Actua Corp - FORM 10-Q - May 9, 2016

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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
 
FORM 10-Q
 
(Mark One)
ý
QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the Quarterly Period Ended March 31, 2016.
or
¨
TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURUTIES EXCHANGE ACT OF 1934
For the Transition Period from              to             .
Commission File Number 001-16249
 
Actua Corporation
(Exact Name of Registrant as Specified in Its Charter)
 

Delaware
 
23-2996071
(State or Other Jurisdiction of
Incorporation or Organization)
 
(I.R.S. Employer
Identification Number)
 
555 East Lancaster Ave., Suite 640, Radnor, PA
 
19087
(Address of Principal Executive Offices)
 
(Zip Code)
(610) 727-6900
(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  ý    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  ý    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 the definitions of “large accelerated filer,” “accelerated filer” and “smaller reporting company” in Rule 12b-2 of the Exchange Act.
 
Large accelerated filer
 
ý
  
Accelerated filer
 
¨
 
 
 
 
Non-accelerated filer
 
¨  (Do not check if a smaller reporting company)
  
Smaller reporting company
 
¨
Indicate by check mark whether the Registrant is a shell company (as defined in Rule 12b-2 of the Act).    Yes  ¨    No  ý
The number of shares of the Company’s Common Stock, $0.001 par value per share, outstanding as of May 2, 2016 was 39,459,062 shares.
 
 
 
 
 


ACTUA CORPORATION
QUARTERLY REPORT ON FORM 10-Q
INDEX
ITEM
 
 
  
PAGE NO
 
 
PART I—FINANCIAL INFORMATION
 
 
ITEM 1.
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
ITEM 2.
 
 
ITEM 3.
 
 
ITEM 4.
 
 
 
 
PART II—OTHER INFORMATION
 
 
ITEM 1.
 
 
ITEM 1A.
 
 
ITEM 2.
 
 
ITEM 3.
 
 
ITEM 4.
 
 
ITEM 5.
 
 
ITEM 6.
 
 
 

1

Availability of Reports and Other Information
Our Internet website address is www.actua.com. Unless this Quarterly Report on Form 10-Q (this “Report”) explicitly states otherwise, neither the information on our website, nor the information on the websites of any of our businesses, is incorporated by reference into this Report.
Our Annual Reports on Form 10-K, Quarterly Reports on Form 10-Q, Current Reports on Form 8-K (including, in each case, those filed by ICG Group, Inc. (NASDAQ: ICGE) prior to our corporate name change to Actua Corporation (NASDAQ: ACTA) in September 2014) and all amendments to those reports filed by us with the U.S. Securities and Exchange Commission (the “SEC”) pursuant to Sections 13(a) and 15(d) of the Securities Exchange Act of 1934, as amended (the “Exchange Act”), are accessible free of charge through our website as soon as reasonably practicable after we electronically file those documents with, or otherwise furnish them to, the SEC.
The public may read and copy any of the reports that are filed with the SEC at the SEC’s Public Reference Room at 100 F Street, N.E., Washington, D.C. 20549. The public may obtain information on the operation of the Public Reference Room by calling the SEC at 1-800-SEC-0330. The SEC maintains a website (www.sec.gov) that contains reports, proxy and information statements, and other information that publicly-traded companies file electronically with the SEC.
 
Forward-Looking Statements
Forward-looking statements made with respect to our financial condition, results of operations and business in this Report, and those made from time to time by us through our senior management, are made pursuant to the “safe harbor” provisions of the Private Securities Litigation Reform Act of 1995. Those forward-looking statements are based on our current expectations and projections about future events but are subject to known and unknown risks, uncertainties and assumptions about us and our companies that may cause our actual results, levels of activity, performance or achievements to be materially different from any future results, levels of activity, performance or achievements expressed or implied by those forward-looking statements.
Factors that could cause our actual results, levels of activity, performance or achievements to differ materially from those anticipated in forward-looking statements include, but are not limited to, factors discussed elsewhere in this Report and include, among other things:
•
the valuation of public and private cloud-based businesses by analysts, investors and other market participants;
•
continued development of the cloud-based software market;
•
our ability to compete successfully in highly-competitive, rapidly-developing markets;
•
economic and market conditions generally;
•
capital spending by customers;
•
our ability to retain existing customer relationships (particularly significant customer relationships) and secure new ones;
•
developments in the vertical markets in which we operate, and our ability to respond to those changes in a timely and effective manner;
•
the availability, performance and security of our cloud-based technology, particularly in light of increased cybersecurity risks and concerns;
•
our ability to retain and motivate current key personnel and to attract new personnel;
•
our ability to deploy capital effectively and on acceptable terms;
•
our ability to successfully integrate any acquired businesses, and any other difficulties related to the acquisition of businesses;
•
the impact of any potential acquisitions, dispositions or other strategic transactions, which may impact our operations, financial condition, capitalization or indebtedness; and
•
our ability to have continued access to capital and to manage capital resources effectively.
In light of those risks, uncertainties and assumptions, the forward-looking events discussed in this Report might not occur. In some cases, you can identify forward-looking statements by terminology such as “may,” “will,” “should,” “could,” “would,” “expect,” “plan,” “anticipate,” “believe,” “estimate,” “continue” or the negative of such terms or other similar expressions. All forward-looking statements attributable to us or persons acting on our behalf are expressly qualified in their entirety by the cautionary statements included in this Report. We undertake no obligation to publicly update or revise any forward-looking statements, whether as a result of new information, future events or otherwise.

2


Item 1. Financial Statements
ACTUA CORPORATION
CONSOLIDATED BALANCE SHEETS
(in thousands, except per share data)
 
March 31, 2016
 
December 31, 2015
ASSETS
(unaudited)
 
 
Current assets
 
 
 
Cash and cash equivalents
$
53,292

 
$
76,313

Restricted cash
2,354

 
2,206

Accounts receivables, net of allowance ($1,337-2016; $918-2015)
28,310

 
19,902

Prepaid expenses and other current assets
4,761

 
4,876

Total current assets
88,717

 
103,297

Fixed assets, net of accumulated depreciation and amortization ($18,416-2016; $17,537-2015)
11,225

 
8,781

Goodwill
226,034

 
226,034

Intangible assets, net
87,444

 
89,395

Cost method businesses
18,646

 
18,146

Deferred tax asset
2,905

 
2,900

Other assets, net
1,686

 
1,591

Total assets
$
436,657

 
$
450,144

LIABILITIES
 
 
 
Current liabilities
 
 
 
Short-term debt
$
5,390

 
$
1,320

Accounts payable
10,002

 
11,301

Accrued expenses
12,337

 
10,979

Accrued compensation and benefits
6,757

 
12,251

Deferred revenue
46,977

 
40,282

Total current liabilities
81,463

 
76,133

Deferred tax liability
266

 
266

Deferred revenue
1,356

 
2,038

Other liabilities
6,801

 
3,230

Total liabilities
89,886

 
81,667

Redeemable noncontrolling interests (Note 4, Consolidated Businesses)
5,823

 
10,506

EQUITY
 
 
 
Actua Corporation’s stockholders’ equity
 
 
 
Preferred stock, $0.01 par value; 10,000 shares authorized, none issued or outstanding
—

 
—

Common stock, $0.001 par value; 2,000,000 shares authorized, 46,417 shares (2016) and 46,763 shares (2015) issued
47

 
47

Treasury stock, at cost 6,458 shares (2016) and 5,988 shares (2015)
(59,827
)
 
(55,509
)
Additional paid-in capital
3,566,329

 
3,563,848

Accumulated deficit
(3,179,652
)
 
(3,165,321
)
Accumulated other comprehensive income
(34
)
 
40

Total Actua Corporation’s stockholders’ equity
326,863

 
343,105

Noncontrolling interests
14,085

 
14,866

Total equity
340,948

 
357,971

Total liabilities, redeemable noncontrolling interest and equity
$
436,657

 
$
450,144

 

See accompanying notes to consolidated financial statements.

3
ACTUA CORPORATION
CONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE LOSS
(in thousands, except share data)
(unaudited)




 
 
Three Months Ended March 31,
 
 
2016
 
2015
Revenue
 
$
34,610

 
$
30,592

Operating expenses
 
 
 
 
Cost of revenue
 
10,192

 
9,732

Sales and marketing
 
13,159

 
11,236

General and administrative
 
14,496

 
15,436

Research and development
 
7,550

 
7,093

Amortization of intangibles assets
 
4,064

 
4,016

Impairment related and other
 
231

 
346

Total operating expenses
 
49,692

 
47,859

Operating loss
 
(15,082
)
 
(17,267
)
Other (loss) income, net
 
(156
)
 
1,537

Interest income
 
48

 
19

Interest expense
 
(46
)
 
(37
)
Loss before income taxes and noncontrolling interest
 
(15,236
)
 
(15,748
)
Income tax expense
 
(147
)
 
(177
)
Net loss
 
(15,383
)
 
(15,925
)
Less: Net loss attributable to the noncontrolling interest
 
(1,052
)
 
(1,160
)
Net loss attributable to Actua Corporation
 
$
(14,331
)
 
$
(14,765
)
 
 
 
 
 
Basic and diluted net loss per share attributable to Actua Corporation:
 
$
(0.38
)
 
$
(0.40
)
 
 
 
 
 
Shares used in computation of basic and diluted loss per share
 
37,293

 
36,842

 
 
 
 
 
Net loss
 
$
(15,383
)
 
$
(15,925
)
Other comprehensive loss:
 
 
 
 
Foreign currency translation adjustment
 
(74
)
 
—

Comprehensive loss
 
(15,457
)
 
(15,925
)
Less: Comprehensive loss attributable to the noncontrolling interest
 
(1,052
)
 
(1,160
)
Comprehensive loss attributable to Actua Corporation
 
$
(14,405
)
 
$
(14,765
)
See accompanying notes to consolidated financial statements.

4
ACTUA CORPORATION
CONSOLIDATED STATEMENTS OF CHANGES IN EQUITY
(in thousands)
(unaudited)



 
 
Actua Corporation Stockholders’ Equity
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Additional
Paid-In
Capital
 
Accumulated
Deficit
 
Accumulated
Other
Comprehensive
Income
(“AOCI”)
 
Non-
controlling
Interest
 
Total
 
 
Common Stock
 
Treasury Stock
 
 
 
 
 
 
 
Shares
 
Amount
 
Shares
 
Amount
 
 
 
 
 
Balance as of December 31, 2014
 
46,405

 
$
46

 
(5,892
)
 
$
(53,807
)
 
$
3,553,430

 
$
(3,069,241
)
 
$
40

 
$
18,288

 
$
448,756

Equity-based compensation expense related to stock appreciation rights (“SARs”) and stock options
 
—

 
—

 
—

 
—

 
147

 
—

 
—

 
—

 
147

Equity-based compensation related to deferred stock units (“DSUs”)
 
—

 
—

 
—

 
—

 
17

 
—

 
—

 
—

 
17

Equity-based compensation related to restricted stock (“RS”)
 
—

 
—

 
—

 
—

 
6,655

 
—

 
—

 
—

 
6,655

Issuance of DSUs
 
5

 
—

 
—

 
—

 
82

 
—

 
—

 
—

 
82

Issuance of RS, net of forfeitures primarily related to satisfying tax withholdings
 
198

 
—

 
—

 
—

 
(3,480
)
 
—

 
—

 
—

 
(3,480
)
Exercise of SARs and stock options, net of forfeitures related to satisfying tax withholdings
 
2

 
—

 
—

 
—

 
(9
)
 
—

 
—

 
—

 
(9
)
Impact of redeemable noncontrolling interest accretion
 
—

 
—

 
—

 
—

 
(1,303
)
 
—

 
—

 
—

 
(1,303
)
Impact of subsidiary equity transactions
 
—

 
—

 
—

 
—

 
618

 
—

 
—

 
8

 
626

Repurchase of common stock
 
—

 
—

 
(96
)
 
(1,702
)
 
—

 
—

 
—

 
—

 
(1,702
)
Net loss
 
—

 
—

 
—

 
—

 
—

 
(14,765
)
 
—

 
(1,092
)
 
(15,857
)
Balance as of March 31, 2015
 
46,610

 
$
46

 
(5,988
)
 
$
(55,509
)
 
$
3,556,157

 
$
(3,084,006
)
 
$
40

 
$
17,204

 
$
433,932

 
See accompanying notes to consolidated financial statements.

  



















5
ACTUA CORPORATION
CONSOLIDATED STATEMENTS OF CHANGES IN EQUITY
(in thousands)
(unaudited)


 
 
Actua Corporation Stockholders’ Equity
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Additional Paid-In
Capital
 
Accumulated
Deficit
 
Accumulated
Other
Comprehensive Income (“AOCI”)
 
Non-controlling
Interest
 
Total
 
 
Common Stock
 
Treasury Stock
 
 
 
 
 
 
 
Shares
 
Amount
 
Shares
 
Amount
 
 
 
 
 
Balance as of December 31, 2015
 
46,763

 
$
47

 
(5,988
)
 
$
(55,509
)
 
$
3,563,848

 
$
(3,165,321
)
 
$
40

 
$
14,866

 
$
357,971

Equity-based compensation expense related to stock appreciation rights (“SARs”) and stock options
 
—

 
—

 
—

 
—

 
58

 
—

 
—

 
—

 
58

Equity-based compensation related to deferred stock units (“DSUs”)
 
—

 
—

 
—

 
—

 
99

 
—

 
—

 
—

 
99

Equity-based compensation related to restricted stock (“RS”)
 
—

 
—

 
—

 
—

 
3,925

 
—

 
—

 
—

 
3,925

Issuance of RS, net of forfeitures primarily related to satisfying tax withholdings
 
(346
)
 
—

 
—

 
—

 
(1,529
)
 
—

 
—

 
—

 
(1,529
)
Impact of redeemable noncontrolling interest accretion
 
—

 
—

 
—

 
—

 
(564
)
 
—

 
—

 
—

 
(564
)
Impact of subsidiary equity transactions
 
—

 
—

 
—

 
—

 
492

 
—

 
(74
)
 
202

 
620

Repurchase of common stock
 
—

 
—

 
(470
)
 
(4,318
)
 
—

 
—

 
—

 
—

 
(4,318
)
Net loss
 
—

 
—

 
—

 
—

 
—

 
(14,331
)
 
—

 
(983
)
 
(15,314
)
Balance as of March 31, 2016
 
46,417

 
$
47

 
(6,458
)
 
$
(59,827
)
 
$
3,566,329

 
$
(3,179,652
)
 
$
(34
)
 
$
14,085

 
$
340,948

 
See accompanying notes to consolidated financial statements.


6
ACTUA CORPORATION
CONSOLIDATED STATEMENTS OF CASH FLOWS
(in thousands)
(unaudited)

 
 
Three Months Ended March 31,
 
 
2016
 
2015
OPERATING ACTIVITIES
 
 
 
 
Net loss
 
$
(15,383
)
 
$
(15,925
)
Adjustments to reconcile net loss to cash used in operating activities:
 
 
 
 
Depreciation and amortization
 
4,942

 
5,240

Equity-based compensation
 
5,043

 
7,222

Impairment related and other
 
215

 
—

Other loss (income), net
 
156

 
(1,537
)
Deferred tax asset
 
(5
)
 
(13
)
Contingent consideration
 
16

 
172

Changes in operating assets and liabilities - net of acquisitions:
 
 
 
 
Accounts receivable, net
 
(8,659
)
 
(662
)
Prepaid expenses and other assets
 
19

 
(636
)
Accounts payable
 
(2,452
)
 
(551
)
Accrued expenses
 
207

 
1,063

Accrued compensation and benefits
 
(5,658
)
 
(2,030
)
Deferred revenue
 
6,191

 
2,755

Other liabilities
 
2,204

 
496

Cash flows used in operating activities
 
(13,164
)
 
(4,406
)
INVESTING ACTIVITIES
 
 
 
 
Capital expenditures
 
(995
)
 
(2,340
)
Change in restricted cash
 
(148
)
 
140

Proceeds from other distributions
 
46

 
1,415

Ownership acquisition, net of cash acquired
 
(2,168
)
 
(1,257
)
Cash flows used in investing activities
 
(3,265
)
 
(2,042
)
FINANCING ACTIVITIES
 
 
 
 
Acquisition of noncontrolling interest in subsidiary equity
 
(5,515
)
 
(3,952
)
Borrowings of short-term debt and note payable
 
4,674

 
820

Repayment of notes payable and capital lease obligations
 
(145
)
 
(24
)
Purchase of treasury stock
 
(4,048
)
 
(1,704
)
Tax withholdings related to equity-based awards
 
(1,529
)
 
(3,494
)
Other financing activities
 
—

 
65

Cash flows used in financing activities
 
(6,563
)
 
(8,289
)
Effect of exchange rate on cash flows and cash equivalents
 
(29
)
 
(117
)
Net decrease in cash and cash equivalents
 
(23,021
)
 
(14,854
)
Cash and cash equivalents at beginning of period
 
76,313

 
103,134

Cash and cash equivalents at end of period
 
$
53,292

 
$
88,280

 
See accompanying notes to consolidated financial statements.


