OVERVIEW

We create and distribute fundamental 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. We launched our EDGAR Online website in January 1996 and began selling our subscription services and establishing contractual relationships with business and financial information websites to supply EDGAR content. Our primary focus was generating sales leads and building brand recognition.

We are continuing to focus on growing our subscriptions and data and solutions revenues by offering the following:

Subscription Services. Our end-user subscription services include I-Metrix Professional, EDGAR Pro and EDGAR Access. I-Metrix Professional is our premium service which 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. EDGAR Pro offers financial data, stock ownership, public offering data sets and advanced search tools. 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. Revenue from subscription services is recognized ratably over the subscription period, which is typically 12 months.

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, 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-cancellable, 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. These customization fees, as well as the related costs, are deferred and recognized over the estimated life of the customer relationship. In addition, some of our data solutions are billed on a time and materials basis, per service level agreements or for delivery of data. Revenue from time and materials based agreements and data delivery are recognized as the data and services are provided.

Advertising and E-Commerce. We also generate 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 websites. Advertising and e-commerce revenue is recognized as the services are provided.

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, 2007.

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,
                                     2007            2008         2007           2008
    Total revenues                      100 %           100 %        100 %        100 %
    Cost of revenues                     17              14           17           15

    Gross profit                         83              86           83           85
    Operating expenses:
    Sales and marketing                  24              23           29           24
    Product development                  20              22           21           22
    General and administrative           46              45           54           42
    Severance costs                      21              -            12           -
    Amortization and depreciation         9              10           10           10

    Loss from operations                (37 )           (14 )        (43 )        (13 )
    Interest and other, net              (2 )            (2 )         (1 )         (2 )

    Net loss                            (39 )%          (16 )%       (44 )%       (15 )%

REVENUES

Total revenues for the three months ended September 30, 2008 increased slightly to $4,701 compared to $4,677 for the three months ended September 30, 2007. A $287, or 13%, increase in data and solutions was partially offset by a $172, or 8%, decrease in subscriptions and a $91, or 48%, decrease in advertising and e-commerce revenues. Total revenues for the nine months ended September 30, 2008 increased 11% to $14,613, from $13,136 for the nine months ended September 30, 2007. The net increase in revenues was primarily attributable to a $1,832, or 31%, increase in data and solutions which was partially offset by a $198, or 3%, decrease in subscriptions and a $157, or 27%, decrease in advertising and e-commerce revenues. We have experienced slower growth and higher than anticipated cancellations in 2008 due to the significant downturn in the financial services industry and the economy in general.

SUBSCRIPTIONS



                                       THREE MONTHS ENDED          NINE MONTHS ENDED
                                          SEPTEMBER 30,              SEPTEMBER 30,
                                        2007          2008         2007          2008
       Revenues                      $    2,260     $  2,088     $   6,613     $  6,415
       Percentage of total revenue           48 %         44 %          50 %         44 %
       Number of subscribers             12,264       11,981        12,264       11,981

Subscription revenues for the three and nine months ended September 30, 2008 decreased from the three and nine months ended September 30, 2007. Our subscriptions business has been impacted by unprecedented reductions in the financial services community in 2008. While we did add new subscribers to all of our subscription products, cancellations exceeded these new sales.

DATA AND SOLUTIONS



                                           THREE MONTHS ENDED          NINE MONTHS ENDED
                                              SEPTEMBER 30,              SEPTEMBER 30,
                                            2007          2008          2007         2008
   Revenues                              $    2,226      $ 2,513     $    5,938     $ 7,770
   Percentage of total revenue                   48 %         54 %           45 %        53 %
   Number of contracts at September 30          262          277            262         277

Data and solutions revenues increased for the three and nine months ended September 30, 2008 compared to the three and nine months ended September 30, 2007 due to an increase in the overall number of contracts as well as an increase in filings revenues in 2008. In the third quarter of 2007, we started to reorganize our sales team and added staff with certified industry credentials to support sales of our products. With the reorganization of our sales team and continued increases in the sale of data and solutions, we expect to increase data and solutions revenues in the future.

ADVERTISING AND E-COMMERCE



                                       THREE MONTHS ENDED           NINE MONTHS ENDED
                                          SEPTEMBER 30,               SEPTEMBER 30,
                                      2007            2008          2007           2008
      Revenues (in $000s)           $     191       $     100     $     585       $  428
      Percentage of total revenue           4 %             2 %           5 %          3 %

The net decrease in advertising and e-commerce revenues for the three and nine months ended September 30, 2008 from the three and nine months ended September 30, 2007 was primarily due to decreased e-commerce revenues. In addition, advertising revenues for the three months ended September 30, 2008 decreased from the three months ended September 30, 2007.

