EX-99.3 5 c50722_ex99-3.htm

EXHIBIT 99.3

THESTREET.COM INC.
Unaudited Pro Forma Combined Condensed Consolidated Financial Information
for the Year Ended December 31, 2006

Description of Acquisition or Disposition of Assets.

          On August 2, 2007, TP Newco LLC, a wholly owned subsidiary of TheStreet.com, Inc. (the “Company”) entered into an agreement pursuant to which it acquired 100% of the membership interests in Corsis Technology Group II, LLC (“Corsis”) from David Barnett and Gregg Alwine (the “Sellers”) pursuant to a Membership Interest Purchase Agreement (the “Agreement”), among TP Newco LLC, and each of the Sellers.

          Corsis, which is based in New York, is a leading provider of custom solutions for advertisers, marketers and content publishers. It also owns Promotions.com, a full-service online interactive marketing agency that implements interactive marketing campaigns for some of the biggest brands in the world.

          The Agreement provided for a purchase price of the membership interests of approximately $20.7 million, consisting of approximately $12.5 million in cash and 694,230 shares of unregistered common stock of TheStreet.com, 485,960 of which were issued to the Sellers and 208,270 of which were placed in escrow pursuant to the terms of an escrow agreement. The shares will be escrowed to secure indemnity obligations until the earlier of two years from the closing date or the date of the last distribution from the escrow fund.

          Pursuant to the Agreement, each of the Sellers entered into five year non-competition and nonsolicitation agreements with the Company with regard to any businesses that compete to any extent with businesses conducted or proposed to be conducted by the Company or its affiliates. Five percent of the purchase price was allocated to such agreements.

          The Sellers provided representations, warranties and indemnities that are typical and consistent for a transaction of this size. The Agreement provides for the two year survival of such representations, with a $200,000 basket subject to a purchase price cap on the Sellers’ indemnification obligations for breaches of representations and warranties.

THESTREET.COM INC.
Unaudited Pro Forma Combined Condensed Consolidated Financial Information
for the Year Ended December 31, 2006

Proforma information

          The following unaudited pro forma combined condensed consolidated financial statements have been prepared to give effect to the acquisition of Corsis Technology Group II, LLC by TheStreet.com Inc. and are based upon the historical results of Corsis Technology Group II, LLC and TheStreet.com Inc., and the preliminary estimates and assumptions have been made solely for the purposes of developing this pro forma information. The unaudited pro forma combined condensed consolidated financial statements are not necessarily indicative of the results of operations or combined financial position that would have been achieved had these transactions been consummated as of the dates indicated, nor is it indicative of the results of operations in future periods or the future financial position of the combined company.

          The unaudited pro forma combined condensed consolidated balance sheet and unaudited pro forma combined condensed consolidated statements of operations and the accompanying notes thereto should be read in conjunction with the historical financial statements of TheStreet.com Inc. and Corsis Technology Group II, LLC and notes thereto.

          The unaudited pro forma combined condensed consolidated balance sheet as of June 30, 2007 gives effect to these transactions as if such transactions had occurred on June 30, 2007. The unaudited pro forma combined condensed consolidated statement of operations for the six month period ended June 30, 2007 and for the year ended December 31, 2006 gives effect to these transactions as if such transactions had occurred on January 1, 2007 and January 1, 2006, respectively.

          The allocation of the purchase price to the assets and liabilities acquired are preliminary. Final allocations will be based on appraisal or other analyses of fair value which are currently in process.

THESTREET.COM INC. AND SUBSIDIARIES

UNAUDITED PRO FORMA COMBINED CONDENSED CONSOLIDATED BALANCE
SHEET

June 30, 2007

(in thousands)

                               
Pro Forma
                       
   
TheStreet
 
Corsis
 
Adjustments
       
Pro Forma
Assets
Current assets:                        
                    
 Cash and cash equivalents      $ 49,610         $ 3        
$
(12,339 )          1 (a)           $ 37,274   
 Accounts receivable, net            6,419              3,998      
(160 )   1 (b)       10,257  
 Other current assets    
 
2,268
     
 
35
     
 
—
           
 
2,303
 
              Total current assets       58,297         4,036      
(12,499 )             49,834  
Fixed assets, net       4,962         461      
—                    5,423  
Investments       —         285      
—               285  
Goodwill and intangible assets, net       11,464         —      
18,494     1 (c)       29,958  
Other assets    
 
691
        408      
 
—
           
 
1,099
 
              Total assets    
$
75,414
     
$
5,190
     
$
     5,995
           
$
86,599
 
 
Liabilities and Stockholders’ Equity
Current liabilities:                        
                   
