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EX-10.1 - ALLIANCE AGREEMENT DATED FEBRUARY 12, 2010 - EDGAR ONLINE INCdex101.htm
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EX-32.2 - CFO CERTIFICATION PURSUANT TO SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002 - EDGAR ONLINE INCdex322.htm
EX-31.1 - CEO CERTIFICATION PURSUANT TO SECTION 302 OF THE SARBANES-OXLEY ACT OF 2002 - EDGAR ONLINE INCdex311.htm
EX-32.1 - CEO CERTIFICATION PURSUANT TO SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002 - EDGAR ONLINE INCdex321.htm
EX-31.2 - CFO CERTIFICATION PURSUANT TO SECTION 302 OF THE SARBANES-OXLEY ACT OF 2002 - EDGAR ONLINE INCdex312.htm
EX-10.2 - AMENDMENT NO. 1 TO STRATEGIC ALLIANCE AGREEMENT, DATED JANUARY 31, 2011 - EDGAR ONLINE INCdex102.htm
Table of Contents

 

 

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

 

 

FORM 10-Q

 

 

 

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

FOR THE QUARTERLY PERIOD ENDED: MARCH 31, 2011

 

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

FOR THE TRANSITION PERIOD FROM                      TO                     

 

 

EDGAR Online, Inc.

(Exact name of registrant as specified in its charter)

 

 

001-32194

(Commission File Number)

 

Delaware   06-1447017

(State or other jurisdiction

of incorporation)

 

(IRS Employer

Identification Number)

11200 Rockville Pike, Rockville, Maryland 20852

(Address of principal executive offices) (Zip Code)

(301) 287-0300

(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  ¨

Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files).    YES  ¨    NO  ¨

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 definitions of “accelerated filer,” “large accelerated filer” and “smaller reporting company” in Rule 12b-2 of the Exchange Act.

 

Large accelerated filer   ¨    Accelerated filer   ¨
Non-accelerated filer   ¨      Smaller reporting company   x

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

Number of shares of common stock outstanding at May 12, 2011: 29,289,612 shares.

 

 

 


Table of Contents

EDGAR ONLINE, INC.

FORM 10-Q

FOR THE QUARTER ENDED MARCH 31, 2011

Forward Looking Statements

The discussions set forth in this Quarterly Report on Form 10-Q contain statements concerning potential future events. Such forward-looking statements are based upon assumptions by our management, as of the date of this Quarterly Report, including assumptions about risks and uncertainties faced by us. In addition, management may make forward-looking statements orally or in other writings, including, but not limited to, in press releases, in the annual report to shareholders and in our other filings with the U.S. Securities and Exchange Commission (the “SEC”). Readers can identify these forward-looking statements by the use of such words as “expect,” “anticipate,” “intend,” “plan,” “believe,” “seek,” “see” or “will,” or similar words. If any of management’s assumptions prove incorrect or should unanticipated circumstances arise, our actual results could materially differ from those anticipated by such forward-looking statements. The differences could be caused by a number of factors or combination of factors including, but not limited to, those factors identified in the “Risk Factors” section of this report, and our Annual Report on Form 10-K for the year ended December 31, 2010, as well as the other information in our periodic reports on Forms 10-K, 10-Q and 8-K filed with the SEC, from time to time. Readers are strongly encouraged to consider those factors when evaluating any forward-looking statements concerning us. We do not undertake to update any forward-looking statements in this Quarterly Report to reflect future events or developments. Investors should also be aware that while we, from time to time, do communicate with securities analysts, it is against our policy to disclose to them any material non-public information or other confidential commercial information. Investors should not assume that we agree with any report issued by any analyst or with any statements, projections, forecasts or opinions contained in any such report. Unless otherwise indicated, all references to the “Company,” “we,” “us,” “our,” and “EDGAR Online” include reference to our subsidiaries as well.

Index

 

     Page No.  
PART I. FINANCIAL INFORMATION   

Item 1. Financial Statements

     3   

Condensed Consolidated Balance Sheets at December 31, 2010 and March 31, 2011 (unaudited)

     3   

Condensed Consolidated Statements of Operations for the Three Months Ended March  31, 2010 and 2011 (unaudited)

     4   

Condensed Consolidated Statements of Changes in Stockholders’ Equity (Deficit) for the Three Months ended March 31, 2010 and 2011 (unaudited)

     5   

Condensed Consolidated Statements of Cash Flows for the Three Months Ended March  31, 2010 and 2011 (unaudited)

     6   

Notes to Condensed Consolidated Financial Statements (unaudited)

     7   

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

     17   

Item 3. Quantitative and Qualitative Disclosures About Market Risk

     22   

Item 4. Controls and Procedures

     22   
PART II. OTHER INFORMATION   

Item 1. Legal Proceedings

     23   

Item 1A. Risk Factors

     23   

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

     25   

Item 3. Defaults Upon Senior Securities

     25   

Item 4. Removed and Reserved

     25   

Item 5. Other Information

     25   

Item 6. Exhibits

     26   

Signatures

     27   


Table of Contents

PART 1. FINANCIAL INFORMATION

 

Item 1. Financial Statements

EDGAR ONLINE, INC.

CONDENSED CONSOLIDATED BALANCE SHEETS

(IN THOUSANDS, EXCEPT SHARE DATA)

 

     December 31,
2010
    March 31,
2011
 
           (unaudited)  

ASSETS

    

Cash and cash equivalents

   $ 10,765      $ 6,261   

Short-term investments

     226        226   

Accounts receivable, less allowance of $527 at December 31, 2010 and $599 at March 31, 2011

     3,988        6,194   

Other current assets

     218        463   
                

Total current assets

     15,197        13,144   

Property and equipment, net of accumulated depreciation and amortization of $9,429 at December 31, 2010 and $10,027 at March 31, 2011

     3,863        3,924   

Goodwill

     7,665        7,387   

Other intangible assets, net of accumulated amortization of $13,344 at December 31, 2010 and $13,623 at March 31, 2011

     3,066        3,007   

Other assets

     458        589   
                

Total assets

   $ 30,249      $ 28,051   
                

LIABILITIES, REDEEMABLE PREFERRED STOCK AND STOCKHOLDERS’ EQUITY (DEFICIT)

    

Accounts payable and accrued expenses

   $ 3,879      $ 3,210   

Deferred revenues

     4,468        4,986   

Current portion of long-term debt

     1,437        1,313   
                

Total current liabilities

     9,784        9,509   

Other long-term liabilities

     233        231   
                

Total liabilities

     10,017        9,740   
                

Commitments and contingencies

     —          —     

Redeemable preferred stock—Series B, convertible, $100 par value, 120,000 shares authorized and outstanding at December 31, 2010 and March 31, 2011; face value of $13,267 and liquidation preference of $14,474 at December 31, 2010 and face value of $13,642 and liquidation preference of $16,246 at March 31, 2011

     12,299        12,928   

Redeemable preferred stock—Series C, convertible, $.01 par value, 90,000 shares authorized and 87,016 shares outstanding at December 31, 2010 and March 31, 2011; liquidation preference of $7,291 at December 31, 2010 and liquidation preference of $8,185 at March 31, 2011

     7,132        7,384   
                

Stockholders’ equity (deficit):

    

Preferred stock—Series A, $0.01 par value, 790,000 shares authorized at December 31, 2010 and March 31, 2011; no shares issued or outstanding

     —          —     

Common stock, $0.01 par value, 75,000,000 shares authorized at December 31, 2010 and March 31, 2011, 29,441,339 shares issued and 28,482,921 shares outstanding at December 31, 2010 and 30,248,030 shares issued and 29,289,612 shares outstanding at March 31, 2011

     294        302   

Additional paid-in capital

     78,201        78,441   

Accumulated deficit

     (76,015 )     (79,065 )

Treasury stock, at cost, 958,418 shares at December 31, 2010 and March 31, 2011

     (1,679 )     (1,679 )
                

Total stockholders’ equity (deficit)

     801        (2,001 )
                

Total liabilities, redeemable preferred stock and stockholders’ equity (deficit)

   $ 30,249      $ 28,051   
                

See accompanying notes to condensed consolidated financial statements.

 

3


Table of Contents

EDGAR ONLINE, INC.

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS

(IN THOUSANDS, EXCEPT PER SHARE DATA)

(UNAUDITED)

 

     Three Months Ended March 31  
     2010     2011  

Revenues:

    

XBRL filings

   $ 950      $ 2,392   

XBRL software

     —          538   

Data and solutions

     1,923        1,816   

Subscriptions

     1,493        1,238   
                

Total revenues

     4,366        5,984   

Cost of revenues

     1,430        2,820   
                

Gross profit

     2,936        3,164   
                

Operating expenses:

    

Sales and marketing

     704        1,000   

Product development

     409        1,017   

General and administrative

     1,811        3,253   

Severance costs

     227        —     

Depreciation and amortization

     664        877   
                
     3,815        6,147   
                

Loss from operations

     (879 )     (2,983

Interest, net

     (72 )     (67 )
                

Net loss

     (951 )     (3,050 )

Dividends on preferred stock

     (236 )     (626

Accretion on preferred stock

     (2 )     (12
                

Net loss to common stockholders

   $ (1,189 )   $ (3,688
                

Net loss to common stockholders per share—basic

   $ (0.04 )   $ (0.13
                

Net loss to common stockholders per share—diluted

   $ (0.04 )   $ (0.13
                

Weighted average shares outstanding—basic

     26,874        29,057   
                

Weighted average shares outstanding—diluted

     26,874        29,057   
                

See accompanying notes to condensed consolidated financial statements.

