UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-K
x |
ANNUAL REPORT PURSUANT TO SECTION 13 OR 15 (D) OF
THE SECURITIES EXCHANGE ACT OF 1934
For the fiscal year ended December 31, 2014 |
OR
o |
TRANSITION REPORT PURSUANT TO SECTION 13 OR 15 (D) OF
THE SECURITIES EXCHANGE ACT OF 1934
For the transition period from ________ to ________ |
Commission file number:
000-26393
Mecklermedia Corporation
(Exact name of Registrant as specified in
its charter)
Delaware |
06-1542480 |
(State or other jurisdiction of incorporation or organization) |
(IRS Employer Identification No.) |
|
|
50 Washington Street, Suite 912
Norwalk, Connecticut |
06854 |
(Address of principal executive offices) |
(Zip Code) |
(203) 662-2800
(Registrant’s telephone number, including
area code)
Securities registered under Section 12(b)
of the Act: None
Title of each class |
Name of each exchange on which registered |
Common Stock $.01 par value |
OTCQX® |
Securities registered under Section 12(g)
of the Act:
Indicate
by check mark if the registrant is a well-known seasoned issuer, as defined in Rule 405 of the Securities Act. Yes o No x
Indicate
by check mark if the registrant is not required to file reports pursuant to Section 15(d) of the Act. Yes o No x
Indicate
by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities
Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports),
and (2) has been subject to such filing requirements for the past 90 days. Yes x No o
Indicate
by check mark whether the registrant has submitted electronically and posted on its corporate Website, if any, every Interactive
Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (§ 232.405 of this chapter) during the
preceding 12 months (or for such shorter period that the registrant was required to submit and post such files). Yes x No o
Indicate
by check mark if disclosure of delinquent filers pursuant to Item 405 of Regulation S-K (§229.405 of this chapter) is
not contained herein, and will not be contained, to the best of registrant’s knowledge, in definitive proxy or information
statements incorporated by reference in Part III of this Form 10-K or any amendment to this Form 10-K. x
Indicate by check mark
whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer or a smaller reporting company.
See definitions of “large accelerated filer,” “accelerated filer” and “smaller reporting company”
in Rule 12b-2 of the Exchange Act. (Check one):
Large accelerated filer o |
|
Accelerated filer o |
Non-accelerated filer o |
|
Smaller reporting company x |
(Do not check if a smaller reporting company) |
|
|
Indicate
by check mark whether the registrant is a shell company (as defined in Exchange Act Rule 12b-2 of the Act). Yes o No x
The aggregate market value
of voting and non-voting common stock held by non-affiliates of the registrant as of June 30, 2014, based upon the last sale
price of such common stock on that date as reported by the OTCQX® was $3,090,984.
The number of shares of
the outstanding registrant’s Common Stock as of March 24, 2015 was 6,057,662.
Information required
by Part III of this Form 10-K, to the extent not set forth herein, is incorporated by reference to the registrant’s definitive
proxy statement for its 2015 annual meeting of stockholders, which will be filed pursuant to Regulation 14A under the Securities
Exchange Act of 1934 within 120 days after the end of the fiscal year to which this Form 10-K relates.
Mediabistro Inc.
Annual Report on Form 10-K
Table of Contents
|
|
Page |
Part I |
|
Item 1. |
Business |
3 |
Item 1A. |
Risk Factors |
5 |
Item 1B. |
Unresolved Staff Comments |
11 |
Item 2. |
Properties |
11 |
Item 3. |
Legal Proceedings |
11 |
Item 4. |
Mine Safety Disclosures |
11 |
Part II |
|
Item 5. |
Market for Registrant’s Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities |
12 |
Item 6. |
Selected Financial Data |
12 |
Item 7. |
Management’s Discussion and Analysis of Financial Condition and Results of Operations |
13 |
Item 7A. |
Quantitative and Qualitative Disclosures about Market Risk |
19 |
Item 8. |
Financial Statements and Supplementary Data |
20 |
Item 9. |
Changes in and Disagreements with Accountants on Accounting and Financial Disclosure |
21 |
Item 9A. |
Controls and Procedures |
21 |
Item 9B. |
Other Information |
21 |
Part III |
|
Item 10. |
Directors, Executive Officers and Corporate Governance |
22 |
Item 11. |
Executive Compensation |
22 |
Item 12. |
Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters |
22 |
Item 13. |
Certain Relationships and Related Transactions, and Director Independence |
22 |
Item 14. |
Principal Accountant Fees and Services |
22 |
Part IV |
|
Item 15. |
Exhibits |
23 |
Signatures |
26 |
“Safe Harbor”
Statement under the Private Securities Litigation Reform Act of 1995: Statements in this Form 10-K that are not historical facts
are “forward-looking statements” pursuant to 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 Mecklermedia competes; the unpredictability of Mecklermedia’s future revenues,
expenses, cash flows and stock price; Mecklermedia’s ability to integrate acquired businesses, products and personnel into
its existing businesses; and Mecklermedia’s ability to protect its intellectual property. For a more detailed discussion
of such risks and uncertainties, refer to Item 1A. The forward-looking statements included herein are made as of the
date of this Form 10-K, and Mecklermedia assumes no obligation to update the forward-looking statements after the date hereof.
PART I
Overview
Mecklermedia Corporation
(f/k/a Mediabistro Inc.) (“Mecklermedia” or the “Company”) is a leading producer of global trade shows
and online publications covering 3D printing, Bitcoin/Blockchain and service Robots. Through December 31, 2014, Mecklermedia has
produced twenty-three conferences worldwide in 2014, including Inside 3D Printing Conference and Expo, Inside Bitcoins, and AllFacebook
Marketing Conference. The Mecklermedia news site and newsletters provide up to date coverage on emerging industries to help drive
business forward.
As discussed in note 3
to our consolidated financial statements, on August 15, 2014 the Company completed its previously announced sale of the Mediabistro
assets to PGM-MB Holdings, LLC (“PGM-MB”), a subsidiary of Prometheus Global Media. The Company sold assets related
to its former business of providing online publishing of editorial content, e-commerce offerings, and online job-board (including
online career-oriented services such as freelancer marketplaces), online education and certificate programs for social media, traditional
media and creative professionals, and bundled subscription services for the foregoing. The assets the Company sold also related
to the marketplace for designing and purchasing logos through Stocklogos.com
After the sale, the Company
offers trade shows which include, among others, Inside 3D Printing Conference & Expo, Inside Bitcoins, and RoboUniverse Conference
and Expo. The Company also provides original and in-depth daily coverage of the latest developments in 3D printing and additive
manufacturing and updates on the bitcoin payment industry.
Liquidity.
The Company has incurred losses and negative cash flows from operations in recent quarters and expects to continue to incur
operating losses for the remainder of 2015. In the absence of a sufficient increase in revenues, the Company will need to do
one or more of the following in the next 12 months to meet its planned level of expenditures: (a) raise additional capital;
(b) reduce spending on operations; or (c) restructure its operations. A capital raise could take any number of forms
including but not limited to: additional debt, additional equity, asset sales, or other forms of financing as dictated by its
needs and its view toward its overall capital structure. However, additional financing might not be available on acceptable
terms, if at all, and such financing might only be available on terms dilutive or otherwise detrimental to its stockholders
or its business.
Additionally, we expect to receive in August 2015 $1.0 million, which is a portion of the purchase price from the sale of
our Mediabistro assets that is being held in escrow to secure our indemnification obligations. Prometheus Global Media could
make an indemnification claim against these funds, which might not be timely released from escrow, if at all. In the first
quarter of 2015, we entered into a Secured Promissory Note and a Security Agreement with Drew Lane Holdings, LLC for $500,000.
Please see note 15 to our consolidated financial statements.
We believe we will not have sufficient cash to conduct our operations
through 2015, if we do not receive additional revenues in 2015 or the $1.0 million being held in escrow.
Our Strategy
Our objective is to strengthen
our position as a leading producer of global trade shows, conferences and digital publications covering 3D printing, robotics and
Bitcoin/Blockchain. We intend to achieve this objective by continuing to execute on the following strategies:
Create and Monetize
New Offerings and Services. We expect to strengthen our existing offerings of products and services by continuing to improve
our original content and trade shows. We expect to continue to develop additional revenue sources by identifying emerging services,
technologies and topics of interest and by creating trade shows for those topics through internal development and strategic acquisitions.
We believe that our creative and entrepreneurial culture enables us to identify technology and business shifts before these
changes are apparent to most of our users and competitors.
Leverage Our Interrelated
and Complementary Business Offerings. We will continue to cross-leverage and cross-promote our various products and service
offerings among the users of our online publications and attendees of our trade shows.
Corporate Information
internet.com LLC was
formed on April 5, 1999 in the State of Delaware. internet.com LLC was merged with and into internet.com Corporation upon
consummation of our initial public offering in June 1999.
On May 24, 2001, internet.com
Corporation changed its name from internet.com Corporation to INT Media Group, Incorporated. On August 12, 2002, INT Media
Group, Incorporated changed its name to Jupitermedia Corporation. On February 23, 2009, Jupitermedia Corporation changed its
name to WebMediaBrands Inc. and on June 13, 2013, WebMediaBrands Inc. changed its name to Mediabistro Inc. On August 8, 2014, Mediabistro
Inc. changed its name to Mecklermedia Corporation.
Our principal
executive offices are located at 475 Park Avenue South, Fourth Floor, New York, New York 10016 and our telephone number is
(212) 389-2000.
Our Website address is
www.mecklermedia.com. We make available free of charge, through a link on our Website to the Securities and Exchange Commission’s
(“SEC”), Internet site, our annual reports on Form 10-K, quarterly reports on Form 10-Q, current reports on Form
8-K and amendments to those reports filed or furnished pursuant to Section 13(a) or 15(d) of the Exchange Act as soon as reasonably
practicable after we electronically file such material with, or furnish such material to, the SEC. We also post our
press releases and other information about our Company on our Website. Information contained in, or accessible through, our Website
does not constitute a part of, and is not incorporated into, this Annual Report. Our consolidated subsidiaries include
the following: Mecklermedia.com Subsidiary Inc., a Delaware corporation; Inside Network, Inc., a California corporation; and Mecklermedia
Asia-Pacific, a logistical office in Hong Kong.
Marketing and Sales
Our marketing efforts are
directed largely at acquiring attendees, exhibitors and sponsors for our trade shows. We also promote our 3D Printing News and
Bitcoin news in order to drive traffic to our related trade shows. We sell most of our products and services online and through
a direct sales force. Our sales force operates from our New York, New York and Norwalk, Connecticut offices.
Seasonality and Cyclicality
There might be fluctuations
in our revenues from period to period as trade shows held in one period in the current year may be held in a different period in
future years. Expenditures by our customers tend to vary in cycles that reflect overall economic conditions as well
as budgeting and buying patterns.
Customers
Our customer base is a
diverse group of individuals as attendees to our trade shows and companies as exhibitors and sponsors of our trade shows. No
customer accounted for more than 10% of our consolidated revenues during any of the periods presented.
Backlog
Our backlog as of December 31,
2014 and 2013 was $353,000 and $195,000, respectively. Our backlog represents attendee registrations, exhibit space and vendor
sponsorships for our trade shows. We expect we will recognize substantially all of our backlog as of December 31, 2014 as
revenue in 2015.
Competition
The market for trade shows
is intensely competitive and rapidly changing. The number of online services competing for users’ attention and spending
continues to proliferate and intensify. Competitive factors include the quantity and quality of the users of our networks, editorial
quality, customer service, relevance and timeliness of our trade show offerings. Our trade shows compete for exhibitors, sponsors
and attendees with other media and marketing related events, including social media and emerging technology-related events.
Intellectual Property
We seek protection of our
proprietary content, logos, brands and domain names relating to our business, and attempt to protect them by relying on trademark,
copyright, trade secret and other laws and restrictions.
Trademarks: We pursue
the registration of certain of our trademarks and service marks in the United States and internationally. We have encountered obstacles
to registration of some marks.
Our trademark portfolio
supports our claim to the exclusive right to use the registered marks for the goods and services listed in the applicable jurisdictions.
This helps us in marketing our goods and services, building goodwill among customers and preventing infringement of our marks by
third parties, which might dilute the value of these marks. The primary marks used in our business are Inside 3D Printing and Inside
Bitcoin, among others.
Copyrights: We own
or have applied for copyright registrations in the United States pertaining to our business. We may not register all items for
protection and we may not be successful in obtaining registrations.
For risks related to our
intellectual property, see Item 1A. Risk Factors.
Employees
As of December 31, 2014,
our business employed 16 full-time and two part-time employees.
YOU SHOULD CAREFULLY CONSIDER
THE RISKS DESCRIBED BELOW BEFORE MAKING AN INVESTMENT DECISION. OUR BUSINESS, FINANCIAL CONDITION OR RESULTS OF OPERATIONS
COULD BE HARMED BY ANY OF THE FOLLOWING RISKS. THE TRADING PRICE OF OUR COMMON STOCK COULD DECLINE DUE TO ANY OF THE FOLLOWING
RISKS, AND YOU MIGHT LOSE ALL OR PART OF YOUR INVESTMENT.
Risks Related to Our Business
We have generated significant losses since
inception and might not report net income in the future.
As of December 31,
2014, we had an accumulated deficit of $294.0 million. Any failure to achieve profitability could deplete our current capital resources
and reduce our ability to raise additional capital in the future. Our advertising, promotion and selling and general and administrative
expenses are based on expectations of future revenues and are relatively fixed in the short term. These expenses totaled $4.1 million
for the year ended December 31, 2014 and $4.3 million for the year ended December 31, 2013. If our revenues are lower
than expected, we might not be able to quickly reduce spending. Any shortfall in revenues would have a direct impact on operating
results for a particular quarter and such fluctuations could affect the market price of our common stock.
We might not be able to raise additional
funds when needed for our business.
We have incurred losses
and negative cash flows from operations in recent quarters and expect to continue to incur operating losses in 2015. Our liquidity
will largely be determined by our ability to raise capital from debt, equity, or other forms of financing, by the success of our
product offerings, by developing additional product offerings, and by expenses associated with operations.
In the absence of a sufficient
increase in revenues, we will need to do one or more of the following in the next 12 months to meet our planned level of expenditures:
(a) raise additional capital; (b) reduce spending on operations; or (c) restructure our operations. A capital raise could take
any number of forms including but not limited to: additional debt, additional equity, asset sales, or other forms of financing
as dictated by our needs and our view toward our overall capital structure. However, additional financing might not be available
on acceptable terms, if at all, and such financing might only be available on terms dilutive or otherwise detrimental to our stockholders
or our business.
As part of the sale of our Mediabistro assets to Prometheus Global Media, a portion of the purchase price was deposited into
an escrow account to secure our indemnification obligations. If Prometheus Global Media successfully makes a claim against
the remaining $1.0 million or those funds are otherwise not released from the escrow account in August 2015, our ability to
conduct our operations could be materially and adversely affected.
Our liquidity over the
next 12 months could be materially affected by, among other things: our ability to increase revenues; costs related to our product
development efforts; or our ability to raise additional funds through debt, equity, or other financing alternatives.
Our revenues could decline if our trade
show offerings fail to attract customers.
The success of our trade
shows depends on attendees, exhibitors and sponsors. There is intense competition to attract attendees, and
we must produce trade shows that are timely and attractive to exhibitors, sponsors and their targeted audience. If we
fail to organize quality programming, attract sufficient numbers of attendees, exhibitors and sponsors, or generate sufficient
interest in our trade shows, our revenues from trade shows would decline or fail to grow, and our business, results of operations
and financial condition would suffer.
Our business will suffer if we are unable
to maintain or enhance awareness of our brands or if we incur excessive expenses attempting to promote our brands.
Promoting and strengthening our
brands is critical to increase attendance at our trade shows. We believe that the importance of brand recognition will likely increase
due to the increasing number of competitors entering our markets. In order to promote these brands, in response to competitive
pressures or otherwise, we might have to increase our marketing budget, hire additional marketing and public relations personnel
or otherwise increase our financial commitment to creating and maintaining brand loyalty among our clients. If we fail to effectively
promote and maintain our brands, or incur excessive expenses attempting to promote and maintain our brands, our business and financial
results would suffer, and, as a result, our stock price could fluctuate or decline.
Given the tenure and experience of our CEO
and his guiding role in developing our business and growth strategy since our inception, our growth might be inhibited or our operations
might be impaired if we were to lose his services.
Our growth and
success depends to a significant extent on our ability to retain Alan M. Meckler, our Chairman and Chief Executive Officer.
Mr. Meckler has developed, engineered and stewarded the growth and operation of our business since its inception. The
loss of the services of Mr. Meckler could inhibit our growth or impair our operations and, as a result, our stock price could
fluctuate or decline.
Our CEO and other employees with specialized
knowledge and expertise in the operation of one or more of our businesses could use that knowledge and expertise to compete against
us, which could reduce our market share and revenues.
We do not have a
non-competition agreement with Mr. Meckler or with any other member of management or personnel. As a result, we might
not have any recourse if they were to join a competitor or start a competing venture. Competition from key employees or a
defection by one or more of them to a competitor could harm our business and results of operations by strengthening our
competitors and, as a result, reducing our market share and revenues, and our stock price could fluctuate or decline.
Our quarterly operating results are subject
to fluctuations, and our stock price might fluctuate or decline if we do not meet the expectations of investors and analysts.
Our quarterly revenues
and operating results are difficult to predict and often fluctuate significantly from quarter to quarter due to a number of factors,
many of which are outside of our control. Our results will also be impacted by the number and size of trade shows we hold in each
quarter. In addition, trade shows held in one period in the current year might be held in a different period in future years. Our
overall revenues could be materially reduced in any period by a decline in the economic prospects of exhibitors, sponsors or the
economy in general, which could alter current or prospective customers’ spending priorities or budget cycles or extend our
sales cycle for the period.
Additionally, we completed
the sale of the assets related to our Mediabistro business, in August 2014, and we have made a number of acquisitions
in recent years, including the acquisition of Inside Network, Inc. in May 2011, all of which make it difficult to analyze our results
and to compare them from period to period. Any future acquisitions or dispositions will also make our results difficult to compare
from period to period. Due to such risks, you should not rely on quarter-to-quarter comparisons of our results of operations as
an indicator of our future results.
The impairment of a significant amount of
goodwill and intangible assets on our balance sheet could result in a decrease in earnings and, as a result, our stock price could
decline.
In the course of our operating
history, we have acquired numerous assets and businesses. Some of our acquisitions have resulted in recording a significant amount
of goodwill and/or intangible assets on our financial statements. We had $57,000 of net intangible assets as of December 31,
2014. The goodwill and/or intangible assets were recorded because the fair value of the net tangible assets acquired was less than
the purchase price. We might not realize the full value of our intangible assets. For example, during the year ended December 31,
2014 and 2013, in conjunction with the Company’s annual impairment test, the Company identified indicators that its goodwill
was impaired. These indicators included a decline in revenue and recurring operating losses. As a result, the Company recorded
a non-cash impairment charge of $989,000 and $438,000 for the years ended December 31, 2014 and 2013, respectively, related to
the write-down of goodwill. We evaluate goodwill and other intangible assets with indefinite useful lives for impairment on an
annual basis or more frequently if events or circumstances suggest that the asset may be impaired. We evaluate other intangible
assets subject to amortization whenever events or changes in circumstances indicate that the carrying amount of those assets may
not be recoverable. If other intangible assets are deemed to be impaired, we would write off the unrecoverable portion as a charge
to our earnings. If we acquire new assets and businesses in the future, as we might do if appropriate circumstances arise, we might
record additional goodwill and/or intangible assets. The possible write-off of the goodwill and/or intangible assets could negatively
impact our future earnings and, as a result, our stock price could fluctuate or decline.
