell our advertising inventory. Several, but not all, of our key employees are bound by employment or non-competition agreements, certain of which have been noticed for non-renewal. There can be no assurances that the substitute employment and other arrangements, which have not been finalized, with key employees will provide adequate protections to us and will be acceptable and unobjectionable to such employees or will not result in management changes that would have material adverse impact on us. In addition, we may incur increased costs to continue to compensate our key executives, as well

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as other employees, through competitive salaries, stock ownership and bonus plans. Nevertheless, we can make no assurances that these programs will allow us to retain key employees or hire new employees. The loss of one or more of our key employees, or our inability to attract experienced and qualified replacements, could materially adversely affect our business, results of operations and financial condition.

We may have difficulty maintaining or increasing our advertising revenue, a significant portion of which is concentrated among our top advertisers and subject to industry and other factors

Our ability to maintain or increase our advertising revenue depends on a variety of factors. Such factors include: general market conditions; seasonal fluctuations in financial news consumption and overall online usage; our ability to maintain or increase our unique visitors and page view inventory; and our ability to win advertisers’ from other Web sites, television, newspapers, magazines, newsletters or other new media. Advertising revenues could decline if the relationships we have with portals and other high-traffic Web sites is adversely affected. In addition, our advertising revenues may decline as a result of pricing pressures on internet advertising rates due to industry developments, changes in consumer interest in the financial media and other factors in and outside of our control, including in particular as a result of the ongoing economic downturn, thus reducing advertising revenues. In this regard, where advertising revenue is performance-based, such revenue is directly sensitive to performance and thus may be directly and adversely impacted by the foregoing and other factors. If our advertising revenue significantly decreases, our business, results of operations and financial condition could be materially adversely affected.

In 2008, our top five advertisers accounted for approximately 26% of our total advertising revenue, a decrease from 28% for 2007. Furthermore, although we have advertisers from outside the financial services industry, such as travel, automotive and technology, a large proportion of our top advertisers are concentrated in financial services, particularly in the online brokerage business. Recent consolidation of financial institutions, budgetary cuts by our advertisers in response to adverse macro economic conditions and other factors could cause us to lose a number of our top advertisers, our business, results of operations and financial condition could be materially adversely affected. As is typical in the advertising industry, our advertising contracts have short notice cancellation provisions.

Investment of the company’s cash carries risks

Financial instruments that subject the Company to concentrations of credit risk consist primarily of cash, cash equivalents, debt securities available for sale and restricted cash. The Company maintains all of its cash, cash equivalents, debt securities available for sale and restricted cash in six financial institutions, although substantially all of the balance is within one institution. The Company performs periodic evaluations of the relative credit standing of the six institutions. The cash balances are insured by either the FDIC, up to $250,000 per depositor (currently set to expire on December 31, 2009, after which the limit will reduce to $100,000 per depositor), or the U.S. Department of Treasury’s Temporary Guarantee Program for Money Market Funds (currently set to expire on April 30, 2009). The Company has cash balances on deposit with three financial institutions at December 31, 2008 that exceed the insured limit in the amount of $24.7 million. Of this total, $21.8 million is invested in a money market fund that invests only in U.S. Treasury backed securities. No assurances can be made that the third party institutions will retain acceptable credit ratings or investment practices. Investment decisions of third parties and market conditions may adversely affect the Company’s cash balances and financial condition.

The company recorded impairment of intangible assets and there can be no assurances that we will not have to record additional impairments in the future

In 2008 the Company recorded an impairment of intangible assets that totaled $2,325,481. No impairment expense was recorded for the year ended December 31, 2007. The recorded impairments were the result of reduced revenue and cash flows as well as discontinued use of certain trade names. No assurances can be made that the Company will not have to record additional impairments in the future which may adversely affect the Company’s cash balances and financial condition.

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We face intense competition

Our services face intense competition from other providers of business, personal finance, investing and ratings content, including:

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investment newsletter publishers, such as Investormedia and Agora Publishing; and

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established ratings services, such as Standard & Poors, Morningstar, Inc., Lipper and A.M. Best.

Additionally, advances in technology have reduced the cost of production and online distribution of print, audio and video content, which has resulted in the proliferation of small, often self-published providers of free content, such as bloggers. We compete with these other publications and services for customers, including subscribers, readers and viewers of our video content, for advertising revenue, and for employees and contributors to our services. Our ability to compete successfully depends on many factors, including the quality, originality, timeliness, insightfulness and trustworthiness of our content and that of our competitors, the success of our recommendations and research, our ability to introduce products and services that keep pace with new investing trends, the ease of use of services developed either by us or our competitors and the effectiveness of our sales and marketing efforts.

Many of our competitors have longer operating histories, greater name recognition, larger customer bases and significantly greater financial, technical and marketing resources than we have. Increased competition could result in price reductions, reduced margins or loss of market share, any of which could materially adversely affect our business, results of operations and financial condition. Accordingly, we cannot guarantee that we will be able to compete effectively with our current or future competitors or that this competition will not significantly harm our business.

Risks Associated With Our Strategic Acquisitions Could Adversely Affect Our Business

We have completed several acquisitions within the last three years, and we expect to make additional acquisitions and strategic investments in the future. Acquisitions involve numerous risks, including difficulties in the assimilation of the operations and services of the acquired companies as well as the diversion of management's attention from other business concerns. In addition, there may be expenses incurred in connection with the acquisition and subsequent assimilation of operations and services and the potential loss of key employees of the acquired company. There can be no assurance that the Company's acquisitions will be successfully integrated into the Company's operations. In addition, there can be no assurance that the Company will complete any future acquisitions or that acquisitions will contribute favorably to the Company's operations and financial condition.

Although due diligence and detailed analysis were conducted before these acquisitions, there can be no assurance that these can fully expose all hidden problems that the acquired company may have. In addition, our valuations and analyses are based on numerous assumptions, and there can be no assurance that those assumptions will be proven correct or appropriate. Relevant facts and circumstances of our analyses could have changed over time, and new facts and circumstances may come to light as to render the previous assumptions and the valuations and analyses based thereon incorrect. Further, we may not necessarily be able to successfully integrate the acquired companies, may not be able to derive any synergy from the acquisitions and may not realize the benefits intended in such acquisitions.

System failure or interruption may result in reduced traffic, reduced revenue and harm to our reputation

Our ability to provide timely, updated information depends on the efficient and uninterrupted operation of our computer and communications hardware and software systems. Similarly, our ability to track, measure and

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report the delivery of advertisements on our Web sites depends on the efficient and uninterrupted operation of a third-party system. Our operations depend in part on the protection of our data systems and those of our third party provider against damage from human error, natural disasters, fire, power loss, water damage, telecommunications failure, computer viruses, terrorist acts, vandalism, sabotage, and other adverse events. Although we utilize the services of a third party data-center host with both physical and procedural security systems and have put in place certain other disaster recovery measures, including offsite storage of backup data, there is no guarantee that our Internet access and other data operations will be uninterrupted, error-free or secure. Any system failure, including network, software or hardware failure, that causes an interruption in our service or a decrease in responsiveness of our Web sites could result in reduced traffic, reduced revenue and harm to our reputation, brand and relations with our advertisers and strategic partners. Our insurance policies may not adequately compensate us for such losses. In such event, our business, results of operations and financial condition could be materially adversely affected.

Our Ratings models, purchased from Weiss Ratings, were written in legacy technologies that do not have robust backup or recovery provisions. The ongoing production of valid ratings data is based upon the successful continued migration of these legacy systems to more robust and current systems. The hardware platforms upon which these applications run have been migrated to more modern equipment within our multi-redundant hosting facilities; however, many of the core application code remains in production. Migration of such complex applications is time consuming, resource intensive and can pose considerable risk.

Difficulties in new product development could harm our business

In the past few years, we have introduced several new products and services, and expect to continue to do so. However, we may experience difficulties that could delay or prevent us from introducing new products and services in the future, or cause our costs to be higher than anticipated, which could materially adversely affect our business, results of operations and financial condition.

Failure to establish and maintain successful strategic relationships with other companies could decrease our subscriber and reader base

We rely in part on establishing and maintaining successful strategic relationships with other companies to attract and retain a portion of our current subscriber and reader base and to enhance public awareness of our brands. In particular, our relationships with Yahoo! and America Online, which indexes our headlines and hosts our content including our video offerings, and CNBC, which telecasts James Cramer’s “Mad Money” television program, have been important components of our effort to enhance public awareness of our brands. There is intense competition for relationships with these firms and for content placement on their Web sites and for distribution of our audio and video content, and we may have to pay significant fees to establish additional relationships with large, high-traffic partners or maintain existing relationships in the future. From time to time, we enter into agreements with advertisers that require us to exclusively feature these parties in sections of our Web sites. Existing and future exclusivity arrangements may prevent us from entering into other advertising or sponsorship arrangements or other strategic relationships. If we do not successfully establish and maintain our strategic relationships on commercially reasonable terms or if these relationships do not attract significant revenue, our business, results of operations and financial condition could be materially adversely affected.

Difficulties associated with our brand development may harm our ability to attract subscribers to our paid services and users to our advertising supported services

We believe that maintaining and growing awareness about our services is an important aspect of our efforts to continue to attract users. Our new services do not have widely recognized brands, and we will need to increase awareness of these brands among potential users. Our efforts to build brand awareness may not be cost effective or successful in reaching potential users, and some potential users may not be receptive to our marketing efforts or advertising campaigns. Accordingly, we can make no assurances that such efforts will be successful in raising awareness of our brands or in persuading potential users to subscribe to or use our services.

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Failure to maintain our reputation for trustworthiness may harm our business

It is very important that we maintain our reputation as a trustworthy organization. The occurrence of events such as our misreporting a news story, the non-disclosure of a stock ownership position by one or more of our writers, or the manipulation of a security by one or more of our outside contributors, or any other breach of our compliance policies, could harm our reputation for trustworthiness and reduce readership. These events could materially adversely affect our business, results of operations and financial condition.

We may face liability for, or incur costs to defend, information published in our services

We may be subject to claims for defamation, libel, copyright or trademark infringement, fraud or negligence, or based on other theories of liability, in each case relating to the articles, commentary, investment recommendations, ratings, or other information we publish in our services. These types of claims have been brought, sometimes successfully, against online services as well as other print publications in the past. We could also be subject to claims based upon the content that is accessible from our Web sites through links to other Web sites. Our insurance may not adequately protect us against these claims.

We may not adequately protect our own intellectual property and may incur costs to defend against, or face liability for, intellectual property infringement claims of others

To protect our rights to our intellectual property, we rely on a combination of trademark and copyright law, trade secret protection, confidentiality agreements and other contractual arrangements with our employees, affiliates, customers, strategic partners and others. Additionally, we aggressively police Internet message boards and other Web sites for copyrighted content that has been republished without our permission. The protective steps we have taken may be inadequate to deter misappropriation of our proprietary information. We may be unable to detect the unauthorized use of, or take appropriate steps to enforce, our intellectual property rights. We have registered several trademarks in the United States and also have pending U.S. applications for other trademarks. Failure to adequately protect our intellectual property could harm our brand, devalue our proprietary content and affect our ability to compete effectively. In addition, although we believe that our proprietary rights do not infringe on the intellectual property rights of others, other parties may assert infringement claims against us or claim that we have violated a patent or infringed a copyright, trademark or other proprietary right belonging to them. We incorporate licensed third-party technology in some of our services. In these license agreements, the licensors have generally agreed to defend, indemnify and hold us harmless with respect to any claim by a third party that the licensed software infringes any patent or other proprietary right. We cannot assure you that these provisions will be adequate to protect us from infringement claims. Protecting our intellectual property rights, or defending against infringement claims, even if not meritorious, could result in the expenditure of significant financial and managerial resources on our part, which could materially adversely affect our business, results of operations and financial condition.

We face government regulation and legal uncertainties

Internet Communications, Commerce and Privacy Regulation. The growth and development of the market for Internet commerce and communications has prompted both federal and state laws and regulations concerning the collection and use of personally identifiable information (including consumer credit and financial information under the Gramm-Leach-Bliley Act), consumer protection, the content of online publications, the taxation of online transactions and the transmission of unsolicited commercial email, popularly known as “spam.” More laws and regulations are under consideration by various governments, agencies and industry self-regulatory groups. Although our compliance with applicable federal and state laws, regulations and industry guidelines has not had a material adverse effect on us, new laws and regulations may be introduced and modifications to existing laws may be enacted that require us to make changes to our business practices. Although we believe that our practices are in compliance with applicable laws, regulations and policies, if we were required to defend our practices against investigations of state or federal agencies or if our practices were deemed to be violative of applicable laws, regulations or policies, we could be penalized and our activities enjoined. Any of the foregoing could increase the cost of conducting online activities, decrease demand for our services, lessen our ability to effectively market our services, or otherwise materially adversely affect our business, financial condition and results of operations.

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Securities Industry Regulation. Our activities include, among other things, the offering of stand-alone services providing stock recommendations and analysis to subscribers. The securities industry in the United States is subject to extensive regulation under both federal and state laws. A failure to comply with regulations applicable to securities industry participants could materially and adversely affect our business, results of operations and financial condition.

Our ability to comply with all applicable securities laws and rules is largely dependent on our establishment and maintenance of appropriate compliance systems, as well as our ability to attract and retain qualified compliance personnel.

Because we operate in an industry subject to extensive regulation, new regulation, changes in existing regulation, or changes in the interpretation or enforcement of existing laws and rules could have a material adverse effect on our business, results of operations and financial condition.

Regulation of Sweepstakes and Promotions. Our activities include, among other things, conducting online sweepstakes and contests for clients of our interactive marketing services. We use best efforts to comply with all sweepstakes, contest and bonding requirements as specified under various state laws. However, promotions law is subject to variation in regulation from state to state and new regulation, changes in existing regulation, or changes in the interpretation or enforcement of existing laws and rules could impose requirements that add cost or otherwise necessitate changes or even termination of certain practices in this area which could have a material adverse effect on our business, results of operations and financial condition.

Foreign Regulation. Although we do not actively seek customers and have no property outside the United States, regulatory entities of foreign governments could seek to exercise jurisdiction over our activities. If we were required to defend our practices against investigations of foreign regulatory agencies or if our practices were deemed to be violative of the laws, regulations or policies of such jurisdictions, we could be penalized and our activities enjoined. Any of the foregoing could materially adversely affect our business, financial condition and results of operations.

Any failure of our internal security measures or breach of our privacy protections could cause us to lose users and subject us to liability

Users who subscribe to our paid subscription services are required to furnish certain personal information (including name, mailing address, phone number, email address and credit card information), which we use to administer our services. We also require users of some of our free services and features to provide us with some personal information during the membership registration process. Additionally, we rely on security and authentication technology licensed from third parties to perform real-time credit card authorization and verification, and at times rely on third parties, including technology consulting firms, to help protect our infrastructure from security threats. We may have to continue to expend capital and other resources on the hardware and software infrastructure that provides security for our processing, storage and transmission of personal information.

In this regard, our users depend on us to keep their personal information safe and private and not to disclose it to third parties or permit our security to be breached. However, advances in computer capabilities, new discoveries in the field of cryptography or other events or developments, including improper acts by third parties, may result in a compromise or breach of the security measures we use to protect the personal information of our users. If a party were to compromise or breach our information security measures or those of our agents, such party could misappropriate the personal information of our users, cause interruptions in our operations, expose us to significant liabilities and reporting obligations, damage our reputation and discourage potential users from registering to use our Web sites or other services, any of which could have a material adverse effect on our business, results of operations and financial condition.

We utilize various third parties to assist with various aspects of our business. Some of these partnerships require the exchange of user information. This is required because some features of our Web sites may be hosted by these third parties. While we take significant measures to guarantee the security of our customer data and require such third parties to comply with our privacy and security policies as well as be contractually

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bound to defend, indemnify and hold us harmless with respect to any claim by a third party related to any breach of relevant privacy laws, we are still at risk if any of these third party systems are breached or compromised.

Control by principal stockholders, officers and directors could adversely affect our stockholders, and the terms of our Series B preferred stock include significant control rights

Our officers, directors and greater-than-five-percent stockholders (and their affiliates), acting together, may have the ability to control our management and affairs, and substantially all matters submitted to stockholders for approval (including the election and removal of directors and any merger, consolidation or sale of all or substantially all of our assets). Some of these persons acting individually or together, even in the absence of control, may be able to exert a significant degree of influence over such matters. The interests of persons having this concentration of ownership may not always coincide with our interests or the interests of other stockholders. This concentration of ownership, for example, may have the effect of delaying, deferring or preventing a change in control of the Company, impeding a merger, consolidation, takeover or other business combination involving the Company or discouraging a potential acquirer from making a tender offer or otherwise attempting to obtain control of the Company, which in turn could materially adversely affect the market price of the common stock.

In November 2007, we issued to and sold to TCV VI, L.P. and TCV Member Fund, L.P., for an aggregate purchase price of approximately $55 million, a total of 5,500 shares of our Series B preferred stock, par value $0.01 per share (“Series B Preferred Stock”), which are convertible into an aggregate of 3,856,942 shares of our Common Stock, at a conversion price of $14.26 per share and warrants to purchase 1,157,083 shares of Common Stock at an exercise price of $15.69 per share. The holders of the Series B Preferred Stock have the right to vote on any matter submitted to a vote of the stockholders of the Company and are entitled to vote that number of votes equal to the aggregate number of shares of Common Stock issuable upon the conversion of such holders’ shares of Series B Preferred Stock. In addition, so long as 2,200 shares of Series B Preferred Stock remain outstanding, the holders of a majority of such shares will have the right to appoint one person to the Company’s board of directors.

So long as 30% of the shares of the currently-outstanding Series B Preferred Stock remain outstanding, the affirmative vote of the holders of a majority of such shares will be necessary to take any of the following actions: (i) authorize, create or issue any class or classes of our capital stock ranking senior to, or on a parity with (as to dividends or upon a liquidation event) the Series B Preferred Stock or any securities exercisable or exchangeable for, or convertible into, any now or hereafter authorized capital stock ranking senior to, or on a parity with (as to dividends or upon a liquidation event) the Series B Preferred Stock (including, without limitation, the issuance of any shares of Series B Preferred Stock (other than shares of Series B Preferred Stock issued as a stock dividend or in a stock split); (ii) any increase or decrease in the authorized number of shares of Series B Preferred Stock; (iii) any amendment, waiver, alteration or repeal of our certificate of incorporation or bylaws in a way that adversely affects the rights, preferences or privileges of the Series B Preferred Stock; (iv) the payment of any dividends (other than dividends paid in our capital stock or any of our subsidiaries) in excess of $0.10 per share per annum on the Common Stock unless after the payment of such dividends we have unrestricted cash (net of all indebtedness for borrowed money, purchase money obligations, promissory notes or bonds) in an amount equal to at least two times the product obtained by multiplying the number of shares of Series B Preferred Stock outstanding at the time such dividend is paid by the liquidation preference; and (v) the purchase or redemption of: (A) any Common Stock (except for the purchase or redemption from employee, directors and consultants pursuant to agreements providing us with repurchase rights upon termination of their service with us) unless after such purchase or redemption we have unrestricted cash (net of all indebtedness for borrowed money, purchase money obligations, promissory notes or bonds) equal to at least two times the product obtained by multiplying the number of shares of Series B Preferred Stock outstanding at the time such dividend is paid by the liquidation preference; or (B) any class or series of now or hereafter of our authorized stock that ranks junior to (upon a liquidation event) the Series B Preferred Stock.

As a result of the foregoing, the requisite holders of the Series B Preferred Stock may be able to block the proposed approval of any of the above actions, which blockage may prevent us from achieving strategic or other goals dependent on such actions, including without limitation additional capital raising, certain dividend

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increases, and the redemption of outstanding Common Stock. All of the foregoing rights may limit our ability to take certain actions deemed in the interests of all of our stockholders but as to which the holders of the Series B Preferred Stock have control rights.

Anti-takeover provisions could prevent or delay a change of control

Provisions of our amended and restated certificate of incorporation and amended and restated bylaws and Delaware law could make it more difficult for a third party to acquire the Company, even if doing so would be beneficial to our stockholders.

Our revenues could be adversely affected if the securities markets decline

Our results of operations, particularly related to subscription revenue, are affected by certain economic factors, including the performance of the securities markets. While we believe investors are seeking more information related to the financial markets from trusted sources, the existence of adverse or stagnant securities markets conditions and lack of investor confidence could result in investors decreasing their interest in investor-related publications, which could adversely affect the subscription revenue we derive from our subscription based Web sites and newsletters.

The utilization of tax operating loss carryforwards depends upon future income

We have net operating loss carryforwards of approximately $124 million and $128 million as of December 31, 2008 and 2007, respectively, available to offset future taxable income through 2025. Our ability to fully utilize these net operating loss carryforwards is dependent upon the generation of future taxable income before the expiration of the carryforward period attributable to these net operating losses.

Item 1B. Unresolved Staff Comments.

Not applicable.

Item 2. Properties.

Our principal administrative, sales, marketing, and editorial facilities currently reside in a facility encompassing approximately 35,000 square feet of office space on one floor in an office building at 14 Wall Street in New York, New York. Our interactive marketing services and internal technology services primarily reside in approximately 10,000 square feet in an office building at 29 West 38^th Street in New York, New York. Our West Coast bureau is located in approximately 265 square feet of office space in Santa Monica, California. Regional locations of our wholly owned subsidiaries include: TheStreet.com Ratings, Inc., which occupies 5,220 square feet of office space in Jupiter, Florida, as well as approximately 2,500 square feet of office space in Boston, Massachusetts; Promotions.com LLC, which maintains regional offices in both Chicago, Illinois and Omaha, Nebraska occupying approximately 1,764 square feet and 1,784 square feet, respectively; and Bankers Financial Products Corporation (d/b/a RateWatch) and BankingMyWay.com LLC, which together occupy approximately 15,000 square feet of office space in Fort Atkinson, Wisconsin.

Item 3. Legal Proceedings.

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Inc. Approximately 300 other issuers and their underwriters have had similar suits filed against them, all of which are included in a single coordinated proceeding in the district court (the “IPO Litigations”). The complaints allege that the prospectus and the registration statement for the IPO failed to disclose that the underwriters allegedly solicited and received “excessive” commissions from investors and that some investors in the IPO allegedly agreed with the underwriters to buy additional shares in the aftermarket in order to inflate the price of the Company’s stock. An amended complaint was filed April 19, 2002. The Company and the officers and directors were named in the suits pursuant to Section 11 of the Securities Act of 1933, Section 10(b) of the Exchange Act of 1934, and other related provisions. The complaints seek unspecified damages, attorney and expert fees, and other unspecified litigation costs.

On July 1, 2002, the underwriter defendants in the consolidated actions moved to dismiss all of the IPO Litigations, including the action involving the Company. On July 15, 2002, the Company, along with other non-underwriter defendants in the coordinated cases, also moved to dismiss the litigation. On February 19, 2003, the district court ruled on the motions. The district court granted the Company’s motion to dismiss the claims against it under Rule 10b-5, due to the insufficiency of the allegations against the Company. The motions to dismiss the claims under Section 11 of the Securities Act were denied as to virtually all of the defendants in the consolidated cases, including the Company. In addition, some of the individual defendants in the IPO Litigations, including Mr. Cramer, signed a tolling agreement and were dismissed from the action without prejudice on October 9, 2002.

In June 2003, a proposed collective partial settlement of this litigation was structured between the plaintiffs, the issuer defendants in the consolidated actions, the issuer officers and directors named as defendants, and the issuers’ insurance companies. On or about June 25, 2003, a committee of the Company’s Board of Directors conditionally approved the proposed settlement. In June 2004, an agreement of partial settlement was submitted to the court for preliminary approval. The court granted the preliminary approval motion on February 15, 2005, subject to certain modifications. On August 31, 2005, the court issued a preliminary order further approving the modifications to the settlement and certifying the settlement classes. The court also appointed the notice administrator for the settlement and ordered that notice of the settlement be distributed to all settlement class members by January 15, 2006. The settlement fairness hearing occurred on April 24, 2006, and the court reserved decision at that time.

While the partial settlement was pending approval, the plaintiffs continued to litigate against the underwriter defendants. The district court directed that the litigation proceed within a number of “focus cases” rather than in all of the 310 cases that have been consolidated. The Company’s case is not one of these focus cases. On October 13, 2004, the district court certified the focus cases as class actions. The underwriter defendants appealed that ruling, and on December 5, 2006, the Court of Appeals for the Second Circuit reversed the district court’s class certification decision. On April 6, 2007, the Second Circuit denied plaintiffs’ petition for rehearing. In light of the Second Circuit opinion, counsel to the issuers informed the district court that the settlement with the plaintiffs could not be approved because the defined settlement class, like the litigation class, could not be certified. The settlement was terminated pursuant to a Stipulation and Order dated June 25, 2007.

On August 14, 2007, plaintiffs filed their second consolidated amended class action complaints against the focus cases and, on September 27, 2007, again moved for class certification. On November 12, 2007, certain of the defendants in the focus cases moved to dismiss plaintiffs’ second amended consolidated class action complaints. On March 26, 2008, the district court denied the motions to dismiss except as to Section 11 claims raised by those plaintiffs who sold their securities for a price in excess of the initial offering price and those who purchased outside of the previously certified class period. Briefing on the class certification motion was completed in May 2008. That motion was withdrawn without prejudice on October 10, 2008.

We are presently defending the action vigorously. Any unfavorable outcome of this litigation could have an adverse impact on the Company’s business, financial condition, results of operations, and cash flows.

