Form 10-Q TechTarget Inc For: Jun 30

Form 10-Q TechTarget Inc For: Jun 30

Sign up for StreetInsider Free!

Sign up for StreetInsider Free!

Create E-mail Alert Related Categories

You May Also Be Interested In

Create E-mail Alert Related Categories

Free News Feed

Article Stock Quotes (1)

FREE Breaking News Alerts from StreetInsider.com!

StreetInsider.com Top Tickers, 4/19/2024

1. NFLX
2. TSM
3. ISRG
4. INFY
5. SNV

6. TSLA
7. SPY
8. SMCI
9. AAPL
10. NVDA

Top News Most Read Special Reports

August 7, 2015 5:42 PM EDT

E-mail

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, D.C. 20549

FORM 10-Q

(Mark One)

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

For the quarterly period ended June 30, 2015

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

For the transition period from to

Commission File Number: 1-33472

LOGO

TECHTARGET, INC.

(Exact name of registrant as specified in its charter)

Delaware

04-3483216

(State or other jurisdiction of

incorporation or organization)

(I.R.S. Employer

Identification No.)

275 Grove Street

Newton, Massachusetts 02466

(Address of principal executive offices) (zip code)

(617) 431-9200

(Registrant’s telephone number, including area code)

(Former name, former address and formal fiscal year, if changed since last report): Not applicable

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 (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files). Yes x No ¨

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 the definitions of “large accelerated filer”, “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

The registrant had 32,277,271 shares of Common Stock, $0.001 par value per share, outstanding as of July 31, 2015.

TABLE OF CONTENTS


Item		Page

PART I. FINANCIAL INFORMATION
Item 1.	Financial Statements
	Consolidated Balance Sheets as of June 30, 2015 (unaudited) and December 31, 2014		3
	Consolidated Statements of Operations and Comprehensive Income for the Three and Six Months Ended June 30, 2015 and 2014 (unaudited)		4
	Consolidated Statements of Cash Flows for the Six Months Ended June 30, 2015 and 2014 (unaudited)		5
	Notes to Consolidated Financial Statements		6
Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations		21
Item 3.	Quantitative and Qualitative Disclosures About Market Risk		37
Item 4.	Controls and Procedures		37

PART II. OTHER INFORMATION
Item 1.	Legal Proceedings		38
Item 1A.	Risk Factors		38
Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds		38
Item 3.	Defaults Upon Senior Securities		38
Item 4.	Mine Safety Disclosures		39
Item 5.	Other Information		39
Item 6.	Exhibits		39
	Signatures		40

PART I. FINANCIAL INFORMATION

Item 1.

Financial Statements

TECHTARGET, INC.

Consolidated Balance Sheets

(In thousands, except share and per share data)


	June 30, 2015			December 31, 2014
	(Unaudited)
Assets
Current assets:
Cash and cash equivalents	$	19,163		$	19,275
Short-term investments		2,144			5,480
Accounts receivable, net of allowance for doubtful accounts of $1,333 and $1,014 as of June 30, 2015 and December 31, 2014, respectively		28,902			23,200
Prepaid expenses and other current assets		5,982			2,842
Deferred tax assets		2,753			2,674

Total current assets		58,944			53,471
Property and equipment, net		9,104			9,215
Long-term investments		15,975			13,428
Goodwill		93,883			93,979
Intangible assets, net of accumulated amortization		2,179			2,995
Deferred tax assets		2,980			3,230
Other assets		1,110			1,166

Total assets	$	184,175		$	177,484

Liabilities and Stockholders’ Equity
Current liabilities:
Accounts payable	$	2,786		$	2,733
Accrued expenses and other current liabilities		3,250			2,719
Accrued compensation expenses		805			3,043
Contingent consideration		1,189			—
Income taxes payable		447			1,088
Deferred revenue		9,588			6,940

Total current liabilities		18,065			16,523
Long-term liabilities:
Deferred rent		2,435			2,598
Deferred tax liabilities		457			473
Contingent consideration		—			1,114
Other liabilities		—			930

Total liabilities		20,957			21,638
Commitments and contingencies (Note 9)
Stockholders’ equity:
Preferred stock, 5,000,000 shares authorized; no shares issued or outstanding		—			—
Common stock, $0.001 par value per share, 100,000,000 shares authorized, 50,450,206 shares issued and 32,823,881 shares outstanding at June 30, 2015 and 49,587,137 shares issued and 32,371,251 shares outstanding at December 31, 2014		51			50
Treasury stock, 17,626,325 and 17,215,886 shares at June 30, 2015 and December 31, 2014, respectively, at cost		(102,645	)		(98,851	)
Additional paid-in capital		288,832			280,702
Accumulated other comprehensive loss		(228	)		(87	)
Accumulated deficit		(22,792	)		(25,968	)

Total stockholders’ equity		163,218			155,846

Total liabilities and stockholders’ equity	$	184,175		$	177,484

See accompanying notes.