 Accounts payable and accrued expenses     $ 5,479       $ 845      
$
157     1 (c)     $ 6,481  
 Line of credit       —         1,971      
(1,971 )             —  
 Deferred revenue       14,232         1,786      
—               16,018  
 Deferred tax liability       —         60      
(60 )             —  
 Other current liabilities       145         166      
(107 )             204  
 Net current liabilities of discontinued operations    
 
222
     
 
—
     
 
—
           
 
222
 
             Total current liabilities       20,078         4,828      
(1,981 )             22,925  
 Deferred rent, net of current portion       —         47      
—               47  
 Term loan, net of current portion       —         197      
(197 )             —  
 Capital lease, net of current portion    
 
—
     
 
44
     
 
—
           
 
44
 
 
             Total liabilities    
 
20,078
     
 
5,116
     
 
(2,178
)          
 
23,016
 
 
Stockholders’ equity:                        
                   
Common stock       344         —      
7     1 (e)       351  
Additional paid-in capital       198,140         —      
8,240     1 (e)       206,380  
Treasury stock at cost       (9,033 )       —      
—               (9,033 )
Members capital       —         74      
(74 )   1 (d)       —  
Accumulated deficit    
 
(134,115
)    
 
—
     
 
—
           
 
(134,115
)
              Total stockholders’ equity    
 
55,336
     
 
74
     
 
8,173
           
 
63,583
 
              Total liabilities and stockholders’ equity    
$
75,414
     
$
5,190
     
$
5,995
           
$
86,599
 

THESTREET.COM INC. AND SUBSIDIARIES

UNAUDITED PRO FORMA COMBINED CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS

SIX MONTHS ENDED JUNE 30, 2007

(in thousands, except per share amounts)

               
     
Pro Forma
               
   
TheStreet
     
Corsis
     
Adjustments
               
Pro Forma
Revenue      
$
29,407
         
$
5,523
         
$
(160
)          2 (a)           
$
34,770
   
 
Operating expenses:              
       
                     
         Cost of sales       11,272      
     3,295      
—               14,567  
         Sales, marketing, general and administrative       11,858      
1,497      
—               13,355  
         Depreciation and amortization    
 
815
     
 
123
     
 
379
    2 (b)    
 
1,317
 
 
                         Total operating expenses
   
 
23,945
     
 
4,915
     
 
379
           
 
29,239
 
 
Income (loss) from operations       5,462      
608      
(539 )             5,531  
 
Interest income (expense), net       1,226      
(69 )    
        47               1,204  
Other income, net    
 
—
     
 
81
     
 
—
           
 
81
 
Net income (loss) from continuing operations before              
       
                   
       income taxes            6,688      
620      
(492 )                  6,816  
         Income tax expense    
 
134
     
 
98
     
 
—
           
 
232
 
Net income (loss) from continuing operations       6,554      
522      
(492 )             6,584  
Loss from discontinued operations    
 
(1
)    
 
—
     
 
—
           
 
(1
)
Net income (loss)    
$
6,553
     
$
522
     
$
(492
)          
$
6,583
 
 
Basic per share data:              
       
                   
Net income from continuing operations per share     $ 0.23      
       
              $ 0.23  
Loss from discontinued operations per share    
 
(0.00
)    
       
             
 
(0.00
)
Basic net income per share    
$
0.23
     
       
             
$
0.23
 
 
Diluted per share data:              
       
                   
Net income from continuing operations per share     $ 0.23      
       
              $ 0.23  
Loss from discontinued operations per share    
 
(0.00
)    
       
             
 
(0.00
)
Diluted net income per share    
$
0.23
     
       
             
$
0.23
 
 
Weighted average shares of common stock outstanding              
       
                   
         used in computing basic net income per share    
 
28,185
     
       
 
694
    2 (c)    
 
28,879
 
 
Weighted average shares of common stock outstanding              
       
                   
         used in computing diluted net income per share    
 
28,389
     
       
 
694
    2 (c)    
 
29,083
 

THESTREET.COM INC. AND SUBSIDIARIES

UNAUDITED PRO FORMA COMBINED CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS

YEAR ENDED DECEMBER 31, 2006

(in thousands, except per share amounts)

               
     
Pro Forma
               
   
TheStreet
     
Corsis
     
Adjustments
               
Pro Forma
Revenue      
$
50,889
         
$
10,470
         
$
—
               
$
61,359
   
 
Operating expenses:              
                             
         Cost of services       18,450      
6,512         —               24,962  
         Sales, marketing, general and administrative       20,290      
     3,443         —               23,733  
         Depreciation and amortization    
 
1,089
     
 
248
     
 
758
         2 (b)           
 
2,095
 
 
                    Total operating expenses.
   