Item 4. Submission of Matters to a Vote of Security Holders.

None.

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PART II

Item 5. Market for Registrant’s Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities.

Our Common Stock has been quoted on the Nasdaq Global Market under the symbol TSCM since our initial public offering on May 11, 1999. The following table sets forth, for the periods indicated, the high and low closing sales prices per share of the Common Stock as reported on the Nasdaq Global Market.


	Low		High
2007
First quarter	$	8.23	$	12.27
Second quarter	$	10.10	$	12.05
Third quarter	$	9.78	$	13.26
Fourth quarter	$	11.95	$	16.57
2008
First quarter	$	7.80	$	15.58
Second quarter	$	6.51	$	9.48
Third quarter	$	5.64	$	7.32
Fourth quarter	$	2.70	$	5.69

On March 9, 2009, the last reported sale price for our Common Stock was $1.81 per share.

Set forth below is a graph comparing the cumulative total stockholder return on the Company’s common stock from December 31, 2003 through December 31, 2008 with the cumulative total return on the Nasdaq Composite Index, a self-constructed industry-specific peer group (1) and the Research Data Group (RDG) Internet Composite Index. The RDG Internet Composite Index is included this year as the Company believes that this index more adequately represents it’s industry and will use this comparison going forward. The performance graph is based upon closing prices on December 31^st of each year other than 2006, which is based on the closing price on December 29, 2006, the last trading day before December 31, 2006. The comparison assumes $100 was invested on December 31, 2003 in the Company’s common stock and in each of the foregoing indices and assumes reinvestment of dividends. The closing price of our Common Stock on December 31, 2003 was $4.06.

(1)

The peer group consists of the following companies: Bankrate, Inc., Yahoo! Inc., The Knot, Inc. and Move, Inc. Cnet Networks, Inc., which was acquired by CBS Corporation on June 30, 2008, had been included in the self-constructed peer group in prior years.

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COMPARISON OF 5 YEAR CUMULATIVE TOTAL RETURN*
Among TheStreet.com, The NASDAQ Composite Index,
The RDG Internet Composite Index and a Peer Group

[GRAPHIC MISSING]

$100 invested on 12/31/03 in stock & index-including reinvestment of dividends. Fiscal year ending December 31.


	December 31,
	2003		2004		2005		2006		2007		2008
TheStreet.com		100.00		100.49		177.59		221.48		398.88		74.11
NASDAQ Composite		100.00		110.08		112.88		126.51		138.13		80.47
RDG Internet Composite		100.00		114.69		116.44		133.17		162.74		88.24
Peer Group		100.00		164.98		173.62		116.38		104.77		55.86

Holders

The number of holders of record of our Common Stock on March 9, 2009 was 255, which does not include beneficial owners of our Common Stock whose shares are held in the names of various dealers, clearing agencies, banks, brokers and other fiduciaries.

Dividends

On December 31, 2008, the Company paid its fourth quarterly cash dividend of $0.025 per share on its common stock and its convertible preferred stock on a converted common share basis, to stockholders of record at the close of business on December 15, 2008. This dividend totaled approximately $0.9 million. For the year ended December 31, 2008, dividends paid totaled approximately $3.5 million, as compared to approximately $2.9 million for the year ended December 31, 2007. The Company intends, although there can be no assurance, to pay regular quarterly cash dividends in the future.

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Issuer Purchases of Equity Securities

The following table presents information related to repurchases of its Common Stock made by the Company during the three months ended December 31, 2008.


Period	(a) Total Number of Shares (or Units) Purchased		(b) Average Price Paid per Share (or Unit)		(c) Total Number of Shares (or Units) Purchased as Part of Publicly Announced Plans or Programs		(d) Maximum Number (or Approximate Dollar Value) of Shares (or Units) that May Yet Be Purchased Under the Plans or Programs*
October 1 – 31, 2008		—	$	—		—	$	2,678,878
November 1 – 30, 2008		—	$	—		—	$	2,678,878
December 1 – 31, 2008		—	$	—		—	$	2,678,878
Total		—	$	—		—	$	2,678,878

In December 2000, the Company’s Board of Directors authorized the repurchase of up to $10 million worth of the Company’s Common Stock, from time to time, in private purchases or in the open market. In February 2004, the Company’s Board approved the resumption of this program under new price and volume parameters, leaving unchanged the maximum amount available for repurchase under the program. The program does not have a specified expiration date and is subject to certain limitations. See “Risk Factors — “Control by principal stockholders, officers and directors could adversely affect our stockholders, and the terms of our Series B preferred stock include significant control rights.”

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Item 6. Selected Financial Data.

The following selected financial data is qualified by reference to, and should be read in conjunction with, our audited consolidated financial statements and the notes to those statements and “Management’s Discussion and Analysis of Financial Condition and Results of Operations” appearing elsewhere herein. The selected statement of operations data presented below for the years ended December 31, 2008, 2007 and 2006, and the balance sheet data as of December 31, 2008 and 2007, are derived from our audited consolidated financial statements included elsewhere herein. The selected statement of operations data presented below for the years ended December 31, 2005 and 2004 and the balance sheet data as of December 31, 2006, 2005 and 2004 have been derived from our audited consolidated financial statements, which are not included herein.


	For the Year Ended December 31,
	2008		2007		2006		2005		2004
	(In Thousands, Except per Share Data)
Statement of Operations Data:
Revenue:
Paid services	$	41,186	$	38,421	$	35,442	$	24,221	$	23,684
Marketing services		30,714		26,985		15,447		9,523		7,066
Total revenue		71,900		65,406		50,889		33,744		30,750
Operating expense:
Cost of services		32,205		25,559		18,450		12,727		11,843
Sales and marketing		14,263		12,209		9,616		7,264		8,019
General and administrative		17,562		12,216		10,674		8,177		7,082
Intangible asset impairment		2,326		—		—		—		—
Depreciation and amortization		5,894		2,528		1,089		674		656
One-time lease termination costs		—		—		—		—		393
Asset recovery		—		—		—		—		(500 )
Total operating expense		72,250		52,512		39,829		28,842		27,493
Operating (loss) income		(350 )		12,894		11,060		4,902		3,257
Net interest income		1,574		2,476		2,037		853		362
Gain on sale of marketable security		121		—		—		—		—
Income from continuing operations before income taxes		1,345		15,370		13,097		5,755		3,619
(Provision) benefit for income taxes		(2 )		15,694		(261 )		(5 )		—
Income from continuing operations		1,343		31,064		12,836		5,750		3,619
Discontinued operations:(*)
Loss from discontinued operations		—		—		—		(3,075 )		(5,808 )
(Loss) income on disposal of discontinued operations		(8 )		(13 )		32		(2,429 )		—
(Loss) income from discontinued operations		(8 )		(13 )		32		(5,504 )		(5,808 )
Net income (loss)		1,335		31,051		12,868		246		(2,189 )
Preferred stock deemed dividends		—		1,803		—		—		—
Preferred stock cash dividends		386		96		—		—		—
Preferred stock dividends		386		1,899		—		—		—
Net income (loss) attributable to common stockholders	$	949	$	29,152	$	12,868	$	246	$	(2,189 )
Cash dividends paid on common shares	$	3,093	$	2,932	$	2,737	$	—	$	—
Basic net income (loss) per share:
Income from continuing operations	$	0.04	$	1.08	$	0.48	$	0.23	$	0.15
Loss from discontinued operations		—		—		—		(0.12 )		(0.24 )
(Loss) income on disposal of discontinued operations		(0.00 )		(0.00 )		0.00		(0.10 )		—
(Loss) income from discontinued operations		(0.00 )		(0.00 )		0.00		(0.22 )		(0.24 )
Net income (loss)		0.04		1.08		0.48		0.01		(0.09 )
Preferred stock dividends		(0.01 )		(0.07 )		—		—		—
Net income (loss) attributable to common stockholders	$	0.03	$	1.01	$	0.48	$	0.01	$	(0.09 )
Diluted net income (loss) per share:
Income from continuing operations	$	0.04	$	1.06	$	0.47	$	0.22	$	0.14
Loss from discontinued operations		—		—		—		(0.12 )		(0.22 )
(Loss) income from disposal of discontinued operations		(0.00 )		(0.00 )		0.00		(0.09 )		—
(Loss) income from discontinued operations		(0.00 )		(0.00 )		0.00		(0.21 )		(0.22 )
Net income (loss)		0.04		1.06		0.47		0.01		(0.08 )
Preferred stock dividends		(0.01 )		(0.07 )		—		—		—
Net income (loss) attributable to common stockholders	$	0.03	$	0.99	$	0.47	$	0.01	$	(0.08 )
Weighted average basic shares outstanding		30,427		28,830		27,014		24,953		24,529
Weighted average diluted shares outstanding		30,835		29,388		27,546		26,165		26,068

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	December 31,
	2008		2007		2006		2005		2004
	(In Thousands)
Balance Sheet Data:
Cash, cash equivalents, restricted cash, short and long term investments and debt securities available for sale.	$	76,379	$	79,748	$	46,555	$	34,014	$	32,084
Working capital		70,384		73,193		33,797		22,059		19,052
Total assets		172,181		176,435		64,570		43,105		40,077
Long-term obligations, less current maturities		80		90		—		22		258
Total stockholders’ equity		153,162		152,462		44,191		27,441		25,383

(*)

In June 2005, the Company committed to a plan to discontinue the operations of its wholly owned subsidiary, Independent Research Group LLC, which operated the Company’s securities research and brokerage segment. Accordingly, the operating results relating to this segment have been segregated from continuing operations and reported as discontinued operations on a separate line item on the consolidated statements of operations.

Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations.

Statements contained in this annual report on Form 10-K relating to plans, strategies, objectives, economic performance and trends and other statements that are not descriptions of historical facts may be forward-looking statements within the meaning of Section 27A of the Securities Act of 1933, as amended (the “Securities Act”), and Section 21E of the Securities Exchange Act of 1934, as amended (the “Exchange Act”). Forward-looking information is inherently subject to risks and uncertainties, and actual results could differ materially from those currently anticipated due to a number of factors, which include, but are not limited to, the factors set forth under the heading “Risk Factors” and elsewhere in this annual report, and in other documents filed by the Company with the Securities and Exchange Commission from time to time. Forward-looking statements may be identified by terms such as “may,” “will,” “should,” “could,” “expects,” “plans,” “intends,” “anticipates,” “believes,” “estimates,” “predicts,” “forecasts,” “potential,” or “continue” or similar terms or the negative of these terms. Although the Company believes that the expectations reflected in the forward-looking statements are reasonable, the Company cannot guarantee future results, levels of activity, performance or achievements. The Company has no obligation to update these forward-looking statements.

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

Overview

TheStreet.com is a leading financial media company. We distribute our content through proprietary properties, including our network of Web sites, email services, mobile devices, podcasts and video programming. We also syndicate our content for distribution by other media companies and print publications. Our goal is to provide information and services that empower a growing audience of investors and consumers, through our expanding network of properties, to become the leading online destination where issues and topics related to life and money intersect.

The Company pioneered the electronic publishing of business and investment information on the Internet through our creation of TheStreet.com, which launched in 1996 as a paid subscription news and commentary Web site. The Company generates its revenue from (i) paid services, which includes subscription revenue, syndication and licensing fees, and information services revenue, and (ii) marketing services, which includes advertising and interactive marketing services revenue. For the year ended December 31, 2008, the Company’s revenue from paid services and marketing services comprised 57% and 43%, respectively, of total revenue, compared to 59% and 41%, respectively, for the year ended December 31, 2007.

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Paid services revenue includes revenue from our subscription Web sites and newsletters (“Subscriptions Services”), as well as syndication, licensing and information services revenue.

Our Subscription Services are generally targeted at more experienced investors, as compared to the content on our free, advertising supported network of Web sites. Our two subscription Web sites are RealMoney.com, which provides actionable investing ideas, trading strategies, technical analysis and expert market commentary from more than 60 analysts and traders, and RealMoney Silver, a compilation of three email subscription services and the commentary from RealMoney. Our subscription email newsletters, which target a wide variety of investing strategies, includes: Action Alerts PLUS, the stock picks and portfolio strategies of well-known markets commentator James J. Cramer; TheStreet.com Stocks Under $10, which focuses on stocks priced below $10 a share; TheStreet.com Options Alerts, which focuses on the options market; TheStreet.com Top Stocks, which contains stock ideas and technical analysis; TheStreet.com Value Investor, which covers value stocks; BioTech Select which is sector specific; and The Dividend Stock Advisor, a model portfolio and analysis of high yield stocks and funds.

Syndication and licensing fees include revenue from the licensing and syndication of content from TheStreet.com Ratings, which tracks the risk adjusted performance of more than 16,000 mutual funds and ETFs and more than 5,000 stocks. In addition, TheStreet.com Ratings uses proprietary quantitative computer models to evaluate the financial strength of more than 13,000 financial institutions, including life, health and annuity insurers, property and casualty insurers, HMOs, Blue Cross Blue Shield plans, banks and savings and loans. In addition to generating revenue from the licensing and syndication of content from TheStreet.com Ratings, the stock, ETF and mutual fund ratings have been incorporated into our network of Web sites, including on the stock quote pages of TheStreet.com, as well as through online screening tools and regularly published stories.

Paid services also includes information services revenue from RateWatch, which offers competitive rate, fee and financial data, including data about certificates of deposit, IRAs, money market accounts, savings accounts, checking accounts, home mortgages, home equity loans, credit cards and auto loans. The information is obtained from more than 70,000 financial institutions (including branches), providing a comprehensive collection of rate information that also serves as the foundation for the data available on BankingMyWay.com, a free advertising supported Web site that enables consumers to search for the most competitive local and national rates from the RateWatch data.

We seek to grow our paid services business through ongoing tailoring and enhancement of our product offerings, external marketing and promotion, and promotion on our expanding network of Web sites.

Marketing services revenue includes advertising revenue and interactive marketing services revenue from our Promotions.com business. Through our growing network of online Web sites — which include TheStreet.com, Stockpickr.com, MainStreet.com and BankingMyWay.com, along with our recent minority interest in Geezeo.com — our goal is to meet our audience and advertiser demands while becoming the leading independent online network where issues and topics related to life and money intersect. We plan to accomplish this goal by providing:

•

A broader range of content to our audience, including personal finance, real estate, politics, entrepreneurship, small business, and luxury living across a growing network of Web sites; and

•

Innovative, interactive solutions for our advertisers, across our full range of distribution platforms.

As a result of expanded content offerings and implementation of marketing relationships with other high-traffic Web sites, we experienced increases in unique visitors to our network of Web sites. In 2008, our network attracted an average of 7.4 million unique visitors per month, an increase of 29% over the prior year. The growth in our unique audience attracted new advertisers to the site and allowed us to expand our relationships with a number of our existing advertisers. See “Risk Factors — We May Have Difficulty Maintaining or Increasing Our Advertising Revenue, a Significant Portion of Which Is Concentrated Among Our Top Advertisers and Subject to Industry and Other Factors.”

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We generate advertising revenue from our content through the sale of the following types of advertising placements:

•

Advertisement placements in our free email newsletters;

•

Stand-alone emails sent on behalf of our advertisers to our registered users; and

•

Advertisements in TheStreet.com TV, TheStreet.com Mobile and in our podcasts.

We generate interactive marketing services revenue from Promotions.com, which we acquired in August, 2007. Promotions.com implements online and mobile interactive promotions — including sweepstakes, instant win games and customer loyalty programs — for some of the world’s largest brands, and provides the Company with the capabilities to deliver these promotions for our advertisers on campaigns that run across our network of Web sites.

•

New York Press Club Journalism Award in the Business Internet category;

•

New York Press Club Journalism Award in the Political Coverage Internet category;

•

Webby Award nomination for the Company's recently launched personal finance Web site MainStreet.com (www.mainstreet.com) for the Best Business Blog of 2008;

•

Society of American Editors and Writers Award for Enterprise Reporting;

•

Society of American Editors and Writers Award for Commentary;

•

Media Industry Newsletter (min) nomination for Best Premium Web site — RealMoney Silver;

•

Media Industry Newsletter (min) nomination for Best Mobile Platform; and

•

Media Industry Newsletter (min) Award for Editor of the Year — David Morrow, editor-in-chief.

Critical Accounting Estimates

General

The Company’s discussion and analysis of its financial condition and results of operations are based upon its consolidated financial statements, which have been prepared in accordance with U.S. generally accepted accounting principles. The preparation of these financial statements requires management to make estimates and assumptions, specifically for the allowance for doubtful accounts receivable, the useful lives of fixed assets, the valuation of goodwill and intangible assets, as well as accrued expense estimates that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenue and expense during the reporting period. Actual results could differ from those estimates.

The Company believes the following critical accounting policies affect its more significant judgments and estimates used in the preparation of its consolidated financial statements.

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Revenue Recognition

The Company generates its revenue primarily from paid and marketing services.

Paid services include subscription fees paid by customers for access to particular services for the term of the subscription as well as syndication and licensing revenue. Subscriptions are generally charged to customers’ credit cards or are directly billed to corporate subscribers. These are generally billed in advance on a monthly or annual basis. The Company calculates net subscription revenue by deducting from gross revenue an estimate of potential refunds from cancelled subscriptions as well as chargebacks of disputed credit card charges. Net subscription revenue is recognized ratably over the subscription periods. Deferred revenue relates to subscription fees for which amounts have been collected but for which revenue has not been recognized.

Subscription revenue is subject to estimation and variability due to the fact that, in the normal course of business, subscribers may for various reasons contact us or their credit card companies to request a refund or other adjustment for a previously purchased subscription. Accordingly, we maintain a provision for estimated future revenue reductions resulting from expected refunds and chargebacks related to subscriptions for which revenue was recognized in a prior period. The calculation of this provision is based upon historical trends and is reevaluated each quarter.

Marketing services include advertising revenue, which is derived from the sale of Internet sponsorship arrangements and from the delivery of banner, tile, contextual, performance based, and interactive advertisement and sponsorship placements in our advertising-supported Web sites, and is recognized ratably over the period the advertising is displayed, provided that collection of the resulting receivable is reasonably assured. Although infrequent, Company obligations could include guarantees of a minimum number of times that users of the Company’s Web sites “click-through” to the advertisers’ Web site, or take additional specified action, such as opening an account. In such cases, revenue is recognized as the guaranteed “click-throughs” or other relevant delivery criteria are fulfilled.

Marketing services also include revenue associated with Promotions.com. Promotions.com revenue is derived principally from management contracts in which Promotions.com typically provides custom online and mobile interactive solutions for advertisers, marketers and content publishers. Promotions.com recognizes revenue related to its services as the services are provided or ratably over the period of the contract, provided that no significant obligations remain and collection of the resulting receivable is reasonably assured.

Marketing services revenue is subject to estimation and variability due to our policy of recognizing revenue only for arrangements with customers in which, among other things, management believes that collectability of amounts due is reasonably assured. Promotions.com revenue, specifically, is subject to estimation and variability due to the judgment involved in estimating the percentage of completion of a particular contract in determining the amount of revenue to be recognized. Accordingly, we estimate and record a provision for doubtful accounts for estimated losses resulting from the failure of our marketing services customers to make required payments. This provision is recorded as a bad debt expense. A considerable amount of judgment is required in assessing the ultimate realization of these receivables, including the current credit- worthiness of each customer.

Capitalized Software and Web Site Development Costs

The Company expenses all costs incurred in the preliminary project stage for software developed for internal use and capitalizes all external direct costs of materials and services consumed in developing or obtaining internal-use computer software in accordance with Statement of Position (“SOP”) 98-1, “Accounting for the Costs of Computer Software Developed or Obtained for Internal Use.” In addition, for employees who are directly associated with and who devote time to internal-use computer software projects, to the extent of the time spent directly on the project, the Company capitalizes payroll and payroll-related costs of such employees incurred once the development has reached the applications development stage. For the years ended December 31, 2008, 2007 and 2006, the Company capitalized software development costs totaling $566,078, $287,827, and $37,963, respectively. All costs incurred for upgrades, maintenance and enhancements that do not result in additional functionality are expensed.

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In December 1999, the Company adopted Emerging Issues Task Force Abstract (“EITF”) Issue number 00-2, “Accounting for Web Site Development Costs.” EITF 00-2 provides guidance on the accounting for the costs of development of company Web sites, dividing the Web site development costs into five stages: (1) the planning stage, during which the business and/or project plan is formulated and functionalities, necessary hardware and technology are determined, (2) the Web site application and infrastructure development stage, which involves acquiring or developing hardware and software to operate the Web site, (3) the graphics development stage, during which the initial graphics and layout of each page are designed and coded, (4) the content development stage, during which the information to be presented on the Web site, which may be either textual or graphical in nature, is developed, and (5) the operating stage, during which training, administration, maintenance and other costs to operate the existing Web site are incurred. The costs incurred in the Web site application and infrastructure stage, the graphics development stage and the content development stage are capitalized; all other costs are expensed as incurred. Amortization of capitalized costs will not commence until the project is completed and placed into service. For the years ended December 31, 2008 and 2007, the Company capitalized Web site development costs totaling $2,098,798 and $2,824,784, respectively. For the year ended December 31, 2006, the Company did not capitalize any Web site development costs.

Capitalized software and Web site development costs are amortized using the straight-line method over the estimated useful life of the software or Web site. Total amortization expense was $884,978, $41,708 and $84,849, for the years ended December 31, 2008, 2007 and 2006, respectively.

Property and Equipment

Property and equipment are stated at cost, net of accumulated depreciation and amortization. Property and equipment are depreciated on a straight-line basis over the estimated useful lives of the assets. The estimated useful life of computer equipment, computer software and telephone equipment is three years; of furniture and fixtures is five years; and of capitalized software and Web site development costs is variable based upon the applicable project. During the year ended December 31, 2008, completed capitalized software and Web site development projects were deemed to have a five year useful life. Leasehold improvements are amortized on a straight-line basis over the shorter of the respective lease term or the estimated useful life of the asset. If the useful lives of the assets differ materially from the estimates contained herein, additional costs could be incurred, which could have an adverse impact on the Company’s expenses.

Goodwill and Other Intangible Assets

In July 2001, the Financial Accounting Standards Board (“FASB”) issued Statement of Financial Accounting Standards (“SFAS”) No. 142, “Goodwill and Other Intangible Assets.” SFAS No. 142 requires companies to stop amortizing goodwill and certain other intangible assets with indefinite useful lives. Instead, goodwill and other intangible assets deemed to have an indefinite useful life will be subject to an annual review for impairment. Separable intangible assets that are not deemed to have indefinite useful lives will continue to be amortized over their estimated useful lives.

Upon the adoption of SFAS No. 142 in 2002, the Company stopped the amortization of goodwill and certain other intangible assets with indefinite useful lives, and completed the required transitional fair value impairment test on its goodwill and certain other intangible assets, the results of which had no impact on the Company’s financial statements. The Company’s goodwill and intangible assets with indefinite useful lives is tested for impairment between annual tests if an event occurs or circumstances change that would more likely than not reduce the fair value of goodwill or other intangible assets below its carrying amount. We test for goodwill impairment at the enterprise level as the Company is considered to operate as a single reporting unit. Based upon an annual impairment test as of September 30, 2008, the Company recorded an impairment charge totaling $493,333 representing the value remaining from the trade name of Smartportfolio, which it had acquired in December 2000, as the last product carrying the Smartportfolio name was discontinued. Additionally, the Company experienced a decline in anticipated revenues associated with its Promotions.com client relationships and noncompete agreements. Using an income approach based upon estimated future cash flows, the Company determined that the carrying value of the client relationships and noncompete agreements exceeded its fair value at December 31, 2008, and therefore recorded an impairment charge of $1,832,148. Based upon annual impairment tests performed as of October 31, 2007 and September 30, 2006, no impairment was indicated.

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Investment of the Company’s Cash

Financial instruments that subject the Company to concentrations of credit risk consist primarily of cash, cash equivalents, debt securities available for sale and restricted cash. The Company maintains all of its cash, cash equivalents, debt securities available for sale and restricted cash in six financial institutions, although substantially all of the balance is within one institution. The Company performs periodic evaluations of the relative credit standing of the six institutions. As of December 31, 2008, the Company’s cash, cash equivalents, debt securities available for sale and restricted cash are primarily invested indirectly in U.S. Treasury backed securities with a focus on asset protection rather than yield maximization. The cash balances are insured by either the FDIC, up to $250,000 per depositor (currently set to expire on December 31, 2009, after which the limit will reduce to $100,000 per depositor), or the U.S. Department of Treasury’s Temporary Guarantee Program for Money Market Funds (currently set to expire on April 30, 2009). The Company has cash balances on deposit with three financial institutions at December 31, 2008 that exceed the insured limit in the amount of $24.7 million. Of this total, $21.8 million is invested in a money market fund that invests only in U.S. Treasury backed securities.

The Company also holds investments in two municipal auction rate securities (“ARS”) issued by the District of Columbia with a par value of $1.9 million. Due to recent events in credit markets, the auction events, which historically have provided liquidity for these securities, began failing during the first quarter of 2008, and there have been no successful auction events for these ARS since that time. The result of a failed auction is that these ARS holdings will continue to pay interest in accordance with their terms at each respective auction date; however, liquidity of the securities will be limited until there is a successful auction, the issuer redeems the securities, the securities mature or until such time as other markets for these ARS holdings develop.