Our business is vulnerable to natural disasters,
telecommunication failures, terrorism and similar problems, and we are not fully insured for losses caused by all of these incidents.
Natural disasters, terrorist
acts or acts of war could harm our employees or damage our facilities, our clients, our clients’ customers and vendors, or
cause us to postpone or cancel, or result in dramatically reduced attendance at our trade shows, which could adversely impact our
revenues, costs and expenses and financial position. The potential for future terrorist attacks, the national and international
responses to terrorist attacks or perceived threats to national security, and other acts of war or hostility have created many
economic and political uncertainties that could adversely affect our business and results of operations in ways that cannot be
predicted, and could cause our stock price to fluctuate or decline. We are predominantly uninsured for losses and interruptions
to our systems or cancellations of trade shows caused by terrorist acts and acts of war.
System failures and other events may prohibit
users from accessing our networks or Websites, which could reduce traffic on our networks or Websites and result in decreased capacity
for trade show registrations and reduced revenues.
Our networks and Websites
must accommodate a high volume of traffic and deliver frequently updated information. They have in the past experienced, and may
in the future experience, slower response times or decreased traffic for a variety of reasons. Since we became a public company
in 1999, there have been instances where our online networks as a whole, or our Websites individually, have been inaccessible.
Also, slower response times, which have occurred more frequently, can result from general Internet problems, routing and equipment
problems involving third-party Internet access providers, problems with third-party advertising servers, increased traffic to our
servers, viruses and other security breaches. We also depend on information providers to provide information and data feeds on
a timely basis. Some of the services in our networks or Websites could experience temporary interruptions in service due to the
failure or delay in the transmission or receipt of this information. In addition, our users depend on Internet service providers
and online service providers for access to our online networks or Websites. Those providers have experienced outages and delays
in the past, and may experience outages or delays in the future. Moreover, our Internet infrastructure might not be able to support
continued growth of our Websites. Any of these problems could result in less traffic to our Websites or harm the perception of
our networks or Websites as reliable sources of information. Less traffic on our Websites or periodic interruptions in service
could have the effect of reduced registration to our trade shows and thereby reducing our revenues.
Any breach of confidential data in our possession
could expose us to significant expense and liabilities and harm our reputation.
We must maintain facility
and systems security measures to preserve the confidentiality of certain data belonging or related to users that is transmitted
through or stored on our systems or is otherwise in our possession. Additionally, we maintain our own confidential information,
and confidential information received from other third parties, in our facilities and systems. We take steps to protect the security,
integrity, and confidentiality of this data, but there is no guarantee that inadvertent or unauthorized use or disclosure will
not occur or that third parties will not gain unauthorized access to this data despite our efforts. Security breaches, computer
malware and computer hacking attacks may occur on our systems or those of our information technology vendors in the future. Any
security breach with respect to this information, whether caused by hacking, the inadvertent transmission of computer viruses or
other harmful software code, or otherwise, could result in the unauthorized disclosure, misuse, or loss of information, legal claims
and litigation, indemnity obligations, regulatory fines and penalties, contractual obligations and liabilities, other liabilities,
and significant costs for remediation and re-engineering to prevent future occurrences. In addition, if our security measures or
those of our vendors are breached or unauthorized access to consumer data otherwise occurs, our systems may be perceived as not
being secure, and users may reduce or cease the use of our systems.
Despite our security measures,
we are subject to ongoing threats and, therefore, these security measures may be breached as a result of employee error, failure
to implement appropriate processes and procedures, malfeasance, third-party action, including cyber-attacks or other intentional
misconduct by computer hackers or otherwise. This could result in third parties obtaining unauthorized access to users’ data
or our data, including personally identifiable information, intellectual property and other confidential business information.
Third parties may also attempt to fraudulently induce employees into disclosing sensitive information such as user names, passwords
or other information in order to gain access to our advertisers’ data or our data, including intellectual property and other
confidential business information.
Because techniques used
to obtain unauthorized access or sabotage systems change frequently and generally are not identified until they are launched against
a target, we may be unable to anticipate these techniques or to implement adequate preventative or mitigation measures. Though
it is difficult to determine what harm may directly result from any specific interruption or breach, any failure to maintain performance,
reliability, security and availability of our network infrastructure or otherwise to maintain the confidentiality, security, and
integrity of data that we store or otherwise maintain may harm our reputation and our relationships with advertisers and sellers
or harm our ability to retain and attract new buyers and sellers. Any of these could harm our business, financial condition and
results of operations.
If any such unauthorized
disclosure or access does occur, we may be required to notify users or those persons whose information was improperly used, disclosed
or accessed. We may also be subject to claims of breach of contract for such use or disclosure, investigation and penalties by
regulatory authorities and potential claims by persons whose information was improperly used or disclosed. The unauthorized use
or disclosure of information in our control may result in the termination of one or more of our commercial relationships or a reduction
in the confidence of users and usage of our services. We may also be subject to litigation and regulatory action alleging the improper
use, transmission or storage of confidential information, which could damage our reputation among our current and potential users,
require significant expenditures of capital and other resources and cause us to lose business and revenue.
Our network operations may be vulnerable
to hacking, viruses and other disruptions, which may make our products and services less attractive and reliable and could result
in increased costs and reduced revenues.
Internet usage could decline
if any compromise of security occurs. “Hacking” involves efforts to gain unauthorized access to information or systems
or to cause intentional malfunctions or loss or corruption of data, software, hardware or other computer equipment. Hackers, if
successful, could misappropriate proprietary information or cause disruptions in our Websites. We may be required to expend capital
and other resources to protect our Websites against hackers. Our Websites could also be affected by computer viruses or other
similar disruptive problems, and we could inadvertently transmit viruses across our Websites to our users or other third parties.
Any of these occurrences could harm our business or give rise to a cause of action against us. Providing unimpeded access to our
Websites is critical to obtaining registrations to our trade shows. Our inability to provide continuous access to our Websites
could cause some of our clients to discontinue registering for our trade shows and/or prevent or deter our users from accessing
our Websites.
Our intellectual property is important to
our business, and our inability to protect that intellectual property could result in increased expenses or decreased revenues
and adversely affect our future growth and success.
Trademarks, copyrights,
domain names and other proprietary rights are important to our success and competitive position. Our failure to protect our existing
intellectual property rights may result in the loss of exclusivity or the right to use our content and technologies. If we do not
adequately ensure our right to use certain content and technology, we may have to pay others for rights to use their intellectual
property, pay damages for infringement or misappropriation, and/or be prohibited from using this intellectual property.
We seek protection of our
content, logos, brands, domain names and other proprietary rights relating to our businesses, including the registration of our
trademarks, service marks and copyrights both in the United States and in foreign countries. However, our actions may be inadequate
to protect our trademarks, copyrights, domain names and other proprietary rights or to prevent others from claiming violations
of their trademarks and other proprietary rights. We might not be able to obtain effective trademark, copyright, domain name and
trade secret protection in every country in which we provide our products and services or make them available through the Internet.
For instance, it may be difficult for us to enforce our intellectual property rights against third parties who may have inappropriately
acquired interests in our intellectual property. It is also difficult and costly for us to police unauthorized use of our proprietary
rights and information, particularly in foreign countries.
Although we generally obtain
our content and some of our technologies from our employees and through work-for-hire arrangements or purchase, we also license
and/or purchase content from third parties. In the license arrangements, we generally obtain representations as to origin and ownership
of this content, and the licensors have generally agreed to defend, indemnify and hold us harmless from any third party claims
that this content violates the rights of another. However, we cannot be sure to get these protections in all cases, that these
protections will be effective or sufficient or that we will be able to maintain our content and technologies on commercially reasonable
terms.
We have licensed in the
past, and expect to license in the future, proprietary rights, such as trademarks, brands, content or other copyrighted material,
to third parties. While we attempt to ensure that the quality of our content, software and brands are maintained by such licensees,
we cannot be sure that such licensees will not take actions that might decrease the value of our trademarks, brands, content or
rights or other copyrighted material, which could harm our business, prospects, financial condition, results of operations and
cash flows.
In seeking to protect our
trademarks, copyrights and other proprietary rights, we could face costly litigation and the diversion of our management’s
attention and resources, which could result in increased expenses and operating losses and, as a result, our stock price could
fluctuate or decline.
We may be subject to intellectual property
rights claims by third parties, which are costly to defend, could require us to pay significant damages and could limit our ability
to use certain technologies and intellectual property.
The media industry is characterized
by the existence of large numbers of patents, copyrights, trademarks, trade secrets and other intellectual property and proprietary
rights. Companies in this industry are often required to defend against litigation claims that are based on allegations of infringement
or other violations of intellectual property rights. Third parties may assert claims of infringement or misappropriation of intellectual
property rights in proprietary technology against us for which we may be liable or have an indemnification obligation. While we
take reasonable steps to protect our rights, we cannot assure you that we are not infringing or violating any third-party intellectual
property rights. From time to time, we may be subject to legal proceedings relating to our services and the intellectual property
rights of others.
Regardless of whether claims
that we are infringing intellectual property rights have any merit, these claims are time-consuming and costly to evaluate and
defend, and can impose a significant burden on management and employees. The outcome of any litigation is inherently uncertain,
and we may receive unfavorable interim or preliminary rulings in the course of litigation. There can be no assurances that favorable
final outcomes will be obtained in all cases. We may decide to settle lawsuits and disputes on terms that are unfavorable to us.
Although third parties
may offer a license to their technology or intellectual property, the terms of any offered license may not be acceptable and the
failure to obtain a license or the costs associated with any license could cause our business, results of operations or financial
condition to be materially and adversely affected. In addition, some licenses may be non-exclusive, and therefore our competitors
may have access to the same technology or intellectual property licensed to us. Alternatively, we may be required to develop non-infringing
technology or to make other changes, such as to our branding, which could require significant effort and expense and ultimately
may not be successful. Furthermore, a successful claimant could secure a judgment or we may agree to a settlement that prevents
us from distributing certain products or performing certain services or that requires us to pay substantial damages, royalties
and other fees, including treble damages if we are found to have willfully infringed such claimant’s patents, copyrights,
trademarks, trade secrets or other intellectual property. Claims of intellectual property infringement or misappropriation also
could result in injunctive relief against us, or otherwise result in delays or stoppages in providing all or certain aspects of
our services.
We face potential liability for information
that we publish or distribute, which could spur costly litigation against us.
As a publisher and distributor
of original information and research, as well as the result of publishing content placed on our Websites by others, we face potential
liability based on a variety of theories, including defamation, negligence, copyright or trademark infringement or other legal
theories based on the nature, publication or distribution of this information. Such claims could also include, among others, claims
that by providing links to Websites operated by third parties, we are liable for wrongful actions by those third parties through
these Websites. It is also possible that users could make claims against us for losses incurred in reliance on information provided
on our Websites or services. Such claims, whether brought in the United States or abroad, could divert management time and attention
and result in significant cost to investigate and defend, regardless of the merit of these claims. In addition, if we become subject
to these types of claims and are not successful in our defense, we might have to pay substantial damages. Our insurance might not
adequately protect us against these claims. The filing of these claims could also damage our reputation as a high-quality provider
of unbiased, timely information and result in client and user cancellations or overall decreased demand for our products and services.
Intense competition in each of our businesses
could reduce our market share, which could result in a decrease in revenue.
Our trade shows compete
with numerous providers of in-person trade shows. Many of our current and potential competitors have longer operating histories,
larger customer bases, greater brand recognition and significantly greater financial, marketing and other resources than we have.
These competitors might be able to respond more quickly to new or emerging technologies and changes in customer requirements and
to devote greater resources to the development, promotion and sale of their products and services than we can. As a result, we
could lose market share to our competitors in one or more of our businesses and our revenues could decline.
Our decision to accept digital currency
(bitcoin) as a form of payment for registration and exhibition space fees and vender sponsorships for our Inside Bitcoins trade
show may subject us to exchange risk and additional tax and regulatory requirements.
In May 2013, we began accepting
bitcoin as a form of payment for attendee registration and exhibition space fees and vendor sponsorships for our Inside Bitcoins
trade shows. Bitcoin is a digital currency that uses cryptography to control the creation and transfer of the currency between
individual parties. Bitcoin is not considered legal tender or backed by any government. Since inception in 2009, bitcoin has experienced
price volatility, technological glitches and various law enforcement and regulatory interventions.
Since we began accepting
bitcoin as a form of payment for our select trade shows, less than 3% of customer purchases have been made using the currency.
At present we do not accept bitcoin payments directly, but use a third party vendor to accept and temporarily hold bitcoin payments
on our behalf. We transfer our bitcoin from a third party vendor to an offline wallet and they are held in cold storage until they
are sold. An insolvency of our third party vendor, however, may result in our holding bitcoin which could subject us to volatility
and exchange risk.
There is also uncertainty
regarding the current and future accounting treatment and tax, legal and regulatory requirements relating to bitcoin or transactions
utilizing bitcoin. Such accounting, legal, regulatory and tax developments or other requirements may adversely affect us.
We might not be able to attract and retain
qualified personnel, which could impact the quality of our content and services and the effectiveness and efficiency of our management,
resulting in losses in revenue and increased costs.
Our success also depends
on our ability to attract and retain qualified personnel. We depend primarily on our trade show personnel to organize trade shows
and our direct sales force sell exhibit space and/or sponsorship opportunities. Our reliance on trade show and sales personnel
is subject to numerous risks, including the risk that we might be unable to hire, retain, integrate and motivate these personnel,
or expand these groups to increase revenue.
Similarly, our success
also depends on our ability to attract and retain qualified technical, sales and marketing, customer support, financial and accounting,
legal and other managerial personnel. The competition for personnel in the industries in which we operate is intense. Our personnel
may terminate their employment at any time for any reason. Loss of personnel would also result in increased costs for replacement
hiring and training. Our revenues could fail to grow or decline if we fail to maintain an effective trade show team and direct
sales force and, as a result, our stock price could fluctuate or decline. If we fail to attract new personnel or retain
and motivate our current personnel, we might not be able to operate our businesses effectively or efficiently, serve our customers
properly or maintain the quality of our content and services.
We are subject to government regulations
concerning our employees, including wage-hour laws and taxes.
We are subject to applicable
laws and regulations relating to and governing our relationship with our employees, including laws related to overtime and minimum
wage, wage payment, workplace safety and working conditions, immigration status, worker classification, and the provision of health
benefits, unemployment benefits and workers’ compensation benefits. Increases in additional labor cost components, which
could result from legislation or a changed business climate, such as employee benefits costs, workers’ compensation insurance
rates, compliance costs and fines, as well as the cost of litigation in connection with any employment-related laws or regulations,
would increase our labor costs. Moreover, we are subject to various laws and regulations in federal, state and foreign jurisdictions
that impose varying rules and obligations on us with respect to taxation of income and benefits, social security and the classification
of employee benefits for income tax and other purposes that require us to report and/or withhold taxes in respect of such items.
In addition, many employers nationally have been subject to actions brought by governmental agencies and private individuals, including
class actions, under wage-hour laws on a variety of claims, such as improper classification of workers as exempt from overtime
pay requirements or improper classification of workers as independent contractors, resulting in a failure to pay overtime wages
properly and/or to comply with other wage-hour requirements, and these actions can result in material liabilities and expenses.
Should we be subject to employment litigation, such as actions involving wage-hour, overtime, breaks and compensable working time,
it may distract our management from business matters and result in increased labor costs in addition to the costs of litigation.
Our stock price could continue to be volatile,
making an investment in our common stock less predictable and more risky, and could spur costly litigation against us.
The market price of our
common stock has fluctuated in the past and is likely to continue to be highly volatile. For example, the market price of our common
stock has ranged from $0.36 per share to $505.75 per share since our initial public offering in June 1999 (adjusted to give effect
to the one-for-seven reverse stock split implemented on August 16, 2012). In the past, following periods of volatility in the market
price of a company’s securities, securities class action litigation has often been instituted against such a company. Such
litigation could result in substantial costs and divert our management’s attention and resources.
The market for our
common stock is limited and our stockholders might have difficulty reselling their shares when desired or at attractive market
prices.
Our
stock price and our listing may make it more difficult for our stockholders to resell shares when desired or at attractive prices.
Our Company stock trades on the “over-the-counter” market and is listed on OTCQX tier of the OTC Markets bulletin
board. Our common stock has continued to trade in low volumes and at low prices. Some investors view low-priced stocks as unduly
speculative and therefore not appropriate candidates for investment. Many brokerage firms and institutional investors have internal
policies prohibiting the purchase or maintenance of positions in low-priced stocks.
Because our stock ownership is heavily concentrated
with Alan M. Meckler, our Chairman and CEO, Mr. Meckler will be able to influence matters requiring stockholder approval.
As of March 24, 2015, Alan
M. Meckler beneficially owned 44% of our outstanding common stock. As a result of his beneficial ownership, Mr. Meckler, acting
alone or with others, is able to influence matters requiring stockholder approval, including the election of directors and approval
of significant transactions. This concentration of ownership might delay or prevent a change in control of our company that some
investors might deem to be in the best interests of the stockholders.
Antitakeover provisions could discourage
a takeover that stockholders consider to be in their best interests or prevent the removal of our current directors and management.
We have adopted a number
of provisions that could have antitakeover effects or prevent the removal of our current directors and management. Our Amended
and Restated Certificate of Incorporation, bylaws and the Delaware General Corporation Law could make it more difficult for a third
party to acquire us, even if a change in control would be beneficial to our stockholders. Our Amended and Restated Certificate
of Incorporation allows our board of directors to issue preferred stock with rights and preferences that are superior to those
of our common stock, which could deter a potential acquiror. Our bylaws provide that a special meeting of stockholders may only
be called by our Board, Chairman of the Board, Chief Executive Officer or President or at the request of the holders of a majority
of the outstanding shares of our common stock, which could deter a potential acquiror or delay a vote on a potentially beneficial
change in control transaction until the annual meeting of stockholders. Our bylaws also eliminate the ability of the stockholders
to act by written consent without a meeting or make proposals at stockholder meetings without giving us advance written notice,
which could hinder the ability of stockholders to quickly take action that might be opposed by management. These provisions could
also limit the price that investors might be willing to pay for our common stock.
Risks Related to the Information Technology
and Internet Industries
Legal uncertainties could add additional
costs and risks to doing business on the Internet, which would cause an increase in the costs and risks associated with operating
our business.
Legal standards relating
to the validity, enforceability and scope of protection of proprietary rights in Internet-related businesses and digital rights
are still evolving. As a result, we cannot assure the future viability or value of our proprietary rights. We might not have taken
adequate steps to prevent the misappropriation or infringement of our intellectual property or other rights. Any such infringement
or misappropriation, should it occur, might decrease the value of our intellectual property or other rights and undermine our competitive
advantage with respect to such property, resulting in impairment of our business, results of operations and financial condition.
