Exhibit 99.3

THESTREET, INC.

UNAUDITED PRO FORMA CONDENSED COMBINED FINANCIAL INFORMATION

 

On October 31, 2014, the Company closed its previously announced share purchase agreement with Management Diagnostics Limited (“MDL”), a privately held company headquartered in London, England, and certain MDL shareholders, to acquire all of the outstanding share capital of MDL. MDL is the owner of BoardEx, an institutional relationship capital management database and platform. Clients, including investment banks, consultancies and law firms use BoardEx to leverage their relationships and facilitate business and corporate development initiatives. The company was founded in 1999 and is based in London with additional offices in New York City and Chennai, India. BoardEx will be integrated into The Deal, a business unit of TheStreet that serves corporate dealmakers with analysis of mergers and acquisitions, private equity and restructuring. BoardEx’s proprietary people data will be combined with The Deal’s newsroom and transaction data, allowing subscribers to easily network with the very people they read about in The Deal’s exclusive editorial content. The acquisition of BoardEx advances the strategic objectives of TheStreet by increasing both institutional content and subscribers.

 

The following unaudited pro forma condensed combined financial information (“pro forma financial information”) has been prepared to illustrate the effects of the Acquisition. This pro forma financial information has been prepared from the historical consolidated financial statements of TheStreet and MDL, and should be read in conjunction with TheStreet’s historical consolidated financial statements and related notes as found in the Company’s 2013 Annual Report on Form 10-K, and the Quarterly Reports on Form 10-Q for the quarters ended March 31, 2014, June 30, 2014 and September 30, 2014 filed with the Securities and Exchange Commission (“SEC”) on February 28, 2014, May 9, 2014, August 6, 2014 and November 7, 2014, respectively, as well as, the audited financial statements of MDL that have been included as Exhibit 99.1 in this Current Report on Form 8-K/A. Certain amounts in MDL’s financial statements have been reclassified to conform to TheStreet’s basis of presentation. The unaudited pro forma condensed combined statement of operations for the nine months ended September 30, 2014 and year ended December 31, 2013, combines both TheStreet and MDL’s results of operations for this period. The unaudited pro forma condensed balance sheet is presented as if the acquisition occurred on September 30, 2014 and the unaudited pro forma condensed combined statements of operations are presented as if the acquisition had occurred on January 1, 2013, the beginning of TheStreet’s fiscal 2013. The historical financial statements of MDL are prepared in accordance with United Kingdom Generally Accepted Accounting Principles and have been converted to US Generally Accepted Accounting Principles for purposes of the pro forma financial statements.

 

The pro forma financial information has been prepared for illustrative purposes only and is not necessarily indicative of the financial position or results of operations that would have actually occurred had the acquisition been completed at or as of the dates indicated, nor is it indicative of the future operating results or financial position of the combined company. The pro forma financial information does not reflect future nonrecurring charges resulting from the Acquisition. The unaudited condensed combined pro forma statements of operations do not reflect future events that may occur subsequent to the Acquisition, including the potential realization of operational synergies, cost savings, revenue enhancements or other costs of the planned integration. The pro forma financial information included herein has been prepared pursuant to the rules and regulations of the SEC. Certain information and certain footnote disclosures normally included in financial statements prepared in accordance with U.S. GAAP have been condensed or omitted pursuant to these rules and regulations; however, management believes that the disclosures are adequate to not make the information presented misleading.

 

 

 

Exhibit 99.3

THESTREET, INC.