 

4


Table of Contents

EDGAR ONLINE, INC.

CONDENSED CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS’ EQUITY (DEFICIT)

(IN THOUSANDS, EXCEPT SHARE AND PER SHARE DATA)

(UNAUDITED)

 

     COMMON STOCK      TREASURY STOCK     ADDITIONAL
PAID-IN
CAPITAL
    ACCUMULATED
DEFICIT
    TOTAL  
     SHARES      AMOUNT      SHARES      AMOUNT                    

Balance at December 31, 2010

     29,441,339       $ 294         958,418       $ (1,679   $ 78,201      $ (76,015   $ 801   

Net loss

     —           —           —           —          —          (3,050     (3,050

Accrued dividends on Series B Preferred Stock

     —           —           —           —          (374 )     —          (374 )

Accretion of issuance costs on Series B Preferred Stock

     —           —           —           —          (12 )     —          (12 )

Adjustment to fair value of beneficial conversion discount on Series B Preferred Stock

     —           —           —           —          (242 )     —          (242 )

Accrued dividends on Series C Preferred Stock

     —           —           —           —          (252 )     —          (252 )

Stock-based compensation

     —           —           —           —          1,128        —          1,128   

Restricted stock issued

     806,691        8         —           —          (8     —          —     
                                                           

Balance at March 31, 2011

     30,248,030       $ 302         958,418       $ (1,679   $ 78,441      $ (79,065   $ (2,001 )
                                                           

See accompanying notes to condensed consolidated financial statements.

 

5


Table of Contents

EDGAR ONLINE, INC.

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

(IN THOUSANDS)

(UNAUDITED)

 

     Three Months Ended March 31,  
     2010     2011  

Cash flows from operating activities:

    

Net loss

   $ (951 )   $ (3,050 )

Adjustments to reconcile net loss to net cash used in operating activities:

    

Depreciation and amortization

     352        598   

Amortization of intangible assets

     312        279   

Stock-based compensation

     196        1,128   

Equity-based severance charges

     28        —     

Provision for losses on trade accounts receivable

     135        135   

Amortization of capitalized product costs

     55        11   

Amortization of deferred financing costs and discount

     17        8   

Changes in assets and liabilities:

    

Accounts receivable

     172        (2,341 )

Other, net

     102        (289 )

Accounts payable and accrued expenses

     (548 )     (668 )

Deferred revenues

     (187     576   

Long-term payables

     (4 )     (2 )
                

Total adjustments

     630        (565 )
                

Net cash used in operating activities

     (321 )     (3,615
                

Cash flows from investing activities:

    

Capital expenditures

     (354 )     (263 )

Capitalized product development costs

     (490 )     (501 )

Short-term investments

     (4 )     —     
                

Net cash used in investing activities

     (848 )     (764 )
                

Cash flows from financing activities:

    

Proceeds from issuance of Series B Preferred Stock

     12,000        —     

Costs incurred in connection with issuance of Series B Preferred Stock

     (768 )     —     

Proceeds from exercise of stock options and warrants

     —          —     

Payments of notes payable

     (125 )     (125 )
                

Net cash provided by (used in) financing activities

     11,107        (125 )
                

Net increase (decrease) in cash and cash equivalents

     9,938        (4,504 )

Cash and cash equivalents at beginning of period

     2,101        10,765   
                

Cash and cash equivalents at end of period

   $ 12,039      $ 6,261   
                

Supplemental disclosure of cash flow information:

    

Cash paid for interest

   $ 40      $ 30   

Supplemental disclosure of non-cash information:

    

Accrued dividends on Series B and Series C Preferred Stock

   $ 236     $ 626  

Fair value of beneficial conversion discount on Series B Preferred Stock

   $ 84     $ (242

Accretion of issuance costs on Series B Preferred Stock

   $ 2     $ 12  

See accompanying notes to condensed consolidated financial statements.

 

6


Table of Contents

EDGAR ONLINE, INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(IN THOUSANDS, EXCEPT SHARE AND PER SHARE DATA)

(UNAUDITED)

(1) BASIS OF PRESENTATION

The condensed consolidated financial statements include the accounts of EDGAR Online, Inc. and its subsidiaries (“the Company”). All significant intercompany accounts are eliminated upon consolidation. EDGAR Online, Inc. (“EDGAR Online” or “the Company”) was incorporated in the State of Delaware in November 1995 under the name Cybernet Data Systems, launched its EDGAR Online website in January 1996, and went public in May 1999 under its current name. EDGAR Online is a leading provider of XBRL (eXtensible Business Reporting Language) filing services, software, data sets and analysis tools. The Company’s data products provide highly detailed fundamental financial information along with the source documents and are created through the use of proprietary high speed software that automates much of the data extraction and calculation processes. The Company’s XBRL Filing service uses parts of this same proprietary data extraction and processing software along with personnel skilled in accounting, rigorous quality processes and additional proprietary tools to assist public companies in the creation of XBRL filings for submission to the U.S. Securities and Exchange Commission. The Company’s XBRL analysis tool is a proprietary software tool that assists users in analyzing both the Company’s own proprietary XBRL data sets and industry standard XBRL data files. EDGAR Online delivers its data and analysis products via online subscriptions, as data licenses directly to end-users, embedded in other web sites and through a variety of redistributors. The Company delivers its XBRL filings services primarily through partnerships with financial printers and other providers of SEC compliance services. Consumers of the Company’s information are generally financial, corporate and advisory professionals who work in financial institutions such as investment funds, asset management firms, insurance companies and banks, stock exchanges and government agencies, as well as accounting firms, law firms, corporations or individual investors.

The unaudited interim financial statements of the Company as of March 31, 2011 and for the three months ended March 31, 2010 and 2011 included herein have been prepared in accordance with the instructions for Form 10-Q under the Securities Exchange Act of 1934, as amended (the “Exchange Act”), and Article 10 of Regulation S-X under the Exchange Act. Certain information and footnote disclosures normally included in financial statements prepared in accordance with accounting principles generally accepted in the United States have been condensed or omitted pursuant to such rules and regulations relating to interim financial statements.

In the opinion of the Company, the accompanying unaudited interim financial statements reflect all adjustments, consisting only of normal recurring adjustments, necessary to present fairly the financial position of the Company as of March 31, 2011, the results of its operations, changes in stockholders’ equity (deficit) and cash flows for the three months ended March 31, 2010 and 2011. The results for the three months ended March 31, 2011 are not necessarily indicative of the expected results for the full 2011 fiscal year or any future period.

These financial statements should be read in conjunction with the financial statements and related footnotes included in the Company’s Annual Report on Form 10-K for the year ended December 31, 2010, filed with the SEC in March 2011. The condensed consolidated balance sheet information as of December 31, 2010 was derived from the audited consolidated financial statements as of that date.

The preparation of financial statements in conformity with accounting principles generally accepted in the United States requires the Company to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements, and the reported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates. Significant estimates embedded in the condensed consolidated financial statements for the periods presented concern the allowance for doubtful accounts, the fair values of goodwill and other intangible assets and the estimated useful lives of intangible assets.

The Company has evaluated subsequent events for potential disclosure or recognition to the date of the issuance of the condensed consolidated financial statements and believes all subsequent events are properly disclosed.

 

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Table of Contents

EDGAR ONLINE, INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

(IN THOUSANDS, EXCEPT SHARE DATA)

(UNAUDITED)

 

(2) REVENUE RECOGNITION

The Company derives revenues from four primary sources: XBRL filing processing fees, XBRL software fees, data and solutions fees and web services subscriptions fees. The Company recognizes XBRL filings revenue from fixed fees on a ratable basis as well as per-filing fees as the services are provided. Revenue from data licenses is recognized over the term of the underlying contracts. The Company’s software revenues are derived from the licensing of software products, the maintenance and support of those software products and the performance of other professional services. The Company’s software is typically licensed with associated maintenance and support revenues. As there is not sufficient vendor-specific objective evidence to support the separate determination of the fair value of the license fee and undelivered maintenance and support, the total revenues are recognized ratably over the support period. The Company’s professional services revenues are either recognized as they are performed or ratably over a respective support period, dependent on whether the services represent a separate unit of accounting. The Company’s data solutions sometimes involve upfront one-time customization fees along with more traditional data licensing arrangements for the ongoing delivery of the data solution. In addition, some of the Company’s data solutions are billed on a time and materials basis, per service level agreements or for delivery of data. Upfront customization fees are recognized systematically over the expected customer relationship period. Revenue from time and materials based agreements and data delivery is recognized as the services and data are provided. Revenue from subscriptions is recognized ratably over the subscription period, which is typically twelve months. Subscriptions revenue also includes ancillary advertising and e-commerce revenue which are recognized as the services are provided and totaled $55 and $19 in the three months ended March 31, 2010 and 2011, respectively.

