UNITED STATES

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, 2013.

 

or

 

¨	Transition Report Pursuant to Section 13 or 15 (d) of the Securities Exchange Act of 1934   For the transition period from __________ to __________

 

Commission file number: 000-26393

 

WebMediaBrands Inc.

(Exact name of Registrant as specified in its charter)

  

Delaware	06-1542480
(State or other jurisdiction of incorporation or organization)	(I.R.S. Employer Identification No.)
50 Washington Street, Suite 912 Norwalk, Connecticut	06854
(Address of principal executive offices)	(Zip Code)

 

(203) 662-2800

(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 Website, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files). Yes x    No ¨

 

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer or a non-accelerated filer. See definition of “accelerated filer and large accelerated filer” in Rule 12b-2 of the Exchange Act: (Check one):

  

Large accelerated filer   ¨	Accelerated filer   ¨
Non-accelerated filer   ¨	Smaller reporting company   x
(Do not check if a smaller reporting company)

 

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

 

The number of outstanding shares the Registrant’s common stock, par value $0.01 per share, as of May 6, 2013 was 6,022,483.

 

 

WebMediaBrands Inc.

Index

 

		Page
PART I. Financial Information
Item 1.	Financial Statements	3
	Consolidated Condensed Balance Sheets – March  31, 2013 (unaudited) and December 31, 2012	3
	Unaudited Consolidated Condensed Statements of Operations – For the Three Months Ended March 31, 2013 and 2012	4
	Unaudited Consolidated Condensed Statements of Cash Flows – For the Three Months Ended March 31, 2013 and 2012	5
	Notes to Unaudited Consolidated Condensed Financial Statements	6
Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	13
Item 3.	Quantitative and Qualitative Disclosures about Market Risk	18
Item 4.	Controls and Procedures	18
PART II. Other Information
Item 1.	Legal Proceedings	19
Item 1A.	Risk Factors	19
Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds	19
Item 3.	Defaults Upon Senior Securities	19
Item 4.	Mine Safety Disclosures	19
Item 5.	Other Information	19
Item 6.	Exhibits	19
Signatures		20

 

 

 

PART I. FINANCIAL INFORMATION

ITEM 1. Financial Statements

 

WebMediaBrands Inc.

Consolidated Condensed Balance Sheets

March 31, 2013 and December 31, 2012

(in thousands, except share and per share amounts)

 

		March 31, 2013				December 31, 2012
		(unaudited)
ASSETS
Current assets:
Cash and cash equivalents		$	1,626			$	2,210
Accounts receivable, net of allowances of $8 and $16, respectively			451				524
Prepaid expenses and other current assets			764				503
Total current assets			2,841				3,237
Property and equipment, net of accumulated depreciation of $1,520 and $1,475, respectively			229				268
Intangible assets, net			2,245				2,305
Goodwill			9,574				9,574
Investments and other assets			673				687
Total assets		$	15,562			$	16,071
LIABILITIES AND STOCKHOLDERS’ EQUITY
Current liabilities:
Accounts payable		$	437			$	509
Accrued payroll and related expenses			311				493
Accrued expenses and other current liabilities			796				649
Deferred revenues			1,717				1,294
Total current liabilities			3,261				2,945
Loan from related party			7,647				7,647
Deferred revenues			18				17
Deferred income taxes			484				474
Total liabilities			11,410				11,083
Commitments and contingencies (see note 12)
Stockholders’ equity:
Preferred stock, $.01 par value, 4,000,000 shares authorized, no shares issued and outstanding			–				–
Common stock, $.01 par value, 18,750,000 shares authorized, 6,141,768 and 6,138,879 shares issued and 6,022,483 and 6,019,594 shares outstanding at March 31, 2013 and December 31, 2012, respectively			61				61
Additional paid-in capital			289,799				289,711
Accumulated deficit			(285,212	)			(284,288	)
Treasury stock, 119,285 shares, at cost			(496	)			(496	)
Total stockholders’ equity			4,152				4,988
Total liabilities and stockholders’ equity		$	15,562			$	16,071

 

See notes to unaudited consolidated condensed financial statements.

 

 

WebMediaBrands Inc.

Unaudited Consolidated Condensed Statements of Operations

For the Three Months Ended March 31, 2013 and 2012

(in thousands, except per share amounts)

 

		Three Months Ended March 31,
		2013				2012
Revenues		$	2,520			$	3,685
Cost of revenues			1,557				2,043
Advertising, promotion and selling			476				641
General and administrative			1,160				1,319
Depreciation			64				80
Amortization			109				136
Total operating expenses			3,366				4,219
Operating loss			(846	)			(534	)
Other loss, net			(4	)			–
Interest income			1				1
Interest expense			(63	)			(73	)
Loss before income taxes			(912	)			(606	)
Provision for income taxes			12				11
Net loss		$	(924	)		$	(617	)
Loss per share:
Basic net loss		$	(0.15	)		$	(0.10	)
Diluted net loss		$	(0.15	)		$	(0.10	)
Weighted average shares used in computing loss per share:
Basic			6,023				5,956
Diluted			6,023				5,956

  

See notes to unaudited consolidated condensed financial statements.

 

Shares outstanding and per share data have been adjusted to give effect to the one-for-seven stock split implemented on August 16, 2012 as described in note 5 to the consolidated financial statements.

 

  

 

WebMediaBrands Inc.

Unaudited Consolidated Condensed Statements of Cash Flows

For the Three Months Ended March 31, 2013 and 2012

(in thousands)

 

		Three Months Ended March 31,
		2013				2012
Cash flows from operating activities:
Net loss		$	(924	)		$	(617	)
Adjustments to reconcile net loss to net cash used in operating activities:
Depreciation and amortization			173				216
Stock-based compensation			81				122
Provision for losses on accounts receivable			5				9
Other, net			3				8
Amortization of debt issuance costs			10				9
Deferred income taxes			10				9
Changes in assets and liabilities (net of businesses acquired):
Accounts receivable, net			68				(139	)
Prepaid expenses and other assets			(257	)			7
Accounts payable, accrued expenses and other liabilities			(123	)			(55	)
Deferred revenues			423				307
Net cash used in operating activities			(531	)			(124	)
Cash flows from investing activities:
Purchases of property and equipment			(12	)			(32	)
Acquisitions of businesses and assets and other development costs			(48	)			(35	)
Net cash used in investing activities			(60	)			(67	)
Cash flows from financing activities:
Proceeds from exercise of stock options			7				44
Net cash provided by financing activities			7				44
Net decrease in cash and cash equivalents			(584	)			(147	)
Cash and cash equivalents, beginning of period			2,210				3,438
Cash and cash equivalents, end of period		$	1,626			$	3,291

  

See notes to unaudited consolidated condensed financial statements.

