- Quarterly Report (10-Q)

Large accelerated filer

Accelerated filer

Non-accelerated filer

Smaller reporting company

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-Q

x	QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

FOR THE QUARTERLY PERIOD ENDED: SEPTEMBER 30, 2010

¨	TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

FOR THE TRANSITION PERIOD FROM TO

EDGAR Online, Inc.

(Exact name of registrant as specified in its charter)

001-32194

(Commission File Number)

Delaware

06-1447017

(State or other jurisdiction

of incorporation)

(IRS Employer

Identification Number)

50 Washington Street, Norwalk, Connecticut 06854

(Address of principal executive offices) (Zip Code)

(203) 852-5666

(Registrant’s telephone number, including area code)

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 ¨

Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files). YES ¨ NO ¨

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 “accelerated filer,” “large accelerated filer” and “smaller reporting company” in Rule 12b-2 of the Exchange Act.

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). YES ¨ NO x

Number of shares of common stock outstanding at November 12, 2010: 26,984,829 shares.

EDGAR ONLINE, INC.

FORM 10-Q

FOR THE QUARTER ENDED SEPTEMBER 30, 2010

Forward Looking Statements

The discussions set forth in this Quarterly Report on Form 10-Q contain statements concerning potential future events. Such forward-looking statements are based upon assumptions by our management, as of the date of this Quarterly Report, including assumptions about risks and uncertainties faced by us. In addition, management may make forward-looking statements orally or in other writings, including, but not limited to, in press releases, in the annual report to stockholders and in our other filings with the U.S. Securities and Exchange Commission (the “SEC”). Readers can identify these forward-looking statements by the use of such verbs as expects, anticipates, believes or similar verbs or conjugations of such verbs. If any of management’s assumptions prove incorrect or should unanticipated circumstances arise, our actual results could materially differ from those anticipated by such forward-looking statements. The differences could be caused by a number of factors or combination of factors including, but not limited to, those factors identified in Part II, Item 1A, “Risk Factors” of this report, as well as our other periodic reports on Forms 10-K, 10-Q and 8-K filed with the SEC, from time to time. Readers are strongly encouraged to consider those factors when evaluating any forward-looking statements concerning us. We will not update any forward-looking statements in this Quarterly Report to reflect future events or developments. Investors should also be aware that while we, from time to time, do communicate with securities analysts, it is against our policy to disclose to them any material non-public information or other confidential commercial information. Investors should not assume that we agree with any report issued by any analyst or with any statements, projections, forecasts or opinions contained in any such report. Unless otherwise indicated, all references to the “Company,” “we,” “us,” “our,” and “EDGAR Online” include reference to our subsidiaries as well.

Index


	Page No.
PART I. FINANCIAL INFORMATION

Item 1. Financial Statements		3
Condensed Consolidated Balance Sheets at December 31, 2009 and September 30, 2010 (unaudited)		3
Condensed Consolidated Statements of Operations for the Three and Nine Months Ended September 30, 2009 and 2010 (unaudited)		4
Condensed Consolidated Statements of Changes in Common Stockholders’ Equity for the Nine Months ended September 30, 2009 and 2010 (unaudited)		5
Condensed Consolidated Statements of Cash Flows for the Nine Months Ended September 30, 2009 and 2010 (unaudited)		6
Notes to Condensed Consolidated Financial Statements (unaudited)		7

Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations		16

Item 3. Quantitative and Qualitative Disclosures About Market Risk		21

Item 4. Controls and Procedures		21
PART II. OTHER INFORMATION

Item 1. Legal Proceedings		22

Item 1A. Risk Factors		22

Item 2. Unregistered Sales of Equity Securities and Use of Proceeds		27

Item 3. Defaults Upon Senior Securities		27

Item 4. Removed and Reserved		27

Item 5. Other Information		27

Item 6. Exhibits		28

Signatures		28

PART 1. FINANCIAL INFORMATION

Item 1.

Financial Statements

EDGAR ONLINE, INC.

CONDENSED CONSOLIDATED BALANCE SHEETS

(IN THOUSANDS, EXCEPT SHARE DATA)


	December 31, 2009			September 30, 2010
				(unaudited)
ASSETS
Cash and cash equivalents	$	2,101		$	9,503
Short-term investments		222			226
Accounts receivable, less allowance of $344 at December 31, 2009 and $468 at September 30, 2010		2,360			3,095
Other current assets		248			256


Total current assets		4,931			13,080
Property and equipment, net of accumulated depreciation and amortization of $7,611 at December 31, 2009 and $8,865 at September 30, 2010		2,726			3,559
Goodwill		2,189			2,189
Other intangible assets, net of accumulated amortization of $12,250 at December 31, 2009 and $13,185 at September 30, 2010		1,706			771
Other assets		631			415


Total assets	$	12,183		$	20,014


LIABILITIES, REDEEMABLE PREFERRED STOCK AND COMMON STOCKHOLDERS’ EQUITY
Accounts payable and accrued expenses	$	2,546		$	2,786
Deferred revenues		3,370			3,366
Current portion of long-term debt		500			1,562


Total current liabilities		6,416			7,714
Long-term debt		1,408			—
Other long-term liabilities		250			240


Total liabilities		8,074			7,954

Commitments and contingencies		—			—
Redeemable preferred stock - Series B, convertible, $100 par value, no shares authorized or outstanding at December 31, 2009 and 120,000 shares authorized and outstanding at September 30, 2010; face value of $12,921 and liquidation preference of $14,331 at September 30, 2010		—			11,947


Common stockholders’ equity:
Preferred stock - Series A, $0.01 par value, 1,000,000 shares authorized at December 31, 2009 and 880,000 shares authorized at September 30, 2010; no shares issued or outstanding		—			—
Common stock, $0.01 par value, 50,000,000 shares authorized at December 31, 2009 and September 30, 2010, 27,846,902 shares issued and 26,855,150 shares outstanding at December 31, 2009 and 27,936,913 shares issued and 26,978,495 shares outstanding at September 30, 2010		279			279
Additional paid-in capital		74,347			74,343
Accumulated deficit		(68,786	)		(72,830	)
Treasury stock, at cost, 991,752 shares at December 31, 2009 and 958,418 shares at September 30, 2010		(1,731	)		(1,679	)


Total common stockholders’ equity		4,109			113

Total liabilities, redeemable preferred stock and common stockholders’ equity	$	12,183		$	20,014

See accompanying notes to condensed consolidated financial statements.

EDGAR ONLINE, INC.

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS

(IN THOUSANDS, EXCEPT PER SHARE DATA)

(UNAUDITED)


	Three Months Ended September 30,						Nine Months Ended September 30,
	2009			2010			2009			2010
Revenues:
XBRL filings	$	1,478		$	1,959		$	2,488		$	4,642
Data and solutions		2,179			1,892			6,434			5,703
Subscriptions		1,585			1,307			5,122			4,199


Total revenues		5,242			5,158			14,044			14,544
Cost of revenues		1,147			2,244			3,479			5,706


Gross profit		4,095			2,914			10,565			8,838


Operating expenses:
Sales and marketing		701			527			2,450			1,963
Product development		478			440			1,491			1,272
General and administrative		1,897			2,634			5,797			6,799
Severance costs		—			211			57			438
Amortization and depreciation		568			801			1,598			2,189

		3,644			4,613			11,393			12,661


Income (loss) from operations		451			(1,699	)		(828	)		(3,823	)
Interest and other expense, net		(91	)		(65	)		(292	)		(221	)


Net income (loss)		360			(1,764	)		(1,120	)		(4,044	)
Dividends on preferred stock		—			(346	)		—			(921	)
Accretion on preferred stock		—			(19	)		—			(47	)

Net income (loss) to common stockholders	$	360		$	(2,129	)	$	(1,120	)	$	(5,012	)


Weighted average shares outstanding—basic		26,775			26,972			26,731			26,929


Weighted average shares outstanding—diluted		27,437			26,972			26,731			26,929


Net income (loss) per share—basic	$	0.01		$	(0.08	)	$	(0.04	)	$	(0.19	)


Net income (loss) per share—diluted	$	0.01		$	(0.08	)	$	(0.04	)	$	(0.19	)

See accompanying notes to condensed consolidated financial statements.

EDGAR ONLINE, INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF CHANGES IN COMMON STOCKHOLDERS’ EQUITY

(IN THOUSANDS, EXCEPT SHARE AND PER SHARE DATA)

(UNAUDITED)


	COMMON STOCK				TREASURY STOCK						ADDITIONAL PAID-IN CAPITAL			ACCUMULATED DEFICIT			TOTAL
	SHARES		AMOUNT		SHARES			AMOUNT			ADDITIONAL PAID-IN CAPITAL			ACCUMULATED DEFICIT			TOTAL
Balance at December 31, 2008		27,554,713	$	276		1,048,895		$	(1,828	)	$	73,092		$	(67,836	)	$	3,704
Net loss		—		—		—			—			—			(1,120	)		(1,120	)
Exercise of stock options		20,000		—		—			—			16			—			16
Stock-based compensation		—		—		—			—			1,056			—			1,056
Restricted stock issued		217,189		2		—			—			(2	)		—			—
Treasury stock issued		—		—		(33,334	)		58			(58	)		—			—

Balance at September 30, 2009		27,791,902	$	278		1,015,561		$	(1,770	)	$	74,104		$	(68,956	)	$	3,656


Balance at December 31, 2009		27,846,902	$	279		991,752		$	(1,731	)	$	74,347		$	(68,786	)	$	4,109
Net loss		—		—		—			—			—			(4,044	)		(4,044	)
Accrued dividends on Series B Preferred Stock		—		—		—			—			(921	)		—			(921	)
Accretion of issuance costs and beneficial conversion discount on Series B Preferred Stock		—		—		—			—			(47	)		—			(47	)
Fair value of beneficial conversion discount on Series B Preferred Stock		—		—		—			—			254			—			254
Equity-based severance charges		—		—		—			—			28			—			28
Exercise of stock options		50,000		—		—			—			70						70
Stock-based compensation		—		—		—			—			664			—			664
Restricted stock issued		40,011		—		—			—			—			—			—
Treasury stock issued		—		—		(33,334	)		52			(52	)		—			—


Balance at September 30, 2010		27,936,913	$	279		958,418		$	(1,679	)	$	74,343		$	(72,830	)	$	113

See accompanying notes to condensed consolidated financial statements.