In addition, we may have to file lawsuits in the future to perfect or enforce our intellectual property rights or other rights,
to protect our trade secrets or to determine the validity and scope of the proprietary rights of others. These lawsuits could result
in substantial costs and divert our resources and the attention of our management, which could reduce our earnings and cause our
stock price to fluctuate or decline.
Regulation could reduce the value of our
domain names.
We own registrations for
the Internet domain names Mecklermedia.com, InsideNetwork.com, Inside3dprinting.com, InsideBitcoins.com and RoboUniverse.com, as
well as numerous other domain names both in the United States and internationally. Domain names generally are regulated by Internet
regulatory bodies. The regulation of domain names in the United States and in foreign countries is subject to change. Regulatory
bodies could establish additional top-level domains, appoint additional domain name registrars or modify the requirements for holding
domain names. As a result, we might not acquire or maintain our domain names, or comparable domain names, in all the countries
in which we conduct business. Because our domain names are important assets that increase our value and contribute to our competitive
advantage through name recognition, reputation, user and search engine traffic, a failure to acquire or maintain such domain names
in certain countries could inhibit our growth. Furthermore, the relationship between regulations governing domain names and laws
protecting trademarks and similar proprietary rights is still evolving. Therefore, we might be unable to maintain domain names
or prevent third parties from acquiring domain names that infringe or otherwise decrease the value of our trademarks and other
proprietary rights. Any impairment in the value of these important assets could cause our stock price to fluctuate or decline.
Changes in laws and standards relating to
data collection and use practices and the privacy of Internet users and other individuals could impair our efforts to advertise
our products and services and thereby decrease our revenue.
We collect information
from our customers that register for our trade shows or respond to surveys. With our customers’ permission, we may use this
information to inform our customers of products and services that may be of interest to them. The U.S. federal and various state
governments have recently adopted or proposed limitations on the collection, distribution and use of personal information of Internet
users. The European Union adopted a directive that limits our collection and use of information from Internet users in Europe.
In addition, public concern about privacy and the collection, distribution and use of personal information has led to self-regulation
of these practices by the Internet advertising and direct marketing industry and to increased federal and state regulation. Since
many of the proposed laws, regulations and practices are still being developed, we cannot yet determine the impact these issues
may have on our business. Changes to laws or regulations, or industry practices, including privacy laws, could lead to additional
costs and could impair our ability to collect customer information which helps us to provide more targeted advertising for our
customers, thereby impairing our ability to maximize advertising revenue from our advertising clients.
ITEM 1B. |
UNRESOLVED STAFF COMMENTS |
None
The following table sets
forth a list of our current office locations:
Locations |
|
Square
Feet |
|
Termination Date |
|
Use |
Leased and Occupied |
|
|
|
|
|
|
Norwalk, CT |
|
6,600 |
|
May 2016 |
|
Administrative and sales |
New York, NY |
|
16,000 |
|
January 2019 |
|
Administration, marketing and event staffing |
Hong Kong |
|
100 |
|
March 2015 |
|
Event staffing and sales |
We believe that the general condition
of our leased real estate is good and that our facilities are suitable for the purposes for which they are being used. We believe
that our current facilities will be adequate to meet our needs for the foreseeable future.
ITEM 3. |
LEGAL PROCEEDINGS |
None
ITEM 4. |
MINE SAFETY DISCLOSURES |
Not applicable.
PART II
ITEM 5. |
MARKET FOR REGISTRANT’S COMMON EQUITY AND RELATED STOCKHOLDER MATTERS AND ISSUER PURCHASES OF EQUITY SECURITIES |
Our common stock began
trading publicly on the Nasdaq Stock Market on June 25, 1999, under the symbol “INTM”. In September
2002, effective with the change in the name of the company to Jupitermedia Corporation, our ticker symbol was changed to “JUPM”.
In February 2009, effective with the change in the name of the company to WebMediaBrands Inc., our ticker symbol was changed from
“JUPM” to “WEBM.” In June 2013, effective with the change in the name of the company to Mediabistro Inc.,
our ticker symbol was changed from “WEBM” to “MBIS.” In August 2014, effective with the name change of
the company to Mecklermedia Corporation, our ticker symbol was changed from “MBIS” to “MECK”. On June 5,
2014, our common stock was delisted from the Nasdaq Stock Market and on June 6, 2014, our common stock was listed on the OTCQX.
The following table sets forth for the periods indicated the high and low sale prices of our common stock.
|
|
High |
|
|
Low |
|
Year ended December 31, 2013 |
|
|
|
|
|
|
|
|
First Quarter |
|
$ |
2.35 |
|
|
$ |
1.46 |
|
Second Quarter |
|
$ |
2.85 |
|
|
$ |
0.80 |
|
Third Quarter |
|
$ |
2.04 |
|
|
$ |
1.36 |
|
Fourth Quarter |
|
$ |
5.43 |
|
|
$ |
1.48 |
|
|
|
|
|
|
|
|
|
|
Year ended December 31, 2014 |
|
|
|
|
|
|
|
|
First Quarter |
|
$ |
3.44 |
|
|
$ |
2.16 |
|
Second Quarter |
|
$ |
2.50 |
|
|
$ |
0.52 |
|
Third Quarter |
|
$ |
1.09 |
|
|
$ |
0.71 |
|
Fourth Quarter |
|
$ |
0.98 |
|
|
$ |
0.36 |
|
As of March 24, 2015, there
were 27 holders of record of our common stock, although we believe that the number of beneficial owners of our common stock is
substantially higher.
DIVIDEND POLICY
We have never declared
or paid a cash dividend and do not anticipate doing so in the foreseeable future. We expect to retain earnings to finance the
expansion and development of our business. Any determination to pay dividends in the future will be at the discretion of our board
of directors and will depend upon our financial condition, results of operations and capital requirements.
EQUITY COMPENSATION PLAN INFORMATION
Plan Category |
|
Number
of securities to be issued upon exercise of outstanding options, warrants and rights |
|
|
Weighted-
average exercise price of outstanding options, warrants and rights |
|
|
Number
of securities remaining available for future issuance under equity compensation plans (excluding securities reflected in
column (a)) |
|
|
|
(a) |
|
|
(b) |
|
|
(c) |
|
Equity compensation plans approved by security holders |
|
|
1,068,610 |
|
|
$ |
2.58 |
|
|
|
288,430 |
|
Equity compensation plans not approved by security holders |
|
|
– |
|
|
|
– |
|
|
|
– |
|
Total |
|
|
1,068,610 |
|
|
$ |
2.58 |
|
|
|
288,430 |
|
ITEM 6. |
SELECTED FINANCIAL DATA |
As a “smaller reporting
company” under Item 10 of Regulation S-K, we are not required to provide the information under this item.
ITEM 7. |
MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS |
Recent Developments
On August 15, 2014, we
completed the sale of our assets related to the Mediabistro business to PGM-MB Holdings, LLC (“PGM-MB”). The Mediabistro
business provided online publishing of editorial content, e-commerce offerings, an online job board, online education and certificate
programs for social media, traditional media and creative professionals and bundled subscription services of the foregoing. For
more detail and a copy of the asset purchase agreement, see the Company’s Current Report on Form 8-K dated July 2, 2014.
In conjunction with the
sale of the Mediabistro assets, we changed our name to Mecklermedia Corporation from Mediabistro Inc. effective August 8, 2014.
The following disclosures
describe our business as of December 31, 2014 and reflect the sale as a discontinued operation.
Overview
Mecklermedia Corporation
(f/k/a Mediabistro Inc.) is a leading producer of global trade shows and online publications covering 3D printing, Bitcoin, cryptocurrency
and social media. We produced twenty-three conferences worldwide in 2014, including Inside 3D Printing, Inside Bitcoins, and AllFacebook
Marketing Conference. The Mecklermedia news site and newsletters provide up-to-date coverage on emerging industries to help drive
business forward.
Our trade shows include,
among others, Inside 3D Printing Conference & Expo, Inside Bitcoins, and RoboUniverse Conference and Expo. In addition, we
also provide original and in-depth daily coverage of the latest developments in 3D printing and additive manufacturing and updates
on the bitcoin payment industry.
We generate our revenues
from attendee registration fees to our trade shows and exhibition space fees and vendor sponsorships to our trade shows. There
might be quarterly fluctuations in our revenues as trade shows 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 and benefits costs for our personnel; facilities and equipment; and venue, speaker and advertising
expenses for our trade shows.
Results of Operations
Revenues
Revenues from continuing
operations were $3.6 million for the year ended December 31, 2014 and $2.8 million for the year ended December 31, 2013, representing
an increase of 27%. This change was primarily due to a 99% increase in exhibitor and sponsorship revenue as we have refocused our
efforts as a trade show business, and partially offset by a decrease in attendee revenue. We ran twenty-three trade shows during
the year ended December 31, 2014 and twenty-one shows during the year ended December 31, 2013.
The following table sets
forth, for the periods indicated, a year-over-year comparison of our revenues by components (dollars in thousands):
| |
Year Ended December 31, | | |
2014 vs. 2013 | |
| |
2014 | | |
2013 | | |
$ | | |
% | |
Event attendees | |
$ | 1,703 | | |
$ | 1,765 | | |
$ | (62 | ) | |
| (4% | ) |
Event sponsors and exhibitors | |
| 1,691 | | |
| 852 | | |
| 839 | | |
| 98 | |
Other | |
| 163 | | |
| 193 | | |
| (30 | ) | |
| (16 | ) |
Total | |
$ | 3,557 | | |
$ | 2,810 | | |
$ | 747 | | |
| 27% | |
Cost of revenues
Cost of revenues from
continuing operations primarily consists of payroll and benefits costs for trade show staff and editorial personnel, trade
show operations and technology consulting. Cost of revenues excludes depreciation and amortization. Cost of revenues was $4.4
million for the year ended December 31, 2014 and $2.3 million for the year ended December 31, 2013, representing an
increase of 86%. This change was primarily due to an increase in our trade show related costs of $1.4 million and an increase
in costs for hosting services and other technology consulting services of $327,000. The largest increases were for meeting
room space as we continue to grow the exhibitor and sponsorship space.
We intend to make investments
through internal development and continue to expand our trade show offerings. We might need to increase our spending in order to
create additional content related to new topics and trade shows 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 from continuing operations were $1.2 million for the year ended December 31,
2014 and $747,000 for the year ended December 31, 2013, representing an increase of 59%. This increase was due primarily to an
increase in promotion and marketing for our trade shows as we increased the number of Inside 3D Printing shows over the prior year
by ten and the number of Inside Bitcoin shows by nine. Adding new shows in new domestic and international locations requires additional
marketing and promotion costs.
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 from continuing operations were $3.0 million for the year ended December 31, 2014 and $3.6
million for the year ended December 31, 2013, representing a decrease of 18%. This change was due to a decrease in our employee-related
costs of $683,000.
Depreciation and amortization
Depreciation expense from
continuing operations was $74,000 and $116,000 for the years ended December 31, 2014 and 2013, respectively, representing a decrease
of 36%. This change was due to certain assets becoming fully depreciated.
Amortization expense from
continuing operations was $4,000 and $55,000 for the years ended December 31, 2014 and 2014, respectively, representing a decrease
of 93%. This change was due to certain intangible assets becoming fully amortized.
Our depreciation and amortization
expenses might vary in future periods based upon a change in our capital expenditure levels or any future acquisitions.
Impairment
During the year ended December
31, 2014, we identified indicators that our goodwill was impaired. As of January 1, 2014, we had goodwill of $989,000 related to
trade show acquisitions. In 2014, we no longer continued to generate cash inflows from these specific trade shows and the shows
were largely independent of those from our other trade shows. As a result we fully impaired this asset and recorded goodwill impairment
of $989,000 for the year ended December 31, 2014. During the year ended December 31, 2013, in conjunction with our annual impairment
test, we identified indicators that our goodwill was impaired. These indicators included a decline in revenue and recurring operating
losses. As a result, for the year ended December 31, 2013, we recorded a non-cash impairment charge of $438,000, to reduce the
carrying amount of goodwill to fair value.
Other income (loss),
net
Other income of $175,000
for the year ended December 31, 2014 was primarily related to our sale of our interest in the AllFacebook Marketing Conferences
for $350,000 partially offset by digital currency transactions losses. Other loss of $180,000 for the year ended December 31, 2013
was primarily related to losses on the sale of certain assets and investments partially offset by digital currency transaction
gains.
Interest income and
interest expense
The following table sets
forth, for the periods indicated, a year-over-year comparison of our interest income and interest expense (dollars in thousands):
| |
Year
Ended December 31, | | |
2014
vs. 2013 | |
| |
2014 | | |
2013 | | |
$ | | |
% | |
Interest income | |
$ | – | | |
$ | 3 | | |
$ | (3 | ) | |
| (100% | ) |
Interest expense | |
$ | (703 | ) | |
$ | (325 | ) | |
$ | (378 | ) | |
| (116% | ) |
Interest expense during
the years ended December 31, 2014 and 2013 relates to costs associated with our loans from a related party. The increase in interest
expense during the year ended December 31, 2014 was due to the acceleration of the amortization of the debt issuance costs and
debt discount due to the debt payment made in the third quarter of 2014. See “Related Party Transactions” for a description
of the loans and Restated Note.
Provision (benefit)
for income taxes
We recorded an income
tax benefit of $64,000 and $33,000 during the years ended December 31, 2014 and 2013, respectively. During the year ended December
31, 2014 the income benefit consisted primarily of additional income tax expense for tax amortization on indefinite lived assets.
During the year ended December 31, 2013, the income tax benefit was primarily due to the expiration of statutes of limitations.
Based on
current projections, management believes that it is more likely than not that we will have insufficient taxable income to
allow recognition of its deferred tax assets primarily resulting from our federal and state net operating losses. Accordingly, we
established a valuation allowance against deferred income 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.
The total amount of unrecognized
tax benefits was $61,000 as of December 31, 2014 and 2013, all of which would affect the effective tax rate, if recognized,
as of December 31, 2014.
At December 31, 2014,
we had deferred income tax assets associated with federal and state net operating loss (“NOL”) carryforwards of $29.0
million. Realization of the deferred tax assets is dependent on generating sufficient taxable income in future years.
Liquidity and Capital Resources
The following table sets
forth, for the periods indicated, a year-over-year comparison of the key components of our liquidity and capital resources (dollars
in thousands):
| |
| | |
2014 vs. 2013 | |
For the Year Ended December 31: | |
2014 | | |
2013 | | |
$ | | |
% | |
Operating cash flows | |
$ | (3,609 | ) | |
$ | (1,812 | ) | |
$ | (1,797 | ) | |
| 99% | |
Investing cash flows | |
$ | 6,025 | | |
$ | (259 | ) | |
$ | 6,284 | | |
| (2,426% | ) |
Financing cash flows | |
$ | (3,099 | ) | |
$ | 1,093 | | |
$ | (4,192 | ) | |
| (384% | ) |
| |
| | | |
| | | |
| | | |
| | |
As of December 31: | |
| | | |
| | | |
| | | |
| | |
Cash and cash equivalents | |
$ | 549 | | |
$ | 1,232 | | |
$ | (683 | ) | |
| (55% | ) |
Working capital | |
$ | 1,320 | | |
$ | (610 | ) | |
$ | 1,930 | | |
| 316% | |
Loan from related party | |
$ | – | | |
$ | 8,341 | | |
$ | (8,341 | ) | |
| (100% | ) |
Since inception, we have
funded operations through various means, including public offerings of our common stock, the sales of certain of our businesses,
including our Mediabistro assets and AppData assets in 2014, loans from related parties as well as credit agreements and cash flows
from operating activities.
Operating activities.
Cash used in operating activities increased during the year ended December 31, 2014 compared to the same period of 2013 due primarily
to increased losses from continuing operations.
Investing activities.
The amounts of cash provided by or used in investing activities vary in correlation to the number and cost of the acquisitions
we complete or sales of assets we undertake. Net cash provided by investing activities during the year ended December 31, 2014
related primarily to the net proceeds from the sale of our Mediabistro assets. Net cash used by investing activities during the
year ended December 31, 2013 related primarily to the purchase of certain intangible assets and website and product development
costs.
Financing activities.
Cash used in financing activities during the year ended December 31, 2014 related to repayments to a related party. Cash
provided by financing activities during the year ended December 31, 2013 related to proceeds from related party loans. See “Related
Party Transactions” below.
We have incurred losses and negative cash flows from operations in recent quarters and
expect to continue to incur operating losses until revenues from all sources reach a level sufficient to support our on-going
operations, if ever. Our liquidity will largely be determined by our ability to raise capital from debt, equity, or other forms
of financing, by the success of our product offerings, by developing additional product offerings, and/or by reducing expenses
associated with operations.
In the absence of
a sufficient increase in revenues, we will need to do one or more of the following in the next 12 months to meet our
planned level of expenditures: (a) raise additional capital; (b) reduce spending on operations; or (c) restructure our
operations. A capital raise could take any number of forms including but not limited to: additional debt, additional equity,
asset sales, or other forms of financing as dictated by our needs and our view toward our overall capital structure. However,
additional financing might not be available on acceptable terms, if at all, and such financing might only be available on
terms dilutive or otherwise detrimental to our stockholders or our business. In the first quarter of 2015, we entered into a
Secured Promissory Note and a Security Agreement with Drew Lane Holdings, LLC for $500,000. Please see note 15 to our
consolidated financial statements.
Our liquidity over the
next 12 months could be materially affected by, among other things: our ability to increase revenues; costs related to our product
development efforts; our ability to raise additional funds through debt, equity, or other financing alternatives: or other factors
described under the risk factors set forth in “Item 1A. Risk Factors” in our Annual Report on Form 10-K for the year
ended December 31, 2014.
Off-Balance Sheet Arrangements
We have not entered into
off-balance sheet arrangements or issued guarantees to third parties.
Related Party Transactions
In 2009 and 2011, we entered into two promissory note agreements
with our Chief Executive Officer, Alan M. Meckler. As of January 1, 2013, the balance of the 2009 Note was $5.9 million with an interest rate of 2.975% and the balance of the 2011 Note was $1.8 million with an interest rate of 2.40%.
On November 1, 2013, we
along with our wholly-owned subsidiaries, MM Subsidiary and Inside Network entered into an Amended and Restated Promissory Note
(the “Restated Note”) with Mr. Meckler. The Restated Note combines, amends, restates and replaces, but does not extinguish,
the obligations of the 2009 Note and the 2011 Note.
The Restated Note combines
the outstanding principal amounts of the 2009 Note and the 2011 Note along with applicable closing costs to $7.8 million and extends
the maturity date to September 1, 2043. Initially, interest accrues from August 27, 2013, at a rate of 5.5% per annum. Beginning
September 1, 2018 (“Change Date”), the interest rate will convert to an adjustable rate based on a specified amount
above LIBOR, initially not to exceed 7.5% per annum or be less than 5.5% per annum. Thereafter, the adjustable rate will never
be increased or decreased on any single Change Date by more than 2.0% from the rate of interest that we paid for the preceding
twelve months, and will never be less than 5.50% per annum or greater than 11.5% per annum. Interest only is payable in arrears
beginning November 1, 2013 and each month thereafter until September 1, 2023. Beginning October 1, 2023 and continuing each month
thereafter, the monthly payment will be in an amount sufficient to repay the principal and interest at the rate determined under
the Restated Note in substantially equal installments by the maturity date.