Credit Risks of Customers and Business Concentrations

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

For the years ended December 31, 2008, 2007 and 2006, the Company’s top five advertisers accounted for approximately 26%, 28% and 34%, respectively, of its total advertising revenue. For the years ended December 31, 2008 and 2007, no advertiser accounted for 10% or more of total advertising revenue, as compared to one advertiser accounting for approximately 14% for the year ended December 31, 2006.

Stock-Based Compensation

As of October 1, 2005, the Company elected early adoption of Statement of Financial Accounting Standards (“SFAS”) No. 123(R), “Share Based Payment: An Amendment of FASB Statements 123 and 95.” This statement requires that the cost resulting from all share-based payment transactions be recognized in the financial statements based upon estimated fair values. SFAS No. 123(R) supersedes the Company’s previous accounting under Accounting Principles Board No. 25, “Accounting for Stock Issued to Employees” (“APB 25”). In March 2005, the Securities and Exchange Commission issued Staff Accounting Bulletin No. 107 (“SAB 107”) relating to SFAS No. 123(R). The Company has applied the provisions of SAB 107 in its adoption of SFAS No. 123(R).

The Company adopted SFAS No. 123(R) using the modified prospective transition method. The accompanying consolidated statements of operations for the years ended December 31, 2008, 2007 and 2006 reflect the impact of SFAS No. 123(R). Stock-based compensation expense recognized under SFAS No. 123(R) for the years ended December 31, 2008, 2007 and 2006 were $3,537,085, $2,115,599 and $1,753,429, respectively. As of December 31, 2008, there was approximately $6.2 million of unrecognized stock-based compensation expense remaining to be recognized over a weighted-average period of 2.56 years.

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Upon adoption of SFAS No. 123(R), the Company continued its practice of estimating the value of employee stock options on the date of grant using the Black-Scholes option-pricing model. This determination is affected by the Company’s stock price as well as assumptions regarding expected volatility, risk-free interest rate, and expected dividends. The weighted-average fair value of employee stock options granted during the year ended December 31, 2008 was $3.27, using the Black-Scholes model with the following weighted-average assumptions. Because option-pricing models require the use of subjective assumptions, changes in these assumptions can materially affect the fair value of the options. The assumptions presented in the table below represent the weighted-average value of the applicable assumption used to value stock options at their grant date. In determining the volatility assumption, the Company used a historical analysis of the volatility of the Company’s share price for the preceding three and one half years, which is equal to the expected option lives. The expected option lives, which represent the period of time that options granted are expected to be outstanding, were estimated based upon the “simplified” method for “plain-vanilla” options. The risk-free interest rate assumption is based upon observed interest rates appropriate for the term of the Company’s employee stock options. The dividend yield assumption is based on the history and expectation of future dividend payouts.


Expected option lives			3.5 years
Expected volatility			48.20%
Risk-free interest rate			2.32%
Expected dividends			0.96%

The impact of stock-based compensation expense has been significant to reported and pro forma results of operations and per share amounts (see Note 1 to Notes to Consolidated Financial Statements). The fair value of each option grant has been estimated on the date of the grant using the Black-Scholes option pricing model and includes several assumptions, including the risk-free interest rate and the expected volatility of the Company’s common stock price. Because option-pricing models require the use of subjective assumptions, changes in these assumptions can materially affect the fair value of the options. For each 1% increase in the risk-free interest rate used in the Black-Scholes option-pricing model, the resulting estimated impact to the Company’s total operating expense for the year ended December 31, 2008 would increase by approximately $51,000. For each 10% increase in the expected volatility used in the Black-Scholes option-pricing model, the resulting estimated impact to the Company’s total operating expense for the year ended December 31, 2008 would increase by approximately $273,000. Because options are expensed over up to three years from the date of grant, the foregoing estimated increases include potential expense for options granted during the years ended December 31, 2008, 2007, 2006, and 2005. In calculating the amount of each variable that is included in the Black-Scholes options-pricing model (i.e., option exercise price, stock price, option term, risk free interest rate, annual dividend rate, and volatility), the weighted average of such variable for all grants issued in a given year was used.

As stock-based compensation expense recognized in the Consolidated Statements of Operations is based on awards that are ultimately expected to vest, it has been reduced for expected forfeitures. SFAS No. 123(R) requires forfeitures to be estimated at the time of grant and revised, if necessary, in subsequent periods if actual forfeitures differ from those estimates. Forfeitures were estimated based on historical experience.

If factors change and the Company employs different assumptions in the application of SFAS No. 123(R) in future periods, the compensation expense that the Company records under SFAS No. 123(R) may differ significantly from what it has recorded in the current period.

Income Taxes

The Company accounts for its income taxes in accordance with SFAS No. 109, “Accounting for Income Taxes.” Under SFAS No. 109, deferred tax assets and liabilities are recognized for the future tax consequences attributable to differences between the financial statement carrying amounts of existing assets and liabilities and their tax bases. Deferred tax assets and liabilities are measured using enacted tax rates expected to apply to taxable income in the years in which those temporary differences are expected to be recovered or settled. The effect on deferred tax assets or liabilities of a change in tax rates is recognized in the period that the tax change occurs. SFAS No. 109 also requires that deferred tax assets be reduced by a valuation allowance if it is more likely than not that some or all of the deferred tax asset will not be realized.

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Deferred tax assets pertaining to windfall tax benefits on exercise of share awards and the corresponding credit to additional paid-in capital are recorded if the related tax deduction reduces tax payable. The Company has elected the “with-and-without approach” regarding ordering of windfall tax benefits to determine whether the windfall tax benefit did reduce taxes payable in the current year. Under this approach, the windfall tax benefits would be recognized in additional paid-in capital only if an incremental tax benefit is realized after considering all other tax benefits presently available to the Company.

Legal Contingencies

In December 2001, the Company was named as a defendant in a securities class action filed in the United States District Court for the Southern District of New York related to its initial public offering (“IPO”) in May 1999. The lawsuit also named as individual defendants certain of its former officers and directors, James J. Cramer, the Chairman of the Board of the Company, and certain of the underwriters of the IPO, including The Goldman Sachs Group, Inc., Hambrecht & Quist LLC (now part of JP Morgan Chase & Co.), Thomas Weisel Partners LLC, Robertson Stephens Inc. (an investment banking subsidiary of BankBoston Corp., later FleetBoston Corp., which ceased operations in 2002), and Merrill Lynch Pierce Fenner & Smith, Inc. Approximately 300 other issuers and their underwriters have had similar suits filed against them, all of which are included in a single coordinated proceeding in the district court (the “IPO Litigations”). The complaints allege that the prospectus and the registration statement for the IPO failed to disclose that the underwriters allegedly solicited and received “excessive” commissions from investors and that some investors in the IPO allegedly agreed with the underwriters to buy additional shares in the aftermarket in order to inflate the price of the Company’s stock. An amended complaint was filed April 19, 2002. The Company and the officers and directors were named in the suits pursuant to Section 11 of the Securities Act of 1933, Section 10(b) of the Exchange Act of 1934, and other related provisions. The complaints seek unspecified damages, attorney and expert fees, and other unspecified litigation costs.

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Results of Operations

Comparison of Fiscal Years Ended December 31, 2008 and 2007

Net Revenue


	For the Year Ended December 31,										Percent Change
	2008		(*)			2007		(*)			Percent Change
Revenue:
Paid services	$	41,185,988		57	%	$	38,421,393		59	%		7	%
Marketing services		30,714,443		43	%		26,984,637		41	%		14	%
Total revenue	$	71,900,431		100	%	$	65,406,030		100	%		10	%

(*)

Percent of total revenue

Paid Services. Paid services revenue is derived from annual and monthly subscriptions to the Company’s 13 subscription newsletter services and our paid Web sites RealMoney.com and RealMoney Silver, through the syndication and licensing of our content to third parties, and information services revenue attributable to RateWatch. Subscription revenue is recognized ratably over the subscription period, while syndication, licensing and information services revenue is recognized over the contract period.


	For the Year Ended December 31,				Percent Change
	2008		2007		Percent Change
Paid services:
Subscription	$	30,376,549	$	34,119,565		-11	%
Syndication, licensing and information services		10,809,439		4,301,828		151	%
Total	$	41,185,988	$	38,421,393		7	%

Subscription revenue for the year ended December 31, 2008 decreased by 11% when compared to the year ended December 31, 2007. The decrease is partially attributable to the outsourcing of TheStreet.com Ratings business to Grey House Publishing in the second quarter of 2007. Prior to the outsourcing of this business, subscription revenue included the full sales price of the product. Revenue now reflects a fee based upon a percentage of the sales price, which is recorded as licensing revenue. Subscription revenue from TheStreet.com Ratings totaled approximately $1,772,000 in the year ended December 31, 2007, as compared to approximately $147,000 in the year ended December 31, 2008. Excluding the impact of the Ratings outsourcing, revenue specifically from our subscription services business decreased by 7%, the result of a 9% decrease in subscribers to our subscription services from approximately 85,600 as of December 31, 2007 to approximately 77,600 as of December 31, 2008. We believe that the performance of the subscription business is impacted by the performance of the stock market. Prolonged declines in the stock market reduce the size of the potential market for subscribers as more investors turn away from the stock market in their search for investment growth and preservation of principal. While the retention rates across our subscription products remain strong, with renewal rates during the year ended December 31, 2008 of 63% and 90% for annual and monthly subscribers respectively, which are unchanged from the prior year, our lower acquisition rates across our subscriber marketing channels resulted in lower year over year subscribers and subscription revenue.

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For the year ended December 31, 2008, approximately 76% of the Company’s net subscription revenue was derived from annual subscriptions, as compared to approximately 71% for the year ended December 31, 2007. The Company calculates net subscription revenue by deducting anticipated refunds from cancelled subscriptions and chargebacks of disputed credit card charges from gross revenue. Refunds and chargebacks totaled less than 1% of gross subscription revenue during each of the years ended December 31, 2008 and 2007.

Syndication, licensing and information services revenue for the year ended December 31, 2008 increased by 151% when compared to the year ended December 31, 2007. The increase is primarily the result of the information services revenue from the operations of RateWatch, which was acquired on November 2, 2007 and thus did not contribute revenue during the full earlier period. Excluding the impact of RateWatch, syndication, licensing and information services revenue increased by 25%. This increase was driven primarily by increased revenue from the TheStreet.com Ratings license agreement with Grey House Publishing noted above, and other syndication of TheStreet.com Ratings data.

Marketing Services. Marketing services revenue is derived from the placement of advertisements on the Company’s Web sites, email newsletters, video content and podcasts, as well as interactive marketing services for which the Company develops online and mobile interactive solutions for advertisers, marketers and content publishers.


	For the Year Ended December 31,				Percent Change
	2008		2007		Percent Change
Marketing services:
Advertising	$	23,126,532	$	21,985,441		5	%
Interactive marketing services		7,587,911		4,999,196		52	%
Total	$	30,714,443	$	26,984,637		14	%

Advertising revenue for the year ended December 31, 2008, increased by 5% when compared to the year ended December 31, 2007. The increase is primarily attributable to a 29% increase in the average number of monthly unique visitors to the Company’s Web sites, when compared to the year ended December 31, 2007. The increase in reach, combined with continued strength in our audience demographics, and the ability to create new and unique customized advertising solutions enabled us to expand relationships with existing advertisers, acquire new financial advertisers and attract increasing numbers of non-endemic advertisers.

The number of advertisers for the year ended December 31, 2008 was 200 as compared to 186 for the year ended December 31, 2007. The Company’s top five advertisers accounted for approximately 26% of its total advertising revenue for the year ended December 31, 2008, as compared to approximately 28% for the year ended December 31, 2007. For the years ended December 31, 2008 and 2007, no advertiser accounted for 10% or more of total advertising revenue.

Interactive marketing services revenue for the year ended December 31, 2008 increased by 52% when compared to the year ended December 31, 2007. The increase in revenue is primarily the result of a full year of interactive marketing services revenue during the year ended December 31, 2008 associated with Promotions.com, which was acquired on August 2, 2007, and thus did not contribute a full year of revenue during the year ended December 31, 2007.

Operating Expense


	For the Year Ended December 31,										Percent Change
	2008		(*)			2007		(*)			Percent Change
Operating expense:
Cost of services	$	32,204,765		44.8	%	$	25,559,409		39.1	%		26	%
Sales and marketing		14,263,199		19.8	%		12,208,648		18.7	%		17	%
General and administrative		17,562,238		24.4	%		12,215,797		18.7	%		44	%
Intangible asset impairment		2,325,481		3.2	%		—		N/A			N/A
Depreciation and amortization		5,894,186		8.2	%		2,528,042		3.9	%		133	%
Total operating expense	$	72,249,869				$	52,511,896					38	%

(*)

Percent of total revenue

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Cost of Services. Cost of services expense includes compensation and benefits for the Company’s editorial, technology, marketing services, ratings analyst and video staff, as well as fees paid to non-employee content providers, expenses for contract programmers and developers, communication lines and other technology costs.

As a percentage of revenue, cost of services expense was 44.8% for the year ended December 31, 2008, as compared to 39.1% for the year ended December 31, 2007. The increase in cost of services over the periods was largely the result of increased compensation costs totaling approximately $4.6 million. The increased compensation costs are primarily attributable to incremental costs associated with the operations of Promotions.com and Bankers Financial Products since the dates of their acquisitions, as well as compensation expense associated with BankingMyWay.com and MainStreet.com, which were launched in the quarters ended December 31, 2007 and March 31, 2008, respectively. The Company also experienced increased costs related to hosting, data, fulfillment and consulting, the sum of which increased by approximately $2.1 million over the periods, partially offset by reduced printing cost, which decreased by approximately $0.1 million over the periods.

Sales and Marketing. Sales and marketing expense consists primarily of advertising and promotion, promotional materials, content distribution fees, and compensation expense for the direct sales force and customer service departments.

As a percentage of revenue, sales and marketing expense was 19.8% for the year ended December 31, 2008, as compared to 18.7% in the year ended December 31, 2007. The increase in sales and marketing expense was largely the result of increased compensation and online marketing costs, which increased by approximately $2.5 million year over year. This increase included an investment in a larger ad sales team to deliver advertising revenue growth across an expanding network of Web sites, as well as an increase in our search engine marketing and online marketing spend to support the launch of BankingMyWay.com and MainStreet.com. The increased expense also reflects incremental costs associated with the operations of Promotions.com and Bankers Financial Products since the dates of their acquisitions. These increased costs were partially offset by decreases related to consulting, ad serving and credit card processing, the sum of which decreased by approximately $0.5 million over the periods.

General and Administrative. General and administrative expense consists primarily of compensation for general management, finance and administrative personnel, occupancy costs, professional fees, equipment rental and other office expenses.

As a percentage of revenue, general and administrative expense was 24.4% in the year ended December 31, 2008, as compared to 18.7% in the year ended December 31, 2007. The increase in general and administrative expense over the periods was partially the result of higher compensation costs totaling approximately $2.7 million, including an increase in noncash compensation costs of approximately $0.6 million. In addition, the increase in general and administrative expense was the result of increased costs related to occupancy of approximately $1.1 million, an increase to our bad debt reserve in the amount of approximately $0.5 million, a non-recurring charge for professional fees approximating $0.3 million, as well as increases to costs associated with management and analysis tools for our growing network of Web sites and consulting fees, the sum of which increased by approximately $0.1 million over the periods.

Impairment of Intangible Assets. For the year ended December 31, 2008, impairment of intangible assets totaled $2,325,481. No impairment expense was recorded for the year ended December 31, 2007. As a result of reduced revenue and cash flows, the Company determined that the value of intangible assets related to the Promotions.com customer relationships and noncompete agreements were impaired and we recorded an impairment charge approximating $1.8 million during the fourth quarter of 2008. Additionally, due to the discontinuance of the use of the Smartportfolio trade name during the fourth quarter of 2007, the remaining value approximating $0.5 million was deemed to be impaired.

Depreciation and Amortization. As a percentage of revenue, depreciation and amortization expense was 8.2% in the year ended December 31, 2008, as compared to 3.9% in the year ended December 31, 2007. The increase in depreciation and amortization expense is largely attributable to the amortization of intangible assets related to the Promotions.com, Bankers Financial Products and Stockpickr acquisitions, resulting in approximately $1.7 million of additional amortization cost over the periods, depreciation of capitalized costs

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associated with the redesign of TheStreet.com and development of the MainStreet.com Web sites, and higher depreciation costs due to increased capital expenditures.

Net Interest Income


	For the Year Ended December 31,				Percent Change
	2008		2007		Percent Change
Net interest income	$	1,573,752	$	2,476,266		-36	%

The decrease in net interest income is primarily the result of reduced interest rates as a result of our decision to invest our cash balances directly in U.S. Treasury Bills, or indirectly in U.S. Treasury backed securities with a focus on asset protection rather than yield maximization. The lower yield in the period was partially offset by a higher average cash balance.

Gain on Sale of Marketable Security


	For the Year Ended December 31,				Percent Change
	2008		2007		Percent Change
Gain on sale of marketable security	$	120,937	$	—		N/A

For the year ended December 31, 2008, gain on sale of marketable security was $120,937. No gain was recorded for the year ended December 31, 2007. In November 2008 the Company sold a U.S. Treasury Bill that bore interest at the rate of 1.78% per annum and had a maturity date of August 27, 2009, realizing a gain on the sale.

Net Income

Net income for the year ended December 31, 2008 totaled $1,335,199, or $0.04 per basic and diluted share, compared to $31,050,910, or $1.08 per basic and $1.06 per diluted share for the year ended December 31, 2007. The decrease over the periods was in part the result of a $16 million reduction to the Company’s deferred tax asset valuation allowance, which was recorded as a benefit to the income tax provision in the prior year period.

Comparison of Fiscal Years Ended December 31, 2007 and 2006

Net Revenue


	For the Year Ended December 31,										Percent Change
	2007		(*)			2006		(*)			Percent Change
Revenue:
Paid services	$	38,421,393		59	%	$	35,441,457		70	%		8	%
Marketing services		26,984,637		41	%		15,447,378		30	%		75	%
Total revenue	$	65,406,030		100	%	$	50,888,835		100	%		29	%

(*)

Percent of total revenue

Paid Services


	For the Year Ended December 31,				Percent Change
	2007		2006		Percent Change
Paid services:
Subscription	$	34,119,565	$	33,514,590		2	%
Syndication, licensing and information services		4,301,828		1,926,867		123	%
Total	$	38,421,393	$	35,441,457		8	%

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We believe the growth in subscription revenue, the primary component of paid services, is due largely to our success in (i) increasing overall traffic to our Web sites by signing new agreements and expanding existing relationships with large, high-traffic portal and search engine companies, (ii) promoting our brands, products and services through the television program hosted by contributor James J. Cramer, and (iii) generating interest in our paid subscription services with expanded content offerings, including video and podcasts, personal finance and investor education content and lifestyle-oriented content. Additionally, we added new subscribers as a result of our acquisition of Bankers Financial Products Corporation during November 2007 and TheStreet.com Ratings during August 2006, which contributed to the growth in our subscription revenue as compared to the prior year period.

The increase in syndication, licensing and information services revenue is primarily the result of a full year of revenue received from the syndication of independent research from Ratings, as compared to five months in 2006 subsequent to the acquisition of Weiss Ratings in August 2006, as well as from the information services revenue received from the operations of Bankers Financial Products since its acquisition in November 2007.

For the year ended December 31, 2007, approximately 71% of the Company’s net subscription revenue was derived from annual subscriptions, as compared to approximately 65% for the year ended December 31, 2006. The Company calculates net subscription revenue by deducting anticipated refunds from cancelled subscriptions and chargebacks of disputed credit card charges from gross revenue. Refunds and chargebacks totaled less than 1% of gross subscription revenue during each of the years ended December 31, 2007 and 2006.

Marketing Services


	For the Year Ended December 31,				Percent Change
	2007		2006		Percent Change
Marketing services:
Advertising	$	21,985,441	$	15,447,378		42	%
Interactive marketing services		4,999,196		—		N/A
Total	$	26,984,637	$	15,447,378		75	%

Advertising revenue for the year ended December 31, 2007, increased by 42% when compared to the year ended December 31, 2006. The increase is primarily attributable to the effective monetization of a 32% increase in the average number of monthly unique visitors to the Company’s Web sites, when compared to the year ended December 31, 2006. The increase in reach, combined with continued strength in our audience demographics, and the ability to create new and unique customized advertising solutions enabled us to expand relationships with existing advertisers, acquire new financial advertisers and attract increasing numbers of non-endemic advertisers.

We believe that we have particular appeal to a growing number of non-financial advertisers, who comprised 44% of total advertising revenue in the year ended December 31, 2007, as compared to 27% in the year ended December 31, 2006. Additionally, we believe that the continued shift of advertising spending from traditional media to online advertising has led generally to increased spending by the Company’s advertisers and to an increase in the number of advertisers choosing to place their advertisements in the Company’s publications.

The number of advertisers for the year ended December 31, 2007 was 186 as compared to 148 for the year ended December 31, 2006. The Company’s top five advertisers accounted for approximately 28% of its total advertising revenue for the year ended December 31, 2007, as compared to approximately 34% for the year ended December 31, 2006. For the year ended December 31, 2007, no advertiser accounted for 10% or more of total advertising revenue, as compared to one advertiser accounting for approximately 14% of total advertising revenue during the year ended December 31, 2006.

The increase in marketing services revenue also reflects incremental interactive marketing services revenue associated with Promotions.com since its acquisition on August 2, 2007.

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Operating Expense


	For the Year Ended December 31,										Percent Change
	2007		(*)			2006		(*)			Percent Change
Operating expense:
Cost of services	$	25,559,409		39.1	%	$	18,450,110		36.3	%		39	%
Sales and marketing		12,208,648		18.7	%		9,616,491		18.9	%		27	%
General and administrative		12,215,797		18.7	%		10,673,705		21.0	%		14	%
Depreciation and amortization		2,528,042		3.9	%		1,088,679		2.1	%		132	%
Total operating expense	$	52,511,896				$	39,828,985					32	%

(*)

Percent of total revenue

Cost of Services. As a percentage of revenue, cost of services expense was 39.1% for the year ended December 31, 2007, as compared to 36.3% for the year ended December 31, 2006. This increase is in part due to an investment in additional editorial and video staff to increase production of stories and video in areas where we could not meet advertising demand. We believe that these investments have contributed to increased advertising revenue and will deliver stronger gross margins in future periods. In addition, this increase was related to the impact of the acquisition of Promotions.com.

The increase in absolute dollars during the period was largely the result of increased compensation and related costs totaling approximately $5.2 million, of which approximately $2.0 million was incurred within our Ratings, editorial and video staffs related to the creation of additional content to drive increased advertising revenue. Additionally, the Company experienced increases in hosting, computer maintenance and supply costs as well as Ratings fulfillment related expenses, the sum of which totaled approximately $1.4 million. The increased expense also reflects incremental costs associated with the operations of Promotions.com, TheStreet.com Ratings, Stockpickr and Bankers Financial Products since the dates of their acquisitions.

Sales and Marketing. As a percentage of revenue, sales and marketing expense was 18.7% for the year ended December 31, 2007, as compared to 18.9% in the year ended December 31, 2006. This decrease is primarily attributable to the recently acquired Promotions.com and Bankers Financial Products businesses, both of which have historically invested minimal amounts in sales and marketing activities. This was partially offset by our investment in additional headcount in our advertising sales team in the first quarter of 2007, which has driven additional advertising revenue during the year, as well as expanded promotional efforts to drive advertising revenue growth, free-trial subscriptions to our products and to expose our brands and build our customer databases. The advertising programs consist of promotional campaigns on search engines, online media networks, financial portals and smaller niche Web sites, subscription marketing and distribution arrangements and email marketing campaigns.

The increase in absolute dollars during the period was largely the result of the overall growth of the Company, resulting in higher headcount and compensation and related costs, totaling approximately $1.2 million, to drive the Company’s revenue growth, combined with increased advertising and promotion costs and consulting fees, the sum of which totals approximately $1.4 million. The increased expense also reflects incremental costs associated with the operations of Promotions.com, TheStreet.com Ratings and Bankers Financial Products since the dates of their acquisitions.

General and Administrative. As a percentage of revenue, general and administrative expense was 18.7% in the year ended December 31, 2007, as compared to 21.0% in the year ended December 31, 2006. This decrease is largely attributable to management’s ability to generate additional revenue with minimal impact on the overhead cost structure.

The increase in absolute dollars during the period was largely the result of the overall growth of the Company, resulting in higher compensation and related costs, occupancy costs, expenses associated with management and analysis tools for our growing network of Web sites, and increased professional fees, the

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sum of which totals approximately $1.5 million. The increased expense also reflects incremental costs associated with the operations of Promotions.com, Bankers Financial Products, TheStreet.com Ratings and Stockpickr since the dates of their acquisitions.

Depreciation and Amortization. As a percentage of revenue, depreciation and amortization expense was 3.9% in the year ended December 31, 2007, as compared to 2.1% in the year ended December 31, 2006. This increase is largely attributable to amortization of intangible assets related to the Ratings, Promotions.com, Bankers Financial Products and Stockpickr acquisitions, the total of which is approximately $1.1 million, combined with higher depreciation costs due to increased capital expenditures.

Net Interest Income


	For the Year Ended December 31,				Percent Change
	2007		2006		Percent Change
Net interest income	$	2,476,266	$	2,037,496		22	%

The increase in net interest income is primarily the result of increased cash balances combined with higher interest rates.