7
ACTUA CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)


 
1. The Company
Description of the Company
Actua Corporation (together with its subsidiaries, “Actua”), which was formed on March 4, 1996, is a multi-vertical cloud technology company with offerings that it believes create unique and compelling value for its customers and provide transformative efficiency to vertical markets worldwide. As of March 31, 2016, Actua owned four businesses, each of which addresses the needs of a specific vertical market or industry: Bolt Solutions, Inc. (“Bolt”), Folio Dynamics Holdings, Inc. (“FolioDynamix”), GovDelivery Holdings, Inc. (“GovDelivery”), and VelocityEHS Holdings, Inc. (formerly MSDSonline Holdings, Inc.) (“VelocityEHS”). Please refer to Item 1, “Business” in Actua’s Annual Report on Form 10-K for the year ended December 31, 2015 for a more detailed description of Actua and its businesses.
Basis of Presentation
The Consolidated Financial Statements contained herein (the “Consolidated Financial Statements”) include the accounts of Actua Corporation and its wholly-owned subsidiaries and majority-owned subsidiaries. Actua’s Consolidated Statements of Operations and Comprehensive Loss for the three months ended March 31, 2016 and March 31, 2015 and Consolidated Balance Sheets as of March 31, 2016 and December 31, 2015 include the financial position and results of Actua’s majority-owned subsidiaries, (1) Bolt, (2) FolioDynamix, (3) GovDelivery and (4) VelocityEHS.
2. Significant Accounting Policies
Principles of Accounting for Ownership Interests
The various interests that Actua acquires in its businesses are accounted for under one of three methods: the consolidation method, the equity method and the cost method. The applicable accounting method is generally determined based on Actua’s voting interest in a company.
Consolidation Method
Businesses in which (1) Actua directly or indirectly owns more than 50% of the outstanding voting securities and (2) other stockholders do not possess the right to affect significant management decisions are generally accounted for under the consolidation method of accounting. Participation of other stockholders in the net assets and in the earnings or losses of a consolidated subsidiary is reflected in the line items “Noncontrolling interests” in Actua’s Consolidated Balance Sheets and “Net loss attributable to the noncontrolling interest” in Actua’s Consolidated Statements of Operations. Noncontrolling interest adjusts Actua’s consolidated results of operations to reflect only Actua’s share of the earnings or losses of the consolidated subsidiary.
Any changes in Actua’s ownership interest in a consolidated subsidiary, whether through additional equity issuances (whether to Actua or otherwise) by the consolidated subsidiary or through Actua acquiring equity interests from existing shareholders, following which Actua maintains control, is recognized as an equity transaction, with appropriate adjustments to both Actua’s additional paid-in capital and the corresponding noncontrolling interests. The difference between the carrying amount of Actua’s ownership interest in the company and the underlying net book value of the company after the issuance of stock by the company is reflected as an equity transaction in Actua’s Consolidated Statements of Changes in Equity.
An increase in Actua’s ownership interest in a business accounted for under the equity or cost method of accounting in which Actua obtains a controlling financial interest is accounted for as a step acquisition, with an allocation of the purchase price to the fair value of the net assets acquired. In addition, Actua remeasures its previously held ownership interest in a business that was previously not consolidated at the acquisition date fair value; any gain or loss resulting from such a remeasurement is recognized in Actua’s Consolidated Statements of Operations at the time of the remeasurement. Actua begins to include the financial position and operating results of the newly-consolidated subsidiary in its Consolidated Financial Statements from the date Actua obtains the controlling financial interest in that subsidiary. If control is lost, any retained interest is measured at fair value, and a gain or loss is recognized in Actua’s Consolidated Statements of Operations at that time. In addition, to the extent Actua maintains a smaller equity ownership, the accounting method used for that business is adjusted to the equity or cost method of accounting, as appropriate, for subsequent periods.
Equity Method
Actua did not own any equity method businesses during the first quarter of 2016 or during the year ended December 31, 2015. Businesses that are not consolidated, but over which Actua exercises significant influence, are accounted for under the equity method of accounting. The determination as to whether or not Actua exercises significant influence with respect to a company depends on an evaluation of several factors, including, among others, representation on the company’s board of directors ("BODs")

8
ACTUA CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS – (CONTINUED)
(Unaudited)

and equity ownership level, which is generally between a 20% and a 50% interest in the voting securities of an equity method business, as well as voting rights associated with Actua’s holdings in common stock, preferred stock and other convertible instruments in that company.
Cost Method
Businesses not accounted for under either the consolidation method or equity method of accounting are accounted for under the cost method of accounting and are referred to in Note 5, “Cost Method Businesses.” Actua’s share of the earnings and/or losses of cost method businesses is not included in Actua’s Consolidated Statement of Operations. However, impairment charges related to cost method businesses are recognized in Actua’s Consolidated Statements of Operations. If circumstances suggest that the value of a cost method business with respect to which an impairment charge has been made has subsequently recovered, that recovery is not recorded. The carrying values of Actua’s cost method businesses are reflected in the line item “Cost method businesses” in Actua’s Consolidated Balance Sheets.
Actua initially records its carrying value in businesses accounted for under the cost method at cost, unless the equity securities of a cost method business have readily determinable fair values based on quoted market prices, in which case the interests are valued at fair value and are classified as marketable securities or some other classification in accordance with guidance for ownership interests in debt and equity securities.
Use of Estimates
The preparation of financial statements in conformity with U.S. generally accepted accounting principles (“GAAP”) requires management to make estimates and assumptions that affect the amounts reported in the financial statements and accompanying notes. Actual results could differ materially from those estimates. The estimates, which include evaluation of Actua’s debt and equity holdings in businesses, asset impairment, revenue recognition, income taxes, and commitments and contingencies are based on management’s best judgments. Management evaluates its estimates and underlying assumptions on an ongoing basis using historical experience and other factors, such as the current economic environment, that management believes to be reasonable under the circumstances and adjusts its estimates and assumptions when facts and circumstances dictate that it is necessary or appropriate to do so. It is reasonably possible that Actua’s accounting estimates with respect to the ultimate recoverability of Actua’s ownership interests in convertible debt, equity holdings, goodwill, and the useful lives of intangible assets could change in the near term and that the effect of such changes on Actua’s consolidated financial statements could be material. As of March 31, 2016, management believes the recorded amounts of goodwill, intangible assets and cost method businesses were not impaired. Actua determined that, as of December 31, 2015, goodwill associated with the FolioDynamix reporting unit was partially impaired and recognized a loss of $39.7 million for the period. Please refer to Note 3, “Goodwill and Intangible Assets.”
Cash and Cash Equivalents
Actua considers all highly liquid instruments with an original maturity of approximately three months at the time of purchase to be cash equivalents. Cash and cash equivalents at March 31, 2016 and December 31, 2015 were invested principally in money market accounts.
Restricted Cash
Actua considers cash that is legally restricted and cash that is held as a compensative balance for both operating leases and trust accounts, maintained and operated in conjunction with Actua’s insurance business, as restricted cash. Actua had long-term restricted cash of $0.4 million as of March 31, 2016 and December 31, 2015, which is included in “Other assets, net” in Actua’s Consolidated Balance Sheets.
Goodwill
Goodwill represents the excess of the purchase price over the fair value of the net assets of businesses acquired. Actua has made acquisitions over the years that have resulted in the recognition and accumulation of significant goodwill. Actua tests goodwill for impairment annually during the fourth quarter of each year, or more frequently as conditions warrant.
The first step of the test, used to identify potential impairment, compares the estimated fair value of a reporting unit with its carrying amount, including goodwill. If the fair value of a reporting unit exceeds its carrying amount, goodwill of the reporting unit is not considered to be impaired and the second step of the impairment test is unnecessary. If the carrying amount of a reporting unit exceeds its fair value, the second step of the impairment test must be performed to measure the amount of the impairment loss, if any.
The second step of the goodwill impairment test compares the implied fair value of reporting unit goodwill with the carrying amount of that goodwill. The implied fair value of goodwill is determined in the same manner as goodwill recognized in a business combination. If the carrying amount of the reporting unit goodwill exceeds the implied fair value of that goodwill, an impairment loss is recognized in an amount equal to that excess.

9
ACTUA CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS – (CONTINUED)
(Unaudited)

Actua estimates the fair value of its reporting units using “Level 2” and “Level 3” inputs, as described in Note 6, “Fair Value Measurements.” Significant judgments and estimates are made to estimate the fair value of Actua’s reporting units, such as projected future earnings, applicable discount rates, the selection of peer earnings multiples and the relative weighting of different fair value indicators. Actua determines market multiples from comparable publicly-traded companies and applies those approximate multiples to the revenues of the reporting units, which are then compared to the respective carrying values of the reporting units.
Refer to Note 3, “Goodwill and Intangible Assets,” and Note 6, “Fair Value Measurements,” for further details, including sensitivity analysis of the fair value calculation related to Actua’s December 31, 2015 annual impairment evaluation.
Intangible Assets
Intangible assets with determinable lives primarily consist of customer relationships, trademarks and trade names, technology, non-compete agreements and other intellectual property. The cost of intangible assets with determinable lives is amortized on a straight-line basis over the estimated period of economic benefit. Indefinite-lived intangibles are subject to impairment testing at least annually. In addition, intangible assets are tested more frequently if a change in circumstances or the occurrence of events indicates that potential impairment exists.
Cost Method Businesses
Actua evaluates its carrying value in cost method businesses continuously to determine whether an other-than-temporary decline in the fair value of any such business exists and should be recognized. In order to make that determination, Actua considers each such business’ achievement of its business plan objectives and milestones, the fair value of its ownership interest in each such business (which, in the case of any company listed on a public stock exchange, is the quoted stock price of the relevant ownership interest), the financial condition and prospects of each such business, and other relevant factors. The business plan objectives and milestones Actua considers include, among others, those related to financial performance, such as achievement of planned financial results or completion of capital raising activities, and those that are not primarily financial in nature, such as obtaining key business partnerships or the hiring of key employees. Impairment charges are determined by comparing Actua’s carrying value of a business with the business’ estimated fair value. Fair value is determined by using a combination of estimating the cash flows related to the relevant business, including estimated proceeds on disposition, and an analysis of market price multiples of companies engaged in lines of business similar to the business being evaluated. Actua concluded that the carrying values of its cost method businesses were not impaired as of March 31, 2016 and December 31, 2015.
Financial Instruments
Cash and cash equivalents, accounts receivable and accounts payable are carried at cost, which approximates fair value due to the short-term maturity of these instruments. Marketable securities are carried at fair value.
Deferred Revenue
Deferred revenue consists primarily of payments received in advance of revenue being earned under the relevant customer agreements.
Contract Acquisition Costs
Commission expenses associated with the negotiation of a contract are charged to expense as incurred.
Revenue Recognition
Actua recognizes revenue when persuasive evidence of an arrangement exists, delivery of the service has occurred, no significant obligations with regard to implementation remain, the fee is fixed or determinable and collectability is probable.  The following paragraphs provide more specific details regarding the manner in which each of our businesses recognizes revenue.
Bolt
Bolt generates revenue from (1) SaaS software licenses, (2) maintenance and support services, (3) professional service fees, (4) insurance commissions, including contingency bonus revenues from insurance carriers, and (5) subscription fees.  
Bolt enters into certain multiple deliverable arrangements that relate primarily to its software licenses (which are delivered through a cloud-based model), professional services necessary for the functionality of the software and maintenance and support services. Bolt evaluates each deliverable in a multiple deliverable arrangement to determine whether that deliverable has standalone value. A delivered element has standalone value if the element has value to a customer on a standalone basis (supported by whether Bolt routinely provides these elements independent of other products and/or services, or a third-party vendor could provide a similar service to the customer). Additionally, Bolt considers whether there is a customer-negotiated refund or return right for the delivered element. If these criteria are not met, the deliverable is combined with the undelivered elements and the allocation of the arrangement consideration and revenue recognition are determined for the combined elements and recognized over the applicable contract term.

10
ACTUA CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS – (CONTINUED)
(Unaudited)

For Bolt’s professional services or other deliverables that are determined to have standalone value, Bolt allocates the total revenue to be earned under the arrangement among the various elements based on a selling price hierarchy using the relative selling price method. The selling price for a deliverable is based on the best estimated selling price (“ESP”), as neither vendor specific objective evidence (“VSOE”) nor third-party evidence (“TPE”) is available. VSOE of selling price is based on the normal pricing and discounting practices for those products and services when sold separately. TPE of selling price is determined by evaluating largely similar and interchangeable competitor products or services in standalone sales to similarly situated customers. ESP is established by considering factors such as margin objectives, market conditions and competition.  ESP represents the price at which the company would transact for the deliverable if it were sold by the company regularly on a standalone basis.  
Under Bolt’s cloud-based software licenses, certain professional services are essential for the functionality of the software and the related maintenance and support services do not have standalone value to Bolt’s customers and are therefore combined, and revenue is recognized ratably over the applicable contract term.  For certain professional service deliverables that have been determined to have standalone value, Bolt has historically concluded that neither VSOE nor TPE can be established and, as such, it has relied on ESP to allocate revenue to each element. Those fees are then recognized as the services are performed and/or the professional services are delivered. Finally, certain professional services are sold separately. Those fees are recognized as the professional services are delivered.
Bolt’s commissions on the premiums from sales of insurance policies are recognized when Bolt has sufficient information to determine (1) the amount that it is owed, and (2) that it is probable that the economic benefits associated with the transaction will flow to Bolt. Bolt recognizes subscription fee revenue over the subscription period, which is generally a one-month period.  
Bolt has typically represented a small amount of Actua’s historical deferred revenue balances.  Bolt’s contracts are generally billed in annual, quarterly or monthly installments.
FolioDynamix
FolioDynamix generates revenues primarily in the form of (1) recurring software license and subscription fees, (2) maintenance and support services, (3) professional services fees from customization and integration services related to its software, (4) professional services fees for customized investment program management, and consulting, and (5) investment advisory services.  The initial subscription arrangement term is typically between three and five years.
FolioDynamix’s platform revenue from term software license arrangements is recognized on a subscription basis over the customer contract license term of use.  Revenue from annual maintenance is deferred and recognized on a straight-line basis over the period that the service is provided.  Revenue related to platform implementation professional services is deferred and recognized on a straight-line basis over the contract term.  A small portion of revenue is derived from multiple element contracts for which FolioDynamix cannot separate the license element from the service elements; that revenue is deferred until all elements of the arrangement have been delivered. Revenue under arrangements with multiple elements is allocated under the residual method.  Under the residual method, revenue is allocated first to the undelivered elements based on their VSOE of fair value and the residual amount is applied to the delivered elements.    
Certain revenues earned by FolioDynamix for advisory services require judgment to determine whether revenue should be recorded on a gross basis (that is, with FolioDynamix as a principal) or net of related costs (that is, with FolioDynamix as an agent). In general, these revenues are recognized on a net basis if FolioDynamix does not have control over selecting vendors and pricing, and when the FolioDynamix is acting as an agent of the supplier.  Revenues from professional services are deemed to not have standalone value and therefore are recognized ratably over the contract term.
FolioDynamix’s contracts are billed in annual, quarterly or monthly installments and are primarily non-cancellable.
GovDelivery
GovDelivery revenue consists primarily of software subscription revenue; however, GovDelivery has growing revenue from media advertising and delivery of professional services such as developing Drupal applications for government entities. The core business of subscription revenue consist of (1) nonrefundable setup fees and (2) cloud-based SaaS monthly subscription fees. As the setup fees do not have standalone value to a customer, they are combined with subscription fees and are recognized in revenue over the initial contract term. Costs related to performing setup services are expensed as incurred. GovDelivery has typically represented a significant portion of Actua’s historical deferred revenue balances. GovDelivery’s contracts are generally billed in annual, quarterly, or monthly installments and contain cancellation clauses by which the customer can cancel the contract with 30 days written notice. In instances of cancellation, the pro rata balance of the agreement would be refundable. Historically, GovDelivery has experienced very low levels of cancellations.

Media advertising revenue is generated through businesses promoting their products or services within the GovLoop online community, which can include a wide range of advertisements, such as banner ads and sponsored trainings held by GovLoop or online brochures. This revenue is recognized when the relevant work is performed and delivered.

11
ACTUA CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS – (CONTINUED)
(Unaudited)


Professional services revenue for customized Drupal development and other consulting continues to be a growing piece of the business. Revenue is recognized based on a percentage of completion. Projects are reviewed for an estimated total effort required to deliver the contracted output which is compared against the performance completed to determine revenue for the reporting period.
VelocityEHS
VelocityEHS derives revenue from two sources (1) SaaS subscription fees and (2) professional services fees. The vast majority of VelocityEHS’ revenue is derived from subscription fees from customers accessing VelocityEHS’ database and web-based tools; such revenue is recognized ratably over the applicable contract term, beginning with the subscription start date. VelocityEHS also generates professional service fees from (a) customer training, (b) authoring of safety data sheets for customers, and (c) compiling of customers’ online libraries of safety data sheet documents and indexing those documents. Those professional services are generally determined to have standalone value, and the revenue derived from those fees is recognized on a proportional performance basis over the applicable project’s timeline.
VelocityEHS has typically represented the majority of Actua’s historical deferred revenue balances.  VelocityEHS’ contracts are generally billed annually and are non-cancellable.
At each of Actua’s businesses, fees associated with professional services for new customers that are not determined to have standalone value are deferred and recognized over the contract term.  Actua’s businesses recognize those fees, which primarily relate to implementation, over the initial terms of the contracts because, at the time contracts with new customers are consummated, there is no history with such customers and it cannot be determined whether the relationship with such customers will extend beyond the terms of the initial contracts.
Equity-Based Compensation
Actua recognizes equity-based compensation expense in the Consolidated Financial Statements for all stock options and other equity-based arrangements that are expected to vest. Equity-based compensation expense is measured at the date of grant, based on the fair value of the award, and recognized using the straight-line method over the employee’s requisite service period. Equity-based awards with vesting conditions other than service are recognized based on the probability that those conditions will be achieved.
Research and Development
Research and development costs are charged to expense as those costs are incurred.
Income Taxes
Income taxes are accounted for under the asset and liability method, whereby deferred tax assets and liabilities are recognized for the estimated future tax consequences attributable to differences between the financial statement carrying amounts of existing assets and liabilities and their respective tax basis and net operating loss and capital loss carryforwards. Deferred tax assets and liabilities are measured using enacted tax rates in effect for the year in which the temporary differences and net operating loss and capital loss carryforwards are expected to be recovered or settled. The effect on deferred tax assets and liabilities of a change in tax rates is recognized in income in the period that includes the enactment date.
Net Loss Per Share
Basic net loss per share (“EPS”) is computed using the weighted average number of common shares outstanding during a given period, exclusive of unvested restricted stock. Diluted EPS includes shares, unless anti-dilutive, that would be issued in connection with the exercise of stock options and conversion of other convertible securities and is adjusted, if applicable, for the effect on net loss of such transactions. See Note 12, “Net Loss per Share.”
Comprehensive Loss
Actua reports and displays comprehensive loss and its components in the Consolidated Statements of Operations and Comprehensive Loss. Comprehensive loss is the change in equity of a business enterprise during a period from non-owner sources. Actua’s sources of comprehensive loss are net loss and foreign currency translation adjustments. Reclassification adjustments result from the recognition of gains or losses in net loss that were included in comprehensive loss in prior periods.





