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, that are not historical facts are "forward-looking statements" under the safe harbor provisions of the Private Securities Litigation Reform Act of 1995. Forward-looking statements involve risks and uncertainties that could cause actual results to differ materially from those described. The potential risks and uncertainties address a variety of subjects including, for example: general economic conditions; 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 these 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.

Overview

WebMediaBrands is an Internet media company that provides content, education and career services to media and creative professionals through a portfolio of vertical online properties, communities and trade shows. Our online business includes:

· mediabistro.com, a blog network providing content, education, community and career resources about major media industry verticals including new media, social media, Facebook, TV news, advertising, public relations, publishing, design, mobile and the Semantic Web that includes the following:

10,000Words AllTwitter FishbowlLA MediaJobsDaily TVNewser AgencySpy AppNewser FishbowlNY PRNewser TVSpy AllFacebook FishbowlDC GalleyCat SocialTimes UnBeige

Our mediabistro.com business also includes an industry-leading job board for media and business professionals focusing on job categories such as social media, online/new media, publishing, public relations/marketing, advertising, sales, design, web development, television and more;

· InsideNetwork.com, a network of online properties dedicated to providing original market research, data services, news, events and job listings on the Facebook platform, social gaming and mobile applications ecosystems that includes the following:

AppData Inside Social Games PageData Inside Facebook Inside Virtual Goods The Facebook Marketing Bible Inside Mobile Apps

· SemanticWeb.com, a blog providing content, education, community resources and career resources on the commercialization and application of Semantic Technologies, Linked Data and Big Data.

· Community, membership and e-commerce offerings including a freelance listing service, a marketplace for designing and purchasing logos (stocklogos.com) and premium membership services.

Our education business features online and in-person courses and online conferences (including our Facebook Marketing and Social Media Marketing Boot Camps) for social media and traditional media professionals. Online education conferences combine the concepts of a large-scale event and a small group educational workshop that offers attendees the opportunity to learn in a dynamic online setting with live weekly instruction via webcast, discussion forums, homework assignments, and small group interaction where students receive one-on-one guidance and instruction from an advisor.

Our trade shows include, among others, the Semantic Tech and Business Conference, Inside Social Apps, Social Gaming Summit and AllFacebook Marketing Conference.

Our online business also includes AllCreativeWorld.com, a network of online properties providing content, education, community, career and other resources for creative and design professionals.

Our businesses cross-leverage and cross-promote our content, product and service offerings. For example, users of our Websites read our content, search for jobs on our job boards, attend our trade shows, subscribe to and purchase products and services and take courses.

We generate our revenues from:

· fees charged for online job postings;

· advertising on our Websites and e-mail newsletters;

· attendee registration fees for our online and in-person courses and conferences;

· attendee registration fees to our trade shows;

· fees for social media-related market research and data services products;

· exhibition space fees and vendor sponsorships to our trade shows; and

· subscription sales from our paid membership services.

Customers generally post more job listings during the first calendar quarter and fewer job listings during the fourth calendar quarter. Also, advertisers generally place fewer advertisements during the first and third calendar quarters of each year, which, together with fluctuations in online job postings, directly affect our business. Our results will also be impacted by the number and type of education courses we offer and by the number and size of trade shows we hold in each quarter. In addition, there may be fluctuations as trade shows 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 and benefits costs for our personnel; technology related costs; facilities and equipment; and venue, speaker and advertising expenses for our trade shows and courses.

Results of Operations

Revenues

Revenues were $3.7 million for the three months ended March 31, 2012 and $2.2 million for the three months ended March 31, 2011, representing an increase of 64%. This change was primarily due to the acquisition of Inside Network Inc. ("Inside Network"), which we acquired in May 2011, along with continued organic growth of our advertising and education revenues. Our acquisition of Inside Network contributed $1.1 million to our revenues during the three months ended March 31, 2012, primarily from the (i) Inside Social Apps conference held in February, (ii) research and (iii) advertising. Research revenue relates to Inside Network's original market research and data services including AppData, Inside Virtual Goods and the Facebook Marketing Bible.

The organic growth in advertising revenues was primarily due to the growth in both page views and in the number of unique visitors to our Websites, specifically on our social media-related properties. In addition, the increase in education revenue was primarily due to the growth of our online conferences.

The following table sets forth, for the periods indicated, the components of our revenues (in thousands):

Three Months Ended

                             March 31,               2012 vs. 2011
                         2012          2011          $            %
Online job postings   $    1,153      $ 1,149     $     4          0%
Advertising                  651          356         295          83
Trade shows                  640           34         606       1,783
Education                    542          460          82          18
Research                     438            -         438         100
Other                        261          247          14           6
Total                 $    3,685      $ 2,246     $ 1,439         64%

Cost of revenues

Cost of revenues primarily consists of payroll and benefits costs for technology and editorial personnel, freelance costs, communications infrastructure and trade show and education operations. Cost of revenues excludes depreciation and amortization. Cost of revenues was $2.0 million for the three months ended March 31, 2012 and $1.4 million for the three months ended March 31, 2011, representing an increase of 41%. This change was primarily due to the acquisition of Inside Network, which added $517,000 to cost of revenues during the first quarter of 2012, including $299,000 in trade show costs for the Inside Social Apps conference.