Revenue is recognized provided acceptance and delivery, if applicable, has occurred, collection of the resulting receivable is probable and no significant obligations remain. If amounts are received in advance of the services being performed, the amounts are recorded and presented as deferred revenues. Revenue is recognized net of any related state sales taxes charged and sales taxes payable are included in accrued expenses.

(3) LOSS PER SHARE

Loss per share information is determined using the two-class method, which includes the weighted-average number of common shares outstanding during the period and other securities that participate in dividends (“participating security”). The Company considers the Series B and Series C Preferred Stock participating securities because they include rights to participate in dividends with the common stock on a one for one basis, with the holders of Series B and Series C Preferred Stock deemed to have common stock equivalent shares based on a conversion price of $1.10 and $1.45, respectively. In applying the two-class method, earnings are allocated to common stock shares and Series B and Series C Preferred Stock common stock equivalent shares based on their respective weighted-average shares outstanding for the period. Since losses are not allocated to Series B or Series C Preferred Stock shares, the two-class method results in the same loss per common share calculated using the basic method for the periods presented in these financial statements.

Basic loss per common share excludes dilution for common stock equivalents and is computed by dividing the net loss, after deducting preferred stock dividends and the accretion of the beneficial conversion feature discount, by the weighted average number of common shares outstanding for the period. Diluted loss per share is calculated using the treasury stock method and reflects, in periods in which they have a dilutive effect, the potential dilution that could occur if securities or other contracts to issue common stock were exercised or converted and resulted in the issuance of common stock.

Diluted net loss per share is the same as basic net loss per share amounts for the three months ended March 31, 2010 and 2011 as the Company reported a net loss and therefore all outstanding stock options, unvested restricted stock grants and warrants are anti-dilutive. As such, diluted net loss per share does not include the effect of outstanding stock options, unvested restricted stock grants and warrants for the three months ended March 31, 2010 and 2011 of 3,762,990 and 10,160,706, respectively, nor does it include 11,123,636 and 18,649,959 common shares issuable under the conversion provisions of our Series B and Series C Preferred Stock at March 31, 2010 and 2011, respectively.

 

8


Table of Contents

EDGAR ONLINE, INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

(IN THOUSANDS, EXCEPT SHARE DATA)

(UNAUDITED)

 

(4) SOFTWARE DEVELOPMENT COSTS

The Company capitalizes software development costs in accordance with Financial Accounting Standards Board (“FASB”) Accounting Standards Codification (“ASC”) Topic 985-20 (“Costs of Software to be Sold, Leased, or Marketed”). Software development costs are capitalized after technological feasibility is established. Once the software products become available for general release to the public, the Company amortizes such costs over the related product’s estimated economic useful life to cost of revenues. Net capitalized software development costs (included in other assets) totaled $39 and $135 at December 31, 2010 and March 31, 2011, respectively. Related amortization expense, included in cost of revenues, totaled $55 and $11 for the three months ended March 31, 2010 and 2011, respectively.

The Company capitalizes internal-use software development costs in accordance with ASC Topic 350-40 (“Internal-Use Software”). The Company capitalizes internal-use software development costs once certain criteria are met. Once the internal-use software is ready for its intended use, the capitalized internal-use software costs will be amortized over the related software’s estimated economic useful life in amortization and depreciation expense. Our computer software is also subject to review for impairment as events or changes in circumstances occur indicating that the amount of the asset reflected in the Company’s balance sheet may not be recoverable. Net capitalized internal-use software costs (included in property and equipment) were $2,707 and $2,657 at December 31, 2010 and March 31, 2011, respectively. Related amortization expense totaled $209 and $445 in the three months ended March 31, 2010 and 2011, respectively.

(5) LONG-TERM DEBT

On April 5, 2007, the Company entered into a Financing Agreement (“Financing Agreement”) with Rosenthal & Rosenthal, Inc. (“Rosenthal”) for additional working capital. Under the Financing Agreement, Rosenthal made a term loan in the original principal amount of $2,500 to the Company and agreed to provide up to an additional $2,500 under a revolving line of credit. Interest on outstanding borrowings under the Financing Agreement is payable at variable rates of interest over the published JPMorgan Chase prime rate (with a minimum prime rate of 6%), 2.5% on the term loan and 2% on borrowings under the revolving credit facility. The Company’s obligations under the term loan are evidenced by a secured Term Note and all of the Company’s obligations to Rosenthal are secured by a first priority security interest in substantially all of the Company’s assets.

The Financing Agreement, as amended most recently on March 13, 2009, was renewed on March 31, 2011 and then was terminated on April 4, 2011. On that date, the Company repaid all amounts outstanding under the term loan and the first priority security interest was released. At March 31, 2011, the entire balance of $1,313 was classified as the current portion of long-term debt. Interest expense under the Agreement, totaled $69 and $53 for the three months ended March 31, 2010 and 2011, respectively. See note 13 regarding a subsequent credit facilities arrangement.

(6) STOCK-BASED COMPENSATION

Stock Compensation Expense

The Company records stock-based compensation expense under the provisions of FASB ASC Topic 718 (“Awards Classified as Equity”). The Company recognizes stock-based compensation expense on a straight-line basis over the applicable vesting period. Forfeitures are estimated at the time of grant and revised, if necessary, in subsequent periods if actual forfeitures differ from those estimates. Stock-based compensation expense for the three months ended March 31, 2010 and 2011 was recognized in the following income statement expenses:

 

     Three Months Ended
March 31,
 
     2010      2011  

Cost of revenues

   $ 10       $ 12   

Sales and marketing

     38         93   

Product development

     23         36   

General and administrative

     125         987   
                 

Total stock compensation expense

   $ 196       $ 1,128   
                 

 

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Table of Contents

EDGAR ONLINE, INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

(IN THOUSANDS, EXCEPT SHARE DATA)

(UNAUDITED)

 

This expense increased the Company’s net loss per share by $0.01 in the three months ended March 31, 2010 and $0.04 in the three months ended March 31, 2011.

The estimated per share weighted-average grant-date fair values of stock options granted during the three months ended March 31, 2011 were $0.95. There were no shares granted during the three months ended March 31, 2010. Amounts were determined using the Black-Scholes-Merton option pricing model based on the following assumptions:

 

     Three Months Ended
March 31, 2011
 

Expected dividend yield

     0.0 %

Expected volatility

     74 %

Risk-free interest rate

     3.00-3.13

Expected life in years

     6   

The assumptions used in calculating the value of stock options, which involve inherent uncertainties and the application of management judgment, were based on the following:

 

   

Expected dividend yield —reflects the Company’s present intention to retain earnings, if any, for use in the operation and expansion of the Company’s business;

 

   

Expected volatility —determined considering historical volatility of the Company’s common stock over the preceding six years;

 

   

Risk-free interest rate —based on the yield available on U.S. Treasury zero coupon issues with a remaining term approximating the expected life of the stock option awards; and

 

   

Expected life —calculated as the weighted average period that the stock option awards are expected to remain outstanding based on historical experience.

Stock Options and Restricted Stock Grants as of March 31, 2011

In May 2005, the Company adopted the 2005 Stock Award and Incentive Plan (the “2005 Plan”) which replaced all previous stock option plans which in total had authorized the issuance of options to purchase up to 4,100,000 shares of the Company’s common stock since the Company’s inception. All remaining available shares under the Company’s prior stock option plans became available under the 2005 Plan upon its adoption. In addition, the 2005 Plan, when adopted, authorized 1,087,500 new shares of common stock for equity awards. The 2005 Plan authorizes a broad range of awards, including stock options, stock appreciation rights, restricted stock, non-restricted stock and deferred stock. At the Annual Meeting of Stockholders held on June 23, 2008, the 2005 Plan was amended to increase the number of shares available for grant by 1,000,000. At the Annual Meeting of Stockholders held on June 10, 2009, the 2005 Plan was amended to increase the number of shares available for grant by an additional 1,000,000 shares. The 2009 amendment also makes clear that under the 2005 Plan the Company may not reprice stock options or stock appreciation rights without shareholder approval. At the Annual Meeting of Stockholders held on November 18, 2010, the 2005 Plan was amended to increase the number of shares available for grant by an additional 5,955,109 shares. The 2010 amendment also increased the limitation on the number of shares that may be granted under the 2005 Plan to any one participant in a given year from 300,000 to 1,000,000.

Option awards are generally granted with an exercise price equal to the closing market price of the Company’s common stock on the date of grant. Option awards generally vest over three years and have ten year contractual terms.

Option activity for the three months ended March 31, 2011 is as follows:

 

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EDGAR ONLINE, INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

(IN THOUSANDS, EXCEPT SHARE DATA)

(UNAUDITED)

 

     NUMBER OF
OPTIONS
    WEIGHTED
AVERAGE
EXERCISE
PRICE
     WEIGHTED
AVERAGE
REMAINING
CONTRACTUAL
TERM
     AGGREGATE
INTRINSIC
VALUE
 

Outstanding at December 31, 2010

     4,402,547      $ 1.25         

Granted

     697,600        1.43         

Exercised

     —          —           

Cancelled

     (127,835   $ 2.48         
                

Outstanding at March 31, 2011

     4,972,312      $ 1.67         5.96 years       $ 406   
                

Exercisable at March 31, 2011

     2,500,628      $ 2.00         5.06 years       $ 135   
                

The aggregate intrinsic value represents the difference between the exercise price of the underlying awards and the market price of the Company’s common stock for those awards that have an exercise price below the market price at March 31, 2011. There were no options exercised during the three months ended March 31, 2011.