Discontinued Operations


	For the Year Ended December 31,					Percent Change
	2007			2006		Percent Change
(Loss) income on disposal of discontinued operations	$	(12,829	)	$	32,321		N/A

In June 2005, the Company committed to a plan to discontinue the operations of the Company’s securities research and brokerage segment. Accordingly, the operating results relating to this segment have been segregated from continuing operations and reported as a separate line item on the consolidated statements of operations.

The fair market values of the remaining liabilities of the discontinued operation are as follows:


	As of December 31,
	2007		2006
Current liabilities	$	232,242	$	222,425

Net Income

Net income for the year ended December 31, 2007 totaled $31,050,910, or $1.08 per basic and $1.06 per diluted share, compared to $12,868,447, or $0.48 per basic and $0.47 per diluted share for the year ended December 31, 2006.

Liquidity and Capital Resources

The Company has generally invested in money market funds and other short-term, investment grade instruments that are highly liquid and of high-quality, with the intent that such funds could easily be made available for operating purposes. Given the uncertainty surrounding the current macro-economic environment, as of December 31, 2008, substantially all of the Company’s cash, cash equivalents, debt securities available for sale and restricted cash balances were invested indirectly in U.S. Treasury backed securities with a focus on asset protection rather than yield maximization. As of December 31, 2008, the Company’s cash, cash equivalents, debt securities available for sale and restricted cash amounted to $76,378,502, representing 44% of total assets.

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the securities, the securities mature or until such time as other markets for these ARS holdings develop. For each of our ARS, we evaluate the risks related to the structure, collateral and liquidity of the investment, and forecast the probability of issuer default, auction failure and a successful auction at part, or a redemption at par, for each future auction period. Temporary impairment charges are recorded in accumulated other comprehensive income where as other-than-temporary impairment charges are recorded in our statement of operations. The Company used a discounted cash flow model to determine the estimated fair value of its investment in ARS as of December 31, 2008. The assumptions used in preparing the discounted cash flow model include estimates for interest rate, timing and amount of cash flows and expected holding period of ARS. Based upon this assessment of fair value, the Company determined that there was a decline in the fair value of its ARS investments of $290,000 which was deemed temporary and is included within accumulated other comprehensive income for the year ended December 31, 2008.

Financial instruments that subject the Company to concentrations of credit risk consist primarily of cash, cash equivalents, debt securities available for sale and restricted cash. The Company maintains all of its cash, cash equivalents, debt securities available for sale and restricted cash in six financial institutions, although substantially all of the balance is within one institution. The Company performs periodic evaluations of the relative credit standing of the six institutions. As of December 31, 2008, the Company’s cash, cash equivalents, debt securities available for sale and restricted cash are primarily invested indirectly in U.S. Treasury backed securities with a focus on asset protection rather than yield maximization. The cash balances are insured by either the FDIC, up to $250,000 per depositor (currently set to expire on December 31, 2009, after which the limit will reduce to $100,000 per depositor), or the U.S. Department of Treasury’s Temporary Guarantee Program for Money Market Funds (currently set to expire on April 30, 2009). The Company has cash balances on deposit with three financial institutions at December 31, 2008 that exceed the insured limit in the amount of $24.7 million. Of this total, $21.8 million is invested in a money market fund that invests only in U.S. Treasury backed securities.

Cash generated from operations was sufficient to cover expenses during the year ended December 31, 2008. Net cash provided by operating activities totaled $8,652,575 for the year ended December 31, 2008, as compared to net cash provided by operating activities totaling $13,437,984 for the year ended December 31, 2007. The decrease in net cash provided by operating activities is primarily related to a decrease in income from continuing operations together with a decrease in accounts payable primarily related to the timing of payments. These decreases were partially offset by increased noncash expenses, particularly relating to a reduction to the deferred tax asset valuation allowance recorded during 2007, the amortization of intangible assets associated with the acquisitions of Stockpickr LLC, Corsis Technology Group II LLC (renamed Promotions.com LLC) and Bankers Financial Products Corporation, the recording of an intangible asset impairment as a result of reduced revenue and cash flows by Promotions.com, and an increase in stock-based compensation expense, combined with reduced growth of accounts receivable during the current year when compared to the prior year.

Net cash provided by operating activities of $8,652,575 for the year ended December 31, 2008 was primarily the result of the Company’s net income combined with noncash expenses and a decrease in other receivables (primarily due to a working capital true up from the acquisition of Promotions.com), partially offset by decreases in accrued expenses (primarily the result of payments related to annual incentive compensation), accounts payable (due to the timing of payments) and a reduction in deferred revenue (primarily related to reduced subscription revenue).

Net cash used in investing activities of $7,793,231 for the year ended December 31, 2008 was primarily the result of capital expenditures consisting of capitalized Web site and software development costs and purchases of computer hardware, software, leasehold improvements and furniture and fixtures, combined with the Company’s long-term investment in Debtfolio, Inc. (See Note 13 in the Notes to Consolidated Financial Statements).

Net cash used in financing activities of $5,680,571 for the year ended December 31, 2008 primarily consisted of cash dividends paid, an increase in restricted cash and the purchase of treasury stock partially offset by the proceeds from the exercise of stock options.

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The Company has a total of $2,279,030 of cash invested in certificates of deposit that serve as collateral for outstanding letters of credit, and is therefore restricted. The letters of credit serve as security deposits for the Company’s office space in New York City.

The Company believes that its current cash and cash equivalents will be sufficient to meet its anticipated cash needs for at least the next 12 months. The Company is committed to cash expenditures in an aggregate amount of approximately $4.8 million through December 31, 2009, in respect of the contractual obligations set forth below under “Commitments and Contingencies.” Additionally, the Company’s Board of Directors declared four quarterly cash dividends in the amount of $0.025 per share of common stock during year ended December 31, 2008, which resulted in cash expenditures of approximately $3.5 million. The Company intends, although there can be no assurance, to maintain the dividend at the current annual level of $0.10 per share, and will review the dividend on an ongoing basis to ensure that it serves the best interests of stockholders by most effectively utilizing cash balances.

For the year ended December 31, 2006 the Company recorded a full valuation allowance against the deferred tax asset. During the year ended December 31, 2007, the valuation allowance was reduced by $16 million, as management concluded that it is more likely than not that the Company will realize the benefit of this portion of its deferred tax asset through taxable income to be generated in future years. Due to the reversal of the valuation allowance, this amount has been reflected as a benefit to the 2007 tax provision.

The Company recognized a deferred tax asset of approximately $46 million and $47 million as of December 31, 2008 and 2007, respectively, primarily relating to net operating loss carryforwards of approximately $124 million and $128 million as of December 31, 2008 and 2007, respectively, available to offset future taxable income through 2025. The net operating loss carryforward as of December 31, 2008 and 2007 includes approximately $20 million and $19 million, respectively, related to windfall tax benefits for which a benefit would be recorded in additional paid in capital when realized. The Company also has a capital loss carryforward of approximately $4 million as of December 31, 2008 and 2007, respectively, available to offset future capital gains through 2009.

In accordance with Section 382 of the Internal Revenue code, the usage of the Company’s net operating loss carryforward could be limited in the event of a change in ownership. The ultimate realization of deferred tax assets is dependent upon the generation of future taxable income during the period when those temporary differences become deductible. Based upon a study that analyzed the Company’s stock ownership activity from inception to December 31, 2008, a change of ownership was deemed to have occurred in August 2000. This change of ownership created an annual limitation on the usage of the Company’s losses which are available through 2025.

Treasury Stock

As discussed in Note 11 to Notes to Consolidated Financial Statements, in December 2000 the Company’s Board of Directors authorized the repurchase of up to $10 million worth of the Company’s common stock, from time to time, in private purchases or in the open market. In February 2004, the Company’s Board of Directors approved the resumption of the stock repurchase program under new price and volume parameters, leaving unchanged the maximum amount available for repurchase under the program. During the year ended December 31, 2008, the Company did not purchase any shares of common stock under the program. Since inception of the program, the Company has purchased a total of 5,453,416 shares of common stock at an aggregate cost of $7,321,122. In addition, pursuant to the terms of the Company’s 1998 Stock Incentive Plan, as amended (the “Plan”) and certain additional stock option exercise procedures adopted by the Compensation Committee of the Board of Directors, in connection with the exercise of stock options by certain of the Company’s executive officers in November 2005 and February 2006, and the issuance of restricted stock units in January 2008 to Company employees, the Company withheld 231,602, 66,982 and 27,597 shares, respectively, issuable upon the exercise of stock options, in lieu of payment of the exercise price and the minimum amount of applicable withholding taxes then due. These shares have been recorded as treasury stock. In December 2008, the Company received 104,055 shares as partial settlement of the working capital and debt adjustment from the acquisition of Corsis Technology Group II LLC. These shares have been recorded as treasury stock.

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Commitments and Contingencies

The Company is committed under operating leases, principally for office space, which expire at various dates through December 31, 2020. Certain leases contain escalation clauses relating to increases in property taxes and maintenance costs. Rent and equipment rental expenses were $2,564,694, $1,876,735 and $1,717,158 for the years ended December 31, 2008, 2007 and 2006, respectively. The increase in rent and equipment rental expenses was primarily due additional office space resulting from the Promotions.com and Bankers Financial Products Corporation acquisitions, increased headcount and changes in operating expense escalations. Additionally, the Company has employment agreements with certain of its employees and outside contributors, whose future minimum payments are dependent on the future fulfillment of their services thereunder. As of December 31, 2008, total future minimum cash payments are as follows:


	Payments Due By Year
Contractual Obligations:	Total		2009		2010		2011		2012		2013		After 2013
Operating leases	$	21,629,005	$	782,543	$	1,646,982	$	2,259,754	$	2,112,291	$	2,084,866	$	12,742,569
Employment agreements		6,228,238		3,700,071		2,528,167		—		—		—		—
Outside contributors		237,708		237,708		—		—		—		—		—
Leases payable		89,660		65,751		23,909		—		—		—		—
Total contractual cash obligations	$	28,184,611	$	4,786,073	$	4,199,058	$	2,259,754	$	2,112,291	$	2,084,866	$	12,742,569

Future minimum cash payments for the year ended December 31, 2009 and 2010 related to operating leases have been reduced by approximately $1.1 million and $0.7 million, respectively, related to a free rent allowance contained in the Third Amendment of Lease dated December 31, 2008, between CRP/Capstone 14W Property Owner, L.L.C. as Landlord, and the Company, as Tenant (See Exhibit 10.22).

Item 7A. Quantitative and Qualitative Disclosures About Market Risk.

The Company believes that its market risk exposures are immaterial as the Company does not have instruments for trading purposes, and reasonable possible near-term changes in market rates or prices will not result in material near-term losses in earnings, material changes in fair values or cash flows for all instruments.

The Company maintains all of its cash, cash equivalents, debt securities available for sale and restricted cash in six financial institutions and performs periodic evaluations of the relative credit standing of these institutions. However, no assurances can be given that the third party institutions will retain acceptable credit ratings or investment practices.

Item 8. Financial Statements and Supplementary Data.

The Company’s consolidated financial statements required by this item are included in Item 15 of this report.

Item 9. Changes in and Disagreements With Accountants on Accounting and Financial Disclosure.

None.

Item 9A. Controls and Procedures.

A control system, no matter how well designed and operated, can provide only reasonable, not absolute, assurance that the control system’s objectives will be met. The design of a control system must reflect the fact that there are resource constraints, and the benefits of controls must be considered relative to their costs. Further, because of the inherent limitations in all control systems, no evaluation of controls can provide absolute assurance that misstatements due to error or fraud will not occur or that all control issues and instances of fraud, if any, within the company have been detected. These inherent limitations include the realities that judgments in decision-making can be faulty and that breakdowns can occur because of simple error or mistake. Controls can also be circumvented by the individual acts of some persons, by collusion of two or more people, or by management override of the controls. The design of any system of controls is based in part on certain assumptions about the likelihood of future events, and there can be no assurance that any design will

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succeed in achieving its stated goals under all potential future conditions. Projections of any evaluation of controls effectiveness to future periods are subject to risks. Over time, controls may become inadequate because of changes in conditions or deterioration in the degree of compliance with policies or procedures.

The Company carried out, under the supervision and with the participation of the Company’s management, including its Chief Executive Officer and Chief Financial Officer, an evaluation of the effectiveness of the design and operation of the Company’s disclosure controls and procedures (as defined in Rule 13a-15(e) under the Securities Exchange Act of 1934) as of the end of the annual period covered by this report. Based upon that evaluation, the Chief Executive Officer and Chief Financial Officer concluded that, as of December 31, 2008, the design and operation of these disclosure controls and procedures were effective. During the annual period covered by this report, there have been no changes in the Company’s internal control over financial reporting that have materially affected, or are reasonably likely to materially affect, the Company’s internal control over financial reporting.

Management Report on Internal Control Over Financial Reporting

Management is responsible for establishing and maintaining adequate internal control over financial reporting, and for performing an assessment of the effectiveness of internal control over financial reporting as of December 31, 2008. Internal control over financial reporting is defined in Rule 13a-15(f) or 15d-15(f) promulgated under the Securities Exchange Act of 1934 as a process designed by, or under the supervision of, the Company’s principal executive and principal financial officers and effected by the Company’s board of directors, management and other personnel, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with U.S. generally accepted accounting principles. Internal control over financial reporting includes those policies and procedures that (1) pertain to the maintenance of records that, in reasonable detail, accurately and fairly reflect the transactions and dispositions of the assets of the Company; (2) provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance with U.S. generally accepted accounting principles, and that receipts and expenditures of the Company are being made only in accordance with authorizations of management and directors of the Company; and (3) provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use or disposition of the Company’s assets that could have a material effect on the financial statements.

Because of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements. Projections of any evaluation of effectiveness to future periods are subject to the risk that controls may become inadequate because of changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate.

Management performed an assessment of the effectiveness of the Company’s internal control over financial reporting as of December 31, 2008 based upon criteria in Internal Control — Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission (“COSO”). Based on this assessment, management believes that the Company’s internal control over financial reporting was effective as of December 31, 2008 based on those criteria issued by COSO.

The Company’s independent registered public accounting firm, Marcum & Kliegman LLP, has issued an audit report on management’s assessment of the effectiveness of the Company’s internal control over financial reporting as of December 31, 2008. Their report appears on page F-2.

Item 9B. Other Information.

None.

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PART III

Item 10. Directors and Executive Officers of the Registrant.

Other than the information provided below, the information required by this Item is incorporated herein by reference to the Company’s definitive Proxy Statement for its Annual Meeting of Stockholders to be held on May 28, 2009, to be filed with the Securities and Exchange Commission within 120 days after the end of the fiscal year covered by this Report.

Code of Ethics

The Company has adopted a Code of Business Conduct and Ethics that applies to all of its directors, officers and employees, as well as outside contributors to its publications. This code is publicly available on the Company’s Web site at http://www.thestreet.com/investor-relations/index.html?detailInclude=IROL-gov highlights. Any substantive amendments to the code and any grant of waiver from a provision of the code requiring disclosure under applicable SEC or Nasdaq rules will be disclosed in a report on Form 8-K.

Audit Committee Financial Expert

The Board of Directors of the Company has determined that Derek Irwin, the Chairman of the Audit Committee, is an “audit committee financial expert” as defined under Item 401(h) of Regulation S-K, and that he is independent as defined under applicable Nasdaq listing standards and as required under Rule 10A-3(b)(1) under the Securities Exchange Act of 1934, as amended.

Item 11. Executive Compensation.

The information required by this Item is incorporated herein by reference to the Company’s definitive Proxy Statement for its Annual Meeting of Stockholders to be held on May 28, 2009, to be filed with the Securities and Exchange Commission within 120 days after the end of the fiscal year covered by this Report.

Item 12. Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters.

Other than the information provided below, information required by this Item is incorporated herein by reference to the Company’s definitive Proxy Statement for its Annual Meeting of Stockholders to be held on May 28, 2009, to be filed with the Securities and Exchange Commission within 120 days after the end of the fiscal year covered by this Report.

Equity Compensation Plan Information

Under the terms of the Company’s 1998 Stock Incentive Plan, as amended (the “1998 Plan”), 8,900,000 shares of common stock of the Company were reserved for awards of incentive stock options, nonqualified stock options (incentive and nonqualified stock options are collectively referred to as “Options”), restricted stock, deferred stock (also referred to as restricted stock units, or RSUs), or any combination thereof. At the Company’s annual stockholders’ meeting in May 2007, stockholders of the Company approved TheStreet.com, Inc. 2007 Performance Incentive Plan (the “2007 Plan”). Under the terms of the 2007 Plan, 1,250,000 shares of common stock of the Company were reserved for awards of incentive stock options, nonqualified stock options, stock appreciation rights (SARs), restricted stock, restricted stock units (RSUs) or other stock-based awards. The plan also authorized cash performance awards. Additionally, under the terms of the 2007 Plan, unused shares authorized for award under the 1998 Plan are available for issuance under the 2007 Plan. No further awards will be made under the 1998 Plan. Awards may be granted to such directors, employees and consultants of the Company as the Compensation Committee of the Board of Directors shall in its discretion select. Only employees of the Company are eligible to receive grants of incentive stock options. Awards generally vest over a three-year period and have terms of five years. The following table sets forth certain information, as of December 31, 2008, concerning shares of common stock authorized for issuance under that equity compensation plan of the Company.

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Number of Securities
to Be Issued Upon
Exercise of
Outstanding Options

Weighted-Average
Exercise Price of
Outstanding Options

Number of Securities
Remaining Available
for Future Issuance
Under Equity
Compensation Plans
(Excluding Securities
Reflected in Column (a))

(a)

(b)

(c)

Equity compensation plans approved by security holders

2,617,782

6.37

1,352,967*

Aggregate number of shares available for grant under TheStreet.com, Inc. 2007 Performance Incentive Plan, which grants may be in the form of incentive stock options, nonqualified stock options, stock appreciation rights (SARs), restricted stock, restricted stock units (RSUs) or other stock-based awards in the discretion of the Board of Directors, with respect to non-employee director grants, or the Compensation Committee, with respect to all other grants. The plan also authorized cash performance awards.

Item 13. Certain Relationships and Related Transactions.

Item 14. Principal Accounting Fees and Services.

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PART IV

Item 15. Exhibits, Financial Statement Schedules.

(a)

1. Consolidated Financial Statements:

See TheStreet.com, Inc. Index to Consolidated Financial Statements on page F-1.

2. Consolidated Financial Statement Schedules:

See TheStreet.com, Inc. Index to Consolidated Financial Statements on page F-1.

3. Exhibits:

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


Exhibit Number		Description
*3.1		Amended and Restated Certificate of Incorporation of the Company, incorporated by reference to the Exhibits to the Company’s Registration Statement on Form S-1 filed February 23, 1999.
*3.2		Certificate of Designation of the Company’s Series B Preferred Stock, as filed with the Secretary of State of the State of Delaware on November 15, 2007, incorporated by reference to the Exhibits to the Company’s Current Report on Form 8-K filed November 20, 2007.
*3.3		Amended and Restated Bylaws of the Company, incorporated by reference to the Exhibits to the Company’s Annual Report on Form 10-K filed March 30, 2000.
*4.1		Amended and Restated Registration Rights Agreement dated December 21, 1998, by and among the Company and the stockholders named therein, incorporated by reference to the Exhibits to the Company’s Registration Statement on Form S-1 filed February 23, 1999.
*4.2		Form of Rights Agreement incorporated by reference to the Exhibits to the Company’s Registration Statement on Form S-1 filed February 23, 1999.
*4.3		Amendment No. 1 to the Rights Agreement dated August 7, 2000, incorporated by reference to the Exhibits to the Company’s Annual Report on Form 10-K filed April 2, 2001.
*4.4		Amendment No. 2 to the Rights Agreement dated November 15, 2007 by and between the Company and American Stock Transfer & Trust Company, as Rights Agent, incorporated by reference to the Exhibits to the Company’s Current Report on Form 8-K filed November 20, 2007.
*4.5		Option to Purchase Common Stock dated November 1, 2007, incorporated by reference to the Company’s Current Report on Form 8-K filed November 6, 2007.
*4.6		Investor Rights Agreement dated November 15, 2007 by and among the Company, TCV VI, L.P. and TCV Member Fund, L.P., incorporated by reference to the Exhibits to the Company’s Current Report on Form 8-K filed November 20, 2007.
*4.7		Warrant dated November 15, 2007 issued by the Company to TCV VI, L.P., incorporated by reference to the Exhibits to the Company’s Current Report on Form 8-K filed November 20, 2007.
*4.8		Warrant dated November 15, 2007 issued by the Company to TCV Member Fund, L.P., incorporated by reference to the Exhibits to the Company’s Current Report on Form 8-K filed November 20, 2007.
*4.9		Specimen certificate for the Company’s shares of common stock, incorporated by reference to the Exhibits to Amendment 3 to the Company’s Registration Statement on Form S-1 filed April 19, 1999.
*10.1		Amended and Restated 1998 Stock Incentive Plan, dated May 29, 2002, incorporated by reference to the Exhibits to the Company’s Quarterly Report on Form 10-Q filed August 14, 2002.
*10.2		Form of Stock Option Grant Agreement under the 1998 Stock Incentive Plan, incorporated by reference to the Exhibits to the Company’s Annual Report on Form 10-K filed March 16, 2005.

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Exhibit Number		Description
*10.3		Form of Restricted Stock Unit Grant Agreement under the 1998 Stock Incentive Plan, incorporated by reference to the Exhibits to the Company’s Annual Report on Form 10-K filed March 16, 2006.
*10.4		2007 Performance Incentive Plan, incorporated by reference to Appendix A to the Company’s 2007 Definitive Proxy Statement on Schedule 14A filed April 23, 2007.
*10.5		Form of Stock Option Grant Agreement under the Company’s 2007 Performance Incentive Plan, incorporated by reference to the Exhibits to the Company’s Quarterly Report on Form 10-Q filed August 9, 2007.
*10.6		Form of Restricted Stock Unit Grant Agreement under the Company’s 2007 Performance Incentive Plan, incorporated by reference to the Exhibits to the Company’s Quarterly Report on Form 10-Q filed August 9, 2007.
*10.7		Form of Cash Performance Award Agreement under the Company’s 2007 Performance Incentive Plan, incorporated by reference to the Exhibits to the Company’s Quarterly Report on Form 10-Q filed August 9, 2007.
*10.8		Employment Agreement dated April 9, 2008 between James Cramer and the Company, incorporated by reference to the Exhibits to the Company’s Current Report on Form 8-K filed April 9, 2008.
*10.9		Amendment to Employment Agreement dated July 30, 2008 between James Cramer and the Company, incorporated by reference to the Exhibits to the Company’s Current Report on Form 8-K filed July 30, 2008.
*10.10		Employment Agreement, dated September 13, 2007, by and between Thomas J. Clarke, Jr. and the Company, incorporated by reference to the Exhibits to the Company’s Quarterly Report on Form 10-Q filed November 9, 2007.
*10.11		Letter Agreement dated October 24, 2008, by and between Thomas J. Clarke, Jr. and the Company amending the Employment Agreement dated September 13, 2007, incorporated by reference to the Exhibits to the Company’s Quarterly Report on Form 10-Q filed November 7, 2008.
*10.12		Employment Agreement dated June 30, 2008, by and between Eric Ashman and the Company, incorporated by reference to the Exhibits to the Company’s Current Report on Form 8-K filed June 30, 2008.
*10.13		Employment Agreement dated March 26, 2007, by and between Steven Elkes and the Company, incorporated by reference to the Exhibits to the Company’s Quarterly Report on Form 10-Q filed May 10, 2007.
*10.14		Employment Agreement dated August 23, 2007, by and between David Morrow and the Company, incorporated by reference to the Exhibits to the Company’s Quarterly Report on Form 10-Q filed November 9, 2007.
*10.15		Employment Agreement dated May 15, 2008, by and between Teresa Santos and the Company, incorporated by reference to the Exhibits to the Company’s Current Report on Form 8-K filed May 15, 2008.
*10.16		Membership Interest Purchase Agreement dated August 2, 2007 by and among TP Newco LLC, David Barnett, Gregg Alwine and Gregg Alwine as Agent, incorporated by reference to the Exhibits to the Company’s Current Report on Form 8-K filed August 8, 2007.
*10.17		Stock Purchase Agreement dated November 1, 2007 by and among BFPC Newco LLC, Larry Starkweather, Kyle Selberg, Rachelle Zorn, Robert Quinn and Larry Starkweather as Agent, incorporated by reference to the Exhibits to the Company’s Current Report on Form 8-K filed November 6, 2007.

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Exhibit Number		Description
*10.18		Securities Purchase Agreement dated November 15, 2007 by and among the Company, TCV VI, L.P. and TCV Member Fund, L.P., incorporated by reference to the Exhibits to the Company’s Current Report on Form 8-K filed November 20, 2007.
*10.19		Agreement of Lease, dated July 22, 1999, between 14 Wall Street Holdings 1, LLC (as successor to W12/14 Wall Acquisition Associates LLC), as Landlord, and the Company, as Tenant, incorporated by reference to the Exhibits to the Company’s Quarterly Report on Form 10-Q filed August 16, 1999.
*10.20		Amendment of Lease dated October 31, 2001, between 14 Wall Street Holdings 1, LLC (as successor to W12/14 Wall Acquisition Associates LLC), as Landlord, and the Company, as Tenant, incorporated by reference to the Exhibits to the Company’s Annual Report on Form 10-K filed March 16, 2005.
*10.21		Second Amendment of Lease dated March 21, 2007, between 14 Wall Street Holdings 1, LLC as Landlord, and the Company, as Tenant, incorporated by reference to the Exhibits to the Company’s Annual Report on Form 10-K filed March 12, 2008.
10.22		Third Amendment of Lease dated December 31, 2008, between CRP/Capstone 14W Property Owner, L.L.C. as Landlord, and the Company, as Tenant.
*14.1		Code of Business Conduct and Ethics, incorporated by reference to the Exhibits to the Company’s Current Report on Form 8-K filed January 31, 2005.
21.1		Subsidiaries of the Company
23.1		Consent of Marcum & Kliegman LLP.
31.1		Rule 13a-14(a) Certification of CEO.
31.2		Rule 13a-14(a) Certification of CFO.
32.1		Section 1350 Certification of CEO.
32.2		Section 1350 Certification of CFO.