On November 15, 2013, we
along with our wholly-owned subsidiaries, MM Subsidiary and Inside Network entered into a Second Amended and Restated Promissory
Note (the “2nd Restated Note”) with Mr. Meckler. The 2nd Restated Note increases the principal
amount of the Restated Note to $8.8 million, a $1.0 million increase. The terms of the 2nd Restated Note are otherwise
substantially the same as the terms of the Restated Note.
In the event of change
of control, Mr. Meckler may elect to make the remaining principal balance and all accrued and unpaid interest due and payable concurrently
with the closing of the change of control event. A change of control includes a sale of our Company or either subsidiary to a third
party or any merger, consolidation, restructuring or reorganization of our Company that results in the common stock holders immediately
prior to the transaction possessing less than 50% of the voting power of the surviving entity. Upon the occurrence of an event
of default, Mr. Meckler may, among other things, declare the entire outstanding balance under the 2nd Restated Note
to be immediately due and payable, and/or exercise any other rights. Mr. Meckler waived his right to require the repayment of the
2nd Restated Note in respect of the sale of the Mediabistro assets.
Mr. Meckler funded a portion
of the Restated Note with a portion of the proceeds of his personal loan from BOFI Federal Bank (“BOFI”) with the intent
that the principal and interest payments under the Restated Note will be utilized by Mr. Meckler to make payments under his note
with BOFI. We must repay the 2nd Restated Note if Mr. Meckler is required to repay the BOFI note whether due to an
event of default by Mr. Meckler under the BOFI note or otherwise. In October, 2014, Mr. Meckler repaid the BOFI note in full and
waived his right to request repayment of the 2nd Restated Note.
To induce Mr. Meckler to
enter into the 2nd Restated Note, pursuant to a Second Reaffirmation of Collateral Documents (the “Reaffirmation”),
we reaffirmed our obligations under the collateral documents related to the Restated Note. To further induce Mr. Meckler to enter
into the 2nd Restated Note, we issued to Mr. Meckler on November 14, 2013 a warrant for 301,124 shares of the Company’s
common stock. The warrant is exercisable at any time on or after November 14, 2013 until the close of business on November 13,
2018 at an exercise price per share of $2.00, which was 110% of the closing price of the Company’s common stock on November 14,
2013. The exercise price and number of the shares of our common stock issuable upon the exercise of the warrant is subject to adjustment
in the event of any stock dividend, stock split, recapitalization, reorganization or similar transaction. The warrant terminated
upon the sale of the Mediabistro assets.
We recorded a discount
on the 2nd Restated Note based on the value of the warrants as of the date of issuance, which was $455,000. The discount
is being amortized over the life of the 2nd Restated Note.
Effective April 25, 2014,
we entered into a 3rd Restated Note Agreement with Mr. Meckler that increases the principal amount of the Restated
Note to $9.1 million, a $300,000 increase. All other terms of the promissory notes remain unchanged.
Effective May 19, 2014,
we entered into a 4th Restated Note Agreement with Mr. Meckler that increases the principal amount of the Restated
Note to $9.4 million, a $300,000 increase. All other terms of the promissory notes remain unchanged.
Effective
July 1, 2014, we entered into a 5th Restated Note Agreement with Mr. Meckler that increases the principal amount of
the Restated Note to $9.7 million, a $300,000 increase. Additionally, Mr. Meckler agrees to loan us up to an additional aggregate
principal amount of $100,000 in one or more advances. All other terms of the promissory notes remain unchanged.
Following the sale of
the Mediabistro assets, we repaid $4.0 million of the debt to Mr. Meckler.
On November 14, 2014, we and Mr. Meckler, entered into
a loan forgiveness and release agreement. Pursuant to the agreement, Mr. Meckler forgave in full his loan under the Second Amended
and Restated Promissory Note, dated as of November 15, 2013 (as amended, restated, modified and supplemented), the balance of
which was $5,695,000. Mr. Meckler also released all security interests in our assets and properties that we previously granted
to Mr. Meckler to secure the loan. In addition, Mr. Meckler released us, and we released Mr. Meckler, from all claims arising
out of the loan. We accounted for the transaction in accordance with ASC 470-50-40 by recording
this as an equity transaction since Mr. Meckler is a shareholder. The unamortized debt issuance costs of $153,000 and the unamortized
loan discount of $258,000 together with the loan balance of $5,695,000 increased additional paid in capital of the Company’s
consolidated balance sheet by $5,284,000.
Interest expense on the
Restated Notes were $394,000 and $295,000 during the years ended December 31, 2014 and 2013, respectively.
Recent Accounting Pronouncements
We are required to adopt
certain new accounting pronouncements. See note 2 to the consolidated financial statements included in Item 8 of this Form
10-K.
Critical Accounting Estimates
Our significant accounting
policies are described in note 2 to the consolidated financial statements included in Item 8 of this Form 10-K.
The preparation of financial
statements in conformity with accounting principles generally accepted in the U.S. requires us to make estimates and assumptions
that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of our
consolidated financial statements and the revenues and expenses reported during the period. Following are accounting policies that
we believe are most important to the portrayal of our financial condition and results of operations and that require our most difficult
judgments as a result of the need to make estimates and assumptions about the effects of matters that are inherently uncertain.
Management has discussed these critical accounting estimates with our Audit Committee.
Impairment of Goodwill
and Indefinite Lived Intangible Assets. We evaluate the carrying value of our goodwill and indefinite lived intangible
assets annually in the fourth quarter and whenever events or circumstances make it more likely than not that an impairment
may have occurred. We test goodwill and other intangible assets for impairment in accordance with Financial Accounting Standards
Board (“FASB”) Accounting Standards Codification (“ASC”) Topic 350, “Intangibles – Goodwill
and Other”, and all other long-lived assets for impairment in accordance with ASC Topic 360, “Property, Plant, and
Equipment.” Long-lived assets, including goodwill and intangible assets were $57,000 and $1.1 million as of December 31,
2014 and 2013, respectively.
ASC Topic 350 prescribes
a two-step method for determining goodwill impairment. In the first step, we compare the estimated fair value of each reporting
unit to its carrying amount, including goodwill. If the carrying amount of a reporting unit exceeds the estimated fair value, we
complete step two to determine the amount of the impairment loss. Step two requires the allocation of the estimated fair value
of the reporting unit to the assets, including any unrecognized intangible assets, and liabilities in a hypothetical purchase price
allocation. Any remaining unallocated fair value represents the implied fair value of goodwill, which we compare to the corresponding
carrying value of goodwill to compute the goodwill impairment amount.
The determination of reporting
unit fair value is a matter of significant judgment and we employ, as appropriate, three different methodologies to make this determination.
The income approach requires management to estimate a number of factors for each reporting unit, including projected future operating
results, economic projections, anticipated future cash flows, discount rates, and the allocation of shared or corporate items.
The market approach estimates fair value using comparable marketplace fair value data from within a comparable industry grouping.
In the similar transactions method, consideration is given to prices paid in recent transactions that have occurred in the reporting
unit’s industry or in related industries. Our business operates as one reporting unit.
As part of the 2014 and
2013 impairment analysis, we determined the fair value of our business using the market approach and the income approach. The determination
of the fair value of the reporting unit and the allocation of that value to individual assets and liabilities within the reporting
unit requires management to make significant estimates and assumptions. These estimates and assumptions primarily include, but
are not limited to: the selection of appropriate peer group companies; control premiums appropriate for acquisitions in the industries
in which we compete; the discount rate; terminal growth rates; and forecasts of net sales, operating income, depreciation and amortization
and capital expenditures. The allocation requires several analyses to determine the fair value of assets and liabilities including,
among others, trade names, customer relationships and property, plant and equipment. Although we believe our estimates of fair
value are reasonable, actual financial results could differ from those estimates due to the inherent uncertainty involved in making
such estimates. Changes in assumptions concerning future financial results or other underlying assumptions could have a significant
impact on either the fair value of the reporting unit, the amount of the goodwill impairment charge, or both. We also compared
the sum of the estimated fair values of the reporting unit to our total enterprise value as implied by the market value of our
equity. This comparison indicated that, in total, our assumptions and estimates were not unreasonable. However, future declines
in the overall market value of our equity might indicate that the fair value of the reporting unit has declined below its carrying
value.
Determining whether an
impairment of indefinite lived intangible assets has occurred requires an analysis of the fair value of each of the related
domain names. The significant estimates and assumptions used by management in assessing the recoverability of long-lived assets
are estimated future cash flows, weighted average cost of capital, currently enacted tax laws, as well as other factors. Any changes
in these estimates or assumptions could result in an impairment charge. The estimates of future cash flows, based on reasonable
and supportable assumptions and projections, require management’s subjective judgment. Depending on the assumptions and estimates
used, the estimated future cash flows projected in the evaluations of long-lived assets can vary within a range of outcomes.
In addition to the testing described
above, which we do on an annual basis, management evaluates whether the carrying value of its long-lived assets may not be recoverable,
considering, among other things, any (i) current-period operating or cash flow declines combined with a history of operating or
cash flow declines or a projection/forecast that demonstrates continuing declines in the cash flow of an entity or inability of
an entity to improve its operations to forecasted levels and (ii) significant adverse change in the business climate, whether structural
or technological, that could affect the value of an entity.
The annual impairment test
is considered critical because of the significance of goodwill and indefinite lived intangible assets to our consolidated balance
sheet. We have applied what we believe to be the most appropriate valuation methodology for our reporting unit.
Impairment of Long-Lived
Assets. We test all other long-lived assets (amortized intangible assets, such as customer relationships and property,
plant and equipment) for impairment, in accordance with ASC Topic 350 and ASC Topic 360 at the asset level associated with the
lowest level of cash flows. An impairment exists if the carrying value of the asset is (i) not recoverable (the carrying value
of the asset is greater than the sum of undiscounted cash flows) and (ii) is greater than its fair value.
The significant estimates
and assumptions used by management in assessing the recoverability of long-lived assets include estimated future cash flows, weighted
average cost of capital and currently enacted tax laws. Any changes in these estimates or assumptions could result in an impairment
charge. The estimates of future cash flows, based on reasonable and supportable assumptions and projections, require management’s
subjective judgment. Depending on the assumptions and estimates used, the estimated future cash flows projected in the evaluations
of long-lived assets can vary within a range of outcomes.
The annual impairment test
is considered critical because of the significance of long-lived assets to our consolidated balance sheet. We have applied what
we believe to be the most appropriate valuation methodology for our reporting unit.
Stock-based Compensation.
Effective January 1, 2006, we adopted ASC Topic 718, “Compensation-Stock Compensation.” Among its provisions,
ASC Topic 718 requires us to recognize compensation expense for equity awards over the vesting period based on the award’s
grant-date fair value. The intrinsic value of options exercised during the years ended December 31, 2014 and 2013 was $0 and
$49,000, respectively.
Historically, we offered
stock option awards as our primary form of long-term incentive compensation. These stock option awards generally vest over three
years and have a ten year term. We use the Black-Scholes option valuation model to value stock option awards. The fair value of
stock option awards is based on the fair value of our stock on the date of grant.
The Black-Scholes valuation
model for our stock option awards estimates the potential value the employee will receive based on current interest rates, the
expected time at which the employee will exercise the award and the expected volatility of our stock price. These assumptions are
based on historical experience and future expectations of employee behavior and stock price.
Another significant assumption
we utilize in calculating our stock-based compensation is the amount of awards that we expect to forfeit. We recognize compensation
expense only for share-based payments expected to vest, and we estimate forfeitures, both at the date of grant as well as throughout
the vesting period, based on our historical experience and future expectations.
Changes in our assumptions
we utilize to value our stock options and forfeiture rates could materially affect the amount of stock-based compensation expense
recognized in the consolidated statement of operations.
Income Taxes.
We are subject to income taxes in the United States. Significant judgments, estimates and assumptions are required in determining
our tax return reporting positions and in calculating our provisions for income taxes, as they are based on our interpretation
of tax regulations and accounting pronouncements. The tax bases of our assets and liabilities reflect our best estimate of the
tax benefits and costs we expect to realize. We establish valuation allowances to reduce our deferred income tax assets to an amount
that will more likely than not be realized. A significant portion of our deferred income tax assists consist of NOLs. We have NOLs
totaling $156.9 million at December 31, 2014, which are available to reduce future taxes in the United States. The NOLs expire
at various times between 2018 and 2034.
Significant management
judgment is required in determining our income tax provision and in evaluating our tax position. We evaluate our uncertain tax
positions using a two-step approach in accordance with the accounting pronouncement related to income taxes. Recognition, the first
step, occurs when an enterprise concludes that a tax position, based solely on its technical merits, is more-likely-than-not to
be sustained upon examination. Measurement, the second step, determines the amount of benefit that more-likely-than-not will be
realized upon settlement. Reversal of a tax position that was previously recognized would occur when an enterprise subsequently
determines that a tax position no longer meets the more-likely-than-not threshold of being sustained. Our net income tax benefit
was $64,000 and $33,000 for the years ended December 31, 2014 and 2013, respectively. A change in our uncertain tax positions could
have a significant impact on our results of operations. Historically, the difference between our estimates and actual results has
not been material.
Allowance for Doubtful
Accounts. We estimate our allowance for doubtful accounts based on historical losses, existing economic conditions and
specific account analysis of at-risk customers. Historical losses and existing economic conditions might not be indicative of future
losses, and the impact of economic conditions on each of its customers is difficult to estimate. Should future uncollectible amounts
exceed its current estimates, we would be required to charge off its uncollectible accounts through an entry to bad debt expense
included in general and administrative expense in its consolidated statement of operations. To help minimize losses, the Company
requires prepayment for exhibitor and sponsors at our trade shows.
ITEM 7A. |
QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK. |
As a “smaller reporting
company” under Item 10 of Regulation S-K, we are not required to provide the information under this item.
ITEM 8. |
FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA |
Mecklermedia Corporation.
Index to Consolidated Financial Statements
|
Page |
Report of Independent Registered Public Accounting Firm |
F-1 |
|
|
Consolidated Balance Sheets as of December 31, 2014 and 2013 |
F-2 |
|
|
Consolidated Statements of Operations for the Years Ended December 31, 2014 and 2013 |
F-3 |
|
|
Consolidated Statements of Changes in Stockholders’ Equity for the Years Ended December 31, 2014 and 2013 |
F-4 |
|
|
Consolidated Statements of Cash Flows for the Years Ended December 31, 2014 and 2013 |
F-5 |
|
|
Notes to Consolidated Financial Statements |
F-6 |
REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING
FIRM
To the Audit Committee of the Board of Directors and
Stockholders of Mecklermedia Corporation,
We have audited the accompanying consolidated
balance sheets of Mecklermedia Corporation and Subsidiaries (the Company) as of December 31, 2014 and 2013, and the related consolidated
statements of operations, changes in stockholders’ equity, and cash flows for the years then ended. These consolidated financial
statements are the responsibility of the Company’s management. Our responsibility is to express an opinion on these consolidated
financial statements based on our audits.
We conducted our audits in accordance with
the standards of the Public Company Accounting Oversight Board (United States). Those standards require that we plan and perform
the audit to obtain reasonable assurance about whether the consolidated financial statements are free of material misstatement.
The Company is not required to have, nor were we engaged to perform, an audit of its internal control over financial reporting.
Our audits included consideration of internal control over financial reporting as a basis for designing audit procedures that are
appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the Company's internal
control over financial reporting. Accordingly, we express no such opinion. An audit also includes examining, on a test basis, evidence
supporting the amounts and disclosures in the consolidated financial statements, assessing the accounting principles used and significant
estimates made by management, as well as evaluating the overall consolidated financial statement presentation. We believe that
our audits provide a reasonable basis for our opinion.
In our opinion, the financial statements referred
to above present fairly, in all material respects, the consolidated financial position of Mecklermedia Corporation and Subsidiaries,
as of December 31, 2014 and 2013, and the consolidated results of their operations and their cash flows for the years then ended
in conformity with accounting principles generally accepted in the United States of America.
The accompanying financial statements
have been prepared assuming that the Company will continue as a going concern. As discussed in Note 1 to the consolidated
financial statements, the Company has had recurring net losses and continues to experience negative cash flows from
operations. These conditions raise substantial doubt about its ability to continue as a going concern. Management’s
plans regarding those matters are also described in Note 1. The financial statements do not include any adjustments that
might result from the outcome of this uncertainty.
/s/ Marcum LLP
New Haven, CT
March 31, 2015
Mecklermedia Corporation
Consolidated Balance Sheets
December 31, 2014 and 2013
(in thousands, except share and per share
data)
| |
2014 | | |
2013 | |
ASSETS | |
| | | |
| | |
Current assets: | |
| | | |
| | |
Cash and cash equivalents | |
$ | 549 | | |
$ | 1,232 | |
Restricted cash | |
| 1,500 | | |
| – | |
Accounts receivable, net of allowances of $0 in 2014 and 2013 | |
| 262 | | |
| 176 | |
Prepaid expenses and other current assets | |
| 806 | | |
| 729 | |
Assets of discontinued operations | |
| 25 | | |
| 421 | |
Total current assets | |
| 3,142 | | |
| 2,558 | |
| |
| | | |
| | |
Property and equipment, net | |
| 247 | | |
| 309 | |
Intangible assets, net | |
| 57 | | |
| 69 | |
Goodwill | |
| – | | |
| 989 | |
Investments and other assets | |
| 528 | | |
| 632 | |
Assets of discontinued operations | |
| 35 | | |
| 7,647 | |
Total assets | |
$ | 4,009 | | |
$ | 12,204 | |
| |
| | | |
| | |
LIABILITIES AND STOCKHOLDERS’ EQUITY | |
| | | |
| | |
Current liabilities: | |
| | | |
| | |
Accounts payable | |
$ | 238 | | |
$ | 344 | |
Accrued payroll and related expenses | |
| 147 | | |
| 186 | |
Accrued expenses and other current liabilities | |
| 902 | | |
| 979 | |
Deferred revenues | |
| 353 | | |
| 195 | |
Liabilities of discontinued operations | |
| 182 | | |
| 1,464 | |
Total current liabilities | |
| 1,822 | | |
| 3,168 | |
| |
| | | |
| | |
Loan from related party, net of discount | |
| – | | |
| 8,341 | |
Deferred income taxes | |
| – | | |
| 68 | |
Liabilities of discontinued operations | |
| – | | |
| 429 | |
Total liabilities | |
| 1,822 | | |
| 12,006 | |
| |
| | | |
| | |
Commitments and contingencies (see note 12) | |
| | | |
| | |
| |
| | | |
| | |
Stockholders’ equity: | |
| | | |
| | |
Preferred stock, $.01 par value, 4,000,000 shares authorized, 600,000 designated as Series A Junior participating preferred stock, no shares issued and outstanding | |
| – | | |
| – | |
Common stock, $.01 par value, 18,750,000 shares authorized, 6,176,947 and 6,176,661 shares issued and 6,057,662 and 6,057,376 shares outstanding at December 31, 2014 and 2013, respectively | |
| 62 | | |
| 62 | |
Additional paid-in capital | |
| 296,411 | | |
| 290,620 | |
Accumulated deficit | |
| (293,790 | ) | |
| (289,988 | ) |
Treasury stock, 119,285 shares, at cost | |
| (496 | ) | |
| (496 | ) |
Total stockholders’ equity | |
| 2,187 | | |
| 198 | |
Total liabilities and stockholders’ equity | |
$ | 4,009 | | |
$ | 12,204 | |
See notes to consolidated financial statements.