In addition, the Company has historically granted restricted shares under the 2005 Plan as well as out of the Company’s treasury stock. Restricted shares have no exercise price and vest depending on the individual grants. The fair value of the restricted shares is based on the market value of the Company’s common stock on the date of grant. Restricted share activity is as follows:

 

     NUMBER OF
SHARES
    WEIGHTED
AVERAGE
GRANT-DATE
FAIR VALUE
     AGGREGATE
INTRINSIC
VALUE
 

Non-vested at December 31, 2010

     2,496,775      $ 1.18      

Granted

     3,498,310      $ 1.32      

Vested

     (806,691   $ 1.02      

Cancelled

     —        $ —        
             

Non-vested at March 31, 2011

     5,188,394      $ 1.30       $ 6,797   
             

The aggregate intrinsic value was calculated based on the market price of the Company’s common stock at March 31, 2011. During the three months ended March 31, 2011, the aggregate intrinsic value of shares vested was $1,027, determined based on the market price of the Company’s common stock on the respective vesting dates.

At March 31, 2011, 4,071,788 shares were available for grant under the 2005 Plan.

(7) CONCENTRATION OF RISK AND FAIR VALUE OF FINANCIAL INSTRUMENTS

Financial instruments that potentially subject the Company to significant concentration of credit risk consist primarily of accounts receivable. R.R. Donnelley & Sons accounted for 26% of accounts receivable at December 31, 2010 and 29% of accounts receivable at March 31, 2011. PR Newswire accounted for 26% of accounts receivable at December 31, 2010 and 15% of accounts receivable at March 31, 2011. Aguilonius Consulting accounted for 0% of accounts receivable at December 31, 2010 and 13% of accounts receivable at March 31, 2011. There was no other one customer that accounted for more than 10% of accounts receivable at December 31, 2010 or March 31, 2011.

Revenues from R.R. Donnelley & Sons comprised 22% and 27% of the Company’s total revenue for the three months ended March 31, 2010 and 2011, respectively. The Company’s other customers are geographically dispersed throughout the world with no one customer accounting for more than 10% of revenues during the three months ended March 31, 2010 and 2011. In addition, the Company has not experienced any significant credit losses to date from any one customer.

 

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EDGAR ONLINE, INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

(IN THOUSANDS, EXCEPT SHARE DATA)

(UNAUDITED)

 

The financial statement carrying value of the Company’s cash and cash equivalents, short-term investments, accounts receivable, accounts payable and accrued liabilities at December 31, 2010 and March 31, 2011, approximate their fair value because of the immediate or short-term maturity of these instruments. The Company maintains a cash balance at two financial institutions with balances insured by the Federal Deposit Insurance Corporation (“FDIC”). The financial statement carrying value of the Company’s debt approximates its fair value based on interest rates currently available to the Company for borrowings with similar characteristics and maturities.

(8) SEVERANCE COSTS

On March 31, 2010, our former Chief Financial Officer resigned from the Company. As part of the separation and release agreement, the Company paid $187 and continued medical benefits for a ten-month period. In addition, as part of the agreement, 50,000 options immediately vested. As a result, the Company recorded severance costs totaling $227 and additional paid-in capital was increased by $28 to recognize previously unrecognized stock compensation expense remaining from the original grant date valuations of the options. There was no remaining liability at March 31, 2011.

(9) ACQUISITION

On November 22, 2010 (“the Acquisition Date”), the Company completed a merger with UBmatrix, Inc., a Washington corporation (“UBmatrix”). As a result, all of the outstanding shares of capital stock of UBmatrix were converted into the right to receive an aggregate of 74,379 shares of the Company’s Series C Preferred Stock (the “Series C Preferred Stock”) and an aggregate of 2,685,088 shares of the Company’s common stock (the “Common Stock”). Of these shares, all of the shares of Series C Preferred Stock and 1,063,046 shares of the Common Stock were issued at closing, while 1,622,042 shares of the Common Stock were paid into escrow to secure the post-closing indemnification obligations of the UBmatrix stockholders. The common stock issued in connection with the merger included 1,190,056 shares issuable to certain employees of UBmatrix who joined the Company as of the closing and 1,495,032 shares issuable to the stockholders, former Chief Financial Officer and service providers of UBmatrix. The shares issuable to the UBmatrix employees were issued pursuant to our 2005 Stock Award and Incentive Plan, and, except in one case as described in the following sentence, were subject to restrictions on vesting that will last through the recipients’ initial 12 months of employment with us. The stock issued without restriction consists of 60,586 shares of our common stock issued to the former Chief Financial Officer of UBmatrix, who was only employed by the combined entity through February 2011, and was issued as payment for unpaid past bonuses. Also in connection with the merger, the Company entered into a purchase agreement with certain stockholders of UBmatrix to issue and sell 12,637 shares of the Company’s Series C Preferred Stock for an aggregate purchase price of $2,000. In recording the purchase, we combined the merger and the stock purchase as if they were a single transaction in estimating the value of the shares issued as they were mutually dependent.

The results of UBmatrix’s operations have been included in the consolidated financial statements since the Acquisition Date. UBmatrix is a leading provider of XBRL-based software solutions for global organizations and enterprises, enabling them to more efficiently and effectively address the challenges of business and financial information management, governance, risk and compliance and external reporting. As a result of the merger, the Company has become a global end-to-end provider of XBRL software, filings services and data. Additional benefits of the merger include the opportunity to accelerate the Company’s development plans and time to market for new solutions within the highly competitive XBRL market, the potential synergies of combining the XBRL skills, development teams, and sales and marketing organizations of the two companies, and the potential for realizing annual cost savings through consolidation of administrative functions.

The acquisition date fair value of the consideration given by the Company to acquire UBmatrix consisted of the following:

 

Common stock (1,434,446 shares)

   $ 1,463   

Preferred stock (87,016 shares)

     7,046   
        

Total

   $ 8,509   
        

The fair value of the common stock issued was determined based on the closing market price of the Company’s common shares on the acquisition date. The fair value of the preferred stock issued was determined based on the results of a third-party valuation.

The following table summarizes the fair value of the assets acquired and the liabilities assumed as of the acquisition date. The value of the intangible assets is based on a third-party valuation.

 

Cash

   $ 2,531   

Accounts receivable

     98   

Property and equipment

     16   

 

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EDGAR ONLINE, INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

(IN THOUSANDS, EXCEPT SHARE DATA)

 

Other assets

     64   

Intangible assets

     2,675   
        

Total identifiable assets

     5,384   

Current liabilities

     2,073   
        

Net identifiable assets

     3,311   

Goodwill

     5,198   
        

Net assets acquired

   $ 8,509   
        

The intangible assets represent software and licenses included in customer based intangibles, and tradenames which will be amortized over 7.5, 3.33 and 10 years, respectively. The goodwill recognized is primarily attributable to expected synergies and the assembled workforce of UBmatrix. Current liabilities included $1,767 which was the value of compensation payable to employees of UBmatrix that was settled with the issuance of EDGAR common stock upon the closing of the Merger pursuant to certain vesting and escrow provisions. Upon the closing of the merger, this liability was reclassified as additional paid-in capital.

The Company recorded $620 of costs related to the acquisition which were included in general and administrative expenses.

The financial information in the table below summarizes the combined results of the Company and UBmatrix on a pro forma basis, as though the companies had been combined as of the beginning of the period presented. The pro forma financial information is presented for informational purposes only and is not indicative of the results of operations that would have been achieved if the acquisition had taken place on January 1, 2010 or of results that may occur in the future.

The following unaudited pro forma financial information for the three months ended March 31, 2010 combines the historical results of the Company and UBmatrix for the three months ended March 31, 2010:

 

Revenues

   $ 4,866   

Net loss

   $ (1,855 )

Net loss per share

   $ (.08 )

Weighted average shares outstanding

     29,559   

(10) REDEEMABLE PREFERRED STOCK

Series B Preferred Stock

On January 28, 2010, The Company sold 120,000 shares of Series B Preferred Stock to Bain Capital Venture Integral Investors, LLC (“Bain”) at $100 per share for total proceeds of $12,000. The carrying value of the Series B Preferred Stock is reduced by the stock issuance costs and any beneficial conversion feature discounts related to preferred dividends and is then accreted back to redemption value over the eight year redemption period.

Each share of Series B Preferred Stock is convertible into a number of shares of the Company’s common stock determined by dividing the purchase price per share plus accrued dividends by an initial conversion price of $1.10 per share, subject to standard anti-dilution adjustments. However, the shares of Series B Preferred Stock are not convertible to the extent that such conversion would result in the Purchaser and its affiliates owning in excess of 19.9% of the shares of the Company’s voting power. The Company evaluated the conversion feature and determined that it did not have to be recorded as a liability. The holders of Series B Preferred Stock are entitled to the number of votes equal to the number of shares of common stock into which such holder’s Series B Preferred Stock are convertible, subject to the same limitations on conversion as set forth in the preceding sentence. The Series B Preferred Stock contains a compounding, cumulative 11.44% per annum dividend paid-in-kind payable upon conversion of the Series B Preferred Stock. Following the fifth anniversary of the issuance of the Series B Preferred Stock, the dividend will no longer accrue unless declared by the Board of Directors of the Company. The dividends will be cumulative, whether or not declared, accrue daily and compound annually. No cash dividends are payable unless cash dividends are declared on common shares.

