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

Recent Developments

On February 23, 2009, we announced the closing of the previously announced sale of our Online images business, or Jupiterimages, to Getty Images, Inc. ("Getty Images") pursuant to the terms and conditions of a definitive stock purchase agreement dated October 22, 2008 by and between us and Getty Images (the "Agreement") for an aggregate purchase price of $96.0 million in cash, subject to a working capital purchase price adjustment (the "Sale"). As a result of the Sale, we are accounting for the operations of our Online images business as a discontinued operation and our continuing operations is comprised solely of our Online media business.

Overview

We are a leading global provider of original information, job boards and events for information technology ("IT"), business and creative professionals.

WebMediaBrands includes three distinct online networks: internet.com for IT and business professionals and for developers; Mediabistro.com for media professionals; and Graphics.com for design and creative professionals. The networks include more than 150 Web sites and 150 e-mail newsletters that are viewed by over 20 million users monthly. WebMediaBrands also includes specialized career Web sites for select professional communities, which can be found on Mediabistro.com and JustTechJobs.com. In addition, WebMediaBrands includes Mediabistro events, which produce offline conferences and trade shows focused on IT, media and business-specific topics.

We generate our revenues from:

• advertising and custom publishing on our Web sites, e-mail newsletters and online discussion forums;

• e-commerce agreements, which generally include a fixed advertising fee;

• fees charged for online job postings;

• attendee registration fees for our online and in-person training courses;

• advertiser sponsorships for our Webcasts;

• subscription sales for our paid e-mail newsletters and services;

• attendee registration fees to our conferences and trade shows;

• exhibition space fees and vendor sponsorships to our conferences and trade shows;

• renting our permission based opt-in e-mail list names; and

• licensing our editorial content, software and brands to third parties for fixed fees and royalties based on the licensee's revenues generated by the licensed property.

Advertisers generally place fewer advertisements during the first and third calendar quarters of each year, which directly affects our business. Our results will also be impacted by the number and size of events we hold in each quarter. In addition, there may be fluctuations as events held in one period in the current year may be held in a different period in future years.

The principal costs of our business relate to payroll for our editorial, technology, operations and sales personnel; technology related costs; facilities and equipment; paper and printing costs; and venue, speaker and advertising expenses for training and events.

Results of Operations

Revenues

Revenues were $8.4 million for the three months ended March 31, 2008 and $5.8 million for the three months ended March 31, 2009, representing a decrease of 31%. This change was primarily due to the decline in advertising spending by technology companies and the decline in online job posting revenue, which were both primarily due to the downturn in the U.S. economy.

The following table sets forth, for the three months ended March 31, 2008 and 2009 the components of our revenues (in thousands):

                                             Three Months Ended
                                                 March 31,
                                              2008         2009
                     Advertising           $    6,050    $  4,316
                     Online job postings        1,261         504
                     Other                      1,093         954

                                           $    8,404    $  5,774

The following table sets forth a quarter-by-quarter comparison of the number of our online advertisers and the average revenue derived from each advertiser (dollars in thousands):

                                        Number       Average Revenue
                                    of Advertisers    per Advertiser
               March 31, 2008                  217   $             26
               June 30, 2008                   210                 28
               September 30, 2008              207                 24
               December 31, 2008               187                 29
               March 31, 2009                  162                 25

Cost of revenues

Cost of revenues primarily consists of payroll and benefits costs for technology and editorial personnel, freelance costs, communications infrastructure and Web site hosting. Cost of revenues excludes depreciation and amortization. Cost of revenues was $4.1 million for the three months ended March 31, 2008 and $4.6 million for the three months ended March 31, 2009, representing an increase of 12%. This change was primarily due to an increase in employee-related costs of $462,000.

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

Advertising, promotion and selling

Advertising, promotion and selling expenses primarily consist of costs related to sales and marketing staff, sales commissions and promotion costs. Advertising, promotion and selling expenses were $1.9 million for both the three months ended March 31, 2008 and 2009.

General and administrative

General and administrative expenses primarily consist of payroll and benefit costs for administrative personnel, office-related costs and professional fees. General and administrative expenses were $5.7 million for the three months ended March, 31, 2008 and $5.6 million for the three months ended March 31, 2009, representing a decrease of 3%. This change was primarily due to a decrease in professional fees of $835,000 and a decrease in employee-related costs of $580,000. This decrease was partially offset by an increase in stock-based compensation of $1.3 million.

Depreciation and amortization

Depreciation expense was $232,000 for the three months ended March 31, 2008 and $274,000 for the three months ended March 31, 2009, representing an increase of 18%. The increase is due primarily to leasehold improvements made to our New York facility during the second quarter of 2008.

Amortization expense was $792,000 for the three months ended March 31, 2008 and $279,000 for the three months ended March 31, 2009, representing a decrease of 65%. The decrease is due primarily to the write-off of certain intangible assets during the fourth quarter of 2008.