Certain reclassifications
have been made to the prior year financial statements to conform to current year presentation of discontinued operations.
Mecklermedia Corporation.
Consolidated Statements of Operations
For the Years
Ended December 31, 2014 and 2013
(in thousands, except per share data)
| |
| |
| |
2014 | | |
2013 | |
Revenues | |
$ | 3,557 | | |
$ | 2,810 | |
Cost of revenues | |
| 4,362 | | |
| 2,339 | |
Advertising, promotion and selling | |
| 1,184 | | |
| 747 | |
General and administrative | |
| 2,950 | | |
| 3,576 | |
Depreciation | |
| 74 | | |
| 116 | |
Amortization | |
| 4 | | |
| 55 | |
Impairment | |
| 989 | | |
| 438 | |
Total operating expenses | |
| 9,563 | | |
| 7,271 | |
| |
| | | |
| | |
Operating loss | |
| (6,006 | ) | |
| (4,461 | ) |
Other income (loss), net | |
| 175 | | |
| (180 | ) |
Interest income | |
| – | | |
| 3 | |
Interest expense | |
| (703 | ) | |
| (325 | ) |
| |
| | | |
| | |
Loss from continuing operations before income taxes | |
| (6,534 | ) | |
| (4,963 | ) |
Benefit for income taxes | |
| 64 | | |
| 33 | |
Net loss from continuing operations | |
| (6,470 | ) | |
| (4,930 | ) |
Income (loss) from discontinued operations, net of taxes | |
| 1,023 | | |
| (770 | ) |
Gain on sale of discontinued operations, net of taxes | |
| 1,645 | | |
| – | |
Net loss | |
$ | (3,802 | ) | |
$ | (5,700 | ) |
Basic and diluted income (loss) per share: | |
| | | |
| | |
Loss from continuing operations | |
$ | (1.07 | ) | |
$ | (0.82 | ) |
Income (loss) from discontinued operations | |
| 0.44 | | |
| (0.13 | ) |
| |
$ | (0.63 | ) | |
$ | (0.95 | ) |
Weighted average shares used in computing income (loss) per share: | |
| | | |
| | |
Basic and diluted | |
| 6,058 | | |
| 6,025 | |
See notes to consolidated financial statements.
Certain reclassifications have been made to
the prior year financial statements to conform to current year presentation of discontinued operations.
Mecklermedia Corporation
Consolidated Statements of Changes in Stockholders’
Equity
For the Years Ended December 31, 2014
and 2013
(in thousands, except share data)
|
|
Common Stock |
|
|
Additional
Paid-In |
|
|
Accumulated |
|
|
Treasury |
|
|
Total
Stockholders’ |
|
|
|
|
Shares |
|
|
Amount |
|
|
Capital |
|
|
Deficit |
|
|
Stock |
|
|
Equity |
|
|
Balance at January 1, 2013 |
|
|
6,138,879 |
|
|
$ |
61 |
|
|
$ |
289,711 |
|
|
$ |
(284,288 |
) |
|
$ |
(496 |
) |
|
$ |
4,988 |
|
|
Exercise of stock options |
|
|
37,782 |
|
|
|
1 |
|
|
|
108 |
|
|
|
– |
|
|
|
– |
|
|
|
109 |
|
|
Stock-based compensation |
|
|
– |
|
|
|
– |
|
|
|
345 |
|
|
|
– |
|
|
|
– |
|
|
|
345 |
|
|
Issuance of warrants |
|
|
– |
|
|
|
– |
|
|
|
456 |
|
|
|
– |
|
|
|
– |
|
|
|
456 |
|
|
Net loss |
|
|
– |
|
|
|
– |
|
|
|
– |
|
|
|
(5,700 |
) |
|
|
– |
|
|
|
(5,700 |
) |
|
Balance at December 31, 2013 |
|
|
6,176,661 |
|
|
$ |
62 |
|
|
$ |
290,620 |
|
|
$ |
(289,988 |
) |
|
$ |
(496 |
) |
|
$ |
198 |
|
|
Exercise of stock options |
|
|
286 |
|
|
|
- |
|
|
|
1 |
|
|
|
– |
|
|
|
– |
|
|
|
1 |
|
|
Related party loan forgiveness |
|
|
– |
|
|
|
– |
|
|
|
5,284 |
|
|
|
– |
|
|
|
– |
|
|
|
5,284 |
|
|
Stock-based compensation |
|
|
– |
|
|
|
– |
|
|
|
506 |
|
|
|
– |
|
|
|
– |
|
|
|
506 |
|
|
Net loss |
|
|
– |
|
|
|
– |
|
|
|
– |
|
|
|
(3,802 |
) |
|
|
– |
|
|
|
(3,802 |
) |
|
Balance at December 31, 2014 |
|
|
6,176,947 |
|
|
$ |
62 |
|
|
$ |
296,411 |
|
|
$ |
(293,790 |
) |
|
$ |
(496 |
) |
|
$ |
2,187 |
|
|
See notes to consolidated financial statements.
Mecklermedia Corporation
Consolidated Statements of Cash Flows
For the Years Ended December 31, 2014
and 2013
(in thousands)
| |
| |
| |
2014 | | |
2013 | |
Cash flows used in operating activities: | |
| | | |
| | |
Net loss | |
$ | (3,802 | ) | |
$ | (5,700 | ) |
Less: Gain and income (loss) from discontinued
operations, net of taxes | |
| (2,668 | ) | |
| 770 | |
Loss from continuing operations | |
| (6,470 | ) | |
| (4,930 | ) |
Adjustments to reconcile net loss from continuing
operations to net cash used in operating activities: | |
| | | |
| | |
Impairment | |
| 989 | | |
| 438 | |
Depreciation and amortization | |
| 78 | | |
| 171 | |
Stock-based compensation | |
| 318 | | |
| 212 | |
Other, net | |
| – | | |
| 192 | |
Amortization of debt issuance costs | |
| 309 | | |
| 30 | |
Loss on disposition of assets | |
| 81 | | |
| – | |
Provision for losses on accounts receivable | |
| 9 | | |
| – | |
Deferred income taxes | |
| (68 | ) | |
| 15 | |
Changes in current assets and liabilities: | |
| | | |
| | |
Accounts receivable, net | |
| (96 | ) | |
| (137 | ) |
Prepaid expenses and other current assets | |
| (97 | ) | |
| (228 | ) |
Accounts payable, accrued expenses and other liabilities | |
| (220 | ) | |
| 207 | |
Deferred revenues | |
| 158 | | |
| 155 | |
Assets and liabilities
of discontinued operations | |
| 1,400 | | |
| 2,063 | |
Net cash used in operating
activities | |
| (3,609 | ) | |
| (1,812 | ) |
Cash flows from (used in) investing activities: | |
| | | |
| | |
Purchases of property and equipment | |
| (12 | ) | |
| (18 | ) |
Acquisitions of intangible assets and other development costs | |
| (246 | ) | |
| (127 | ) |
Proceeds of from sale of discontinued operations | |
| 7,797 | | |
| – | |
Proceeds from sale of assets and other | |
| – | | |
| 178 | |
Funds held as restricted cash in escrow | |
| (1,500 | ) | |
| – | |
Investing related to discontinued
operations | |
| (14 | ) | |
| (292 | ) |
Net cash provided
by (used in) investing activities | |
| 6,025 | | |
| (259 | ) |
Cash flows from (used in) financing activities: | |
| | | |
| | |
Borrowings from related party | |
| 900 | | |
| 1,148 | |
Repayments on borrowings from related party | |
| (4,000 | ) | |
| – | |
Debt issuance costs | |
| – | | |
| (164 | ) |
Proceeds from exercise of stock options | |
| 1 | | |
| 109 | |
Net cash (used in) provided by
financing activities | |
| (3,099 | ) | |
| 1,093 | |
Net decrease in cash and cash equivalents | |
| (683 | ) | |
| (978 | ) |
Cash and cash equivalents, beginning of year | |
| 1,232 | | |
| 2,210 | |
Cash and cash equivalents, end of year | |
$ | 549 | | |
$ | 1,232 | |
Supplemental disclosure of cash flow: | |
| | | |
| | |
Cash paid for interest | |
$ | 394 | | |
$ | 295 | |
Non-cash investing activities: | |
| | | |
| | |
Acquisitions of long-lived assets | |
$ | – | | |
$ | 1 | |
See notes to consolidated financial statements.
Certain reclassifications have been made to
the prior year financial statements to conform to current year presentation of discontinued operations.
Mecklermedia Corporation
Notes to Consolidated Financial Statements
For the Years Ended December 31, 2014
and 2013
(in thousands,
except share data and per share data)
Mecklermedia Corporation
(f/k/a Mediabistro Inc.) (“Mecklermedia” or the “Company”) is a leading producer of global trade shows
and online publications covering 3D printing, Bitcoin/Blockchain and service Robots. The Mecklermedia news sites and newsletters
provide up to date coverage on emerging industries to help drive business forward.
As discussed in note
3, on August 15, 2014 the Company completed its sale of the Mediabistro assets to PGM-MB Holdings, LLC (“PGM-MB”),
a subsidiary of Prometheus Global Media. The Company sold assets related to its former business of providing online
publishing of editorial content, e-commerce offerings, and online job-board (including online career-oriented services such
as freelancer marketplaces), online education and certificate programs for social media, traditional media and creative
professionals, and bundled subscription services for the foregoing. The assets the Company sold also related to the
marketplace for designing and purchasing logos through Stocklogos.com
After the sale, the Company
offers trade shows which include, among others, Inside 3D Printing Conference & Expo, Inside Bitcoins, and RoboUniverse Conference
and Expo. The Company also provides original and in-depth daily coverage of the latest developments in 3D printing and additive
manufacturing and updates on the bitcoin payment industry.
Liquidity.
The Company has incurred losses and negative cash flows from operations in recent quarters and expects to continue to
incur operating losses for the remainder of 2015. In the absence of a sufficient increase in revenues, the Company will need
to do one or more of the following in the next 12 months to meet its planned level of expenditures: (a) raise additional
capital through outside investors; (b) reduce spending on operations; or (c) restructure its operations. A capital raise
could take any number of forms including but not limited to: additional debt, additional equity, asset sales, or other forms
of financing as dictated by its needs and its view toward its overall capital structure. However, additional financing might
not be available on acceptable terms, if at all, and such financing might only be available on terms dilutive or
otherwise detrimental to its stockholders or its business. The ability of the Company to obtain such additional financing and
to achieve its operating goals is uncertain. In the event that the Company does not obtain additional capital or is not able
to increase cash flow through its operations, there is substantial doubt as to its ability to continue as a going concern.
The accompanying financial statements do not include any adjustments that might result from the outcome of this uncertainty.
As discussed in note 15, in the first quarter of 2015, the Company entered into a Secured Promissory Note and a Security
Agreement with Drew Lane Holdings, LLC for $500.
2. |
BASIS OF PRESENTATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES |
Principles
of consolidation. The consolidated financial statements include the accounts of Mecklermedia Corporation and
its wholly-owned subsidiaries: Mecklermedia.com Subsidiary, Inc., a Delaware corporation; Inside Network, Inc., a
California corporation; and Mecklermedia Asia- Pacific Limited, a logistical office in Hong Kong. All significant
intercompany balances and transactions have been eliminated in consolidation.
Reclassifications.
Certain reclassifications have been made to the prior year financial statements to conform to the current year presentation of
discontinued operations.
Revenue recognition.
Mecklermedia produces trade shows and conferences and generates revenues from attendee registrations, the purchase of exhibition
space by exhibitors who pay a fixed price per square foot of booth space, and advertiser and vendor sponsorships. Mecklermedia
recognizes revenue from trade shows in the period in which the trade show is held.
Use of
estimates in the financial statements. The preparation of financial statements in conformity with accounting
principles generally accepted in the United States of America (“GAAP”) requires management to make estimates and
assumptions that affect the amounts reported in Mecklermedia’s consolidated financial statements. Actual results could
differ from those estimates.
Concentration
of credit risk. Financial instruments that potentially subject Mecklermedia to concentration of credit risk consist
primarily of cash and accounts receivable. In general, Mecklermedia invests its excess cash in savings and business money
market accounts. Mecklermedia’s cash balances at times are in excess of federal depository insurance limitations.
Mecklermedia has not experienced any losses on its deposits of cash and cash equivalents. Mecklermedia’s concentration
of credit risk with respect to accounts receivable is limited due to its large number of customers and their dispersion
across many geographic areas. No single customer represented 10% or more of its total revenue or accounts receivable in any
of the periods presented.
Cash and cash
equivalents. Mecklermedia considers all highly liquid investments purchased with original maturities of three months
or less to be cash equivalents. At December 31, 2014 and 2013, Mecklermedia had no investments with maturities greater
than three months. Restricted cash at December 31, 2014 consisted $1,500 held in escrow from the Mediabistro asset sale as
discussed in note 3 and will be disbursed over the nine month period ending on August 15, 2015, pending any claims against
the escrow.
Financial
instruments. The carrying amounts of financial instruments such as cash and cash equivalents, restricted cash,
accounts receivable and accounts payable approximate their fair values due to their short-term maturities. Until November 14,
2014, when Chief Executive Officer, Alan M. Meckler forgave his promissory note, Mecklermedia paid a fixed interest rate of
5.50% on its long-term debt with Mr. Meckler. See note 9 for information regarding this
related party transaction as the Company fulfilled its obligations on the loan in 2014 through payment of a portion of the
loan and Mr. Meckler’s forgiveness of the remainder.
Fair value
measurements. Certain assets and liabilities of Mecklermedia are required to be recorded at fair value. Fair value is
determined based on the exchange price that would be received for an asset or paid to transfer a liability in an orderly
transaction between market participants. The three-tier value hierarchy, which prioritizes the inputs used in the valuation
methodologies, is as follows:
|
Level 1 |
Valuations based on quoted prices for identical assets and liabilities in active markets. |
|
|
|
|
Level 2 |
Valuations based on observable inputs other than quoted prices included in Level 1, such as quoted prices for similar assets and liabilities in active markets, quoted prices for identical or similar assets and liabilities in markets that are not active, or other inputs that are observable or can be corroborated by observable market data. |
|
|
|
|
Level 3 |
Valuations based on unobservable inputs reflecting the Company’s own assumptions, consistent with reasonably available assumptions made by other market participants. |
Allowance for doubtful
accounts. Mecklermedia estimates its allowance for doubtful accounts based on historical losses, existing economic conditions
and specific account analysis of at-risk customers. Historical losses and existing economic conditions might not be indicative
of future losses, and the impact of economic conditions on each of its customers is difficult to estimate. Should future uncollectible
amounts exceed its current estimates, Mecklermedia would be required to charge off its uncollectible accounts through an entry
to bad debt expense included in general and administrative expense in its consolidated statement of operations. To help minimize
losses, the Company requires prepayment for exhibitors and sponsors at the Company’s trade shows.
Digital currency
transactions. Mecklermedia enters into transactions that are denominated in digital currency (bitcoin). These transactions
result in digital currency denominated assets and liabilities that are revalued periodically. Upon revaluation, transaction gains
and losses are generated and are reported as unrealized gains and losses in other gain (loss), net in the consolidated statements
of operations. Mecklermedia determines fair value based on quoted market exchange prices using significant observable inputs as
of the balance sheet date. Mecklermedia recorded a $90 in unrealized loss on digital currency during the year ended December
31, 2014. The valuation of the Company’s digital currency was $61 as of December 31, 2014 and is included in prepaid expense
and other current assets in the Company’s consolidated balance sheets. The Company also recorded $101 in unrealized gain
on digital currency during 2013 and the value of the Company’s digital currency was $145 as of December 31, 2013.
Property and equipment.
The Company records property and equipment at cost or at their estimated fair value at the date of acquisition if acquired during
a business combination, and depreciates them over their estimated useful lives. The Company depreciates computer equipment
and software by the straight-line method over estimated useful lives of three years. The Company depreciates furniture, fixtures
and equipment by the straight-line method over estimated useful lives ranging from five to ten years. The Company amortizes leasehold
improvements over the shorter of their useful lives or the lease term. Amortization of leasehold improvements is included in depreciation
expense.
Goodwill and other
intangible assets. In accordance with Financial Accounting Standards Board (“FASB”) Accounting Standards Codification
(“ASC”) Topic 350, “Intangibles – Goodwill and Other”, goodwill and other intangible assets with
indefinite useful lives are not amortized, but are reviewed periodically for impairment.
The
Company periodically reviews the values recorded for goodwill and intangible assets to assess recoverability from future
operations whenever events or changes in circumstances indicate that their carrying amounts may not be recoverable, and to
determine if events or circumstance are present that would require a test of recoverability on those assets. If such testing
is applicable, the provisions require that a two-step test be performed to assess goodwill for impairment. First, the
Company compares the fair value of each reporting unit to its carrying value, including goodwill. If the fair value exceeds
the carrying value then goodwill is not impaired and no further testing is performed. If the carrying value of a reporting
unit exceeds its fair value, the Company performs the second step of the goodwill impairment test to measure the amount
of impairment loss, if any. The second step compares the fair value of the reporting unit’s goodwill with the
carrying amount of the goodwill. The Company would recognize an impairment loss in an amount equal to the excess of the
carrying amount of goodwill over the fair value of the goodwill. See note 6 for additional information.
The significant estimates
and assumptions management uses in assessing the recoverability of goodwill and other intangible assets are estimated future cash
flows, present value discount rate and other factors. Any changes in these estimates or assumptions could result in an impairment
charge. The estimates of future cash flows, while based on reasonable and supportable assumptions and projections, require management’s
subjective judgment.
In addition to the testing
above, which the Company does on an annual basis, management uses certain indicators to evaluate whether the carrying value of
goodwill and other intangible assets may not be recoverable, including among others (i) current-period operating or cash flow
declines combined with a history of operating or cash flow declines or a projection/forecast that demonstrates continuing declines
in the cash flow of an entity or inability of an entity to improve its operations to forecasted levels and (ii) a significant
adverse change in the business climate, whether structural or technological, that could affect the value of an entity.
Impairment of long-lived
assets. The Company reviews long-lived assets and certain identifiable intangible assets for impairment whenever events
or changes in circumstances indicate that the carrying amount of an asset might not be recoverable. The Company recognizes an impairment
loss when the sum of undiscounted expected future cash flows is less than the carrying amount of such assets. The measurement for
such impairment loss is based on estimated fair values.