On or at any time after the eighth anniversary of the Purchase Agreement (January 28, 2018), if requested by holders of at least a majority of the then outstanding Series B Preferred Stock, each holder of Series B Preferred Stock shall have the right to require the Company to redeem all the Series B Preferred Stock, for cash, at a redemption price equal to the original purchase price plus all accrued and unpaid dividends thereon.

 

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EDGAR ONLINE, INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

(IN THOUSANDS, EXCEPT SHARE DATA)

 

In the event of a liquidation, dissolution or wind up of the Company, the holders of the Series B Preferred Stock are entitled to a liquidation preference equal to the greater of (i) the original purchase price plus all accrued and unpaid dividends thereon, or (ii) the amount that would be payable in respect of a share of common stock if all outstanding shares of Series B Preferred Stock were converted into common stock immediately prior to such liquidation (without regard as to whether sufficient shares of common stock are available out of the Company’s authorized but unissued stock, for the purpose of effecting the conversion of the Series B Preferred Stock). The amount of liquidation preference calculated in accordance with the provisions of item (ii) of this paragraph at March 31, 2011 is approximately $16,246 based on the market price of the Company’s common stock on March 31, 2011.

In the event of a change in control of the Company as defined in the agreement, each holder of Series B Preferred Stock shall have the right to require the Company to redeem all or a portion of such holder’s Series B Preferred Stock for cash, if the consideration in such change of control transaction is cash, but otherwise for consideration in the same form as all other stockholders will receive in such transaction, at a redemption price per share of Series B Preferred Stock equal to the greater of (i) the fair market value per share valued as of the date of the change of control determined on an as-converted to common stock basis (without regard as to whether sufficient shares of common stock are available out of the Company’s authorized but unissued stock, for the purpose of effecting the conversion of the Series B Preferred Stock) and (ii) the original purchase price plus all accrued and unpaid dividends thereon, provided, however, that in the event of a change of control prior to the fifth anniversary of the issue date, accrued and unpaid dividends will include all dividends that would have accrued thereon from the issue date through and including the fifth anniversary of the issue date. The amount payable to the Series B stockholders calculated in accordance with the provisions of item (ii) of this paragraph at March 31, 2011 would have been approximately $24,563 based on the market price of the Company’s common stock on that date.

The redemption value of the Series B Preferred Stock, representing the original purchase price plus accrued and unpaid dividends, and the number of common shares issuable in the event the conversion provisions are exercised, at December 31 of each of the succeeding five year periods and at the fifth anniversary of the Agreement is expected to be as follows:

 

YEAR

   REDEMPTION VALUE      COMMON SHARES ISSUABLE
UPON CONVERSION
 

2011

   $ 14,785         13,441,182   

2012

   $ 16,481         14,983,182   

2013

   $ 18,367         16,697,273   

2014

   $ 20,468         18,607,545   

January 28, 2015

   $ 20,625         18,750,000   

Series C Preferred Stock

On November 22, 2010, the Company issued a total of 87,016 shares of Series C Preferred Stock, par value $0.01, as a result of the merger with UBmatrix. Each share of Series C Preferred Stock is convertible into a number of shares of the Company’s common stock determined by dividing the sum of the purchase price per share plus accrued dividends by an initial conversion price of $1.45 per share, subject to adjustment. The holders of the Series C Preferred Stock shall be entitled to the number of votes equal to the number of shares of common stock into which such holder’s Series C Preferred Stock are convertible. These shares were initially convertible into 6,001,119 shares of the Company’s common stock.

 

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EDGAR ONLINE, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

(IN THOUSANDS, EXCEPT SHARE AND PER SHARE DATA)

 

Each share of Series C Preferred Stock is convertible at any time at the option of the holder thereof into shares of common stock. The number of shares of common stock into which the Series C Preferred Stock is convertible is equal to (i) the original purchase price per share of $100.00 plus all accrued and unpaid dividends divided by (ii) a conversion price of $1.45, subject to adjustments for stock splits and combinations, dividends and distributions, reclassifications, exchanges or substitutions, mergers or reorganizations, and similar events. The Company evaluated the conversion feature and determined that it did not have to be recorded as a liability. To the extent that at any time sufficient shares of common stock are not available for the purpose of effecting the conversion of Series C Preferred Stock, a holder of Series C Preferred Stock may elect to require the Company to redeem such holder’s shares of Series C Preferred Stock (but only to the extent sufficient shares of common stock are not available). As the average market price for the period outstanding was less than the conversion price, there is no beneficial conversion feature recorded for the Series C Preferred Stock.

The Series C Preferred Stock contains a compounding, cumulative 11.66% per annum paid-in-kind dividend payable upon conversion of the Series C Preferred Stock. The dividends accrue daily. Following January 28, 2015, the dividend will no longer accrue unless declared by the Board of Directors of the Company. Through January 28, 2015, the Series C Preferred stock will receive paid-in-kind dividends that will result in those shares being convertible into an additional 3,508,499 shares of our common stock. No cash dividends are payable unless cash dividends are declared on common shares.

In the event of a liquidation, dissolution or winding up of our company, before any distribution is made to the holders of any security junior to the Series C Preferred Stock, the holders of the Series C Preferred Stock are entitled to be paid out of the assets of the Company available for distribution an amount equal to the greater of (1) $100.00 per share of Series C Preferred Stock plus all accrued but unpaid dividends on the Series C Preferred Stock, and (2) the amount payable with respect to such shares of Series C Preferred Stock as if they had been converted into common stock. The amount of liquidation preference calculated in accordance with the provisions of item (ii) of this paragraph at March 31, 2011 is approximately $8,185 based on the market price of the Company’s common stock on March 31, 2011.

At any time after the earlier of the holders of the Series C Stock notifying the Company of their election to require the redemption of the Series C Stock or the eighth anniversary of the issuance date of the Series C Stock, the holders of a majority of the then outstanding shares of Series C Stock shall have the right to require the Company to redeem such shares of Series C Stock for cash at a price per share equal to the original purchase price of $100.00 plus all accrued and unpaid dividends.

In the event of a change of control, each holder of Series C Stock shall have the right to require the Company to redeem such holder’s shares for cash at a price per share equal to the greater of the (i) the fair market value per share valued as of the date of change of control determined on an as-converted to common stock basis and (ii) the original purchase price of $100.00 plus all accrued and unpaid dividends. The amount payable to the Series C stockholders calculated in accordance with the provisions of item (ii) of this paragraph at March 31, 2011 would have been approximately $12,458 based on the market price of the Company’s common stock on that date.

The redemption value of the Series C Preferred Stock, representing the original purchase price plus accrued and unpaid dividends, and the number of common shares issuable in the event the conversion provisions are exercised, at December 31 of each of the succeeding five year periods and at the fifth anniversary of the Agreement is expected to be as follows:

 

YEAR

   REDEMPTION VALUE      COMMON SHARES ISSUABLE
UPON CONVERSION
 

2011

   $ 7,963         6,781,901   

2012

   $ 8,889         7,570,243   

2013

   $ 9,922         8,450,223   

2014

   $ 11,071         9,429,027   

January 28, 2015

   $ 11,166         9,509,618   

 

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EDGAR ONLINE, INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

(IN THOUSANDS, EXCEPT SHARE DATA)

 

(11) RELATED PARTY TRANSACTIONS

During the quarter ended March 31, 2011, the Company reimbursed Bain $53 for travel and third party consulting expenses related to strategic meetings with the Company. During the quarter ended March 31, 2010, the Company reimbursed Bain $154 for costs related to the issuance of the Series B Preferred Stock. Two principals of Bain were appointed to our Board of Directors in accordance with the terms of the Series B Preferred Stock, and representatives of Bain from time to time have, or will, provide consulting services to us. Effective September 30, 2010 and through March 28, 2011, one of those principals, John M. Connolly, functioned as our interim Chief Executive Officer and President after the resignation of Philip D. Moyer. On March 28, 2011, Mr. Connolly became Chairman of the Company’s Board of Directors. There were no fees paid to the Bain Board Members or consultants for the three months ended March 31, 2010 or 2011.

(12) INCOME TAXES

Since its inception, the Company has incurred net operating losses and has incurred no federal or state income tax expense. At December 31, 2010, the Company had approximately $45,800 in federal net operating losses which will expire between 2012 and 2030, and approximately $40,000 of state net operating loss carry forwards which will expire between 2011 and 2028. Under Section 382 of the Internal Revenue Code of 1986, as amended, the utilization of net operating loss carry forwards is subject to annual limitations based on past and future changes in ownership of the Company. The Company has determined that it has experienced multiple ownership changes since inception, but does not believe that these past changes in ownership will restrict its ability to use its losses and credits within the carry forward period. Approximately $45,200 of the total federal net operating loss is currently subject to an annual limitation of approximately $1,600 per year. If we have further ownership changes, additional annual limitations on the use of our net operating loss carry-forwards may be imposed.