12
ACTUA CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS – (CONTINUED)
(Unaudited)


Supplemental Cash Flow Disclosures
Actua did not pay any interest or make any income tax payments during the three months ended March 31, 2016 and 2015. Non-cash fixed assets purchased but not paid during the three months ended March 31, 2016 and 2015 were in the amounts of $2.3 million and zero, respectively.
Reclassifications
Certain amounts in the prior year financial statements have been reclassified to conform to the current-year presentation. The impact of the reclassifications made to prior year amounts is not material and did not affect net loss.  
Adjustments to Previously Reported Amounts / Immaterial Correction of an Error
During the second quarter of 2015, Actua revised previously reported amounts due to a change from recognizing noncontrolling interests related to FolioDynamix as a component of permanent equity to recognizing those interests as a component of temporary equity in redeemable noncontrolling interests.  In accordance with Staff Accounting Bulletin (“SAB”) No. 99, Materiality, and SAB No. 108, Considering the Effects of Prior Year Misstatements when Quantifying Misstatements in Current Year Financial Statements, management evaluated the materiality of the error from qualitative and quantitative perspectives, and concluded that the error was immaterial to the current and prior periods. The correction of the immaterial error resulted in an increase to the line item “Redeemable noncontrolling interests” of $4.1 million and decreases to the line items “Additional paid-in capital” and “Noncontrolling interests” of $1.4 million and $2.7 million, respectively, on Actua’s Consolidated Balance Sheets as of December 31, 2014. This immaterial correction of an error had no impact on Actua’s Consolidated Statements of Operations in any period.
Escrow Information
When an interest in one of Actua’s businesses is sold, a portion of the proceeds may be held in escrow primarily to satisfy purchase price adjustments and/or indemnity claims. Actua records gains on escrowed proceeds at the time Actua is entitled to receive those proceeds from escrow, the amount is fixed or determinable and realization is assured. As of March 31, 2016, $4.0 million related to Actua’s potential proceeds from sales of former businesses remained in escrow to satisfy potential or unresolved indemnification claims. Those outstanding escrow amounts are scheduled to be released throughout the remainder of 2016, subject to pending and potential indemnity claims pursuant to the terms of the applicable acquisition agreements.
Concentration of Customer Base and Credit Risk
No single customer of Actua’s consolidated businesses represented more than 10% of Actua’s consolidated revenue for the three months ended March 31, 2016, and 2015.
Commitments and Contingencies
From time to time, Actua and its businesses are involved in various claims and legal actions arising in the ordinary course of business. Actua does not expect any liability with respect to any legal claims or actions, either individually or in the aggregate, that would materially affect its consolidated financial position or cash flows.
Recent Accounting Pronouncements
In May 2014, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update (“ASU”) 2014-09, Revenue from Contracts with Customers, that provides a single, comprehensive revenue recognition model for all contracts with customers. Under the new guidance, an entity will recognize revenue based on amounts the entity expects to be entitled to in exchange for the transfer of goods or services. The new guidance also includes enhanced disclosure requirements. This guidance, which will be applied either retrospectively or as a cumulative-effect adjustment as of the date of adoption, will be effective for Actua beginning on January 1, 2018. In March 2016, the FASB issued ASU 2016-08, Revenue from Contracts with Customers (Topic 606): Principal versus Agent Considerations (Reporting Revenue Gross versus Net), to clarify the implementation guidance on principal versus agent considerations. Actua is in the process of evaluating the adoption alternatives and impact that the guidance will have on the Consolidated Financial Statements.
In February 2016, the FASB issued ASU 2016-02, Leases (Topic 842). Under the new guidance, most leases will be recognized on Actua’s Consolidated Balance Sheets as liabilities with corresponding right-of-use assets. The new guidance is effective for Actua for the annual period beginning after December 15, 2018, including interim periods within those annual periods, with early adoption permitted. The standard must be adopted using a modified retrospective approach. Actua is in the process of evaluating the impact of this new pronouncement.
In March 2016, the FASB issued ASU 2016-07, Investments—Equity Method and Joint Ventures (Topic 323): Simplifying the Transition to the Equity Method of Accounting, which eliminated the requirement that when an investment qualifies for use of the equity method as a result of an increase in the level of ownership interest or degree of influence, an investor must adjust the

13
ACTUA CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS – (CONTINUED)
(Unaudited)

investment, results of operations, and retained earnings retroactively on a step-by-step basis as if the equity method had been in effect during all previous periods that the investment had been held. The amendments require that the equity method investor add the cost of acquiring the additional interest in the investee to the current basis of the investor’s previously held interest and adopt the equity method of accounting as of the date the investment becomes qualified for equity method accounting. The amendments in this update are effective for Actua for fiscal years, and interim periods within those fiscal years, beginning after December 15, 2016. As Actua does not currently have any equity method investments, the guidance is not expected to have a significant impact on the Consolidated Financial Statements.
In March 2016, the FASB issued ASU 2016-09, Compensation—Stock Compensation (Topic 718): Improvements to Employee Share-Based Payment Accounting, which provides guidance involving several aspects of the accounting for share-based payment transactions, including the income tax consequences, classification of awards as either equity or liabilities and classification on the statement of cash flows. Under the new guidance, all excess tax benefits and tax deficiencies (including tax benefits of dividends on share-based payment awards) should be recognized as income tax expense or benefit in the income statement, whereas under current GAAP, excess tax benefits are recognized in additional paid-in capital and tax deficiencies are recognized either as an offset to accumulated excess tax benefits, if any, or in the income statement. Under the new guidance, excess tax benefits should be classified along with other income tax cash flows as an operating activity, as opposed to a financing activity under current GAAP. Additionally, an entity can make an accounting policy election to either estimate the number of awards that are expected to vest (current GAAP) or account for forfeitures when they occur. The amendments in this update are effective for Actua for annual periods beginning after December 15, 2016, and interim periods within those annual periods. The adoption of this guidance will impact Actua’s recorded income taxes associated with share-based transactions and change Actua’s classification for excess tax benefits to an operating activity within the Consolidated Statement of Cash Flows.
Recently Adopted Accounting Guidance
In August 2015, the FASB issued ASU 2015-03, Interest—Imputation of Interest (Subtopic 835-30): Simplifying the Presentation of Debt Issuance Costs, that provides guidance regarding a simplified presentation of debt issuance costs, requiring that debt issuance costs related to a recognized debt liability be presented in the balance sheet as a direct deduction from the carrying amount of that debt liability, consistent with debt discounts or premiums. This guidance, which is applied retrospectively upon adoption, was effective for Actua for the December 31, 2015 annual reporting period. The adoption of this guidance did not have a significant impact on Actua’s Consolidated Financial Statements.
In September 2015, the FASB issued ASU 2015-16, Business Combinations (Topic 805): Simplifying the Accounting for Measurement-Period Adjustments. The new guidance eliminates the requirement for an acquirer to retrospectively adjust the financial statements for measurement period adjustments that occur in periods after a business combination is consummated. This guidance was effective for Actua beginning on January 1, 2016. The adoption of this guidance had no impact on Actua’s Consolidated Financial Statements during the current period.
In November 2015, the FASB issued ASU 2015-17, Income Taxes (Topic 740): Balance Sheet Classification of Deferred Taxes, to simplify the presentation of deferred income taxes. The new guidance requires that deferred tax liabilities and assets be classified as non-current on the balance sheet and eliminates the requirement that an entity separate deferred income tax liabilities and assets into current and non-current amounts. This guidance is effective for annual periods beginning after December 15, 2016, and interim periods within those annual periods, with earlier application permitted for all entities as of the beginning of an interim or annual reporting period. Actua early adopted the new guidance and accordingly, the guidance was effective for Actua for the December 31, 2015 annual reporting period. The adoption of this guidance impacted the presentation of deferred income taxes on Actua’s Consolidated Balance Sheets to a non-current classification and was applied retrospectively to the prior periods presented.

3. Goodwill and Intangible Assets
Goodwill
The following table summarizes the activity related to Actua’s goodwill:
(in thousands)
 
Gross Carrying
Amount
 
Accumulated
Impairment
Losses
 
Net Carrying
Amount
Goodwill as of December 31, 2015
 
$
265,994

   
$
(39,960
)
 
$
226,034

   Acquisitions
 
—

  
—

 
—

Goodwill as of March 31, 2016
 
$
265,994

  
$
(39,960
)
 
$
226,034

 
As of March 31, 2016 and December 31, 2015, all of Actua’s goodwill was allocated to its vertical cloud segment.

Impairment

14
ACTUA CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS – (CONTINUED)
(Unaudited)

Actua completed its annual impairment testing in the fourth quarter of 2015. During the fourth quarter of 2015, Actua reviewed the goodwill balance for impairment in accordance with its accounting policy and identified factors, including the market value of Actua’s Common Stock, indicating that the fair value of Actua’s goodwill could have fallen below its book value.  Actua determined that the goodwill associated with the FolioDynamix reporting unit was partially impaired as of December 31, 2015 and recognized an impairment charge of $39.7 million, which was recorded within the “Impairment related and other” line of the Consolidated Statements of Operations for the year ended December 31, 2015. Please refer to Note 6, “Fair Value Measurements,” for a further discussion of the fair value measurement relating to the FolioDynamix reporting unit impairment charge.
The completion of Actua's 2015 year-end impairment testing resulted in no impairments related to Actua’s other consolidated businesses, because Actua’s fair value of its reporting units substantially exceeded its carrying value for each of those reporting units, including goodwill.
Intangible Assets
The following table summarizes Actua’s intangible assets:
(in thousands)
 
 
 
As of March 31, 2016
 
 
 
 
Gross Carrying
 
Accumulated
 
Net Carrying
Intangible Assets
 
Useful Life
 
Amount
 
Amortization
 
Amount
Customer relationships
 
1-11 years
 
$
77,279

 
$
(24,835
)
 
$
52,444

Trademarks/trade names
 
3-11 years
 
24,834

 
(8,626
)
 
16,208

Technology
 
5-10 years
 
27,069

 
(9,064
)
 
18,005

Non-compete agreements
 
2-5 years
 
3,645

 
(3,558
)
 
87

 
 
 
 
132,827

 
(46,083
)
 
86,744

Other intellectual property (1)
 
Indefinite
 
700

 
—

 
700

 
 
 
 
$
133,527

 
$
(46,083
)
 
$
87,444

 
(in thousands)
 
 
 
As of December 31, 2015
 
 
 
 
Gross Carrying
 
Accumulated
 
Net Carrying
Intangible Assets
 
Useful Life
 
Amount
 
Amortization
 
Amount
Customer relationships
 
1-11 years
 
$
76,414

  
$
(22,652
)
  
$
53,762

Trademarks/trade names
 
3-11 years
 
24,835

  
(7,763
)
  
17,072

Technology
 
5-10 years
 
25,820

  
(8,055
)
  
17,765

Non-compete agreements
 
2-5 years
 
3,645

  
(3,549
)
  
96

 
 
 
 
130,714

  
(42,019
)
  
88,695

Other intellectual property (1)
 
Indefinite
 
700

  
—

  
700

 
 
 
 
$
131,414

  
$
(42,019
)
  
$
89,395

____________________
(1) 
Included in this line item is a domain name valued at $0.3 million that Actua currently believes has an indefinite life, and a domain name for which Actua estimated the residual value to approximate its carrying value of $0.4 million as of both March 31, 2016 and December 31, 2015.
 
Amortization expense for intangible assets during the three months ended March 31, 2016 and 2015 was $4.1 million and $4.0 million, respectively.
Remaining estimated amortization expense for the respective years is set forth as follows:
 
(in thousands)
 
 
 
2016 (remaining nine months)
$
(11,873
)
2017
(15,383
)
2018
(13,868
)
2019
(12,299
)
2020
(10,709
)
Thereafter
(22,613
)
Remaining amortization expense
$
(86,744
)
 
4. Consolidated Businesses

15
ACTUA CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS – (CONTINUED)
(Unaudited)

FolioDynamix Acquisition
On November 3, 2014, Actua acquired all of the issued and outstanding stock of FolioDynamix for approximately $201.7 million in cash, which included $0.7 million as a post-closing working capital adjustment that occurred in the first quarter of 2015, and $4.1 million of equity value related to stock options.  
Other Acquisitions
On June 10, 2015, GovDelivery acquired certain assets of Talent Management in Government Inc. (“TMGov”) for $0.5 million of consideration consisting of $0.4 million at closing and $0.1 million to be paid upon achievement of certain milestones, as set forth in the purchase agreement. The $0.1 million was paid during 2015. The acquisition was accounted for under the acquisition method. GovDelivery has allocated the purchase price to the acquired identifiable intangible assets based upon their respective fair values as of the date of acquisition.
On July 13, 2015, GovDelivery acquired Vox Metropolis Inc. (d/b/a Textizen) (“Textizen”) for approximately $1.2 million of cash; $0.4 million of the $1.2 million cash consideration is being retained by GovDelivery until July 2016 in order to satisfy potential indemnity claims. The acquisition was accounted for under the acquisition method. GovDelivery has allocated the purchase price to the acquired identifiable intangible assets based upon their respective fair values as of the date of acquisition.
On November 25, 2015, VelocityEHS acquired certain assets of WellNet Solutions, Inc. (“WellNet”) for cash consideration of $0.7 million. Intangible assets of $1.4 million were recorded in connection with the acquisition. Additionally, as of the three months ended March 31, 2016, $0.7 million of cash consideration was paid and contingent consideration of $0.9 million was recorded within the “accrued expenses” line item in the current liabilities section of the Consolidated Balance Sheet associated with the estimated costs for future incremental WellNet customer acquisitions.
On January 22, 2016, VelocityEHS acquired certain assets of ErgoAdvocate LLC (“ErgoAdvocate”) for $1.25 million of cash consideration, $1.0 million of which was paid at the closing of the transaction, and $0.13 million of which will be paid on each of the six-month and one-year anniversaries of the closing, subject to reduction for any post-closing indemnification claims. The acquisition was accounted for under the acquisition method. VelocityEHS has allocated the purchase price to the acquired identifiable intangible assets based upon their respective fair values as of the date of acquisition.
The allocations of the respective TMGov, Textizen and ErgoAdvocate purchase prices, to identified intangible assets and tangible assets and liabilities were as follows:
(in thousands)
 
TMGov
 
Textizen
 
ErgoAdvocate
Goodwill
 
$
—

 
$
606

 
$
—

Customer lists (5-8 year life)
 
250

 
171

 
—

Trademarks, trade names and domain names (8 year life)
 
—

 
117

 
—

Technology (5-9 year life)
 
250

 
347

 
1,250

Other net assets (liabilities)
 
—

 
(41
)
 
—

Total net assets acquired
 
$
500

 
$
1,200

 
$
1,250


Redeemable Noncontrolling Interests
In connection with the NuCivic, Inc. (“NuCivic”) and Textizen acquisitions, certain GovDelivery stockholders have the ability to require GovDelivery to redeem a portion of their shares in 2017, 2018, 2019 and 2020 based on a fair value determination. Certain VelocityEHS stockholders have the ability to require VelocityEHS to redeem a portion of their shares in 2017 based on a mutually agreed upon fair value determination. Certain FolioDynamix shareholders have the ability to require FolioDynamix to redeem a portion of their shares in 2018, 2019 and 2020 based on a mutually agreed upon fair value determination. Because those redemptions are outside the control of the respective businesses, Actua has classified the noncontrolling interests outside of equity and will accrete to the estimated redemption values with an offset to additional paid-in capital. The noncontrolling interests are classified as “Redeemable noncontrolling interests” in Actua’s Consolidated Balance Sheets.

16
ACTUA CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS – (CONTINUED)
(Unaudited)

The following is a reconciliation of the activity related to Actua’s redeemable noncontrolling interest during the three months ended March 31, 2016 and 2015:
Balance at December 31, 2014
$
6,221

Redeemable noncontrolling interest portion of subsidiary net loss
(68)

Accretion to estimated redemption value
1,303

Equity transfer among owners
(3,339)

Impact of subsidiary equity transactions
(631)

Balance at March 31, 2015
$
3,486

Balance at December 31, 2015
$
10,506

Redeemable noncontrolling interest portion of subsidiary net loss
(69
)
Accretion to estimated redemption value
633

Equity transfer among owners (1)
(5,247
)
Balance at March 31, 2016
$
5,823

____________________________
(1)
This amount primarily relates to cash payments made during the three months ended March 31, 2016 of $5.4 million to acquire $2.5 million of redeemable noncontrolling interests associated with GovDelivery, $2.4 million of redeemable noncontrolling interests associated with VelocityEHS and $0.5 million of redeemable noncontrolling interests associated with FolioDynamix. These transactions increased Actua’s ownership in GovDelivery from 92% to 94% and its ownership in VelocityEHS from 98% to 99%. Its ownership in FolioDynamix did not significantly change from this repurchase.
Other Consolidated Businesses Transactions
From time to time, Actua acquires additional equity ownership interests in its consolidated businesses. Purchasing equity ownership interests from a consolidated business’ existing shareholders results in an increase in Actua’s controlling interest in that business and a corresponding decrease in the noncontrolling interest ownership. Those transactions are accounted for as decreases to “Noncontrolling interests” and increases to “Additional paid-in capital” in Actua’s Consolidated Balance Sheets for the relevant periods. Actua may also acquire additional equity ownership interests in its consolidated businesses, either from existing holders or as a result of share issuances by one or more of those businesses, and Actua’s equity ownership interests may be diluted by any such share issuances to other parties. An issuance of equity securities by a consolidated business that results in a decrease in Actua’s equity ownership interests is accounted for in accordance with the policy for “Principles of Accounting for Ownership Interests” described in Note 2, “Significant Accounting Policies.” Other changes to Actua’s equity ownership interests in its consolidated businesses, as well as equity-based compensation award activity at those businesses, also result in adjustments to “Additional paid-in capital” and “Noncontrolling interests” in Actua’s Consolidated Balance Sheets. The impact of any equity-related transactions at Actua’s consolidated businesses is included in the line item “Impact of subsidiary equity transactions” in Actua’s Consolidated Statements of Changes in Equity. The impact of these changes to the noncontrolling interest are also included in the line item “Impact of subsidiary equity transactions” in Actua’s Consolidated Statements of Changes in Equity for the relevant period. During the three months ended March 31, 2016, the “Impact of subsidiary equity transactions” line item as shown on Actua’s Consolidated Statements of Changes in Equity was $0.5 million, which was comprised of (1) $5.4 million paid by Actua in order to buy back shares in its consolidated businesses and (2) $(4.9) million relating to Actua’s share of its consolidated businesses equity transactions.
Pro Forma Information (Unaudited)
The information in the following table represents the revenue, net loss attributable to Actua Corporation and the net loss per diluted share attributable to Actua Corporation for the relevant periods had it owned TMGov, Textizen, ErgoAdvocate and WellNet for the three months ended March 31, 2015.
(in thousands, except per share data)
 
 
Revenue
 
 
$
30,930

Net loss attributable to Actua Corporation
 
 
$
(15,210
)
Net loss per diluted share attributable to Actua Corporation
 
 
$
(0.41
)
 
5. Cost Method Businesses
Actua’s carrying value of its holdings in cost method businesses was $18.6 million as of March 31, 2016 and $18.1 million as of December 31, 2015 reflected in the line item “Cost method businesses” in Actua’s Consolidated Balance Sheets as of the relevant dates. During the three months ended March 31, 2016, Actua acquired an incremental $0.5 million interest in a cost method business, Parchment Inc. (“Parchment”).

17
ACTUA CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS – (CONTINUED)
(Unaudited)

Impairments
Actua performs ongoing business reviews of its cost method businesses to determine whether Actua’s carrying value in those businesses is impaired. Actua determined its carrying value in its cost method businesses was not impaired during the three months ended March 31, 2016 or the year ended December 31, 2015.
 