EDGAR ONLINE, INC.

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

(IN THOUSANDS)

(UNAUDITED)


	Nine Months Ended September 30,
	2009			2010
Cash flows from operating activities:
Net loss	$	(1,120	)	$	(4,044	)
Adjustments to reconcile net loss to net cash provided by (used in) operating activities:
Depreciation and amortization		663			1,254
Amortization of intangible assets		935			935
Stock-based compensation		1,056			664
Equity-based severance charges		—			28
Provision for losses on trade accounts receivable		455			405
Amortization of capitalized product costs		164			149
Amortization of deferred financing costs and discount		51			62
Changes in assets and liabilities:
Accounts receivable		(326	)		(1,140	)
Other assets, net		102			27
Accounts payable and accrued expenses		(222	)		240
Deferred revenues		(588	)		(4	)
Long-term payables		(127	)		(10	)

Total adjustments		2,163			2,610

Net cash provided by (used in) operating activities		1,043			(1,434	)


Cash flows from investing activities:
Capital expenditures		(277	)		(490	)
Capitalized product development costs		(1,004	)		(1,597	)
Short-term investments		(3	)		(4	)


Net cash used in investing activities		(1,284	)		(2,091	)


Cash flows from financing activities:
Proceeds from issuance of Series B Preferred Stock		—			12,000
Costs incurred in connection with issuance of Series B Preferred Stock		—			(768	)
Proceeds from exercise of stock options and warrants		16			70
Payments of notes payable		(313	)		(375	)


Net cash (used in) provided by financing activities		(297	)		10,927


Net (decrease) increase in cash and cash equivalents		(538	)		7,402
Cash and cash equivalents at beginning of period		2,062			2,101


Cash and cash equivalents at end of period	$	1,524		$	9,503


Supplemental disclosure of cash flow information:
Cash paid for interest	$	146		$	115

Supplemental disclosure of non-cash information:
Accrued dividends on Series B Preferred Stock	$	—		$	921
Fair value of beneficial conversion discount on Series B Preferred Stock	$	—		$	254
Accretion of issuance costs and beneficial conversion discount on Series B Preferred Stock	$	—		$	47

See accompanying notes to condensed consolidated financial statements.

EDGAR ONLINE, INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(IN THOUSANDS, EXCEPT SHARE DATA)

(UNAUDITED)

(1) BASIS OF PRESENTATION

The condensed consolidated financial statements include the accounts of EDGAR Online, Inc. and its subsidiaries (“the Company”). All significant intercompany accounts are eliminated upon consolidation. EDGAR Online, Inc. was incorporated in the State of Delaware in November 1995 under the name Cybernet Data Systems, launched its EDGAR Online website in January 1996, and went public in May 1999 under its current name. We are a leading provider of XBRL (eXtensible Business Reporting Language) filing services, data sets and analysis tools. Our data products provide highly detailed fundamental financial information along with the source documents and are created through the use of proprietary high speed software that automates much of the data extraction and calculation processes. Our XBRL Filing service uses parts of this same proprietary data extraction and processing software along with personnel skilled in accounting, rigorous quality processes and additional proprietary tools to assist public companies in the creation of XBRL filings for submission to the U.S. Securities and Exchange Commission. Our XBRL analysis tool is a proprietary software tool that assists users in analyzing both our own proprietary XBRL data sets and industry standard XBRL data files. We deliver our data and analysis products via online subscriptions, as data licenses directly to end-users, embedded in other web sites and through a variety of redistributors. We deliver our filings services primarily through partnerships with financial printers and other providers of SEC compliance services. Consumers of our information are generally financial, corporate and advisory professionals who work in financial institutions such as investment funds, asset management firms, insurance companies and banks, stock exchanges and government agencies, as well as accounting firms, law firms, corporations or individual investors.

The unaudited interim financial statements of the Company as of September 30, 2010 and for the three and nine months ended September 30, 2009 and 2010 included herein have been prepared in accordance with the instructions for Form 10-Q under the Securities Exchange Act of 1934, as amended (the “Exchange Act”), and Article 10 of Regulation S-X under the Exchange Act. Certain information and footnote disclosures normally included in financial statements prepared in accordance with accounting principles generally accepted in the United States have been condensed or omitted pursuant to such rules and regulations relating to interim financial statements.

In the opinion of the Company, the accompanying unaudited interim financial statements reflect all adjustments, consisting only of normal recurring adjustments, necessary to present fairly the financial position of the Company as of September 30, 2010, the results of its operations for the three and nine months ended September 30, 2009 and 2010 and changes in common stockholders’ equity and cash flows for the nine months ended September 30, 2009 and 2010. The results for the three and nine months ended September 30, 2010 are not necessarily indicative of the expected results for the full 2010 fiscal year or any future period.

These financial statements should be read in conjunction with the financial statements and related footnotes included in the Company’s Annual Report on Form 10-K for the year ended December 31, 2009, filed with the SEC in March 2010. The condensed consolidated balance sheet information as of December 31, 2009 was derived from the audited consolidated financial statements as of that date.

The preparation of financial statements in conformity with accounting principles generally accepted in the United States requires the Company 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 the financial statements, and the reported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates. Significant estimates embedded in the condensed consolidated financial statements for the periods presented concern the allowance for doubtful accounts, the fair values of goodwill and other intangible assets and the estimated useful lives of intangible assets.

On June 22, 2010, the Company formed UBM Acquisition Corp. as a wholly owned subsidiary in connection with the merger agreement with UBmatrix, Inc. (see Note 13- Merger Agreement and Stock Purchase Agreement )

The Company has evaluated subsequent events for potential disclosure or recognition to the date of the issuance of the condensed consolidated financial statements

EDGAR ONLINE, INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

(IN THOUSANDS, EXCEPT SHARE DATA)

(UNAUDITED)

(2) REVENUE RECOGNITION

We derive revenues from three primary sources: XBRL processing fees, fees for data and solutions and fees for subscriptions to our web services. We recognize XBRL filings revenue from fixed fees on a ratable basis as well as per-filing fees as the services are provided. Revenue from data licenses is recognized over the term of the underlying contracts. Our data solutions sometimes involve upfront one-time customization fees along with more traditional data licensing arrangements for the ongoing delivery of the data solution. In addition, some of our data solutions are billed on a time and materials basis, per service level agreements or for delivery of data. Upfront customization fees are recognized systematically over the expected customer relationship period. Revenue from time and materials based agreements and data delivery is recognized as the services and data are provided. Revenue from subscriptions is recognized ratably over the subscription period, which is typically twelve months. Subscriptions revenue also includes ancillary advertising and e-commerce revenue which are recognized as the services are provided.

(3) INCOME (LOSS) PER SHARE

Income (loss) per share information is determined using the two-class method, which includes the weighted-average number of common shares outstanding during the period and other securities that participate in dividends (“participating security”). The Company considers the Series B Preferred Stock a participating security because it includes rights to participate in dividends with the common stock on a one for one basis, with the holders of Series B Preferred Stock deemed to have common stock equivalent shares based on a conversion price of $1.10. In applying the two-class method, earnings are allocated to both common stock shares and Series B Preferred Stock common stock equivalent shares based on their respective weighted-average shares outstanding for the period. Since losses are not allocated to Series B Preferred Stock shares, the two-class method results in the same loss per common share calculated using the basic method for the periods presented in these financial statements.

Basic income (loss) per common share excludes dilution for common stock equivalents and is computed by dividing the net income (loss), after deducting preferred stock dividends and the accretion of the beneficial conversion feature discount, by the weighted average number of common shares outstanding for the period. Diluted income (loss) per share is calculated using the treasury stock method and reflects, in periods in which they have a dilutive effect, the potential dilution that could occur if securities or other contracts to issue common stock were exercised or converted and resulted in the issuance of common stock.

Diluted net income per share for the three months ended September 30, 2009 included the effect of 1,287,378 options with a weighted average exercise price of $1.16 and the effect of 248,495 unvested restricted stock grants. Diluted net loss per share is the same as basic net loss per share amounts for the three months ended September 30, 2009 and the nine months ended September 30, 2009 and 2010 as the Company reported a net loss and therefore all outstanding stock options, unvested restricted stock grants and warrants are anti-dilutive. As such, diluted net loss per share does not include the effect of outstanding stock options, unvested restricted stock grants and warrants of 3,976,857 for the nine months ended September 30, 2009 and 4,245,736 for the three and nine months ended September 30, 2010, nor does it include 11,746,727 common shares issuable under the conversion provisions of our Series B Preferred Stock at September 30, 2010.