(13) SUBSEQUENT EVENTS

On May 3, 2011, the Company entered into new commercial credit facilities (“Credit Facilities”) with Silicon Valley Bank (“SVB”) for additional working capital. Under the Credit Facilities, SVB made a term loan in the original principal amount of $2,000 to the Company and agreed to provide up to an additional $3,000 under a revolving line of credit. Interest on borrowings under the term loan is payable at the prime rate plus 1.25% and interest on borrowings under the revolving credit facility is payable at the prime rate plus 1.75% over the published Wall Street Journal prime rate. The Company’s obligations under the Credit Facilities are evidenced by cross-collateralized agreements with SVB and are secured by a first priority security interest in substantially all of the Company’s assets and a negative pledge on intellectual property.

On May 10, 2011, the Company entered into Amendment No. 3 (the “Amendment”) to the Services Agreement between the Company and R.R. Donnelley & Sons. The Amendment extends the term of the Services Agreement, as previously amended, through December 31, 2013 (as so amended, the “Initial Term”) and amends the flat and variable fee structure of the Services Agreement so that it now features annual minimum fees and volume requirements per Tier Group as defined in the U.S. Securities and Exchange Commission’s XBRL mandate. Amendment No. 3 also provides for volume-based discounts and overage charges under certain circumstances and terms and fees for additional services the Company may provide to RR Donnelley and/or its customers upon request, including consulting and other taxonomy services.

 

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ITEM 2. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS (IN THOUSANDS)

OVERVIEW

We create and distribute financial data and public filings for equities, mutual funds, and a variety of other publicly traded assets. We produce highly detailed data that helps in the analysis of the financial, business and ownership conditions of an investment. We are considered a pioneer and leader in the rapidly emerging financial reporting standard, XBRL, and use our automated processing platform and our expertise in XBRL to produce both datasets and tools to assist organizations with the creation, management and distribution of XBRL financial reports. We launched our EDGAR Online web site and began selling our subscription services and establishing contractual relationships with business and financial information web sites to supply EDGAR content in January 1996.

We recognize revenue from providing the following services:

XBRL Filings. One of our data solutions provides partners and customers with a mechanism for converting financial statements into XBRL for filing with the SEC and potentially other regulators. R.R. Donnelley & Sons and PR Newswire are two of our partners in this channel, whereby we provide services to their customer base for compliance with existing and upcoming SEC regulations mandating the submission of XBRL tagged company reports. This XBRL filing solution leverages our data processing engine and proprietary business rules that we have developed for tagging US GAAP financials with the appropriate XBRL tags. Our process combines our XBRL knowledge and expertise with data-tagging automation and workflow. We recognize revenue from fixed fee arrangements on a ratable basis as well as per-filing fees as the services are provided. We plan to structure our future partnership agreements on the model we signed with other financial printers in which we receive minimum filings fees and/or minimum conversions; however, we may from time to time sign contracts without minimums where we believe the relationship will not be material to our capacity or revenues, or where doing so would otherwise be advantageous to our interests.

XBRL Software. Our XBRL software revenues are derived from the licensing of the UBmatrix XBRL software products, the maintenance and support of those software products and the performance of other professional services related to the software. The Company’s software is typically licensed with associated maintenance and support revenues. As there is not sufficient vendor-specific objective evidence to support the separate determination of the fair value of the license fee and undelivered maintenance and support, the total revenues are recognized ratably over a respective support period, dependent on whether the services represent a separate unit of accounting. Revenue is recognized when persuasive evidence of an arrangement exists, product delivery has occurred or services have been rendered, the sale price is fixed or determinable, and collectability is reasonably assured. If any of the criteria have not been met, then revenue is deferred until such time as all criteria have been met.

Data and Solutions. We produce a specialized line of data feeds, products and solutions based on content sets that we have extracted from SEC filings and other data providers. Both our data products and solutions consist of digital data feeds transmitted through various formats including hosted web pages, multiple application programming interfaces, and other response mechanisms. Our data products include, but are not limited to, full access to SEC filings in multiple formats, standardized and as-reported fundamental financial data, annual and quarterly financial statements, insider trades, institutional holdings, initial and secondary public offerings, Form 8-K disclosures, electronic prospectuses and other investment instrument disclosure information. Our data solutions include the customization of our data products, the conversion of data from unstructured content into multiple formats including XML, XBRL and PDF, the storage and delivery of data and custom feeds and tools to access the information. Revenue from data licenses is recognized over the term of the contract, which are typically non-cancelable, one-year contracts with automatic renewal clauses. Our data solutions sometimes involve some upfront customization fees along with more traditional annual data licensing arrangements for the ongoing delivery of the data solution. In addition, some of our data solutions are billed on a time and materials basis, per service level agreements or for delivery of data. We review each contract in connection with the respective governing accounting literature to determine revenue recognition on a case-by-case basis. Revenue from time and materials based agreements and data delivery is recognized as the data and services are provided. Upfront customization fees are recorded systematically over the expected customer relationship period.

Subscriptions. Our end-user subscription services include I-Metrix and I-Metrix Professional, EDGAR Pro and EDGAR Access. I-Metrix delivers a web only service while I-Metrix Professional allows a user to do in-depth analysis of companies and industries by providing fundamental data and a suite of tools and models that allow users to search, screen and evaluate the data via the web and a Microsoft Excel add-in. EDGAR Pro offers financial data, stock ownership, public offering data sets and advanced search tools for corporate reports filed via the EDGAR system. It is available via multi-seat and enterprise-wide contracts, and may also include add-on services such as global annual reports and conference call transcripts. EDGAR Access, our retail product, has fewer features than EDGAR Pro and is available via single-seat, credit card purchase only. Subscriptions also includes ancillary advertising and e-commerce revenues through the sale of advertising banners, sponsorships and through e-commerce activities such as marketing third party services to the users of our web sites. Revenue from subscription services is recognized ratably over the subscription period, which is typically one year. Advertising and e-commerce revenue is recognized as the services are provided.

 

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CRITICAL ACCOUNTING POLICIES

There have been no material changes in our critical accounting policies and estimates from those disclosed in Item 7 of our Annual Report on Form 10-K for the year ended December 31, 2010.

RESULTS OF OPERATIONS

The following table sets forth the percentage relationships of certain items from our Condensed Consolidated Statements of Operations as a percentage of total revenues.

 

     THREE MONTHS ENDED
MARCH 31,
 
     2010     2011  

Total revenues

     100     100

Cost of revenues

     33        47   
                

Gross profit

     67        53   

Operating expenses:

    

Sales and marketing

     16        17   

Product development

     9        17   

General and administrative

     42        54   

Severance costs

    
5
  
    —     

Amortization and depreciation

     15        15   
                

Loss from operations

     (20     (50

Interest and other, net

     (2     (1
                

Net loss

     (22 )%      (51 )% 
                

REVENUES

Total revenues for the three months ended March 31, 2011 increased 37% to $5,984 from total revenues of $4,366 for the three months ended March 31, 2010. The net increase in revenues was primarily attributable to a $1,442, or 152%, increase in XBRL filings revenues and new XBRL software revenue from the UBmatrix acquisition of $538, which was offset by a $255, or 17%, decrease in subscriptions revenues and a $107, or 6%, decrease in data and solutions revenues.

XBRL FILINGS

 

     THREE MONTHS ENDED
MARCH 31,
 
     2010     2011  

Revenues (in $000s)

   $ 950      $ 2,392   

Percentage of total revenue

     22     40

The increase in XBRL filings revenues for the three months ended March 31, 2011 from the three months ended March 31, 2010 was primarily related to the SEC rules that require certain companies (“tier 1 companies”) to file their documents in XBRL beginning with the quarter ended after June 15, 2009 and additional companies (“tier 2 companies”) beginning with the quarter ended after June 15, 2010, as well as XBRL conversions from companies that were not required to file with the SEC but nevertheless did. In addition, tier 1 companies were required to file detailed footnotes in XBRL in the quarter ended March 31, 2011 which increased revenue. The increase is also attributable to new business volume from PR Newswire as a result of the partnership agreement signed in 2010, which contributed no revenues in the quarter ended March 31, 2010. In addition we added, revenue from mutual fund risk return business during the quarter ended March 31, 2011, which was not in the corresponding quarter of 2010.

 

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XBRL SOFTWARE

 

     THREE MONTHS ENDED
MARCH 31,
 
     2010     2011  

Revenues (in $000s)

   $ —        $ 538   

Percentage of total revenue

     —       9

The XBRL software revenues for the three months ended March 31, 2011 represents revenue related to the UBmatrix acquisition completed in the fourth quarter of 2010. As such, there were no corresponding revenues in the first quarter of 2010.

DATA AND SOLUTIONS

 

     THREE MONTHS ENDED
MARCH 31,
 
     2010     2011  

Revenues (in $000s)

   $ 1,923      $ 1,816   

Percentage of total revenue

     44     30

Number of contracts at March 31

     296        305   

Data and solutions revenues decreased for the three months ended March 31, 2011 from the three months ended March 31, 2010 primarily due to less annual value of data and solutions contracts in force for the quarter ended March 31, 2011 compared to the quarter ended March 31, 2010.

