OVERVIEW

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

We went public in May 1999. In September 1999, we acquired all of the outstanding equity of Partes Corporation, owner of the Freeedgar.com web site for $9,900. The purchase price consisted of the issuance of common stock, stock options and warrants, the assumption of liabilities and acquisition related expenses. In October 2000, we acquired all the outstanding equity of Financial Insight Systems, Inc. for approximately $28,100. The purchase price included the issuance of common stock and notes, a cash payment and acquisition related expenses.

We recognize revenue from providing the following services:

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

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

XBRL Filings. One of our data solutions provides partners and customers with a mechanism for converting financial statements into XBRL for filing with the SEC and potentially other regulators. Our primary partner in this channel is R.R. Donnelley & Sons, where we provide services to their customer base for compliance with upcoming SEC regulations mandating the submission of XBRL tagged company reports. This XBRL Filing solution leverages our data processing engine and proprietary business rules that we have developed for tagging US GAAP financials with the appropriate XBRL tags. Our process combines our XBRL knowledge and expertise with data-tagging automation and workflow. We recognize revenue from fixed fees on a ratable basis as well as per-filing fees as the services are provided. Currently, all of our XBRL filings revenues are generated from our agreement with R.R. Donnelley & Sons, which is for an initial term of three years. According to the agreement, fees for the second and third years shall be agreed to prior to October 1, 2009 and 2010, respectively. The second year of the agreement began on October 1, 2009 without the parties having reached agreement as to the fees for such period. Currently the agreement is still active and in force and the company continues to provide services to R .R. Donnelley & Sons using year one pricing while the negotiations continue. While we continue to negotiate, we cannot assure you that we will agree on new pricing or other terms that will be attractive to us.

CRITICAL ACCOUNTING POLICIES

There have been no material changes in our critical accounting policies and estimates from those disclosed in Item 7 of our Annual Report on Form 10-K for the year ended December 31, 2008. However, in 2009, we have categorized revenue into the following; subscriptions, data and solutions and XBRL filings. Prior period revenues have been reclassified accordingly.

RESULTS OF OPERATIONS

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

                                      THREE MONTHS ENDED         NINE MONTHS ENDED
                                         SEPTEMBER 30,             SEPTEMBER 30,
                                     2008            2009        2008           2009
    Total revenues                      100 %           100 %       100 %        100 %
    Cost of revenues                     14              22          15           25

    Gross profit                         86              78          85           75
    Operating expenses:
    Sales and marketing                  23              13          24           17
    Product development                  22               9          22           11
    General and administrative           45              36          42           42
    Amortization and depreciation        10              11          10           11

    Income (loss) from operations       (14 )             9         (13 )         (6 )
    Interest and other, net              (2 )            (2 )        (2 )         (2 )

    Net income (loss)                   (16 )%            7 %       (15 )%        (8 )%

REVENUES

Total revenues for the three months ended September 30, 2009 increased 12% to $5,242, from $4,701 for the three months ended September 30, 2008. The net increase in revenues was primarily attributable to a $1,014, or 219%, increase in XBRL filings revenues and a $69, or 3%, increase in data and solutions revenues which were partially offset by a $542, or 25%, decrease in subscriptions revenues. Total revenues for the nine months ended September 30, 2009 decreased 4% to $14,044, from $14,613 for the nine months ended September 30, 2008. The net decrease in revenues was primarily attributable to a $1,540, or 23%, decrease in subscriptions revenues and a $651, or 9%, decrease in data and solutions revenues which were partially offset by a $1,622, or 187%, increase in XBRL filings revenues.

SUBSCRIPTIONS



                                            THREE MONTHS ENDED          NINE MONTHS ENDED
                                               SEPTEMBER 30,              SEPTEMBER 30,
                                             2008          2009          2008         2009
  Revenues (in $000s)                     $     2,127     $ 1,585     $    6,662     $ 5,122
  Percentage of total revenue                      45 %        30 %           46 %        36 %
  Average price per subscriber            $       710     $   638     $      741     $   687
  Number of subscribers at September 30        11,981       9,935         11,981       9,935

Subscription revenues for the three and nine months ended September 30, 2009 decreased from the three and nine months ended September 30, 2008 due to decreased sales of our premium products, EDGAR Pro and I-Metrix Professional, as well as decreased sales of EDGAR Access, our retail service. Our subscription business has been impacted by unprecedented business and workforce reductions in the financial services community over the past year and the current economic crisis in general. While we continue to add new subscribers to all of our subscription products, cancellations exceeded these new sales during the referenced periods.