A reconciliation of shares used in calculating basic and diluted net income per share for the three months ended September 30, 2009 is as follows:


	Three Months Ended September 30, 2009
Basic		26,774,736
Effect of options and unvested restricted stock grants		662,737


Diluted		27,437,473

EDGAR ONLINE, INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

(IN THOUSANDS, EXCEPT SHARE DATA)

(UNAUDITED)

(4) SOFTWARE DEVELOPMENT COSTS

The Company capitalizes software development costs in accordance with Financial Accounting Standards Board (“FASB”) Accounting Standards Codification (“ASC”) Topic 985-20 (previously Statement of Financial Accounting Standards (“SFAS”) No. 86 “Accounting for the Costs of Computer Software to be Sold, Leased, or Otherwise Marketed”). Software development costs are capitalized after technological feasibility is established. Once the software products become available for general release to the public, the Company amortizes such costs over the related product’s estimated economic useful life to cost of revenues. Net capitalized software development costs (included in other assets) totaled $198 and $49 at December 31, 2009 and September 30, 2010, respectively. Related amortization expense, included in cost of revenues, totaled $55 and $40 for the three months ended September 30, 2009 and 2010, respectively, and $164 and $149 for the nine months ended September 30, 2009 and 2010, respectively.

The Company capitalizes internal-use software development costs in accordance with ASC Topic 350-40 (previously Statement of Position No. 98-1, “Accounting for the Costs of Computer Software Developed or Obtained for Internal Use”). The Company capitalizes internal-use software development costs once certain criteria are met. Once the internal-use software is ready for its intended use, the capitalized internal-use software costs will be amortized over the related software’s estimated economic useful life in amortization and depreciation expense. Our computer software is also subject to review for impairment as events or changes in circumstances occur indicating that the amount of the asset reflected in the Company’s balance sheet may not be recoverable. Net capitalized internal-use software costs (included in property and equipment) were $1,784 and $2,585 at December 31, 2009 and September 30, 2010, respectively. Related amortization expense totaled $122 and $333 in the three months ended September 30, 2009 and 2010, respectively, and $245 and $796 in the nine months ended September 30, 2009 and 2010, respectively.

(5) LONG-TERM DEBT

On April 5, 2007, the Company entered into a Financing Agreement (“Financing Agreement”) with Rosenthal & Rosenthal, Inc. (“Rosenthal”) for additional working capital. Under the Financing Agreement, Rosenthal made a term loan in the original principal amount of $2,500 to the Company and agreed to provide up to an additional $2,500 under a revolving line of credit. Interest on outstanding borrowings under the Financing Agreement is payable at variable rates of interest over the published JPMorgan Chase prime rate (with a minimum prime rate of 6%), 2.5% on the term loan and 2% on borrowings under the revolving credit facility. The Company’s obligations under the term loan are evidenced by a secured Term Note and all of the Company’s obligations to Rosenthal are secured by a first priority security interest in substantially all of the Company’s assets.

The Financing Agreement, as amended most recently on March 13, 2009, terminates on March 30, 2011 unless sooner terminated by either party in accordance with the terms of the Financing Agreement. The terms include a provision that would allow the lender to accelerate the due date of the debt based on certain circumstances. The Company is required to maintain certain levels of working capital and tangible net worth pursuant to the Financing Agreement. The Company was in compliance with the amended terms at September 30, 2010.

In connection with the Financing Agreement, the Company issued to Rosenthal a warrant to purchase 100,000 shares of the Company’s common stock at an exercise price equal to $2.81 (the market price of the Company’s common stock on the closing date of the transaction) which expired unexercised on April 30, 2010. A discount related to the warrant totaling $125 was recorded based on the Black-Scholes-Merton fair value of the warrant on the date of issue and was amortized over the term of the warrant. Also in connection with this transaction, the Company paid its financial advisor $125, which represents 3% of the gross principal amount of the term loan and 2% of the gross principal amount of the revolving credit which is being amortized over the term of the loan.

The term loan, as amended, is due as follows: (i) $21 per month from July 1, 2008 through and including March 1, 2009; (ii) $42 from April 1, 2009 through the maturity date and (iii) the entire remaining unpaid balance on the maturity date. At September 30, 2010, the entire balance of $1,562 was classified as the current portion of long-term debt and there were $22

EDGAR ONLINE, INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

(IN THOUSANDS, EXCEPT SHARE DATA)

(UNAUDITED)

of unamortized deferred financing costs included in other current assets. The Company has not received any funding under the revolving line of credit as of September 30, 2010. Interest expense under the Agreement, totaled $77 and $58 for the three months ended September 30, 2009 and 2010, respectively, and included $17 and $11, respectively, of amortization of deferred financing costs and warrant discount. Interest expense under the Agreement, totaled $250 and $211 for the nine months ended September 30, 2009 and 2010, respectively, and included $51 and $62, respectively, of amortization of deferred financing costs and warrant discount.

(6) STOCK-BASED COMPENSATION

Stock Compensation Expense

The Company records stock-based compensation expense under the provisions of FASB ASC Topic 718 (previously SFAS No. 123 (R), “Share-Based Payment”). Stock-based compensation expense for the three and nine months ended September 30, 2009 and 2010 was recognized in the following income statement expenses:


	Three Months Ended September 30,				Nine Months Ended September 30,
	2009		2010		2009		2010
Cost of revenues	$	12	$	7	$	35	$	24
Sales and marketing		93		31		298		97
Product development		36		16		107		55
General and administrative		132		230		616		488


Total stock compensation expense	$	273	$	284	$	1,056	$	664

This expense decreased the Company’s net income per share by $0.01 in the three months ended September 30, 2009 and increased the Company’s net loss per share by $0.01 in the three months ended September 30, 2010, and increased the Company’s net loss per share by $0.04 and $0.02 in the nine months ended September 30, 2009 and 2010, respectively

The estimated per share weighted-average grant-date fair values of stock options granted during the three months ended September 30, 2009 and 2010 were $0.84 and $0.73, respectively. The estimated per share weighted-average grant-date fair values of stock options granted during the nine months ended September 30, 2009 and 2010 were $0.99 and $1.20, respectively. Amounts were determined using the Black-Scholes-Merton option pricing model based on the following assumptions:


	Nine Months Ended September 30,
	2009			2010
Expected dividend yield		0.0	%		0.0	%
Expected volatility		74	%		75	%
Risk-free interest rate		1.92-2.04	%		2.63-3.00	%
Expected life in years		6			6

EDGAR ONLINE, INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

(IN THOUSANDS, EXCEPT SHARE DATA)

(UNAUDITED)

The assumptions used in calculating the value of stock options, which involve inherent uncertainties and the application of management judgment, were based on the following:

•

Expected dividend yield —reflects the Company’s present intention to retain earnings, if any, for use in the operation and expansion of the Company’s business;

•

Expected volatility —determined considering historical volatility of the Company’s common stock over the preceding six years;

•

Risk-free interest rate —based on the yield available on U.S. Treasury zero coupon issues with a remaining term approximating the expected life of the stock option awards; and

•

Expected life —calculated as the weighted average period that the stock option awards are expected to remain outstanding based on historical experience.

Stock Options and Restricted Stock Grants as of September 30, 2010

In May 2005, the Company adopted the 2005 Stock Award and Incentive Plan (the “2005 Plan”) which replaced all previous stock option plans which in total had authorized the issuance of options to purchase up to 4.1 million shares of the Company’s common stock since the Company’s inception. All remaining available shares under the Company’s prior stock option plans became available under the 2005 Plan upon its adoption. In addition, the 2005 Plan, when adopted, authorized 1,087,500 new shares of common stock for equity awards. The 2005 Plan authorizes a broad range of awards, including stock options, stock appreciation rights, restricted stock, non-restricted stock and deferred stock. At the Annual Meeting of Stockholders held on June 23, 2008, the 2005 Plan was amended to increase the number of shares available for grant by 1,000,000. At the Annual Meeting of Stockholders held on June 10, 2009, the 2005 Plan was amended to increase the number of shares available for grant by an additional 1,000,000 shares. The 2009 amendment also makes clear that under the 2005 Plan the Company may not reprice stock options or stock appreciation rights without shareholder approval.

Option awards are generally granted with an exercise price equal to the closing market price of the Company’s common stock on the date of grant. Option awards generally vest over three years and have ten year contractual terms.

Option activity for the nine months ended September 30, 2010 is as follows:


	NUMBER OF OPTIONS			WEIGHTED AVERAGE EXERCISE PRICE		WEIGHTED AVERAGE REMAINING CONTRACTUAL TERM		AGGREGATE INTRINSIC VALUE
Outstanding at December 31, 2009		3,618,362		$	2.12
Granted		435,000		$	1.64
Exercised		(50,000	)	$	1.39
Cancelled		(471,825	)	$	3.12


Outstanding at September 30, 2010		3,531,537		$	1.73		4.61 years	$	111


Exercisable at September 30, 2010		2,820,045		$	2.04		5.18 years	$	77

EDGAR ONLINE, INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

(IN THOUSANDS, EXCEPT SHARE DATA)

(UNAUDITED)

The aggregate intrinsic value represents the difference between the exercise price of the underlying awards and the market price of the Company’s common stock for those awards that have an exercise price below the market price at September 30, 2010. During the nine months ended September 30, 2010, the aggregate intrinsic value of options exercised under the Company’s stock option plans was approximately $33. Cash received from stock options exercised during the nine months ended September 30, 2010 was $70.

In addition, the Company has historically granted restricted shares under the 2005 Plan as well as out of the Company’s treasury stock. Restricted shares have no exercise price and vest depending on the individual grants. The fair value of the restricted shares is based on the market value of the Company’s common stock on the date of grant. Restricted share activity is as follows:


	NUMBER OF SHARES			WEIGHTED AVERAGE GRANT-DATE FAIR VALUE		AGGREGATE INTRINSIC VALUE
Non-vested at December 31, 2009		169,686		$	2.47
Granted		675,000		$	1.42
Vested		(73,345	)	$	2.50
Cancelled		(57,142	)	$	2.90

Non-vested at September 30, 2010		714,199		$	1.44	$	871

The aggregate intrinsic value was calculated based on the market price of the Company’s common stock at September 30, 2010. During the nine months ended September 30, 2010, the aggregate intrinsic value of shares vested was $110, determined based on the market price of the Company’s common stock on the respective vesting dates.