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

Impairment

During the first quarter of 2009, we listed the building and land of our Peoria, IL facility for sale at an amount that was less then the carrying value. As a result, we recorded an impairment charge of $662,000 during the three months ended March 31, 2009.

Restructuring charge

We recorded severance expense of $567,000 during the three months ended March 31, 2009 related to the termination of certain employees.

Other income (loss), net

Other income of $64,000 during the three months ended March 31, 2009 was due primarily to net foreign currency transaction gains.

Interest income and interest expense

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

Three Months Ended March 31, 2008 vs. 2009 2008 2009 $ % Interest income $ 5 $ 1 $ (4 ) (80 )% Interest expense (1,726 ) (1,307 ) 419 24

Interest expense relates primarily to costs associated with our senior credit facility. See Liquidity and Capital Resources below for a description of the facility.

Loss on fair value of interest rate swap

Due to the termination of our credit agreement with KeyBank National Association as described in Liquidity and Capital Resources below, the derivative interest rate swap no longer meets the criteria for hedge accounting under SFAS No. 133 and therefore, during the three months ended March 31, 2009, the Company recorded a charge of $7.2 million as loss on fair value of interest rate swap in the consolidated statement of operations, which represents the fair value of the interest rate swap as of March 31, 2009.

Benefit for income taxes

A benefit for income taxes of $292,000 was recorded during the three months ended March 31, 2008, which consisted of a tax benefit for federal, state and foreign income taxes of $258,000 and $26,000 and $8,000 respectively. The income tax benefit for federal, state and foreign taxes is primarily due to the losses incurred during the three months ended March 31, 2008.

A benefit for income taxes of $2.6 million was recorded during the three months ended March 31, 2009, which consisted primarily of a net tax benefit of $2.9 million recorded on the reclassification of the fair value adjustments on the interest rate swap from other comprehensive income (loss) to loss from continuing operations. The income tax benefit was partially offset by a provision for income taxes of $264,000, which was created primarily by additional tax amortization on indefinite lived assets.

Based on current projections, management has concluded that it is more likely than not that we will have insufficient taxable income to allow recognition of our deferred tax assets. Accordingly, a valuation allowance has been established

against deferred tax assets to the extent that deductible temporary differences cannot be offset by taxable temporary differences. To the extent that the net book value of indefinite lived assets exceeds the net tax value of indefinite lived assets, an additional tax provision will be incurred as the assets are amortized.

Getty Images has until October 15, 2009 to notify us if it intends to make a 338(h)(10) election and treat the acquisition of Jupiterimages as an asset purchase. For the three months ended March 31, 2009, the Sale has been reported as a stock sale for purposes of calculating the income tax benefit or provision. The current estimate is a taxable loss on Sale of the shares of Jupiterimages. To the extent the taxable loss on Sale is deductible, a full valuation allowance will be established against the deferred tax asset. Accordingly, there is no income tax benefit or provision reported as part of the gain on sale of discontinued operations.

As of March 31, 2009, the total amount of unrecognized tax benefits was $1.3 million, of which $200,000 would affect the effective tax rate, if recognized, as of March 31, 2009. In accordance with FASB Interpretation No. 48, "Accounting for Uncertainty in Income Taxes - an Interpretation of SFAS No. 109", we recognize interest and penalties related to unrecognized tax benefits as income tax expense. Accrued interest and penalties are included in accrued expenses and other current liabilities in the consolidated balance sheet.

Noncontrolling interest

Noncontrolling interest represents the minority stockholder's proportionate share of profits or losses of our majority-owned Japanese subsidiary. Subsequent to March 31, 2009, we no longer have any noncontrolling interests.

Liquidity and Capital Resources

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



                                                  Three Months Ended
                                                       March 31,                   2008 vs. 2009
                                                  2008             2009            $            %
Operating cash flows                         $        6,188     $   (5,285 )   $ (11,473 )      (185 )%
Investing cash flows                                 (3,079 )       90,897        93,976       3,052
Financing cash flows                                   (195 )      (81,371 )     (81,176 )   (41,629 )
Purchases of assets and other                          (194 )          (44 )         150          77
Purchases of property and equipment                    (290 )         (105 )         185          64

                                                         As of                     2008 vs. 2009
                                              December 31,      March 31,
                                                  2008             2009            $            %
Cash and cash equivalents                    $        3,755     $    7,931     $   4,176         111 %
Accounts receivable, net                              6,673          4,837        (1,836 )       (28 )
Working capital                                     (88,693 )        6,559        95,252         107

Since inception, we have funded operations through various means including our initial and follow-on public offerings of our common stock in June 1999, January 2000 and May 2004, the sales of our Events, Research and Online images businesses, through various credit agreements and through cash flows from operating activities. Our cash balance increased from December 31, 2008 due primarily to proceeds from the Sale of the Online images business.