 

 

 

WebMediaBrands Inc.

Notes to Unaudited Consolidated Condensed Financial Statements

March 31, 2013

 

1. THE COMPANY

 

WebMediaBrands Inc. (“WebMediaBrands” or the “Company”) is an Internet media company that provides content, education and career services to social media, traditional media and creative professionals through a portfolio of vertical online properties, communities and trade shows. The Company’s online business includes:

 

·

mediabistro.com, a blog network providing content, education, community resources and career resources about major media industry verticals including new media, social media, Facebook, Twitter, TV news, advertising, public relations, publishing, design and mobile that includes the following:

 

	10,000Words	AppNewser	GalleyCat	SocialTimes
	AgencySpy	FishbowlDC	LostRemote	TVNewser
	AllFacebook	FishbowlLA	MediaJobsDaily	TVSpy
	AllTwitter	FishbowlNY	PRNewser	UnBeige

 

The mediabistro.com business also includes an industry-leading job board for media and business professionals focusing on job categories such as social media, online/new media, publishing, public relations/marketing, advertising, sales, design, web development, television and more;

 

·

InsideNetwork.com, a network of online properties dedicated to providing original market research, data services, news, events and job listings on the Facebook platform, on social gaming and on mobile applications ecosystems that includes the following:

  

	AppData	Inside Mobile Apps	PageData
	GPlusData	Inside Social Games	The Facebook Marketing Bible
	Inside Facebook

  

	·	SemanticWeb.com, a blog providing content, education, community resources and career resources on the commercialization and application of Semantic Technologies, Linked Data and Big Data; and
	·	AllCreativeWorld.com, a network of online properties providing content, education and community, career and other resources for creative and design professionals along with a marketplace for designing and purchasing logos that includes the following:

 

	AdsoftheWorld	DynamicGraphics	LiquidTreat
	BrandsoftheWorld	Graphics.com	StockLogos
	Creativebits	GraphicsDesignForum

 

Stocklogos.com is an identity design community offering creative and affordable logos.

 

The Company’s online business also includes community, membership and e-commerce offerings including a freelance listing service and premium membership services.

 

The Company’s education business features online and in-person courses and online conferences for social media and traditional media professionals. Online education conferences combine the concepts of a large-scale event and a small-group, educational workshop that offers attendees the opportunity to learn in a dynamic online setting with live weekly instruction via webcast, discussion forums, homework assignments, and small-group interaction where students receive one-on-one guidance and instruction from an advisor.

 

The Company’s trade shows include, among others, Inside 3D Printing Conference & Expo, Semantic Technology and Business Conference, Inside Social Apps Conference & Expo, Social Gambling & Gaming Summit and AllFacebook Marketing Conference.

 

 

2. BASIS OF PRESENTATION

 

The accompanying unaudited consolidated condensed financial statements have been prepared from the books and records of WebMediaBrands in accordance with accounting principles generally accepted in the United States of America and Rule 10-01 of Regulation S-X promulgated by the Securities and Exchange Commission (“SEC”). Accordingly, they do not include all of the information and footnotes required by accounting principles generally accepted in the United States of America for complete financial statements. The consolidated condensed statements of operations for the three months ended March 31, 2013 are not necessarily indicative of the results to be expected for the full year or any future interim period. These unaudited consolidated condensed financial statements should be read in conjunction with the consolidated financial statements and notes thereto included in WebMediaBrands’s Annual Report on Form 10-K for the year ended December 31, 2012. Certain reclassifications have been made to the prior year financial statements to conform to the current year presentation. In the opinion of management, all adjustments considered necessary for a fair presentation of the results for the interim periods presented have been reflected in such consolidated condensed financial statements.

 

The consolidated condensed financial statements include the accounts of WebMediaBrands and its wholly-owned subsidiaries: Mediabistro.com Inc., a Delaware corporation, and Inside Network, Inc., a California corporation. All significant intercompany balances and transactions have been eliminated in consolidation.

 

3. RECENT ACCOUNTING PRONOUNCEMENTS

 

In August 2012, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update (“ASU”) No. 2012-03, “Technical Amendments and Corrections to SEC Sections: Amendments to SEC Paragraphs Pursuant to SEC Staff Accounting Bulletin (“SAB”) No. 114, Technical Amendments Pursuant to SEC Release No. 33-9250, and Corrections Related to FASB ASU 2010-22.”  This update amends various SEC paragraphs pursuant to the issuance of SAB No. 114. This pronouncement did not have a material effect on the Company’s consolidated condensed financial statements.

 

4. SEGMENT INFORMATION

 

Segment information is presented in accordance with Accounting Standards Codification (“ASC”) Topic 280, “Segment Reporting”. ASC Topic 280 is typically based on a management approach that designates the internal organization used for making operating decisions and assessing performance. Operating segments are defined as business areas or lines of an enterprise about which financial information is available and evaluated on a regular basis by the chief operating decision-makers, or decision-making groups, in deciding how to allocate capital and other resources to such lines of business. The Company operates in one reportable segment. The Company is affected by seasonality as customers generally post more job listings during the first calendar quarter and fewer job listings during the fourth calendar quarter. Also, advertisers generally place fewer advertisements during the first and third calendar quarters of each year, which together with fluctuations in online job postings, directly affect our business. The Company’s results will also be impacted by the number and type of education courses offered and by the number and size of trade shows held in each quarter. In addition, there may be fluctuations as trade shows held in one period in the current year may be held in a different period in future years.

 

5. REVERSE STOCK SPLIT AND AUTHORIZED COMMON STOCK

 

On August 16, 2012 (“Effective Date”), the Company amended its Amended and Restated Certificate of Incorporation to reduce the number of shares of common stock the Company is authorized to issue and to effect a one-for-seven reverse stock split of the Company's issued common stock. On the Effective Date, the number of shares of common stock, par value $0.01 per share, the Company is authorized to issue decreased to 18,750,000 shares from 75,000,000 shares. As a result of the reverse stock split, each seven shares of common stock issued on the Effective Date were combined and converted into one share of common stock, par value $0.01 per share. Any stockholder who otherwise would have been entitled to receive a fractional share as a result of the reverse stock split became entitled to receive a cash payment in lieu of such fractional share. Each stockholder's percentage ownership in the Company and proportional voting power remained unchanged after the reverse stock split, except for minor changes and adjustments resulting from the treatment of fractional shares. Immediately prior to the effectiveness of the reverse stock split, 42,902,316 shares of common stock were issued. Immediately after the reverse stock split, 6,128,879 shares of common stock were issued. Trading of WebMediaBrands's common stock on The Nasdaq Capital Market began on a split-adjusted basis at the open of trading on August 17, 2012.  The ticker symbol remains "WEBM".