Incorporated by reference

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SIGNATURES

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

THESTREET.COM, INC.

Dated: March 11, 2009

By:

/s/ Thomas J. Clarke, Jr.

Thomas J. Clarke, Jr.
Chief Executive Officer

Pursuant to the requirements of the Securities Exchange Act of 1934, as amended, this report has been signed below by the following persons on behalf of the Registrant and in the capacities and on the dates indicated:


Signature	Title	Date
/s/ Thomas J. Clarke, Jr. (Thomas J. Clarke, Jr.)	Chief Executive Officer	March 11, 2009
/s/ Eric Ashman (Eric Ashman)	Chief Financial Officer and Principal Accounting Officer	March 11, 2009
/s/ Richard Broitman (Richard Broitman)	Vice President, Finance	March 11, 2009
/s/ James J. Cramer (James J. Cramer)	Chairman of the Board	March 11, 2009
/s/ William R. Gruver (William R. Gruver)	Director	March 11, 2009
/s/ Derek Irwin (Derek Irwin)	Director	March 11, 2009
/s/ Daryl Otte (Daryl Otte)	Director	March 11, 2009
/s/ Martin Peretz (Martin Peretz)	Director	March 11, 2009
/s/ Jeffrey A. Sonnenfeld (Jeffrey A. Sonnenfeld)	Director	March 11, 2009

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THESTREET.COM, INC.

INDEX TO CONSOLIDATED FINANCIAL STATEMENTS

Item 15(a)


	Page
Report of Independent Registered Public Accounting Firm		F-2
Consolidated Balance Sheets as of December 31, 2008 and 2007		F-3
Consolidated Statements of Operations for the Years Ended December 31, 2008, 2007 and 2006		F-4
Consolidated Statements of Stockholders’ Equity for the Years Ended December 31, 2008, 2007 and 2006		F-5
Consolidated Statements of Cash Flows for the Years Ended December 31, 2008, 2007 and 2006		F-6
Notes to Consolidated Financial Statements		F-7
Schedule II — Valuation and Qualifying Accounts for the Years Ended December 31, 2008, 2007 and 2006		F-39

F-1

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REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

To the Audit Committee of
The Board of Directors and Stockholders of
TheStreet.com, Inc.

We have audited the accompanying consolidated balance sheets of TheStreet.com, Inc. (the “Company”) as of December 31, 2008 and 2007, and the related consolidated statements of operations, stockholders’ equity and cash flows for each of the years in the three-year period ended December 31, 2008. Our audits also included the financial statement schedule listed in the Index at Item 15(a). We have also audited the Company's internal control over financial reporting as of December 31, 2008, based on the criteria established in Internal Control — Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission. The Company's management is responsible for these consolidated financial statements, for maintaining effective internal control over financial reporting, and for its assessment of the effectiveness of internal control over financial reporting. Our responsibility is to express an opinion on these consolidated financial statements and an opinion on the Company's internal control over financial reporting based on our audits.

We conducted our audits in accordance with the standards of the Public Company Accounting Oversight Board (United States). Those standards require that we plan and perform the audits to obtain reasonable assurance about whether the consolidated financial statements are free of material misstatement and whether effective internal control over financial reporting was maintained in all material respects. Our audits of the consolidated financial statements included examining, on a test basis, evidence supporting the amounts and disclosures in the consolidated financial statements, assessing the accounting principles used and significant estimates made by management, and evaluating the overall consolidated financial statement presentation. Our audit of internal control over financial reporting included obtaining an understanding of internal control over financial reporting, assessing the risk that a material weakness exists, and testing and evaluating the design and operating effectiveness of internal control based on the assessed risk. Our audits also included performing such other procedures as we considered necessary in the circumstances. We believe that our audits provide a reasonable basis for our opinions.

A company's internal control over financial reporting is a process designed 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. A company's internal control over financial reporting includes those policies and procedures that (1) pertain to the maintenance of records that, in reasonable detail, accurately and fairly reflect the transactions and dispositions of the assets of the company; (2) provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance with generally accepted accounting principles, and that receipts and expenditures of the company are being made only in accordance with authorizations of management and directors of the company; and (3) provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use, or disposition of the company's assets that could have a material effect on the financial statements.

Because of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements. Also, projections of any evaluation of effectiveness to future periods are subject to the risk that controls may become inadequate because of changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate.

In our opinion, the consolidated financial statements referred to above present fairly, in all material respects, the consolidated financial position of TheStreet.com, Inc. at December 31, 2008 and 2007, and the consolidated results of its operations and its cash flows for each of the years in the three-year period ended December 31, 2008 in conformity with accounting principles generally accepted in the United States of America. Also, in our opinion, the related financial statement schedule, when considered in relation to the financial statements taken as a whole, presents fairly in all material respects the information set forth therein. Also, in our opinion, the Company maintained, in all material respects, effective internal control over financial reporting as of December 31, 2008, based on the criteria established in Internal Control — Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission.

/s/ Marcum & Kliegman LLP

New York, New York
March 10, 2009

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TABLE OF CONTENTS

THESTREET.COM, INC.

CONSOLIDATED BALANCE SHEETS


	December 31,
	2008			2007
ASSETS
Current Assets:
Cash and cash equivalents	$	72,441,294		$	77,262,521
Restricted cash		516,951			—
Accounts receivable, net of allowance for doubtful accounts of $531,092 as of December 31, 2008 and $242,807 as of December 31, 2007		11,179,564			11,133,957
Other receivables		647,596			1,227,144
Deferred taxes		2,546,743			5,800,000
Prepaid expenses and other current assets		1,990,717			1,652,608
Total current assets		89,322,865			97,076,230
Property and equipment, net of accumulated depreciation and amortization of $11,250,569 as of December 31, 2008 and $17,493,847 as of December 31, 2007		10,047,779			7,730,922
Debt securities available for sale		1,658,178			1,908,233
Long term investment		2,042,970			—
Other assets		122,197			328,117
Goodwill		40,024,076			40,245,413
Other intangibles, net		13,630,900			18,368,792
Deferred taxes		13,570,047			10,200,000
Restricted cash		1,762,079			576,951
Total assets	$	172,181,091		$	176,434,658
LIABILITIES AND STOCKHOLDERS’ EQUITY
Current Liabilities:
Accounts payable	$	390,610		$	2,189,259
Accrued expenses		2,784,902			5,006,635
Deferred revenue		15,331,949			16,240,008
Other current liabilities		205,838			214,654
Current liabilities of discontinued operations		225,925			232,242
Total current liabilities		18,939,224			23,882,798
Other liabilities		79,896			90,105
Total liabilities		19,019,120			23,972,903
Stockholders’ Equity
Preferred stock; $0.01 par value; 10,000,000 shares authorized; 5,500 issued and outstanding as of December 31, 2008 and December 31, 2007; the aggregate liquidation preference as of December 31, 2008 totals $55,000,000, and $55,096,424 as of December 31, 2007		55			55
Common stock; $0.01 par value; 100,000,000 shares authorized; 36,262,546 shares issued and 30,378,894 shares outstanding as of December 31, 2008, and 36,006,137 shares issued and 30,254,137 shares outstanding as of December 31, 2007		362,625			360,061
Additional paid-in capital		271,271,574			270,752,308
Accumulated other comprehensive income		(290,000	)		—
Treasury stock at cost; 5,883,652 shares as of December 31, 2008 and 5,752,000 shares as of December 31, 2007		(9,900,284	)		(9,033,471	)
Accumulated deficit		(108,281,999	)		(109,617,198	)
Total stockholders’ equity		153,161,971			152,461,755
Total liabilities and stockholders’ equity	$	172,181,091		$	176,434,658

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

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TABLE OF CONTENTS

THESTREET.COM, INC.

CONSOLIDATED STATEMENTS OF OPERATIONS


	For the Years Ended December 31,
	2008			2007			2006
Net revenue:
Paid services	$	41,185,988		$	38,421,393		$	35,441,457
Marketing services		30,714,443			26,984,637			15,447,378
Total net revenue		71,900,431			65,406,030			50,888,835
Operating expense:
Cost of services		32,204,765			25,559,409			18,450,110
Sales and marketing		14,263,199			12,208,648			9,616,491
General and administrative		17,562,238			12,215,797			10,673,705
Intangible asset impairment		2,325,481			—			—
Depreciation and amortization		5,894,186			2,528,042			1,088,679
Total operating expense		72,249,869			52,511,896			39,828,985
Operating (loss) income		(349,438	)		12,894,134			11,059,850
Net interest income		1,573,752			2,476,266			2,037,496
Gain on sale of marketable security		120,937			—			—
Income from continuing operations before income taxes		1,345,251			15,370,400			13,097,346
(Provision) benefit for income taxes		(2,040	)		15,693,339			(261,220	)
Income from continuing operations		1,343,211			31,063,739			12,836,126
Discontinued operations:
(Loss) income on disposal of discontinued operations		(8,012	)		(12,829	)		32,321
(Loss) income from discontinued operations		(8,012	)		(12,829	)		32,321
Net income		1,335,199			31,050,910			12,868,447
Preferred stock deemed dividend		—			1,802,733			—
Preferred stock cash dividend		385,696			96,424			—
Preferred stock dividends		385,696			1,899,157			—
Net income attributable to common stockholders	$	949,503		$	29,151,753		$	12,868,447
Basic net income (loss) per share:
Income from continuing operations	$	0.04		$	1.08		$	0.48
(Loss) income on disposal of discontinued operations		(0.00	)		(0.00	)		0.00
Net income		0.04			1.08			0.48
Preferred stock dividends		(0.01	)		(0.07	)		—
Net income attributable to common stockholders	$	0.03		$	1.01		$	0.48
Diluted net income (loss) per share:
Income from continuing operations	$	0.04		$	1.06		$	0.47
(Loss) income on disposal of discontinued operations		(0.00	)		(0.00	)		0.00
Net income		0.04			1.06			0.47
Preferred stock dividends		(0.01	)		(0.07	)		—
Net income attributable to common stockholders	$	0.03		$	0.99		$	0.47
Weighted average basic shares outstanding		30,427,421			28,830,366			27,014,047
Weighted average diluted shares outstanding		30,835,131			29,387,727			27,546,137

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

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TABLE OF CONTENTS

THESTREET.COM, INC.

CONSOLIDATED STATEMENTS OF STOCKHOLDERS’ EQUITY
For the Years Ended December 31, 2008, 2007, and 2006


	Common Stock				Series B Preferred Stock				Additional Paid in Capital			Accumulated Other Comprehensive Income			Treasury Stock						Accumulated Deficit			Total Stockholders' Equity
	Shares		Par Value		Shares		Par Value		Additional Paid in Capital			Accumulated Other Comprehensive Income			Shares			Cost			Accumulated Deficit			Total Stockholders' Equity
Balance at December 31, 2005		31,220,123	$	312,201		—	$	—	$	189,167,895		$	—			(5,685,018	)	$	(8,502,310	)	$	(153,536,555	)	$	27,441,231
Exercise of options		2,386,712		23,867		—		—		5,372,125			—			—			—			—			5,395,992
Stock-based compensation expense related to employee stock options		—		—		—		—		1,753,429			—			—			—			—			1,753,429
Stock repurchase		—		—		—		—		—			—			(66,982	)		(531,161	)		—			(531,161	)
Dividend paid to stockholders										(2,736,550	)														(2,736,550	)
Net income		—		—		—		—		—			—			—			—			12,868,447			12,868,447
Balance at December 31, 2006		33,606,835		336,068		—		—		193,556,899			—			(5,752,000	)		(9,033,471	)		(140,668,108	)		44,191,388
Exercise of options		739,424		7,394		—		—		3,010,029			—			—			—			—			3,017,423
Issuance of common stock for acquisitions		1,659,878		16,599		—		—		20,258,848			—			—			—			—			20,275,447
Issuance of preferred stock		—		—		5,500		55		54,839,028			—			—			—			—			54,839,083
Stock-based compensation expense related to employee stock options		—		—		—		—		2,115,599						—			—			—			2,115,599
Common stock cash dividends		—		—		—		—		(2,931,671	)		—			—			—			—			(2,931,671	)
Preferred stock cash dividends										(96,424	)		—												(96,424	)
Net income		—		—		—		—		—			—			—			—			31,050,910			31,050,910
Balance at December 31, 2007		36,006,137		360,061		5,500		55		270,752,308			—			(5,752,000	)		(9,033,471	)		(109,617,198	)		152,461,755
Unrealized loss on debt securities available for sale		—		—		—		—		—			(290,000	)		—			—			—			(290,000	)
Exercise of options		256,409		2,564		—		—		586,310			—			—			—			—			588,874
Costs associated with issuance of preferred stock		—		—		—		—		(125,000	)		—			—			—			—			(125,000	)
Stock repurchase		—		—		—		—		—			—			(131,652	)		(866,813	)		—			(866,813	)
Stock-based compensation expense related to employee stock options		—		—		—		—		3,537,085			—			—			—			—			3,537,085
Common stock cash dividends		—		—		—		—		(3,093,433	)					—			—			—			(3,093,433	)
Preferred stock cash dividends		—		—		—		—		(385,696	)		—			—			—			—			(385,696	)
Net income		—		—		—		—		—			—			—			—			1,335,199			1,335,199
Balance at December 31, 2008		36,262,546	$	362,625		5,500	$	55	$	271,271,574		$	(290,000	)		(5,883,652	)	$	(9,900,284	)	$	(108,281,999	)	$	153,161,971

F-5

TABLE OF CONTENTS

THESTREET.COM, INC.
CONSOLIDATED STATEMENTS OF CASH FLOWS


	For the Years Ended December 31,
	2008			2007			2006
Cash Flows from Operating Activities:
Net income	$	1,335,199		$	31,050,910		$	12,868,447
Loss (income) from discontinued operations		8,012			12,829			(32,321	)
Income from continuing operations		1,343,211			31,063,739			12,836,126
Adjustments to reconcile income from continuing operations to net cash provided by operating activities:
Stock-based compensation expense		3,537,085			2,115,599			1,753,429
Provision for doubtful accounts		692,406			175,000			84,500
Depreciation and amortization		5,894,186			2,528,042			1,088,679
Deferred tax benefit		(116,790	)		(16,000,000	)		—
Intangible asset impairment		2,325,481			—			—
Deferred rent		195,665			119,317			89,370
Loss on disposal of equipment		17,117			—			—
Changes in operating assets and liabilities:
Accounts receivable		(738,013	)		(3,124,728	)		(3,203,875	)
Other receivables		579,548			(350,638	)		(182,640	)
Prepaid expenses and other current assets		(299,859	)		(143,765	)		(335,048	)
Other assets		143,896			(52,965	)		(15,836	)
Accounts payable		(1,798,649	)		134,663			30,387
Accrued expenses		(2,125,309	)		(1,601,575	)		2,036,858
Deferred revenue		(908,059	)		(1,406,786	)		1,323,067
Other current liabilities		(8,816	)		31,373			36,030
Other liabilities		(66,196	)		(46,280	)		—
Net cash provided by continuing operations		8,666,904			13,440,996			15,541,047
Net cash used in discontinued operations		(14,329	)		(3,012	)		(21,984	)
Net cash provided by operating activities		8,652,575			13,437,984			15,519,063
Cash Flows from Investing Activities:
Long-term investment		(2,042,970	)		—			—
Purchase of long-term debt securities available for sale		(39,945	)		(1,908,233	)		—
Sale of short-term investments		—			—			500,000
Purchase of Bankers Financial Products Corporation		(94,184	)		(16,811,966	)		—
Purchase of Corsis Technology Group II LLC		(28,270	)		(11,890,071	)		—
Purchase of Stockpickr LLC		(6,209	)		(1,572,106	)		—
Purchase of Weiss Ratings, Inc.		—			124,663			(3,316,048	)
Capital expenditures		(5,609,806	)		(4,979,247	)		(1,687,672	)
Proceeds from the sale of fixed assets		28,153			—			—
Net cash used in investing activities		(7,793,231	)		(37,036,960	)		(4,503,720	)
Cash Flows from Financing Activities:
Proceeds from the exercise of stock options		588,874			3,017,423			5,395,992
Net proceeds from the sale of preferred stock		—			54,839,083			—
Costs associated with the sale of preferred stock		(125,000	)		—			—
Cash dividends paid on common stock		(3,093,433	)		(2,931,671	)		(2,736,550	)
Cash dividends paid on preferred stock		(482,120	)		(96,424	)		—
Repayment of note payable		—			(22,146	)		(102,931	)
Restricted cash		(1,702,079	)		—			600,000
Purchase of treasury stock		(866,813	)		—			(531,161	)
Net cash (used in) provided by financing activities		(5,680,571	)		54,806,265			2,625,350
Net (decrease) increase in cash and cash equivalents		(4,821,227	)		31,207,289			13,640,693
Cash and cash equivalents, beginning of period		77,262,521			46,055,232			32,414,539
Cash and cash equivalents, end of period	$	72,441,294		$	77,262,521		$	46,055,232
Supplemental disclosures of cash flow information:
Cash payments made for interest	$	36,813		$	41,146		$	27,360
Cash payments made for income taxes	$	348,240		$	242,771		$	411,851

F-6

TABLE OF CONTENTS

THESTREET.COM, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
December 31, 2008

(1) Organization, Nature of Business and Summary of Operations and Significant Accounting Policies

Organization and Nature of Business

TheStreet.com, Inc., together with its wholly owned subsidiaries (collectively, the “Company,” “our,” “we” or “us”) is a leading financial media company. We distribute our content through proprietary properties, including our network of Web sites, email services, mobile devices, podcasts and video programming. We also syndicate our content for distribution by other media companies and print publications. Our goal is to provide information and services that empower a growing audience of investors and consumers, through our expanding network of properties to become the leading independent online destination where issues and topics related to life and money intersect.

In June 2005, the Company committed to a plan to discontinue the operations of its wholly owned subsidiary, Independent Research Group LLC, which operated the Company’s securities research and brokerage segment. Accordingly, the operating results relating to this segment have been segregated from continuing operations and reported as a separate line item on the consolidated statements of operations. See Note 2 to Notes to Consolidated Financial Statements.

Use of Estimates

The preparation of financial statements in conformity with U.S. generally accepted accounting principles requires management to make estimates and assumptions. Significant estimates include the allowance for doubtful accounts receivable, valuation allowance of deferred taxes, the useful lives of fixed assets, the valuation of goodwill and intangible assets, as well as accrued expense estimates, that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenue and expense during the reporting period. Actual results could differ from those estimates.

Consolidation

The consolidated financial statements include the accounts of TheStreet.com, Inc. and its wholly-owned subsidiaries. All intercompany balances and transactions have been eliminated in consolidation.

Revenue Recognition

The Company generates its revenue primarily from paid and marketing services.

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TABLE OF CONTENTS

THESTREET.COM, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
December 31, 2008

(1) Organization, Nature of Business and Summary of Operations and Significant Accounting Policies – (continued)

Cash, Cash Equivalents and Restricted Cash

The Company considers all short-term investment grade securities with original maturities of three months or less from the date of purchase to be cash equivalents. The Company has a total of $1,762,079 of cash invested in certificates of deposit that serve as collateral for outstanding letters of credit, and is therefore restricted. The letters of credit serve as security deposits for the Company’s office space in New York City. The office leases do not expire within the next 12 months, and the restricted cash is therefore classified as a noncurrent asset.

Property and Equipment

Capitalized Software and Web Site Development Costs

F-8

TABLE OF CONTENTS

THESTREET.COM, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
December 31, 2008

(1) Organization, Nature of Business and Summary of Operations and Significant Accounting Policies – (continued)

who are directly associated with and who devote time to internal-use computer software projects, to the extent of the time spent directly on the project, the Company capitalizes payroll and payroll-related costs of such employees incurred once the development has reached the applications development stage. For the years ended December 31, 2008, 2007 and 2006, the Company capitalized software development costs totaling $566,078, $287,827, and $37,963, respectively. All costs incurred for upgrades, maintenance and enhancements that do not result in additional functionality are expensed.

Goodwill and Other Intangible Assets

Upon the adoption of SFAS No. 142 in 2002, the Company stopped the amortization of goodwill and certain other intangible assets with indefinite useful lives, and completed the required transitional fair value impairment test on its goodwill and certain other intangible assets, the results of which had no impact on the Company’s financial statements. The Company’s goodwill and intangible assets with indefinite useful lives is tested for impairment between annual tests if an event occurs or circumstances change that would more likely than not reduce the fair value of goodwill or other intangible assets below its carrying amount. We test for goodwill impairment at the enterprise level as the Company is considered to operate as a single reporting unit. Based upon an annual impairment test as of September 30, 2008, the company recorded an impairment charge totaling $493,333 representing the value remaining from the trade name of Smartportfolio, which it had acquired in December 2000, as the last product carrying the Smartportfolio name was discontinued. Additionally, the Company has experienced a decline in anticipated revenues associated with its Promotions.com client relationships and noncompete agreements. Using an income approach based upon estimated future cash flows, the Company determined that the carrying value of the client relationships and noncompete agreements

F-9

TABLE OF CONTENTS

THESTREET.COM, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
December 31, 2008

(1) Organization, Nature of Business and Summary of Operations and Significant Accounting Policies – (continued)

exceeded its fair value at December 31, 2008 and therefore recorded an impairment charge of $1,832,148. Based upon annual impairment tests performed as of October 31, 2007 and September 30, 2006, no impairment was indicated.

Long-Lived Assets

The Company adopted SFAS No. 144 “Accounting for the Impairment or Disposal of Long-Lived Assets.” Long-lived assets held for use are subject to an impairment assessment if the carrying value is no longer recoverable based upon the undiscounted cash flows of the assets. The amount of the impairment is the difference between the carrying amount and the fair value of the asset. Management does not believe that there is any impairment of long-lived assets at December 31, 2008.

Income Taxes

Deferred tax assets pertaining to windfall tax benefits on exercise of share awards and the corresponding credit to additional paid-in capital are recorded if the related tax deduction reduces tax payable. The Company has elected the “with-and — without approach” regarding ordering of windfall tax benefits to determine whether the windfall tax benefit did reduce taxes payable in the current year. Under this approach, the windfall tax benefits would be recognized in additional paid-in capital only if an incremental tax benefit is realized after considering all other tax benefits presently available to the Company.

Effective January 1, 2007, the Company adopted the provisions of FASB Interpretation No. 48, “Accounting for Uncertainty in Income Taxes — an interpretation of FASB Statement No. 109” (“FIN 48”). FIN 48 prescribes a recognition threshold and a measurement attribute for the financial statement recognition and measurement of tax positions taken or expected to be taken in a tax return. For those benefits to be recognized, a tax position must be more likely than not to be sustained upon examination by taxing authorities. Differences between tax positions taken or expected to be taken in a tax return and the benefit recognized and measured pursuant to the interpretation are referred to as “unrecognized benefits.” A liability is recognized for an unrecognized tax benefit because it represents an enterprise’s potential future obligation to the taxing authority for a tax position that was not recognized as a result of applying the provisions of FIN 48.

The adoption of the provisions of FIN 48 did not have a material impact on the Company’s consolidated financial position and results of operations. As of December 31, 2008 and 2007, no liability for unrecognized tax benefits was required to be recorded.

In accordance with FIN 48, interest costs related to unrecognized tax benefits are required to be calculated (if applicable) and would be classified as “Net interest income” in the consolidated statements of operations. Penalties would be recognized as a component of “General and administrative” expenses. There is no interest expense or penalty related to tax uncertainties reported in the consolidated statements of operations.

F-10

TABLE OF CONTENTS

THESTREET.COM, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
December 31, 2008

(1) Organization, Nature of Business and Summary of Operations and Significant Accounting Policies – (continued)

The Company files income tax returns in the United States (federal) and in various state and local jurisdictions. In most instances, the Company is no longer subject to federal, state and local income tax examinations by tax authorities for years prior to 2005, and is not currently under examination by any federal, state or local jurisdiction. It is not anticipated that unrecognized tax benefits will significantly change in the next twelve months.

Fair Value of Financial Instruments

The carrying amounts of cash and cash equivalents, restricted cash, accounts and other receivables, accounts payable, accrued expenses and deferred revenue approximate fair value due to the short-term maturities of these instruments.

Business Concentrations and Credit Risk

Financial instruments that subject the Company to concentrations of credit risk consist primarily of cash, cash equivalents, debt securities available for sale, restricted cash and accounts receivable. The Company maintains all of its cash, cash equivalents, debt securities available for sale and restricted cash in six financial institutions and performs periodic evaluations of the relative credit standing of these institutions. The Company’s customers are primarily concentrated in the United States. The Company performs ongoing credit evaluations, generally does not require collateral, and establishes an allowance for doubtful accounts based upon factors surrounding the credit risk of customers, historical trends and other information. To date, actual losses have been within management’s expectations.