Equity method
for accounting for investments. Mecklermedia accounts for investments in accordance with ASC Topic 323,
“Investments – Equity Method and Joint Ventures.” Investments in companies in which the Company has a 20%
to 50% interest are carried at cost, adjusted for the Company’s proportional share of their undistributed earnings or
losses. The Company reviews these investments whenever events or changes in circumstances indicate that the carrying amount
of these investments may not be recoverable. Mecklermedia has a 27% investment in 3dPrintingIndustry.com
(“3dPI”), which began April 15, 2013. Originally, the Company held a 15% equity ownership and accounted for the
investment at cost. During the year ended December 31, 2014, the Company increased its investment by 12% and is now
accounting for the investment under the equity method. As of December 31, 2014 and 2013, respectively, the Company recorded
an investment of $313 and $125 in 3dPI and is included in investments and other assets in the Company’s consolidated
balance sheet. The Company’s share of the net income (loss) in 3DPI since its investment was initiated is immaterial.
Advertising and promotion
expense. Mecklermedia expenses advertising and promotion costs as incurred unless the expenses are directly related to
a trade show. Advertising and promotion costs directly related to trade shows are expensed in the period the trade show occurred.
Advertising and promotion expense was $600 and $336 for the years ended December 31, 2014 and 2013, respectively.
Income taxes.
Mecklermedia accounts for income taxes in accordance with ASC Topic 740, “Income Taxes”, which requires an asset and
liability approach to financial reporting for incomes taxes. Deferred income tax assets and liabilities are recognized for the
future tax consequences attributable to differences between the financial statement carrying amounts of existing assets and liabilities
and their respective tax bases. Deferred income tax assets and liabilities are measured using presently enacted statutory tax rates.
The Company recognizes the effect on deferred income tax assets and liabilities of changes in tax rates in income in the period
that includes the enactment date. ASC Topic 740 also requires that deferred income tax assets be reduced by a valuation allowance
if it is more likely than not that some portion or all of the deferred income tax assets will not be realized.
The Company
is required to determine whether its tax positions are more likely than not to be sustained upon examination by the applicable
taxing authority, including resolution of any related appeals or litigation processes, based on the technical merits of the position. The
Company measures tax benefit recognized as the largest amount of benefit that has a greater than fifty percent likelihood of being
realized upon ultimate settlement with the relevant taxing authority. De-recognition of a tax benefit previously recognized results
in the Company recording a tax liability that reduces retained earnings. Mecklermedia recognizes penalties and tax-related interest
expense as a component of income tax expense in the Company’s consolidated statements of operations. See note
11 for additional disclosure related to income taxes.
Self-insurance.
Through August 31, 2014, Mecklermedia was self-insured for its health and welfare costs. Beginning on September 1, 2014, the Company
was no longer self insures itself and currently pays a monthly premium for coverage of its employees. The Company's liability for
health and welfare claims includes an estimate for claims incurred but not yet reported through August 31, 2014. This liability
is included in accrued payroll and related expenses on the consolidated balance sheets as of December 31, 2013 and
2014.
Stock-based
compensation. Mecklermedia follows ASC Topic 718, “Compensation-Stock Compensation.” Among
its provisions, the ASC Topic 718 requires Mecklermedia to recognize compensation expense for equity awards over the vesting
period based on their grant-date fair value. Mecklermedia’s policy is to grant stock options and restricted stock
awards with an exercise price equal to or greater than the fair value on the date of grant. Mecklermedia amortizes
stock-based compensation expense on a straight-line basis over the vesting term.
The Company recognizes
compensation expense only for stock-based awards expected to vest. Mecklermedia estimates forfeitures at the date of grant based
on Mecklermedia’s historical experience and future expectations.
Recent accounting
pronouncements. In September 2014, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards
Update (“ASU”) 2014-12, “Compensation – Stock Compensation (Topic 718): Accounting for Share-Based
Payments When the Terms of an Award Provide That a Performance Target Could Be Achieved after the Requisite Service Period (a
consensus of the FASB Emerging Issues Task Force),” which amends current guidance for stock compensation tied to performance
targets. The amendments require that a performance target that affects vesting and that could be achieved after the requisite
service period be treated as a performance condition and apply existing guidance in Topic 718 as it relates to awards with performance
conditions that affect vesting to account for such awards. ASU 2014-12 will be effective for interim and annual periods beginning
after December 15, 2015 with early adoption permitted. The adoption of ASU 2014-12 is not expected to have a material impact
on the Company’s consolidated financial position, results of operations or cash flows.
In August 2014, the FASB issued ASU No. 2014-15, "Presentation
of Financial Statements —Going Concern" This standard requires management to evaluate for each annual and interim reporting
period whether it is probable that the reporting entity will not be able to meet its obligations as they become due within one
year after the date that the financial statements are issued. If the entity is in such a position, the standard provides for certain
disclosures depending on whether or not the entity will be able to successfully mitigate its going concern status. This guidance
is effective for annual periods ending after December 15, 2016 and interim periods within annual periods beginning after December
15, 2016. Early application is permitted. The Company does not expect a material impact to the Company's financial condition, results
of operations or cash flows from the adoption of this guidance.
In May 2014, the
FASB issued ASU No. 2014-09, "Revenue from Contracts with Customers," which will replace most existing revenue recognition
guidance in generally accepted accounting principles in the United States of America. The core principle of this ASU is that an
entity should recognize revenue for the transfer of goods or services equal to the amount that it expects to be entitled to receive
for those goods or services. This ASU requires additional disclosure about the nature, amount, timing and uncertainty of revenue
and cash flows arising from customer contracts, including significant judgments and changes in judgments. This ASU will be effective
for the Company beginning January 1, 2017, including interim periods in 2017, and allows for both retrospective and prospective
methods of adoption. The Company is in the process of determining method of adoption and assessing the impact of this ASU on its
consolidated financial statements.
In April 2014,
the FASB issued ASU 2014-08, “Reporting Discontinued Operations and Disclosures of Disposals of
Components of an Entity” to Accounting Standards Codification
(“ASC”) Topic 205, “Presentation of Financial Statements” and ASC Topic
360, “Property Plant and Equipment”. Under ASU 2014-08, only disposals that represent a strategic shift that
has (or will have) a major effect on the entity's results and operations would qualify as discontinued operations. In
addition, ASU 2014-08 expands the disclosure requirements for disposals that meet the definition of a discontinued
operation and requires entities to disclose information about disposals of individually significant
components that do not meet the definition of discontinued operations. ASU 2014-08 is effective for interim and
annual reporting periods in fiscal years that begin after December 15, 2014; early adoption is permitted. In 2014, the
Company elected early adoption of ASU 2014-08. As a result of the adoption of ASU 2014-08, results of operations for assets
that are classified as held for sale or disposed of in the ordinary course of business on or subsequent to January 1, 2014
would generally be included in continuing operations on the Company’s consolidated condensed statements of
operations, to the extent such disposals did not meet the criteria for classification of a discontinued operation as
described above. Additionally, any gain or loss on sale of assets that does not meet the criteria for classification as a
discontinued operation would be included in income from continuing operations on the consolidated statement of
operations. See note 3 for further details of the disposition of assets.
3. |
DISPOSITION OF ASSETS AND DISCONTINUED OPERATIONS |
On August 15, 2014, the
Company completed the sale of its Mediabistro assets to PGM-MB for $8,000. As of December 31, 2014, $1,500 is held in escrow and
will be disbursed over the 12-month period ending on August 15, 2015, subject to any indemnification claims against the escrow.
As a result of this sale, Mecklermedia is accounting for its Mediabistro operations as a discontinued operation since the sale
caused a strategic shift in the business from an online publishing, online job board and online education business to a trade show
business with in-depth coverage and updates of the 3D printing and bitcoin payment industry. The carrying value of the net assets
of the business at the time of the sale was $1.9 million and resulted in a gain of $5.7 million.
The information below
presents results of operations of the Mediabistro business:
| |
Year Ended | |
| |
December 31, | |
| |
2014 | | |
2013 | |
Revenues | |
$ | 5,158 | | |
$ | 8,018 | |
Net income of discontinued operations net of taxes | |
$ | 1,290 | | |
$ | 1,655 | |
Assets and liabilities
of the discontinued operations of the Mediabistro business are as follows:
| |
December 31, | |
| |
2014 | | |
2013 | |
Accounts receivable | |
$ | 25 | | |
$ | 381 | |
Prepaids and other assets | |
| 35 | | |
| 40 | |
Property and equipment, net | |
| – | | |
| 107 | |
Intangible assets, net | |
| – | | |
| 1,095 | |
Goodwill | |
| – | | |
| 1,927 | |
Total assets | |
$ | 60 | | |
$ | 3,550 | |
| |
| | | |
| | |
Accounts payable | |
$ | – | | |
$ | 99 | |
Accrued payroll and related expenses | |
| 182 | | |
| 280 | |
Accrued expenses and other current liabilities | |
| – | | |
| 107 | |
Deferred revenues | |
| – | | |
| 818 | |
Deferred tax liability | |
| – | | |
| 413 | |
Total liabilities | |
$ | 182 | | |
$ | 1,717 | |
As a result of the sale
of the Appdata assets on May 30, 2014, Mecklermedia is accounting for its operations as a discontinued operation. The carrying
value of the net assets of the business at the time of the sale was $4.3 million and resulted in a loss of $4.1 million.
The information below presents
results of operations of the Appdata business:
| |
Year Ended | |
| |
December 31, | |
| |
2014 | | |
2013 | |
Revenues | |
$ | 372 | | |
$ | 1,657 | |
Net income (loss) of discontinued operations before income taxes | |
$ | (267 | ) | |
$ | (2,425 | ) |
Assets and liabilities
of the discontinued operations of the Appdata business are as follows:
| |
December 31, 2013 | |
Property and equipment, net | |
$ | 14 | |
Intangible assets, net | |
| 782 | |
Goodwill | |
| 3,717 | |
Other assets | |
| 5 | |
Total assets | |
$ | 4,518 | |
| |
| | |
Accounts payable | |
$ | 2 | |
Accrued payroll and related expenses | |
| 45 | |
Accrued expenses and other current liabilities | |
| 6 | |
Deferred revenues | |
| 123 | |
Total liabilities | |
$ | 176 | |
There were no assets or
liabilities associated with the Appdata business as of December 31, 2014. Prior year financial results have been presented to
reflect these disposals as a discontinued operation.
4. |
COMPUTATION OF LOSS PER SHARE |
Basic loss per share is
computed using the weighted average number of common shares outstanding during the period. Dilutive earnings per share is computed
using the weighted average number of common and dilutive common equivalent shares outstanding during the period. Common equivalent
shares consist of the incremental common shares that may be issued upon the exercise of stock options. Common equivalent shares
are excluded from the calculation if their effect is anti-dilutive.
The following table summarizes
the number of outstanding stock options excluded from the calculation of diluted loss per share for the periods presented because
the result would have been anti-dilutive:
| |
Year Ended December 31, | |
| |
2014 | | |
2013 | |
Number of anti-dilutive stock options | |
| 1,068,610 | | |
| 793,169 | |
Weighted average exercise price | |
$ | 2.58 | | |
$ | 5.59 | |
5. |
PROPERTY AND EQUIPMENT |
Property and equipment
consisted of the following:
| |
December 31, | |
| |
2014 | | |
2013 | |
Computer equipment and software | |
$ | 47 | | |
$ | 80 | |
Furniture, fixtures and equipment | |
| 222 | | |
| 219 | |
Leasehold improvements | |
| 1,017 | | |
| 1,014 | |
Total | |
| 1,286 | | |
| 1,313 | |
Less: Accumulated depreciation | |
| (1,039 | ) | |
| (1,004 | ) |
Property and equipment, net | |
$ | 247 | | |
$ | 309 | |
Depreciation expense was $74 and $116 for the years ended December 31, 2014 and 2013, respectively.
6. |
INTANGIBLE ASSETS AND GOODWILL |
Amortized Intangible Assets
The following table sets
forth the intangible assets that are subject to amortization, including the related accumulated amortization:
| |
December
31, 2014 | |
| |
Cost | | |
Accumulated Amortization | | |
Net
Carrying Value | |
Website development costs | |
$ | 42 | | |
$ | (7 | ) | |
$ | 35 | |
Copyrights and trademarks | |
| 19 | | |
| (2 | ) | |
| 17 | |
Total | |
$ | 61 | | |
$ | (9 | ) | |
$ | 52 | |
| |
December 31, 2013 | |
| |
Cost | | |
Accumulated Amortization | | |
Net
Carrying Value | |
Website development costs | |
$ | 7 | | |
$ | (5 | ) | |
$ | 2 | |
Copyrights and trademarks | |
| 27 | | |
| (26 | ) | |
| 1 | |
Customer relationships | |
| 180 | | |
| (180 | ) | |
| – | |
Total | |
$ | 214 | | |
$ | (211 | ) | |
$ | 3 | |
The Company amortizes intangible
assets that are subject to amortization on a straight-line basis over their expected useful lives. The Company amortizes website
and development costs, customer relationships and copyrights and trademarks over three to seven years and content development costs
over two years. Estimated amortization expense for intangible assets subject to amortization is as follows:
Year Ending December 31: |
|
|
|
|
2015 |
|
|
$ |
22 |
|
2016 |
|
|
|
17 |
|
2017 |
|
|
|
13 |
|
|
|
|
|
$ |
52 |
|
Unamortized Intangible Assets and Goodwill
During the years ended December
31, 2014 and 2013, in conjunction with Mecklermedia’s annual impairment test, the Company identified indicators that its
goodwill was impaired. These indicators included a decline in revenue and recurring operating losses. As a result, the Company
recorded a non-cash impairment charge of $989 and $438 for the years ended December 31, 2014 and 2013, respectively, related to
the write-down of goodwill. This impairment charge is not tax deductible because the acquisitions that gave rise to most of
the carrying value of the Company’s goodwill were structured as stock transactions.
During the year ended December
31, 2014, concurrently with the sale of the Mediabistro assets, the Company identified indicators that the goodwill associated
with the purchase of Mediabistro in 2008 was impaired. As a result, the Company recorded a non-cash charge of $1,927 related to
the write-down of the goodwill. In addition, in the year ended December 31, 2014, the Company identified indicators that the Inside
Network goodwill was impaired in connection with the sale of Inside Network’s Appdata and Pagedata. As a result, the Company
recorded a non-cash impairment charge of $3,717 related to the write-down of goodwill. This impairment charge is not tax deductible
because the acquisitions that gave rise to most of the carrying value of the Company’s goodwill were structured as stock
transactions. Both of these sales are accounted for as discontinued operations and therefore the goodwill is included in assets
of discontinued operations on the consolidated balance sheet as of December 31, 2013 and the impairment is included in
the gain or loss on the sale of the discontinued operations in 2014 on the consolidated statements
of operations. See note 3.
The fair value of goodwill
is the residual fair value after allocating the total fair value of a reporting unit to its other assets, net of liabilities. For
the year ended December 31, 2014, the Company determined that the carrying value of its remaining goodwill may not be recoverable.
The acquisitions that gave rise to the goodwill were no longer part of the Company in its current or future operations and therefore
the Company determined that it was impaired. For the year ended December 31, 2013, the Company utilized a market approach model
because management determined that it was a more accurate estimate of the carrying value of the reporting units.
The following table sets
forth the intangible assets that are not subject to amortization:
| |
December 31, | |
| |
2014 | | |
2013 | |
Domain names | |
$ | 5 | | |
$ | 66 | |
The changes in the carrying
amount of goodwill for each of the two years in the period ended December 31, 2014 are as follows:
Balance as of January 1, 2013 | |
$ | 1,427 | |
Goodwill impaired during year | |
| (438 | ) |
Balance as of December 31, 2013 | |
$ | 989 | |
Goodwill impaired during year | |
| (989 | ) |
Balance as of December 31, 2014 | |
$ | – | |
7. |
ACCRUED EXPENSES AND OTHER CURRENT LIABILITIES |
Accrued expenses and other
current liabilities consist of the following:
| |
December 31, | |
| |
2014 | | |
2013 | |
Deferred rent | |
$ | 539 | | |
$ | 578 | |
Accrued professional fees | |
| 88 | | |
| 63 | |
Customer overpayments | |
| 64 | | |
| 64 | |
Accrued property and capital taxes | |
| 44 | | |
| 45 | |
Accruals related to trade shows | |
| 49 | | |
| 67 | |
Other | |
| 118 | | |
| 162 | |
Total | |
$ | 902 | | |
$ | 979 | |
Segment information is
presented in accordance with ASC Topic 280, “Segment Reporting”. ASC Topic 280 is typically based on a management approach
that designates the internal organization used for making operating decisions and assessing performance. Operating segments are
defined as business areas or lines of an enterprise about which financial information is available and evaluated on a regular basis
by the chief operating decision-makers, or decision-making groups, in deciding how to allocate capital and other resources to such
lines of business. The Company operates in one reportable segment. The Company’s results will be impacted by the number and size of trade shows held in each quarter. In addition, there may be
quarterly fluctuations as trade shows held in one period in the current year may be held in a different period in future years.
In 2009 and 2011, the
Company entered into two promissory note agreements with its Chief Executive Officer, Alan M. Meckler. As of January 1, 2013,
the balance of the 2009 Note was $5.9 million with an interest rate of 2.975% and the balance of the 2011 Note was
$1.8 million with an interest rate of 2.40%.
On November 1, 2013, the
Company and its wholly-owned subsidiaries, MM Subsidiary and Inside Network entered into an Amended and Restated Promissory Note
(the “Restated Note”) with Mr. Meckler. The Restated Note combines, amends, restates and replaces, but does not extinguish,
the obligations of the 2009 Note and the 2011 Note.
The Restated Note combines
the outstanding principal amounts of the 2009 Note and the 2011 Note, along with applicable closing costs, in the amount of $7,800
and extends the maturity date to September 1, 2043. Initially, interest accrues from August 27, 2013, at a rate of 5.5% per annum.
Beginning September 1, 2018 (“Change Date”), the interest rate will convert to an adjustable rate based on a specified
amount above LIBOR, initially not to exceed 7.5% per annum or be less than 5.5% per annum. Thereafter, the adjustable rate will
never be increased or decreased on any single Change Date by more than 2.0% from the rate of interest paid by the Company for the
preceding twelve months, and will never be less than 5.50% per annum or greater than 11.5% per annum. Interest only is payable
in arrears beginning November 1, 2013 and each month thereafter until September 1, 2023. Beginning October 1, 2023 and continuing
each month thereafter, the monthly payment will be in an amount sufficient to repay the principal and interest at the rate determined
under the Restated Note in substantially equal installments by the maturity date.
On November 15, 2013, the
Company and its wholly-owned subsidiaries, MM Subsidiary Inc. and Inside Network, Inc. entered into a Second Amended and Restated
Promissory Note (the “2nd Restated Note”) with Mr. Meckler. The 2nd Restated Note increases
the principal amount of the Restated Note to $8,800, a $1,000 increase. The terms of the 2nd Restated Note are otherwise
substantially the same as the terms of the Restated Note.