 

6. ACCOUNTING FOR EMPLOYEE STOCK-BASED COMPENSATION

 

Shares outstanding and per share data below have been adjusted to give effect to the one-for-seven reverse stock split implemented on August 16, 2012 as described in note 5 above.

 

 

Total employee stock-based compensation is as follows (in thousands):

 

		Three Months Ended March 31,
		2013				2012
Stock options for employees		$	80			$	124
Restricted stock for employees			1				(2	)
Total employee stock-based compensation		$	81			$	122

 

Total employee stock-based compensation increased additional paid-in capital by $81,000 and $122,000 for the three months ended March 31, 2013 and 2012, respectively.

 

The fair value of each stock option grant is estimated using the Black-Scholes option pricing model with the following assumptions used for grants during the periods presented:

 

		Three Months Ended March 31,
		2013				2012
Risk-free interest rate			0.35	%			1.10	%
Expected life (in years)			3.4				6.0
Dividend yield			0	%			0	%
Expected volatility			125	%			97	%

 

The expected stock price volatility is based on the historical volatility of WebMediaBrands’s common stock. The risk-free interest rate is based on the implied yield available on U.S. Treasury zero-coupon issues with an equivalent remaining term. The Company calculated the expected term using the simplified method for options issued through the third quarter of 2012. Since then, the Company has calculated the expected term for stock options issued using historical data. In 2010, the Company began issuing stock options with a 10-year life. As a result, the Company did not have enough historical data to calculate the expected term and therefore relied on the simplified method for the calculation of the expected life until the fourth quarter of 2012. 

 

The weighted-average grant date fair value of stock options granted during the three months ended March 31, 2013 and 2012 was $1.52 and $4.48, respectively.

 

The following table summarizes stock option activity during the three months ended March 31, 2013:

 

		Shares				Weighted Average Exercise Price				Weighted Average Remaining Contractual Term (years)				Aggregate Intrinsic Value (in thousands)
Outstanding at December 31, 2012			850,701			$	5.88
Granted			6,000			$	2.02
Exercised			(3,581	)		$	1.82
Forfeited, expired or cancelled			(29,124	)		$	5.00
Outstanding at March 31, 2013			823,996			$	5.90				5.69			$	–
Vested and expected to vest at March 31, 2013			781,095			$	5.99				5.66			$	–
Exercisable at March 31, 2013			604,986			$	6.46				4.59			$	–

 

The aggregate intrinsic value in the table above is before income taxes, based on WebMediaBrands’s closing stock price of $1.64 as of March 29, 2013, the last trading day of the quarter. During the three months ended March 31, 2013 and 2012, the total intrinsic value of stock options exercised was $2,000 and $105,000, respectively.

 

 

As of March 31, 2013, there was $408,000 of total unrecognized compensation cost related to nonvested stock-based compensation arrangements granted under the Company’s stock incentive plan. The Company expects to amortize that cost over a weighted-average period of 1.9 years.

 

The following table summarizes restricted stock activity during the three months ended March 31, 2013:

 

		Shares				Weighted Average Grant Date Fair Value
Outstanding  nonvested shares at December 31, 2012			779			$	11.69
Granted			–			$	–
Vested			(87	)		$	11.69
Forfeited			(692	)		$	11.69
Outstanding nonvested shares at March 31, 2013			–			$	–

 

7. COMPUTATION OF LOSS PER SHARE

 

Shares outstanding and per share data have been adjusted to give effect to the one-for-seven reverse stock split implemented on August 16, 2012 as described in note 5 above.

 

The Company computes basic loss per share using the weighted average number of common shares outstanding during the period. The Company computes diluted loss per share using the weighted average number of common and dilutive common equivalent shares outstanding during the period. Common equivalent shares consist of the incremental common shares issuable upon the exercise of stock options. Common equivalent shares are excluded from the calculation if their effect is anti-dilutive.

 

Computations of basic and diluted loss per share for the periods presented are as follows (in thousands, except per share amounts):

 

		Three Months Ended March 31,
		2013				2012
Net loss		$	(924	)		$	(617	)
Basic weighted average common shares outstanding			6,023				5,956
Effect of dilutive stock options			–				–
Total basic weighted average common shares and dilutive stock options			6,023				5,956
Basic and diluted loss per share		$	(0.15	)		$	(0.10	)

 

The following table summarizes the number of outstanding stock options excluded from the calculation of diluted loss per share for the periods presented because the result would have been anti-dilutive (in thousands, except weighted average exercise price):

  

		Three Months Ended March 31,
		2013				2012
Number of anti-dilutive stock options			824				966
Weighted average exercise price		$	5.90			$	6.51

 

 

8. INTANGIBLE ASSETS AND GOODWILL

 

Amortized Intangible Assets

 

The following tables set forth the intangible assets that are subject to amortization, including the related accumulated amortization (in thousands):

 

		March 31, 2013
		Cost				Accumulated Amortization				Net Carrying Value
Website and product development costs		$	829			$	(418	)		$	411
Customer relationships			797				(449	)			348
Copyrights and trademarks			540				(223	)			317
Total		$	2,166			$	(1,090	)		$	1,076

  

		December 31, 2012
		Cost				Accumulated Amortization				Net Carrying Value
Website and product development costs		$	780			$	(369	)		$	411
Customer relationships			804				(425	)			379
Copyrights and trademarks			540				(194	)			346
Content development costs			156				(156	)			–
Total		$	2,280			$	(1,144	)		$	1,136

 

The Company amortizes intangible assets that are subject to amortization on a straight-line basis over their expected useful lives. The Company amortizes website and product development costs, customer relationships and copyrights and trademarks over three to seven years and content development costs over two years.  

 

Amortization expense related to intangible assets subject to amortization was $109,000 and $136,000 for the three months ended March 31, 2013 and 2012, respectively. Estimated annual amortization expense for the next five years, including the remainder of 2013, is expected to be as follows (in thousands):

 

Years Ending December 31:
2013		$	291
2014			313
2015			263
2016			123
2017			61
Thereafter			25
		$	1,076

 

Unamortized Intangible Assets

 

The following tables set forth the intangible assets that are not subject to amortization (in thousands):

 

		March 31, 2013				December 31, 2012
Domain names		$	1,169			$	1,169

Goodwill

 

There were no changes in the carrying amount of goodwill for the three months ended March 31, 2013.