UNAUDITED PRO FORMA CONDENSED COMBINED BALANCE SHEET

September 30, 2014

 

		TheStreet, Inc.				MDL				Pro Forma Adjustments				Pro Forma Combined
Assets
Current Assets
Cash and cash equivalents		$	48,275,969			$	1,910,721				$             (22,130,609	)(a)		$	28,056,081
Marketable securities			6,043,940				-				-				6,043,940
Accounts receivable			3,894,744				844,322				-				4,739,066
Other receivables			413,123				114,017				781,387	(b)			1,308,527
Prepaid expenses and other current assets			1,281,878				110,869				-				1,392,747
Restricted cash			139,750				-				-				139,750
Total current assets			60,049,404				2,979,929				(21,349,222	)			41,680,111
Property and equipment			4,809,295				158,056				-				4,967,351
Marketable securities			1,550,000				-				-				1,550,000
Other assets			8,128				47,795				-				55,923
Goodwill			27,997,286				-				17,100,069	(c)			45,097,355
Other intangibles			9,398,586				6,422,692				2,687,308	(d)			18,508,586
Restricted cash			1,161,250				-				-				1,161,250
Total assets		$	104,973,949			$	9,608,472			$	(1,561,845	)		$	113,020,576
Liabilities and Stockholders’ Equity
Current Liabilities
Accounts payable		$	2,283,362			$	65,136			$	-			$	2,348,498
Accrued expenses			3,929,501				352,500				319,391	(e)			4,601,392
Deferred revenue			22,823,142				4,232,924				(118,521	)(f)			26,937,545
Other current liabilities			804,429				294,197				-				1,098,626
Total current liabilities			29,840,434				4,944,757				200,870				34,986,061
Deferred tax liability			288,000				-				-				288,000
Contingent consideration			-				-				2,901,000	(g)			2,901,000
Other liabilities			4,623,914				-				-				4,623,914
Total Liabilities			34,752,348				4,944,757				3,101,870				42,798,975
Stockholders’ Equity
Preferred stock			55				143,627				(143,627	)(h)			55
Common stock			415,038				599,224				(599,224	)(h)			415,038
Additional paid-in capital			272,371,156				26,927,621				(26,927,621	)(h)			272,371,156
Accumulated other comprehensive income			(283,167	)			24,408				(24,408	)(h) (j)			(283,167	)
Treasury stock			(12,480,568	)			-				-				(12,480,568	)
Accumulated deficit			(189,800,913	)			(23,031,165	)			23,031,165	(h)			(189,800,913	)
Total stockholders’ equity			70,221,601				4,663,715				(4,663,715	)			70,221,601
Total liabilities and stockholders equity		$	104,973,949			$	9,608,472			$	(1,561,845	)		$	113,020,576

 

 

Exhibit 99.3

  

THESTREET, INC.

UNAUDITED PRO FORMA CONDENSED COMBINED STATEMENT OF OPERATIONS

For the Nine Months Ended September 30, 2014

 

										Pro Forma				Pro Forma
		The Street, Inc.				MDL				Adjustments				Combined
Net Revenue:
Subscription services		$	34,722,784			$	7,645,097			$	-			$	42,367,881
Marketing services			9,047,623				-				-				9,047,623
			43,770,407				7,645,097				-				51,415,504
Operating expense:
Cost of services			22,897,998				2,895,099				-				25,793,097
Sales and marketing			11,202,886				1,247,302				-				12,450,188
General and administrative			9,821,941				2,216,735				(410,860	)(i) (j)			11,627,816
Depreciation and amortization			2,178,908				873,249				(146,066	)(l)			2,906,091
Loss on exchange			-				86,419				-				86,419
Total operating expense			46,101,733				7,318,804				(556,926	)			52,863,611
Operating (loss) income			(2,331,326	)			326,293				556,926				(1,448,107	)
Interest income			96,785				1,364				-				98,149
(Loss) income before income taxes			(2,234,541	)			327,657				556,926				(1,349,958	)
Provision for income taxes			-				(28,389	)			-				(28,389	)
Net (loss) income			(2,234,541	)			299,268				556,926				(1,378,347	)
Preferred stock cash dividends			289,272				-				-				289,272
Net (loss) income attributable to common stockholders		$	(2,523,813	)		$	299,268			$	556,926			$	(1,667,619	)
Basic and diluted net loss per share:
Net loss		$	(0.06	)		$	-			$	-			$	(0.04	)
Preferred stock cash dividends			(0.01	)			-				-				(0.01	)
Net loss attributable to common stockholders		$	(0.07	)		$	-			$	-			$	(0.05	)
Weighted average basic and diluted shares outstanding			34,337,597				-				-				34,337,597

 

  

Exhibit 99.3

 

THESTREET, INC.