6. Fair Value Measurements
Fair value is the price that would be received from selling an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date. There are three levels of inputs that may be used to measure fair value, which are as follows:
•
Level 1 – Observable inputs, such as quoted market prices for identical assets and liabilities in active public markets.
•
Level 2 – Observable inputs other than Level 1 prices based on quoted prices in markets with insufficient volume or infrequent transactions, or valuations in which all significant inputs are observable for substantially the full term of the asset or liability.
•
Level 3 – Unobservable inputs to the valuation techniques that are significant to the fair value of the asset or liability.
Assets and liabilities are measured at fair value based on one or more of the following three valuation techniques:
•
Market Approach – Fair value is determined based on prices and other relevant information generated by market transactions involving identical or comparable assets and liabilities.
•
Income Approach – Fair value is determined by converting relevant future amounts to a single present amount based on market expectations (including present value techniques and option pricing models).
•
Cost Approach – Fair value represents the amount that currently would be required to replace the service capacity of the relevant asset (often referred to as replacement cost).
The fair value hierarchy of Actua’s financial assets measured at fair value on a recurring basis were as follows:
(in thousands)
 
 
 
Valuation
 
 
 
 
 
 
 
 
 
 
Technique
 
 
 
 
 
 
 
 
Asset (liability)
 
(Approach)
 
Level 1
 
Level 2
 
Level 3
March 31, 2016
 
 
 
 
 
 
 
 
 
 
Cash equivalents (money market accounts)
 
$
45,997

 
Market
 
$
45,997

 
$
—

 
$
—

Acquisition contingent consideration obligations
 
(1,984
)
 
Income
 
—

 
—

 
(1,984
)
 
 
$
44,013

 
 
 
$
45,997


$
—


$
(1,984
)
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Valuation
 
 
 
 
 
 
 
 
 
 
Technique
 
 
 
 
 
 
 
 
Asset (liability)
 
(Approach)
 
Level 1
 
Level 2
 
Level 3
December 31, 2015
 
 
 
 
 
 
 
 
 
 
Cash equivalents (money market accounts)
 
$
65,136

 
Market
 
$
65,136

 
$
—

 
$
—

Acquisition contingent consideration obligations
 
(1,968
)
 
Income
 
—

 
—

 
(1,968
)
 
 
$
63,168

 
 
 
$
65,136

 
$
—

 
$
(1,968
)

 The carrying value of certain of Actua’s other financial instruments, including accounts receivable and accounts payable, approximates fair value due to the short-term nature of those instruments.

As of March 31, 2016 and December 31, 2015, Actua accounts for a contingent earn-out payment related to VelocityEHS’ acquisition of KMI, which was a component of VelocityEHS’ purchase price for KMI. A fair value of that obligation was determined on the date of acquisition using Monte Carlo simulation models that yielded a value of $1.2 million. The obligation could range in value from zero to $2.0 million; the fair value as of March 31, 2016 has been determined through the update of models, Actua’s calculations and/or qualitative analysis. The contingent obligation related to VelocityEHS’ acquisition of KMI will become due, if at all, in

18
ACTUA CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS – (CONTINUED)
(Unaudited)

June 2016 and has been classified as a short-term liability on Actua’s Consolidated Balance Sheets as of both March 31, 2016 and December 31, 2015. Increases were reflected as charges on the "Impairment related and other" line item on Actua's Consolidated Statements of Operations.

As discussed in Note 3, “Goodwill and Intangible Assets,” for the year ended December 31, 2015, a goodwill impairment charge was taken on the FolioDynamix reporting unit. For purposes of determining the goodwill impairment of the FolioDynamix reporting unit, Actua estimated the implied fair value of the goodwill using a variety of valuation methods, including the income and market approaches. The fair market value based on significant unobservable inputs within the Level 3 hierarchy was $126.5 million, in comparison to the net book value of $166.2 million, resulting in a total pre-tax (non-cash) impairment loss of $39.7 million. Actua’s estimate of fair value under the income approach included discounted cash flow estimates and a risk adjusted discount rate of 23.4%.

Actua performs sensitivity analysis of the fair value calculation. In evaluating the reasonableness of Actua’s fair value estimates, Actua considers, among other factors, the relationship between its book value, the market price of its common stock and the fair value of its reporting units. As of March 31, 2016, the closing price of Actua's Common Stock ($9.05 per share) exceeded the book value of its assets ($8.53 per share). Multiples of revenue are commonly used in valuing businesses. In 2016, the market multiples of comparable companies in the cloud technology industry have decreased significantly over the past year. If the closing stock price or market multiples continue to decline, it would likely indicate the occurrence of events or changes that would cause Actua to perform additional impairment analyses which could result in further revisions to its fair value estimates. Actua will continue to monitor and evaluate this relationship. Additionally, should actual results differ materially from Actua's projections, additional impairment would likely result.
7. Debt
On August 9, 2013, as part of a round of debt financing led by Actua, Bolt entered into certain loan agreements with one of its minority shareholders that exercised its preemptive rights, Neurone II Investments G.P., Ltd. (“Neurone”). Those agreements provided for a term loan of $0.5 million, subject to an interest rate of 8.0% and maturity date of August 9, 2015. Since the loan matured on August 9, 2015, it has become payable on demand and interest continues to accrue at 8% interest. The principal amount on the loan, which is convertible into shares of preferred stock in Bolt, has a fair value of $0.5 million as of both March 31, 2016 and December 31, 2015. As of both March 31, 2016 and December 31, 2015, $0.5 million is outstanding under the term loan and is included in the line item “Short-term debt” in Actua’s Consolidated Financial Statements.
On January 1, 2015, as part of a round of debt financing led by Actua, Bolt entered into certain additional loan agreements with Neurone that provide for a term loan of $0.8 million, subject to an interest rate of 8.0% and a maturity date of May 1, 2016 and is now payable on demand. The loan, which is convertible into shares of Bolt’s preferred stock, has a fair value of $0.8 million as of March 31, 2016.  As of March 31, 2016, $0.8 million is outstanding under the term loan and is included in the line item “Short-term debt” in Actua’s Consolidated Balance Sheets.
On February 26, 2016, GovDelivery entered into a working capital revolving credit facility with Venture Bank, that matures on February 26, 2017 and provides for an advance amount of $5.0 million, subject to an interest rate of 5.5% and certain financial covenants. The facility is secured by the assets of GovDelivery.  During the three months ended March 31, 2016, GovDelivery borrowed $4.1 million under the credit facility. GovDelivery was compliant with the financial covenants of the credit facility for the period ended March 31, 2016.

8. Treasury Stock
Actua has been authorized pursuant to a share repurchase program to repurchase, from time to time, shares of Common Stock in open market transactions, including pursuant to trading plans meeting the requirements of Rule 10b5-1 under the Exchange Act or in privately negotiated transactions. The program was adopted in 2008 and was most recently expanded in 2013 to allow for the repurchase of up to $150.0 million of shares of Actua's Common Stock. During the three months ended March 31, 2016, Actua repurchased 470,000 shares of its Common Stock at an average stock price of $9.15 per share. During the three months ended March 31, 2016, Actua paid $4.0 million related to the repurchase and due to the timing of payments, the remaining $0.3 million was accrued. During the three months ended March 31, 2015, Actua repurchased 96,277 shares of its Common Stock at an average price of $17.66 per share. Since commencement of the program, Actua has deployed a total of $64.8 million to repurchase a total of 6,997,849 shares of Common Stock for an average purchase price of $9.26 per share. As of the date of this Report, Actua may repurchase an additional $85.2 million of its Common Stock under the program. Repurchases are reflected in the line item “Treasury stock, at cost” as a reduction of stockholders’ equity in Actua’s Consolidated Balance Sheets in the relevant period.


19
ACTUA CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS – (CONTINUED)
(Unaudited)

9. Equity-Based Compensation
Equity-based compensation awards may be granted to Actua employees, directors and consultants and certain employees of its consolidated businesses under Actua’s 2005 Omnibus Equity Compensation Plan (as amended from time to time, the “Plan”). Generally, the awards vest over a period from one to four years or based on the achievement of performance-based or market-based conditions, and expire eight to ten years after the grant date. Most businesses in which Actua holds equity ownership interests also maintain their own equity incentive compensation plans. As of March 31, 2016, Actua had 1,893,678 shares of Common Stock reserved under the Plan for possible future issuance.
Actua may issue the following types of equity-based compensation to its employees and non-employee directors (1) restricted stock and restricted stock units (often subject to performance-based or market-based conditions), (2) stock appreciation rights (“SARs”), (3) stock options, and (4) deferred stock units (“DSUs”). Actua’s grants of equity-based compensation are approved by its BODs or the Compensation Committee of its BODs. Equity-based compensation is included in operating expenses, primarily in the line item “General and administrative” in Actua’s Consolidated Statements of Operations.
The following table summarizes the equity-based compensation recognized by expense line item on Actua’s Consolidated Statements of Operations:
(in thousands)
 
Three Months Ended March 31,
 
 
2016
 
2015
Cost of revenue
 
$
41

 
$
26

Sales and marketing
 
104

 
58

General and administrative
 
4,774

 
7,093

Research and development
 
124

 
45

Total equity-based compensation
 
$
5,043

 
$
7,222


Equity-based compensation by equity award type:
(in thousands, except weighted average years)
 
Three Months Ended March 31,
 
Weighted Average Years Remaining of Equity-Based Compensation as of
 
 
2016
 
2015
 
March 31, 2016
Restricted stock
 
$
3,925

 
$
6,655

 
1.78
SARs
 
58

 
147

 
0.85
DSUs
 
99

 
17

 
2.70
 
 
4,082

 
6,819

 
 
Equity-based compensation for consolidated businesses
 
961

 
403

 
2.79
Total equity-based compensation
 
$
5,043

 
$
7,222

 
 

Unrecognized equity-based compensation by equity award type:
(in thousands)
 
As of March 31,
 
 
2016
 
2015
Restricted stock
 
$
18,387

 
$
37,632

SARs
 
67

 
386

DSUs
 
869

 
—

 
 
19,323

 
38,018

Equity-based compensation for consolidated businesses
 
9,660

 
4,687

Total equity-based compensation
 
$
28,983

 
$
42,705


Restricted Stock
Actua periodically issues shares of restricted stock to its employees, employees of its consolidated businesses and non-management directors. Recipients of restricted stock do not pay cash consideration for the shares and have the right to vote all shares subject

20
ACTUA CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS – (CONTINUED)
(Unaudited)

to the grant. Any cash dividends paid by Actua in respect of unvested restricted stock would be paid to the holders of outstanding restricted stock at the same time as cash dividends are paid to common stockholders. Any dividends paid by Actua in stock or other property in respect of unvested restricted stock would be paid to the holders of outstanding unvested restricted stock, subject to the same terms and conditions related to vesting, forfeiture and non-transferability as the underlying stock.
Share activity with respect to restricted stock awards for the three months ended March 31, 2016 and 2015 was as follows:
 
 
Number of Shares
 
Weighted Average Grant Date Fair Value
Issued and unvested as of December 31, 2014
 
3,755,275

 
$
15.94

Granted
 
441,256

 
$
16.21

Vested
 
(644,247
)
 
$
19.70

Forfeited
 
(43,660
)
 
$
17.85

Issued and unvested as of March 31, 2015
 
3,508,624

 
$
15.75


 
 
Number of Shares
 
Weighted Average Grant Date Fair Value
Issued and unvested as of December 31, 2015
 
3,480,828

 
$
16.51

Granted
 
434,283

 
$
8.44

Vested
 
(657,317
)
 
$
18.75

Forfeited
 
(588,819
)
 
$
10.69

Issued and unvested as of March 31, 2016
 
2,668,975

 
$
15.93


The total aggregate fair value of restricted stock awards that vested and were converted into Actua’s Common Stock during the three months ended March 31, 2016 and 2015 was $5.2 million and $10.8 million, respectively. 191,898 and 207,649 shares were surrendered by Actua’s employees for satisfying withholding taxes for the three months ended March 31, 2016 and 2015, respectively.
As of March 31, 2016, issued and unvested shares of restricted stock granted to Actua’s employees and BODs vest as follows:
Number of Shares Unvested
 
Vesting Conditions
1,335,700

 
Subject to certain market conditions, as discussed below
419,283

 
Subject to certain performance conditions, as discussed below
913,992

 
Subject to certain service conditions, as discussed below
2,668,975

 
 
 
 
 
 
 
 
 
 
Restricted Stock – Awards with Market Conditions
In recent years, Actua has issued restricted stock awards with market-based vesting conditions to its employees and certain employees of its consolidated businesses, the vesting of which is contingent upon specified price targets of Actua’s Common Stock. The equity-based compensation expense for awards with market-based vesting conditions is recorded based on the fair value of the awards, which is determined using a Monte Carlo simulation model at the time the award is granted. For the majority of the market-based awards that are outstanding as of March 31, 2016, the derived service period over which the expense is to be recognized is also determined by the Monte Carlo simulation model. In the event that the market-based conditions are not achieved and the related restricted stock awards are forfeited, equity-based compensation expense is not reversed; if an employee terminates service with Actua prior to completing the service period associated with the award, any compensation expense associated with the unvested award is reversed.  
During 2011, a total of 366,666 shares of restricted stock with market-based conditions were granted to Actua’s Chief Executive Officer and its President. The market-based conditions were not achieved and the relevant shares of restricted stock lapsed unvested in the first quarter of 2016.

21
ACTUA CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS – (CONTINUED)
(Unaudited)

In February 2014, a total of 1,277,500 shares of restricted stock with market-based conditions were granted to certain of Actua’s employees, including Actua’s executive officers, and certain executives of Actua’s consolidated businesses (the “2014 Management Market-Based Awards”). The vesting of those shares is contingent upon the 45-trading day volume-weighted average price per share (“VWAP”) of Actua’s Common Stock meeting or exceeding specified 45-trading day VWAP targets ($28.07, $30.16, $32.38 and $34.71) (the “2014 VWAP Targets”) on or before February 28, 2018, with 25% of the shares vesting upon achievement of each of the targets. In the event that any of the 2014 VWAP Targets are not achieved, the relevant shares of restricted stock will lapse unvested.
In April 2014, 50,800 shares of restricted stock were granted to Actua’s non-management employees (the “2014 Employee Market-Based Awards”). The vesting of those shares is contingent upon the 45-trading day VWAP of Actua’s Common Stock meeting or exceeding the 2014 VWAP Targets on or before February 28, 2018. Through the three months ended March 31, 2016, a total of 12,600 of these shares have been forfeited.
During the year ended December 31, 2015, 20,000 shares of restricted stock were granted to an executive of one of Actua’s consolidated businesses.  The vesting of those shares is contingent upon the 45-trading date VWAP of Actua’s Common Stock meeting or exceeding the 2014 VWAP Targets on or before February 28, 2018.
In aggregate, and inclusive of any amounts noted in the paragraphs of this subsection, compensation expense related to awards with market conditions was $0.8 million and $2.6 million for the three months ended March 31, 2016 and 2015, respectively. Unamortized compensation expense of less than $0.1 million will be amortized in the nine months remaining in 2016.
Restricted Stock – Awards with Performance Conditions
Actua also grants restricted stock awards with performance-based vesting conditions to its employees and certain employees of its consolidated businesses, the vesting of which is contingent upon the achievement of specified financial goals. The equity-based compensation expense for awards with performance-based vesting conditions is recorded based on the fair value of the awards, determined by the ending price of Actua’s Common Stock on the date of grant. Actua assesses the probability of the achievement of any performance conditions and adjusts the related equity compensation expense accordingly. In the event that the performance-based conditions are not achieved and the related restricted stock awards are forfeited, equity-based compensation expense related to those awards is reversed.
During the year ended December 31, 2014, 244,506 shares of restricted stock were granted to two Actua employees; the vesting of the shares was based on GovDelivery’s achievement of certain performance metrics in 2014 and 2015, with a maximum vesting of 100,247 shares for 2015 and a maximum vesting of 144,259 shares for 2016.  To the extent the performance metrics were not met, the restricted shares lapsed unvested. Based on the achievement of GovDelivery’s 2014 performance metrics, 56,587 shares vested and 43,660 shares were forfeited during the first quarter of 2015. Based on the achievement of GovDelivery’s 2015 performance metrics, 81,322 shares vested and 62,937 shares were forfeited during the first quarter of 2016.
During the three months ended March 31, 2014, in lieu of the right to receive up to 100% of their respective target bonus amounts under the Actua 2014 Performance Plan (the “2014 Performance Plan”) in cash, senior Actua employees, including Actua’s executive officers, were issued a total of 158,942 shares of restricted stock (determined based on the value of 100% of their respective individual target bonuses under the 2014 Performance Plan and the closing price of Actua’s Common Stock of $20.33 per share on February 28, 2014, the date of the restricted stock grant) (such shares, the “2014 Performance Shares”). If and to the extent that an employee’s achievement percentage under the 2014 Performance Plan: 
•
was greater than or equal to 100%, all of the employee’s 2014 Performance Shares would have vested; or
•
was greater than 0% but less than 100%, a portion of that employee’s 2014 Performance Shares would have vested, as determined by the Compensation Committee of Actua’s BODs, based on the quantitative and qualitative goals under the 2014 Performance Plan. All of the 2014 Performance Shares vested during the first quarter of 2015.
During the three months ended March 31, 2015, in lieu of any right to receive up to 150% of their respective target bonus amounts under the Actua 2015 Performance Plan (the “2015 Performance Plan”) in cash, senior Actua employees, including each of Actua’s executive officers, were issued a total of 316,715 shares of restricted stock (determined based on the value of 150% of their respective individual target bonuses under the 2015 Performance Plan and the closing price of Actua’s Common Stock of $16.76 per share on February 27, 2015, the date of the restricted stock grant) (such shares, the “2015 Performance Shares”). If and to the extent that the payout (expressed as a percentage) for an executive officer under the 2015 performance plan:

22
ACTUA CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS – (CONTINUED)
(Unaudited)

•
were greater than or equal to 150% of the target, all of his Performance Plan Restricted Stock would have vested, and the remainder of his bonus, if any, would have been paid in cash; or
•
were greater than 0% but less than 150% of the target, a percentage of his Performance Plan Restricted Stock equal to two-thirds of his payout percentage would have vested, his non-vesting shares of Performance Plan Restricted Stock would have been forfeited, and no amount would have been paid in cash.
During the year ended December 31, 2015, certain executives of Actua’s consolidated businesses were issued a total of 42,341 shares of restricted stock, the vesting of which was contingent upon the achievement of specified performance targets at those respective businesses.  Based on the achievement of the applicable performance targets, 28,341 of these shares vested in the first quarter of 2016, and 14,000 of these shares were forfeited.
During the three months ended March 31, 2016, in lieu of any right to receive up to 100% of their respective target bonus amounts under the Actua 2016 Performance Plan (the “2016 Performance Plan”) in cash, senior Actua employees, including each of Actua’s executive officers, were issued a total of 419,283 shares of restricted stock (determined based on the value of 100% of their respective individual target bonuses under the 2016 Performance Plan and the closing price of Actua’s Common Stock of $8.44 per share on March 3, 2016, the date of the restricted stock grant) (such shares, the “2016 Performance Shares”). If and to the extent that an individual’s achievement percentage under the 2016 Performance Plan is: (1) greater than or equal to 100%, all of that employee’s 2016 Performance Shares will vest or (2) greater than 0% but less than 100%, a portion of that employee’s 2016 Performance Shares will vest, and the remaining shares will lapse unvested, as determined by the Compensation Committee of Actua’s BODs.
In aggregate, and inclusive of any amounts noted in the paragraphs of this subsection, compensation expense related to performance-based awards was $1.0 million and $1.4 million for the three months ended March 31, 2016 and 2015, respectively. Unamortized compensation expense of $2.7 million will be amortized in the nine months remaining in 2016.
Restricted Stock – Awards with Service Conditions
Actua grants restricted stock awards to its employees, its BODs and certain employees of its consolidated businesses that vest over a period of time of employee service. The equity-based compensation expense for those time-based awards is recorded based on the fair value of the awards, determined by the ending price of Actua’s Common Stock on the date of grant. In the event that an employee or board member terminates service with Actua (or its consolidated businesses) prior to the vesting of a time-based award, the related restricted stock awards are forfeited and equity-based compensation related to any forfeited award is reversed.  
During the three months ended March 31, 2014, 37,500 shares of restricted stock were granted to Actua’s BODs in accordance with Actua’s Amended and Restated Non-Management Director Compensation Plan (the “Director Plan”). Those shares vested during the three months ended March 31, 2015. See “Non-Management Director Equity-Based Compensation - The Director Plan” in this Note 9 for additional details regarding equity-based compensation awarded to Actua’s BODs.
During the three months ended March 31, 2014, 1,377,500 shares of restricted stock were granted to certain of Actua’s employees, including Actua’s executive officers, and certain executives of Actua’s consolidated businesses. Those awards vest in equal increments each year for four years on the anniversary of the grant date.  Accordingly, 344,375 shares of restricted stock vested during both the three months ended March 31, 2015 and 2016. The unamortized equity-based compensation as of March 31, 2016 related to those time-based awards was $13.4 million and will be recognized as follows: $5.2 million in the remaining nine months of 2016, $7.0 million in 2017, and $1.2 million in 2018.
In April 2014, 76,200 shares of restricted stock were granted to certain of Actua’s employees. Those awards vest in equal increments on February 28 of each year for four years. Of those shares, 18,825 and 14,325 vested during the three months ended March 31, 2015 and 2016, respectively. Up to and including the three months ended March 31, 2016, a total of 14,400 shares have been forfeited.
During the three months ended March 31, 2015, 4,000 shares of restricted stock were granted to certain of Actua’s non-management employees.  Those awards vest in equal increments each year for four years on the anniversary of the grant date; accordingly, 1,000 shares of restricted stock vested during the three months ended March 31, 2016.
During the three months ended March 31, 2015, 20,000 shares of restricted stock were granted to an executive of one of Actua’s consolidated businesses. The shares vest in equal increments each year for four years on the anniversary of the grant date; accordingly, 5,000 shares of restricted stock vested during the three months ended March 31, 2016.