 
39,829
     
 
10,203
     
 
758
           
 
50,790
 
 
Income from operations       11,060      
267         (758 )             10,569  
 
Interest income (expense), net            2,037      
(65 )                 56                    2,028  
Other expense, net    
 
—
     
 
(165
)    
 
—
           
 
(165
)
Net income (loss) from continuing operations before              
                             
       income taxes       13,097      
37         (702 )             12,432  
         Income tax expense    
 
261
     
 
2
     
 
—
           
 
263
 
Net income (loss) from continuing operations       12,836      
35         (702 )             12,169  
Income from discontinued operations    
 
32
     
 
—
     
 
—
           
 
32
 
Net income (loss)    
$
12,868
     
$
35
     
$
(702
)          
$
12,201
 
 
Basic per share data:              
                             
Net income from continuing operations per share     $ 0.48      
                        $ 0.44  
Income from discontinued operations per share    
 
0.00
     
                       
 
0.00
 
Basic net income per share    
$
0.48
     
                       
$
0.44
 
 
Diluted per share data:              
                             
Net income from continuing operations per share     $ 0.47      
                        $ 0.43  
Income from discontinued operations per share    
 
0.00
     
                       
 
0.00
 
Diluted net income per share    
$
0.47
     
                       
$
0.43
 
 
Weighted average shares of common stock outstanding              
                             
         used in computing basic net income per share    
 
27,014
     
       
 
694
    2 (c)    
 
27,708
 
 
Weighted average shares of common stock outstanding              
                             
         used in computing diluted net income per share    
 
27,546
     
       
 
694
    2 (c)    
 
28,240
 

THESTREET.COM INC. AND SUBSIDIARIES
NOTES TO UNAUDITED PRO FORMA COMBINED CONDENSED CONSOLIDATED FINANCIAL
STATEMENTS
(in thousands, except share data)

1.          

The pro forma adjustments to the unaudited pro forma combined condensed consolidated balance sheet as of June 30, 2007 are as follows:
 
  a)     

Adjustment to cash for the cash portion of the acquisition price of approximately $12,339, exclusive of a $157,000 adjustment to the purchase price.
 
  b)

Adjustment to accounts receivable to eliminate intercompany transacations.
 
  c)

Preliminary adjustment to goodwill and intangible assets, net, to reflect the excess of the fair value of the net assets acquired over the purchase price, calculated as follows:
 
Purchase price  
$
20,743  
Adjustment to purchase price  
 
(157
)
Adjusted purchase price  
$
20,586
 
Fair value of assets and liabilities:  
   
Current assets  
$
3,876  
Tangible long-term assets  
1,154  
Identifiable intangible assets  
18,494  
Fair value of liabilities assumed  
 
(2,938
)
Net fair value assigned to assets acquired and liabilities assumed                 
$
20,586
 

             

  • The value of the common stock to be issued in connection with the acquisition was estimated as $11.88, the average value of the TheStreet.com Inc. common stock for the ten business days preceding the closing date.
     
     

  • The allocation of the purchase price to the assets and liabilities acquired are preliminary. Final allocations will be based on appraisal and other analyses of fair values. The final allocation may differ from the amounts above.
     
     

  • On the actual acquisition date which took place August 2, 2007 and based on the value of net assets as of that day, the goodwill and intangible assets value was approximately $19 million.
     
      d)     

    Adjustment to reflect the elimination of all of the historical stockholders’ equity balances of Corsis.
     
      e)

    Adjustment to the weighted average shares of common stock outstanding used in computing basic and diluted net loss per share to reflect the issuance of 694,230 shares of common stock in connection with the acquisition of Corsis.
     

    THESTREET.COM INC. AND SUBSIDIARIES
    NOTES TO UNAUDITED PRO FORMA COMBINED CONDENSED CONSOLIDATED FINANCIAL
    STATEMENTS
    (in thousands, except share data)

    2.          

    The pro forma adjustments to the unaudited pro forma combined condensed consolidated statement of operations for the six month period ended June 30, 2007 and for the year ended December 31, 2006 are as follows:
     
      a)     

    Adjustment to eliminate intercompany revenue transactions.
     
      b)

    Adjustment to reflect amortization of intangible assets over the expected period of benefit.
     
      

    As of June 30, 2007:
     
    Intangible assets          
    acquired
              
    Amount
              
    		 Amortization life
    Customer list  
    $
    		3,040   9 years
    Non compete     1,000   5 years
    Trade name     300   Indefinite
    Software     660   3 years
    Goodwill  
     
    13,494
    		  indefinite
       
    $
    18,494
    		   

                  c)     

    Adjustment to the weighted average shares of common stock outstanding used in computing basic and diluted net loss per share to reflect the issuance of 694,230 shares of common stock in connection with the acquisition of Corsis.