 

 

9. ACCRUED EXPENSES AND OTHER CURRENT LIABILITIES

 

Accrued expenses and other current liabilities consist of the following (in thousands):

 

		March 31, 2013				December 31, 2012
Deferred rent		$	268			$	120
Accrued professional fees			167				107
Customer overpayments			64				96
Accrued property and capital taxes			42				65
Other			255				261
Total		$	796			$	649

 

10. DEBT

 

On May 29, 2009, WebMediaBrands entered into a loan agreement in the amount of $7.2 million with the Company’s Chief Executive Officer, Alan M. Meckler (the “2009 Meckler Loan”).

 

In conjunction with the 2009 Meckler Loan, the Company (1) entered into a promissory note jointly and severally payable by the Company and its subsidiary, Mediabistro, to Mr. Meckler (the “2009 Note”), (2) entered into a Security Agreement by and between the Company and Mr. Meckler (the “Security Agreement”) pursuant to which the Company granted to Mr. Meckler a security interest in the Company’s assets, (3) entered into an Intellectual Property Security Agreement by and between the Company and Mr. Meckler (the “IP Security Agreement”) pursuant to which the Company granted to Mr. Meckler a security interest in the Company’s intellectual property, (4) entered into a Pledge Agreement by the Company in favor of Mr. Meckler (the “Pledge Agreement”) pursuant to which the Company granted to Mr. Meckler a security interest in and an assignment of all of the shares of stock or other equity interest of Mediabistro owned by the Company, and (5) agreed to enter into a Blocked Account Control Agreement by and among the Company, Mr. Meckler and a depositary bank, to further secure the Note (the “Control Agreement” and, together with the 2009 Note, the Security Agreement, the IP Security Agreement and the Pledge Agreement, the “Company Loan Documents”).

 

Simultaneously, Mediabistro (1) entered into a Security Agreement by and between Mediabistro and Mr. Meckler pursuant to which Mediabistro granted to Mr. Meckler a security interest in Mediabistro’s assets (the “Mediabistro Security Agreement”), (2) entered into an Intellectual Property Security Agreement by and between Mediabistro and Mr. Meckler pursuant to which Mediabistro granted to Mr. Meckler a security interest in Mediabistro’s intellectual property (the “Mediabistro IP Security Agreement”), and (3) agreed to enter into a Blocked Account Control Agreement by and among Mediabistro, Mr. Meckler and a depositary bank, to further secure the 2009 Note (the “Mediabistro Control Agreement” and, together with the Mediabistro Security Agreement and the Mediabistro IP Security Agreement, the “Mediabistro Documents”).

 

To fund the 2009 Meckler Loan, Mr. Meckler used a portion of the proceeds of a residential mortgage loan that Bank of America, N.A. (“BOA”) granted to Mr. Meckler and Mrs. Ellen L. Meckler (the “BOA Loan”). Pursuant to a Collateral Assignment of the 2009 Note dated May 29, 2009, by Mr. Meckler to BOA, Mr. Meckler collaterally assigned the Note to BOA as additional collateral for the BOA Loan. Payment terms of the 2009 Meckler Loan reflect pass through of the BOA Loan payment terms (excluding those funds borrowed pursuant to the BOA Loan for Mr. Meckler’s personal use). As a result, the interest rate, amortization schedule and maturity date of each loan are identical.

 

On September 1, 2010, WebMediaBrands entered into a Note Modification Agreement with Mr. Meckler. The Note Modification Agreement reduced the interest rate of the 2009 Note from 4.7% to 3.4% per annum. Interest on the outstanding principal amount is due and payable on the first day of each calendar month through June 2014. Thereafter, principal and interest is due and payable in equal monthly payments in an amount sufficient to pay the loan in full based on an amortization term of 15 years. In addition to the interest rate reduction noted above, the Note Modification Agreement also reduced the required minimum monthly principal and interest payments that commence on July 1, 2014.  

 

On November 14, 2011, the Company and Mediabistro entered into a 2^nd Note Modification Agreement with Mr. Meckler. The 2^nd Note Modification Agreement amends the 2009 Note, which is described above.  Under the 2^nd Note Modification Agreement, the parties agreed to terminate the Company’s obligation to make a monthly accommodation fee of $40,000 to Mr. Meckler. As a result, the 2^nd Note Modification Agreement reduces the effective interest payable on the 2009 Meckler Loan by $480,000 per year. The Company granted Mr. Meckler a fully vested stock option to purchase 142,858 shares of the Company’s common stock (after giving effect to the August 16, 2012 one-for-seven reverse stock split) pursuant to the terms of the 2008 WebMediaBrands Stock Option Plan.  All other terms of the 2009 Meckler Loan remain unchanged.

 

 

Also on November 14, 2011, WebMediaBrands  and its wholly owned subsidiaries, Mediabistro and Inside Network: (1) entered into a promissory note jointly and severally payable by the Company, Mediabistro and Inside Network to Mr. Meckler (the “2011 Note”); (2) entered into a Security Agreement by and between the Company and Mr. Meckler (the “WEBM Security Agreement”) pursuant to which the Company granted to Mr. Meckler a security interest in the Company’s assets; (3) entered into an Intellectual Property Security Agreement by and between the Company and Mr. Meckler (the “2^nd IP Security Agreement”) pursuant to which the Company granted to Mr. Meckler a security interest in the Company’s intellectual property; and (4) entered into a Pledge Agreement by the Company in favor of Mr. Meckler (the “2^nd Pledge Agreement”) and, together with the 2011 Note, the WEBM Security Agreement and the 2^nd IP Security Agreement, (the “2011 Company Loan Documents”) pursuant to which the Company granted to Mr. Meckler a security interest in and assignment of all of the shares of stock or other equity interest of Mediabistro and Inside Network owned by the Company.

 

In the 2011 Note, Mr. Meckler loaned the Company $1,750,000 (the “2011 Meckler Loan”). The interest rate of the 2011 Note at the time of the loan was 3.10% per annum.  Interest on the outstanding principal amount is due and payable monthly until August 2014.  Thereafter, principal and interest is due and payable in equal monthly installments, with the outstanding principal amount, together with all accrued interest thereon, due and payable on August 18, 2016. The 2011 Note may be prepaid at any time without penalty or premium.

 

In partial consideration of the 2011 Note and the 2^nd Note Modification Agreement, Inside Network entered into a Security Agreement by and between Inside Network and Mr. Meckler pursuant to which Inside Network granted to Mr. Meckler a security interest in Inside Network’s assets (the “Inside Network Security Agreement”) to secure Inside Network’s obligations under the 2011 Note and the 2009 Note.

