You should read the following discussions of our financial condition and results of operations in conjunction with the financial statements and the notes to those statements included elsewhere in this Annual Report. This discussion may contain forward-looking statements that involve risks and uncertainties. Our actual results may differ materially from those anticipated in these forward-looking statements as a result of certain factors, such as those set forth under "Risk Factors" and elsewhere in this Annual Report.

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 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. Our primary focus was generating sales leads and building brand recognition.

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 ("FreeEDGAR"), 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 FIS for approximately $28,100. The purchase price included the issuance of common stock, a cash payment, issuance of notes and acquisition related expenses.

We are continuing to focus on growing our subscriptions and data products and solutions and expect to generate positive cash flow from operations by offering the following:

Subscription Services. 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. 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 twelve 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, 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. In addition, R.R. Donnelley & Sons leverages one of our data solutions to provide its customers with a mechanism for converting their statements into XBRL for filing with the SEC. 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.

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 web sites. Advertising and e-commerce revenue is recognized as the services are provided.

RESULTS OF OPERATIONS

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

                                               Year Ended December 31,
                                             2006          2007       2008
            Total revenues                     100 %         100 %     100 %
            Cost of revenues                    15            17        16

            Gross profit                        85            83        84
            Operating expenses:
            Sales and marketing                 32            27        23
            Product development                 23            21        21
            General and administrative          56            54        42
            Severance costs                     -             11        -
            Amortization and depreciation       11            10        10

            Loss from operations               (37 )         (40 )     (12 )
            Interest and other, net              1            (1 )      (2 )

            Net loss                           (36 )%        (41 )%    (14 )%

COMPARISON OF THE YEARS 2006, 2007 and 2008

REVENUES

Total revenues for the year ended December 31, 2008 increased 9% to $19,463, from $17,908 for the year ended December 31, 2007. The net increase in revenues was primarily attributable to a $2,226, or 27%, increase in data licenses which was partially offset by a $402, or 5%, decrease in subscriptions and a $269, or 33%, decrease in advertising and e-commerce revenues.

Total revenues for the year ended December 31, 2007 increased 10% to $17,908, from $16,246 for the year ended December 31, 2006. The net increase in revenues was primarily attributable to a $1,728, or 27%, increase in data licenses and $441, or 119%, increase in advertising and e-commerce revenues which were partially offset by a $507, or 5%, decrease in subscriptions.

Subscriptions



                                                Year Ended December 31,
                                             2006         2007         2008
             Revenues                      $  9,364     $  8,857     $  8,455
             Percentage of total revenue         58 %         49 %         43 %
             Number of subscribers           17,700       12,500       11,700

The decline in subscribers from 2006 to 2008 was primarily due to significant systems and controls upgrades in 2007 that more accurately reflected our active subscriber base and purged many inactive users from our user counts.

The net decrease in subscription revenues for the year ended December 31, 2008 from the year ended December 31, 2007 was due to a decrease across all of our subscription products. 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.

The net decrease in subscription revenues for the year ended December 31, 2007 from the year ended December 31, 2006 was due to a decrease in sales to EDGAR Access, our retail service, which was partially offset by increases in the sales of our premium products, EDGAR Pro and I-Metrix Professional.

Data and Solutions



                                                Year Ended December 31,
                                             2006        2007         2008
              Revenues                      $ 6,510     $ 8,238     $ 10,464
              Percentage of total revenue        40 %        46 %         54 %
              Number of contracts               242         266          283

Data licenses have increased in 2007 and 2008 due to the increase in the overall number of contracts as well as a substantial increase in filings revenues in 2008. The increase in filings revenue was related to new SEC rules that require certain companies to file in XBRL beginning in 2009. In 2008, we recognized revenue from upfront fees and per-filing fees as many companies began to prepare their documents in XBRL in anticipation of these rules. In addition, we added several data solution sales in 2007 and 2008.

Advertising and E-Commerce



                                                Year Ended December 31,
                                             2006           2007       2008
             Revenues                      $    372       $    813     $ 544
             Percentage of total revenue          2 %            5 %       3 %

The decrease in revenues for the year ended December 31, 2008 compared to the year ended December 31, 2007 was primarily due to a decrease in e-commerce revenues from list sales. The increase in revenues for the year ended December 31, 2007 compared to the year ended December 31, 2006 was due to an increase in both advertising and e-commerce revenues. The increase in advertising revenues in 2007 was due to the addition of a barter contract, as well as additional advertising partners. The increase in e-commerce revenues in 2007 was due to increased list sales.

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. Also, for each period, barter advertising expense is recorded equal to the barter advertising revenue for that period.

