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 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.

On April 29, 2009, we acquired the assets of Brandsoftheworld.com for $1.5 million in cash. Brandsoftheworld.com is a user generated content site where readers view and download more than 160,000 vector format brands and logos. The site has approximately 2 million unique visitors and over 30 million page views a month.

On August 7, 2009, we entered into a definitive asset purchase agreement to sell our Internet.com division to QuinStreet, Inc. for an aggregate purchase price of $18 million in cash, subject to a working capital purchase price adjustment.

Overview

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

WebMediaBrands currently 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 might be fluctuations as events held in one period in the current year might 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 $8.9 million for the three months ended June 30, 2008 and $5.8 million for the three months ended June 30, 2009, representing a decrease of 35%. Revenues were $17.3 million for the six months ended June 30, 2008 and $11.6 million for the six months ended June 30, 2009, representing a decrease of 33%. These changes were primarily due to a decline in advertising spending by technology companies and a 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 periods indicated, the components of our revenues (in thousands):

                        Three Months Ended          Six Months Ended
                             June 30,                    June 30,
                         2008          2009         2008         2009
Advertising           $    6,559      $ 4,532     $ 12,609     $  8,848
Online job postings        1,123          465        2,418          983
Other                      1,228          832        2,287        1,772
                      $    8,910      $ 5,829     $ 17,314     $ 11,603

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
June 30, 2009                     180                   25

Cost of revenues

Cost of revenues primarily consists of payroll and benefit 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 $4.9 million for the three months ended June 30, 2008 and $2.8 million for the three months ended June 30, 2009, representing a decrease of 43%. This change was primarily due to a decrease in employee related costs of $1.0 million, a decrease in event related costs of $702,000 and a decrease in print magazine costs of $182,000.

Cost of revenues was $9.0 million for the six months ended June 30, 2008 and $7.4 million for the six months ended June 30, 2009, representing a decrease of 18%. This change was primarily due to a decrease in employee related costs of $545,000, a decrease in event related costs of $483,000, a decrease in print magazine costs of $148,000 and a decrease in freelance costs of $121,000.

We intend to make investments through internal development and, where appropriate opportunities arise, acquisitions to continue to expand our content offerings. We might 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 $2.3 million for the three months ended June 30, 2008 and $1.5 million for the three months ended June 30, 2009, representing a decrease of 35%. This change was primarily due to a decrease in employee related costs of $463,000 and event advertising costs of $225,000.

Advertising, promotion and selling expenses were $4.2 million for the six months ended June 30, 2008 and $3.4 million for the six months ended June 30, 2009, representing a decrease of 19%. This change was primarily due to a decrease in employee related costs of $527,000 and event advertising costs of $127,000.

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 $6.1 million for the three months ended June, 30, 2008 and $2.3 million for the three months ended June 30, 2009, representing a decrease of 61%. This change was primarily due to a decrease in stock-based compensation of $1.9 million, a decrease in employee related costs of $1.1 million and a decrease in professional fees of $608,000.

General and administrative expenses were $11.8 million for the six months ended June 30, 2008 and $7.9 million for the six months ended June 30, 2009, representing a decrease of 33%. This change was primarily due to a decrease in employee related costs of $1.7 million, a decrease in professional fees of $1.5 million and a decrease in stock-based compensation of $552,000.

Depreciation and amortization

Depreciation expense was $230,000 for the three months ended June 30, 2008 and $274,000 for the three months ended June 30, 2009, representing an increase of 19%. Depreciation expense was $462,000 for the six months ended June 30, 2008 and $548,000 for the six months ended June 30, 2009, representing an increase of 19%. These increases are due primarily to leasehold improvements made to our New York facility during the second quarter of 2008.

Amortization expense was $829,000 for the three months ended June 30, 2008 and $205,000 for the three months ended June 30, 2009, representing a decrease of 75%. Amortization expense was $1.6 million for the six months ended June 30, 2008 and $484,000 for the six months ended June 30, 2009, representing a decrease of 70%. These decreases are due primarily to the write-off of certain intangible assets during the fourth quarter of 2008.