At September 30, 2010, 1,460,010 shares were available for grant under the 2005 Plan. The Company has requested shareholders approve an increase of 5,955,109 shares to be available for grant under the Plan at its annual meeting of stockholders scheduled on November 18, 2010.

(7) CONCENTRATION OF RISK AND FAIR VALUE OF FINANCIAL INSTRUMENTS

Financial instruments that potentially subject the Company to significant concentration of credit risk consist primarily of accounts receivable. R.R. Donnelley & Sons accounted for 27% of accounts receivable at December 31, 2009 and 41% of accounts receivable at September 30, 2010. PR Newswire accounted for 0% of accounts receivable at December 31, 2009 and 11% of accounts receivable at September 30, 2010. There was no other one customer that accounted for more than 10% of accounts receivable at December 31, 2009 or September 30, 2010.

R.R. Donnelley & Sons comprised 28% and 36% of the Company’s total revenue for the three months ended September 30, 2009 and 2010, respectively, and 18% and 31% of the Company’s total revenue for the nine months ended September 30, 2009 and 2010, respectively. The Company’s other customers are geographically dispersed throughout the United States with no one customer accounting for more than 10% of revenues during the three or nine months ended September 30, 2009 and 2010, In addition, the Company has not experienced any significant credit losses to date from any one customer

The financial statement carrying value of the Company’s cash and cash equivalents, short-term investments, accounts receivable, accounts payable and accrued liabilities at December 31, 2009 and September 30, 2010, approximate their fair value because of the immediate or short-term maturity of these instruments. The Company maintains a cash balance at one financial institution with balances insured by the Federal Deposit Insurance Corporation (“FDIC”). At times, the balance at such financial institution exceeds the FDIC insured limits. The financial statement carrying value of the Company’s long-term debt approximates its fair value based on interest rates currently available to the Company for borrowings with similar characteristics and maturities.

EDGAR ONLINE, INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

(IN THOUSANDS, EXCEPT SHARE DATA)

(UNAUDITED)

(8) SEVERANCE COSTS

On March 31, 2010, our former Chief Financial Officer resigned from the Company. As part of the separation and release agreement, the Company will pay $187 and continue medical benefits for a ten-month period. In addition, as part of the agreement, 50,000 options immediately vested. As a result, the Company recorded severance costs totaling $227 and additional paid-in capital was increased by $28 to recognize previously unrecognized stock compensation expense remaining from the original grant date valuations of the options. In July 2010, the Company effected a workforce reduction and recorded $211 of severance costs. At September 30, 2010, there were $91 of severance costs payable through January 2011 included in accrued expenses.

(9) REDEEMABLE PREFERRED STOCK

On January 28, 2010, The Company sold 120,000 shares of Series B Preferred Stock to Bain Capital Venture Integral Investors, LLC (“Bain”) at $100 per share for total proceeds of $12,000. The carrying value of the Series B Preferred Stock at September 30, 2010 is as follows:


Original face value plus accrued dividends	$	12,921
Issuance costs and beneficial conversion feature discount		(1,021	)
Accretion on preferred stock		47

	$	11,947

The carrying value of the Series B Preferred Stock is reduced by the issuance stock costs and any beneficial conversion feature discounts and is then accreted back to redemption value over the eight year redemption period.

Each share of Series B Preferred Stock is convertible into a number of shares of the Company’s common stock determined by dividing the purchase price per share plus accrued dividends by an initial conversion price of $1.10 per share, subject to standard antidilution adjustments. However, the shares of Series B Preferred Stock are not convertible to the extent that such conversion would result in the Purchaser and its affiliates owning in excess of 19.9% of the shares of the Company’s voting power. The holders of Series B Preferred Stock are entitled to the number of votes equal to the number of shares of common stock into which such holder’s Series B Preferred Stock are convertible, subject to the same limitations on conversion as set forth in the preceding sentence. The Series B Preferred Stock contains a compounding, cumulative 11.44037% per annum dividend. Following the fifth anniversary of the issuance of the Series B Preferred Stock, the dividend will no longer accrue unless declared by the Board of Directors of the Company. The dividends will be cumulative, whether or not declared, accrue daily and compound annually. No cash dividends are payable unless cash dividends are declared on common shares.

On or at any time after the eighth anniversary of the Purchase Agreement (January 28, 2018), if requested by holders of at least a majority of the then outstanding Series B Preferred Stock, each holder of Series B Preferred Stock shall have the right to require the Company to redeem all the Series B Preferred Stock, for cash, at a redemption price equal to the original purchase price plus all accrued and unpaid dividends thereon.

In the event of a liquidation, dissolution or wind up of the Company, the holders of the Series B Preferred Stock are entitled to a liquidation preference equal to the greater of (i) the original purchase price plus all accrued and unpaid dividends thereon, or (ii) the amount that would be payable in respect of a share of common stock if all outstanding shares of Series B Preferred Stock were converted into common stock immediately prior to such liquidation (without regard as to whether sufficient shares of common stock are available out of the Company’s authorized but unissued stock, for the purpose of effecting the conversion of the Series B Preferred Stock). The amount of liquidation preference calculated in accordance with the provisions of item (ii) of this paragraph at September 30, 2010 is approximately $14,331 based on the market price of the Company’s common stock on September 30, 2010.

EDGAR ONLINE, INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

(IN THOUSANDS, EXCEPT SHARE DATA)

(UNAUDITED)

In the event of a change in control of the Company as defined in the agreement, each holder of Series B Preferred Stock shall have the right to require the Company to redeem all or a portion of such holder’s Series B Preferred Stock for cash, if the consideration in such change of control transaction is cash, but otherwise for consideration in the same form as all other stockholders will receive in such transaction, at a redemption price per share of Series B Preferred Stock equal to the greater of (i) the fair market value per share valued as of the date of the change of control determined on an as-converted to common stock basis (without regard as to whether sufficient shares of common stock are available out of the Company’s authorized but unissued stock, for the purpose of effecting the conversion of the Series B Preferred Stock) and (ii) the original purchase price plus all accrued and unpaid dividends thereon, provided, however, that in the event of a change of control prior to the fifth anniversary of the issue date, accrued and unpaid dividends will include all dividends that would have accrued thereon from the issue date through and including the fifth anniversary of the issue date. The amount payable to the Series B stockholders calculated in accordance with the provisions of item (ii) of this paragraph at September 30, 2010 would have been approximately $22,875 based on the market price of the Company’s common stock on that date.

The redemption value of the Series B Preferred Stock, representing the original purchase price plus accrued and unpaid dividends, and the number of common shares issuable in the event the conversion provisions are exercised, at December 31 of each of the succeeding five year periods and at the fifth anniversary of the Agreement is expected to be as follows:


YEAR	REDEMPTION VALUE		COMMON SHARES ISSUABLE UPON CONVERSION
2010	$	13,267		12,061,364
2011	$	14,785		13,441,182
2012	$	16,481		14,983,182
2013	$	18,367		16,697,273
2014	$	20,468		18,607,545
January 28, 2015	$	20,625		18,750,000

(10) RELATED PARTY TRANSACTIONS

The Company reimbursed Bain $154 for costs related to the issuance of the Series B Preferred Stock. Two principals of Bain were appointed to our Board of Directors in accordance with the terms of the Series B Preferred Stock, and representatives of Bain from time to time have, or will, provide consulting services to us. Effective September 30, 2010, one of those principals, John M. Connolly, was named interim Chief Executive Officer and President after the resignation of Philip D. Moyer, There were no fees paid to the Bain Board Members or consultants for the nine months ended September 30, 2010.

(11) INCOME TAXES

Since its inception, the Company has incurred net operating losses and has incurred no federal or state income tax expense. At December 31, 2009, the Company had approximately $40,000 in federal net operating losses which will expire between 2011 and 2029, and approximately $38,000 of state net operating loss carry forwards which will expire between 2010 and 2027. Under Section 382 of the Internal Revenue Code of 1986, as amended, the utilization of net operating loss carry forwards is subject to annual limitations based on past and future changes in ownership of the Company. The Company has determined that it has experienced multiple ownership changes since inception, but does not believe that these past changes in ownership will restrict its ability to use its losses and credits within the carry forward period. Approximately $13,000 of the total federal net operating loss is currently subject to an annual limitation of approximately $1,400 per year. If we have further ownership changes, additional annual limitations on the use of our net operating loss carry-forwards may be imposed.

(12) RECENT ACCOUNTING PRONOUNCEMENTS

In September 2009, the Financial Accounting Standards Board issued authoritative guidance on revenue arrangements with multiple deliverables that are not covered by software revenue recognition guidance. This guidance provides another alternative for establishing fair value for a deliverable when vendor specific objective evidence or third-party evidence for deliverables in an arrangement cannot be determined. Under this guidance, companies will be required to develop a best

EDGAR ONLINE, INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

(IN THOUSANDS, EXCEPT SHARE DATA)

(UNAUDITED)

estimate of the selling price for separate deliverables. Arrangement consideration will need to be allocated using the relative selling price method as the residual method will no longer be permitted. This guidance is effective January 1, 2011, and early adoption is permitted. The Company is currently evaluating the impact, if any, of this guidance on its consolidated financial statements.

Other recently issued accounting pronouncements are not expected to have a material impact on the Company’s financial position or results of operations.