Net Income or Loss per Share of Common Stock

Basic net income per share is computed using the weighted average number of common shares outstanding during the period. Diluted net income per share is computed using the weighted average number of common shares and, if dilutive, potential common shares outstanding during the period. Potential common shares consist of restricted stock units (using the treasury stock method), the incremental common shares issuable upon the exercise of stock options (using the treasury stock method), and the conversion of the Company’s convertible preferred stock and warrants (using the if-converted method). For 2008, 2007 and 2006, approximately 2.6 million, 1.6 million, and 0.3 million options and warrants to purchase common stock, respectively, were excluded from the calculation, as the exercise prices were greater than the average market price of the common stock during the respective years. In addition, 3,856,942 shares associated with the convertible preferred stock were also excluded from the calculation of diluted net income per share in 2008 and 2007, as the results would have been antidilutive.

Advertising Costs

Advertising costs are expensed as incurred. For the years ended December 31, 2008, 2007 and 2006, advertising costs were $3,297,125, $1,981,320 and $1,254,360, respectively.

Stock-Based Compensation

As of October 1, 2005, the Company elected early adoption of Statement of Financial Accounting Standards No. 123(R), “Share Based Payment: An Amendment of FASB Statements 123 and 95.” This statement requires that the cost resulting from all share-based payment transactions be recognized in the financial statements based upon estimated fair values. SFAS No. 123(R) supersedes the Company’s previous accounting

F-11

TABLE OF CONTENTS

THESTREET.COM, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
December 31, 2008

(1) Organization, Nature of Business and Summary of Operations and Significant Accounting Policies – (continued)

under Accounting Principles Board No. 25, “Accounting for Stock Issued to Employees” (“APB 25”). In March 2005, the Securities and Exchange Commission issued Staff Accounting Bulletin No. 107 (“SAB 107”) relating to SFAS No. 123(R). The Company has applied the provisions of SAB 107 in its adoption of SFAS No. 123(R).

The Company adopted SFAS No. 123(R) using the modified prospective transition method. The accompanying consolidated statements of operations reflect the impact of SFAS No. 123(R). Stock-based compensation expense recognized under SFAS No. 123(R) for the years ended December 31, 2008, 2007 and 2006 were $3,537,085, $2,115,599 and $1,753,429, respectively. As of December 31, 2008, there was approximately $6.2 million of unrecognized stock-based compensation expense remaining to be recognized over a weighted-average period of 2.56 years.

SFAS No. 123(R) requires companies to estimate the fair value of share-based payment awards on the date of grant. The value of stock options granted to employees and directors is estimated using an option-pricing model. The value of each restricted stock unit under the 1998 Plan is equal to the closing price per share of the Company’s common stock on the trading day immediately prior to the date of grant. The value of each restricted stock unit under the 2007 Plan is equal to the closing price per share of the Company’s common stock on the date of grant. The value of the portion of the award that is ultimately expected to vest is recognized as expense over the requisite service periods. Prior to the adoption of SFAS No. 123(R), the Company accounted for stock-based awards to employees and directors using the intrinsic value method in accordance with APB 25 as allowed under Statement of Financial Accounting Standards No. 123, “Accounting for Stock-Based Compensation.” Under the intrinsic value method, no stock-based compensation expense had been recognized, as the exercise price of the Company’s stock options granted to employees and directors equaled the fair market value of the underlying stock at the date of grant.

Stock-based compensation expense recognized in the Company’s Consolidated Statements of Operations for the years ended December 31, 2008, 2007 and 2006 includes compensation expense for all share-based payment awards granted prior to, but not yet vested as of January 1, 2006, based upon the grant date fair value estimated in accordance with the pro forma provision of SFAS No. 123, and compensation expense for the share-based payment awards granted subsequent to January 1, 2006, based upon the grant date fair value estimated in accordance with the provisions of SFAS No. 123(R). The Company recognizes compensation expense for share-based payment awards on a straight-line basis over the requisite service period of the award. As stock-based compensation expense recognized in the years ended December 31, 2008, 2007 and 2006 is based upon awards ultimately expected to vest, it has been reduced for estimated forfeitures. SFAS No. 123(R) requires forfeitures to be estimated at the time of grant and revised, if necessary, in subsequent periods if actual forfeitures differ from those estimates.

Upon adoption of SFAS No. 123(R), the Company continued its practice of estimating the value of employee stock options on the date of grant using the Black-Scholes option-pricing model. This determination is affected by the Company’s stock price as well as assumptions regarding expected volatility, risk-free interest rate, and expected dividends. The weighted-average fair value of employee stock options granted during the years ended December 31, 2008, 2007 and 2006 was $3.27, $4.15 and $3.50, respectively, using the Black-Scholes model with the weighted-average assumptions presented below. Because option-pricing models require the use of subjective assumptions, changes in these assumptions can materially affect the fair value of the options. The assumptions presented below represent the weighted-average value of the applicable assumption used to value stock options at their grant date. In determining the volatility assumption, the Company used a historical analysis of the volatility of the Company’s share price for the preceding period equal to the expected option lives. The expected option lives, which represent the period of time that options granted are expected to be outstanding, were estimated based upon the “simplified” method for “plain-vanilla” options. The risk-free interest rate assumption is based upon observed interest rates appropriate for the term of the Company’s

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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
December 31, 2008

(1) Organization, Nature of Business and Summary of Operations and Significant Accounting Policies – (continued)

employee stock options. The dividend yield assumption is based on the history and expectation of future dividend payouts. The periodic expense is determined based on the valuation of the options, and at that time an estimated forfeiture rate is used to reduce the expense recorded. The Company’s estimate of pre-vesting forfeitures is primarily based on the Company’s historical experience and is adjusted to reflect actual forfeitures as the options vest.


	For the Years Ended December 31,
	2008			2007			2006
Expected option lives		3.5 years			3.5 years			3.5 years
Expected volatility		48.20	%		46.56	%		44.84	%
Risk-free interest rate		2.32	%		4.62	%		4.76	%
Expected dividends		0.96	%		0.94	%		1.08	%

On November 10, 2005, the Financial Accounting Standards Board (“FASB”) issued FASB Staff Position No. FAS 123(R)-3 “Transition Election Related to Accounting for Tax Effects of Share-Based Payment Awards.” The Company has elected to adopt the alternative transition method provided in the FASB Staff Position for calculating the tax effects of stock-based compensation pursuant to SFAS No. 123(R). The alternative transition method includes simplified methods to establish the beginning balance of the additional paid-in capital pool (“APIC pool”) related to the tax effects of employee stock-based compensation, and to determine the subsequent impact on the APIC pool and cash flows of the tax effects of employee stock-based compensation awards that are outstanding upon adoption of SFAS 123(R).

Executive Incentive Plan

In 2007, the Company adopted an executive incentive plan, whereby executive officers and other key employees are eligible to receive cash performance awards based on set performance criteria.

In March 2007, the Compensation Committee granted such cash performance awards, payable to certain executive officers upon the Company’s achievement of specified 2007 performance goals. The target short term and long term bonus opportunity for executive officers each range from 75% of salary for the CEO to 50% of salary for the other named executive officers.

The short-term incentive is based 50% on achievement of a revenue target and 50% on achievement of a net income target. Potential payout with respect to each measure ranges from 50% of the bonus opportunity for that measure for achievement of 80% of target performance to 200% of the bonus opportunity for achievement of 120% or more of target performance. As of December 31, 2007, no short-term incentive payments were earned.

The long-term incentive is based on a comparison of the Company’s Enterprise Multiple as compared to a peer group, on a sliding scale calculated within a range whose target is benchmarked at the Company’s performance against the peer group in 2006. If the Company’s 2007 performance is at 100% of the target performance, the executive will earn 100% of the target long-term incentive. If the Company’s 2007 performance is within the range of 50% to 150% of the target level, the portion of the long-term incentive award payable to the executive will be calculated on a sliding scale using a one-to one relationship. Performance below the 50% level will result in no long-term incentive compensation being paid, and performance above it will result in payment of 150% of the target long-term incentive. The amount of long-term incentive earned will be determined following the end of the 2007 plan year and converted into phantom shares of the Company whereby the value of the grant in shares will be recorded as a liability until paid. The value of the liability will be adjusted each reporting period to equal the market value of the underlying shares until vested. The account will be credited with dividend equivalents, which will be converted into additional phantom shares. On December 31, 2008 (provided the executive is still employed by the Company), one-third of the

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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
December 31, 2008

(1) Organization, Nature of Business and Summary of Operations and Significant Accounting Policies – (continued)

phantom shares will vest, and the value thereof will be distributed to the executive in cash within 60 days. On December 31, 2009 (provided the executive is still employed by the Company), one-half of the remaining phantom shares will vest, and the value thereof will be distributed to the executive in cash within 60 days. Finally, on December 31, 2010 (provided the executive is still employed by the Company), the remaining phantom shares will vest, and the value thereof will be distributed to the executive in cash within 60 days.

As of December 31, 2008, $180,950 in awards has been earned by key executives based upon the closing market value of the Company’s stock on that date. The Company has amortized one-third of this amount to compensation expense as of December 31, 2008 and will amortize the remaining two-thirds to compensation expense over the next two years.

Common Stock Purchase Warrants

The Company accounts for the issuance of common stock purchase warrants issued in connection with capital financing transactions in accordance with the provisions of Emerging Issues Task Force (“EITF”) Issue No. 00-19 “Accounting for Derivative Financial Instruments Indexed to, and Potentially Settled in, a Company’s Own Stock.” Based upon the provisions of EITF Issue No. 00-19, the Company classifies as equity any contracts that (i) require physical settlement or net-share settlement or (ii) gives the Company a choice of net-cash settlement or settlement in its own shares (physical settlement or net-share settlement). The Company classifies as assets or liabilities any contracts that (i) require net-cash settlement (including a requirement to net-cash settle the contract if an event occurs and if that event is outside the control of the Company) or (ii) gives the counterparty a choice of net-cash settlement or settlement in shares (physical settlement or net-share settlement).

The Company assessed the classification of its derivative financial instruments as of December 31, 2007, which consist of common stock purchase warrants, and determined that such derivatives meet the criteria for equity classification under EITF 00-19.

Convertible Instruments

The Company evaluates and accounts for conversion options embedded in its convertible instruments in accordance with SFAS No. 133 “Accounting for Derivative Instruments and Hedging Activities” (“SFAS 133”) and EITF 00-19 “Accounting for Derivative Financial Instruments Indexed to, and Potentially Settled in, a Company’s Own Stock” (“EITF 00-19”).

SFAS 133 generally provides three criteria that, if met, require companies to bifurcate conversion options from their host instruments and account for them as free standing derivative financial instruments in accordance with EITF 00-19. These three criteria include circumstances in which (a) the economic characteristics and risks of the embedded derivative instrument are not clearly and closely related to the economic characteristics and risks of the host contract, (b) the hybrid instrument that embodies both the embedded derivative instrument and the host contract is not remeasured at fair value under otherwise applicable generally accepted accounting principles with changes in fair value reported in earnings as they occur and (c) a separate instrument with the same terms as the embedded derivative instrument would be considered a derivative instrument subject to the requirements of SFAS133. SFAS 133 and EITF 00-19 also provide an exception to this rule when the host instrument is deemed to be conventional (as that term is described in the implementation guidance to SFAS 133 and further clarified in EITF 05-2 “The Meaning of “Conventional Convertible Debt Instrument” in Issue No. 00-19).

The Company accounts for convertible instruments (when it has determined that the embedded conversion options should not be bifurcated from their host instruments) in accordance with the provisions of EITF 98-5 “Accounting for Convertible Securities with Beneficial Conversion Features,” (“EITF 98-5”) and EITF 00-27 “Application of EITF 98-5 to Certain Convertible Instruments.” Accordingly, the Company

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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
December 31, 2008

(1) Organization, Nature of Business and Summary of Operations and Significant Accounting Policies – (continued)

records, when necessary, discounts to convertible notes for the intrinsic value of conversion options embedded in debt instruments based upon the differences between the fair value of the underlying common stock at the commitment date of the note transaction and the effective conversion price embedded in the note. Debt discounts under these arrangements are amortized over the term of the related debt to their earliest date of redemption. The Company also records when necessary deemed dividends for the intrinsic value of conversion options embedded in preferred shares based upon the differences between the fair value of the underlying common stock at the commitment date of the note transaction and the effective conversion price embedded in the note.

The Company evaluated the conversion option embedded in the Convertible Preferred Stock that it issued during the year ended December 31, 2007 and determined, in accordance with the provisions of these statements, that such conversion option does not meet the criteria requiring bifurcation of these instruments. The characteristics of the common stock that is issuable upon a holder’s exercise of the conversion option embedded in the Convertible Preferred Stock are deemed to be clearly related to the characteristics of the preferred shares (as that term is clarified in paragraph 61.1 of the implementation guidance included in Appendix A of SFAS 133). Additionally, the Company’s conversion options, if free standing, would not be considered derivatives subject to the accounting guidelines prescribed under SFAS 133.

Preferred Stock

The Company applies the guidance in SFAS No. 150 “Accounting for Certain Financial Instruments with Characteristics of both Liabilities and Equity” and EITF Topic D-98 “Classification and Measurement of Redeemable Securities,” when determining the classification and measurement of its convertible preferred shares. Preferred shares subject to mandatory redemption (if any) are classified as liability instruments and are measured at fair value in accordance with SFAS 150. All other issuances of preferred stock are subject to the classification and measurement principles of EITF Topic D-98. Accordingly the Company classifies conditionally redeemable preferred shares (if any), which includes preferred shares that feature redemption rights that are either within the control of the holder or subject to redemption upon the occurrence of uncertain events not solely within the Company’s control, as temporary equity. At all other times, the Company classifies its preferred shares as a component of stockholders’ equity.

The Company’s convertible preferred shares do not feature any redemption rights within the holders’ control or conditional redemption features not solely within the Company’s control as of December 31, 2008. Accordingly, the Series B Convertible Preferred shares are presented as a component of stockholders’ equity.

New Accounting Pronouncements

In March 2008, the Financial Accounting Standards Board (“FASB”) issued Statement of Financial Accounting Standards No. 161, “Disclosures about Derivative Instruments and Hedging Activities — an amendment of FASB Statement No. 133” (“SFAS No. 161”). SFAS No. 161 changes the disclosure requirements for derivative instruments and hedging activities. Entities are required to provide enhanced disclosures about (a) how and why an entity uses derivative instruments, (b) how derivative instruments and related hedged items are accounted for under SFAS No. 133 and its related interpretations, and (c) how derivative instruments and related hedged items affect an entity’s financial position, financial performance and cash flows. The guidance in SFAS No. 161 is effective for financial statements issued for fiscal years and interim periods beginning after November 15, 2008, with early application encouraged. This Statement encourages, but does not require, comparative disclosures for earlier periods at initial adoption. Management has concluded that the implementation of SFAS No. 161 will have no impact on the Company’s consolidated financial statements.

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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
December 31, 2008

(1) Organization, Nature of Business and Summary of Operations and Significant Accounting Policies – (continued)

In February, 2007, the FASB issued SFAS No. 159, “The Fair Value Option for Financial Assets and Financial Liabilities” (“SFAS No. 159”). SFAS No. 159 provides companies with an option to report selected financial assets and liabilities at fair value. SFAS No. 159's objective is to reduce both complexity in accounting for financial instruments and the volatility in earnings caused by measuring related assets and liabilities differently. SFAS No. 159 also establishes presentation and disclosure requirements designed to facilitate comparisons between companies that choose different measurement attributes for similar types of assets and liabilities. SFAS No. 159 requires companies to provide additional information that will help investors and other users of financial statements to more easily understand the effect of the company's choice to use fair value on its earnings. It also requires entities to display the fair value of those assets and liabilities for which the company has chosen to use fair value on the face of the balance sheet. SFAS No. 159 is effective as of the beginning of an entity's first fiscal year beginning after November 15, 2007. The implementation of SFAS No. 159 did not have a material effect on the Company’s consolidated financial statements.

In September 2006, the FASB issued SFAS No. 157, “Fair Value Measurements” (“SFAS No. 157”). This Statement defines fair value, establishes a framework for measuring fair value and expands disclosure of fair value measurements. SFAS No. 157 applies under other accounting pronouncements that require or permit fair value measurements and accordingly, does not require any new fair value measurements. SFAS No. 157 is effective for financial statements issued for fiscal years beginning after November 15, 2007. The implementation of SFAS No. 157 did not have a material effect on the Company’s consolidated financial statements.

In October 2008, The FASB issued FSP 157-3 “Determining Fair Value of a Financial Asset in a Market That is Not Active” (“FSP 157-3”). FSP 157-3 classified the application of SFAS No. 157 in an inactive market. It demonstrated how the fair value of a financial asset is determined when the market for that financial asset is inactive. FSP 157-3 was effective upon issuance, including prior periods for which financial statements had not been issued. The implementation of FSP 157-3 did not have a material effect on the Company’s consolidated financial statements.

In June 2008, the FASB ratified Emerging Issue Task Force (“EITF”) 07-5, “Determining Whether an Instrument (or an Embedded Feature) is Indexed to an Entity’s Own Stock” (“EITF 07-5”). EITF 07-5 provides framework for determining whether an instrument is indexed to an entity’s own stock. EITF 07-5 is effective for fiscal years beginning after December 15, 2008. The implementation of EITF 07-5 is not expected to have a material effect on the Company’s consolidated financial statements.

In December 2007, the Financial Accounting Standards Board (“FASB”) issued Statement of Financial Accounting Standards (“SFAS”) No. 141R, “Business Combinations” (“SFAS 141R”), which replaces SFAS No. 141, “Business Combinations.” SFAS 141R establishes principles and requirements for determining how an enterprise recognizes and measures the fair value of certain assets and liabilities acquired in a business combination, including noncontrolling interests, contingent consideration, and certain acquired contingencies. SFAS 141R also requires acquisition-related transaction expenses and restructuring costs be expensed as incurred rather than capitalized as a component of the business combination. SFAS 141R will be applicable prospectively to business combinations for which the acquisition date is on or after the beginning of the first annual reporting period beginning on or after December 15, 2008. SFAS 141R will have an impact on accounting for any businesses acquired after the effective date of this pronouncement.

In December 2007, the FASB issued SFAS No. 160, “Noncontrolling Interests in Consolidated Financial Statements — An Amendment of ARB No. 51” (“SFAS 160”). SFAS 160 establishes accounting and reporting standards for the noncontrolling interest in a subsidiary (previously referred to as minority interests). SFAS 160 also requires that a retained noncontrolling interest upon the deconsolidation of a subsidiary be initially measured at its fair value. Upon adoption of SFAS 160, the Company will be required to report any noncontrolling interests as a separate component of stockholders’ equity. The Company will also be required

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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
December 31, 2008

(1) Organization, Nature of Business and Summary of Operations and Significant Accounting Policies – (continued)

to present any net income allocable to noncontrolling interests and net income attributable to the stockholders of the Company separately in its consolidated statement of operations. SFAS 160 is effective for fiscal years, and interim periods within those fiscal years, beginning on or after December 15, 2008. SFAS 160 requires retroactive adoption of the presentation and disclosure requirements for existing minority interests. All other requirements of SFAS 160 shall be applied prospectively. SFAS 160 will have an impact on the presentation and disclosure of the noncontrolling interests of any non wholly-owned businesses acquired in the future.

Reclassifications

Certain prior period amounts have been reclassified to conform to current year presentation.

(2) Discontinued Operations

For the years ended December 31, 2008, 2007 and 2006, there was no net revenue from discontinued operations. Net loss from discontinued operations was as follows:


	For the Years Ended December 31,
	2008			2007			2006
(Loss) income on disposal of discontinued operations	$	(8,012	)	$	(12,829	)	$	32,321
(Loss) income from discontinued operations	$	(8,012	)	$	(12,829	)	$	32,321

The fair market values of the liabilities of the discontinued operation as of December 31, 2008 and 2007 are as follows:


	December 31,
	2008		2007
Current liabilities	$	225,925	$	232,242

As of December 31, 2008, current liabilities of discontinued operations consists of accrued shutdown costs.

The following table displays the activity and balances of the provisions related to discontinued operations:


	Initial Charge		Year 2005 Activity			Year 2006 Activity			Year 2007 Activity		Balance 12/31/2007		Year 2008 Activity			Balance 12/31/2008
Net asset write-off	$	666,546	$	(666,546	)	$	—		$	—	$	—	$	—		$	—
Severance payments		1,134,323		(905,566	)		(6,332	)		—		222,425		—			222,425
Extinguishment of lease and other obligations		582,483		(531,310	)		(51,173	)		9,817		9,817		(6,317	)		3,500
	$	2,383,352	$	(2,103,422	)	$	(57,505	)	$	9,817	$	232,242	$	(6,317	)	$	225,925

(3) Acquisitions

Weiss Ratings, Inc.

On August 7, 2006, the Company, through its newly formed, wholly-owned subsidiary, TheStreet.com Ratings, Inc., acquired substantially all of the assets and certain liabilities of Weiss Ratings, Inc. (“Ratings”), a wholly owned subsidiary of Weiss Group, Inc. that provides independent ratings and evaluations of mutual funds, exchange-traded funds, stocks and financial institutions, including insurers, healthcare providers, banks

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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
December 31, 2008

(3) Acquisitions – (continued)

and savings and loans. The Company paid cash consideration of $3.2 million, equal to the total purchase price of $4.7 million less the value of assumed deferred revenue liabilities totaling approximately $1.5 million. The acquired deferred revenue was subsequently reduced by approximately $125,000 with the offset being a reduction to goodwill.

The acquisition provides the Company with a rich new data set that will provide valuable information to our growing audience across our network of Web sites and subscription services, and provide new advertising and sponsorship opportunities for our advertisers. Ratings has proprietary quantitative models that have built an excellent reputation over the years. These models, and the data they produce on a daily basis, in collaboration with the Company’s distribution capabilities, provide significant growth opportunities for the Company. These factors contributed to a purchase price in excess of the fair value of net tangible and intangible assets acquired from Ratings, and as a result, the Company recorded goodwill in connection with this transaction.

The results of operations have been included in the accompanying consolidated financial statements from the date of acquisition. Based on the Company’s evaluation, the allocation of the purchase price for the acquisition was as follows:


Assets acquired:
Property and equipment	$	348,411
Intangible assets (amortizable over 3 – 5 years)		1,902,000
Goodwill		2,394,691
Total assets acquired		4,645,102
Liabilities assumed:
Deferred revenue		1,328,436
Total liabilities assumed		1,328,436
Total consideration (including legal fees of approximately $150,000)	$	3,316,666

In accordance with the requirements of Statement of Financial Accounting Standards No. 141 (“SFAS No. 141”), “Business Combinations,” the Company recognized certain intangible assets acquired, primarily a syndication agreement, software models and a covenant not to compete. In accordance with the provisions of SFAS No. 142, “Goodwill and Other Intangible Assets,” the syndication agreement of $870,000, software models of $562,000 and covenant not to compete of $470,000 will be amortized over their estimated useful lives ranging from three to five years. The goodwill recorded as a result of the acquisition is deductible for Federal, New York State and New York City income tax purposes over a period of 15 years. The estimated amortization expense of amortizable intangible assets for the next five years is as follows:


For the Years Ended December 31,	Amount
2009	$	375,567
2010		206,400
2011		120,400
2012		—
2013		—
Total	$	702,367

Stockpickr.com

On January 3, 2007, the Company formed a joint venture with A.R. Partners, a New York-based media holding company, to operate a Web site called Stockpickr — “The Stock Idea Network.” Stockpickr, located

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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
December 31, 2008

(3) Acquisitions – (continued)

at www.stockpickr.com, allows its members to compare their portfolios to others in the network, scan portfolios for investment ideas and open a dialogue with like-minded investors in a secure environment. A.R. Partners owned 50.1% and TheStreet.com 49.9% of the venture. On April 25, 2007, the Company announced the acquisition of the remaining 50.1% stake in Stockpickr.com that it did not already own. The Company paid consideration of $1.5 million in cash and issued 329,567 unregistered shares of the Company’s common stock, having a value on the closing date of approximately $3.5 million.

The acquisition provides the Company with several competitive advantages, including: a Web site that provides a Web 2.0 community to TheStreet.com network, engaging active investors in an ongoing dialog about the over 800 professional portfolios and thousands of individual investor portfolios on the site; a Web site that serves as an ongoing source of innovative audience engagement technologies and tools; and insight into advertiser demand for community generated content and user demand for ever evolving Web 2.0 tools and features. These factors contributed to a purchase price in excess of the fair value of net tangible and intangible assets acquired from Stockpickr, and as a result, the Company recorded goodwill in connection with this transaction.


