UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-Q
QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended March 31, 2004
Commission File Number 000-25779
TheStreet.com, Inc.
(Exact name of Registrant as specified in its charter)
| Delaware (State or other jurisdiction of incorporation or organization) |
06-1515824 (I.R.S. Employer Identification Number) |
14 Wall Street
New York, New York 10005
(Address of principal executive offices, including zip code)
(212) 321-5000
(Registrant’s telephone number, including area code)
Indicate by 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 whether the registrant is an accelerated filer (as defined in Rule 12b-2 of the Exchange Act). YES x NO o
Indicate the number of shares outstanding of each of the issuer’s classes of common stock as of the latest practicable date.
(Title of Class) Common Stock, par value $0.01 per share |
(Number of Shares Outstanding as of May 5, 2004) 24,579,757 |
TheStreet.com, Inc.
Form 10-Q
For the Three Months Ended March 31, 2004
| PART I |
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| Item 1. |
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| Item 2. |
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Management’s Discussion and Analysis of Financial Condition and Results of Operations |
7 |
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| Item 3. |
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| Item 4. |
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14 | |
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| PART II |
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23 | |
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| Item 1. |
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23 | |
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| Item 2. |
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Changes in Securities, Use of Proceeds and Issuer Purchases of Equity Securities |
23 |
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| Item 3. |
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24 | |
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| Item 4. |
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24 | |
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| Item 5 |
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| Item 6. |
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| 26 | |||
ii
Part I – FINANCIAL INFORMATION
Item 1. |
THESTREET.COM, INC.
CONDENSED CONSOLIDATED BALANCE SHEETS
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March 31, |
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December 31, |
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(unaudited) |
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(Note 1) |
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| ASSETS |
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| Current Assets: |
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| Cash and cash equivalents |
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$ |
25,724,738 |
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$ |
22,247,400 |
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| Restricted cash |
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300,000 |
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300,000 |
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| Short-term investments |
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2,004,917 |
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4,010,904 |
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| Accounts receivable, net of allowance for doubtful accounts of $117,096 as of March 31, 2004 and $129,096 as of December 31, 2003 |
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1,481,636 |
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1,637,822 |
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| Other receivables |
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221,280 |
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202,336 |
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| Receivables from related parties |
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73,912 |
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214,788 |
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| Prepaid expenses and other current assets |
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1,196,883 |
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1,303,891 |
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| Total current assets |
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31,003,366 |
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29,917,141 |
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| Property and equipment, net of accumulated depreciation and amortization of $11,962,333 as of March 31, 2004 and $11,744,173 as of December 31, 2003 |
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2,543,946 |
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2,553,063 |
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| Other assets |
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314,445 |
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343,450 |
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| Goodwill |
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1,990,312 |
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1,990,312 |
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| Other intangibles, net |
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493,333 |
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493,333 |
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| Restricted cash |
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1,900,000 |
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1,900,000 |
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| Total assets |
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$ |
38,245,402 |
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$ |
37,197,299 |
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| LIABILITIES AND STOCKHOLDERS’ EQUITY |
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| Current Liabilities: |
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| Accounts payable |
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$ |
727,936 |
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$ |
787,409 |
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| Accrued expenses |
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3,299,950 |
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3,144,949 |
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| Deferred revenue |
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8,147,688 |
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6,839,171 |
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| Current portion of note payable |
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91,430 |
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89,895 |
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| Other current liabilities |
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75,484 |
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71,859 |
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| Total current liabilities |
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12,342,488 |
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10,933,283 |
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| Note payable |
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197,828 |
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221,269 |
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| Other liabilities |
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55,399 |
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55,399 |
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| Total liabilities |
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12,595,715 |
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11,209,951 |
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| Stockholders’ Equity |
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| Preferred stock; $0.01 par value; 10,000,000 shares authorized; none issued and outstanding |
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— |
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— |
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| Common stock; $0.01 par value; 100,000,000 shares authorized; 29,949,123 shares issued and 24,524,423shares outstanding at March 31, 2004, and 29,463,299 shares issued and 24,041,199 shares outstanding at December 31, 2003 |
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299,491 |
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294,633 |
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| Additional paid-in capital |
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185,740,273 |
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184,502,124 |
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| Treasury stock at cost; 5,424,700 shares at March 31, 2004 and 5,422,100 shares at December 31, 2003 |
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(7,228,162 |
) |
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(7,215,410 |
) |
| Accumulated deficit |
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(153,161,915 |
) |
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(151,593,999 |
) |
| Total stockholders’ equity |
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25,649,687 |
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25,987,348 |
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| Total liabilities and stockholders’ equity |
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$ |
38,245,402 |
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$ |
37,197,299 |
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The accompanying notes to the condensed consolidated financial statements are an integral part of these statements
1
THESTREET.COM, INC.