Operating activities. Cash used by operating activities decreased during the three months ended March 31, 2009 due primarily to loss from continuing operations.

Investing activities. The amounts of cash used in investing activities vary in correlation to the number and cost of the acquisitions consummated. Net cash provided by investing activities in 2009 related primarily to the net proceeds from the Sale of the Online images business. Net cash used in investing activities in 2008 related primarily to information technology related spending.

Financing activities. Cash used by financing activities during the three months ended March 31, 2008 and 2009 related primarily to repayments under our credit facilities.

We were party to a Credit and Security Agreement, dated as of July 12, 2007 (the "Credit Agreement"), among ourselves, as borrower, the lenders party thereto (the "Lenders"), KeyBank National Association, as the lead arranger, sole book runner and administrative agent (the "Administrative Agent"), and Citizens Bank, N.A., as Syndication Agent. The Credit Agreement provided for a $115.0 million senior credit facility. The senior credit facility was comprised of (i) a $75.0 million term loan facility, that was drawn in full on July 12, 2007, and (ii) a $40.0 million revolving credit facility, including a $2.0 million sublimit for letters of credit and a $5.0 million swingline facility. In connection with the Sale, as described in note 7 of the notes to unaudited consolidated financial statements, the Company terminated the Credit Agreement and applied approximately $82.0 million of the gross proceeds from the Sale to repay all outstanding indebtedness under the Credit Agreement other than (a) a $500,000 letter of credit previously issued by KeyBank, on behalf of the Lenders, pursuant to the Credit Agreement, which has been fully cash collateralized by the Company and (b) the Swap Agreement. We make quarterly payments pursuant to the Swap Agreement, as amended, that are calculated on a net basis and based on the notional amount under the Swap Agreement (with the notional amount amortizing over time). As described in more detail in the Related Party Transaction section of this Item 2, the Swap Agreement with KeyBank will remain outstanding. We expensed $2.1 million in unamortized debt issuance costs related to the Credit Agreement during the first quarter of 2009.

We expect to continue our investing activities on a limited basis for the foreseeable future, which includes the potential to strategically acquire companies and content that are complementary to our business. We expect to finance any near-term acquisitions with cash, which as noted above is primarily proceeds from the Sale.

Our existing cash balances may decline during 2009 in the event of a continued downturn in the general economy or changes in our planned cash outlay. However, after applying approximately $82.0 million of the $96.0 million in gross proceeds from the Sale to repay our outstanding debt obligations and paying Sale-related costs, we feel as though the remaining cash

flow from the Sale together with our existing cash balances, current business plan and revenue prospects will be sufficient to meet the working capital and operating resource expenditure requirements of our business for the foreseeable future.

Off-Balance Sheet Arrangements

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

Recent Accounting Pronouncements

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

Related Party Transaction

In connection with the Sale, on February 23, 2009, we entered into (a) the Swap Amendment, with respect to the Original Swap Agreement and (b) the Credit Support Agreement, dated as of February 23, 2009, by and among Alan M. Meckler ("Mr. Meckler"), Ellen L. Meckler ("Mrs. Meckler") and the Company (the "Credit Support Agreement"). In connection with the Credit Support Agreement, Mr. Meckler agreed to personally guarantee the Company's obligations under the Swap Agreement and Mrs. Meckler has agreed to grant a security interest to KeyBank in respect of certain of her assets to support Mr. Meckler's personal guarantee to KeyBank. In exchange for Mr. Meckler's personal guarantee to KeyBank and Mrs. Meckler's grant of a security interest to KeyBank, the Company has agreed pursuant to the Credit Support Agreement to, among other things, pay cash consideration to Mr. Meckler and Mrs. Meckler on a monthly basis. The amount of the cash consideration is equal to one-twelfth (1/12) of one percent (1%) of the notional amount of the Swap Agreement, which notional amount is initially $49,250,000 and will decrease by $125,000 at the beginning of each fiscal quarter commencing on March 31, 2009. In addition, in certain circumstances, Mr. Meckler may have the right to assume KeyBank's interests in the Swap Agreement and the Swap Security Agreements and, in the event that Mr. Meckler or Mrs. Meckler is required to satisfy the Company's obligations under the Swap Agreement, Mr. Meckler and Mrs. Meckler will be subrogated to KeyBank's rights against the Company under the Swap Agreement and the Swap Security Agreements. The Credit Support Agreement was approved by all of the independent members of the Company's Board of Directors, each of whom also has no direct or indirect interest in the Credit Support Agreement (the "Disinterested Directors"), following Mr. Meckler's disclosure to such Disinterested Directors of the terms of the Credit Support Agreement.

Critical Accounting Policies

There have been no changes to our critical accounting policies from those included in our most recent Form 10-K for the year ended December 31, 2008.