(13) MERGER AGREEMENT AND STOCK SALE AGREEMENT

On June 23, 2010, the Company, through its wholly owned subsidiary UBM Acquisition Corp., entered into a merger agreement with UBmatrix, Inc., an XBRL software provider to independent software vendors and major U.S. and international regulators. The merger will be an all equity transaction with the issuance by the Company of a combination of designated Series C Preferred Stock and common stock. The issuance of stock in this merger is subject to approval of the stockholders of the Company. If the merger is approved and becomes effective, the stockholders of UBmatrix will receive an initial payment of 74,379 shares of EDGAR Online Series C Preferred Stock (initially redeemable into 5,129,573 shares of common stock) and 2,685,088 shares of EDGAR Online common stock. A portion of the common stock will be issued to certain employees of UBmatrix and will be issued pursuant to our 2005 Plan. A total of 1,622,042 shares of the common stock will be held in escrow for a period of twelve months to secure the post-closing indemnification obligations of the UBmatrix stockholders.

Each share of Series C Preferred Stock will be redeemable into 100 shares of common stock at a conversion price of $1.45 per share. The Series C Preferred Stock will carry an 11.44037% dividend payable in additional convertible shares. Through January 28, 2015, the maturity date, the Series C Preferred Stock will earn paid-in-kind dividends that will result in an additional 2,998,957 shares of EDGAR Online common stock being issuable upon conversion. The Series C Preferred Stock will contain change of control, liquidation and other preferences substantially similar to the Series B Preferred Stock (see Note 9 – Redeemable Preferred Stock ).

The definitive merger agreement has been approved by the Boards of Directors of both companies and by a requisite number of stockholders of UBmatrix. The issuance of the EDGAR Online stock in the merger and certain of the other transactions contemplated by the merger agreement are subject to a vote by the EDGAR Online stockholders. Closing is contingent on this approval as well as other customary closing conditions. If the issuance of stock in the merger is approved by stockholders, it is anticipated that the merger will be consummated in the fourth quarter of 2010.

In connection with the merger agreement and simultaneously with the closing, the UBmatrix stockholders will purchase an additional $2,000 worth of Series C Preferred Stock for cash (initially redeemable into 871,546 shares of common stock) pursuant to a Stock Purchase Agreement. This offering will earn paid-in-kind dividends through January 28, 2015, that will result in an additional 509,542 shares of EDGAR Online common stock being issuable upon conversion.

(14) SUBSEQUENT EVENTS

Effective September 30, 2010 (the “Resignation Date”), Philip D. Moyer resigned from his duties as Chief Executive Officer and President and John M. Connolly was named interim Chief Executive Officer and President. On October 13, 2010, the Company and Mr. Moyer entered into an agreement (the “Agreement’) under which Mr. Moyer provides certain advisory and consulting services to the Company until March 31, 2011 for a monthly fee. Also per the Agreement, Mr. Moyer’s unvested stock options and restricted shares of the Company’s stock were forfeited as of the Resignation Date and his vested stock options remain exercisable for a period of twelve months following the Resignation Date. The Agreement also specifies certain non-compete, non-solicit and non-servicing obligations and mutual release provisions.

On October 29, 2010, the Company entered into Amendment No. 2 to the R. R. Donnelley Services Agreement, which renewed the Agreement for the third year of its term and also extendend such term through December 31, 2011. The Amendment also modified the Agreement’s renewal conditions so that R.R. Donnelley must elect to renew the Agreement by September 30, 2011 for the Agreement to continue beyond calendar 2011 and sets fees and volume commitments through the remainder of the term.

ITEM 2.

MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS (IN THOUSANDS)

OVERVIEW

We create and distribute financial data and public filings for equities, mutual funds, and a variety of other publicly traded assets. We produce highly detailed data that helps in the analysis of the financial, business and ownership conditions of an investment. We are considered a pioneer and leader in the rapidly emerging financial reporting standard, XBRL, and use our automated processing platform and our expertise in XBRL to produce both datasets and tools to assist organizations with the creation, management and distribution of XBRL financial reports. We launched our EDGAR Online web site and began selling our subscription services and establishing contractual relationships with business and financial information web sites to supply EDGAR content in January 1996.

We recognize revenue from providing the following services:

XBRL Filings. One of our data solutions provides partners and customers with a mechanism for converting financial statements into XBRL for filing with the SEC and potentially other regulators. R.R. Donnelley & Sons is one of our partners in this channel, whereby we provide services to their customer base for compliance with existing and upcoming SEC regulations mandating the submission of XBRL tagged company reports. This XBRL filing solution leverages our data processing engine and proprietary business rules that we have developed for tagging US GAAP financials with the appropriate XBRL tags. Our process combines our XBRL knowledge and expertise with data-tagging automation and workflow. We recognize revenue from fixed fee arrangements on a ratable basis as well as per-filing fees as the services are provided. As of December 30, 2009, our relationship with R.R. Donnelley & Sons became non-exclusive for both parties. Since then, we have signed an agreement with PR Newswire and we are exploring other potential XBRL partnerships and distribution agreements. We plan to structure our future agreements on the model we signed with other financial printers in which we receive minimum filings fees and/or minimum conversions; however, we may on occasion sign contracts without minimums where we believe the relationship will not be material to our capacity or revenues, or where doing so would otherwise be advantageous to our interests. For 2010, we have contracted minimum fee commitments totaling $5.5 million with respect to our XBRL filings channel.

Data and Solutions. We produce a specialized line of data feeds, products and solutions based on content sets that we have extracted from SEC filings and other data providers. Both our data products and solutions consist of digital data feeds transmitted through various formats including hosted web pages, multiple application programming interfaces, and other response mechanisms. Our data products include, but are not limited to, full access to SEC filings in multiple formats, standardized and as-reported fundamental financial data, annual and quarterly financial statements, insider trades, institutional holdings, initial and secondary public offerings, Form 8-K disclosures, electronic prospectuses and other investment instrument disclosure information. Our data solutions include the customization of our data products, the conversion of data from unstructured content into multiple formats including XML, XBRL and PDF, the storage and delivery of data and custom feeds and tools to access the information. Revenue from data licenses is recognized over the term of the contract, which are typically non-cancelable, one-year contracts with automatic renewal clauses. Our data solutions sometimes involve some upfront customization fees along with more traditional annual data licensing arrangements for the ongoing delivery of the data solution. In addition, some of our data solutions are billed on a time and materials basis, per service level agreements or for delivery of data. We review each contract in connection with the respective governing accounting literature to determine revenue recognition on a case-by-case basis. Revenue from time and materials based agreements and data delivery is recognized as the data and services are provided. Upfront customization fees are recorded systematically over the expected customer relationship period.

Subscriptions . Our end-user subscription services include I-Metrix and I-Metrix Professional, EDGAR Pro and EDGAR Access. I-Metrix delivers a web only service while I-Metrix Professional allows a user to do in-depth analysis of companies and industries by providing fundamental data and a suite of tools and models that allow users to search, screen and evaluate the data via the web and a Microsoft Excel add-in. EDGAR Pro offers financial data, stock ownership, public offering data sets and advanced search tools for corporate reports filed via the EDGAR system. It is available via multi-seat and enterprise-wide contracts, and may also include add-on services such as global annual reports and conference call transcripts. EDGAR Access, our retail product, has fewer features than EDGAR Pro and is available via single-seat, credit card purchase only. Subscriptions also includes ancillary advertising and e-commerce revenues through the sale of advertising banners, sponsorships and through e-commerce activities such as marketing third party services to the users of our web sites. Revenue from subscription services is recognized ratably over the subscription period, which is typically one year. Advertising and e-commerce revenue is recognized as the services are provided.

CRITICAL ACCOUNTING POLICIES

There have been no material changes in our critical accounting policies and estimates from those disclosed in Item 7 of our Annual Report on Form 10-K for the year ended December 31, 2009.

RESULTS OF OPERATIONS

The following table sets forth the percentage relationships of certain items from our Condensed Consolidated Statements of Operations as a percentage of total revenues.


	THREE MONTHS ENDED SEPTEMBER 30,						NINE MONTHS ENDED SEPTEMBER 30,
	2009			2010			2009			2010
Total revenues		100	%		100	%		100	%		100	%
Cost of revenues		22			44			25			39


Gross profit		78			56			75			61
Operating expenses:
Sales and marketing		13			10			17			13
Product development		9			8			11			9
General and administrative		36			51			42			47
Severance costs		—			4			—			3
Amortization and depreciation		11			16			11			15


Income (loss) from operations		9			(33	)		(6	)		(26	)
Interest and other, net		(2	)		(1	)		(2	)		(2	)


Net income (loss)		7	%		(34	)%		(8	)%		(28	)%

REVENUES

Total revenues for the three months ended September 30, 2010 decreased 2% to $5,158 from total revenues of $5,242 for the three months ended September 30, 2009. The net decrease in revenues was primarily attributable to a $481, or 33%, increase in XBRL filings revenues which was more than offset by a $278, or 18% decrease in subscriptions revenues and a $287, or 13%, decrease in data and solutions revenues. Total revenues for the nine months ended September 30, 2010 increased 4% to $14,544, from $14,044 for the nine months ended September 30, 2009. The net increase in revenues was primarily attributable to a $2,154, or 87%, increase in XBRL filings revenues which was partially offset by a $923, or 18%, decrease in subscriptions revenues and a $731, or 11%, decrease in data and solutions revenues.