23
ACTUA CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS – (CONTINUED)
(Unaudited)

During the three months ended March 31, 2015, 20,000 shares of Actua’s Common Stock were awarded to certain executives of Actua’s consolidated businesses; those shares were not subject to any vesting requirements.  Actua recorded $0.3 million of expense during the three months ended March 31, 2015 related to those awards; the expense is included in the line item “Restricted stock” in the equity-based compensation by equity award type table above.
During the three months ended March 31, 2015, 18,200 shares of restricted stock were granted to Actua’s non-management BODs in accordance with Actua’s Second Amended and Restated Non-Management Director Compensation Plan (the “Amended Director Plan”) that took effect January 1, 2015.  Those awards vested in July 2015.  See “Non-Management Director Equity-Based Compensation - The Amended Director Plan” in this Note 9 for additional details regarding equity-based compensation awarded to Actua’s BODs.  
During the year ended December 31, 2015, 140,416 shares of restricted stock were granted to Actua's non-management directors in accordance with the Amended Director Plan. During the year ended December 31, 2015, 511 shares were vested and 514 shares were forfeited. 79,391 shares vest in June 2016; the remaining 60,000 shares vest in increments from September 2016 through June 2018. See “Non-Management Director Equity-Based Compensation - The Amended Director Plan” in this Note 9 for additional details regarding equity-based compensation awarded to Actua’s BODs.
During the three months ended March 31, 2016, 15,000 shares of restricted stock were granted to Actua’s non-management employees. Those awards vest in equal increments each year for four years on the anniversary of the grant date.
There are various other restricted stock awards that were issued in previous years, which vest according to specified service criteria, and remain unvested as of March 31, 2016. Those awards include 7,701 shares of restricted stock granted to Actua’s employees during 2012 that vest ratably each March and September from March 2013 to September 2016. The remaining 16,500 shares of restricted stock vest on the various anniversaries of the grants through 2018.
In aggregate, and inclusive of any amounts noted in the paragraphs of this subsection, compensation expense related to awards with service conditions was $2.2 million and $2.7 million for the three months ended March 31, 2016 and 2015, respectively. Unamortized compensation expense of $6.1 million will be amortized in the nine months remaining in 2016.
SARs
Each SAR represents the right of the holder to receive, upon exercise of that SAR, shares of Actua Common Stock equal to the amount by which the fair market value of a share of that Common Stock on the date of exercise of the SAR exceeds the base price of the SAR. The base price is determined by the NASDAQ closing price of Actua’s Common Stock on the date of grant (or the closing price on the next trading day if there are no trades in Actua’s Common Stock on the date of grant). The fair value of each SAR is estimated on the grant date using the Black-Scholes option-pricing model. SARs generally vest over four years, with 25% vesting on the first anniversary of the grant date, and the remaining 75% vesting ratably each month over the subsequent 36 months.
 

24
ACTUA CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS – (CONTINUED)
(Unaudited)

There was no activity with respect to SARs during the three months ended March 31, 2016. The activity with respect to SARs for the three months ended March 31, 2015 and 2016 was as follows:
 
 
Number of SARs
 
Weighted Average Base Price
 
Weighted Average
Fair Value
Outstanding as of December 31, 2014
 
548,482

 
$
10.62

 
$
5.79

Granted
 
1,500

 
$
16.69

 
$
8.99

Exercised (1)
 
(7,897
)
 
$
10.61

 
$
5.72

Forfeited
 
—

 
$
—

 
$
—

Outstanding as of March 31, 2015
 
542,085

 
$
10.64

 
$
5.80

 
 
 
 
 
 
 
 
 
Number of SARs
 
Weighted Average Base Price
 
Weighted Average
Fair Value
Outstanding as of December 31, 2015
 
479,656

 
$
10.64

 
$
5.80

Granted
 
—

 
$
—

 
$
—

Exercised (1)
 
—

 
$
—

 
$
—

Forfeited
 
—

 
$
—

 
$
—

Outstanding as of March 31, 2016
 
479,656

 
$
10.64

 
$
5.80

                                                    
(1) 
The exercise of SARs listed above resulted in the issuance of 1,869 and zero shares of Actua’s Common Stock for the three-month periods ended March 31, 2015 and March 31, 2016, respectively.
 
The following table summarizes information about SARs outstanding as of March 31, 2016:
Grant price
 
Number of SARs outstanding
 
Number of SARs exercisable
 
Weighted average remaining contractual life of SARs outstanding
(in years)
 
Aggregate intrinsic value of SARs outstanding as of March 31, 2016
(in thousands)
$6.70 - $8.76
 
68,264

 
68,264

 
2.93
 
$
75

$9.25 - $9.84
 
144,095

 
132,537

 
6.21
 
$
—

$11.69 - $17.31
 
267,297

 
265,160

 
4.85
 
$
—

 
 
479,656

 
465,961

 
 
 
$
75

As of March 31, 2016 and 2015, there were 465,961 SARs and 460,911 SARs exercisable, respectively, at a weighted average base price of $10.65 per share and $10.72 per share, respectively, under the Plan. As of March 31, 2016, Actua expects an additional 13,695 SARs to vest in the future. The aggregate intrinsic value of the SARs outstanding as of March 31, 2016 and 2015 was $0.1 million and $4.2 million, respectively.
Stock Options
The fair value of each stock option is estimated on the grant date using the Black-Scholes option-pricing model. Stock options generally vest ratably over four years: 25% vest on the first anniversary of the grant date, and the remaining 75% vest ratably each month over the subsequent 36 months.  
There was no activity with respect to stock options during the three months ended March 31, 2016 and 2015. There were 250 stock options outstanding as of both March 31, 2016 and December 31, 2015; the aggregate intrinsic value of the stock options outstanding as of both March 31, 2016 and December 31, 2015 was de minimis.

25
ACTUA CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS – (CONTINUED)
(Unaudited)

SARs and Stock Options Fair Value Assumptions
Actua estimates the grant date fair value of SARs and stock options using the Black-Scholes option-pricing model, which requires the input of highly subjective assumptions. Those assumptions include estimating the expected life of the award and estimating the volatility of Actua’s stock price over the expected term. Expected volatility approximates the historical volatility of Actua’s Common Stock over the period, commensurate with the expected term of the award. Actua has sufficient historical data to calculate an expected term for SARs and stock options granted in the future. The risk-free interest rate is based on the U.S. Treasury yield in effect at the time of grant for an instrument with a maturity that is commensurate with the expected term of the award. Changes in the above assumptions, the estimated forfeitures and/or the requisite service period can materially affect the amount of equity-based compensation recognized in Actua’s Consolidated Statements of Operations. The following assumptions were used to determine the fair value of SARs granted to employees by Actua during the three months ended March 31, 2015.
 
 
Three Months Ended March 31, 2015
Expected volatility
 
56
%
Average expected life of SAR (in years)
 
6.13

Risk-free interest rate
 
1.51
%
Dividend yield
 
—

Non-Management Director Equity-Based Compensation
Actua periodically issues DSUs and/or shares of restricted stock to its non-management directors in accordance with the Director Plan and the Amended Director Plan. Each DSU represents a share of Common Stock into which that DSU will be converted upon the termination of the recipient’s service at Actua.  
As of the three months ended March 31, 2016 and year ended December 31, 2015, 90,000 DSUs were outstanding with a weighted average grant date fair value of $13.17. For the three months ended March 31, 2016, there was no share activity with respect to the DSUs. Share activity with respect to the annual DSU awards for the three months ended March 31, 2015 was as follows:
 
 
Number of shares
 
Weighted
average grant
date fair value
Issued and unvested as of December 31, 2014
 
22,500

 
$
17.63

Vested
 
(22,500
)
 
$
17.63

Issued and unvested as of March 31, 2015
 
—

 
$
—

Non-Management Director Equity-Based Compensation – The Director Plan
The Director Plan was effective through December 31, 2014. Under the Director Plan, non-management directors were entitled to an annual grant for which each such director could elect to receive restricted stock or DSUs. All of those shares of restricted stock and DSUs vested during the year ended December 31, 2015.
In 2014, each non-management director was also entitled to receive quarterly cash payments for his service on the BODs and its committees, as applicable, under the Director Plan. Each director had the option to elect to receive DSUs in lieu of all or a portion of those cash fees. Each participating director received DSUs representing shares of Actua’s Common Stock with a fair market value equal to the relevant cash fees (with such fair market value determined by reference to the closing Common Stock price reported by NASDAQ on the date these cash fees otherwise would have been paid). DSUs received in lieu of cash fees were fully vested at the time they were granted and will be settled in shares of Actua’s Common Stock upon the termination of the recipient’s service at Actua. The expense for those DSUs was recorded when the fees to which the DSUs relate were earned and is included in the line item “General and administrative” on Actua’s Consolidated Statements of Operations for three months ended March 31, 2015 (but is not reflected in the summarized Equity-Based Compensation table above). During the three months ended March 31, 2015, non-management directors received DSUs representing 4,469 shares of Actua’s Common Stock in lieu of cash for services provided.

26
ACTUA CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS – (CONTINUED)
(Unaudited)

Non-Management Director Equity-Based Compensation – The Amended Director Plan
Pursuant to the Amended Director Plan, the compensation of Actua’s non-management directors was modified as follows for 2015:  (1) the form of director retainer fee payments changed from quarterly cash payments to annual director restricted stock grants (with restricted stock with a six-month vesting period being granted in January 2015 and, thereafter, annual grants being made in connection with Actua’s annual meetings of stockholders) and (2) the number and frequency of non-management director service grant DSUs/shares of director restricted stock changed from 7,500 annually to 22,500 triennially (with 7,500 DSUs/shares of director restricted stock vesting on the one-year anniversary of the grant date, and the remaining 15,000 DSUs/shares of director restricted stock vesting in equal quarterly installments over the following two years).  The annual grants of shares of director restricted stock that replaced the quarterly cash retainer fees are (a) made at the board meeting immediately following the annual meeting of stockholders, (b) equal in value to the total amount of annual retainer fees that were previously payable for the year (based on the NASDAQ closing price of Actua’s Common Stock on the grant date), (c) vest on the one-year anniversary of the grant date and (d) no longer subject to a director option to receive DSUs in lieu of the shares.
During the three months ended March 31, 2015, 18,200 shares of restricted stock with a grant date fair value of $16.10 were granted to Actua’s non-management directors (as discussed previously in this Note 9) representing the director retainer fee for the first half of 2015; those awards vested in July 2015. During the year ended December 31, 2015, 50,416 shares of restricted stock with a grant date fair value of $13.17 were granted to Actua’s non-management directors (as discussed previously in this Note 9) representing the director retainer fee for the period from the June 12, 2015 grant date through June 12, 2016; those awards vest in June 2016.
Also during the year ended December 31, 2015, 90,000 shares of restricted stock and 90,000 DSUs (both with a grant date fair value of $13.17) were granted to Actua’s non-management directors representing the directors’ triennial service awards. As detailed above, 30,000 shares of restricted stock and 30,000 DSUs vest in June 2016, and the remaining 60,000 shares of restricted stock and 60,000 DSUs vest in equal quarterly installments beginning in September 2016 and ending in June 2018.
Consolidated Businesses
All of Actua’s consolidated businesses issue equity-based compensation awards to their employees. Those awards are most often in the form of stock options for the respective businesses’ stock that vest over four years. The fair value of the stock option awards is estimated on the grant date using the Black-Scholes option pricing model. The majority of the stock options vest 25% on the first anniversary of the grant date, and the remaining 75% vest ratably each month over the subsequent 36 months. The other awards generally vest ratably over four years, with 25% vesting on each anniversary date over that term.
Consolidated business
 
Description of equity-based compensation award
GovDelivery - NuCivic acquisition (1)
 
Grant of $3.1 million in restricted stock
GovDelivery - Textizen acquisition (1)
 
Grant of $0.9 million in restricted stock
FolioDynamix (2)
 
Grant of stock options with total fair value of $5.1 million
______________________________
(1) In conjunction with the NuCivic and Textizen acquisition transactions, GovDelivery granted $3.1 million and $0.9 million, respectively,
of restricted stock. The expense associated with those awards is being recognized ratably over a four-year vesting period. That expense is included in the line item “Equity-based compensation for consolidated businesses” in the equity-based compensation by equity award type table above.
(2) In conjunction with Actua’s acquisition of FolioDynamix, stock options with a total fair value of $5.1 million were granted to certain of FolioDynamix’s employees. The majority of those stock options vest as follows: 25% vested in November 2015, and the remaining 75% vest ratably each month through November 2018. The remaining stock options vest upon the achievement of certain performance or market conditions, as well as service conditions; to the extent that the performance or market conditions are not achieved, those stock options will lapse unvested. The expense associated with those awards is being recognized over the relative vesting periods.

27
ACTUA CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS – (CONTINUED)
(Unaudited)

The following assumptions were used to determine the fair value of stock options granted by Actua's consolidated businesses to their employees during the three-month period ended March 31, 2016; there were no stock option grants made by Actua's consolidated businesses during the three-months ended March 31, 2015. Due to insufficient historical data, Actua's consolidated businesses used the simplified method to determine the expected life of all stock options granted under the respective equity incentive plans.
 
Three Months Ended March 31, 2016
Expected volatility
30% - 50%
Average expected life of stock options (in years)
5.93 - 6.25
Risk-free interest rate
1.42% - 1.44%
Dividend yield
—
 

10. Other (Loss) Income, net
Other (loss) income, net recorded in Actua's Consolidated Statements of Operations consists of the effect of transactions and other events relating to Actua’s ownership interests and its operations in general, and is comprised of the following:
(in thousands)
 
Three Months Ended March 31,
 
 
2016
 
2015
Gain on sales/distributions of ownership interests (1)
 
$
46

 
$
1,390

Foreign currency gain (loss)
 
(202
)
 
147

Total other (loss) income, net
 
$
(156
)
 
$
1,537

____________________________
(1)    During the three months ended March 31, 2016 and 2015, Actua received distributions from a previously owned interest that resulted
in proceeds of $30 thousand and $1.0 million for the respective periods. Also during the three months ended March 31, 2016 and 2015, Actua received loan repayments from a previously owned equity method investment in the amounts of $16 thousand and $0.4 million, respectively.

11. Income Taxes
Actua Corporation, FolioDynamix, GovDelivery, and VelocityEHS file a consolidated federal income tax return. Bolt is not included in Actua’s consolidated federal income tax return. For the three months ended March 31, 2016 and 2015, a tax provision was recognized for state and foreign income taxes; no tax benefit for the loss from continuing operations was recognized as Actua maintains a full valuation allowance against its federal net deferred tax assets that it believes, after evaluating all the positive and negative evidence, both historical and prospective, is more likely than not to not be realized.

12. Net Loss per Share
The calculations of net loss per share were as follows:
(in thousands, except per share data)
 
Three Months Ended March 31,
 
 
2016
 
2015
Basic and Diluted:
 
 
 
 
Net loss attributable to Actua Corporation
 
$
(14,331
)
 
$
(14,765
)
 
 
 
 
 
Basic and Diluted:
 
 
 
 
Net loss attributable to Actua Corporation per share
 
$
(0.38
)
 
$
(0.40
)
 
 
 
 
 
Shares used in computation of basis and diluted loss per share
 
37,293

 
36,842



28
ACTUA CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS – (CONTINUED)
(Unaudited)

The following potentially dilutive securities were not included in the computation of diluted net loss per share, as their effect would have been anti-dilutive:
 
 
Units
(in thousands)
 
Weighted Average
Price per Share
Three Months Ended March 31, 2015
 
 
 
 
SARs
 
542

 
$
10.64

Restricted stock (1)
 
3,509

 
$
—

DSUs
 
—

 
$
—

 
 
 
 
 
Three Months Ended March 31, 2016
 
 
 
 
SARs
 
480

 
$
10.64

Restricted stock (1)
 
2,669

 
$
—

DSUs
 
90

 
$
—

___________________________
(1) 
Anti-dilutive securities include contingently issuable shares unvested as of March 31, 2016 and 2015, the vesting of which is based on service conditions, performance conditions and market conditions that have not yet been achieved. See Note 9, “Equity-Based Compensation.”