In the event of change
of control, Mr. Meckler may elect to make the remaining principal balance and all accrued and unpaid interest due and payable concurrently
with the closing of the change of control event. A change of control includes a sale of the Company or either subsidiary to a third
party or any merger, consolidation, restructuring or reorganization of the Company that results in the common stock holders immediately
prior to the transaction possessing less than 50% of the voting power of the surviving entity. Upon the occurrence of an event
of default, Mr. Meckler may, among other things, declare the entire outstanding balance under the 2nd Restated Note
to be immediately due and payable, and/or exercise any other rights. Mr. Meckler waived his right to require the Company to repay
the 2nd Restated Note in respect of the sale of the Mediabistro assets.
Mr. Meckler funded a portion
of the Restated Note with a portion of the proceeds of his personal loan from BOFI Federal Bank (“BOFI”) with the intent
that the principal and interest payments under the Restated Note will be utilized by Mr. Meckler to make payments under his note
with BOFI. The Company must repay the 2nd Restated Note if Mr. Meckler is required to repay the BOFI note whether due
to an event of default by Mr. Meckler under the BOFI note or otherwise. In October 2014, Mr. Meckler repaid the BOFI note in full
and waived his right to require the Company to repay the 2nd Restated Note.
To induce Mr. Meckler to
enter into the 2nd Restated Note, pursuant to a Second Reaffirmation of Collateral Documents (the “Reaffirmation”),
the Company reaffirmed its obligations under the collateral documents related to the Restated Note. To further induce Mr. Meckler
to enter into the 2nd Restated Note, the Company issued to Mr. Meckler on November 14, 2013 a warrant for 301,124 shares
of the Company’s common stock. The warrant is exercisable at any time on or after November 14, 2013 until the close of business
on November 13, 2018 at an exercise price per share of $2.00, which was 110% of the closing price of the Company’s common
stock on November 14, 2013. The exercise price and number of the shares of the common stock issuable upon the exercise of
the warrant is subject to adjustment in the event of any stock dividend, stock split, recapitalization, reorganization or similar
transaction. The warrant terminated upon the sale of the Mediabistro assets.
The Company recorded a
discount on the 2nd Restated Note based on the value of the warrants as of the date of issuance, which was $455. The
discount is being amortized over the life of the 2nd Restated Note.
Effective April 25, 2014,
the Company entered into a 3rd Restated Note Agreement with Mr. Meckler that increases the principal amount of the
Restated Note to $9,100, a $300 increase. All other terms of the promissory notes remain unchanged.
Effective May 19, 2014,
the Company entered into a 4th Restated Note Agreement with Mr. Meckler that increases the principal amount of the
Restated Note to $9,400, a $300 increase. All other terms of the promissory notes remain unchanged.
Effective July 1, 2014,
the Company entered into a 5th Restated Note Agreement with Mr. Meckler that increases the principal amount of the
Restated Note to $9,700, a $300 increase. Additionally, Mr. Meckler agrees to loan the company up to an additional aggregate principal
amount of $100 in one or more advances. All other terms of the promissory notes remain unchanged.
Following the sale of the
Mediabistro assets, Mecklermedia Corporation repaid $4,000 of the debt to Mr. Meckler.
On
November 14, 2014, the Company and Mr. Meckler entered into a loan forgiveness and release agreement. Pursuant to the agreement,
Mr. Meckler forgave in full his loan to the Company under the Second Amended and Restated Promissory Note, dated as of November
15, 2013 (as amended, restated, modified and supplemented), the balance of which was $5,695. Mr. Meckler also released all security
interests in the Company’s assets and properties that the Company previously granted to Mr. Meckler to secure the loan. In
addition, Mr. Meckler released the Company, and the Company released Mr. Meckler, from all claims arising out of the loan. The
Company accounted for the transaction in accordance with ASC 470-50-40 by recording this as
an equity transaction since Mr. Meckler is a related party. The unamortized debt issuance costs of $153 and the unamortized loan
discount of $258 together with the loan balance of $5,695 increased additional paid in capital of the Company’s consolidated
balance sheet by $5,284.
Interest expense on the
Restated Notes were $394 and $295 during the year ended December 31, 2014 and 2013, respectively.
Mecklermedia is authorized
to issue up to 4,000 shares of preferred stock, $.01 par value, of which 600 shares are designated Series A Junior Participating
Preferred Stock. The Board of Directors has the authority, without further vote or action by the stockholders, to issue
the undesignated shares of preferred stock in one or more series and to fix all rights, qualifications, preferences, limitations
and restrictions of each series, including dividend rights, voting rights, terms of redemption, redemption prices, liquidation
preferences and the number of shares constituting any series or the designation of such series.
Mecklermedia’s provision (benefit) for income taxes for each
of the years presented is determined in accordance with ASC Topic 740, “Income Taxes”.
Loss from continuing operations
before income taxes is attributable to the following tax jurisdictions:
| |
Years
Ended December 31, | |
| |
2014 | | |
2013 | |
United States | |
$ | (6,533 | ) | |
$ | (4,963 | ) |
Loss from continuing operations before income taxes | |
$ | (6,533 | ) | |
$ | (4,963 | ) |
The provision (benefit)
for income taxes from continuing operations consists of the following components:
| |
Years
Ended December 31, | |
| |
2014 | | |
2013 | |
Current income tax provision (benefit) from continuing operations | |
| | | |
| | |
State and local | |
$ | 5 | | |
$ | (48 | ) |
Total current income tax provision (benefit) from continuing operations | |
| 5 | | |
| (48 | ) |
Deferred income tax provision (benefit) from continuing operations | |
| | | |
| | |
Federal | |
| (58 | ) | |
| 14 | |
State and local | |
| (11 | ) | |
| 1 | |
Total deferred income provision (benefit) from continuing operations | |
| (69 | ) | |
| 15 | |
Income tax provision (benefit) from continuing operations | |
$ | (64 | ) | |
$ | (33 | ) |
A summary of Mecklermedia’s
deferred income tax assets and liabilities as of December 31, 2014 and 2013 is as follows:
| |
December 31, | |
| |
2014 | | |
2013 | |
Deferred income tax assets: | |
| | | |
| | |
Net operating loss carryforward | |
$ | 28,845 | | |
$ | 29,015 | |
Capital loss carryforward | |
| – | | |
| 44,579 | |
Amortization and impairment of goodwill and long-lived assets | |
| (12 | ) | |
| 743 | |
Depreciation of property and equipment | |
| 244 | | |
| 237 | |
Reserves recorded for financial reporting purposes | |
| 19 | | |
| 30 | |
Stock-based compensation | |
| 1,130 | | |
| 1,642 | |
Other | |
| 757 | | |
| 971 | |
Total deferred income tax assets | |
| 30,983 | | |
| 77,217 | |
Less valuation allowance | |
| (30,983 | ) | |
| (77,217 | ) |
Net deferred income tax assets | |
| – | | |
| – | |
Deferred income tax liabilities: | |
| | | |
| | |
Amortization of intangible assets | |
| – | | |
| (68 | ) |
Total deferred income tax liabilities | |
| – | | |
| (68 | ) |
Net deferred income tax liabilities | |
$ | – | | |
$ | (68 | ) |
Mecklermedia recorded an
income tax benefit from continuing operations of $64 and $33 during the years ended December 31, 2014 and 2013, respectively. During
the year ended December 31, 2014 the income benefit consisted primarily of additional income tax expense for tax amortization on
indefinite lived assets. During the year ended December 31, 2013, the income tax benefit was primarily due to the expiration of
statutes of limitations.
Based on current projections,
management believes that it is more likely than not that Mecklermedia will have insufficient taxable income to allow recognition
of its deferred tax assets. Accordingly, a valuation allowance has been established against deferred income 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.
At December 31, 2014,
Mecklermedia had deferred income tax assets associated with federal and state net operating loss (“NOL”) carryforwards
of $29.0 million. Realization of the deferred tax assets is dependent on generating sufficient taxable income in future years.
A reconciliation setting
forth the difference between the amount of taxes from continuing operations computed at Mecklermedia’s effective income tax
rate and the U.S. federal statutory income tax rate is as follows:
| |
Year Ended December 31, | |
| |
2014 | | |
2013 | |
Income tax expense based on federal statutory rate | |
$ | (2,221 | ) | |
$ | (1,688 | ) |
State and local tax expense, net of U.S. federal income tax | |
| 416 | | |
| (1,101 | ) |
Change in valuation allowance | |
| (46,234 | ) | |
| 2,681 | |
Non-deductible expenses | |
| 153 | | |
| 161 | |
Debt forgiveness | |
| 1,786 | | |
| – | |
Expired capital loss carryforwards | |
| 41,967 | | |
| – | |
Expired stock options | |
| 630 | | |
| – | |
Change in deferred tax assets | |
| 3,385 | | |
| – | |
Other | |
| 54 | | |
| (86 | ) |
Total | |
$ | (64 | ) | |
$ | (33 | ) |
Non-deductible expenses
during the years ended December 31, 2014 and 2013 relate primarily to impairment of non-deductible goodwill.
Mecklermedia’s deferred
income tax assets at December 31, 2014 with respect to NOLs expire as follows:
|
|
Deferred Income Tax Assets |
|
|
Net Operating Loss Carry Forwards |
|
United States (Federal), expiring between 2024 and 2033 |
|
$ |
23,783 |
|
|
$ |
69,949 |
|
United States (State), expiring between 2017 and 2033 |
|
|
5,062 |
|
|
|
86,979 |
|
Total |
|
$ |
28,845 |
|
|
$ |
156,928 |
|
With limited exceptions,
the Company is no longer subject to state and local or non-U.S. income tax audits by taxing authorities for years prior to 2011.
In addition, for years prior to 2011 in which NOLs were generated, the tax authorities could adjust the NOL carryovers up to the
amount of the NOL carryover.
As of December 31,
2014 and 2013, the amount of accrued interest and penalties from continuing operations, resulting from a state tax audit
which was concluded in 2013, included in accrued expenses and other current liabilities was $30 and $25, respectively.
The change in the value
of the Company’s unrecognized benefits for the two years ended December 31, 2014 are as follows:
Balance as of January 1, 2013 | |
$ | 134 | |
Additions for tax positions from prior years | |
| 8 | |
Reduction for expiration of stature of limitations | |
| (56 | ) |
Balance as of December 31, 2013 | |
$ | 86 | |
Additions for tax positions from prior years | |
| 5 | |
Balance as of December 31, 2014 | |
$ | 91 | |
The total amount of unrecognized
tax benefits was $61 as of December 31, 2014 and December 31, 2013, all of which would affect the effective tax rate from continuing
operations, if recognized, as of December 31, 2014.
12. |
COMMITMENTS AND CONTINGENCIES |
Mecklermedia has entered
into operating leases for each of its office facilities. Generally under the lease agreements, Mecklermedia is obligated to pay
a proportionate share of all operating costs for these premises. Rent expense for leased facilities was $281 and $280 for
the years ended December 31, 2014 and 2013, respectively, and was net of sublease income of $341 and $318 during the years
ended December 31, 2014 and 2013, respectively.
Future annual minimum lease
payments under all operating leases are as follows:
Year Ending December 31: |
|
|
|
|
2015 |
|
|
$ |
883 |
|
2016 |
|
|
|
819 |
|
2017 |
|
|
|
751 |
|
2018 |
|
|
|
751 |
|
2019 |
|
|
|
63 |
|
Total minimum payments |
|
|
$ |
3,267 |
|
|
|
|
|
|
|
|
Mecklermedia is subject
to legal proceedings and claims that arise in the ordinary course of its business. In the opinion of management, the amount of
ultimate liability with respect to active legal proceedings will not materially affect the financial statements of Mecklermedia.
13. |
EMPLOYEE BENEFIT PLAN |
Mecklermedia has a defined
contribution plan, which qualifies under Section 401(k) of the Internal Revenue Code for employees meeting certain service
requirements. Mecklermedia may also make contributions each year for the benefit of all eligible employees under the plan. There
were no discretionary contributions to the plan for the years ended December 31, 2014 and 2013.
In April 1999, Mecklermedia
established the Mecklermedia 1999 Stock Incentive Plan (Amended and Restated as of March 5, 2008) (the “1999 Plan”)
under which Mecklermedia may issue qualified incentive or nonqualified stock options to employees, including officers, consultants
and directors. The exercise price of the options granted under the 1999 Plan will not be less than the fair market value of the
shares of Mecklermedia’s common stock on the date of grant. In June 2006, the 1999 Plan was amended to increase the number
of shares of Mecklermedia common stock and options to purchase shares of Mecklermedia common stock available for issuance thereunder
to 1,714,285 shares.
In June 2008, Mecklermedia’s
stockholders approved the Mecklermedia 2008 Stock Incentive Plan (the “2008 Plan”). The 2008 Plan, along with the form
of Incentive Stock Option Agreement and the form of Nonqualified Stock Option Agreement were previously approved and adopted by
Mecklermedia’s Board in April 2008. The Compensation Committee of the Board administers the 2008 Plan, which
allows for the grant of incentive stock options, nonqualified stock options, restricted stock, performance-based awards and other
stock-based awards.
At the Annual Meeting of
Stockholders of Mecklermedia in June 2013, the 2008 Plan was amended to increase the number of shares reserved for issuance under
the 2008 Plan by 250,000 shares, from 571,429 shares to 821,429 shares.
Subject to antidilution
adjustments, 1,068,610 shares of Mecklermedia common stock may be issued under the 2008 Plan, and up to 288,430 shares of common stock
underlying outstanding awards granted under the 1999 Plan and 2008 Plan as of December 31, 2014. These shares will be available
for grants following any expiration, cancellation, forfeiture, cash settlement, or other termination of such awards.
Stock options granted in
2014 and 2013 have a 10-year term. Stock option grants generally vest equally on each of the first three anniversaries of their
respective grant dates. Mecklermedia issues new shares of common stock upon the exercise of stock options.
The fair value of each
option grant is estimated on the date of grant using the Black-Scholes option pricing model with the following assumptions used
for grants during the periods presented (table is not in thousands):
| |
Year Ended December 31, | |
| |
2014 | | |
2013 | |
Risk-free interest rate | |
| 0.92% | | |
| 0.56% | |
Expected life (in years) | |
| 3.40 | | |
| 3.40 | |
Dividend yield | |
| 0% | | |
| 0% | |
Expected volatility | |
| 144% | | |
| 133% | |
The expected stock price
volatility is based on the historical volatility of Mecklermedia’s common stock. The risk-free interest rate is based on
the implied yield available on U.S. Treasury zero-coupon issues with an equivalent remaining term. The Company calculates
the expected term for stock options using historical data.
The weighted-average grant
date fair value of options granted during the years ended December, 31 2014 and 2013 was $0.81 and $2.19, respectively. The total
intrinsic value of options exercised during the years ended December 31, 2014 and 2013 was $0 and $49, respectively.
The following table summarizes
nonvested option activity for the year ended December 31, 2014:
|
|
Shares |
|
|
Weighted Average
Exercise Price |
|
Outstanding nonvested shares at December 31,
2013 |
|
|
189,540 |
|
|
$ |
3.39 |
|
Granted |
|
|
662,000 |
|
|
$ |
0.87 |
|
Vested |
|
|
(236,929 |
) |
|
$ |
3.10 |
|
Forfeited |
|
|
(39,911 |
) |
|
$ |
3.02 |
|
Outstanding nonvested shares at
December 31, 2014 |
|
|
574,700 |
|
|
$ |
0.64 |
|
The following table summarizes option
activity during the year ended December 31, 2014:
| |
Shares | | |
Weighted Average Exercise Price | | |
Weighted Average Remaining Contractual Term (years) | | |
Aggregate Intrinsic Value | |
Outstanding at December 31, 2013 | |
| 793,169 | | |
$ | 5.59 | | |
| | | |
| | |
Granted | |
| 662,000 | | |
$ | 0.87 | | |
| | | |
| | |
Exercised | |
| (286 | ) | |
$ | 1.82 | | |
| | | |
| | |
Forfeited or expired | |
| (386,273 | ) | |
$ | 5.82 | | |
| | | |
| | |
Outstanding at December 31, 2014 | |
| 1,068,610 | | |
$ | 2.58 | | |
| 8.10 | | |
$ | – | |
Vested and expected to vest at
December 31, 2014 | |
| 948,116 | | |
$ | 2.8 | | |
| 7.90 | | |
$ | – | |
Exercisable at December 31, 2014 | |
| 493,910 | | |
$ | 4.85 | | |
| 5.98 | | |
$ | – | |
The aggregate
intrinsic value in the table above is before income taxes, based on Mecklermedia’s closing stock price of $0.45 as of
December 31, 2014.
Total stock-based compensation
is as follows:
| |
Years ended December 31, | |
| |
2014 | | |
2013 | |
Stock-based compensation included in continuing operations | |
$ | 318 | | |
$ | 212 | |
Stock-based compensation included in discontinued operations | |
| 188 | | |
| 133 | |
Total stock- based compensation | |
$ | 506 | | |
$ | 345 | |
As a result of the sale
of the Mediabistro assets on August 15, 2014, all unvested options on that date became immediately vested and all unrecognized
stock-based compensation was immediately expensed. During the year ended December 31, 2014, $307 of the stock-based compensation
was related to the sale to PGM-MB. Stock-based compensation increased additional paid-in capital by $506 during the year ended
December 31, 2014. Mecklermedia received $1 and $109 from the exercise of stock options during the years ended December 31, 2014
and 2013, respectively. As of December 31, 2014, there was $214 of total unrecognized compensation costs related to nonvested stock-based
compensation. The company expects to amortize these costs over a weighted-average period of 2.93 years.
The Company has evaluated
events and transactions subsequent to December 31, 2014 through the date the consolidated financials statements were included in
this Form 10-K and filed with the SEC.
In March 2015, the Company
and its wholly owned subsidiaries entered into a Secured Promissory Note and a Security Agreement with Drew Lane Holdings, LLC,
a Delaware limited liability company. Pursuant to the promissory note, Drew Land Holdings agreed to lend the Company up to $500
in one or more advances. Interest accrues on the outstanding amount of all advances at an annual rate of 8.00%. Interest only is
due and payable on the last day of each month beginning April 30, 2015, and continuing on the last day of each month thereafter;
and one final installment of all unpaid principal and all accrued but unpaid interest will be due and payable on March 31, 2018.
The Company may prepay the note without prepayment penalty or premium.
The note will immediately
become due and payable at the option of Drew Lane Holdings, upon the occurrence of an event of default, including the failure to
pay any amount payable under the note, an uncured failure to observe or perform any of the provisions under the note, the Company‘s
uncured default in the performance of its obligations under the Security Agreement, or specified events in respect of the Company’s
dissolution, liquidation, or bankruptcy.
In connection with the
promissory note, the Company and its subsidiaries granted Drew Lane Holdings a security interest in the Company’s assets.
ITEM 9. |
CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL DISCLOSURE |
None
ITEM 9A. |
CONTROLS AND PROCEDURES |
Disclosure Controls
and Procedures. The Company conducted an evaluation of the effectiveness of the design and operation of our disclosure
controls and procedures, as defined in Rule 13a-15(e) and 15d-15(e) of the Securities Exchange Act of 1934, as amended (“Exchange
Act”) under the supervision and with the participation of its management including the Company’s Chief Executive
Officer (“CEO”) and Chief Financial Officer (“CFO”), or persons performing similar functions, as appropriate
to allow timely decisions regarding required disclosure.