We intend to make investments through internal development and, where appropriate opportunities arise, through 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 payroll and benefits costs for sales and marketing personnel, sales commissions and promotion costs. Advertising, promotion and selling expenses were $641,000 and $432,000 for the three months ended March 31, 2012 and 2011, respectively, representing an increase of 48%. This increase was primarily due to the acquisition of Inside Network, which added $154,000 to advertising, promotion and selling during the first quarter of 2012.

General and administrative

General and administrative expenses consist primarily of payroll and benefits costs for administrative personnel, office-related costs and professional fees. General and administrative expenses were $1.3 million and $1.4 million for the three months ended March 31, 2012 and 2011, respectively, representing a decrease of 3%. This decrease was due primarily to a reduction in employee-related costs of $35,000.

Depreciation and amortization

Depreciation expense was $80,000 for the three months ended March 31, 2012 and $84,000 for the three months ended March 31, 2011, representing a decrease of 5%. This decrease was due primarily to a decrease in capital expenditures.

Amortization expense was $136,000 for the three months ended March 31, 2012 and $118,000 for the three months ended March 31, 2011, representing an increase of 15%. This increase was primarily due to the acquisition of Inside Network in May 2011.

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

Other loss, net

Other loss was $0 and $4,000 during the three months ended March 31, 2012 and 2011, respectively. Other loss for the three months ended March 31, 2011 was primarily related to translation loss on foreign currency and additional costs related to the sale of our building and land in Peoria, Illinois in December 2010.

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, 2012 vs. 2011 2012 2011 $ % Interest income $ 1 $ 35 $ (34) (97)% Interest expense $ (73) $ (179) $ 106 59%

Interest expense during the three months ended March 31, 2012 and 2011 relates primarily to costs associated with our loans from a related party. See "Related Party Transactions" for a description of the loans.

Provision for income taxes

We recorded a provision for income taxes of $11,000 and $10,000 during the three months ended March 31, 2012 and 2011, respectively.

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.

The total amount of unrecognized tax benefits was $85,000 as of March 31, 2012 and December 31, 2011, all of which would affect the effective tax rate, if recognized, as of March 31, 2012.

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,              2012 vs. 2011
                         2012          2011           $            %
Operating cash flows   $   (124)     $ (1,183)     $  1,059       90%
Investing cash flows        (67)         (676)          609        90
Financing cash flows          44          (11)           55       500



                                        As of                    2012 vs. 2011
                             March 31,       December 31,
                               2012              2011             $           %
Cash and cash equivalents   $     3,291     $        3,438     $ (147)       (4)%
Working capital                   1,510              1,794       (284)       (16)
Loan from related party           7,647              7,647           -          -

Since inception, we have funded operations through various means, including public offerings of our common stock, the sales of our Events, Research, Online images and Internet.com businesses, credit agreements and cash flows from operating activities.

Operating activities. Cash used by operating activities decreased during the three months ended March 31, 2012 compared to the same period of 2011 due primarily to a reduction in operating losses that was driven by an increase in our revenues.

Investing activities. The amounts of cash used in investing activities vary in correlation to the number and cost of the acquisitions we complete. Net cash used in investing activities during the three months ended March 31, 2012, related primarily to the purchase of certain assets. Net cash used in investing activities during the three months ended March 31, 2011, related primarily to the acquisition of businesses.

Financing activities. Cash provided by financing activities during the three months ended March 31, 2012 related to stock option exercises. Cash used in financing activities during the three months ended March 31, 2011 related primarily to loan repayments to a related party, partially offset by stock option exercises.

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 on hand.

Our existing cash balances might decline during the remainder of 2012 in the event of a downturn in the general economy or changes in our planned cash outlay. However, we believe the remaining cash flow together with our existing cash balances and 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 next 12 months.

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 condensed financial statements included in Item 1 of this Form 10-Q.

Related Party Transactions

On May 29, 2009, we entered into a loan agreement in the amount of $7.2 million with our Chief Executive Officer, Alan M. Meckler (the "2009 Meckler Loan").

In conjunction with the 2009 Meckler Loan, we (1) entered into a promissory note jointly and severally payable by us and our subsidiary, Mediabistro, to Mr. Meckler (the "2009 Note"), (2) entered into a Security Agreement with Mr. Meckler (the "Security Agreement") pursuant to which we granted to Mr. Meckler a security interest in the our assets, (3) entered into an Intellectual Property Security Agreement with Mr. Meckler (the "IP Security Agreement") pursuant to which the we granted to Mr. Meckler a security interest in the our intellectual property, (4) entered into a Pledge Agreement by us in favor of Mr. Meckler (the "Pledge Agreement") pursuant to which we 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 us, 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 2009 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 2009 Note (the "Mediabistro Control Agreement" and, together with the Mediabistro Security Agreement and the Mediabistro IP Security Agreement, the "Mediabistro Documents").