13. Segment Information
The results of operations of our businesses are reported in two segments; the “vertical cloud” reporting segment and the “vertical cloud (venture)” reporting segment.  The vertical cloud reporting segment reflects the aggregate financial results of Actua’s businesses (1) that share economic and other characteristics, (2) in which Actua’s management takes a very active role in providing strategic direction and operational support, and (3) towards which Actua devotes relatively large proportions of its personnel, financial capital and other resources.  As of the date of this Report, Actua owns majority controlling equity positions in (and therefore consolidates the financial results of) the four businesses in the vertical cloud segment: Bolt, FolioDynamix, GovDelivery and VelocityEHS.  The vertical cloud (venture) reporting segment includes businesses with many characteristics similar to those of the businesses in the vertical cloud segment, but in which Actua takes a less active role in terms of strategic direction and operational support, and, accordingly, towards which Actua devotes relatively small amounts of personnel, financial capital and other resources.
During the three months ended March 31, 2016 and 2015, approximately $1.6 million and $1.6 million, respectively, of Actua’s consolidated revenue relates to sales generated outside of the United States, primarily Europe and Canada. As of March 31, 2016 and December 31, 2015, Actua’s assets were located primarily in the United States.

29
ACTUA CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - (CONTINUED)
(Unaudited)

The following tables summarize selected information related to Actua’s segments.
(in thousands)
 
 
 
 
 
 
 
Reconciling Items
 
 
 
 
Vertical Cloud
 
Vertical Cloud
(Venture)
 
Total
Segment
 
Other (1)
 
Consolidated
Three Months Ended March 31, 2016
 
 
 
 
 
 
 
 
 
 
 Revenue
 
$
34,610

 
$
—

 
$
34,610

 
$
—

 
$
34,610

Net loss attributable to Actua Corporation
 
$
(8,521
)
 
$
—

 
$
(8,521
)
 
$
(5,810
)
 
$
(14,331
)
Three Months Ended March 31, 2015
 
 
 
 
 
 
 
 
 
 
 Revenue
 
$
30,592

 
$
—

 
$
30,592

 
$
—

 
$
30,592

Net loss attributable to Actua Corporation
 
$
(7,947
)
 
$
—

 
$
(7,947
)
 
$
(6,818
)
 
$
(14,765
)
________________
(1) 
The following table reflects the components of “Net loss attributable to Actua Corporation” included within the “Other” category:
 
(in thousands)
 
Three Months Ended March 31,
Selected Data:
 
2016
 
2015
General and administrative
 
$
(6,945
)
 
$
(9,291
)
Impairment related and other
 
—

 
(95
)
Other (loss) income, net (Note 10)
 
46

 
1,390

Interest income
 
37

 
18

Net loss attributable to the noncontrolling interest
 
1,052

 
1,160

Net loss
 
$
(5,810
)
 
$
(6,818
)

 
 
Vertical Cloud
 
Vertical Cloud (Venture)
 
Total Segment
 
Other
 
Consolidated Results
Assets as of:
 
 
 
 
 
 
 
 
 
 
March 31, 2016
 
$
380,289

 
$
17,117

 
$
397,406

 
$
39,251

 
$
436,657

December 31, 2015
 
$
376,565

 
$
16,617

 
$
393,182

 
$
56,962

 
$
450,144


14. Contingencies
During 2008 and 2009, two carried interest plans (one in each year) were established, for which a carried interest of 15% is allocable to Actua’s management participants in each plan. Carried interest will be paid in connection with a liquidity event or income receipt at any of the businesses in which the carried interest plans hold interests, subject to an aggregate specified hurdle threshold and hold-back and claw-back criteria. Actua has allocated approximately $77 million as of March 31, 2016 with respect to these plans and there were no cash deployments related to these plans in 2015 nor the three months ended March 31, 2016. Actua’s ownership in Bolt acquired prior to 2015 is held in the 2009 carried interest plan, and the activities over the past few years relative to the 2009 carried interest plan primarily relate to cash deployment from Actua to achieve its objectives of increasing its ownership in, and supporting the cash needs of, Bolt. Beginning in 2015, any additional cash deployment to Bolt will not be included in the carried interest plans. Other than the stake in Bolt held by the 2009 carried interest plan, the assets held by the carried interest plans are immaterial to Actua. As of March 31, 2016, Actua does not expect a liquidity event or income receipt at any of the relevant businesses that would trigger a payment under either of the carried interest plans to occur in the near future, and, accordingly, Actua has not recorded a liability with respect to these plans. Once a liquidity event or income receipt at any of the relevant businesses that would yield proceeds in excess of the calculated hurdle rate occurs, and a payment becomes probable and estimable, Actua would record the appropriate liability. Payments against that liability would occur thereafter, subject to relevant hold-backs and claw-backs. As of March 31, 2016, there were no distributions over the aggregate specified hurdle thresholds and none expected.  


30

ITEM 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations
The following Management’s Discussion and Analysis of Financial Condition and Results of Operations contains forward-looking statements that involve risks and uncertainties. Our actual results could differ materially from those anticipated in these forward-looking statements as a result of certain factors, including those set forth elsewhere in this Report and discussed in our other SEC filings. The following discussion should be read in conjunction with our unaudited Consolidated Financial Statements and the related Notes thereto included in this Report.
The Consolidated Financial Statements include the consolidated accounts of Actua Corporation, a company incorporated in Delaware, and its subsidiaries, both wholly-owned and consolidated (Actua Corporation and all such subsidiaries are collectively hereafter referred to as “Actua,” the “Company,” “we,” “our,” or “us”), and have been prepared in accordance with GAAP.
Executive Summary
Actua is a multi-vertical cloud technology company with offerings that we believe create unique and compelling value for our customers and provide transformative efficiency to vertical markets. We manage our consolidated vertical cloud-based businesses, which operate in the commercial and personal property and casualty insurance, wealth management, government communications and environmental, health and safety (“EH&S”) markets, with a uniform set of industry-standard recurring revenue metrics and specifically look to drive growth at those businesses by:
•
continuously creating compelling, differentiated cloud-based products and services through investment in research and development;
•
driving efficient long-term growth in recurring revenue through investment in lead generation, marketing and sales;
•
identifying, structuring and executing accretive acquisitions that accelerate strategic plans, increase revenue growth and, over time, improve margins;
•
investing in and cultivating deep, domain-expert management teams; and
•
implementing strategies to obtain operational leverage and increased profitability while maintaining high revenue growth, particularly as a company scales.
We believe that, through those and other measures, we are developing a set of leading businesses that possess unique assets which are hard to replicate and which provide competitive differentiation in the sizable vertical markets in which they operate.  We believe further that our vertical cloud business model focus, which drives the compelling value proposition of our businesses, well-positions us to generate sustained, meaningful long-term returns for our stockholders through, among other things:
•
revenue visibility and predictability (and lower revenue volatility than traditional software companies);
•
strong gross margins;
•
disciplined customer acquisition and attractive lifetime customer values, which allow for efficient growth through investment in sales and marketing;
•
economies of scale inherent in multi-tenancy software architecture, which allow a focus on innovation; and
•
ultimately, long-term profitability and operating cash flow.
The results of operations of our businesses are reported in two segments:  the “vertical cloud” reporting segment and the “vertical cloud (venture)” reporting segment.  Our vertical cloud reporting segment reflects the aggregate financial results of our businesses:
•
that generally share the economic and other characteristics described above;
•
in which our management takes a very active role in providing strategic direction and operational support; and
•
towards which we devote relatively large proportions of our personnel, financial capital and other resources.
As of the date of this Report, we own substantial majority controlling equity positions in (and therefore consolidate the financial results of) each of the four businesses in our vertical cloud segment: Bolt (of which we own 70%), FolioDynamix (of which we own 98%), GovDelivery (of which we own 94%) and VelocityEHS (of which we own 99%).
Our vertical cloud (venture) reporting segment includes businesses with many characteristics similar to those of the businesses in our vertical cloud segment, but in which we take a less active role in terms of strategic direction and operational support, and, accordingly, towards which we devote relatively small amounts of personnel, financial capital and other resources. Each of the two businesses in our vertical cloud (venture) reporting segment, InstaMed and Parchment, is accounted for under the cost method of accounting (see Note 2, “Significant Accounting Policies,” to our Consolidated Financial Statements) since we own less than 20% in each of these businesses.


31

As described in expanded detail below, each of our four vertical cloud businesses, Bolt, FolioDynamix, GovDelivery and VelocityEHS, offers cloud-based products and services that address the needs of a specific vertical market or industry. Each of those businesses competes with one or more traditional or cloud-based software firms, some of which have a horizontal/multi-industry focus and some of which may have better name recognition and greater financial and other resources than our businesses do. We believe that each of our businesses is well-positioned to compete with those firms because of, among other things, the vertical domain expertise and vertically-focused technology that we have cultivated.
Our focus on serving vertical markets, each of which has customers with similar needs and challenges, allows for narrowly-focused and rapid product development, which results in technology that is often better suited than a horizontal solution to address customer needs and challenges. In addition, our proprietary, scalable and secure multi-tenant architecture enables us to have relatively lower research and development expenses than traditional software companies. Based in large part on those advantages, we have invested, and will continue to invest, heavily in research and development at each of our businesses to continue to develop differentiated, vertically-focused cloud-based offerings, which are highlighted by:
•
approximately 5,160 commercial and personal property and casualty insurance products from over 95 carriers that Bolt is able to offer through its platform;
•
the broad reach of FolioDynamix’s wealth management platform, which serviced approximately $622 billion of assets under management (“AUM”) as of March 31, 2016, and its complementary investment advisory services, which encompassed approximately $20 billion of AUM (of which $4.9 billion are Regulatory AUM) as of March 31, 2016;
•
GovDelivery’s subscriber base in excess of 120 million interested citizens; and
•
VelocityEHS’ industry-leading proprietary database, which contains over 9.6 million safety data sheets.
Another key component of our business strategy, in addition to our multi-vertical domain expertise and effective and efficient research and development, is the leverage inherent in the recurring revenue generated by our cloud-based software delivery model. In part because our customers are required to make periodic payments to continue receiving access to our cloud-based products and services, we have established long-term relationships with our customers, many of which are governed by multi-year contracts that have historically high renewal rates.  The consistent revenue stream provided by our recurring revenue model, coupled with our relatively high gross margins, allow us to drive revenue growth more consistently over time through investment in lead generation, sales and marketing. In order to ensure that we are effectively leveraging our cloud-based model, we closely monitor and manage the revenue growth rates, along with the gross margins, number of customers and a variety of customer retention and sales efficiency metrics, at each of our businesses. Through the first quarter of 2016:
•
Bolt's revenue grew approximately 10% in the three-month period ended March 31, 2016 from the corresponding prior year period. During the three months ended March 31, 2016, Bolt served approximately 2,065 independent commercial and personal property and casualty insurance agent customers, seven large commercial and personal property and casualty insurance carrier-agency customers, six customers who are non-traditional sellers of commercial and personal property and casualty insurance products and one state commercial and personal property and casualty insurance exchange customer;
•
FolioDynamix’s revenue was essentially flat from the corresponding three-month prior year period, and, during the three months ended March 31, 2016, it served over 91 direct financial services organizations, such as brokerage firms, banks (trust and retail), large registered investment advisors (“RIAs”) and RIA networks and other fee-based managed account providers;
•
GovDelivery’s revenue grew approximately 20% from the corresponding three-month prior year period, and, during the three months ended March 31, 2016, it served over 1,200 government entities, agencies and organizations at the national, state and local levels in both the United States and Europe; and
•
VelocityEHS’ revenue grew approximately 23% from the corresponding three-month prior year period. During the three months ended March 31, 2016, VelocityEHS served around 12,000 customers; approximately 75% are platform customers, consisting of large and mid-market North American businesses in a wide variety of industries.
We also actively source and intend to selectively pursue acquisitions that would provide one or more of our businesses with critical mass, complementary cloud-based products and services to sell to existing customers, additional customers for existing cloud-based products and services, access to adjacent cloud computing markets, and/or technology that is a differentiator in the business’ vertical cloud computing market. For example, in January 2016, VelocityEHS acquired substantially all of the assets of ErgoAdvocate, a company that provides ergonomics assessment and training software; the acquisition allows VelocityEHS to provide a new offering to customers.

32

Our ability to execute against our business strategy and continue to successfully grow our vertical cloud businesses will be dependent on a number of factors, including the following:
•
our ability to compete in highly-competitive, rapidly developing markets against traditional and cloud-based software firms, some of which may have better name recognition and greater financial and other resources than our businesses do;
•
the emergence of additional competitors in our markets and improved product offerings by existing and new competitors;
•
our prospective customers’ willingness to migrate to cloud computing services;
•
the availability, performance and security of our cloud-based technology, particularly in light of increased cybersecurity risks and concerns;
•
our ability to continue to drive successful customer adoption and utilization of our cloud-based technologies;
•
our ability to continue to release, and gain customer acceptance of, new and improved features and functionality;
•
our ability to continue to maintain a leadership role in the vertical industries in which we operate;
•
our ability to have continued access to capital and to manage capital resources effectively;
•
our ability to successfully integrate acquired businesses and technologies;
•
acceptance of our cloud-based products and services in new markets or markets where we have few customers;
•
our ability to continue to maintain appropriate data center capacity and security as our businesses grow;
•
our ability to attract new personnel and retain and motivate current personnel, particularly personnel with the vertical domain expertise that is critical to our success; and
•
general economic conditions, which could affect our customers’ ability and willingness to purchase our cloud-based solutions, delay customers’ purchasing decisions or affect customer attrition rates.

Our Vertical Cloud Businesses

As of the date of this Report, we consolidated the following vertical cloud businesses:

Bolt

Bolt offers a cloud-based platform that, through its unique product and technology connectivity, is changing the way insurance is sold.  The platform provides:

•
large commercial and personal property and casualty insurance carrier-agencies with a means to enable all of their captive agents to meet the needs of their customers by giving them instant access to a wide range of commercial and personal property and casualty insurance products from a variety of other prominent carriers;
•
independent commercial and personal property and casualty insurance agents with a means to meet the needs of their customers by giving them instant access to a wide range of commercial and personal property and casualty insurance products from a variety of prominent carriers;
•
non-traditional sellers of commercial and personal property and casualty insurance products with a means to meet the needs of their customers by giving them instant access to a cloud-based distribution network and a wide range of commercial and personal property and casualty insurance products from a variety of prominent carriers; and
•
commercial and personal property and casualty insurance carriers with a variety of additional distribution channels that foster a richer flow of business across their commercial and personal property and casualty insurance product lines.

Bolt is able to provide its platform-subscriber customers and partners, which include large insurance carrier-agencies, independent insurance agents and other insurance-based organizations, with access to a wide array of commercial and personal property and casualty insurance products through its agency appointments from various prominent insurance carriers. Any loss by Bolt of one or more of these agency appointments or one or more of its large platform customers would have a negative impact on Bolt’s business, financial results and condition, but Bolt does not have any agency appointment or customer the loss of which would have a materially adverse financial impact on our vertical cloud business as a whole. Bolt’s platform customers pay both subscription and transaction-based fees (commissions) for use of its platform; the insurance carriers whose products are sold on the platform pay Bolt on a commissions basis for products sold. Bolt sells the periodic (usually multi-year) platform subscriptions to its customers and establishes and manages its carrier agency relationships directly through its internal sales team. In addition to the revenue Bolt derives from providing access to its platform, Bolt also operates as an independent insurance agency and sells commercial and personal property and casualty insurance products directly to consumers online through its platform; those sales represent a relatively small percentage of Bolt’s business.


33

The insurance intermediary business is highly competitive, and numerous firms, some of which have substantially greater financial and other resources, name recognition and market presence than Bolt, actively compete with Bolt for customers and insurance markets. Competition in the insurance business is largely based on innovation, quality of service and price. A number of insurance companies directly sell insurance, primarily to individuals, and do not pay commissions to third-party agents and brokers. In addition, the cloud has increasingly become a source for the direct placement of personal business lines.  We believe that Bolt’s unique platform and the product and technology connectivity that it offers allows Bolt to compete in the insurance market. In the three months ended March 31, 2016, Bolt spent approximately $1.0 million on research and development activities.  

As of March 31, 2016, Bolt had 200 employees, of which 6 were part-time employees.  

FolioDynamix

FolioDynamix offers wealth management service providers and financial advisors a comprehensive, secure, cloud-based wealth management technology platform and advisory solutions for managing the full wealth management lifecycle across all types of investment programs. FolioDynamix provides its customers with leading-edge technology to attract and retain the best advisors, enable more effective business process management, accelerate client acquisition and gain visibility across all AUM.    

FolioDynamix’s customers include a variety of financial services organizations, such as brokerage firms, banks (trust and retail), large RIAs, and RIA networks and other fee-based managed account providers. FolioDynamix's customers access specified bundles of platform applications through the cloud on a periodic (usually multi-year) subscription basis. FolioDynamix sells the periodic subscriptions directly to its customers through its internal sales team.  FolioDynamix’s comprehensive, integrated platform enables highly sophisticated management of all aspects of a financial services organization’s wealth management process, including:

•
proposal generation and investment policy statement management;
•
client acquisition and onboarding;
•
investment model management;
•
portfolio rebalancing;
•
trading and trade order management;
•
performance management and reporting; and
•
portfolio accounting.

FolioDynamix complements its innovative wealth management platform and applications with institutional-quality research, content and consulting expertise through its subsidiary, FDx Advisors, Inc. (“FDx Advisors”).  FDx Advisors is an RIA firm that is independently available to help wealth management firms with due diligence and discretionary investment solutions that can be fully integrated with the FolioDynamix technology platform. The company charges its customers for these advisory services fees based on a specified percentage of AUM.

FolioDynamix’s five largest customers in terms of revenue generation represented approximately 56% of its revenue for the three months ended March 31, 2016. Although a loss of one or more of these customers (most of which have been signed to long-term contracts through at least 2017) would have a negative impact on FolioDynamix’s financial results and condition, FolioDynamix does not have any customer the loss of which would have a materially adverse financial impact on our vertical cloud businesses as a whole.

The market for wealth management software and advisory services is fragmented, competitive and rapidly changing. When selling its software to large financial services organizations, FolioDynamix faces competition from software companies who provide end-to-end, cloud-based solutions and an even larger number of software companies that offer individual point solutions; some of these companies may have better name recognition and financial and other resources than FolioDynamix. To a lesser degree, the company competes with in-house solutions that its current and prospective clients may develop. We believe that FolioDynamix’s sophisticated, highly-scalable, comprehensive cloud-based technology platform, along with its deep wealth management domain knowledge and processes, particularly in the areas of research and regulatory compliance, provide it with a strong position in the wealth management software and advisory services market. During the three months ended March 31, 2016, FolioDynamix spent approximately $2.4 million on research and development activities.

As of March 31, 2016, FolioDynamix had 121 employees, of which 2 were part-time employees.  