UNAUDITED PRO FORMA CONDENSED COMBINED STATEMENT OF OPERATIONS

For the Year Ended December 31, 2013

 

										Pro Forma				Pro Forma
		The Street, Inc.				MDL				Adjustments				Combined
Net Revenue:
Subscription services		$	43,549,359			$	9,528,820			$	-			$	53,078,179
Marketing services			10,901,052				-				-				10,901,052
			54,450,411				9,528,820				-				63,979,231
Operating expense:
Cost of services			27,431,566				3,667,847				-				31,099,413
Sales and marketing			14,453,465				1,657,283				-				16,110,748
General and administrative			12,218,964				2,673,378				(62,061	)(k)			14,830,281
Depreciation and amortization			3,768,536				1,158,560				(151,103	)(l)			4,775,993
Restructuring and other charges			385,610				-				-				385,610
Gain on exchange			-				(331,383	)			-				(331,383	)
Loss on disposition of assets			187,434				-				-				187,434
Total operating expense			58,445,575				8,825,685				(213,164	)			67,058,096
Operating (loss) income			(3,995,164	)			703,135				213,164				(3,078,865	)
Interest income			209,463				2,885				-				212,348
(Loss) income before income taxes			(3,785,701	)			706,020				213,164				(2,866,517	)
Provision for income taxes			-				51,602				-				51,602
Net loss (income)		$	(3,785,701	)		$	757,622			$	213,164			$	(2,814,915	)
Basic and diluted net loss per share:
Net loss		$	(0.11	)		$	-			$	-			$	(0.08	)
Weighted average basic and diluted shares outstanding			33,725,317				-				-				33,725,317

 

 

Exhibit 99.3

 

Notes to Unaudited Pro Forma Condensed Combined Financial Statements

  

Note 1 – Basis of Presentation

 

The Acquisition was accounted for under the acquisition method of accounting in accordance with Accounting Standards Codification (“ASC”) Topic No. 805, “Business Combinations – Overall” (“ASC 805”). Under this method, the total preliminary purchase price was allocated to MDL’s net tangible and intangible assets acquired and liabilities assumed based on their estimated fair values as of September 30, 2014. The excess of purchase consideration over the net tangible and intangible assets is reflected as goodwill. The process for estimating the fair values of identifiable intangibles and certain tangible assets requires the use of significant estimates and assumptions, including estimating future cash flows and developing appropriate discount rates. Use of different estimates and judgments could yield different results.

 

For purposes of measuring the estimated fair value of the assets acquired and liabilities assumed as reflected in the unaudited pro forma condensed combined financial statements, the Company used the guidance in ASC Topic No 820, “ Fair Value Measurement and Disclosure – Overall” (“ASC 820”), which establishes a framework for measuring fair values. ASC 820 defines fair value as the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date (an exit price). Market participants are assumed to be buyers and sellers in the principal (most advantageous) market for the asset or liability. Additionally, under ASC 820, fair value measurements assume the highest and best use of that asset by market participants. As a result, the Company may be required to value MDL’s assets at fair value measures that do not reflect the Company’s intended use of those assets.

 

Under ASC 805, acquisition related costs such as advisory, legal, valuation and other professional fees are not included as a component of consideration transferred, but are required to be expensed as incurred.

 

 

 

Exhibit 99.3

 

Reclassifications

 

Certain reclassifications have been made to MDL’s historical financial statements in order to conform with TheStreet’s presentation.