To fund the 2009 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 Mrs. Ellen L. Meckler (the "BOA Loan"). Pursuant to a Collateral Assignment of the 2009 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 2009 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 original principal amount of the 2009 Meckler Loan equaled the amount required to pay off and terminate an interest rate swap agreement between us and KeyBank and related transactional expenses. On September 1, 2010, we entered into a note modification agreement with Mr. Meckler. The Note Modification Agreement reduced the interest rate of the Note from 4.7% to 3.4% per annum. Interest on the outstanding principal amount is due and payable on the first day of each calendar month through June 2014. Thereafter, principal and interest is due and payable in equal monthly payments in an amount sufficient to pay the loan in full based on an amortization term of 15 years. In addition to the interest rate reduction noted above, the note modification agreement also reduced the required minimum monthly principal and interest payments that commence on July 1, 2014. Although there are no future minimum principal payments due under the 2009 Meckler Loan for the years ended December 31, 2011 through December 31, 2013, we had repaid approximately $1.3 million of the 2009 Meckler Loan as of March 31, 2012. The 2009 Note is due and payable in full on May 29, 2016, and may be prepaid at any time without penalty or premium. We made no principal payments during the three months ended March 31, 2012 and one principal payment on the 2009 Meckler Loan totaling $50,000 during the three months ended March 31, 2011.

On November 14, 2011, we along with Mediabistro, entered into a 2nd Note Modification Agreement with Mr. Meckler. The 2nd Note Modification Agreement amends the 2009 Note, which is described above. Under the 2nd Note Modification Agreement, the parties agreed to terminate our obligation to make a monthly accommodation fee of $40,000 to Mr. Meckler. As a result, the 2nd Note Modification Agreement reduces the effective interest payable on the 2009 Meckler Loan by $480,000 per year. We granted Mr. Meckler a fully vested stock option to purchase 1,000,000 shares of our common stock pursuant to the terms of the 2008 WebMediaBrands Stock Option Plan. All other terms of the 2009 Meckler Loan remain unchanged.

Also on November 14, 2011, we, along with our wholly owned subsidiaries, Mediabistro and Inside Network: (1) entered into a promissory note jointly and severally payable by the Company, Mediabistro and Inside Network to Mr. Meckler (the "2011 Note"); (2) entered into a Security Agreement by and between the Company and Mr. Meckler (the "WEBM 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 by and between the Company and Mr. Meckler (the "2nd IP Security Agreement") pursuant to which the Company granted to Mr. Meckler a security interest in the Company's intellectual property; and (4) entered into a Pledge Agreement by the Company in favor of Mr. Meckler (the "2nd Pledge Agreement"), and together with the 2011 Note, the WEBM Security Agreement and the 2nd IP Security Agreement, the "2011 Company Loan Documents") pursuant to which the Company granted to Mr. Meckler a security interest in and assignment of all of the shares of stock or other equity interest of Mediabistro and Inside Network owned by the Company.

In the 2011 Note, Mr. Meckler loaned us $1,750,000 (the "2011 Meckler Loan"). The interest rate of the 2011 Note is 3.10% per annum. Interest on the outstanding principal amount is due and payable monthly until August 2014. Thereafter, principal and interest is due and payable in equal monthly installments, with the outstanding principal amount, together with all accrued interest thereon, due and payable on August 18, 2016. The 2011 Note may be prepaid at any time without penalty or premium.

In partial consideration of the 2011 Note and the 2nd Note Modification Agreement, Inside Network entered into a Security Agreement by and between Inside Network and Mr. Meckler pursuant to which Inside Network granted to Mr. Meckler a security interest in Inside Network's assets (the "Inside Network Security Agreement") to secure Inside Network's obligations under the 2011 Note and the 2009 Note.

The 2011 Company Loan Documents and Inside Network Security Agreement contain customary terms for a loan transaction of this type. In an Event of Default (as defined in the 2011 Note) occurs and is continuing beyond a specified cure period, Mr. Meckler may declare the 2011 Meckler Loan immediately due and payable. The 2011 Meckler Loan also will become immediately due and payable upon certain events of bankruptcy or insolvency or in the event of a Change of Control (as defined in the 2011 Note) of Mediabistro, Inside Network, or the Company.

Interest expense on the 2009 Meckler Loan and 2011 Meckler Loan was $64,000 and $170,000 during the three months ended March 31, 2012 and 2011, respectively. There are no future minimum principal payments due under the 2009 Meckler Loan and the 2011 Meckler Loan for the years ended December 31, 2012 and 2013. There are future minimum principal payments due to Mr. Meckler for the 2009 Meckler Loan and the 2011 Meckler Loan in the amount of $189,000 for the year ended December 31, 2014; $419,000 for the year ended December 31, 2015; and $7.0 million for the year ended December 31, 2016.

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, 2011.