 

The 2011 Company Loan Documents and the Inside Network Security Agreement contain customary terms for a loan transaction of this type.  In an Event of Default (as defined in the 2011 Note) occurs and is continuing beyond a specified cure period, Mr. Meckler may declare the 2011 Meckler Loan immediately due and payable. The 2011 Meckler Loan also will become immediately due and payable upon certain events of bankruptcy or insolvency or in the event of a Change of Control (as defined in the 2011 Note) of Mediabistro, Inside Network, or the Company.

 

On July 27, 2012, the Company entered into a 3^rd Note Modification Agreement with Mr. Meckler that reduces the interest rate (i) of the 2009 Note to 2.975% from 3.40% effective June 1, 2012, and (ii) of the 2011 Note to 2.40% from 3.10% effective on June 18, 2012.  All other terms of the promissory notes remain unchanged. 

 

Interest expense on the 2009 Meckler Loan and 2011 Meckler Loan was $54,000 and $64,000 during the three months ended March 31, 2013 and 2012, respectively. There are no future minimum principal payments due under the 2009 Meckler Loan and the 2011 Meckler Loan for the year ended December 31, 2013.  There are future minimum payments due to Mr. Meckler for the 2009 Meckler Loan and the 2011 Meckler Loan in the amount of $189,000 for the year ended December 31, 2014; $419,000 for the year ended December 31, 2015; and $7.0 million for the year ended December 31, 2016.

 

11. INCOME TAXES

 

The Company recorded a provision for income taxes of $12,000 and $11,000 during the three months ended March 31, 2013 and 2012, respectively.

 

Based on current projections, management believes that it is more likely than not that WebMediaBrands will have insufficient taxable income to allow recognition of its deferred tax assets. Accordingly, a valuation allowance has been established against deferred tax assets to the extent that deductible temporary differences cannot be offset by taxable temporary differences. To the extent that the net book value of indefinite lived assets exceeds the net tax value of indefinite lived assets, an additional tax provision will be incurred as the assets are amortized.

 

The total amount of unrecognized tax benefits was $100,000 as of March 31, 2013 and December 31, 2012, all of which would affect the effective tax rate, if recognized, as of March 31, 2013.

 

12. COMMITMENTS AND CONTINGENCIES

 

WebMediaBrands is subject to legal proceedings and claims that arise in the ordinary course of its business. In the opinion of management, the amount of ultimate liability with respect to these actions should not materially affect the financial statements of WebMediaBrands.

  

 

 

Item 2.

Management’s Discussion and Analysis of Financial Condition and Results of Operations

 

The following discussion should be read in conjunction with our unaudited consolidated condensed financial statements and the accompanying notes that appear elsewhere in this filing. Statements in this Form 10-Q, that are not historical facts are “forward-looking statements” under the safe harbor provisions of the Private Securities Litigation Reform Act of 1995. Forward-looking statements involve risks and uncertainties that could cause actual results to differ materially from those described. The potential risks and uncertainties address a variety of subjects including, for example: general economic conditions; the competitive environment in which WebMediaBrands competes; the unpredictability of WebMediaBrands’s future revenues, expenses, cash flows and stock price; WebMediaBrands’s ability to integrate acquired businesses, products and personnel into its existing businesses; WebMediaBrands’s dependence on a limited number of advertisers; and WebMediaBrands’s ability to protect its intellectual property. For a more detailed discussion of these risks and uncertainties, refer to WebMediaBrands’s other reports filed with the Securities and Exchange Commission pursuant to the Securities Exchange Act of 1934. The forward-looking statements included herein are made as of the date of this Form 10-Q, and we are under no obligation to update the forward-looking statements after the date hereof, except as required by law.

 

Overview

 

WebMediaBrands Inc. is an Internet media company that provides content, education and career services to social media, traditional media and creative professionals through a portfolio of vertical online properties, communities and trade shows.  Our online business includes:

 

·

mediabistro.com, a blog network providing content, education, community resources and career resources about major media industry verticals including new media, social media, Facebook, Twitter, TV news, advertising, public relations, publishing, design and mobile that includes the following:

 

	10,000Words	AppNewser	GalleyCat	SocialTimes
	AgencySpy	FishbowlDC	LostRemote	TVNewser
	AllFacebook	FishbowlLA	MediaJobsDaily	TVSpy
	AllTwitter	FishbowlNY	PRNewser	UnBeige

 

Our mediabistro.com business also includes an industry-leading job board for media and business professionals focusing on job categories such as social media, online/new media, publishing, public relations/marketing, advertising, sales, design, web development, television and more;

 

·

InsideNetwork.com, a network of online properties dedicated to providing original market research, data services, news, events and job listings on the Facebook platform, on social gaming and on mobile applications ecosystems that includes the following:

  

	AppData	Inside Mobile Apps	PageData
	GPlusData	Inside Social Games	The Facebook Marketing Bible
	Inside Facebook

  

·

SemanticWeb.com, a blog providing content, education, community resources and career resources on the commercialization and application of Semantic Technologies, Linked Data and Big Data; and

 

·

AllCreativeWorld.com, a network of online properties providing content, education and community, career and other resources for creative and design professionals along with a marketplace for designing and purchasing logos that includes the following:

 

	AdsoftheWorld	DynamicGraphics	LiquidTreat
	BrandsoftheWorld	Graphics.com	StockLogos
	Creativebits	GraphicsDesignForum

 

Stocklogos.com is a leading identity design community offering creative, high quality and affordable logos.

 

Our online business also includes community, membership and e-commerce offerings including a freelance listing service and premium membership services.

 

Our education business features online and in-person courses and online conferences for social media and traditional media professionals. Online education conferences combine the concepts of a large-scale event and a small-group, educational workshop that offers attendees the opportunity to learn in a dynamic online setting with live weekly instruction via webcast, discussion forums, homework assignments, and small-group interaction where students receive one-on-one guidance and instruction from an advisor.

 

 

Our trade shows include, among others, Inside 3D Printing Conference & Expo, Semantic Technology and Business Conference, Inside Social Apps Conference & Expo, Social Gambling & Gaming Summit and AllFacebook Marketing Conference.

 

Our businesses cross-leverage and cross-promote our content, product and service offerings. For example, users or our Websites read our content, search for jobs on our job boards, attend our trade shows, subscribe to and purchase products and services and take continuing education courses.

 

We generate revenues from:

 

	·	fees charged for online job postings;
	·	attendee registration fees for our online and in-person education courses and online conferences;
	·	advertising on our Websites and e-mail newsletters;
	·	fees for social media-related market research and data services products ;
	·	attendee registration fees to our trade shows;
	·	exhibition space fees and vendor sponsorships to our trade shows;
	·	subscription sales from our paid membership services; and
	·	granting rights to use logos that are downloaded from our stocklogos.com website.