 

MANAGEMENT DIAGNOSTICS LIMITED

September 30, 2014

 

		As Previously Reported				Reclass (1)				Other Reclasses				Revised
Assets
Current Assets
Cash and cash equivalents		$	1,910,721			$	-			$	-			$	1,910,721
Accounts receivable			1,441,221				(596,899	)			-				844,322
Other receivables			-				486,030				(372,013	) (2) (3) (4)			114,017
Prepaid expenses and other current assets			-				110,869				-				110,869
Total current assets			3,351,942				-				(372,013	)			2,979,929
Tangible Assets			6,580,748				(6,580,748	)			-				-
Property and equipment			-				158,056				-				158,056
Other assets			-				-				47,795	(3)			47,795
Other intangibles			-				6,422,692				-				6,422,692
Total assets			9,932,690			$	-			$	(324,218	)		$	9,608,472
Liabilities and Stockholders’ Equity
Current Liabilities
Accounts payable		$	1,073,963			$	(1,008,827	)		$	-			$	65,136
Accrued expenses			-				352,500				-				352,500
Deferred revenue			4,232,924				-				-				4,232,924
Other current liabilities			-				656,327				(362,130	) (2)			294,197
Total current liabilities			5,306,887				-				(362,130	)			4,944,757
Stockholders’ Equity
Called up share capital			742,851				(742,851	)			-				-
Share premium account			26,018,857				(26,018,857	)			-				-
ESOP			(37,912	)			-				37,912	(4)			-
Other Reserves			908,764				(908,764	)			-				-
Preferred stock			-				143,627				-				143,627
Common stock			-				599,224				-				599,224
Additional paid-in capital			-				26,927,621				-				26,927,621
Accumulated other comprehensive income			-				24,408				-				24,408
Accumulated deficit			(23,006,757	)			(24,408	)			-				(23,031,165	)
Total stockholders’ equity			4,625,803				-				37,912				4,663,715
Total liabilities and stockholders equity		$	9,932,690			$	-			$	(324,218	)		$	9,608,472

 

(1)

To reclass MDL’s balance sheet account classifications to conform to TheStreet’s account classifications.

(2)

Tax asset of $362,130 was reclassed to offset tax liability.

(3)

Long-term portion of rent deposit of $47,795 was reclassed from Other receivables under current assets to Other assets under long term assets.

(4)

ESOP of $37,912 was reclassed from Capital and Reserves to Other receivables. This was an amount due to MDL from the ESOP as a result of shares issued to the ESOP in return for a receivable. The ESOP paid this receivable upon acquisition of MDL by the Company.

  

  

Exhibit 99.3

 

On the Statement of Operations, MDL presented only data feed expenses in Cost of Sales. All other expenses were aggregated within Administrative Expenses. In order to conform to TheStreet’s financial statement presentation MDL’s Administrative Expenses have been disaggregated into Cost of Services, Sales and Marketing, General and Administrative expenses and Depreciation and Amortization as follows:

  

		Management Diagnostics Limited
		For the Nine Months ended September 30, 2014
		As Previously Reported				Adjustments				Revised
Net Revenue:
Subscription services		$	7,645,097			$	-			$	7,645,097
Operating expense:
Cost of services			92,653				2,802,446				2,895,099
Sales and marketing			-				1,247,302				1,247,302
General and administrative			7,226,151				(5,009,416	)			2,216,735
Depreciation and amortization			-				873,249				873,249
Loss on exchange			-				86,419				86,419
Total operating expense			7,318,804				-				7,318,804
Operating income			326,293				-				326,293
Interest income			1,364				-				1,364
Income before income taxes			327,657				-				327,657
Provision for income taxes			(28,389	)			-				(28,389	)
Net income		$	299,268			$	-			$	299,268

 

 

Exhibit 99.3

 

		Management Diagnostics Limited
		For the Year Ended December 31, 2013
		As Previously Reported				Adjustments				Revised
Net Revenue:
Subscription services		$	9,528,820			$	-			$	9,528,820
Operating expense:
Cost of services			146,695				3,521,152				3,667,847
Sales and marketing			-				1,657,283				1,657,283
General and administrative			8,678,990				(6,005,612	)			2,673,378
Depreciation and amortization			-				1,158,560				1,158,560
Loss on exchange			-				(331,383	)			(331,383	)
Total operating expense			8,825,685				-				8,825,685
Operating income			703,135				-				703,135
Interest income			2,885				-				2,885
Income before income taxes			706,020				-				706,020
Provision for income taxes			51,602				-				51,602
Net income		$	757,622			$	-			$	757,622