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
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For the Three Months Ended |
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2004 |
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2003 |
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(unaudited) |
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(unaudited) |
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| Net revenue: |
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| Subscription |
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$ |
5,409,495 |
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$ |
4,272,889 |
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| Advertising |
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1,427,974 |
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1,200,743 |
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| Commission |
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776,790 |
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— |
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| Other |
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306,043 |
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182,610 |
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| Total net revenue |
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7,920,302 |
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5,656,242 |
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| Operating expense: |
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| Cost of services |
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4,077,360 |
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3,411,617 |
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| Sales and marketing |
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3,081,195 |
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1,658,233 |
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| General and administrative |
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2,189,161 |
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1,755,331 |
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| Depreciation and amortization |
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211,905 |
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765,958 |
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| Noncash compensation |
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— |
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238,420 |
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| Total operating expense |
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9,559,621 |
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7,829,559 |
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| Operating loss |
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(1,639,319 |
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(2,173,317 |
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| Net interest income |
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71,403 |
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117,673 |
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| Net loss |
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$ |
(1,567,916 |
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$ |
(2,055,644 |
) |
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| Net loss per share - basic and diluted: |
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$ |
(0.06 |
) |
$ |
(0.09 |
) |
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| Weighted average basic and diluted shares outstanding |
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24,240,143 |
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23,651,979 |
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The accompanying notes to the condensed consolidated financial statements are an integral part of these statements
2
THESTREET.COM, INC.
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
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For the Three Months Ended March 31, |
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2004 |
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2003 |
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(Unaudited) |
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(Unaudited) |
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| Cash Flows from Operating Activities: |
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| Net loss |
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$ |
(1,567,916 |
) |
$ |
(2,055,644 |
) |
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Adjustments to reconcile net loss to cash provided by (used in) operating activities: |
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| Noncash compensation expense |
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— |
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238,420 |
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| Recovery of doubtful accounts |
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(12,000 |
) |
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(43,839 |
) |
| Depreciation and amortization |
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|
211,905 |
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|
765,958 |
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| Changes in operating assets and liabilities: |
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| Accounts receivable |
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168,186 |
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|
122,281 |
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| Other receivables |
|
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(18,944 |
) |
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(104,601 |
) |
| Receivables from related parties |
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140,876 |
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|
22,218 |
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| Prepaid expenses and other current assets |
|
|
107,008 |
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197,572 |
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| Other assets |
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59,510 |
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65,775 |
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| Accounts payable and accrued expenses |
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95,528 |
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(1,512,752 |
) |
| Deferred revenue |
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1,308,517 |
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1,231,955 |
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| Other current liabilities |
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3,625 |
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|
963 |
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| Net cash provided by (used in) operating activities |
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496,295 |
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(1,071,694 |
) |
| Cash Flows from Investing Activities: |
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| Purchase of short-term investments |
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(2,000,000 |
) |
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— |
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| Sale of short-term investments |
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4,005,987 |
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4,465,907 |
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| Capital expenditures |
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(233,293 |
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(129,078 |
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| Net cash provided by investing activities |
|
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1,772,694 |
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4,336,829 |
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| Cash Flows from Financing Activities: |
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| Proceeds from the exercise of stock options |
|
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1,243,007 |
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|
142,758 |
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| Note payable |
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(21,906 |
) |
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(20,472 |
) |
| Purchase of treasury stock |
|
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(12,752 |
) |
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— |
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| Net cash provided by financing activities |
|
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1,208,349 |
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|
122,286 |
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| Net increase in cash and cash equivalents |
|
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3,477,338 |
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|
3,387,421 |
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| Cash and cash equivalents, beginning of period |
|
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22,247,400 |
|
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21,565,018 |
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| Cash and cash equivalents, end of period |
|
$ |
25,724,738 |
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$ |
24,952,439 |
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| Supplemental disclosures of cash flow Information: |
|
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|
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| Cash payments made for interest |
|
$ |
6,410 |
|
$ |
6,593 |
|
Supplemental disclosures of noncash investing and financing activities:
During 2003, $172,629 of restricted cash that was invested in short-term investments became unrestricted.
The accompanying notes to the condensed consolidated financial statements are an integral part of these statements
3
TheStreet.com, Inc.
Notes to Condensed Consolidated Financial Statements
1. DESCRIPTION OF THE BUSINESS AND BASIS OF PRESENTATION
Business
TheStreet.com, Inc., together with its wholly-owned subsidiaries (collectively, the “Company”), operates its businesses in two segments, electronic publishing and securities research and brokerage. Our electronic publishing segment provides investment commentary, analysis and news to both retail and professional customers, which we distribute through our production of web sites, email reports and newsletters, syndicated radio programming, and conferences. Our electronic publishing segment receives revenue from subscription sales, advertising and sponsorship sales, as well as content syndication and conference attendees. Our securities research and brokerage segment provides proprietary equity research and brokerage services to institutional clients, and, as a broker-dealer, receives revenue from trading commissions, a standard payment method in the professional markets.
Basis of Presentation
The accompanying unaudited condensed consolidated financial statements of the Company have been prepared in accordance with accounting principles generally accepted in the United States for interim financial information and with the instructions to Exchange Act Form 10-Q and Article 10 of Regulation S-X. Accordingly, they do not include all of the information and footnotes required by accounting principles generally accepted in th