 

Customers generally post more job listings during the first calendar quarter and fewer job listings during the fourth calendar quarter. Also, advertisers generally place fewer advertisements during the first and third calendar quarters of each year, which, together with fluctuations in online job postings, directly affect our business. Our results will also be impacted by the number and type of education courses we offer and by the number and size of trade shows we hold in each quarter. In addition, there may be fluctuations as trade shows held in one period in the current year may be held in a different period in future years.

 

The principal costs of our business relate to: payroll and benefits costs for our personnel; technology-related costs; facilities and equipment; and venue, speaker and advertising expenses for our trade shows and courses.

 

Results of Operations

 

Revenues

 

Revenues were $2.5 million for the three months ended March 31, 2013 and $3.7 million for the three months ended March 31, 2012, representing a decrease of 32%. This change was primarily due to the reduced number of trade shows that were held during the first quarter of 2013. We did not run any trade shows during the three months ended March 31, 2013. By comparison, we ran three trade shows during the same period in 2012, including our Inside Social Apps trade show, which will be held during the second quarter of 2013. The decrease in advertising revenues is due in part to the consolidation of certain social media services-related companies that had previously advertised with us.

 

The following table sets forth, for the periods indicated, the components of our revenues (in thousands):

 

		Three Months Ended March 31,								2013 vs. 2012
		2013				2012				$				%
Online job postings		$	941			$	1,153			$	(212	)			(18	)%
Education			535				542				(7	)			(1	)
Advertising			386				651				(265	)			(41	)
Research			383				438				(55	)			(13	)
Other			268				261				7				3
Trade shows			7				640				(633	)			(99	)
Total		$	2,520			$	3,685			$	(1,165	)			(32	)%

  

Other revenues include subscription sales from our paid membership services and sales of logos through stocklogos.com.

 

 

Cost of revenues

 

Cost of revenues primarily consists of payroll and benefits costs for technology and editorial personnel, freelance costs, communications infrastructure and trade show and education operations. Cost of revenues excludes depreciation and amortization. Cost of revenues was $1.6 million for the three months ended March 31, 2013 and $2.0 million for the three months ended March 31, 2012, representing a decrease of 24%.  This change was primarily due to a decrease in trade show costs of $372,000, as well as decreases in editorial freelance and technology consulting costs of $80,000 and employee-related costs of $79,000.

 

We intend to make investments through internal development and, where appropriate opportunities arise, through targeted asset acquisitions to continue to expand our content offerings. We might need to increase our spending in order to create additional content related to new topics, trade shows or offerings.

 

Advertising, promotion and selling

 

Advertising, promotion and selling expenses primarily consist of payroll and benefits costs for sales and marketing personnel, sales commissions and promotion costs. Advertising, promotion and selling expenses were $476,000 and $641,000 for the three months ended March 31, 2013 and 2012, respectively, representing a decrease of 26%.  This decrease was primarily due to a decrease in employee-related costs of $90,000 and a decrease in trade show advertising costs of $53,000.

 

General and administrative

 

General and administrative expenses consist primarily of payroll and benefits costs for administrative personnel, office-related costs and professional fees. General and administrative expenses were $1.2 million and $1.3 million for the three months ended March 31, 2013 and 2012, respectively, representing a decrease of 12%. This decrease was due primarily to a decrease in rent expense for our New York City location of $81,000, a decrease in employee-related costs of $79,000 and a decrease in stock-based compensation of $43,000, which was partially offset by an increase in professional fees of $35,000. The decrease in rent expense related to our New York City office was due to a modification of the terms of our office lease, which resulted in a reduction in the office space that we occupy.

 

Depreciation and amortization

 

Depreciation expense was $64,000 for the three months ended March 31, 2013 and $80,000 for the three months ended March 31, 2012, representing a decrease of 2%. This decrease was due primarily to certain assets becoming fully depreciated.

 

Amortization expense was $109,000 for the three months ended March 31, 2013 and $136,000 for the three months ended March 31, 2012, representing a decrease of 20%. This decrease was primarily due to certain intangibles becoming fully amortized.

 

Our depreciation and amortization expenses might vary in future periods based upon a change in our capital expenditure levels or any future acquisitions.

 

Other loss, net

 

Other loss was $4,000 and $0 during the three months ended March 31, 2013 and 2012, respectively.  

 

Interest income and interest expense

 

The following table sets forth, for the periods indicated, a comparison of our interest income and interest expense (dollars in thousands):

 

		Three Months Ended March 31,								2013 vs. 2012
		2013				2012				$				%
Interest income		$	1			$	1			$	–				–%
Interest expense		$	(63	)		$	(73	)		$	10				14%

 

Interest expense during the three months ended March 31, 2013 and 2012 related primarily to costs associated with our loans from a related party. The reduction in interest expense during the quarter ended March 31, 2013 was due to the 3^rd Note Modification Agreement that was entered into on July 27, 2012. See “Related Party Transactions” for a description of the loans and the 3^rd Note Modification Agreement.

 

 

Provision for income taxes

 

We recorded a provision for income taxes of $12,000 and $11,000 during the three months ended March 31, 2013 and 2012, respectively.

 

Based on current projections, management believes that it is more likely than not that we will have insufficient taxable income to allow recognition of our deferred tax assets. Accordingly, we have established a valuation allowance against deferred tax assets to the extent that deductible temporary differences cannot be offset by taxable temporary differences. To the extent that the net book value of indefinite lived assets exceeds the net tax value of indefinite lived assets, we will incur an additional tax provision as the assets are amortized.

 

The total amount of unrecognized tax benefits was $100,000 as of March 31, 2013 and December 31, 2012, all of which would affect the effective tax rate, if recognized, as of March 31, 2013.

 

Liquidity and Capital Resources

 

The following table sets forth, for the periods indicated, a comparison of the key components of our liquidity and capital resources (dollars in thousands):

 

		Three Months Ended March 31,								2013 vs. 2012
		2013				2012				$				%
Operating cash flows		$	(531	)		$	(124	)		$	(407	)			(328	)%
Investing cash flows			(60	)			(67	)			7				10
Financing cash flows			7				44				(37	)			(84	)

   

		As of								2013 vs. 2012
		March 31, 2013				December 31, 2012				$				%
Cash and cash equivalents		$	1,626			$	2,210			$	(584	)			(26	)%
Working capital			(420	)			292				(712	)			(244	)
Loan from related party			7,647				7,647				–				–

 

Since inception, we have funded operations through various means, including public offerings of our common stock, the sales of certain of our businesses, including our Jupiterimages and Internet.com businesses in 2009, as well as credit agreements and cash flows from operating activities.