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GovDelivery

GovDelivery is a provider of cloud-based communication solutions that allow governments, government agencies and government organizations to reach more people and mobilize them to action. GovDelivery’s digital communication management platform enables the public sector to address a variety of real, ongoing challenges it faces by interacting more efficiently with citizens through e-mail, mobile text alerts, really simple syndication (“RSS”), and social media channels.  

Through the GovDelivery platform, GovDelivery’s customers, which include government entities, agencies and organizations at the national, state and local levels in both the United States and Europe, are able to:

•
increase online transactions, such as registrations and renewals, through personalized content, reminders, cross-promotion offers and other features;
•
promote successful events through multi-channel communications, personalized and contextual content and integration with other organizations and registration platforms;
•
manage emergency situations with real-time updates, sophisticated audience targeting and integration with other emergency alert systems;
•
build communities around data and expand volunteerism with broad reach, engaging content, sophisticated audience targeting and in-depth tracking analytics;
•
create modern training experiences that support regulatory compliance, encourage disaster preparedness and advance community education through a unified platform with sophisticated audience targeting;
•
improve media relations with tools that streamline communications with media outlets and measure the level of engagement that media outlets have with their multi-channel communications; and
•
drive increased digital engagement among citizens with a user-friendly, integrated, multi-channel communications approach.

GovDelivery’s customers access the company’s platform through the cloud on a periodic (usually annual or multi-year) subscription basis; GovDelivery sells the periodic subscriptions directly to its customers through its internal sales team.  Since GovDelivery’s customers are government entities and government affiliates, they generally have the right to terminate contracts upon notice at their unilateral election. In addition, GovDelivery derives, and will continue to derive, the majority of its revenue from work performed for the United States federal government and federal government agencies, some of which individually account for a significant amount of GovDelivery’s revenue; however, the work is performed under a myriad of separate, independent relationships and agreements with various branches and agencies within the federal government.

The market for digital communication solutions in general is fragmented, highly competitive and rapidly changing. GovDelivery provides its solutions exclusively to the public sector, while its competitors generally focus on digital marketing solutions targeting either the small business market or the private sector enterprise market. To a lesser degree, GovDelivery competes with in-house solutions that its current and prospective customers may develop. We believe that GovDelivery’s cloud-based technology and domain expertise, which manifests itself in strong relationships with many government entities, a subscriber base of more than 100 million interested citizens and a unique understanding of the day-to-day communication challenges faced by public sector clients, allows it to compete effectively against other digital communications service providers. During the three months ended March 31, 2016, GovDelivery spent approximately $2.2 million on research and development initiatives.  
 
As of March 31, 2016, GovDelivery had 221 employees, of which 1 was a part-time employee.  

VelocityEHS

In September 2015, MSDSonline Holdings, Inc. undertook a rebranding effort and changed its corporate name to VelocityEHS Holdings, Inc. in order to reflect the completion of its transformation into a platform with a comprehensive set of cloud-based EH&S tools. These tools allow customers to gain visibility into, and control risk at, their companies in the areas of incident management, audit and inspection training, compliance management, risk analysis, ergonomics, greenhouse gas reporting and sustainability metrics and reporting.
VelocityEHS’s platform helps businesses create safer work environments by identifying, managing and reducing potential workplace and environmental hazards that save time, lower costs and reduce the risk and liability associated with meeting compliance (particularly U.S. Occupational Safety and Health Administration (“OSHA”)) requirements.  


35

VelocityEHS’s customers, which include large and mid-market North American businesses in a wide variety of industries (including healthcare, manufacturing, education, construction, hospitality and technology, among many others), access the company’s applications through the cloud on a subscription basis (usually multi-year); VelocityEHS sells the subscriptions directly to its customers through its internal sales team.  

VelocityEHS’s principal products are currently chemical management products. Both of these cloud-based applications provide customers with the ability to track, manage and report on the hazardous chemicals contained in their workplaces, with the HQ RegXR Account application containing additional regulatory reporting functionality.  Specifically, the applications provide businesses with:

•
24/7 access to the industry’s leading database of chemical safety data sheets, which ensures that their safety data sheet libraries are complete, up-to-date and OSHA-compliant;
•
user-friendly tools that enable compliance with a variety of hazard communication requirements, such as chemical labeling, safe chemical handling and more (with the HQ RegXR Account application featuring a sophisticated regulatory cross-referencing engine);
•
robust chemical management tools, including chemical mapping features, which significantly increase control over the location, status and risks associated with the chemicals at their facilities;
•
mobile-enabled functionality and chemical inventory scanning technology, which allow on-the-spot access to chemical inventory information via mobile devices; and
•
quick ROI and low cost of ownership, as they eliminate time-consuming, manual administrative tasks.

VelocityEHS offers a number of customer services to support its HQ Account and HQ RegXR Account applications, such as customer training, safety data sheet authoring and compiling/indexing of customers’ online safety data sheet libraries; those services are sold to customers on a project fee basis.

VelocityEHS has around 12,000 customers, none of which individually account for a material portion of the company’s annual revenues. The market for EH&S software is fragmented and competitive. When selling its applications and services to large organizations, VelocityEHS faces competition from both large horizontal/multi-industry software companies that offer EH&S modules and smaller software companies focused solely on EH&S markets; some of these software companies provide cloud-based software solutions, while others offer only traditional, on-premise software solutions. In the large enterprise EH&S market, VelocityEHS often competes with incumbent vendors, many of which have more name recognition and financial and other resources than VelocityEHS. In the mid-market, VelocityEHS competes sometimes with smaller software companies but more often with home-grown (often manual/off-line) solutions that current and prospective customers may develop. We believe that VelocityEHS’s unparalleled proprietary database, which contains over 9.6 million safety data sheets, along with its cloud-based, EH&S-focused technology, its sales and marketing expertise and its deep EH&S and regulatory domain knowledge, provides VelocityEHS with a strong competitive position relative to both large and small companies offering competing EH&S software solutions. In the three months ended March 31, 2016, VelocityEHS spent approximately $1.9 million on research and development initiatives.     

As of March 31, 2016, VelocityEHS had 352 employees.

Our Vertical Cloud (Venture) Businesses

As of the date of this Report, the following businesses are included in our vertical cloud (venture) segment:

InstaMed Holdings, Inc. (“InstaMed”)

InstaMed operates a cloud-based healthcare payments network focused exclusively on healthcare providers, payers and patients. With its bank partners, InstaMed moves billions of dollars and information on its single, integrated network, connecting thousands of hospitals, practices and payers, and millions of patients for business. InstaMed’s innovative private cloud technology transforms the healthcare payment process by delivering new levels of payment assurance, simplicity, convenience and cost savings to the healthcare industry.


36

Parchment Inc.

Parchment is a leader in education credentials technology, allowing learners, educators and employers to collect, analyze, use and share credentials in simple and secure ways.  Parchment’s cloud-based software offering is a transcript exchange and intelligence platform that enables the secure, rapid exchange of electronic transcripts and other student records among schools, universities, state education agencies and individuals. Through Parchment’s website, students can research colleges and discover their chances of admission, see how they compare with peers, get college recommendations and send official transcripts when they are ready to apply.

Employees

Corporate headcount at Actua as of March 31, 2016 was 22, of which 1 was a part time employee. The headcount at our consolidated businesses as of March 31, 2016 was 894 employees.  See the individual descriptions of our consolidated businesses above for the number of employees at those businesses. 
Results of Operations
The following tables contain selected financial information related to our reportable segments. The segments, as applicable, include the results of our consolidated businesses and the businesses included in each segment are consistent between period. The method of accounting for any particular business may change based upon, among other things, a change in our ownership interest.
“Other” expenses represent: (1) the corporate general and administrative expenses of Actua’s business operations, which primarily include employee costs and costs associated with operating as a public company and acquiring businesses, (2) gains or losses on the dispositions of ownership interests, (3) income taxes, and (4) the results of operations attributable to the respective noncontrolling interests of our businesses.
(in thousands)
 
Segment Information
 
 
 
 
 
 
 
 
Reconciling Items
 
 
 
 
Vertical Cloud
 
Vertical Cloud
(Venture)
 
Total
Segment
 
Other
 
Consolidated
Three Months Ended March 31, 2016
 
 
 
 
 
 
 
 
 
 
Revenue
 
$
34,610

 
$
—

 
$
34,610

 
$
—

 
$
34,610

Net loss attributable to
     Actua Corporation
 
$
(8,521
)
 
$
—

 
$
(8,521
)
 
$
(5,810
)
 
$
(14,331
)
Three Months Ended March 31, 2015
 
 
 
 
 
 
 
 
 
 
Revenue
 
$
30,592

 
$
—

 
$
30,592

 
$
—

 
$
30,592

Net loss attributable to
     Actua Corporation
 
$
(7,947
)
 
$
—

 
$
(7,947
)
 
$
(6,818
)
 
$
(14,765
)


37

Results of Operations – Vertical Cloud Businesses
For the Three Months Ended March 31, 2016 and 2015
The following presentation includes the consolidated financial results of Bolt, FolioDynamix, GovDelivery and VelocityEHS.
 
(in thousands)
 
Three Months Ended March 31,
 
Quarterly Change
 
 
2016
 
2015
 
$ Change
 
% Change
Selected data:
 
 
 
 
 
 
 
 
Revenue
 
$
34,610

 
$
30,592

 
$
4,018

 
13
 %
Cost of revenue
 
(10,192
)
 
(9,732
)
 
(460
)
 
5
 %
Sales and marketing
 
(13,159
)
 
(11,236
)
 
(1,923
)
 
17
 %
General and administrative
 
(7,551
)
 
(6,145
)
 
(1,406
)
 
23
 %
Research and development
 
(7,550
)
 
(7,093
)
 
(457
)
 
6
 %
Amortization of intangible assets
 
(4,064
)
 
(4,016
)
 
(48
)
 
1
 %
Impairment related and other
 
(231
)
 
(79
)
 
(152
)
 
192
 %
Operating expenses
 
(42,747
)
 
(38,301
)
 
(4,446
)
 
12
 %
Operating loss
 
(8,137
)
 
(7,709
)
 
(428
)
 
6
 %
Other loss
 
(202
)
 
(25
)
 
(177
)
 
708
 %
Interest income
 
11

 
1

 
10

 
1,000
 %
Interest expense
 
(46
)
 
(37
)
 
(9
)
 
24
 %
Income tax expense
 
(147
)
 
(177
)
 
30

 
(17
)%
Net loss
 
$
(8,521
)
 
$
(7,947
)
 
$
(574
)
 
7
 %
 
Revenue
Revenue from the three months ended March 31, 2015 compared to the three months ended March 31, 2016 increased $4.0 million from $30.6 million to $34.6 million, primarily due to additional customer revenue at Bolt, GovDelivery and VelocityEHS. The increase in customers at our businesses was primarily driven by increased spending on sales and marketing initiatives.  We anticipate that the number of customers at our businesses will continue to increase due to both an increase in the number of cloud-based solutions we offer and an increase in the penetration of those solutions across our existing customer base.  Additionally, we plan to continue selectively pursuing acquisitions that further expand and complement our existing businesses.
Cost of revenue
Cost of revenue for the three months ended March 31, 2016 was $10.2 million, an increase of $0.5 million (or 5%) from cost of revenue of $9.7 million for the three months ended March 31, 2015. The increase was primarily due to higher personnel costs related to increased headcount at our businesses in 2016 as a result of staffing initiatives that were related to our growth. We also incurred higher expenses for depreciation, occupancy and network services in the three months ended March 31, 2016 than for the comparable 2015 period. Cost of revenue was 29% of revenue for the three months ended March 31, 2016 and 32% of revenue for the comparable 2015 period. Going forward, we anticipate that cost of revenue will increase in absolute dollars as we continue to hire additional personnel and expand our businesses.
Sales and marketing expenses
Sales and marketing expenses for the three months ended March 31, 2016 were $13.2 million, an increase of $1.9 million (or 17%) from $11.2 million of sales and marketing expenses for the three months ended March 31, 2015. The increase was primarily due to increased sales and marketing headcount at our businesses in 2016 as a result of staffing initiatives that were related to our growth, which resulted in higher personnel costs, as well as increased commissions earned by sales personnel at our businesses. We also incurred more occupancy expenses in the three months ended March 31, 2016 than in the comparable 2015 period. As a percentage of revenue, sales and marketing expenses were 38% for the three months ended March 31, 2016 compared to 37% for the comparable 2015 period. As we expand our businesses, we will continue to add resources to our sales and marketing efforts, and, accordingly, we expect that our sales and marketing expenses will continue to increase in absolute dollars.




38

General and administrative expenses
General and administrative expenses for the three months ended March 31, 2016 were $7.6 million, an increase of $1.4 million (or 23%) from $6.1 million of general and administrative expenses for the three months ended March 31, 2015.  The increase was due to higher personnel costs related to increased headcount at our businesses in 2016, as a result of staffing initiatives that were related to our growth. General and administrative expenses represented 22% of revenue for the three-month period ended March 31, 2016 and 20% for the comparable 2015 period. Going forward, we expect that general and administrative expenses will continue to increase in absolute dollars but will decrease as a percentage of revenue as we expand our business.
Research and development expenses
Research and development expenses for the three months ended March 31, 2016 were $7.6 million, an increase of $0.5 million (or 6%) from $7.1 million for the three months ended March 31, 2015. This increase was due primarily to higher personnel costs related to increased headcount at our businesses in 2016, as a result of staffing initiatives that were related to our growth. Also contributing to the increase were higher expenses for software subscriptions, stock-based compensation and occupancy in the three months ended March 31, 2016 as compared to the comparable 2015 period. As a percentage of revenues, research and development expenses were 22% for the three months ended March 31, 2016 and 23% for the comparable 2015 period. As we enhance and expand our solutions and applications, we expect that research and development expenses will continue to increase in absolute dollars.
Amortization of intangible assets
Amortization expense for the three months ended March 31, 2016 was $4.1 million, and remained relatively consistent in comparison to the prior period with an increase of $0.1 million (or 1%) from $4.0 million of amortization expense for the three months ended March 31, 2015.  Over the next few years, we expect that amortization expense will increase in absolute dollars if businesses continue to be acquired.
Impairment related and other expense
Impairment related and other expenses was primarily comprised of charges associated with certain severance for the three months ended March 31, 2016 and 2015.
Interest income
Interest income for the three months ended March 31, 2016 remained relatively the same as compared to the three months ended March 31, 2015.
Interest expense
The change in interest expense for the three months ended March 31, 2016 compared to the three months ended March 31, 2015 remained relatively the same.
Income tax expense
Our provision for income taxes, which relates to state and foreign income tax expense, for the three months ended March 31, 2016 compared to the three months ended March 31, 2015 remained relatively the same.

Results of Operations – Vertical Cloud (Venture) Businesses

As of March 31, 2016 and 2015, the vertical cloud (venture) segment includes only cost method businesses, which are reflected in the assets of that segment.


39

Results of Operations – Reconciling Items
For the Three Months Ended March 31, 2016 and 2015
Other
(in thousands)
 
Three Months Ended March 31,
 
Quarterly Change
 
 
2016
 
2015
 
$ Change
 
% Change
General and administrative
 
$
(6,945
)
 
$
(9,291
)
 
$
2,346

 
(25
)%
Impairment related and other
 
—

 
(95
)
 
95

 
(100
)%
Other (loss) income, net
 
46

 
1,390

 
(1,344
)
 
(97
)%
Interest income
 
37

 
18

 
19

 
106
 %
Noncontrolling interest loss
 
1,052

 
1,160

 
(108
)
 
(9
)%
Net loss
 
$
(5,810
)
 
$
(6,818
)
 
$
1,008

 
(15
)%

Corporate general and administrative
Corporate general and administrative expenses decreased from the three months ended March 31, 2015 compared to the three months ended March 31, 2016 primarily due to the run-off of certain equity-based compensation charges in the 2015 period.
Impairment related and other expense
Impairment related and other costs decreased from the three months ended March 31, 2015 compared to the three months ended March 31, 2016 primarily due to higher severance expenses in the 2015 period.
Corporate other (loss) income, net
Other corporate income pertains to gains on sales/distributions of ownership interests. The decrease from the three months ended March 31, 2015 compared to the three months ended March 31, 2016 was primarily due to higher proceeds that were released from escrow related to the sale of a former business in 2015.
Interest income
Interest income remained relatively flat for the three months ended March 31, 2016 compared to the three months ended March 31, 2015.
Noncontrolling interest loss
Noncontrolling interest loss pertains to the operating results from noncontrolling interests in Actua’s consolidated businesses. The loss attributable to the noncontrolling interests for the three months ended March 31, 2016 compared to the three months ended March 31, 2015 improved slightly due to a reduced non-controlling interest for the three months ended March 31, 2016 in comparison to the previous period.
Liquidity and Capital Resources
As of March 31, 2016, our principal source of liquidity was cash and cash equivalents totaling $53.3 million. Our cash and cash equivalents are comprised primarily of money market funds. We fund our operations with cash on hand, cash flow from operations, borrowings at certain of our businesses and proceeds from sales of businesses and other assets. We expect that these sources of liquidity will be sufficient to fund our cash requirements over the next 12 months. Bolt is expected to require additional borrowings, to fund its operations for the foreseeable future; historically, Bolt’s debt funding has come primarily from Actua. 
On February 26, 2016, GovDelivery entered into a working capital revolving credit facility with Venture Bank that matures on February 26, 2017 and provides for an advance amount of $5.0 million, subject to an interest rate of 5.5%. The facility is secured by the assets of GovDelivery.  During the three months ended March 31, 2016, GovDelivery borrowed $4.1 million on the credit facility.