Assets acquired:
Accounts receivable	$	22,780
Intangible assets (amortizable over 5 years)		500,000
Goodwill		4,567,116
Total assets acquired		5,089,896
Liabilities assumed:
Accounts payable		11,581
Total liabilities assumed		11,581
Total consideration (including legal fees of approximately $78,300)	$	5,078,315

In accordance with the requirements of Statement of Financial Accounting Standards No. 141 (“SFAS No. 141”), “Business Combinations,” the Company recorded the estimated value of $500,000 related to the software models acquired within intangible assets. In accordance with the provisions of SFAS No. 142, “Goodwill and Other Intangible Assets,” the intangible asset will be amortized over its estimated useful life of five years. The goodwill recorded as a result of the acquisition is deductible for Federal, New York State and New York City income tax purposes over a period of 15 years. The estimated amortization expense of amortizable intangible assets for the next five years is as follows:


For the Years Ended December 31,	Amount
2009	$	100,000
2010		100,000
2011		100,000
2012		33,333
2013		—
Total	$	333,333

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THESTREET.COM, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
December 31, 2008

(3) Acquisitions – (continued)

Corsis Technology Group II LLC (Renamed Promotions.com LLC)

On August 2, 2007, the Company acquired, through a newly created subsidiary, 100% of the membership interests of Corsis Technology Group II LLC, a leading provider of custom solutions for advertisers, marketers and content publishers. The acquisition of Corsis also included the Promotions.com business, which is a full-service online promotions agency that implements interactive promotions campaigns for some of the largest brands in the world. The purchase price of the acquisition was approximately $20.7 million, consisting of approximately $12.5 million in cash and the issuance of 694,230 shares of unregistered common stock of TheStreet.com, having a value on the closing date of approximately $8.2 million.

The acquisition provides the Company with several competitive advantages, including: the expertise to deliver the integrated interactive marketing and promotional campaigns that its advertisers are increasingly demanding; providing the Company with the promotional capabilities to engage its audience across the Company’s network of sites to increase page views and time spent on the sites through the use of the promotions engines developed by the acquired company; and a technology platform that will support the Company’s growing network of sites, providing greater scale and cost efficiencies than the Company could have achieved on its own. These factors contributed to a purchase price in excess of the fair value of net tangible and intangible assets acquired from Corsis and as a result, the Company recorded goodwill in connection with this transaction.


Assets acquired:
Cash	$	3,257
Accounts receivable		2,432,137
Other receivables		715,222
Prepaid expenses		77,000
Property and equipment		440,812
Other assets		146,579
Goodwill		14,339,718
Other intangibles		5,000,000
Restricted cash		76,951
Total assets acquired		23,231,676
Liabilities assumed:
Accounts payable		545,611
Accrued expenses		207,000
Deferred revenue		1,337,885
Other current liabilities		392,175
Total liabilities assumed		2,482,671
Total consideration (including legal fees of approximately $162,600)	$	20,749,005

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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
December 31, 2008

(3) Acquisitions – (continued)

over their estimated useful lives of nine years (customer relationships), five years (noncompete agreement) and three years (software). The Promotions.com trade name was deemed to have an indefinite life. The goodwill recorded as a result of the acquisition is deductible for Federal, New York State and New York City income tax purposes over a period of 15 years.

Since the acquisition, the Company has experienced a decline in anticipated revenues associated with its Promotions.com subsidiary. Accordingly, the Company reduced its future revenue expectations and estimated future cash flows for that business. Using an income approach based upon the estimated present value of future cash flows, the Company determined that the carrying value of the client relationships and noncompete agreements exceeded its fair value at December 31, 2008 and recorded an impairment charge of $1,832,148. The estimated amortization expense of amortizable intangible assets for the next five years is as follows:


For the Years Ended December 31,	Amount
2009	$	446,893
2010		355,226
2011		226,893
2012		198,288
2013		158,242
Thereafter		708,791
Total	$	2,094,333

Bankers Financial Products Corporation

On November 2, 2007, the Company acquired, through a newly created subsidiary, 100% of the common stock of Bankers Financial Products Corporation (“Bankers”), Bankers, using its trade name RateWatch, offers pricing information (such as certificates of deposit. IRAs, money market accounts, savings accounts, checking accounts, home mortgages, home equity loans, credit cards, and auto loans) to more than 5,500 financial institutions (including banks, credit unions, Internet banks and mortgage companies). The information is obtained from more than 70,000 financial institutions through surveys, phone calls, data feeds, and online Internet searches. The acquisition also includes bankingMyway.com (“BMW”), a wholly-owned subsidiary of Bankers. BMW is an online search engine that leverages the data set of RateWatch, allowing customers to perform searches of the rate information by zip code, city or state. BMW derives its revenue from advertising contracts with its financial institution clients and other advertisers. The purchase price of the acquisition was approximately $25.4 million, consisting of approximately $16.9 million in cash (net of $3.9 million in debt repayment) and 636,081 shares of unregistered common stock of TheStreet.com, having a value on the payment date of approximately $8.0 million. 79,510 of the common shares were issued to the sellers and 556,571 common shares were placed in escrow pursuant to the terms of an escrow agreement. 159,020 of the escrowed shares will be used to secure indemnity obligations until the earlier of two years from the closing date or the date of the last distribution from the escrow fund. The remaining 397,551 shares placed in escrow represent deferred stock to be released to the sellers under terms of the escrow agreement on each of the first, second and third anniversaries of the acquisition. In addition, the principal stockholder of Bankers received an option to purchase up to 175,600 shares of common stock priced at $12.577, vesting ratably over three years, and valued at $0.5 million.

The acquisition provides the Company with several competitive advantages, including: a rich data set of rate information from 70,000 financial institutions through the Rate Watch business that serves as the foundation for BMW; the BMW domain name and Web site, which as a part of the expanding TheStreet.com network of Web sites, presents a significant opportunity to expand our audience and advertisers; and new advertising models, including higher CPM and new hyperlink models to contribute to continued growth in the advertising side of our business and expanding margins. These factors contributed to a purchase price in

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THESTREET.COM, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
December 31, 2008

(3) Acquisitions – (continued)

excess of the fair value of net tangible and intangible assets acquired from Bankers, and as a result, the Company recorded goodwill in connection with this transaction.


Cash and cash equivalents	$	90,057
Accounts receivable		93,538
Prepaid expenses and other current assets		48,104
Property and equipment		835,534
Deferred taxes		4,335,000
Goodwill		16,732,239
Other intangibles		12,137,000
Total assets acquired		34,271,472
Accounts payable		37,201
Accrued expenses		280,664
Deferred revenue		3,603,871
Current portion of note payable		39,953
Other current liabilities		94,008
Deferred taxes		4,335,000
Note payable		71,946
Other liabilities		20,718
Total liabilities acquired		8,483,361
Total consideration (including legal fees of approximately $358,100)	$	25,788,111

In accordance with the requirements of Statement of Financial Accounting Standards No. 141 (“SFAS No. 141”), “Business Combinations,” the Company recorded the estimated value of $8,460,000 related to the customer relationships, $2,000,000 related to a noncompete agreement, $720,000 related to the trade name, $470,000 related to software and $137,000 related to the client data base within intangible assets. In accordance with the provisions of SFAS No. 142, “Goodwill and Other Intangible Assets,” the intangible assets will be amortized over their estimated useful lives of ten years (customer relationships) and five years (noncompete agreement, software and client data base). The trade name was deemed to have an indefinite life. The estimated amortization expense of amortizable intangible assets for the next five years is as follows:


For the Years Ended December 31,	Amount
2009	$	1,402,400
2010		1,402,400
2011		1,402,400
2012		1,315,500
2013		881,000
Thereafter		4,097,167
Total	$	10,500,867

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THESTREET.COM, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
December 31, 2008

(3) Acquisitions – (continued)

Proforma Information for all Acquisitions

Unaudited pro forma consolidated financial information is presented below as if all of the acquisitions had occurred as of the first day of the earliest period presented. The results have been adjusted to account for the amortization of acquired intangible assets. The pro forma information presented below does not purport to present what actual results would have been if the acquisitions had occurred at the beginning of such periods, nor does the information project results for any future period. The unaudited pro forma consolidated financial information should be read in conjunction with the historical financial information of the Company included in this report, as well as the historical financial information included in other reports and documents filed with the Securities and Exchange Commission. The unaudited pro forma consolidated financial information for the years ended December 31, 2007 and 2006 is as follows:


	For the Years Ended December 31,
	2007		2006
Total net revenue	$	77,178,492	$	70,517,706
Net income	$	25,901,386	$	10,373,196
Basic net income per share	$	0.90	$	0.37
Diluted net income per share	$	0.89	$	0.36
Weighted average basic shares outstanding		28,830,366		28,344,358
Weighted average diluted shares outstanding		29,387,727		28,876,448

(4) Net Income (Loss) per Share

Basic net income per share is computed using the weighted average number of common shares outstanding during the period. Diluted net income per share is computed using the weighted average number of common shares and, if dilutive, potential common shares outstanding during the period. Potential common shares consist of restricted stock units (using the treasury stock method), the incremental common shares issuable upon the exercise of stock options (using the treasury stock method), and the conversion of the Company’s convertible preferred stock and warrants (using the if-converted method). For the years ended December 31, 2008, 2007 and 2006, approximately 2.6 million, 1.6 million and 0.3 million options and warrants to purchase common stock, respectively, were excluded from the calculation, as the exercise prices were greater than the average market price of the common stock during the respective periods.

The following table reconciles the numerator and denominator for the calculation.


	For the Years Ended December 31,
	2008			2007			2006
Basic net income per share
Numerator:
Income from continuing operations	$	1,343,211		$	31,063,739		$	12,836,126
(Loss) income on disposal of discontinued operations		(8,012	)		(12,829	)		32,321
Preferred stock deemed dividends		—			(1,802,733	)		—
Preferred stock cash dividends		(385,696	)		(96,424	)		—
Numerator for basic earnings per share – Net income available to common stockholders	$	949,503		$	29,151,753		$	12,868,447
Denominator:
Weighted average basic shares outstanding		30,427,421			28,830,366			27,014,047

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THESTREET.COM, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
December 31, 2008

(4) Net Income (Loss) per Share – (continued)


	For the Years Ended December 31,
	2008			2007			2006
Net income (loss) per basic share:
Continuing operations	$	0.04		$	1.08		$	0.48
Disposal of discontinued operations		(0.00	)		(0.00	)		0.00
Preferred stock deemed dividends		—			(0.07	)		—
Preferred stock cash dividends		(0.01	)		(0.00	)		—
Net income attributable to common stockholders	$	0.03		$	1.01		$	0.48
Dilutive net income per share
Numerator:
Income from continuing operations	$	1,343,211		$	31,063,739		$	12,836,126
(Loss) income on disposal of discontinued operations		(8,012	)		(12,829	)		32,321
Preferred stock deemed dividends		—			(1,802,733	)		—
Preferred stock cash dividends		(385,696	)		(96,424	)		—
Numerator for basic earnings per share – Net income available to common stockholders	$	949,503		$	29,151,753		$	12,868,447
Denominator:
Weighted average basic shares outstanding		30,427,421			28,830,366			27,014,047
Weighted average effect of dilutive securities:
Employee stock options and restricted stock units		407,710			557,361			532,090
Weighted average diluted shares outstanding		30,835,131			29,387,727			27,546,137
Net income (loss) per basic share-diluted:
Continuing operations	$	0.04		$	1.06		$	0.47
Disposal of discontinued operations		(0.00	)		(0.00	)		0.00
Preferred stock deemed dividend		—			(0.07	)		—
Preferred stock cash dividend		(0.01	)		(0.00	)		—
Net income attributable to common stockholders	$	0.03		$	0.99		$	0.47

(5) Debt Securities Available for Sale

The Company holds investments in two municipal auction rate securities (“ARS”) issued by the District of Columbia with a par value of $1.9 million. These securities pay interest in accordance with their terms at each respective auction date, typically every 35 days, and mature in the year 2038. The Company accounts for these securities in accordance with the provisions of SFAS 115, Accounting for Certain Investments in Debt and Equity Securities. The Company classifies these securities as available for sale and are reported at fair value. Unrealized gains and losses are recorded as a component of comprehensive income and excluded from net income.

(6) Fair Value Measurements

Effective January 1, 2008, the Company adopted SFAS No. 157, “Fair Value Measurements” (“SFAS 157”) which refines the definition of fair value, provides a framework for measuring fair value and expands disclosures about fair value measurements. SFAS 157 defines fair value as the price that would be received to sell an asset or paid to transfer a liability (an exit price) in an orderly transaction between market participants at the reporting date. The statement establishes consistency and comparability by providing a fair value hierarchy that prioritizes the inputs to valuation techniques into three broad levels, which are described below:

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THESTREET.COM, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
December 31, 2008

(6) Fair Value Measurements – (continued)

•

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

•

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

•

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

Financial assets and liabilities included in our financial statements and measured at fair value as of December 31, 2008 are classified based on the valuation technique level in the table below:


	Total		Level 1		Level 2		Level 3
Description:
Cash equivalents⁽¹⁾	$	72,032,486	$	72,032,486	$	—	$	—
Debt securities available for sale⁽²⁾		1,658,178		—		—		1,658,178
Total at fair value	$	73,690,664	$	72,032,486	$	—	$	1,658,178

(1)

Cash and cash equivalents, totaling $72,441,294, include $408,808 of cash in checking accounts. The balance totaling $72,032,486 consists primarily of money market funds invested in U.S. Treasury backed securities for which we determine fair value through quoted market prices.

(2)

Debt securities available for sale consists of two municipal auction rate securities (“ARS”) issued by the District of Columbia. Typically the fair value of ARS investments approximates par value due to the frequent resets through the auction process. Due to recent events in credit markets, the auction events, which historically have provided liquidity for these securities, have been unsuccessful. The result of a failed auction is that these ARS holdings will continue to pay interest in accordance with their terms at each respective auction date; however, liquidity of the securities will be limited until there is a successful auction, the issuer redeems the securities, the securities mature or until such time as other markets for these ARS holdings develop. For each of our ARS, we evaluate the risks related to the structure, collateral and liquidity of the investment, and forecast the probability of issuer default, auction failure and a successful auction at part, or a redemption at par, for each future auction period. Temporary impairment charges are recorded in accumulated other comprehensive income where as other-than-temporary impairment charges are recorded in our statement of operations. The Company used a discounted cash flow model to determine the estimated fair value of its investment in ARS as of December 31, 2008. The assumptions used in preparing the discounted cash flow model include estimates for interest rate, timing and amount of cash flows and expected holding period of ARS. Based upon this assessment of fair value, the Company determined there was a decline in the fair value of its ARS investments of $290,000 which was deemed temporary and is included within accumulated other comprehensive income for the year ended December 31, 2008.

The following table provides a reconciliation of the beginning and ending balance for the Company’s debt securities available for sale measured at fair value using significant unobservable inputs (Level 3):


	Debt Securities Available for Sale
Balance at January 1, 2008	$	—
Transfers in to Level 3		1,948,178
Total losses included in comprehensive other income		(290,000	)
Balance at December 31, 2008	$	1,658,178

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THESTREET.COM, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
December 31, 2008

(7) Property and Equipment

Property and equipment as of December 31, 2008 and 2007 consists of the following:


	December 31,
	2008		2007
Computer equipment	$	16,643,874	$	19,844,869
Furniture and fixtures		1,522,888		2,218,862
Leasehold improvements		3,131,586		3,161,038
		21,298,348		25,224,769
Less accumulated depreciation and amortization		11,250,569		17,493,847
Property and equipment, net	$	10,047,779	$	7,730,922

Included in computer equipment are capitalized software and Web site development costs of $5,947,990 and $4,351,635 at December 31, 2008 and 2007, respectively. A summary of the activity of capitalized software and Web site development costs is as follows:


Balance December 31, 2007	$	4,351,635
Additions		2,664,876
Deletions		(1,068,521	)
Balance December 31, 2008	$	5,947,990

During the fourth quarter of 2008, the Company wrote off the cost and accumulated depreciation related to assets no longer in service. A summary of this activity is as follows:


Computer equipment	$	8,664,897
Furniture and fixtures		731,812
Leasehold improvements		73,935
		9,470,644
Less accumulated depreciation and amortization		9,453,527
Net loss	$	17,117

Depreciation and amortization expense for the above noted property and equipment aggregated $3,247,678, $1,542,804 and $1,005,158 for the years ended December 31, 2008, 2007 and 2006, respectively. The Company does not include depreciation and amortization expense in cost of services.

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THESTREET.COM, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
December 31, 2008

(8) Goodwill and Other Intangible Assets

The Company’s goodwill and other intangible assets and related accumulated amortization as of December 31, 2008 and 2007 consists of the following:


	December 31,
	2008			2007
Total goodwill not subject to amortization	$	40,024,076		$	40,245,413
Other intangible assets not subject to amortization:
Trade name	$	1,020,000		$	1,513,333
Total other intangible assets not subject to amortization		1,020,000			1,513,333
Other intangible assets subject to amortization:
Customer relationships		10,234,176			12,750,000
Technology		—			730,000
Syndication agreement		870,000			870,000
Software models		2,192,000			2,192,000
Noncompete agreements		2,813,256			3,470,000
Products database		137,000			137,000
Total other intangible assets subject to amortization		16,246,432			20,149,000
Less accumulated amortization		(3,635,532	)		(3,293,541	)
Net other intangible assets subject to amortization		12,610,900			16,855,459
Total other intangible assets	$	13,630,900		$	18,368,792

Amortization expense totaled $2,762,411, $1,106,707 and $206,833 for the years ended December 31, 2008, 2007 and 2006, respectively. The estimated amortization expense for the next five years is as follows:


For the Years Ended December 31,	Amount
2009	$	2,324,860
2010		2,064,026
2011		1,849,693
2012		1,547,122
2013		1,039,242
Thereafter		4,805,957
Total	$	13,630,900

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THESTREET.COM, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
December 31, 2008

(9) Accrued Expenses

Accrued expenses as of December 31, 2008 and 2007 consists of the following:


	December 31,
	2008		2007
Other liabilities	$	842,101	$	940,170
Professional fees		478,857		830,831
Payroll and related costs		467,078		821,529
Third party content and data costs		232,272		197,319
Advertising fees		230,742		242,242
Business development costs		164,338		270,378
Consulting fees		132,431		39,232
Bonuses		80,317		1,001,885
Tax related costs		63,645		331,198
Insurance		45,328		222,207
Statistical services fees		47,793		109,644
Total accrued expenses	$	2,784,902	$	5,006,635

(10) Income Taxes

Deferred income taxes reflect the net effects of temporary differences between the carrying amounts of assets and liabilities for financial reporting purposes and the amounts used for income tax purposes.

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THESTREET.COM, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
December 31, 2008

(10) Income Taxes – (continued)

The principal reasons for the variation between income taxes at the statutory federal rate and that shown in the statement of operations for the years ended December 31, 2008, 2007 and 2006 were as follows:


	For the Years Ended December 31,
	2008			2007			2006
Statutory federal income tax rate		34.0	%		34.0	%		34.0	%
State income taxes, net of federal tax benefit		9.7	%		6.0	%		6.0	%
Effect of permanent differences		3.4	%		1.5	%		1.2	%
Change to valuation allowance		(46.1%)			(144.3%)			(39.2%)
Other		(0.9%)			0.7	%		—
Net tax rate		0.1	%		(102.1%)			2.0	%

Temporary differences between the financial statement and tax basis of assets and liabilities may give rise to deferred tax assets and deferred tax liabilities. The composition of deferred taxes is approximately as follows:


	For the Years Ended December 31,
	2008			2007
Deferred tax assets:
Operating loss carryforward	$	49,790,000		$	51,377,000
Windfall tax benefit carryforward		(8,186,000	)		(7,616,000	)
Capital loss carryforward		1,422,000			1,422,000
Depreciation and amortization		62,000			192,000
Alternative minimum tax		217,000			—
Accrued expenses		2,330,000			1,325,000
Total deferred tax assets		45,635,000			46,700,000
Deferred tax liabilities:
Purchased intangible assets		(3,912,000	)		(4,336,000	)
Total deferred tax liabilities		(3,912,000	)		(4,336,000	)
Less: valuation allowance		(25,606,000	)		(26,364,000	)
Net deferred tax assets	$	16,117,000		$	16,000,000

(11) Equity Investments

Preferred Stock

Securities Purchase Agreement

On November 15, 2007, the Company entered into a Securities Purchase Agreement (the “Purchase Agreement”) with TCV VI, L.P., a Delaware limited partnership, and TCV Member Fund, L.P., a Delaware limited partnership. TCV VI, L.P. and TCV Member Fund, L.P. are referred to as the “Purchasers.”

Pursuant to the Purchase Agreement the Company sold the Purchasers an aggregate of 5,500 shares of its newly-created Series B preferred stock, par value $0.01 per share (“Series B Preferred Stock”), that are immediately convertible into an aggregate of 3,856,942 shares of its common stock, par value $0.01 per share (“Common Stock”) at a conversion price of $14.26 per share, and warrants (the “Warrants”) to purchase an aggregate of 1,157,083 shares of Common Stock for $15.69 per share. The consideration paid for the Series B Preferred Stock and the Warrants was $55 million.

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THESTREET.COM, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
December 31, 2008

(11) Equity Investments – (continued)

The issuance of the Series B Preferred Stock and Warrants to the Purchasers was completed through a private placement to accredited investors and is exempt from registration pursuant to Section 4(2) of the Securities Act of 1933, as amended (the “Securities Act”). The shares of the Series B Preferred Stock, the shares of the Common Stock issuable upon the conversion of the Series B Preferred Stock, the Warrants and the shares of the Common Stock issuable upon the exercise of the Warrants have not been registered under the Securities Act or any state securities laws. Unless so registered, such securities may not be offered or sold in the United States absent an exemption from, or in a transaction not subject to, the registration requirement of the Securities Act and any applicable state securities laws.

Investor Rights Agreement

On November 15, 2007, the Company also entered into an Investor Rights Agreement with the Purchasers (the “Investor Rights Agreement”) pursuant to which, among other things, the Company has agreed to grant the Purchasers certain registration rights including the right to require the Company to file a registration statement within 30 days to register the Common Stock issuable upon conversion of the Series B Preferred Stock and upon exercise of the Warrants and to use its reasonable best efforts to cause the registration to be declared effective within 90 days after the date the registration is filed.

Certificate of Designation

On November 15, 2007, the Company also filed a Certificate of Designation for the Series B Preferred Stock (the “Certificate of Designation”) with the Secretary of State of the State of Delaware. The Certificate of Designation authorizes the Company to issue 5,500 of its 10,000,000 authorized shares of preferred stock as shares of Series B Preferred Stock.

The Series B Preferred Stock has a purchase price per share equal to $10,000 (the “Original Issue Price”). In the event of any Liquidation Event (as defined in the Certificate of Designation), the holders of shares of Series B Preferred Stock are entitled to receive, prior to any distribution to the holders of the Common Stock, an amount per share equal to the Original Issue Price, plus any declared and unpaid dividends.

The holders of the Series B Preferred Stock have the right to vote on any matter submitted to a vote of the stockholders of the Company and are entitled to vote that number of votes equal to the aggregate number of shares of Common Stock issuable upon the conversion of such holders’ shares of Series B Preferred Stock. For so long as 40% of the shares of Series B Preferred Stock remain outstanding, the holders of a majority of such shares will have the right to elect one person to the Company’s board of directors.

The Series B Preferred Stock automatically converts into an aggregate of 3,856,942 shares of Common Stock in the event that the Common Stock trades on a trading market at or above a closing price equal to $28.52 per share for 90 consecutive trading days and any demand registration previously requested by the holders of the Series B Preferred Stock has become effective.

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THESTREET.COM, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
December 31, 2008

(11) Equity Investments – (continued)

such dividends we have unrestricted cash (net of all indebtedness for borrowed money, purchase money obligations, promissory notes or bonds) in an amount equal to at least two times the product obtained by multiplying the number of shares of Series B Preferred Stock outstanding at the time such dividend is paid by the liquidation preference; and (v) the purchase or redemption of: (A) any Common Stock (except for the purchase or redemption from employee, directors and consultants pursuant to agreements providing us with repurchase rights upon termination of their service with us) unless after such purchase or redemption we have unrestricted cash (net of all indebtedness for borrowed money, purchase money obligations, promissory notes or bonds) equal to at least two times the product obtained by multiplying the number of shares of Series B Preferred Stock outstanding at the time such dividend is paid by the liquidation preference; or (B) any class or series of now or hereafter of our authorized stock that ranks junior to (upon a liquidation event) the Series B Preferred Stock.

Warrants

As discussed above, the Warrants entitle the Purchasers to purchase an aggregate of 1,157,083 shares of Common Stock for $15.69 per share. The Warrants expire on the fifth anniversary of the date they were first issued, or earlier in certain circumstances.

Treasury Stock

In December 2000 the Company’s Board of Directors authorized the repurchase of up to $10 million worth of the Company’s common stock, from time to time, in private purchases or in the open market. In February 2004, the Company’s Board of Directors approved the resumption of the stock repurchase program under new price and volume parameters, leaving unchanged the maximum amount available for repurchase under the program. During the years ended December 31, 2008 and 2007, the Company did not purchase any shares of common stock under the program. Since inception of the program, the Company has purchased a total of 5,453,416 shares of common stock at an aggregate cost of $7,321,122. In addition, pursuant to the terms of the Company’s 1998 Stock Incentive Plan, as amended (the “Plan”) and certain additional stock option exercise procedures adopted by the Compensation Committee of the Board of Directors, in connection with the exercise of stock options by certain of the Company’s executive officers in November 2005 and February 2006, and the issuance of restricted stock units in January 2008 to Company employees, the Company withheld 231,602, 66,982 and 27,597 shares, respectively, issuable upon the exercise of stock options, in lieu of payment of the exercise price and the minimum amount of applicable withholding taxes then due. These shares have been recorded as treasury stock. In December 2008, the Company received 104,055 shares as partial settlement of the working capital and debt adjustment from the acquisition of Corsis Technology Group II LLC. These shares have been recorded as treasury stock.