 

 

Exhibit 99.3

Note 2 – Purchase Price Allocation

 

          The following table summarizes the preliminary allocation of the purchase price to the estimated fair values of assets and liabilities assumed at the assumed acquisition date of September 30, 2014. The preliminary fair value estimates for the assets and liabilities were based upon preliminary calculations and valuations and our estimates and assumptions for this acquisition is subject to change as we obtain additional information for our estimates during the measurement period, a period not to exceed 12 months from the acquisition date. Changes to amounts recorded as assets or liabilities may result in a corresponding adjustment to goodwill.

 

		Amortization Life
		(in years)				Amount
Accounts receivable, net						$	844,322
Other receivables							857,493
Prepaid expenses and other current assets							148,782
Property and equipment, net							158,056
Other assets							47,795
Identifiable intangible assets:
-          Customer relationships			10				3,670,000
-          Database			10				5,130,000
-          Trade name			6				310,000
Accounts payable							(65,136	)
Accrued expenses							(671,891	)
Deferred revenue							(4,114,403	)
Other current liabilities							(294,199	)
Contingent consideration							(2,901,000	)
Total identifiable net assets							3,119,819
Goodwill							17,100,069
Cash consideration						$	20,219,888

 

The estimated useful life of computer equipment, computer software and telephone equipment is three years; of furniture and fixtures is five years; and leasehold improvements are amortized on a straight-line basis over the shorter of the respective lease term or the estimated useful life of the asset.

 

The Company believes that information gathered to date provide a reasonable basis of estimating the fair values of assets acquired and liabilities assumed, but the Company is waiting for additional information necessary to finalize those fair values. Thus the provisional measures of fair value set forth above are subject to change, although such changes are not anticipated to be significant. The Company expects to complete the purchase price allocation as soon as practical, but no later than one year from the acquisition date.

 

Note 3 – Pro Forma Adjustments

 

          The following is a summary of pro forma adjustments reflected in the unaudited pro forma condensed combined financial statements based on management’s preliminary estimates. These estimates may change as additional information is obtained.

 

(a)

To record $22,130,609 cash used to purchase MDL.

 

(b)

To record ESOP cash payment of $781,387. MDL previously issued shares to the ESOP in return for a receivable. The ESOP paid the receivable upon acquisition of MDL by the Company.

 

 

 

 

Exhibit 99.3

 

(c)

To record the preliminary estimate of goodwill for the purchase of MDL of $17,100,069.

 

(d)

To record the adjustment to other intangible assets of $2,687,308 to record the preliminary fair value of intangible assets of $9,110,000.

 

(e)

To record $319,391 in accrued expenses for miscellaneous costs deducted from cash used to purchase MDL.

 

(f)

To record estimated purchase price adjustment on deferred revenue of $118,521.

 

(g)

To record the fair value of contingent consideration of $2,901,000 relating to estimated revenue earn-out.

 

(h)

To eliminate MDL’s historical stockholder’s equity.

 

(i)

An adjustment of $464,852 was made to exclude transaction costs directly related to the acquisition that were included in the historical financial statements for the nine months ended September 30, 2014.

 

(j)

To reclass actuarial loss of $53,992, in relation to the actuarial valuation of the defined benefit plan obligation, from the statement of operations to Accumulated other comprehensive income in accordance with US GAAP.

 

(k)

To reclass actuarial gain of $62,061 in relation to the actuarial valuation of the defined benefit plan obligation, from the statement of operations to Accumulated other comprehensive income in accordance with US GAAP.

 

(l)

Adjustments to record depreciation and amortization on acquired fixed assets and intangible assets are as follows:

 

		Nine Months Ended				Year Ended
		September 30, 2014				December 31, 2013
Depreciation and amortization after fair value adjustments associated with acquired assets		$	727,183			$	1,007,457
MDL’s historical depreciation and amortization			(873,249	)			(1,158,560	)
Decrease in depreciation and amortization expense		$	(146,066	)		$	(151,103	)