COST OF REVENUES

Cost of revenues consists primarily of fees paid to acquire the Level I EDGAR database feed from the SEC, other content feeds and costs, salaries and benefits of operations employees, commissions related to e-commerce revenues and the amortization of costs related to developing our I-Metrix products that were previously capitalized. In addition, for each period, barter advertising expense is recorded equal to the barter advertising revenue for that period.

Total cost of revenues for the three months ended September 30, 2008 decreased $152, or 19%, to $645 from $797 for the three months ended September 30, 2007. The net decrease in cost of revenues was primarily due to a $54 decrease in data costs, a $35 decrease in commissions related to e-commerce revenues and a $42 decrease in payroll costs. Total cost of revenues for the nine months ended September 30, 2008 was $2,224 which was consistent with $2,222 for the nine months ended September 30, 2007. A $159 increase in data and staffing costs related to data solutions contracts in 2008 was offset by a $136 decrease in commissions related to e-commerce 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, 2008 decreased $47, or 4%, to $1,081 from $1,128 for the three months ended September 30, 2007. Sales and marketing expenses for the nine months ended September 30, 2008 decreased $250, or 7%, to $3,481 from $3,731 for the nine months ended September 30, 2007. The net decrease was primarily due to a $307 decrease in payroll and related expenses which was partially offset by a $74 increase in advertising expenses.

Development. Development expenses, which consist primarily of salaries and outside development costs, for the three months ended September 30, 2008 increased $130, or 14%, to $1,043 from $913 for the three months ended September 30, 2007. Development expenses for the nine months ended September 30, 2008 increased $372, or 13% to $3,147 from $2,775 for the nine months ended September 30, 2007. These increases were primarily due to increased XBRL-related development activities in 2008.

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, 2008 decreased $80, or 4%, to $2,097 from $2,177 for the three months ended September 30, 2007. The net decrease was primarily due to a $129 decrease in stock-based compensation which was partially offset by a $58 increase in rent. General and administrative expenses for the nine months ended September 30, 2008 decreased $1,021, or 14%, to $6,122 from $7,143 for the nine months ended September 30, 2007. The net decrease was primarily due to a $385 decrease in tax expenses (there was $390 recorded in relation to a sales tax audit in 2007), a $354 decrease in payroll and related expenses, a $208 decrease in stock-based compensation and a $108 decrease in insurance expenses.

Severance Costs. In the second quarter of 2007, we accrued $631 of severance costs related to the resignations of our Executive Vice President of Sales and Chairman of the Board. In the third quarter of 2007, we accrued additional severance costs totaling $984 related to our former CEO and workforce reductions. Also, non-cash compensation and additional paid-in capital were increased by $191 in the second quarter of 2007 and $164 in the third quarter of 2007 to recognize previously unrecognized stock compensation remaining from the original grant date valuation of the options.

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, 2008 increased $28, or 6%, to $464 from $436 for the three months ended September 30, 2007. Depreciation and amortization for the nine months ended September 30, 2008 increased $84, or 6%, to $1,394 from $1,310 for the nine months ended September 30, 2007. The increases were a result of capital expenditures.

LIQUIDITY AND CAPITAL RESOURCES

Net cash used in operating activities was $286 for the nine months ended September 30, 2008 compared to $1,553 for the nine months ended September 30, 2007. The improvement was primarily due to a decrease in net loss which was partially offset by a reduction in current and long-term payables.

Capital expenditures, primarily for computers and equipment, totaled $411 for the nine months ended September 30, 2008 compared to $190 for the nine months ended September 30, 2007. The purchases were made to support our expansion and increased infrastructure.

On April 5, 2007, we entered into a Financing Agreement ("Financing Agreement") with Rosenthal & Rosenthal, Inc. ("Rosenthal") for additional working capital. Under the Financing Agreement, Rosenthal made a term loan in the 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. We were in compliance with these ratios and covenants at September 30, 2008 and we believe that we will be in compliance throughout 2008. The Financing Agreement terminates on March 30, 2010 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, 2008, we had cash and cash equivalents on hand of $2,654. We have no off-balance sheet arrangements at September 30, 2008. We believe that our existing capital resources will be sufficient to meet our anticipated cash needs for working capital and capital expenditures for at least the next 12 months. Thereafter, if cash generated from operations is insufficient to satisfy our liquidity requirements, we may need to raise additional funds through public or private debt or equity financings, strategic relationships or other arrangements. We may also consider such financings prior to such time if conditions suggest engaging in such a financing would be advantageous to us. There can be no assurance that such additional funding, if needed, will be available on terms attractive to us, or at all. The failure to raise capital when needed could materially adversely affect our business, results of operations and financial condition. If additional funds are raised through the issuance of equity securities, the percentage ownership of our then-current stockholders would be reduced.