XBRL FILINGS


	THREE MONTHS ENDED SEPTEMBER 30,						NINE MONTHS ENDED SEPTEMBER 30,
	2009			2010			2009			2010
Revenues (in $000s)	$	1,478		$	1,959		$	2,488		$	4,642
Percentage of total revenue		28	%		38	%		18	%		32	%

The increase in XBRL filings revenues for the three and nine months ended September 30, 2010 from the three and nine months ended September 30, 2009 was primarily related to the SEC rules that require certain companies to file their documents in XBRL beginning with the quarter ended after June 15, 2009, as well as XBRL conversions from companies that were not required to file with the SEC.

DATA AND SOLUTIONS


	THREE MONTHS ENDED SEPTEMBER 30,						NINE MONTHS ENDED SEPTEMBER 30,
	2009			2010			2009			2010
Revenues (in $000s)	$	2,179		$	1,892		$	6,434		$	5,703
Percentage of total revenue		42	%		37	%		46	%		39	%
Number of contracts at September 30		300			307			300			307

Data and solutions revenues decreased for the three and nine months ended September 30, 2010 from the three and nine months ended September 30, 2009 primarily due to a decrease in data solutions revenues resulting in reductions from one contract. Although the number of data license contracts has increased, the revenues from data licenses has decreased from prior year as there were several large cancellations in 2009.

SUBSCRIPTIONS


	THREE MONTHS ENDED SEPTEMBER 30,						NINE MONTHS ENDED SEPTEMBER 30,
	2009			2010			2009			2010
Revenues (in $000s)	$	1,585		$	1,307		$	5,122		$	4,199
Percentage of total revenue		30	%		25	%		36	%		29	%
Average price per subscriber	$	640		$	568		$	690		$	609
Number of subscribers at September 30		9,900			9,200			9,900			9,200

Subscription revenues for the three and nine months ended September 30, 2010 decreased from the three and nine months ended September 30, 2009 due to decreased sales of our premium products, EDGAR Pro and I-Metrix Professional, as well as decreased sales of EDGAR Access, our retail service. Our subscription business has been impacted by unprecedented business and workforce reductions in the financial services community over the past year and the recent and continuing economic downturn in general. While we continue to add new subscribers to all of our subscription products, cancellations exceeded these new sales during the referenced periods.

COST OF REVENUES

Cost of revenues primarily consists of salaries and benefits of operations employees to create XBRL filings and produce data sets, fees paid to acquire data and the amortization of costs related to developing our I-Metrix products that were previously capitalized. Total cost of revenues for the three months ended September 30, 2010 increased $1,097, or 96%, to $2,244 from $1,147 for the three months ended September 30, 2009. The net increase in cost of revenues was primarily due to an $1,102 increase in payroll related expenses related to our XBRL filings business. Total cost of revenues for the nine months ended September 30, 2010 increased $2,227, or 64%, to $5,706 from $3,479 for the nine months ended September 30, 2009. The net increase in cost of revenues was primarily due to a $2,123 increase in payroll related expenses related to our XBRL filings business and a $166 increase in XBRL related production costs.

GROSS PROFIT

Gross profit for the three months ended September 30, 2010 decreased $1,181, or 29%, to $2,914 from $4,095 for the three months ended September 30, 2009. The gross profit percentage decreased to 56% for the three months ended September 30, 2010 from 78% for the three months ended September 30, 2009. Gross profit for the nine months ended September 30, 2010 decreased $1,727, or 16%, to $8,838 from $10,565 for the nine months ended September 30, 2009. The gross profit percentage decreased to 61% for the nine months ended September 30, 2010 from 75% for the nine months ended September 30, 2009. The decreases in the gross profit percentages were due to the higher costs related to XBRL filings revenues which have increased as a percentage of total revenues. We expect our gross profit percentages will continue to decline as we increase our XBRL business since the gross profit margins related to the XBRL business are lower than our historical gross profit margins from our data and subscription businesses.

OPERATING EXPENSES

Sales and Marketing . Sales and marketing expenses consist primarily of salaries and benefits, sales commissions, advertising expenses, and costs of marketing materials. Sales and marketing expenses for the three months ended September 30, 2010 decreased $174, or 25%, to $527 from $701 for the three months ended September 30, 2009. The net decrease was primarily due to a $167 decrease in payroll related expenses. Sales and marketing expenses for the nine months ended September 30, 2010 decreased $487, or 20%, to $1,963 from $2,450 for the nine months ended September 30, 2009. The net decrease was primarily due to a $262 decrease in payroll related expenses and a $202 decrease in stock compensation expense.

Development . Development expenses, which consist primarily of salaries and benefits and outside development costs, for the three months ended September 30, 2010 decreased $38, or 8%, to $440 from $478 for the three months ended September 30, 2009. The decrease was primarily due to a $29 decrease in payroll related costs and a $21 decrease in stock compensation expense. Development expenses for the nine months ended September 30, 2010 decreased $219, or 15%, to $1,272 from $1,491 for the nine months ended September 30, 2009. The decrease was primarily due to an $89 decrease in professional fees as well an $84 decrease in payroll related costs and a $46 decrease in stock compensation expense.

General and Administrative . General and administrative expenses consist primarily of salaries and benefits, insurance, fees for professional services, general corporate expenses and facility expenses. General and administrative expenses for the three months ended September 30, 2010 increased $737, or 39%, to $2,634 from $1,897 for the three months ended September 30, 2009. The net increase was primarily due to a $306 increase in professional fees, a $274 increase in payroll related expenses, a $98 increase in stock compensation expense and a $32 increase in rent. General and administrative expenses for the nine months ended September 30, 2010 increased $1,002, or 17%, to $6,799 from $5,797 for the nine months ended September 30, 2009. The net increase was primarily due to a $485 increase in professional fees, a $445 increase in payroll related expenses and a $125 increase in rent.

Severance Costs . In the nine months ended September 30, 2010, we accrued $227 of severance costs related to the resignation of our former Chief Financial Officer. As part of the severance agreement, 50,000 options immediately vested. As a result, additional paid-in capital was increased by $28 to recognize previously unrecognized stock compensation expense remaining from the original grant date valuations of the options. We also recognized $211 of severance costs related to workforce reductions in July 2010. In the nine months ended September 30, 2009, we accrued $57 of severance costs related to workforce reductions.

Depreciation and Amortization . Depreciation and amortization expenses include the depreciation of property and equipment and the amortization of definite lived intangible assets. Depreciation and amortization for the three months ended September 30, 2010 increased $233, or 41%, to $801 from $568 for the three months ended September 30, 2009. Depreciation and amortization for the nine months ended September 30, 2010 increased $591, or 37%, to $2,189 from $1,598 for the nine months ended September 30, 2009. The increases are a result of increased capital expenditures and the addition of amortization expense related to capitalized XBRL development costs.

LIQUIDITY AND CAPITAL RESOURCES

Net cash used by operating activities was $1,434 for the nine months ended September 30, 2010 compared to net cash provided by operations of $1,043 for the nine months ended September 30, 2009, primarily due to the increase in net loss for the nine months ended September 30, 2010.

Net cash used in investing activities was $2,091 for the nine months ended September 30, 2010 compared to net cash used in investing activities of $1,284 for the nine months ended September 30, 2009. The increase for the nine months ended September 30, 2010 was due to a $213 increase in capital expenditures and a $593 increase in capitalized product development costs.

Net cash provided by financing activities was $10,927 for the nine months ended September 30, 2010 compared to net cash used of $297 for the nine months ended September 30, 2009. On January 28, 2010 we issued 120,000 shares of our Series B Preferred Stock for $12,000, offset by fees incurred of $768. Generally, each Series B Preferred Share is convertible into shares of our common stock determined by dividing the purchase price per share plus accrued dividends by a conversion price of $1.10 per share. Under certain conditions, we may be required to redeem all or part of the Series B Preferred Shares at fair value (see Note 9, Redeemable Preferred Stock of the accompanying notes to unaudited financial statements). We expect to use a substantial portion of the proceeds from the issuance to support investment in personnel, infrastructure, training and other costs related to our XBRL filings business.

We are party to a Financing Agreement with Rosenthal and Rosenthal, Inc. (“Rosenthal”) for additional working capital. Under the Financing Agreement, Rosenthal made a term loan in the original principal amount of $2,500 to us and has provided a revolving line of credit of up to $2.5 million of which approximately $2.0 million would have been available to us at June 30, 2010 in accordance with the provisions of the agreement. Interest on outstanding borrowings under the Financing Agreement is payable at variable rates of interest over the published JPMorgan Chase prime rate (with a minimum prime rate of 6%), 2.5% on the term loan and 2% on borrowings under the revolving credit facility. Our obligations under the term loan are evidenced by a secured Term Note and are secured by a first priority security interest in substantially all of our assets. We are required to maintain certain collateral ratios and financial covenants under the agreement, as amended. We were in compliance with these ratios and covenants, as amended, at September 30, 2010. At September 30, 2010 we had sufficient cash to repay the outstanding indebtedness under the term loan. The Financing Agreement, as amended, terminates on March 30, 2011 unless sooner terminated by either party in accordance with the terms of the Financing Agreement.

At September 30, 2010, we had cash and cash equivalents on hand of $9,503. We have no off-balance sheet arrangements at September 30, 2010. We believe that our existing capital resources will be sufficient to meet our anticipated cash needs for funding working capital needs, capital expenditures and debt obligations for at least the next 12 months. Thereafter, if the remaining cash from the proceeds from our Series B preferred stock issuance and cash generated from operations is insufficient to satisfy our liquidity requirements, we may need to raise additional funds through public or private financings, strategic relationships or other arrangements. There can be no assurance that such additional funding, if needed, will be available on terms attractive to us, or at all. The failure to raise capital when needed could materially adversely affect our business, results of operations and financial condition. If additional funds are raised through the issuance of equity securities, the percentage ownership of our then-current stockholders would be reduced.

