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.

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          SIX MONTHS ENDED
                                           JUNE 30,                   JUNE 30,
                                     2008            2009         2008          2009
    Total revenues                     100 %           100 %        100 %        100 %
    Cost of revenues                    16              26           16           26


    Gross profit                        84              74           84           74
    Operating expenses:
    Sales and marketing                 24              18           24           20
    Product development                 22              10           22           12
    General and administrative          40              41           41           45
    Amortization and depreciation        9              11            9           12


    Loss from operations               (11 )            (6 )        (12 )        (15 )
    Interest and other, net             (3 )            (2 )         (2 )         (2 )


    Net loss                           (14 )%           (8 )%       (14 )%       (17 )%

REVENUES

Total revenues for the three months ended June 30, 2009 decreased 7% to $4,567, from $4,921 for the three months ended June 30, 2008. The net decrease in revenues was primarily attributable to a $617, or 26%, decrease in subscriptions revenues and a $186, or 8%, decrease in data and solutions revenues which were partially offset by a $449, or 141%, increase in XBRL filings revenues. Total revenues for the six months ended June 30, 2009 decreased 11% to $8,802, from $9,912 for the six months ended June 30, 2008. The net decrease in revenues was primarily attributable to a $1,026, or 22%, decrease in subscriptions revenues and a $692, or 14%, decrease in data and solutions revenues which were partially offset by a $608, or 151%, increase in XBRL filings revenues.

SUBSCRIPTIONS



                                        THREE MONTHS ENDED            SIX MONTHS ENDED
                                             JUNE 30,                     JUNE 30,
                                        2008           2009          2008          2009
   Revenues (in $000s)                $   2,368      $  1,751      $  4,655      $  3,629
   Percentage of total revenue               48 %          38 %          47 %          41 %
   Average price per subscriber       $     772      $    683      $    759      $    708
   Number of subscribers at June 30      12,264        10,248        12,264        10,248

Subscription revenues for the three and six months ended June 30, 2009 decreased from the three and six months ended June 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           SIX MONTHS ENDED
                                             JUNE 30,                    JUNE 30,
                                        2008           2009          2008         2009
     Revenues (in $000s)              $   2,234       $ 2,048      $  4,855      $ 4,163
     Percentage of total revenue             45 %          45 %          49 %         47 %
     Number of contracts at June 30         287           280           287          280

Data and solutions revenues decreased for the three and six months ended June 30, 2009 from the three and six months ended June 30, 2008 due in large part to non-recurring data solutions revenue of approximately $170 in the three months ended June 30, 2008 and $550 in the six months ended June 30, 2008. In addition, cancellations of data licenses contracts exceeded new contracts in the six months ended June 30, 2009.

XBRL FILINGS



                                      THREE MONTHS ENDED           SIX MONTHS ENDED
                                           JUNE 30,                    JUNE 30,
                                      2008            2009        2008          2009
      Revenues (in $000s)           $    319         $  768      $   402       $ 1,010
      Percentage of total revenue          7 %           17 %          4 %          12 %

The increase in XBRL filings revenues for three and six months ended June 30, 2009 from the three and six months ended June 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. We recognized revenue from both fixed fees and per-filing fees as companies began to prepare their documents in XBRL in anticipation of those rules.

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 six months ended June 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 six months ended June 30, 2009.

Total cost of revenues for the three months ended June 30, 2009 increased $400, or 51%, to $1,181 from $781 for the three months ended June 30, 2008. The net increase in cost of revenues was primarily due to a $273 increase in payroll related expenses and the addition of $190 of XBRL related production costs which were partially offset by a decrease of $39 in barter expense. Total cost of revenues for the six months ended June 30, 2009 increased $753, or 48%, to $2,332 from $1,579 for the three months ended June 30, 2008. The net increase in cost of revenues was primarily due to a $482 increase in payroll related expenses and the addition of $361 of XBRL related production costs which were partially offset by a decrease of $78 in barter expense.