SUBSCRIPTIONS

 

     THREE MONTHS ENDED
MARCH 31,
 
     2010     2011  

Revenues (in $000s)

   $ 1,493      $ 1,238   

Percentage of total revenue

     34     21

Average price per subscriber

   $ 629      $ 563   

Number of subscribers at March 31

     9,500        8,800   

Subscription revenues for the three months ended March 31, 2011 decreased from the three months ended March 31, 2010 due to decreased sales of our premium products, EDGAR Pro and I-Metrix Professional, as well as decreased sales of EDGAR Access, our retail service. Our subscription business has been impacted by substantial business and workforce reductions in the financial services community over the past two years and the continuing slow economic climate in general. While we continue to add new subscribers to all of our subscription products, cancellations exceeded these new sales during the referenced periods.

COST OF REVENUES

Cost of revenues primarily consists of salaries and benefits of operations employees to create XBRL filings and produce data sets, fees paid to acquire data and the amortization of costs related to developing our I-Metrix products that were previously capitalized. Total cost of revenues for the three months ended March 31, 2011 increased $1,390, or 97%, to $2,820 from $1,430 for the three months ended March 31, 2010. The net increase in cost of revenues was primarily due to a $1,209 increase in payroll related expenses related to the increase in our XBRL filings business. For the three months ended March 31, 2011 we incurred $406 of costs associated with the start up of our contract with SunGard that we signed in the second half of 2010 to supply additional staff for the filings business. These cost increases were offset by other reductions in temporary personnel.

GROSS PROFIT

Gross profit for the three months ended March 31, 2011 increased $228, or 8%, to $3,164 from $2,936 for the three months ended March 31, 2010. The gross profit percentage decreased to 53% for the three months ended March 31, 2011 from 67% for the three months ended March 31, 2010. The decreases in the gross profit percentages were due to the higher costs related to XBRL filings revenues which have increased as a percentage of total revenues. We expect our gross profit percentages will continue to decline as we increase our XBRL business since the gross profit margins related to the XBRL service business are lower than our historical gross profit margins from our data and subscription businesses.

 

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OPERATING EXPENSES

Sales and Marketing. Sales and marketing expenses consist primarily of salaries and benefits, sales commissions, advertising expenses, and costs of marketing materials. Sales and marketing expenses for the three months ended March 31, 2011 increased $296, or 42%, to $1,000 from $704 for the three months ended March 31, 2010. The net increase was primarily due to a $221 increase in payroll related expenses related primarily to the UBmatrix merged operations.

Product Development. Product development expenses, which consist primarily of salaries and benefits and outside development costs, for the three months ended March 31, 2011 increased $608, or 149%, to $1,017 from $409 for the three months ended March 31, 2010. The increase was primarily due to a $548 increase in payroll related costs related primarily to the UBmatrix merged operations.

General and Administrative. General and administrative expenses consist primarily of salaries and benefits, insurance, fees for professional services, general corporate expenses and facility expenses. General and administrative expenses for the three months ended March 31, 2011 increased $1,442, or 80%, to $3,253 from $1,811 for the three months ended March 31, 2010. The net increase was primarily due to a $862 increase in stock compensation and expenses related primarily to the UBmatrix merged operations including a $126 increase in rent and a $226 increase in payroll related expenses.

Severance Costs. In the three months ended March 31, 2010, we accrued $227 of severance costs related to the resignation of our former Chief Financial Officer. As part of the severance agreement, 50,000 options immediately vested. As a result, additional paid-in capital was increased by $28 during the quarter ended March 31, 2010 to recognize previously unrecognized stock compensation expense remaining from the original grant date valuations of the options.

Depreciation and Amortization. Depreciation and amortization expenses include the depreciation of property and equipment and the amortization of finite lived intangible assets. Depreciation and amortization for the three months ended March 31, 2011 increased $213, or 32%, to $877 from $664 for the three months ended March 31, 2010. The increases are a result of increased capital expenditures and the addition of amortization expense of $195 related to the amortization of the UBmatrix acquisition intangibles.

LIQUIDITY AND CAPITAL RESOURCES

Net cash used by operating activities was $3,615 for the three months ended March 31, 2011 compared to net cash used by operations of $321 for the three months ended March 31, 2010, primarily due to the increase in net loss for the three months ended March 31, 2011 and a growth in accounts receivable related to the XBRL filings business increase during the quarter.

Net cash used in investing activities was $764 for the three months ended March 31, 2011 compared to net cash used in investing activities of $848 for the three months ended March 31, 2010. The decrease for the three months ended March 31, 2011 was primarily due to a $91 decrease in capital expenditures.

Net cash used in financing activities was $125 for the three months ended March 31, 2011 compared to net cash provided by financing activities of $11,107 for the three months ended March 31, 2010. On January 28, 2010 we issued 120,000 shares of our Series B Preferred Stock for $12,000, offset by fees incurred of $768. Generally, each Series B Preferred Share is convertible into shares of our common stock determined by dividing the purchase price per share plus accrued dividends by a conversion price of $1.10 per share. Under certain conditions, we may be required to redeem all or part of the Series B Preferred Shares at fair value (see Note 10, Redeemable Preferred Stock in the accompanying notes to unaudited financial statements). We expect to use a substantial portion of the proceeds from the issuance to support investment in personnel, infrastructure, training and other costs related to our XBRL filings business.

 

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We were party to a Financing Agreement with Rosenthal and Rosenthal, Inc. (“Rosenthal”) for additional working capital. We were required to maintain certain collateral ratios and financial covenants under the agreement, as amended. At March 31, 2011, the entire balance of $1,313 was classified as the current portion of long-term debt. Interest expense under the Agreement, totaled $69 and $53 for the three months ended March 31, 2010 and 2011, respectively. We were in compliance with the required ratios and covenants, as amended, at March 31, 2011. The Financing Agreement was terminated on April 4, 2011. On that date, the Company repaid all amounts outstanding under the term loan and the first priority security interest was released. The Company entered into new commercial credit facilities (“Credit Facilities”) with Silicon Valley Bank (SVB) on May 3, 2011 for additional working capital. Under the Credit Facilities, SVB made a term loan in the original principal amount of $2,000 to the Company and agreed to provide up to an additional $3,000 under a revolving line of credit. Interest on borrowings under the term loan is payable at the prime rate plus 1.25% and interest on borrowings under the revolving credit facility is payable at the prime rate plus 1.75% over the published Wall Street Journal prime rate. The Company’s obligations under the Credit Facilities are evidenced by cross-collateralized agreements with SVB and are secured by a first priority security interest in substantially all of the Company’s assets and a negative pledge on intellectual property (see Note 13, Subsequent Events in the accompanying notes to unaudited financial statements).

At March 31, 2011, we had cash and cash equivalents on hand of $6,261. We have no off-balance sheet arrangements at March 31, 2011. We believe that our existing capital resources will be sufficient to meet our anticipated cash needs for funding working capital needs, capital expenditures and debt obligations for at least the next 12 months. Thereafter, if the remaining cash from the proceeds from our Series B preferred stock issuance, new bank credit facilities, and cash generated from operations is insufficient to satisfy our liquidity requirements, we may need to raise additional funds through public or private financings, strategic relationships or other arrangements. There can be no assurance that such additional funding, if needed, will be available on terms attractive to us, or at all. The failure to raise capital when needed could materially adversely affect our business, results of operations and financial condition. If additional funds are raised through the issuance of equity securities, the percentage ownership of our then-current stockholders would be reduced.

 

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ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK.

There have been no material changes in our exposure to market risk from that disclosed in Item 7A of our Annual Report on Form 10-K for the year ended December 31, 2010.

 

ITEM 4. CONTROLS AND PROCEDURES

Conclusion Regarding Effectiveness of Disclosure Controls and Procedures

We carried out an evaluation under the supervision and with the participation of our management, including our Chief Executive Officer and Chief Financial Officer, of the design and effectiveness of our disclosure controls and procedures, as defined in Rules 13a-15(e) and 15d-15(e) of Exchange Act, as of the end of the period covered by this Quarterly Report. Based on the evaluation of our disclosure controls and procedures, our Chief Executive Officer and Chief Financial Officer have concluded that, as of the end of the period covered by this report, our disclosure controls and procedures were effective to provide reasonable assurance that the information required to be disclosed by us in reports filed under the Exchange Act, is recorded, processed, summarized and reported within the time periods specified in the SEC’s rules and forms, and that information required to be disclosed by us in the reports we file or submit under the Exchange Act, is accumulated and communicated to our management, including our principle executive and financial officers, or persons performing similar functions, as appropriate to allow timely decisions regarding required disclosure. It should be noted that the design of any system of controls is based in part upon certain assumptions about the likelihood of future events, and can therefore only provide reasonable, not absolute, assurance that the design will succeed in achieving its stated goals.

Changes in Internal Control over Financial Reporting

We hired our new Chief Executive Officer, Robert J. Farrell, effective March 28, 2011. Effective March 28, 2011, Mark Maged resigned as Chairman of the Board of Directors and assumed the newly created role of Lead Independent Director. John M. Connolly, a member of our Board of Directors who had functioned as our interim Chief Executive Officer and President since September 30, 2010 assumed the position of Chairman of the Board of Directors as of that date. There were no other changes in our internal control over financial reporting during the most recently completed fiscal quarter that materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.

Inherent Limitations of Controls

Because of their inherent limitations, disclosure controls and procedures and 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.

 

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PART II. OTHER INFORMATION.