40

Our future capital requirements will depend on many factors, including our customer and revenue growth rates, customer renewal activity, the timing and extent of research and development efforts, the timing and extent of sales and marketing activities, the decision whether to move into new geographical territories or markets, the introduction of new and enhanced solutions and the continuing market acceptance of our solutions. As part of our business strategy, we currently expect to continue our aggressive sales and marketing campaigns and research and development initiatives. In addition, we actively source and intend to selectively pursue acquisitions, which we could fund using cash, debt, equity or some combination thereof. In connection with any such acquisition, and as part of our capital allocation program, we may purchase additional debt or equity securities from our existing businesses. Additionally, we may repurchase outstanding equity securities of our businesses from employees or other holders. We may also use cash or incur indebtedness to repurchase shares of our Common Stock or purchase additional equity interests.  From time to time, we provide parent-company guarantees for our businesses. Since these guarantees are provided to consolidated subsidiaries, the consolidated balance sheet is not affected by the issuance of these guarantees.
Our consolidated businesses may issue additional securities, repurchase outstanding shares or undergo a recapitalization of their debt or equity interests. Recapitalizations or equity issuances or repurchases by one of our businesses, including dilution associated with management equity grants, may change the ownership split that we and the noncontrolling interest holders have in that business. Any change in the ownership of a consolidated subsidiary would result in an adjustment to our additional paid-in capital. From time to time, we may be required to increase our ownership in one or more of our consolidated businesses as a result of certain members of those businesses’ management teams exercising put rights (See Note 4, “Consolidated Businesses,” in the Notes to our Consolidated Financial Statements). From time to time, we may also voluntarily seek to increase our ownership in one or more of our consolidated businesses. We do not expect any of our existing vertical cloud businesses to pay a dividend in the near future. However, because we do not own 100% of any of those businesses, if one of our existing businesses were to pay a dividend or to make any other distribution to its equity holders, the noncontrolling interest holders would receive a portion of that dividend or distribution.
Our cash flows from operating, investing and financing activities of continuing operations, as reflected in the Consolidated Statements of Cash Flows, are summarized in the following table:
(in thousands)
 
Three Months Ended March 31,
 
 
2016
 
2015
Cash used in operating activities
 
$
(13,164
)
 
$
(4,406
)
Cash used in investing activities
 
$
(3,265
)
 
$
(2,042
)
Cash used in financing activities
 
$
(6,563
)
 
$
(8,289
)
 
Operating activities
Net loss is adjusted for non-cash items that include (1) depreciation and amortization, (2) equity-based compensation charges, (3) impairment related and other, (4) other loss (income), net, (5) deferred tax assets and (6) contingent consideration. Additionally, cash flows from operating activities are impacted by the changes in operating assets and liabilities, net of acquisitions. During the three months ended March 31, 2016, the increase in cash used in operating activities compared to prior year was primarily a result of the seasonality of cash collections as of March 31, 2016 as well as a reduction in accrued compensation and benefits.
Investing activities
The increase in cash used in investing activities for the three months ended March 31, 2016 compared to the equivalent period in 2015 was primarily due to (1) reductions in proceeds from other distributions in the current period and (2) an increase in acquisition activity in the current period.
Financing activities
Cash used in financing activities improved for the three months ended March 31, 2016 compared to the equivalent period in 2015 primarily due to an increase in borrowings of debt from the prior-year period and decreased tax withholdings related to equity based awards, partially offset by increases in payments to repurchase our Common Stock and payments to acquire noncontrolling interests in subsidiary equity.
Working capital and other considerations
Our working capital as of March 31, 2016 of $7.3 million decreased from working capital as of December 31, 2015 of $27.2 million, primarily due to the decrease in cash during the 2016 period. The largest component of the decrease in cash is related to cash used in operating activities during the three-month 2016 period.

41

From time to time, we and our businesses are involved in various claims and legal actions arising in the ordinary course of business. We do not expect any liability with respect to any legal claims or actions, either individually or in the aggregate, that would materially affect our financial position or cash flows.

Contractual Cash Obligations and Commercial Commitments
On February 26, 2016, GovDelivery entered into a working capital revolving credit facility with Venture Bank that matures on February 26, 2017 and provides for an advance amount of $5.0 million, subject to an interest rate of 5.5% and certain financial covenants. The facility is secured by the assets of GovDelivery. During the three months ended March 31, 2016, GovDelivery borrowed $4.1 million under the credit facility. GovDelivery was compliant with the financial covenants of the credit facility for the period ended March 31, 2016. We had no other material changes to our contractual cash obligations and commercial commitments during the three months ended March 31, 2016 from those disclosed in our Annual Report on Form 10-K for the year ended December 31, 2015.
Off-Balance Sheet Arrangements
We are not involved in any off-balance sheet arrangements that have or are reasonably likely to have a material future effect on our financial condition, changes in financial condition, revenue or expenses, results of operations, liquidity, capital expenditures or capital resources.
Critical Accounting Policies
Our discussion and analysis of our financial condition and results of operations are based upon our Consolidated Financial Statements, which have been prepared in accordance with GAAP. The preparation of our financial statements requires us to make estimates and judgments that affect the reported amounts of assets, liabilities, revenue and expenses and related disclosure of contingent assets and liabilities. On an ongoing basis, we evaluate our estimates, including those related to goodwill, intangibles, our interests in our businesses, marketable securities, revenue, income taxes and commitments and contingencies. We base our estimates on historical experience and on various other assumptions that are believed to be reasonable under the circumstances, the results of which form the basis for making judgments about the carrying values of assets and liabilities. Actual results may differ from those estimates under different assumptions or conditions.
We believe the following critical accounting policies are important to the presentation of our financial statements and often require difficult, subjective, and complex judgments.
Revenue Recognition
We recognize revenue when persuasive evidence of an arrangement exists, delivery of the service has occurred, no significant obligations with regard to implementation remain, the fee is fixed or determinable and collectability is probable.  Please refer to Note 2, “Significant Accounting Policies,” to our Consolidated Financial Statements for more specific details regarding the manner in which each of our businesses recognizes revenue.
Goodwill
Goodwill represents the excess of the purchase price over the fair value of the net assets of businesses acquired. We have made acquisitions over the years that have resulted in the recognition and accumulation of significant goodwill. We test goodwill for impairment annually during the fourth quarter of each year, or more frequently as conditions warrant.
The first step of the test, used to identify potential impairment, compares the estimated fair value of a reporting unit with its carrying amount, including goodwill. If the fair value of a reporting unit exceeds its carrying amount, goodwill of the reporting unit is not considered to be impaired and the second step of the impairment test is unnecessary. If the carrying amount of a reporting unit exceeds its fair value, the second step of the impairment test must be performed to measure the amount of the impairment loss, if any.
The second step of the goodwill impairment test compares the implied fair value of reporting unit goodwill with the carrying amount of that goodwill. The implied fair value of goodwill is determined in the same manner as goodwill recognized in a business combination. If the carrying amount of the reporting unit goodwill exceeds the implied fair value of that goodwill, an impairment loss is recognized in an amount equal to that excess.
We estimate the fair value of our reporting units using “Level 2” and “Level 3” inputs described in Note 6, “Fair Value Measurements,” to the Consolidated Financial Statements. Significant judgments and estimates are made to estimate the fair value of our reporting units, such as projected future earnings, applicable discount rates, the selection of peer earnings multiples and the

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relative weighting of different fair value indicators. We determine market multiples from comparable publicly-traded companies and apply those approximate multiples to the revenues of the reporting units, which are then compared to the respective carrying values of the reporting units.
As of March 31, 2016, the closing price of our Common Stock ($9.05 per share) exceeded the book value of our assets ($8.53 per share). In 2016, the market multiples of comparable companies in the cloud technology industry have decreased significantly over the past year. If the closing stock price or market multiples continue to decline, it would likely indicate the occurrence of events or changes that would cause us to perform additional impairment analyses which could result in further revisions to our fair value estimates. We will continue to monitor and evaluate this relationship. Additionally, should actual results differ materially from our projections, additional impairment would likely result. Refer to Note 3, “Goodwill and Intangible Assets” and Note 6, “Fair Value Measurements” to the Consolidated Financial Statements for further details related to our December 31, 2015 annual impairment analysis.
Intangible Assets
Intangible assets with determinable lives primarily consist of customer relationships, trademarks and trade names, technology, non-compete agreements and other intellectual property. The cost of intangible assets with determinable lives is amortized on a straight-line basis over the estimated period of economic benefit. Indefinite-lived intangibles are subject to impairment testing at least annually. In addition, intangible assets are tested more frequently if a change in circumstances or the occurrence of events indicates that potential impairment exists.
Cost Method Businesses
We evaluate our cost method businesses continuously to determine whether an other-than-temporary decline in the fair value of any such business exists and should be recognized. In order to make that determination, we consider each such business’ achievement of its business plan objectives and milestones, the fair value of our ownership interest in each such business (which, in the case of any company listed on a public stock exchange, is the quoted stock price of the relevant ownership interest), the financial condition and prospects of each such business, and other relevant factors. The business plan objectives and milestones we consider include, among others, those related to financial performance, such as achievement of planned financial results or completion of capital raising activities, and those that are not primarily financial in nature, such as obtaining key business partnerships or the hiring of key employees. Impairment charges are determined by comparing our carrying value of a business with the business’ estimated fair value. Fair value is determined by using a combination of estimating the cash flows related to the relevant business, including estimated proceeds on disposition, and an analysis of market price multiples of companies engaged in lines of business similar to the business being evaluated. We concluded that the carrying values of our cost method businesses were not impaired as of March 31, 2016 or December 31, 2015.
Deferred Income Taxes
We record a valuation allowance to reduce our net deferred tax assets to the amount that is more likely than not to be realized. We consider future taxable income and prudent and feasible tax planning strategies in determining the need for a valuation allowance. In the event that we determine that we would not be able to realize all or part of our net deferred tax assets, an adjustment to the deferred tax assets would be charged to earnings in the period such determination is made. Likewise, if we later determine that it is more likely than not that the net deferred tax assets would be realized, the previously provided valuation allowance would be reversed.
Commitments and Contingencies
From time to time, we are a defendant or plaintiff in various legal actions that arise in the normal course of business. From time to time, we are also a guarantor of various third-party obligations and commitments. We are required to assess the likelihood of any adverse judgments or outcomes to these matters, as well as potential ranges of probable losses. A determination of the amount of reserves required for these contingencies, if any, which would be charged to earnings, is made after careful analysis of each individual matter. The required reserves may change in the future due to new developments in each matter or changes in circumstances, such as a change in settlement strategy. Changes in required reserves could increase or decrease our earnings in the period the changes are made.
Fair Value Measurements
Fair value is the price that would be received from selling an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date. There are three levels of inputs that may be used to measure fair value. Any marketable securities we hold are reported at fair value on our Consolidated Balance Sheets based on quoted prices in active markets for identical or comparable assets.


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Recent Accounting Pronouncements

Refer to the Recent Accounting Pronouncements in Note 2, “Significant Accounting Policies” to our Consolidated Financial Statements.

ITEM 3. Quantitative and Qualitative Disclosures About Market Risk
As of March 31, 2016, our cash and cash equivalents included $46.0 million that is held primarily in money market accounts. We may be exposed to market risk relating to changes in market interest rates and overall market conditions that could affect the value of our cash equivalents; however, we believe any changes in the fair value of our investment portfolio would be insignificant to our results, given current market conditions. 

ITEM 4. Controls and Procedures
Disclosure Controls and Procedures
Disclosure controls and procedures refer to controls and other procedures designed to ensure that information required to be disclosed in the reports we file or submit under the Exchange Act is recorded, processed, summarized and reported, within the time periods specified in the rules and forms of the U.S. Securities and Exchange Commission. Disclosure controls and procedures include, without limitation, controls and procedures designed to ensure that information required to be disclosed by us in our reports that we file or submit under the Exchange Act is accumulated and communicated to our management, including our Chief Executive Officer and Chief Financial Officer, as appropriate to allow timely decisions regarding our required disclosure. In designing and evaluating our disclosure controls and procedures, our management recognizes that any controls and procedures, no matter how well designed and operated, can provide only reasonable assurance of achieving the desired control objectives, and management is required to apply its judgment in evaluating and implementing possible controls and procedures.
We carried out an evaluation, under the supervision and with the participation of our Chief Executive Officer and Chief Financial Officer, of the effectiveness of the design and operation of our disclosure controls and procedures (as defined in Rules 13a-15(e) and 15d-15(e) under the Exchange Act) as of the end of the period covered in this Report. Based upon that evaluation, our Chief Executive Officer and Chief Financial Officer concluded that due to material weaknesses in our internal control over financial reporting as described in Item 9A-Controls and Procedures in our 2015 Annual Report on Form 10-K, our disclosure controls and procedures were not effective as of March 31, 2016.
In light of the material weaknesses in internal control over financial reporting, we engaged significant internal resources to perform supplemental procedures prior to filing this Periodic Report on Form 10-Q. These additional procedures have allowed us to conclude that, notwithstanding the material weaknesses in our internal control over financial reporting, the consolidated financial statements included in this report fairly present, in all material respects, our financial position, results of operations and cash flows for the periods presented in conformity with accounting principles generally accepted in the United States of America.
Changes in Internal Control Over Financial Reporting
There have been no changes in internal control over financial reporting during the period covered by this Report that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.
Remediation Plan
We are committed to remediating the material weaknesses in a timely fashion. We have begun the process of developing a remediation plan that will address the material weaknesses in internal control over financial reporting described above. Specifically, we intend to implement and monitor the following actions:
•
Changing the organizational reporting structure at Bolt to ensure an appropriate level of authority, responsibility and accountability to implement, maintain and evaluate necessary internal control over financial reporting;
•
Establishing general information technology controls to assign appropriate user access to the information technology operating systems, applications and databases as well as program change, maintenance and development controls;
•
Performing a comprehensive review of internal control over financial reporting across the organization to ensure that all aspects of the COSO 2013 Framework are appropriately addressed at each of our operating subsidiaries;
•
Developing a monitoring plan by the corporate office over the operating subsidiaries including increasing the level of involvement and oversight from the corporate office; and
•
Providing additional training regarding evidence standards for documenting operating effectiveness of internal control over financial reporting.

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The Audit Committee has directed management to develop a detailed plan and timetable for the implementation of remedial measures and will monitor their implementation. In addition, under the direction of the Audit Committee, management will continue to review and make necessary changes to the overall design of the Company’s internal control environment as well as policies and procedures to improve the overall effectiveness of internal control over financial reporting.
Management believes the measures described above and others that will be implemented will remediate the material weaknesses identified and will strengthen internal control over financial reporting. Management is committed to continuous improvement of the Company’s internal control processes and will continue to diligently review our financial reporting controls and procedures. As management continues to evaluate and work to improve internal control over financial reporting, we may take additional measures to address control deficiencies or determine to modify certain of the remediation measures described above. We expect these remedial actions and/or other actions related to these material weaknesses to be effectively implemented in 2016.
If the remedial measures described above are insufficient to address the identified material weaknesses or are not implemented effectively, or additional deficiencies arise in the future, material misstatements in our interim or annual financial statements may occur in the future which could harm our business.

PART II – OTHER INFORMATION
 
ITEM 1. Legal Proceedings
Actua and its consolidated subsidiaries are involved in various claims and legal actions arising in the ordinary course of business.  In the opinion of management, the amount of the ultimate liability with respect to any legal claims or actions, either individually or in the aggregate, will not materially affect the financial position, results of operations or cash flows of Actua or its consolidated businesses.  
 
ITEM 1A. Risk Factors
In addition to the other information set forth in this Report, you should carefully consider the factors discussed in Item 1A — “Risk Factors” in our Annual Report on Form 10-K for the year ended December 31, 2015, which could materially affect our business, financial condition or future results. Those are not the only risks facing us, however. Additional risks and uncertainties that are not currently known to us or that we currently deem to be immaterial also may materially adversely affect our business, financial condition and/or operating results.
 
ITEM 2. Unregistered Sales of Equity Securities and Use of Proceeds
Issuer Purchases of Equity Securities. We maintain a share repurchase program under which we may, from time to time, repurchase shares of our Common Stock in the open market, including pursuant to trading plans meeting the requirements of Rule 10b5-1 under the Exchange Act or in privately negotiated transactions. The program was most recently expanded in September 2013 to allow for the repurchase of up to $150.0 million of shares of our Common Stock. The table below contains information relating to the repurchases of our Common Stock that occurred under the share repurchase program from the program’s inception on July 31, 2008 through the date of the filing of this Report.
  
Period
 
Total Number of Shares Purchased (1)
 
Average Price Paid per Share (2)
 
Total Number of Shares Purchased as Part of Publicly Announced Program (1)
 
Approximate Dollar Value That May 
Yet Be Purchased Under the Program
Repurchased through 12/31/2015
 
5,987,849

 
$
9.23

 
5,987,849

 
$ 94.7 million
1/1/2016 to 1/31/2016
 
—

 
$
—

 
—

 
$ 94.7 million
2/1/2016 to 2/29/2016
 
—

 
$
—

 
—

 
$ 94.7 million
3/1/2016 to 3/31/2016
 
470,000

 
$
9.15

 
470,000

 
$ 90.4 million
4/1/2016 to 4/30/2016
 
540,000

 
$
9.63

 
540,000

 
$ 85.2 million
5/1/2016 to 5/9/2016
 
—

 
$
—

 
—

 
$ 85.2 million
Total
 
6,997,849

 
$
9.26

 
6,997,849

 
$ 85.2 million
                                

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(1) 
All shares purchased in open market transactions.
(2) 
Average price paid per share excludes commissions.

ITEM 3. Defaults Upon Senior Securities
None.
 
ITEM 4. Mine Safety Disclosures
Not applicable.

ITEM 5. Other Information
None.


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ITEM 6. Exhibits
Exhibit Index
 
Exhibit
Number
  
Document
 
 
 
10.1
 
Actua 2016 Performance Plan (incorporated by reference to Exhibit 10.1 of Actua's Current Report on Form 8-K, filed March 4, 2016 (File No. 001-16249)).*
 
 
 
10.2
 
Form of Performance Plan Restricted Share Agreement (incorporated by reference to Exhibit 10.2 of Actua's Current Report on Form 8-K, filed March 4, 2016 (File No. 001-16249)).*
 
 
 
11.1
  
Statement Regarding Computation of Per Share Earnings (included herein at Note 2-"Significant Accounting Policies" in the subsection Net Loss per Share to the Consolidated Financial Statements and Note 12-"Net Loss per Share" to the Consolidated Financial Statements)
 
 
 
31.1
  
Certification of Chief Executive Officer required by Section 302 of the Sarbanes-Oxley Act of 2002, as amended (filed herewith).
 
 
 
31.2
  
Certification of Chief Financial Officer required by Section 302 of the Sarbanes-Oxley Act of 2002, as amended (filed herewith).
 
 
 
32.1
  
Certification of the Chief Executive Officer required by Section 906 of the Sarbanes-Oxley Act of 2002, as amended (furnished herewith).
 
 
 
32.2
  
Certification of the Chief Financial Officer required by Section 906 of the Sarbanes-Oxley Act of 2002, as amended (furnished herewith).
 
 
 
101.0
  
The following financial information from the Actua Corporation Quarterly Report on Form 10-Q for the quarter ended March 31, 2016, formatted in Extensible Business Reporting Language (XBRL): (i) Consolidated Balance Sheets, (ii) Consolidated Statements of Operations and Comprehensive Loss, (iii) Consolidated Statements of Changes in Equity, (iv) Consolidated Statements of Cash Flows, and (v) Notes to Consolidated Financial Statements (filed herewith).
 
*
Management contract or compensatory plan or arrangement.


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SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, Actua Corporation has duly caused this Report to be signed on its behalf by the undersigned, thereunto duly authorized.
 
Date:
May 9, 2016
 
ACTUA CORPORATION
 
 
 
 
 
 
 
 
 
By:
 
/s/ R. KIRK MORGAN
 
 
 
Name:
 
R. Kirk Morgan
 
 
 
Title:
 
Chief Financial Officer
 
 
 
 
 
(Principal Financial and Accounting Officer)


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Actua Corp Reports