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

Impairment

Because of declining real estate markets, during the first quarter of 2009, we listed the building and land of our Peoria, Illinois 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 six months ended June 30, 2009.

Restructuring charge

During the three and six months ended June 30, 2009, we recorded expense of $308,000 and $875,000 respectively, related to the termination of certain employees and the termination of our Darien, Connecticut office lease.

Other income (loss), net

Other income of $67,000 during the three months ended June 30, 2009 relates primarily to rent received from Getty Images (US), Inc. in conjunction with their lease of our Peoria facility.

Other income of $131,000 during the six months ended June 30, 2009 relates primarily to rent received from Getty Images (US), Inc. and 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 Six Months Ended June 30, 2008 vs. 2009 June 30, 2008 vs. 2009 2008 2009 $ % 2008 2009 $ % Interest income $ 1 $ 157 $ 156 15,600 % $ 6 $ 158 $ 152 2,533 % Interest expense (1,847 ) (185 ) 1,662 90 (3,573 ) (1,492 ) 2,081 58

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

Gain (loss) on fair value of interest rate swap

Due to the termination of our credit agreement with KeyBank 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 June 30, 2009, the Company recorded a gain of $438,000 on the fair value of interest rate swap in the consolidated statements of operations. During the six months ended June 30, 2009, the Company recorded a charge of $6.7 million as loss on fair value of interest rate swap.

Provision (benefit) for income taxes

We recorded a provision for income taxes of $325,000 and $33,000 during the three months and six months ended June 30, 2008, respectively. During the three and six months ended June 30, 2008, the income tax provision consisted primarily of a provision for federal income taxes offset by a benefit for state and foreign income taxes. The income tax provision for federal income taxes is primarily due to certain FASB Interpretation No. 48 liabilities. The income tax benefit for state and foreign taxes is primarily due to the losses incurred during the three and six months ended June 30, 2008.

We recorded a provision for income taxes of $66,000 and a benefit for income taxes of $2.6 million during the three and six months ended June 30, 2009. The income tax provision for the three months ended June 30, 2009 is primarily due to additional tax amortization on indefinite lived assets. During the six months ended June 30, 2009, the tax benefit for income taxes 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 $330,000 for the six months ended June 30, 2009, which was primarily created by additional tax amortization on indefinite lived assets.

Based on current projections, management believes that it is more likely than not that we will have insufficient taxable income to allow recognition of our deferred tax assets. Accordingly, we have established a valuation allowance 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, we will incur an additional tax provision 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 and six months ended June 30, 2009, we have reported the sale of our images business as a stock sale for tax purposes, resulting in the current estimated taxable loss. To the extent the loss is deductible, we will establish a full valuation allowance 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.

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 had 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):

                                                 Six Months Ended
                                                     June 30,                    2008 vs. 2009
                                                2008            2009            $               %
Operating cash flows                         $       9,719     $  (6,324 )   $ (16,043 )        (165 ) %
Investing cash flows                                (6,816 )      89,089        95,905         1,407
Financing cash flows                                (4,383 )     (80,935 )     (76,552 )      (1,747 )
Purchases of businesses, assets and other             (565 )      (1,584 )      (1,019 )        (180 )
Purchases of property and equipment                 (1,500 )        (315 )       1,185            79

                                                      As of                      2008 vs. 2009
                                            December 31,      June 30,
                                                2008            2009              $             %
Cash and cash equivalents                    $       3,755     $   5,520     $   1,765            47 %
Accounts receivable, net                             6,673         4,559        (2,114 )         (32 )
Long-term debt                                           -         7,197         7,197           100
Working capital                                    (88,693 )       4,238        92,931           105

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, after repayment of debt.