 

ITEM 1. LEGAL PROCEEDINGS.

None

 

ITEM 1A. RISK FACTORS.

The risk factors, which were included in our Annual Report on Form 10-K for the fiscal year ended December 31, 2010, have been updated with respect to results from the period covered by this report. Other than those below, there were no other material changes from the risk factors previously reported in our Annual Report on Form 10-K for the fiscal year ended December 31, 2010. Please refer to Item I of our Annual Report for 2010 for disclosures regarding other risks and uncertainties related to our business.

We have a history of losses and we expect to incur losses for the foreseeable future. If we are unable to achieve profitability, our business will suffer and our stock price is likely to decline.

We have never operated at a profit and we anticipate incurring a loss in 2011, and may incur additional losses in 2012. At March 31, 2011, we had an accumulated deficit of approximately $79 million. As a result, we will need to significantly increase our revenues to achieve and sustain profitability. If revenues grow more slowly than we anticipate, or if operating and development expenses exceed our expectations or cannot be adjusted accordingly, we may incur further losses in the future. We are highly likely to incur additional costs as we expand our product offerings and increase our intellectual property portfolio which reduces our chances of attaining profitability. We cannot assure you that we will be able to achieve or sustain profitability.

If we fail to increase revenues, we will not achieve or maintain profitability.

Even though our revenues have increased from $14.2 million in 2005 to $19.5 million in 2010, to achieve profitability we will need to continue to increase revenues substantially through implementation of our growth strategy and/or reduce expenses significantly. Revenues for three months ended March 31, 2011 totaled $6.0 million. We cannot assure you that our revenues will grow or that we will achieve or maintain profitability in the future.

In 2010, we derived a significant portion of our total revenue from our partnership with R.R. Donnelley & Sons. We cannot guarantee the continuance of this revenue stream or, if it does continue, that it will remain as significant.

Sales to R.R. Donnelley & Sons accounted for 27% of our total revenues for the three months ended March 31, 2011 and 31% for the year ended December 31, 2010 due to our partnership in which, pursuant to a Services Agreement between us and R.R. Donnelley, we jointly offer public companies a compliance solution for financial reporting in XBRL.

On May 10, 2011, we entered into Amendment No. 3 (the “Amendment”) to the Services Agreement. Amendment No. 3 extends the term of the Services Agreement, as previously amended, through December 31, 2013 (as so amended, the “Initial Term”) and amends the flat and variable fee structure of the Services Agreement so that it now features annual minimum fees and volume requirements per Tier Group as defined in the U.S. Securities and Exchange Commission’s XBRL mandate. Amendment No. 3 also provides for volume-based discounts and overage charges under certain circumstances and terms and fees for additional services the Company may provide to R.R. Donnelley and/or its customers upon request, including consulting and other taxonomy services.

The Agreement will automatically renew for an additional one year term on January 1, 2014 unless either party notifies the other of its decision not to renew at least ninety (90) days prior to the end of the Initial Term. We cannot assure you that the Services Agreement will continue beyond December 31, 2013 or, if it does continue, that it will contain terms that will be attractive to us or material to our revenue stream.

The Services Agreement is non-exclusive for both parties, and as such we cannot guarantee that R.R. Donnelley & Sons will continue to provide us with all of their XBRL assignments, or will not chose another outside organization to translate its XBRL filings. In addition, because R.R. Donnelley & Sons purchased Bowne & Co., Inc., a provider of shareholder and marketing communications services, in November 2010, and in doing so acquired Bowne & Co., Inc.’s in-house XBRL solution, we cannot assure you that R.R. Donnelley & Sons will continue to use any external XBRL provider. In addition, our costs relating to our joint XBRL compliance solution, including personnel and other resources dedicated to XBRL conversion, may make the R.R. Donnelley & Sons partnership not as profitable as we expect. Also, any variance or uncertainty in R.R. Donnelley & Sons’ position as one of the market leaders in the printing industry could compromise our position in the compliance market. The loss or decrease in business of the significant relationship we have with R.R. Donnelley & Sons, a decline in the success of R.R. Donnelley & Sons as an industry leader, or if the partnership is not as long or lucrative as we expected could have a material adverse effect on our financial results.

 

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Our ability to use net operating loss carryforwards to offset future taxable income for U.S. federal income tax purposes is subject to limitation and may be limited further as a result of the merger with UBmatrix and sale of Series C stock.

In general, under Section 382 of the Code, a corporation that undergoes an “ownership change” is subject to limitations on its ability to utilize its pre-change net operating losses, or NOLs, to offset future taxable income. In general, an ownership change occurs if the aggregate stock ownership of certain stockholders increases by more than 50% over such stockholders’ lowest percentage ownership during the testing period (generally three years). Since inception, we have incurred net operating losses and have incurred no federal or state income tax expense. At December 31, 2010, we had approximately $46 million in federal net operating losses which will expire between 2011 and 2028, and approximately $40 million of state net operating loss carry forwards which will expire between 2011 and 2028. We have determined that we have experienced multiple ownership changes since inception, but do not believe that these changes in ownership will restrict our ability to use the losses and credits within the carry forward period. Approximately $45 million of our total federal net operating loss is currently subject to an annual limitation of approximately $1.6 million per year. If we have further ownership changes, additional annual limitations on the use of our net operating loss carry-forwards may be imposed.

In addition, as of its last fiscal year ended September 30, 2009, UBmatrix had federal net operating loss carry forwards of approximately $21 million. We believe that UBmatrix has also experienced multiple ownership changes since its inception, and that the merger will likely result in limitations on our ability to utilize UBmatrix’s net operating losses in the future.

We currently anticipate that the shares issued pursuant to the merger agreement with UBmatrix and the sale of Series C stock to certain stockholders of UBmatrix, together with certain other transactions involving our common stock within the testing period, resulted in an additional ownership change. Even if the merger and the sale of Series C stock did not result in an immediate ownership change, they would significantly increase the likelihood that there would be an additional ownership change in the future (which ownership change could occur as a result of transactions involving our stock that are outside of our control).

 

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ITEM 2. UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS.

None.

 

ITEM 3. DEFAULTS UPON SENIOR SECURITIES.

None.

 

ITEM 4. REMOVED AND RESERVED.

 

ITEM 5. OTHER INFORMATION.

None.

 

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ITEM 6. EXHIBITS

a. Exhibits:

 

Exhibit

Number

  

Description

10.1    Alliance Agreement dated February 12, 2010, between PR Newswire Association LLC and the Registrant@*
10.2    Amendment No. 1 to Strategic Alliance Agreement, dated January 31, 2011, between PR Newswire Association LLC and the Registrant@*
10.3    Employment Agreement, dated March 1, 2011, between Robert J. Farrell and the Registrant (1) +
31.1    Certification of Chief Executive Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002*
31.2    Certification of Chief Financial Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002*
32.1    Certification of Chief Executive Officer pursuant to Section 906 of the Sarbanes-Oxley Act of 2002*
32.2    Certification of Chief Financial Officer pursuant to Section 906 of the Sarbanes-Oxley Act of 2002*
101.INS    XBRL Instance Document.**
101.SCH    XBRL Taxonomy Extension Schema Document.**
101.CAL    XBRL Taxonomy Calculation Linkbase Document.**
101.LAB    XBRL Taxonomy Label Linkbase Document.**
101.PRE    XBRL Taxonomy Presentation Linkbase Document.**
101.DEF    XBRL Taxonomy Extension Definition Linkbase Document.**

 

(1) Filed as an exhibit to the Registrant’s Current Report on Form 8-K filed with the SEC on March 8, 2011, and incorporated by reference herein.
+ Compensatory plan or arrangement.
@ Confidential treatment has been requested as to certain portions of this exhibit pursuant to Rule 24b-2 under the Securities Exchange Act of 1934, as amended.
* filed or furnished herewith, as the case may be
** submitted electronically herewith

Attached as Exhibit 101 to this report are the following formatted in XBRL (Extensible Business Reporting Language): (i) Condensed Consolidated Statements of Operations for the three months ended March 31, 2011 and 2010, (ii) Condensed Consolidated Balance Sheets at March 31, 2011 and December 31, 2010, (iii) Condensed Consolidated Statements of Changes in Stockholders’ Equity March 31, 2011, (iv) Condensed Consolidated Statements of Cash Flows for the three months ended March 31, 2011 and 2010 and (v) Notes to Condensed Consolidated Financial Statements. Users of these data are advised pursuant to Rule 401 of Regulation S-T that the information contained in the XBRL documents is unaudited and these are not the official publicly filed financial statements of the Company. In accordance with Rule 402 of Regulation S-T, the XBRL related information in Exhibit 101 to this Quarterly Report on Form 10-Q shall not be deemed to be “filed” for purposes of Section 18 of the Exchange Act, or otherwise subject to the liability of that section, and shall not be incorporated by reference into any registration statement or other document filed under the Securities Act or the Exchange Act, except as shall be expressly set forth by specific reference in such filing.

 

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SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the Registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.

 

Date: May 12, 2011

    EDGAR ONLINE, INC.
      By:   /s/    ROBERT J. FARRELL        
       

Robert J. Farrell

Chief Executive Officer and President

      By:   /s/    DAVID J. PRICE        
       

David J. Price

Chief Financial Officer

 

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