GROSS PROFIT

Gross profit for the three months ended June 30, 2009 decreased $754, or 18%, to $3,386 from $4,140 for the three months ended June 30, 2008. Gross profit for the six months ended June 30, 2009 decreased $1,863, or 22%, to $6,470 from $8,333 for the six months ended June 30, 2008. The gross profit percentage decreased to 74% for the both the three and six months ended June 30, 2009 from 84% for both the three and six months ended June 30, 2008. The decreases were due to lower total revenues as well as the higher cost of revenues related to XBRL filings revenues which have increased as a percentage of total revenues. We expect that gross profit percentages will remain at or near this lower rate as the lower margin XBRL filings revenues are expected to continue to 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 June 30, 2009 decreased $365 or 31%, to $820 from $1,185 for the three months ended June 30, 2008. The net decrease was primarily due to a $237 decrease in payroll related expenses and a $90 decrease in advertising and marketing expenses. Sales and marketing expenses for the six months ended June 30, 2009 decreased $651 or 27%, to $1,749 from $2,400 for the six months ended June 30, 2008. The net decrease was primarily due to a $511 decrease in payroll related expenses and a $129 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 June 30, 2009 decreased $628, or 58%, to $455 from $1,083 for the three months ended June 30, 2008. The decrease was primarily due to a $261 decrease in professional fees as well as the capitalization of $343 of payroll costs related to development of our XBRL processes. Development expenses for the six months ended June 30, 2009 decreased $1,091, or 52%, to $1,013 from $2,104 for the six months ended June 30, 2008. The decrease was primarily due to a $369 decrease in professional fees as well as the capitalization of $768 of development costs.

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 June 30, 2009 decreased $90, or 5%, to $1,870 from $1,960 for the three months ended June 30, 2008. The net decrease was primarily due to a $208 decrease in payroll related expenses which was partially offset by a $78 increase in professional fees and a $27 increase in rent. General and administrative expenses for the six months ended June 30, 2009 decreased $108, or 3%, to $3,957 from $4,065 for the six months ended June 30, 2008. The net decrease was primarily due to a $390 decrease in payroll related expenses which was partially offset by a $166 increase in stock compensation expense, a $86 increase in rent and a $71 increase in professional fees.

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 June 30, 2009 increased $70, or 15%, to $533 from $463 for the three months ended June 30, 2008. Depreciation and amortization for the six months ended June 30, 2009 increased $100, or 11%, to $1,030 from $930 for the six months ended June 30, 2008. The increases are a result of 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 $245 for the six months ended June 30, 2009 compared to net cash used of $645 for the six months ended June 30, 2008 primarily due to changes in assets and liabilities.

Net cash used in investing activities was $927 for the six months ended June 30, 2009 compared to $340 for the six months ended June 30, 2008. The increase was due to $768 of capitalized product development costs in the six months ended June 30, 2009 which was partially offset by a decrease in capital expenditures of $156 for the six months ended June 30, 2009 compared to $330 for the six months ended June 30, 2008. The purchases were made to support our expansion and increased infrastructure.

Net cash used in financing activities was $172 for the six months ended June 30, 2009 compared to net cash provided of $79 for the six months ended June 30, 2008. Debt payments of $188 in the six months ended June 30, 2009 were slightly offset by proceeds from option exercises which totaled $16 in the six months ended June 30, 2009 compared to $79 in the six months ended June 30, 2008.

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, 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 June 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 June 30, 2009, we had cash and cash equivalents on hand of $1,208. We have no off-balance sheet arrangements at June 30, 2009. We believe that our existing capital resources will be sufficient to meet our anticipated cash needs for working capital and capital expenditures for the next 12 months. However, the Company will require additional growth capital to meet its longer term revenue opportunity. We are currently evaluating strategic partnerships, potential scenarios for outside investors and other options to raise growth 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.