Operating activities. Cash used by operating activities decreased during the six months ended June 30, 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 in financing activities during the six months ended June 30, 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"), with lenders (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 8 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 made quarterly payments pursuant to the Swap Agreement, as amended, that were 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 was terminated on May 29, 2009. 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 might 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, proceeds from the proposed sale of our Internet.com assets, our 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 Transactions

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, with Alan M. Meckler ("Mr. Meckler") and Ellen L. Meckler ("Mrs. Meckler") (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 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 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 was equal to one-twelfth of one percent of the notional amount of the Swap Agreement, which notional amount was initially $49,250,000 but decreased by $125,000 at the beginning of each fiscal quarter commencing on March 31, 2009. In addition, in certain circumstances, Mr. Meckler might 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 was required to satisfy the Company's obligations under the Swap Agreement, Mr. Meckler and Mrs. Meckler would have been 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.

On May 29, 2009, WebMediaBrands paid off and terminated its Swap Agreement using the proceeds of a $7.2 million loan to the Company from Mr. Meckler ("Meckler Loan"). The Company obtained the Meckler Loan and paid off and terminated the Swap Agreement in order to restructure and eliminate the Company's ongoing obligations under the Swap Agreement and preserve working capital. In connection with these transactions, the Company entered into various security agreements to secure the Meckler Loan, as described in more detail below, and terminated various agreements securing the Swap Agreement and Swap Security Agreement.

On May 29, 2009, the Company (1) entered into a promissory note jointly and severally payable by the Company and Mediabistro, to Mr. Meckler (the "Note"),
(2) entered into a Security Agreement with Mr. Meckler (the "Security Agreement") pursuant to which the Company granted to Mr. Meckler a security interest in the Company's assets, (3) entered into an Intellectual Property Security Agreement with Mr. Meckler (the "IP Security Agreement") pursuant to which the Company granted to Mr. Meckler a security interest in the Company's intellectual property, (4) entered into a Pledge Agreement by the Company in favor of Mr. Meckler (the "Pledge Agreement") pursuant to which the Company granted to Mr. Meckler a security interest in and an assignment of all of the shares of stock or other equity interest of Mediabistro owned by the Company, and (5) agreed to enter into a Blocked Account Control Agreement with Mr. Meckler and a depositary bank, to further secure the Note (the "Control Agreement," and together with the Note, the Security Agreement, the IP Security Agreement and the Pledge Agreement, the "Company Loan Documents").

Simultaneously, Mediabistro (1) entered into a Security Agreement with Mr. Meckler pursuant to which Mediabistro granted to Mr. Meckler a security interest in Mediabistro's assets (the "Mediabistro Security Agreement"), (2) entered into an Intellectual Property Security Agreement with Mr. Meckler pursuant to which Mediabistro granted to Mr. Meckler a security interest in Mediabistro's intellectual property (the "Mediabistro IP Security Agreement"), and (3) agreed to enter into a Blocked Account Control Agreement with Mr. Meckler and a depositary bank, to further secure the Note (the "Mediabistro Control Agreement" and, together with the Mediabistro Security Agreement and the Mediabistro IP Security Agreement, the "Mediabistro Documents").

To fund the Meckler Loan, Mr. Meckler used a portion of the proceeds of a residential mortgage loan that Bank of America, N.A. ("BOA") granted to Mr. Meckler and Ellen L. Meckler ("Mrs. Meckler") (the "BOA Loan"). Pursuant to a Collateral Assignment of Note dated May 29, 2009, by Mr. Meckler to BOA, Mr. Meckler collaterally assigned the Note to BOA as additional collateral for the BOA Loan. Payment terms of the Meckler Loan reflect pass through of the BOA Loan payment terms (excluding those funds borrowed pursuant to the BOA Loan for Mr. Meckler's personal use). As a result, the interest rate, amortization schedule and maturity date of each loan are identical.

The principal amount of the Meckler Loan equals the amount required to pay off . . .