Disclosure controls and
procedures are designed only to provide reasonable assurance that (i) information required to be disclosed in an issuer’s
reports filed under the Exchange Act is recorded, processed, summarized and reported within the time period specified in the SEC
rules and forms and (ii) information is accumulated and communicated to management as appropriate to allow timely decisions regarding
required disclosures.
As a result of this evaluation,
the CEO concluded that the Company’s disclosure controls and procedures are effective to provide the reasonable assurance
discussed above.
Management’s
Report on Internal Control over Financial Reporting. Management of the Company is responsible for
establishing and maintaining adequate internal control over financial reporting, as defined in Rules 13a-15(f) and
15d-15(f) under the Exchange Act. The Company’s internal control over financial reporting is designed to provide
reasonable assurance regarding the reliability of financial reporting and preparation of financial statements for external
purposes in accordance with generally accepted accounting principles. A control system, no matter how well conceived
and operated, can provide only reasonable assurance that the objectives of the control system are met. Management
applied its judgment in assessing the benefits of controls relative to their cost. Because of the inherent
limitations in control systems, no evaluation of controls can provide absolute assurance that all controls issues and
instances of fraud, if any, within the company have been detected. Because of its inherent limitations, internal
control over financial reporting might not prevent or detect misstatements. Also, projections of any evaluation of the
effectiveness of internal control over financial reporting to future periods are subject to the risk that controls might
become inadequate because of changes in conditions, or that the degree of compliance with policies or procedures might
deteriorate. The Company’s management, with the participation of the CEO, assessed the effectiveness of the
Company’s internal control over financial reporting as of December 31, 2014. Based on the Company’s
evaluation, management concluded that the Company’s internal control over financial reporting was effective as of
December 31, 2014 based on criteria set forth in 1992 in Internal Control—Integrated Framework issued by
the Committee of Sponsoring Organizations of the Treadway Commission.
Changes in Internal
Control over Financial Reporting. There were no changes in our internal control over financial reporting during the year
ended December 31, 2014 that have materially affected, or are reasonably likely to affect, our internal control over financial
reporting.
ITEM 9B. |
OTHER INFORMATION |
None
PART III
ITEM 10. |
DIRECTORS, EXECUTIVE OFFICERS AND CORPORATE GOVERNANCE |
Information with respect
to this Item is incorporated herein by reference to Mecklermedia’s Proxy Statement for its Annual Meeting of Stockholders
to be held in 2015.
ITEM 11. |
EXECUTIVE COMPENSATION |
Information with respect
to this Item is incorporated herein by reference to Mecklermedia’s Proxy Statement for its Annual Meeting of Stockholders
to be held in 2015.
ITEM 12. |
SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT AND RELATED STOCKHOLDER MATTERS |
Information with respect
to this Item is incorporated herein by reference to Mecklermedia’s Proxy Statement for its Annual Meeting of Stockholders
to be held in 2015.
ITEM 13. |
CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS, AND DIRECTOR INDEPENDENCE |
Information with respect
to this Item is incorporated herein by reference to Mecklermedia’s Proxy Statement for its Annual Meeting of Stockholders
to be held in 2015.
ITEM 14. |
PRINCIPAL ACCOUNTANT FEES AND SERVICES |
Information with respect
to this Item is incorporated herein by reference to Mecklermedia’s Proxy Statement for its Annual Meeting of Stockholders
to be held in 2015.
PART IV
ITEM 15. |
EXHIBITS AND FINANCIAL STATEMENT SCHEDULES |
INDEX TO EXHIBITS
(a) Documents filed as
part of this report.
(1) Financial Statements:
See Mecklermedia Corporation.—Index to Consolidated Financial Statements at Item 8 of this report.
(3) Exhibits
The following is a list
of exhibits filed as part of this Report on Form 10-K. Where so indicated by footnote, exhibits, which were previously filed, are
incorporated by reference. For exhibits incorporated by reference, the location of the exhibit in the previous filing is indicated
parenthetically except for in those situations where the exhibit number was the same as set forth below.
Exhibit
Number |
|
Description of Document |
|
Registrant’s
Form |
|
Dated |
|
Exhibit
Number |
|
Filed
Herewith |
|
|
|
|
|
|
|
|
|
|
|
3.1 |
|
Registrant’s Amended and Restated Certificate of Incorporation, as amended. |
|
Form 10-Q |
|
11/14/14 |
|
3.1 |
|
|
|
|
|
|
|
|
|
|
|
|
|
3.2 |
|
Registrant’s Amended and Restated Bylaws, as amended. |
|
Form 8-K |
|
02/08/13 |
|
3.2 |
|
|
|
|
|
|
|
|
|
|
|
|
|
4.1 |
|
Form of Specimen Stock Certificate for the Registrant’s Common Stock. |
|
Form S-1/A |
|
05/19/99 |
|
4.1 |
|
|
|
|
|
|
|
|
|
|
|
|
|
10.1 |
|
Form of Indemnification Agreement entered into between the Registrant and each of its directors and executive officers. |
|
Form S-1/A |
|
05/19/99 |
|
10.1 |
|
|
|
|
|
|
|
|
|
|
|
|
|
10.16 |
|
Agreement and Plan of Merger, dated as of July 17, 2007, by and among Jupitermedia Corporation, a Delaware corporation, Mediabistro Acquisition Subsidiary, Inc., a Delaware corporation and a wholly-owned subsidiary of Jupitermedia Corporation, Mediabistro.com Inc., a Delaware corporation and Laurel Touby, as agent for the security holders of the Company. |
|
Form 8-K |
|
07/20/07 |
|
10.1 |
|
|
|
|
|
|
|
|
|
|
|
|
|
10.17† |
|
Registrant’s 1999 Stock Incentive Plan (Amended and Restated as of March 5, 2008). |
|
Form 8-K |
|
03/07/08 |
|
10.1 |
|
|
|
|
|
|
|
|
|
|
|
|
|
10.18† |
|
Registrant’s 1999 Stock Incentive Plan Form of Incentive Stock Option Agreement. |
|
Form 10-Q |
|
05/12/08 |
|
10.3 |
|
|
|
|
|
|
|
|
|
|
|
|
|
10.19† |
|
Registrant’s 1999 Stock Incentive Plan Form of Nonqualified Stock Option Agreement. |
|
Form 10-Q |
|
05/12/08 |
|
10.4 |
|
|
|
|
|
|
|
|
|
|
|
|
|
10.25† |
|
Registrant’s 2008 Stock Incentive Plan. |
|
Form 8-K |
|
06/09/08 |
|
10.1 |
|
|
|
|
|
|
|
|
|
|
|
|
|
10.26† |
|
Registrant’s 2008 Stock Incentive Plan Form of Incentive Stock Option Agreement. |
|
Form 8-K |
|
06/09/08 |
|
10.2 |
|
|
|
|
|
|
|
|
|
|
|
|
|
10.27† |
|
Registrant’s 2008 Stock Incentive Plan Form of Nonqualified Stock Option Agreement. |
|
Form 8-K |
|
06/09/08 |
|
10.3 |
|
|
|
|
|
|
|
|
|
|
|
|
|
10.44 |
|
Security Agreement, dated as of May 29, 2009, by and between WebMediaBrands Inc. and Alan M. Meckler. |
|
Form 8-K |
|
06/04/09 |
|
10.2 |
|
|
|
|
|
|
|
|
|
|
|
|
|
10.45 |
|
Intellectual Property Security Agreement, dated as of May 29, 2009, by and between WebMediaBrands Inc. and Alan M. Meckler. |
|
Form 8-K |
|
06/04/09 |
|
10.3 |
|
|
|
|
|
|
|
|
|
|
|
|
|
10.46 |
|
Pledge Agreement, dated as of May 29, 2009, by WebMediaBrands Inc. in favor of Alan M. Meckler. |
|
Form 8-K |
|
06/04/09 |
|
10.4 |
|
|
10.47 |
|
Form of Blocked Account Control Agreement by and among the WebMediaBrands Inc., Alan M. Meckler and a depositary bank. |
|
Form 8-K |
|
06/04/09 |
|
10.5 |
|
|
|
|
|
|
|
|
|
|
|
|
|
10.48 |
|
Security Agreement, dated as of May 29, 2009, by and between Mediabistro.com Inc. and Alan M. Meckler. |
|
Form 8-K |
|
06/04/09 |
|
10.6 |
|
|
|
|
|
|
|
|
|
|
|
|
|
10.49 |
|
Intellectual Property Security Agreement, dated as of May 29, 2009, by and between Mediabistro.com Inc. and Alan M. Meckler. |
|
Form 8-K |
|
06/04/09 |
|
10.7 |
|
|
|
|
|
|
|
|
|
|
|
|
|
10.50 |
|
Form of Blocked Account Control Agreement by and among Mediabistro.com Inc., Alan M. Meckler and a depositary bank. |
|
Form 8-K |
|
06/04/09 |
|
10.8 |
|
|
|
|
|
|
|
|
|
|
|
|
|
10.55 |
|
Stock Purchase Agreement dated May 11, 2011, by and among WebMediaBrands Inc., certain Stockholders of Inside Network, Inc. and Justin L. Smith as Stockholder Representative. |
|
Form 8-K |
|
05/17/11 |
|
10.55 |
|
|
|
|
|
|
|
|
|
|
|
|
|
10.56 |
|
Form of Restricted Stock Purchase Agreement by and between WebMediaBrands Inc. and certain Stockholders of Inside Network, Inc. |
|
Form 8-K |
|
05/17/11 |
|
10.56 |
|
|
|
|
|
|
|
|
|
|
|
|
|
10.60 |
|
Promissory Note, dated November 14, 2011, issued by WebMediaBrands Inc., Mediabistro.com, Inc., and Inside Network Inc. to Alan M. Meckler. |
|
Form 8-K |
|
11/17/11 |
|
10.60 |
|
|
|
|
|
|
|
|
|
|
|
|
|
10.61 |
|
Security Agreement, dated as of November 14, 2011, by and between WebMediaBrands Inc. and Alan M. Meckler. |
|
Form 8-K |
|
11/17/11 |
|
10.61 |
|
|
|
|
|
|
|
|
|
|
|
|
|
10.62 |
|
Intellectual Property Security Agreement, dated as of November 14, 2011, by and between WebMediaBrands Inc. and Alan M. Meckler. |
|
Form 8-K |
|
11/17/11 |
|
10.62 |
|
|
|
|
|
|
|
|
|
|
|
|
|
10.63 |
|
Pledge Agreement, dated as of November 14, 2011, by WebMediaBrands Inc. in favor of Alan M. Meckler. |
|
Form 8-K |
|
11/17/11 |
|
10.63 |
|
|
|
|
|
|
|
|
|
|
|
|
|
10.64 |
|
Security Agreement, dated as of November 14, 2011, by and between Inside Network Inc. and Alan M. Meckler. |
|
Form 8-K |
|
11/17/11 |
|
10.64 |
|
|
|
|
|
|
|
|
|
|
|
|
|
10.67 |
|
Note Modification Agreement dated as of April 25, 2014,
by and among Mediabistro Inc., Mediabistro.com Subsidiary Inc., Inside Network, Inc. and Alan M. Meckler.
|
|
Form 8-K |
|
04/29/14 |
|
10.67 |
|
|
10.68 |
|
Note Modification Agreement dated as of May 19, 2014,
by and among Mediabistro Inc., Mediabistro.com Subsidiary Inc., Inside Network, Inc. and Alan M. Meckler.
|
|
Form 8-K |
|
05/23/14 |
|
10.68 |
|
|
10.69 |
|
Voting Agreement dated May 28, 2014 between Alan M. Meckler
and PGM-MB Holdings LLC.
|
|
Form 8-K |
|
06/02/14 |
|
10.69 |
|
|
10.70 |
|
Note Modification Agreement effective as of July 1, 2014,
by and between Mediabistro Inc., Mediabistro.com Inc., Inside Network, Inc. and Alan M. Meckler.
|
|
Form 8-K |
|
07/07/14 |
|
10.70 |
|
|
10.71 |
|
Loan Forgiveness and Release Agreement made as of November
14, 2014 by and between Mecklermedia Corporation, Mecklermedia Subsidiary, Inc., Inside Network, and Alan M. Meckler.
|
|
Form 10-Q |
|
11/14/14 |
|
10.71 |
|
|
10.72 |
|
Secured Promissory Note dated as of March 16, 2015, by Mecklermedia
Corporation, Mecklermedia.com Subsidiary Inc., Inside Network, Inc. made payable to Drew Lane Holdings, LLC.
|
|
Form 8-K |
|
03/18/15 |
|
10.72 |
|
|
10.73 |
|
Security Agreement dated as of March 16, 2015, by and among Mecklermedia Corporation, Mecklermedia.com Subsidiary Inc., Inside Network, Inc. and Drew Lane Holdings, LLC. |
|
Form 8-K |
|
03/18/15 |
|
10.73 |
|
|
|
|
|
|
|
|
|
|
|
|
|
21.1 |
|
Subsidiaries of the Registrant. |
|
|
|
|
|
|
|
X |
|
|
|
|
|
|
|
|
|
|
|
23.1 |
|
Consent of Marcum LLP |
|
|
|
|
|
|
|
X |
|
|
|
|
|
|
|
|
|
|
|
31.1 |
|
Rule 13a-14(a)/15d-14(a) Certification. |
|
|
|
|
|
|
|
X |
|
|
|
|
|
|
|
|
|
|
|
32.1 |
|
Certification of the Principal Executive Officer pursuant to Section 906 of the Sarbanes-Oxley Act of 2002. |
|
|
|
|
|
|
|
X |
|
|
|
|
|
|
|
|
|
|
|
101.INS |
|
XBRL Instance Document |
|
|
|
|
|
|
|
X |
|
|
|
|
|
|
|
|
|
|
|
101.SCH |
|
XBRL Schema Document |
|
|
|
|
|
|
|
X |
|
|
|
|
|
|
|
|
|
|
|
101.CAL |
|
XBRL Calculations Linkbase Document |
|
|
|
|
|
|
|
X |
|
|
|
|
|
|
|
|
|
|
|
101.DEF |
|
XBRL Definitions Linkbase Document |
|
|
|
|
|
|
|
X |
|
|
|
|
|
|
|
|
|
|
|
101.LAB |
|
XBRL Label Linkbase Document |
|
|
|
|
|
|
|
X |
|
|
|
|
|
|
|
|
|
|
|
101.LAB |
|
XBRL Presentations Linkbase Document |
|
|
|
|
|
|
|
X |
|
|
|
|
|
|
|
|
|
|
|
† |
|
Compensatory plans and arrangements for executives and others |
|
|
|
|
|
|
|
|
SIGNATURES
Pursuant to the requirements
of Section 13 or 15(d) of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on
its behalf by the undersigned, thereunto duly authorized.
|
Mediabistro Inc. |
|
|
|
|
|
|
|
|
|
March 31, 2015 |
By: |
/S/
ALAN M. MECKLER |
|
|
Name: |
Alan M. Meckler |
|
|
Title: |
Chairman and Chief Executive Officer
(Principal Executive Officer and Principal
Financial Officer) |
|
|
|
|
|
Pursuant to the requirements
of the Securities Exchange Act of 1934, this report has been signed below by the following persons on behalf of the registrant
and in the capacities and on the dates indicated.
/S/
ALAN M. MECKLER |
|
Chairman of the Board, Chief Executive Officer |
|
March 31, 2015 |
Alan M. Meckler |
|
and Director (Principal Executive Officer and Principal Financial Officer) |
|
|
|
|
|
/S/
WAYNE A. MARTINO |
|
Director |
|
March 31, 2015 |
Wayne A. Martino |
|
|
|
|
|
|
|
/S/
JOHN R. PATRICK |
|
Director |
|
March 31, 2015 |
John R. Patrick |
|
|
|
|
EXHIBIT 21.1
SUBSIDIARIES OF THE REGISTRANT
as of March 31, 2015
Mecklermedia.com Subsidiary, Inc. (a Delaware Corporation)
Inside Network Inc. (a California Corporation)
Mecklermedia Asia- Pacific Limited (a Hong Kong Company)
EXHIBIT 23.1
CONSENT OF INDEPENDENT REGISTERED PUBLIC
ACCOUNTING FIRM
We consent to the incorporation by reference
in the Registration Statements of Mecklermedia Corporation on Form S-8 (File Nos. 333-137349, 333-153508, and 333-190310) of our
report dated March 31, 2015, with respect to our audits of the consolidated financial statements of Mecklermedia Corporation as
of December 31, 2014 and 2013 and for the years then ended, which report is included in its Annual Report on Form 10-K for
the year ended December 31, 2014 filed with the Securities and Exchange Commission.
Marcum LLP
New Haven, CT
March 31, 2015
EXHIBIT 31.1
CERTIFICATION
I, Alan M. Meckler, certify that:
1. I have reviewed this Form 10-K of Mecklermedia
Corporation;
2. Based on my knowledge, this report does
not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in
light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;
3. Based on my knowledge, the financial statements,
and other financial information included in this report, fairly present in all material respects the financial condition, results
of operations and cash flows of the registrant as of, and for, the periods presented in this report;
4. The registrant's other certifying officer(s)
and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a–15(e)
and 15d–15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a–15(f) and 15d–15(f))
for the registrant and have:
(a) Designed such disclosure controls
and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material
information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities,
particularly during the period in which this report is being prepared;
(b) Designed such internal control
over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide
reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external
purposes in accordance with generally accepted accounting principles;
(c) Evaluated the effectiveness of
the registrant's disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the
disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and
(d) Disclosed in this report any
change in the registrant's internal control over financial reporting that occurred during the registrant's most recent fiscal quarter
(the registrant's fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely
to materially affect, the registrant's internal control over financial reporting; and
5. The registrant's other certifying officer(s)
and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant's auditors
and the audit committee of the registrant's board of directors (or persons performing the equivalent functions):
(a) All significant deficiencies
and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to
adversely affect the registrant's ability to record, process, summarize and report financial information; and
(b) Any fraud, whether or not material,
that involves management or other employees who have a significant role in the registrant's internal control over financial reporting.
Date: March 31, 2015 |
/s/ Alan M. Meckler |
|
|
Alan M. Meckler
Chairman and Chief Executive Officer
(Principal Executive Officer and Principal Financial Officer) |
|
EXHIBIT 32.1
CERTIFICATION PURSUANT TO
18 U.S.C. SECTION 1350,
AS ADOPTED PURSUANT TO
SECTION 906 OF THE SARBANES-OXLEY ACT OF
2002
In connection with the
Annual Report of Mediabistro Inc. (the “Company”) on Form 10-K for the year ended December 31, 2014 as filed with
the Securities and Exchange Commission on the date hereof (the “Report”), I, Alan M. Meckler, Chairman and Chief Executive
Officer of the Company, certify, pursuant to 18 U.S.C. § 1350, as adopted pursuant to § 906 of the Sarbanes-Oxley
Act of 2002, that:
(1) The Report fully complies
with the requirements of section 13(a) or 15(d) of the Securities Exchange Act of 1934; and
(2) The information contained
in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company.
Date: March 31, 2015 |
/S/ ALAN M. MECKLER |
|
|
Alan M. Meckler
Chairman and Chief Executive Officer
(Principal Executive Officer and Principal
Financial Officer) |
|