Total cost of revenues for the year ended December 31, 2008 increased $121, or 4%, to $3,140, from $3,019 for the year ended December 31, 2007. The increase in cost of revenues was primarily attributable to a $370 increase in payroll and related expenditures which was partially offset by a $184 decrease in commissions related to e-commerce revenues and a $66 decrease in data costs.

Total cost of revenues for the year ended December 31, 2007 increased $555, or 23%, to $3,019, from $2,464 for the year ended December 31, 2006. The increase in cost of revenues was primarily attributable to a $247 increase in data costs, a $75 increase in commissions related to e-commerce revenues and a $49 increase in payroll costs as well as the addition of $139 of barter expense in 2007.

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 year ended December 31, 2008 decreased $379, or 8%, to $4,545, from $4,924 for the year ended December 31, 2007, primarily due to a $275 decrease in payroll and related expenditures and $86 decrease in stock-based compensation expense. Sales and marketing expenses for the year ended December 31, 2007 decreased $256, or 5%, to $4,924, from $5,180 for the year ended December 31, 2006, primarily due to a $274 decrease in payroll expenditures and $87 decrease in travel and entertainment expenses partially offset by a $139 increase in stock-based compensation expense.

Development. Development expenses for the year ended December 31, 2008 increased $184, or 5%, to $3,894, from $3,710 for the year ended December 31, 2007, primarily due to a $198 increase in outside development expenses related to our I-Metrix products. Increases in payroll related expenditures were offset by the capitalization of certain of those costs. Development expenses for the year ended December 31, 2007 decreased $99, or 3%, to $3,710, from $3,809 for the year ended December 31, 2006, primarily due to a $277 decrease in outside development expenses related to our I-Metrix products partially offset by a $142 increase in payroll costs and a $36 increase in stock-based compensation expense.

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 year ended December 31, 2008 decreased $1,446, or 15%, to $8,177, from $9,623 for the year ended December 31, 2007. The net decrease was primarily due to a $411 decrease in payroll related expenditures and a $364 decrease in stock-based compensation expense. In addition, 2007 expenses included a one-time accrual of $620 related to the settlement of a sales tax audit. General and administrative expenses for the year ended December 31, 2007 increased $603, or 7%, to $9,623, from $9,020 for the year ended December 31, 2006. The net increase was primarily due to a $389 increase in stock-based compensation expense as well as the settlement of a sales tax audit of $620, which were partially offset by a $104 decrease in rent, a $95 decrease in communications, a $95 decrease in tax expenses and $56 decrease in insurance expenses.

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 year ended December 31, 2008 increased $117, or 7%, to $1,870 from $1,753 from the year ended December 31, 2007 as a result of increased capital expenditures. Depreciation and amortization for the year ended December 31, 2007 decreased $90, or 5%, to $1,753 from $1,843 for the year ended December 31, 2006 due to several fixed assets becoming fully depreciated.

Severance Costs. In 2007, we accrued $631 of severance costs related to the termination of the employment agreements of our Executive Vice President of Sales and Chairman of the Board, $984 related to our former CEO and workforce reductions and $396 related to our former CFO and COO. As part of the employment and/or severance agreements, all options held by these executives vested immediately. As a result, non-cash compensation and additional paid-in capital were increased by $465 to recognize previously unrecognized stock compensation remaining from the original grant date valuation of the options.

SELECTED QUARTERLY REVENUE RESULTS

The following table sets forth unaudited revenue results for each of our last eight fiscal quarters. In the opinion of management, this unaudited quarterly information has been prepared on a basis consistent with our audited consolidated financial statements and includes all adjustments (consisting of normal and recurring adjustments) that management considers necessary for a fair presentation of the data. These quarterly revenue results are not necessarily indicative of future quarterly patterns or revenue results. This information should be read in conjunction with our financial statements and the related notes included elsewhere in this Annual Report.

                                                                             Three Months Ended
                                   March 31,     June 30,     Sept. 30,     Dec. 31,     March 31,     June 30,     Sept. 30,     Dec. 31,
                                     2007          2007         2007          2007         2008          2008         2008          2008
                                                                                 (UNAUDITED)
Revenue Sources:
Subscriptions                     $     2,143   $    2,209   $     2,260   $    2,245   $     2,147   $    2,180   $     2,088   $    2,040
Data licenses                           1,757        1,956         2,226        2,299         2,704        2,553         2,513        2,694
Advertising and e-commerce                202          192           191          228           140          188           100          116

Total                             $     4,102   $    4,357   $     4,677   $    4,772   $     4,991   $    4,921   $     4,701   $    4,850

LIQUIDITY AND CAPITAL RESOURCES

Net cash used in operating activities was $230 for the year ended December 31, 2008, an improvement from net cash used in operating activities of $1,276 for the year ended December 31, 2007. This was primarily due to continued increases in revenues and reduced operating expenses through continued cost control measures in the year ended December 31, 2008.