In addition, if the merger agreement with UBmatrix Inc. is approved by the stockholders, we may be required to invest capital to support that business. In anticipation of that requirement, simultaneous with the closing of the merger agreement the Company will receive $2 million in additional capital from sale of additional Series C Preferred Stock to certain current investors in UBmatrix which amount will be in addition to the working capital of UBmatrix acquired at closing (see Note 13- Merger Agreement and Stock Purchase Agreement in the accompanying financial statements).

ITEM 3.

QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK.

There have been no material changes in our exposure to market risk from that disclosed in Item 7A of our Annual Report on Form 10-K for the year ended December 31, 2009.

ITEM 4.

CONTROLS AND PROCEDURES

Conclusion Regarding Effectiveness of Disclosure Controls and Procedures

We carried out an evaluation under the supervision and with the participation of our management, including our Chief Executive Officer and Chief Financial Officer, of the design and effectiveness of our disclosure controls and procedures, as defined in Rules 13a-15(e) and 15d-15(e) of Exchange Act, as of the end of the period covered by this Quarterly Report. Based on the evaluation of our disclosure controls and procedures, our Chief Executive Officer and Chief Financial Officer have concluded that, as of the end of the period covered by this report, our disclosure controls and procedures were effective to provide reasonable assurance that the information required to be disclosed by us in reports filed under the Exchange Act, is recorded, processed, summarized and reported within the time periods specified in the SEC’s rules and forms, and that information required to be disclosed by us in the reports we file or submit under the Exchange Act, is accumulated and communicated to our management, including our principle executive and financial officers, or persons performing similar functions, as appropriate to allow timely decisions regarding required disclosure. It should be noted that the design of any system of controls is based in part upon certain assumptions about the likelihood of future events, and can therefore only provide reasonable, not absolute, assurance that the design will succeed in achieving its stated goals.

Changes in Internal Control over Financial Reporting

We hired our new Chief Financial Officer, David J. Price, effective July 6, 2010. Effective September 30, 2010, Philip D. Moyer resigned from his duties as Chief Executive Officer and President. John M. Connolly, a member of our Board of Directors, was appointed Interim Chief Executive Officer and President as of that date. There were no other changes in our internal control over financial reporting during the most recently completed fiscal quarter that materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.

Inherent Limitations of Controls

Because of their inherent limitations, disclosure controls and procedures and internal control over financial reporting may not prevent or detect misstatements. Also, projections of any evaluation of effectiveness to future periods are subject to the risk that controls may become inadequate because of changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate. policies or procedures may deteriorate.

PART II. OTHER INFORMATION.

ITEM 1.

LEGAL PROCEEDINGS.

None

ITEM 1A.

RISK FACTORS.

The following risk factors relate to our proposed merger with UBmatrix.

We may not realize all of the anticipated benefits of the UBmatrix acquisition.

The success of the merger will depend, in part, on our ability to realize the anticipated growth opportunities and strategic synergies from combining the businesses of our company and UBmatrix. Our ability to realize these benefits, and the timing of this realization, depend upon a number of factors, including:

•

continued adoption of XBRL by regulators filers and financial analysts in the United States and globally;

•

our ability to preserve and expand UBmatrix’s and EDGAR Online’s existing and potential channel partnerships;

•

our ability to preserve and expand important customers of data, regulatory or filing offerings;

•

our ability to effectively consolidate research and development operations, software development technologies and product planning functions;

•

the pricing the market will bear for XBRL filing, regulation systems and data;

•

customer acceptance of our strategy to cross sell our products and services;

•

other technology solutions or service offerings that develop greater market acceptance than ours;

•

prior art, prior patents or developments in intellectual property law that reduce the effectiveness of our own intellectual property positions;

•

unforeseen technology integration issues or additional development that must be done to improve the competitiveness of our combined offerings

•

the ability of our team to scale our infrastructure and resources to meet the demands of our customers, partners and new markets simultaneously;

•

unforeseen capital requirements, skill requirements or regulatory requirements to enter new markets;

•

the ability of our team to scale our infrastructure and resources using our current capital base;

•

retaining and attracting key employees;

•

consolidating corporate and administrative functions;

•

effective business development efforts; and

•

minimizing the diversion of management’s attention from ongoing business concerns.

The number of shares of our Series C Stock and common stock to be issued to the securityholders and service providers of UBmatrix is not adjustable based on the market price of our common stock, so the merger consideration at the closing may have a greater or lesser value than at the time the merger agreement was signed.

The parties to the merger agreement have determined the number of shares of Series C Stock and common stock to be issued to UBmatrix’s securityholders and service providers, and this number is not adjustable based on changes in the market price of our common stock. Any changes in the market price of our common stock will not affect the number of shares that holders of UBmatrix securities will be entitled to receive pursuant to the merger. Therefore, if the market price of our common stock declines from the market price on the date of the merger agreement prior to the consummation of the merger, UBmatrix securityholders and service providers could receive merger consideration with considerably less value. Similarly, if the market price of our common stock increases from the market price on the date of the merger agreement prior to the consummation of the merger, UBmatrix securityholders and service providers could receive merger consideration with considerably more value than their UBmatrix securities, and our stockholders immediately prior to the merger will not be compensated for the increased market value of our common stock. Because the number of shares of our common stock to be issued to the securityholders and service providers of UBmatrix does not adjust as a result of changes in the value of our common stock, for each 1% that the market value of our common stock rises or declines, there is a corresponding 1% rise or decline, respectively, in the value of the total merger consideration issued to the UBmatrix securityholders and service providers.

Our stockholders may not realize a benefit from the merger commensurate with the ownership dilution they will experience in connection with the merger.

If the combined company is unable to realize the strategic, operational and financial benefits currently anticipated from the merger, you may experience substantial dilution of your ownership interest in our company without receiving any commensurate benefit.

The merger is subject to conditions to closing that could result in the merger being delayed or not consummated, which could negatively impact our stock price and future business and operations.

The merger is subject to conditions to closing as set forth in the merger agreement, including obtaining the requisite approval of our stockholders. The requisite approval of the stockholders of UBmatrix to the merger was obtained on June 23, 2010. If any of the conditions to the merger are not satisfied or, where permissible, not waived, the merger will not be consummated. Failure to consummate the merger could negatively impact our stock price, future business and operations, and financial condition. Any delay in the consummation of the merger or any uncertainty about the consummation of the merger may adversely affect the future business, growth, revenue and results of operations of the combined company.

Changes to our financial statements resulting from accounting for the acquisition might adversely affect the market value of our common stock following the merger.

In accordance with U.S. GAAP, the merger will be accounted for as a purchase of a business, which will result in changes to our financial statements that could have an adverse impact on the market value of our common stock following completion of the merger. The total estimated purchase price will be allocated to UBmatrix’s net tangible assets, identifiable intangible assets and in-process research and development assets based on their fair values as of the date of completion of the merger. Any excess of the purchase price over those fair values will be allocated to goodwill.

If UBmatrix’s former stockholders, or other holders of our stock, immediately sell our common stock received in the merger, they could cause our common stock price to decline.

If the former stockholders or employees of UBmatrix who receive our shares in the merger, or other holders of our stock, sell significant amounts of our common stock following the merger (in the case of the former stockholders or employees of UBmatrix, after the shares are released from escrow or the restrictions on vesting lapse, as the case may be), the market price of our common stock could decline. These sales may also make it more difficult for us to sell equity securities in the future at a time and at a price that we deem appropriate to raise funds through future offerings of common stock.

Our business and stock price may be adversely affected if the acquisition of UBmatrix is not completed.

Our acquisition of UBmatrix is subject to several customary conditions, including the approvals of the transaction by our stockholders. If our acquisition of UBmatrix is not completed, we could be subject to a number of risks that may adversely affect our business and stock price, including:

•

the potential difficulty of unwinding business plans created in reliance on the license agreement with UBmatrix;

•

the current market price of shares of our common stock reflects a market assumption that the acquisition will be completed; and

•

we would not realize the benefits we expect from acquiring UBmatrix.

After the completion of the merger, the surviving corporation, which will be a wholly-owned subsidiary of our company, will possess not only all of the assets but also all of the liabilities of UBmatrix. Discovery of previously undisclosed or unknown liabilities could have an adverse effect on the combined company’s business, operating results and financial condition.

Acquisitions involve risks, including inaccurate assessment of undisclosed, contingent or other liabilities or problems. After the completion of the merger, the surviving corporation, which will be a wholly-owned subsidiary of our company, will possess not only all of the assets, but also all of the liabilities of UBmatrix. Although we conducted a due diligence investigation of UBmatrix and its known and potential liabilities and obligations, it is possible that undisclosed, contingent or other liabilities or problems may arise after the completion of the merger, which could have an adverse effect on the combined company’s business, operating results and financial condition. The amount of such liabilities may be in excess of the value of the shares of our common stock that will be placed into escrow until the one-year anniversary of the closing of the merger to cover the indemnification obligations of the UBmatrix stockholders under the merger agreement, or such liabilities may not be uncovered until after such shares have been released from escrow.

Our ability to use net operating loss carryforwards to offset future taxable income for U.S. federal income tax purposes is subject to limitation and may be limited further as a result of the merger with UBmatrix and sale of Series C stock.