DATA AND SOLUTIONS



                                           THREE MONTHS ENDED          NINE MONTHS ENDED
                                              SEPTEMBER 30,              SEPTEMBER 30,
                                            2008          2009          2008         2009
   Revenues (in $000s)                   $    2,110      $ 2,179     $    7,085     $ 6,434
   Percentage of total revenue                   45 %         42 %           48 %        46 %
   Number of contracts at September 30          277          300            277         300

Data and solutions revenues increased for the three months ended September 30, 2009 from the three months ended September 30, 2008 as decreases in data solutions revenues were partially offset by increases in data license revenues. We had slightly higher new sales of our data licenses in the three months ended September 30, 2009 than in the previous quarter. We continued to experience cancellations in our data business. However our better sales resulted in new license sales which exceeded cancellations-resulting in a net positive increase in annualized contract value in this business. Data and solutions revenues decreased for the nine months ended September 30, 2009 from the nine months ended September 30, 2008 due in large part to non-recurring data solutions revenue of approximately $574 in 2008.

XBRL FILINGS



                                       THREE MONTHS ENDED          NINE MONTHS ENDED
                                          SEPTEMBER 30,              SEPTEMBER 30,
                                       2008           2009         2008          2009
       Revenues (in $000s)           $    464       $  1,478     $    866       $ 2,488
       Percentage of total revenue         10 %           28 %          6 %          18 %

The increase in XBRL filings revenues for three and nine months ended September 30, 2009 from the three and nine months ended September 30, 2008 was directly related to the SEC rules that require certain companies to file their documents in XBRL beginning with the quarter ending after June 15, 2009, as well as increased exclusivity fees and XBRL conversions from companies that were not required to file with the SEC.

COST OF REVENUES

Cost of revenues primarily consists of salaries and benefits of operations employees to produce data sets and create XBRL filings, fees paid to acquire data and the amortization of costs related to developing our I-Metrix products that were previously capitalized. In addition, in the three and nine months ended September 30, 2008, barter advertising expense was recorded equal to the barter advertising revenue for that period. There were no barter revenues or expenses in the three and nine months ended September 30, 2009.

Total cost of revenues for the three months ended September 30, 2009 increased $502, or 78%, to $1,147 from $645 for the three months ended September 30, 2008. The net increase in cost of revenues was primarily due to a $306 increase in payroll related expenses and the addition of $192 of XBRL related production costs which were partially offset by a decrease of $27 in barter expense. Total cost of revenues for the nine months ended September 30, 2009 increased $1,255, or 56%, to $3,479 from $2,224 for the nine months ended September 30, 2008. The net increase in cost of revenues was primarily due to a $789 increase in payroll related expenses and the addition of $553 of XBRL related production costs which were partially offset by a decrease of $105 in barter expense.

GROSS PROFIT

Gross profit for the three months ended September 30, 2009 increased $39, or 1%, to $4,095 from $4,056 for the three months ended September 30, 2008. The gross profit percentage decreased to 78% for the three months ended September 30, 2009 from 86% for the three months ended September 30, 2008. Gross profit for the nine months ended September 30, 2009 decreased $1,824, or 15%, to $10,565 from $12,389 for the nine months ended September 30, 2008. The gross profit percentage decreased to 75% for the nine months ended September 30, 2009 from 85% for the nine months ended September 30, 2008. The decreases in the gross profit percentages were due to the higher cost of revenues related to XBRL filings revenues which have increased as a percentage of total revenues. In addition, the decrease for the nine months ended September 30, 2009 is due to lower total revenues. The gross profit percentages will continue to decrease as the lower margin XBRL filings revenues increase as a percentage of total revenues.

OPERATING EXPENSES

Sales and Marketing. Sales and marketing expenses consist primarily of salaries and benefits, sales commissions, advertising expenses, public relations, and costs of marketing materials. Sales and marketing expenses for the three months ended September 30, 2009 decreased $380 or 35%, to $701 from $1,081 for the three months ended September 30, 2008. The net decrease was primarily due to a $224 decrease in payroll related expenses and a $136 decrease in advertising and marketing expenses. Sales and marketing expenses for the nine months ended September 30, 2009 decreased $1,031 or 30%, to $2,450 from $3,481 for the nine months ended September 30, 2008. The net decrease was primarily due to a $735 decrease in payroll related expenses and a $266 decrease in advertising and marketing expenses.

Development. Development expenses, which consist primarily of salaries and benefits and outside development costs, for the three months ended September 30, 2009 decreased $565, or 54%, to $478 from $1,043 for the three months ended September 30, 2008. The decrease was primarily due to a $333 decrease in professional fees and a $232 decrease in payroll costs. Development expenses for the nine months ended September 30, 2009 decreased $1,656, or 53%, to $1,491 from $3,147 for the nine months ended September 30, 2008. The decrease was primarily due to a $704 decrease in professional fees as well an increase in capitalization development costs of $744.