Net cash used in investing activities was $1,268 for the year ended December 31, 2008 and included $511 related to capital expenditures and $747 in capitalized product development costs. The capital expenditures were primarily for computers and equipment to support our expansion and increased infrastructure. The capitalized product development costs primarily related to the continued development of our XBRL processing platform. We expect capitalized product development costs to increase in future years as we continue the development of our XBRL processing platform. Net cash used in investing activities for the year ended December 31, 2007 was $572 and related primarily to capital expenditures.

Net cash used in financing activities of $9 for the year ended December 31, 2008 consisted of the repayment of $125 of notes payable, as described below, which was partially offset by proceeds from the exercises of stock options of $116. Net cash provided by financing activities for the year ended December 31, 2007 was $2,551 and consisted of $2,500 of proceeds from notes payable and $289 proceeds from the exercise of stock options and warrants which were partially offset by $238 of deferred financing costs.

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. On March 13, 2009, the ratios and covenants were further amended effective as of December 31, 2008. In addition, the maturity date was amended to March 30, 2011 and the renewal date was amended to March 31, 2011. We were in compliance with these ratios and covenants, as amended, at December 31, 2008 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 December 31, 2008, we had cash and cash equivalents on hand of $2,062. We have no off-balance sheet arrangements at December 31, 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. Our future contractual obligations at December 31, 2008 were as follows:

                                                      Payments Due by Period
                                                Less than     Years     Years     More than 5
                                      Total      1 Year        1-3       4-5         Years
Long-term debt, including interest   $ 2,733   $       623   $ 2,110   $    -    $          -
Operating lease obligations            4,933           967     1,924     1,200             842
Severance agreements                     471           340       131        -               -

Total                                $ 8,137   $     1,930   $ 4,165   $ 1,200   $         842

CRITICAL ACCOUNTING POLICIES AND ESTIMATES

The discussion and analysis of our financial condition and results of operations is based upon our financial statements, which have been prepared in accordance with accounting principles generally accepted in the U.S.. The preparation of these financial statements requires us to make estimates and judgments that affect the reported amounts of assets, liabilities, revenues and expenses, and related disclosure of contingent assets and liabilities. Actual results may vary from these estimates under different assumptions or conditions. On an on-going basis, we evaluate our estimates, including those related to the allowance for doubtful accounts, estimated useful lives of intangible assets and the determination of restructuring obligations. We base our estimates on historical experience, business practices and corporate policies, contractual provisions and various other assumptions that are believed to be reasonable under the circumstances.

We derive revenues from three primary sources: subscriptions to our web services, data licenses and solutions and advertising and other e-commerce based revenues. Revenue from subscriptions is recognized ratably over the subscription period, which is typically twelve months. Revenue from data licenses is recognized over the term of the contract. Our data solutions sometimes involve some upfront one-time 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. Upfront customization fees are recorded systematically over the expected customer relationship period. 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. Advertising and e-commerce revenue is recognized as the services are provided. Revenue is recognized provided acceptance and delivery, if applicable, has occurred, collection of the resulting receivable is probable and no significant obligations remain. If amounts are received in advance of the services being performed, the amounts are recorded and presented as deferred revenues. Revenue is recognized net of any related state sales taxes charged and sales taxes payable are included in accrued expenses.

Several of our accounting policies involve significant judgments and uncertainties. The policies with the greatest potential effect on our results of operations and financial position include the estimated collectability of accounts receivable, the estimated useful lives and fair values of intangible assets and the estimated fair value of goodwill. We maintain an allowance for doubtful accounts for estimated losses resulting from the inability of customers to make payments and for sales allowances. If the financial conditions of our customers deteriorate or there are specific factors resulting from the specific type of product, or customer class inability to make payments, additional allowances will be required. We establish the estimated useful lives of our intangible assets based on a number of factors, which is in part based on our assessments of the technology and customer relationships acquired. If these estimates change, the estimated useful lives of our intangibles may require adjustment. We test goodwill annually and between annual tests if events occur or circumstances change that would more likely than not reduce the fair value of a reporting unit below its carrying amount. Our evaluation is based primarily on market capitalization as we have only one reporting unit. Subsequent reviews may result in future periodic impairments that could have a material adverse effect on the results of operations in the period recognized.

We recognize compensation expense for all employee and director stock-based compensation awards based on estimated grant date fair values. We estimate the fair value using the Black-Scholes valuation model which requires us to make assumptions about the expected life of options, stock price volatility, risk-free interest rates and dividend yields. We recognize the expense on a straight-line basis over the applicable vesting period. SFAS 123(R) requires forfeitures to be estimated at the time of grant and revised, if necessary, in subsequent periods if actual forfeitures differ from those estimates. Upon adopting SFAS 123(R), we estimated expected forfeitures over the life of each . . .