Stock Options

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THESTREET.COM, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
December 31, 2008

(11) Equity Investments – (continued)

generally vest over a three-year period and have terms of five years. As of December 31, 2008, there remained 1,352,967 shares available for future awards under the 2007 Plan.

A stock option represents the right, once the option has vested and become exercisable, to purchase a share of the Company’s common stock at a particular exercise price set at the time of the grant. An RSU represents the right to receive one share of the Company’s common stock on the applicable vesting date for such RSU. Until the stock certificate for a share of common stock represented by an RSU is delivered, the holder of an RSU does not have any of the rights of a stockholder with respect to the common stock. However, the grant of an RSU includes the grant of dividend equivalents with respect to such RSU. The Company records cash dividends for RSUs to be paid in the future at an amount equal to the rate paid on a share of common stock for each then-outstanding RSU granted. The accumulated dividend equivalents vest on the applicable vesting date for the RSU with respect to which such dividend equivalents were credited, and are paid in cash at the time a stock certificate evidencing the shares represented by such vested RSU is delivered.

A summary of the activity of the 1998 and 2007 Stock Incentive Plans is as follows:


	Shares Underlying Awards			Weighted Average Exercise Price		Aggregate Intrinsic Value ($000)		Weighted Average Remaining Contractual Life (In Years)
Awards outstanding, December 31, 2007		1,926,354		$	6.45
Options granted		657,106		$	9.56
Restricted stock units granted		458,371		$	0.00
Options exercised		(138,368	)	$	4.26
Restricted stock units issued		(118,041	)	$	0.00
Options cancelled		(145,536	)	$	9.88
Restricted stock units cancelled		(22,104	)	$	0.00
Awards outstanding, December 31, 2008		2,617,782		$	6.37	$	1,689		2.66
Awards vested and expected to vest at December 31, 2008		2,471,935		$	6.28	$	1,608		1.81
Options exercisable at December 31, 2008		1,007,796		$	6.22	$	0		1.26
Restricted stock units exercisable at December 31, 2008		0		$	0.00	$	0		3.04

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THESTREET.COM, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
December 31, 2008

(11) Equity Investments – (continued)

The following table summarizes information about options outstanding at December 31, 2008:


Range of Exercise Price	Options Outstanding		Options Outstanding Weighted Average Remaining Contractual Life		Options Outstanding Weighted Average Exercise Price		Options Exercisable		Weighted Average Exercise Price of Options Exercisable
$3.34 – $7.15		781,670		1.1	$	4.12		671,670	$	4.08
$7.56 – $11.94		907,940		3.5	$	10.06		214,995	$	9.30
$11.99 – $13.19		345,900		3.3	$	12.50		121,131	$	12.63
Total		2,035,510		2.6	$	8.19		1,007,796	$	6.22

A summary of the status of the Company’s unvested share-based payment awards as of December 31, 2008 and changes in the year then ended is as follows:


Unvested Awards	Awards			Weighted Average Grant Date Fair Value
Shares underlying awards unvested at January 1, 2008		1,203,127		$	4.66
Shares underlying options granted		657,106		$	3.27
Shares underlying restricted stock units granted		458,371		$	9.81
Shares underlying options vested		(464,133	)	$	3.15
Shares underlying restricted stock units issued		(118,041	)	$	8.73
Shares underlying unvested options cancelled		(104,336	)	$	3.61
Shares underlying unvested restricted stock units cancelled		(22,104	)	$	9.55
Shares underlying awards unvested at December 31, 2008		1,609,990		$	5.70

The weighted-average fair value of employee stock options granted during the years ended December 31, 2008, 2007 and 2006 was $3.27, $4.15 and $3.50, respectively. For the years ended December 31, 2008, 2007 and 2006, the total fair value of share-based awards vested was $1,460,310, $1,448,986 and $1,365,896, respectively. For the years ended December 31, 2008, 2007 and 2006, the total intrinsic value of options exercised was $1,152,566, $4,906,279 and $15,388,676, respectively. As of December 31, 2008, there was approximately $6.2 million of unrecognized stock-based compensation expense remaining to be recognized over a weighted-average period of 2.56 years.

F-33

TABLE OF CONTENTS

THESTREET.COM, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
December 31, 2008

(12) Commitments and Contingencies

Operating Leases and Employment Agreements

The Company is committed under operating leases, principally for office space, which expire at various dates through December 31, 2020. Certain leases contain escalation clauses relating to increases in property taxes and maintenance costs. Rent and equipment rental expenses were $2,564,694, $1,876,735 and $1,717,158 for the years ended December 31, 2008, 2007 and 2006, respectively. Additionally, the Company has employment agreements with certain of its employees and outside contributors, whose future minimum payments are dependent on the future fulfillment of their services thereunder. As of December 31, 2008, total future minimum cash payments are as follows:


	Payments Due By Year
Contractual Obligations:	Total		2009		2010		2011		2012		2013		After 2013
Operating leases	$	21,629,005	$	782,543	$	1,646,982	$	2,259,754	$	2,112,291	$	2,084,866	$	12,742,569
Employment agreements		6,228,238		3,700,071		2,528,167		—		—		—		—
Outside contributors		237,708		237,708		—		—		—		—		—
Leases payable		89,660		65,751		23,909		—		—		—		—
Total contractual cash obligations	$	28,184,611	$	4,786,073	$	4,199,058	$	2,259,754	$	2,112,291	$	2,084,866	$	12,742,569

Concentration of Credit Risk

Financial instruments that subject the Company to concentrations of credit risk consist primarily of cash, cash equivalents, debt securities available for sale and restricted cash. The Company maintains all of its cash, cash equivalents, debt securities available for sale and restricted cash in six financial institutions, although substantially all of the balance is within one institution. The Company performs periodic evaluations of the relative credit standing of the six institutions. As of December 31, 2008, the Company’s cash, cash equivalents, debt securities available for sale and restricted cash are primarily invested indirectly in U.S. Treasury backed securities with a focus on asset protection rather than yield maximization. The cash balances are insured by either the FDIC, up to $250,000 per depositor (currently set to expire on December 31, 2009, after which the limit will reduce to $100,000 per depositor), or the U.S. Department of Treasury’s Temporary Guarantee Program for Money Market Funds (currently set to expire on April 30, 2009). The Company has cash balances on deposit with three financial institutions at December 31, 2008 that exceed the insured limit in the amount of $24.7 million. Of this total, $21.8 million is invested in a money market fund that invests only in U.S. Treasury backed securities.

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TABLE OF CONTENTS

THESTREET.COM, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
December 31, 2008

(12) Commitments and Contingencies – (continued)

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

Legal Proceedings

F-35

TABLE OF CONTENTS

THESTREET.COM, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
December 31, 2008

(12) Commitments and Contingencies – (continued)

(13) Long Term Investment

On April 23, 2008, the Company made an investment in Debtfolio, Inc., doing business as Geezeo, a Web-based personal finance site. Geezeo combines online personal finance tools in a social networking environment to assist consumers in achieving their financial goals. Geezeo allows users to track bank accounts and credit card balances, as well as investments, mortgages, student loans and auto loans. The Company’s initial investment in Geezeo included an investment of $1.2 million for an approximate 13% interest in Geezeo. On October 23, 2008, the Company invested $650,000 in additional funds to increase to an 18.5% ownership. Additionally, the Company has incurred approximately $0.2 million of legal fees in connection with this investment. The Company also retains the option to purchase the company based on an equity value of $12 million at any point prior to April 23, 2009. Promotions.com has agreed to provide software development services to Geezeo on an arm’s length basis.

(14) Employee Benefit Plan

Effective January 1, 1997, the Company adopted a noncontributory savings plan with a salary reduction arrangement in accordance with Section 401(k) of the Internal Revenue Code. The 401(k) plan covers all eligible employees and, through June 30, 2006, was funded solely by employee contributions. Effective July 1, 2006, the Company modified the 401(k) plan to provide an employer match of 50% of employee contributions, up to a maximum of 4% of each employee’s total compensation. The Company’s matching contribution totaled $367,714, $266,742 and $84,729 for the years ended December 31, 2008, 2007 and 2006, respectively.

F-36

TABLE OF CONTENTS

THESTREET.COM, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
December 31, 2008

(15) Selected Quarterly Financial Data (Unaudited)


	For the Year Ended December 31, 2008
	First Quarter			Second Quarter			Third Quarter			Fourth Quarter
	(In Thousands, Except per Share Data)
Total revenue	$	18,948		$	19,689		$	16,723		$	16,540
Total operating expense		17,039			17,660			18,027			19,524
Income (loss) from continuing operations before income taxes		2,595			2,429			(959	)		(2,720	)
(Provision) benefit for income tax		(146	)		(126	)		(106	)		376
Income (loss) from continuing operations		2,449			2,303			(1,065	)		(2,344	)
Loss on disposal of discontinued operations		(3	)		(2	)		(3	)		(—)
Net income (loss)		2,446			2,301			(1,068	)		(2,344	)
Preferred stock dividends		96			96			96			96
Net income (loss) attributable to common stockholders	$	2,350		$	2,205		$	(1,164	)	$	(2,441	)
Basic net income (loss) per share:
Income (loss) from continuing operations	$	0.08		$	0.07		$	(0.04	)	$	(0.08	)
Loss on disposal of discontinued operations		(0.00	)		(0.00	)		(0.00	)		(0.00	)
Net income (loss)		0.08			0.07			(0.04 )			(0.08	)
Preferred stock dividends		(0.00	)		(0.00	)		(0.00	)		(0.00	)
Net income (loss) attributable to common stockholders	$	0.08		$	0.07		$	(0.04	)	$	(0.08	)
Diluted net income (loss) per share:
Income (loss) from continuing operations	$	0.07		$	0.07		$	(0.04	)	$	(0.08	)
(Loss) income on disposal of discontinued operations		(0.00	)		0.00			(0.00	)		(0.00	)
Net income (loss)		0.07			0.07			(0.04	)		(0.08	)
Preferred stock dividends		—			—			(0.00	)		(0.00	)
Net income (loss) attributable to common stockholders	$	0.07		$	0.07		$	(0.04	)	$	(0.08	)

F-37

TABLE OF CONTENTS

THESTREET.COM, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
December 31, 2008

(15) Selected Quarterly Financial Data (Unaudited) – (continued)


	For the Year Ended December 31, 2007
	First Quarter			Second Quarter			Third Quarter			Fourth Quarter
	(In Thousands, Except per Share Data)
Total revenue	$	14,508		$	14,899		$	16,118		$	19,881
Total operating expense		12,043			11,902			12,848			15,719
Income from continuing operations before income taxes		3,065			3,622			3,842			4,841
(Provision) benefit for income tax		(61	)		(72	)		15,923			(96	)
Income from continuing operations		3,004			3,550			19,765			4,745
(Loss) income on disposal of discontinued operations		(1	)		0			(1	)		(11	)
Net income		3,003			3,550			19,764			4,734
Preferred stock dividends		—			—			—			1,899
Net income attributable to common stockholders	$	3,003		$	3,550		$	19,764		$	2,835
Basic net income (loss) per share:
Income from continuing operations	$	0.11		$	0.12		$	0.68		$	0.16
(Loss) income on disposal of discontinued operations		(0.00	)		0.00			(0.00	)		(0.00	)
Net income		0.11			0.12			0.68			0.16
Preferred stock dividends		—			—			—			(0.07	)
Net income attributable to common stockholders	$	0.11		$	0.12		$	0.68		$	0.09
Diluted net income (loss) per share:
Income from continuing operations	$	0.11		$	0.12		$	0.67		$	0.16
(Loss) income on disposal of discontinued operations		(0.00	)		0.00			(0.00	)		(0.00	)
Net income		0.11			0.12			0.67			0.16
Preferred stock dividends		—			—			—			(0.07	)
Net income attributable to common stockholders	$	0.11		$	0.12		$	0.67		$	0.09

F-38

TABLE OF CONTENTS

SCHEDULE II — VALUATION AND QUALIFYING ACCOUNTS
For the Years Ended December 31, 2008, 2007 and 2006


Allowance for Doubtful Accounts	Balance at Beginning of Period		Provisions Charged to Expense		Write-Offs		Balance at End of Period
For the year ended December 31, 2008	$	242,807	$	692,405	$	404,120	$	531,092
For the year ended December 31, 2007	$	216,077	$	175,000	$	148,270	$	242,807
For the year ended December 31, 2006	$	131,840	$	84,500	$	263	$	216,077

F-39

TABLE OF CONTENTS

EXHIBIT INDEX


Exhibit Number		Description
*3.1		Amended and Restated Certificate of Incorporation of the Company, incorporated by reference to the Exhibits to the Company’s Registration Statement on Form S-1 filed February 23, 1999.
*3.2		Certificate of Designation of the Company’s Series B Preferred Stock, as filed with the Secretary of State of the State of Delaware on November 15, 2007, incorporated by reference to the Exhibits to the Company’s Current Report on Form 8-K filed November 20, 2007.
*3.3		Amended and Restated Bylaws of the Company, incorporated by reference to the Exhibits to the Company’s Annual Report on Form 10-K filed March 30, 2000.
*4.1		Amended and Restated Registration Rights Agreement dated December 21, 1998, by and among the Company and the stockholders named therein, incorporated by reference to the Exhibits to the Company’s Registration Statement on Form S-1 filed February 23, 1999.
*4.2		Form of Rights Agreement incorporated by reference to the Exhibits to the Company’s Registration Statement on Form S-1 filed February 23, 1999.
*4.3		Amendment No. 1 to the Rights Agreement dated August 7, 2000, incorporated by reference to the Exhibits to the Company’s Annual Report on Form 10-K filed April 2, 2001.
*4.4		Amendment No. 2 to the Rights Agreement dated November 15, 2007 by and between the Company and American Stock Transfer & Trust Company, as Rights Agent, incorporated by reference to the Exhibits to the Company’s Current Report on Form 8-K filed November 20, 2007.
*4.5		Option to Purchase Common Stock dated November 1, 2007, incorporated by reference to the Company’s Current Report on Form 8-K filed November 6, 2007.
*4.6		Investor Rights Agreement dated November 15, 2007 by and among the Company, TCV VI, L.P. and TCV Member Fund, L.P., incorporated by reference to the Exhibits to the Company’s Current Report on Form 8-K filed November 20, 2007.
*4.7		Warrant dated November 15, 2007 issued by the Company to TCV VI, L.P., incorporated by reference to the Exhibits to the Company’s Current Report on Form 8-K filed November 20, 2007.
*4.8		Warrant dated November 15, 2007 issued by the Company to TCV Member Fund, L.P., incorporated by reference to the Exhibits to the Company’s Current Report on Form 8-K filed November 20, 2007.
*4.9		Specimen certificate for the Company’s shares of common stock, incorporated by reference to the Exhibits to Amendment 3 to the Company’s Registration Statement on Form S-1 filed April 19, 1999.
*10.1		Amended and Restated 1998 Stock Incentive Plan, dated May 29, 2002, incorporated by reference to the Exhibits to the Company’s Quarterly Report on Form 10-Q filed August 14, 2002.
*10.2		Form of Stock Option Grant Agreement under the 1998 Stock Incentive Plan, incorporated by reference to the Exhibits to the Company’s Annual Report on Form 10-K filed March 16, 2005.
*10.3		Form of Restricted Stock Unit Grant Agreement under the 1998 Stock Incentive Plan, incorporated by reference to the Exhibits to the Company’s Annual Report on Form 10-K filed March 16, 2006.
*10.4		2007 Performance Incentive Plan, incorporated by reference to Appendix A to the Company’s 2007 Definitive Proxy Statement on Schedule 14A filed April 23, 2007.
*10.5		Form of Stock Option Grant Agreement under the Company’s 2007 Performance Incentive Plan, incorporated by reference to the Exhibits to the Company’s Quarterly Report on Form 10-Q filed August 9, 2007.
*10.6		Form of Restricted Stock Unit Grant Agreement under the Company’s 2007 Performance Incentive Plan, incorporated by reference to the Exhibits to the Company’s Quarterly Report on Form 10-Q filed August 9, 2007.

TABLE OF CONTENTS


Exhibit Number		Description
*10.7		Form of Cash Performance Award Agreement under the Company’s 2007 Performance Incentive Plan, incorporated by reference to the Exhibits to the Company’s Quarterly Report on Form 10-Q filed August 9, 2007.
*10.8		Employment Agreement dated April 9, 2008 between James Cramer and the Company, incorporated by reference to the Exhibits to the Company’s Current Report on Form 8-K filed April 9, 2008.
*10.9		Amendment to Employment Agreement dated July 30, 2008 between James Cramer and the Company, incorporated by reference to the Exhibits to the Company’s Current Report on Form 8-K filed July 30, 2008.
*10.10		Employment Agreement, dated September 13, 2007, by and between Thomas J. Clarke, Jr. and the Company, incorporated by reference to the Exhibits to the Company’s Quarterly Report on Form 10-Q filed November 9, 2007.
*10.11		Letter Agreement dated October 24, 2008, by and between Thomas J. Clarke, Jr. and the Company amending the Employment Agreement dated September 13, 2007, incorporated by reference to the Exhibits to the Company’s Quarterly Report on Form 10-Q filed November 7, 2008.
*10.12		Employment Agreement dated June 30, 2008, by and between Eric Ashman and the Company, incorporated by reference to the Exhibits to the Company’s Current Report on Form 8-K filed June 30, 2008.
*10.13		Employment Agreement dated March 26, 2007, by and between Steven Elkes and the Company, incorporated by reference to the Exhibits to the Company’s Quarterly Report on Form 10-Q filed May 10, 2007.
*10.14		Employment Agreement dated August 23, 2007, by and between David Morrow and the Company, incorporated by reference to the Exhibits to the Company’s Quarterly Report on Form 10-Q filed November 9, 2007.
*10.15		Employment Agreement dated May 15, 2008, by and between Teresa Santos and the Company, incorporated by reference to the Exhibits to the Company’s Current Report on Form 8-K filed May 15, 2008.
*10.16		Membership Interest Purchase Agreement dated August 2, 2007 by and among TP Newco LLC, David Barnett, Gregg Alwine and Gregg Alwine as Agent, incorporated by reference to the Exhibits to the Company’s Current Report on Form 8-K filed August 8, 2007.
*10.17		Stock Purchase Agreement dated November 1, 2007 by and among BFPC Newco LLC, Larry Starkweather, Kyle Selberg, Rachelle Zorn, Robert Quinn and Larry Starkweather as Agent, incorporated by reference to the Exhibits to the Company’s Current Report on Form 8-K filed November 6, 2007.
*10.18		Securities Purchase Agreement dated November 15, 2007 by and among the Company, TCV VI, L.P. and TCV Member Fund, L.P., incorporated by reference to the Exhibits to the Company’s Current Report on Form 8-K filed November 20, 2007.
*10.19		Agreement of Lease, dated July 22, 1999, between 14 Wall Street Holdings 1, LLC (as successor to W12/14 Wall Acquisition Associates LLC), as Landlord, and the Company, as Tenant, incorporated by reference to the Exhibits to the Company’s Quarterly Report on Form 10-Q filed August 16, 1999.
*10.20		Amendment of Lease dated October 31, 2001, between 14 Wall Street Holdings 1, LLC (as successor to W12/14 Wall Acquisition Associates LLC), as Landlord, and the Company, as Tenant, incorporated by reference to the Exhibits to the Company’s Annual Report on Form 10-K filed March 16, 2005.
*10.21		Second Amendment of Lease dated March 21, 2007, between 14 Wall Street Holdings 1, LLC as Landlord, and the Company, as Tenant, incorporated by reference to the Exhibits to the Company’s Annual Report on Form 10-K filed March 12, 2008.

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Exhibit Number		Description
10.22		Third Amendment of Lease dated December 31, 2008, between CRP/Capstone 14W Property Owner, L.L.C. as Landlord, and the Company, as Tenant.
*14.1		Code of Business Conduct and Ethics, incorporated by reference to the Exhibits to the Company’s Current Report on Form 8-K filed January 31, 2005.
21.1		Subsidiaries of the Company.
23.1		Consent of Marcum & Kliegman LLP.
31.1		Rule 13a-14(a) Certification of CEO.
31.2		Rule 13a-14(a) Certification of CFO.
32.1		Section 1350 Certification of CEO.
32.2		Section 1350 Certification of CFO.

Incorporated by reference

ENTITY		JURISDICTION OF INCORPORATION
BankingMyWay.com, LLC		Wisconsin
Bankers Financial Products Corporation d/b/a RateWatch		Wisconsin
Promotions.com LLC		Delaware
Stockpickr LLC		Delaware
SP-TSC Holdings LLC		Delaware
Independent Research Group LLC		Delaware

Date: March 11, 2009	By:	/s/ THOMAS J. CLARKE, JR.

		Thomas J. Clarke, Jr. Chief Executive Officer

Date: March 11, 2009	By:	/s/ ERIC ASHMAN

		Eric Ashman Chief Financial Officer

/s/ Eric Ashman

Eric Ashman Chief Financial Officer March 11, 2009

UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549

FORM 10-K

ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d)OF THE SECURITIES EXCHANGE ACT OF 1934

For the Fiscal Year Ended December 31, 2008

Commission File Number 0-25779

THESTREET.COM, INC.

(212) 321-5000

DOCUMENTS INCORPORATED BY REFERENCE

THESTREET.COM, INC.2008 ANNUAL REPORT ON FORM 10-K

TABLE OF CONTENTS

THESTREET.COM, INC. 2008 ANNUAL REPORT ON FORM 10-K

PART I

Item 1. Business

2008 Highlights

Marketing Services

Advertising Sales

TheStreet.com

Stockpickr.com

BankingMyWay.com

MainStreet.com

Email Newsletters

Podcasts

Interactive Marketing Services

Paid Services

Subscription Services

Syndication & Licensing & Information Services Revenue

Marketing

Consumer Services Sales and Marketing

Online and Email Marketing

Content Syndication and Subscription Distribution

Public Awareness

Competition

Infrastructure, Operations & Technology

Intellectual Property

Employees

Government Regulation

Available Information

Item 1A. Risk Factors.

Our quarterly financial results may fluctuate and our future revenue is difficult to forecast

Key writers, particularly James J. Cramer, are essential sources of revenue

The loss of the services of other key employees could affect our business

We may have difficulty maintaining or increasing our advertising revenue, a significant portion of which is concentrated among our top advertisers and subject to industry and other factors

Investment of the company’s cash carries risks

The company recorded impairment of intangible assets and there can be no assurances that we will not have to record additional impairments in the future

We face intense competition

Risks Associated With Our Strategic Acquisitions Could Adversely Affect Our Business

System failure or interruption may result in reduced traffic, reduced revenue and harm to our reputation

Difficulties in new product development could harm our business

Failure to establish and maintain successful strategic relationships with other companies could decrease our subscriber and reader base

Difficulties associated with our brand development may harm our ability to attract subscribers to our paid services and users to our advertising supported services

Failure to maintain our reputation for trustworthiness may harm our business

We may face liability for, or incur costs to defend, information published in our services

We may not adequately protect our own intellectual property and may incur costs to defend against, or face liability for, intellectual property infringement claims of others

We face government regulation and legal uncertainties

Any failure of our internal security measures or breach of our privacy protections could cause us to lose users and subject us to liability

Control by principal stockholders, officers and directors could adversely affect our stockholders, and the terms of our Series B preferred stock include significant control rights

Anti-takeover provisions could prevent or delay a change of control

Our revenues could be adversely affected if the securities markets decline

The utilization of tax operating loss carryforwards depends upon future income

Item 1B. Unresolved Staff Comments.

Item 2. Properties.

Item 3. Legal Proceedings.

Item 4. Submission of Matters to a Vote of Security Holders.

PART II

Item 5. Market for Registrant’s Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities.

COMPARISON OF 5 YEAR CUMULATIVE TOTAL RETURN*Among TheStreet.com, The NASDAQ Composite Index,The RDG Internet Composite Index and a Peer Group

Holders

Dividends

Issuer Purchases of Equity Securities

Item 6. Selected Financial Data.

Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations.

Overview

Critical Accounting Estimates

General

Revenue Recognition

Capitalized Software and Web Site Development Costs

Property and Equipment

Goodwill and Other Intangible Assets

Investment of the Company’s Cash

Credit Risks of Customers and Business Concentrations

UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549

ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934

THESTREET.COM, INC.
2008 ANNUAL REPORT ON FORM 10-K

THESTREET.COM, INC.

2008 ANNUAL REPORT ON FORM 10-K

COMPARISON OF 5 YEAR CUMULATIVE TOTAL RETURN*
Among TheStreet.com, The NASDAQ Composite Index,
The RDG Internet Composite Index and a Peer Group

THESTREET.COM, INC.

INDEX TO CONSOLIDATED FINANCIAL STATEMENTS

Item 15(a)

THESTREET.COM, INC.

CONSOLIDATED BALANCE SHEETS

THESTREET.COM, INC.

CONSOLIDATED STATEMENTS OF OPERATIONS

THESTREET.COM, INC.

CONSOLIDATED STATEMENTS OF STOCKHOLDERS’ EQUITY
For the Years Ended December 31, 2008, 2007, and 2006

THESTREET.COM, INC.
CONSOLIDATED STATEMENTS OF CASH FLOWS

THESTREET.COM, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
December 31, 2008

THESTREET.COM, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
December 31, 2008

THESTREET.COM, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
December 31, 2008

THESTREET.COM, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
December 31, 2008

THESTREET.COM, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
December 31, 2008