General and Administrative. General and administrative expenses consist primarily of salaries and benefits, insurance, fees for professional services, general corporate expenses and facility expenses. General and administrative expenses for the three months ended September 30, 2009 decreased $200, or 10%, to $1,897 from $2,097 for the three months ended September 30, 2008. The net decrease was primarily due to a $149 decrease in payroll related expenses and a $118 decrease in professional fees which were partially offset by a $35 increase in bad debt expenses and a $32 increase in rent. General and administrative expenses for the nine months ended September 30, 2009 decreased $308, or 5%, to $5,854 from $6,162 for the nine months ended September 30, 2008. The net decrease was primarily due to a $540 decrease in payroll related expenses which was partially offset by a $117 increase in stock compensation expense and a $117 increase in rent.

Depreciation and Amortization. Depreciation and amortization expenses include the depreciation of property and equipment and the amortization of definite lived intangible assets. Depreciation and amortization for the three months ended September 30, 2009 increased $104, or 22%, to $568 from $464 for the three months ended September 30, 2008. Depreciation and amortization for the nine months ended September 30, 2009 increased $204, or 15%, to $1,598 from $1,394 for the nine months ended September 30, 2008. The increases were primarily due to increased capital expenditures and the addition of amortization expense related to capitalized XBRL development costs.

LIQUIDITY AND CAPITAL RESOURCES

Net cash provided by operating activities was $1,043 for the nine months September 30, 2009 compared to net cash used of $286 for the nine months ended September 30, 2008 primarily due to a decrease in net loss for the nine months ended September 30, 2009.

Net cash used in investing activities was $1,284 for the nine months ended September 30, 2009 compared to $681 for the nine months ended September 30, 2008. The increase for the nine months ended September 30, 2009 was due to a $744 increase in capitalized product development costs which was partially offset by a decrease in capital expenditures of $134.

Net cash used in financing activities was $297 for the nine months ended September 30, 2009 compared to net cash provided of $53 for the nine months ended September 30, 2008. The decrease was due to a $250 increase in debt payments and a $100 decrease in proceeds from option exercises for the nine months ended September 30, 2009.

On April 5, 2007, we entered into the Financing Agreement with Rosenthal for additional working capital. Under the Financing Agreement, Rosenthal made a term loan in the principal amount of $2,500 to us and has additionally agreed to provide up to an additional $2,500 under a revolving line of credit. Interest on outstanding borrowings under the Financing Agreement is payable at variable rates of interest over the published JPMorgan Chase prime rate (with a minimum prime rate of 6%), 2.5% on the term loan and 2% on borrowings under the revolving credit facility. Our obligations under the term loan are evidenced by a secured Term Note and are secured by a first priority security interest in substantially all of our assets. We are required to maintain certain collateral ratios and financial covenants under the agreement. On April 22, 2008, the ratios and covenants were amended effective as of December 31, 2007. On March 13, 2009, the ratios and covenants were further amended effective December 31, 2008. In addition, the maturity date was extended to March 30, 2011 and the renewal date was extended to March 31, 2011. We were in compliance with these ratios and covenants, as amended, at September 30, 2009 and we believe that we will be in compliance throughout 2009. The Financing Agreement, as amended, terminates on March 30, 2011 unless sooner terminated by either party in accordance with the terms of the Financing Agreement. In connection with the Financing Agreement, we issued a warrant to purchase 100,000 shares of our common stock at an exercise price equal to $2.81 (the market price of our common stock on the closing date of the transaction) to Rosenthal. The warrant expires on April 30, 2010. Also in connection with this transaction, we paid our financial advisor $125, which represents 3% of the gross principal amount of the term loan and 2% of the gross principal amount of the revolving credit.

At September 30, 2009, we had cash and cash equivalents on hand of $1,524. We have no off-balance sheet arrangements at September 30, 2009. As previously discussed, we will require additional capital to fund our operations and meet our longer term revenue opportunities, and we continue our efforts to access capital, seeking to raise approximately $10 million. The exact amount of capital needed and the timing on which it will be required depend on various factors, including the manner in which our negotiations with R.R. Donnelley are resolved. We are currently evaluating strategic partnerships, potential scenarios for outside investors and other options, including a draw down on the revolving line of credit, to raise capital. There can be no assurance that such additional funding will be available on terms attractive to us, or at all. The failure to raise capital when needed could materially adversely affect our business, results of operations and financial condition. If additional funds are raised through the issuance of equity securities, the percentage ownership of our then-current stockholders would be reduced.