In general, under Section 382 of the Code, a corporation that undergoes an “ownership change” is subject to limitations on its ability to utilize its pre-change net operating losses, or NOLs, to offset future taxable income. In general, an ownership change occurs if the aggregate stock ownership of certain stockholders increases by more than 50% over such stockholders’ lowest percentage ownership during the testing period (generally three years). Since inception, we have incurred net operating losses and have incurred no federal or state income tax expense. At December 31, 2009, we had approximately $40 million in federal net operating losses which will expire between 2011 and 2029, and approximately $38 million of state net operating loss carry forwards which will expire between 2010 and 2027. We have determined that we have experienced multiple ownership changes since inception, but do not believe that these changes in ownership will restrict our ability to use the losses and credits within the carry forward period. Approximately $13 million of our total federal net operating loss is currently subject to an annual limitation of approximately $1.4 million per year. If we have further ownership changes, additional annual limitations on the use of our net operating loss carry-forwards may be imposed.

In addition, as of its last fiscal year ended September 30, 2009, UBmatrix had federal net operating loss carry forwards of approximately $21 million. We believe that UBmatrix has also experienced multiple ownership changes since its inception, and that the merger will likely result in limitations on our ability to utilize UBmatrix’s net operating losses in the future.

We currently anticipate that the shares issued pursuant to the merger agreement and the sale of Series C stock, together with certain other transactions involving our common stock within the testing period, will result in an ownership change. Even if the merger and the sale of Series C stock do not result in an immediate ownership change, they would significantly increase the likelihood that there would be an additional ownership change in the future (which ownership change could occur as a result of transactions involving our stock that are outside of our control).

In addition to the above described risks regarding our potential merger with UBmatrix, the following risk factors, which were included in our Annual Report on Form 10-K for the fiscal year ended December 31, 2009, have been updated with respect to results from the period covered by this report. Other than those below, there were no other material changes from the risk factors previously reported in our Annual Report on Form 10-K for the fiscal year ended December 31, 2009. Please refer to Item I of our Annual Report for 2009 for disclosures regarding other risks and uncertainties related to our business.

We have a history of losses and we expect to incur losses for the foreseeable future. If we are unable to achieve profitability, our business will suffer and our stock price is likely to decline.

We have never operated at an annual profit and we anticipate incurring a loss in 2010, and may incur additional losses in 2011. At September 30, 2010, we had an accumulated deficit of approximately $73 million. As a result, we will need to significantly increase our revenues to achieve and sustain profitability. If revenues grow more slowly than we anticipate, or if operating and development expenses exceed our expectations or cannot be adjusted accordingly, we may incur further losses in the future. We are highly likely to incur additional costs as we expand our product offerings and increase our intellectual property portfolio which reduces our chances of attaining profitability. We cannot assure you that we will be able to achieve or sustain profitability.

If we fail to increase revenues, we will not achieve or maintain profitability.

Even though our revenues have increased from $14.2 million in 2005 to $19.2 million in 2009, to achieve profitability, we will need to continue to increase revenues substantially through implementation of our growth strategy and/or reduce expenses significantly. Revenues for nine months ended September 30, 2010 totaled $14.5 million. We cannot assure you that our revenues will grow or that we will achieve or maintain profitability in the future.

In 2009, we derived a significant portion of our total revenue from our partnership with R.R. Donnelley & Sons. We cannot guarantee the continuance of this revenue stream or, if it does continue, that it will remain as significant.

Sales to R.R. Donnelley & Sons accounted for 31% of our total revenues for the nine months ended September 30, 2010 and 22% for the year ended December 31, 2009 due to our partnership in which we jointly offer public companies a compliance solution for financial reporting in XBRL. On October 29, 2010, the Company entered into Amendment No. 2 to the R. R. Donnelley Services Agreement, which renewed the Agreement for the third year of its term and also extended such term through December 31, 2011. The Amendment also modified the Agreement’s renewal conditions so that RR Donnelley must elect to renew the Agreement by September 30, 2011 for the Agreement to continue beyond calendar 2011 and sets fees and volume commitments through the remainder of the term. We cannot assure you that the Services Agreement will continue beyond December 31, 2011 or, if it does continue, will consist of terms that will be attractive to us or material to our revenue stream.

On December 30, 2009, we amended our service agreement to make the relationship between us and R.R. Donnelley & Sons non-exclusive for both parties. As such, we cannot guarantee that R.R. Donnelley & Sons will continue to provide us with all of their XBRL assignments, or will not chose another outside organization to translate its XBRL filings. In addition, because R.R. Donnelley & Sons recently announced an intention to purchase Bowne & Co., Inc., a provider of shareholder and marketing communications services, and Bowne & Co., Inc. has an in-house XBRL solution, we cannot assure you that R.R. Donnelley & Sons will continue to use any external XBRL provider.

In addition, our costs relating to our joint XBRL compliance solution, including personnel and other resources dedicated to XBRL conversion, may make the R.R. Donnelley & Sons partnership not as profitable as we expected. Also, any variance or uncertainty in R.R. Donnelley & Sons’ position as one of the market leaders in the printing industry could compromise our position in the compliance market. The loss or decrease in business of the significant relationship we have with R.R. Donnelley & Sons, a decline in the success of R.R. Donnelley & Sons as an industry leader, or if the partnership is not as long or lucrative as we expected could have a material adverse effect on our financial results.

Future delays or changes to the SEC mandate may impact the growth of our XBRL filings business.

Revenues generated from our XBRL filings business are based on a number of factors, including the SEC mandate. The SEC has currently mandated phased-in XBRL filing; filers with over $5 billion in market capital in 2009, large accelerated filers in 2010, and all remaining filers in 2011. Each of the groups must start tagging their primary financial statements in their first year of filing and expand their tagging to include detailed footnotes in the second year of the filing. The SEC, in its final adoption of XBRL as a regulatory standard, initially delayed the implementation of the mandate for U.S. filers from what we originally expected. If the SEC changes or delays the mandate as it now stands, our revenue opportunity could be significantly restricted. Such a restriction would have a materially negative impact on our revenues and financial results.

The adoption of XBRL may potentially commoditize large parts of our business.

The XBRL mandate could commoditize some of our key revenue sources. As data comes out in native format from more companies, there is the potential that our customers may find less of a need for our XBRL dataset, analysis tools or solutions products. There will likely also be more competitors entering the market as the cost of collection is reduced. Any of these market forces could reduce our revenues, inhibit our growth, or increase our costs as we have to build or acquire additional innovations.

In connection with the XBRL conversion services that we offer, we are made aware of information regarding our clients prior to it becoming public. If we fail to keep this information confidential, our business and reputation could be significantly and adversely affected.

Part of our business involves the conversion of materials to XBRL format for filing with the SEC before the information contained in the materials is made public. As such, we are frequently in possession of confidential information and documentation regarding our clients before it is made public. Securities laws and regulations in the US and elsewhere contain penalties for misuse of material nonpublic information of the type we often possess, and violation of these laws and regulations could result in civil and criminal penalties. If we do not keep this information confidential, or misuse it in violation of the aforementioned laws and regulations, we could be subject to civil claims by our clients or other third parties or criminal investigations by appropriate authorities. We could also damage our relationships with existing clients or harm our ability to attract new clients.

ITEM 2.

UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS.

None.

ITEM 3.

DEFAULTS UPON SENIOR SECURITIES.

None.

ITEM 4.

REMOVED AND RESERVED.

ITEM 5.

OTHER INFORMATION.

None.

ITEM 6.

EXHIBITS

a. Exhibits:


Exhibit Number		Description

10.1		Employment Agreement, dated June 25, 2010, between David Price and the Registrant (1) +

31.1		Certification of Chief Executive Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002*

31.2		Certification of Chief Financial Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002*

32.1		Certification of Chief Executive Officer pursuant to Section 906 of the Sarbanes-Oxley Act of 2002*

32.2		Certification of Chief Financial Officer pursuant to Section 906 of the Sarbanes-Oxley Act of 2002*

101.INS		XBRL Instance Document.**

101.SCH		XBRL Taxonomy Extension Schema Document.**

101.CAL		XBRL Taxonomy Calculation Linkbase Document.**

101.LAB		XBRL Taxonomy Label Linkbase Document.**

101.PRE		XBRL Taxonomy Presentation Linkbase Document.**

101.DEF		XBRL Taxonomy Extension Definition Linkbase Document.**

(1)	Filed as an exhibit to the Registrant’s Current Report on Form 8-K filed with the SEC on July 26, 2010, and incorporated by reference herein.

+	Compensatory plan or arrangement.

*	filed or furnished herewith, as the case may be

**	submitted electronically herewith

Attached as Exhibit 101 to this report are the following formatted in XBRL (Extensible Business Reporting Language): (i) Condensed Consolidated Statements of Operations for the nine months ended September 30, 2010 and 2009, (ii) Condensed Consolidated Balance Sheets at September 30, 2010 and December 31, 2009, (iii) Condensed Consolidated Statements of Changes in Common Stockholders’ Equity September 30, 2010 and 2009, (iv) Condensed Consolidated Statements of Cash Flows for the nine months ended September 30, 2010 and 2009 and (v) Notes to Condensed Consolidated Financial Statements. Users of these data are advised pursuant to Rule 401 of Regulation S-T that the information contained in the XBRL documents is unaudited and these are not the official publicly filed financial statements of the Company. In accordance with Rule 402 of Regulation S-T, the XBRL related information in Exhibit 101 to this Quarterly Report on Form 10-Q shall not be deemed to be “filed” for purposes of Section 18 of the Exchange Act, or otherwise subject to the liability of that section, and shall not be incorporated by reference into any registration statement or other document filed under the Securities Act or the Exchange Act, except as shall be expressly set forth by specific reference in such filing.

SIGNATURES

Pursuant to the requirements 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.


Date: November 12, 2010	EDGAR ONLINE, INC.

	By:	/ S / J OHN M. C ONNOLLY
		John M. Connolly
		Interim Chief Executive Officer and President

	By:	/ S / D AVID J. P RICE
		David J. Price
		Chief Financial Officer