 

Operating activities. Cash used by operating activities increased during the three months ended March 31, 2013 compared to the same period of 2012 due primarily to increased losses from operations.

 

Investing activities. The amounts of cash used in investing activities vary in correlation to the number and cost of the acquisitions we complete.  Net cash used in investing activities during the three months ended March 31, 2013 and 2012, related primarily to the purchase of certain assets and website and product development costs.  

 

Financing activities. Cash provided by financing activities during the three months ended March 31, 2013 and 2012 related primarily to proceeds from stock option exercises.

 

We expect to continue our investing activities on a limited basis for the foreseeable future, which includes the potential to strategically acquire content and assets that are complementary to our business. We expect to finance any near-term investments with cash on hand.

 

Our existing cash balances might decline during 2013 in the event of a downturn in the economy or changes in our planned cash outlay. However, we believe the remaining cash flow together with our existing cash balances, our current business plan and our current revenue prospects will be sufficient to meet the working capital and operating requirements of our business for at least the next 12 months. 

 

Off-Balance Sheet Arrangements

 

We have not entered into off-balance sheet arrangements or issued guarantees to third parties.

 

 

Recent Accounting Pronouncements

 

We are required to adopt certain new accounting pronouncements. See note 3 to the consolidated condensed financial statements included in Item 1 of this Form 10-Q.

 

Related Party Transactions

 

On May 29, 2009, we entered into a loan agreement in the amount of $7.2 million with our Chief Executive Officer, Alan M. Meckler (the “2009 Meckler Loan”).

 

In conjunction with the 2009 Meckler Loan, we (1) entered into a promissory note jointly and severally payable by us and our subsidiary, Mediabistro, to Mr. Meckler (the “2009 Note”), (2) entered into a Security Agreement with Mr. Meckler (the “Security Agreement”) pursuant to which we granted to Mr. Meckler a security interest in the our assets, (3) entered into an Intellectual Property Security Agreement with Mr. Meckler (the “IP Security Agreement”) pursuant to which the we granted to Mr. Meckler a security interest in the our intellectual property, (4) entered into a Pledge Agreement by us in favor of Mr. Meckler (the “Pledge Agreement”) pursuant to which we granted to Mr. Meckler a security interest in and an assignment of all of the shares of stock or other equity interest of Mediabistro owned by us, and (5) agreed to enter into a Blocked Account Control Agreement with Mr. Meckler and a depositary bank, to further secure the Note (the “Control Agreement” and, together with the 2009 Note, the Security Agreement, the IP Security Agreement and the Pledge Agreement, the “Company Loan Documents”).

 

Simultaneously, Mediabistro (1) entered into a Security Agreement with Mr. Meckler pursuant to which Mediabistro granted to Mr. Meckler a security interest in Mediabistro’s assets (the “Mediabistro Security Agreement”), (2) entered into an Intellectual Property Security Agreement with Mr. Meckler pursuant to which Mediabistro granted to Mr. Meckler a security interest in Mediabistro’s intellectual property (the “Mediabistro IP Security Agreement”), and (3) agreed to enter into a Blocked Account Control Agreement with Mr. Meckler and a depositary bank, to further secure the 2009 Note (the “Mediabistro Control Agreement” and, together with the Mediabistro Security Agreement and the Mediabistro IP Security Agreement, the “Mediabistro Documents”).

 

To fund the 2009 Meckler Loan, Mr. Meckler used a portion of the proceeds of a residential mortgage loan that Bank of America, N.A. (“BOA”) granted to Mr. Meckler and Mrs. Ellen L. Meckler (the “BOA Loan”). Pursuant to a Collateral Assignment of the 2009 Note dated May 29, 2009, by Mr. Meckler to BOA, Mr. Meckler collaterally assigned the 2009 Note to BOA as additional collateral for the BOA Loan. Payment terms of the 2009 Meckler Loan reflect pass through of the BOA Loan payment terms (excluding those funds borrowed pursuant to the BOA Loan for Mr. Meckler’s personal use). As a result, the interest rate, amortization schedule and maturity date of each loan are identical.

 

On September 1, 2010, we entered into a note modification agreement with Mr. Meckler.  The Note Modification Agreement reduced the interest rate of the 2009 Note from 4.7% to 3.4% per annum. Interest on the outstanding principal amount is due and payable on the first day of each calendar month through June 2014. Thereafter, principal and interest is due and payable in equal monthly payments in an amount sufficient to pay the loan in full based on an amortization term of 15 years.  In addition to the interest rate reduction noted above, the note modification agreement also reduced the required minimum monthly principal and interest payments that commence on July 1, 2014

 

On November 14, 2011, we along with Mediabistro, entered into a 2^nd Note Modification Agreement with Mr. Meckler. The 2^nd Note Modification Agreement amends the 2009 Note, which is described above.  Under the 2^nd Note Modification Agreement, the parties agreed to terminate our obligation to make a monthly accommodation fee of $40,000 to Mr. Meckler. As a result, the 2^nd Note Modification Agreement reduces the effective interest payable on the 2009 Meckler Loan by $480,000 per year. We granted Mr. Meckler a fully vested stock option to purchase 142,858 shares of our common stock (after giving effect to the August 16, 2012 one-for-seven reverse stock split) pursuant to the terms of the 2008 WebMediaBrands Stock Option Plan.  All other terms of the 2009 Meckler Loan remain unchanged.

 

Also on November 14, 2011, we, along with our wholly owned subsidiaries, Mediabistro and Inside Network: (1) entered into a promissory note jointly and severally payable by the Company, Mediabistro and Inside Network to Mr. Meckler (the “2011 Note”); (2) entered into a Security Agreement by and between the Company and Mr. Meckler (the “WEBM Security Agreement”) pursuant to which the Company granted to Mr. Meckler a security interest in the Company’s assets; (3) entered into an Intellectual Property Security Agreement by and between the Company and Mr. Meckler (the “2^nd IP Security Agreement”) pursuant to which the Company granted to Mr. Meckler a security interest in the Company’s intellectual property; and (4) entered into a Pledge Agreement by the Company in favor of Mr. Meckler (the “2^nd Pledge Agreement”) and, together with the 2011 Note, the WEBM Security Agreement and the 2^nd IP Security Agreement, (the “2011 Company Loan Documents”) pursuant to which the Company granted to Mr. Meckler a security interest in and assignment of all of the shares of stock or other equity interest of Mediabistro and Inside Network owned by the Company.

 

In the 2011 Note, Mr. Meckler loaned us $1,750,000 (the “2011 Meckler Loan”).  The interest rate of the 2011 Note at the time of the loan was 3.10% per annum.  Interest on the outstanding principal amount is due and payable monthly until August 2014.  Thereafter, principal and interest is due and payable in equal monthly installments, with the outstanding principal amount, together with all accrued interest thereon, due and payable on August 18, 2016.  The 2011 Note may be prepaid at any time without penalty or premium.

 

 

In partial consideration of the 2011 Note and the 2^nd Note Modification Agreement, Inside Network entered into a Security Agreement by and between Inside Network and Mr. Meckler pursuant to which Inside Network granted to Mr. Meckler a security interest in Inside Network’s assets (the “Inside Network Security Agreement”) to secure Inside Network’s obligations under the 2011 Note and the 2009 Note.

 

The 2011 Company Loan Documents and Inside Network Security Agreement contain customary terms for a loan transaction of this type.  In an Event of Default (as defined in the 2011 Note) occurs and is continuing beyond a specified cure period, Mr. Meckler may declare the 2011 Meckler Loan immediately due and payable.  The 2011 Meckler Loan also will become immediately due and payable upon certain events of bankruptcy or insolvency or in the event of a Change of Control (as defined in the 2011 Note) of Mediabistro, Inside Network, or the Company.

 

On July 27, 2012, we entered into a 3^rd Note Modification Agreement with Mr. Meckler that reduces the interest rate (i) of the 2009 Note to 2.975% from 3.40% effective June 1, 2012, and (ii) of the 2011 Note to 2.40% from 3.10% effective on June 18, 2012.  All other terms of the promissory notes remain unchanged. 

 

Interest expense on the 2009 Meckler Loan and 2011 Meckler Loan was $54,000 and $64,000 during the three months ended March 31, 2013 and 2012, respectively. There are no future minimum principal payments due under the 2009 Meckler Loan and the 2011 Meckler Loan for the year ended December 31, 2013.  There are future minimum principal payments due to Mr. Meckler for the 2009 Meckler Loan and the 2011 Meckler Loan in the amount of $189,000 for the year ended December 31, 2014; $419,000 for the year ended December 31, 2015; and $7.0 million for the year ended December 31, 2016.

 

Critical Accounting Policies

 

There have been no changes to our critical accounting policies from those included in our most recent Form 10-K for the year ended December 31, 2012.

 

Item 3.

Quantitative & Qualitative Disclosures about Market Risk

 

As a smaller reporting company as defined by Item 10(f)(1) of Regulation S-K, we are not required to provide the information required by this Item.

   

Item 4.

Controls and Procedures

 

Disclosure Controls and Procedures. The Company conducted an evaluation of the effectiveness of the design and operation of our disclosure controls and procedures, as defined in Rule 13a-15(e) and 15d-15(e) of the Securities Exchange Act of 1934, as amended (“Exchange Act”) under the supervision and with the participation of its management including the Company’s  Chief Executive Officer (“CEO”) and Chief Financial Officer (“CFO”), or persons performing similar functions, as appropriate to allow timely decisions regarding required disclosure.

 

Disclosure controls and procedures are designed only to provide reasonable assurance that (i) information required to be disclosed in an issuer’s reports filed under the Exchange Act is recorded, processed, summarized and reported within the time period specified in the SEC rules and forms and (ii) information is accumulated and communicated to management as appropriate to allow timely decisions regarding required disclosures.

 

As a result of this evaluation, the CEO and CFO concluded that the Company’s disclosure controls and procedures are effective to provide the reasonable assurance discussed above.

 

Management’s Report on Internal Control over Financial Reporting.   Management of the Company is responsible for establishing and maintaining adequate internal control over financial reporting, as defined in Rules 13a-15(f) and 15d-15(f) under the Exchange Act. The Company’s internal control over financial reporting is designed to provide reasonable assurance regarding the reliability of financial reporting and preparation of financial statements for external purposes in accordance with generally accepted accounting principles.  A control system, no matter how well conceived and operated, can provide only reasonable assurance that the objectives of the control system are met.   Management applied its judgment in assessing the benefits of controls relative to their cost.   Because of the inherent limitations in control systems, no evaluation of controls can provide absolute assurance that all controls issues and instances of fraud, if any, within the company have been detected.  Because of its inherent limitations, internal control over financial reporting might not prevent or detect misstatements. Also, projections of any evaluation of the effectiveness of internal control over financial reporting to future periods are subject to the risk that controls might become inadequate because of changes in conditions, or that the degree of compliance with policies or procedures might deteriorate.  The Company’s management, with the participation of the CEO and CFO, assessed the effectiveness of the Company’s internal control over financial reporting as of March 31, 2013.  Based on the Company’s evaluation, management concluded that our internal control over financial reporting was effective as of March 31, 2013 based on criteria in Internal Control—Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission.

 

Changes in Internal Control over Financial Reporting.  There were no changes in our internal control over financial reporting during the quarter ended March 31, 2013 that have materially affected, or are reasonably likely to affect, our internal control over financial reporting.

  

 

 

PART II - OTHER INFORMATION

 

Item 1.

LEGAL PROCEEDINGS

 

None.

 

Item 1A.

RISK FACTORS

 

The primary risk factors affecting our business have not changed materially from the risk factors set forth in our Annual Report on Form 10-K for the year ended December 31, 2012.

 

Item 2.

UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS

 

Not Applicable

 

Item 3.

DEFAULTS UPON SENIOR SECURITIES

 

Not Applicable

 

Item 4.

MINE SAFETY DISCLOSURES

  

Not Applicable

 

Item 5.

OTHER INFORMATION

 

Not Applicable

  

Item 6.

EXHIBITS

 

The following is a list of exhibits filed as part of this Report on Form 10-Q.

 

Exhibit Number		Description
31.1		Certification pursuant to Section 302 of the Sarbanes-Oxley Act of 2002
31.2		Certification pursuant to Section 302 of the Sarbanes-Oxley Act of 2002
32.1		Certification Pursuant to 18 U.S.C. Section 1350, as Adopted Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002
32.2		Certification Pursuant to 18 U.S.C. Section 1350, as Adopted Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002
101.INS		XBRL Instance Document
101.SCH		XBRL Schema Document
101.CAL		XBRL Calculations Linkbase Document
101.DEF		XBRL Definition Linkbase Document
101.LAB		XBRL Label Linkbase Document
101.PRE		XBRL Presentation Linkbase Document

   

 

 

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.

 

		WebMediaBrands Inc.
Dated: May 9, 2013		/s/ Alan M. Meckler
		Alan M. Meckler Chairman and Chief Executive Officer
		/s/ Donald J. O’Neill
		Donald J. O’Neill Vice President and Chief Financial Officer (Principal Financial Officer and Chief Accounting Officer)