TECHTARGET, INC.

Consolidated Statements of Operations and Comprehensive Income

(In thousands, except per share data)


	Three Months Ended June 30,				Six Months Ended June 30,
	2015		2014		2015		2014
	(Unaudited)
Revenues:
Online	$	27,736	$	23,652	$	50,784	$	45,732
Events		2,021		2,496		2,631		3,393

Total revenues		29,757		26,148		53,415		49,125
Cost of revenues:
Online(1)		6,719		6,149		13,248		12,239
Events(1)		877		979		1,332		1,526

Total cost of revenues		7,596		7,128		14,580		13,765

Gross profit		22,161		19,020		38,835		35,360
Operating expenses:
Selling and marketing(1)		10,958		10,007		21,299		19,753
Product development(1)		2,032		1,742		3,808		3,347
General and administrative(1)		3,591		3,884		6,611		7,236
Depreciation		1,016		1,012		2,024		2,001
Amortization of intangible assets		344		454		717		905

Total operating expenses		17,941		17,099		34,459		33,242

Operating income		4,220		1,921		4,376		2,118
Interest and other income, net		250		99		87		109


Income before provision for income taxes		4,470		2,020		4,463		2,227
Provision for income taxes		1,641		717		1,287		789

Net income	$	2,829	$	1,303	$	3,176	$	1,438

Net income per common share:
Basic	$	0.09	$	0.04	$	0.10	$	0.04

Net income per common share:
Diluted	$	0.08	$	0.04	$	0.09	$	0.04

Weighted average common shares outstanding:
Basic		33,268		32,891		33,202		32,788

Weighted average common shares outstanding:
Diluted		34,989		34,022		34,956		33,827


Comprehensive income	$	2,820	$	1,296	$	3,035	$	1,460


(1) Amounts include stock-based compensation expense as follows:
Cost of online revenues	$	16	$	21	$	30	$	51
Cost of events revenues		—		4		—		8
Selling and marketing		650		552		1,339		1,240
Product development		27		27		37		58
General and administrative		623		585		1,357		1,239

See accompanying notes.

TECHTARGET, INC.

Consolidated Statements of Cash Flows

(In thousands)


	Six Months Ended June 30,
	2015			2014
	(Unaudited)
Operating activities:
Net income	$	3,176		$	1,438
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation and amortization		2,741			2,906
Provision for bad debt		405			293
Amortization of investment premiums		124			184
Stock-based compensation expense		2,763			2,596
Non-cash interest expense		4			—
Deferred tax provision		(159	)		—
Excess tax benefit – stock options		(1,983	)		(464	)
Other non-cash		—			32
Changes in operating assets and liabilities:
Accounts receivable		(6,130	)		(1,843	)
Prepaid expenses and other current assets		835			503
Other assets		54			(6	)
Accounts payable		56			(22	)
Income taxes payable		(1,807	)		(164	)
Accrued expenses and other current liabilities		1,280			257
Accrued compensation expenses		(846	)		(231	)
Deferred revenue		2,648			2,808
Other liabilities		(2,189	)		(49	)

Net cash provided by operating activities		972			8,238

Investing activities:
Purchases of property and equipment, and other capitalized assets		(1,917	)		(2,078	)
Purchases of investments		(2,622	)		(3,642	)
Sales of investments		3,310			3,500

Net cash used in investing activities		(1,229	)		(2,220	)

Financing activities:
Excess tax benefit—stock options		1,983			464
Purchase of treasury shares and related costs		(3,794	)		(16	)
Registration fees		(22	)		—
Proceeds from exercise of stock options		2,003			1,768

Net cash provided by financing activities		170			2,216
Effect of exchange rate changes on cash and cash equivalents		(25	)		(36	)
Net (decrease) increase in cash and cash equivalents		(112	)		8,198
Cash and cash equivalents at beginning of period		19,275			15,412

Cash and cash equivalents at end of period	$	19,163		$	23,610

Supplemental disclosure of cash flow information:

Cash paid for taxes	$	3,181		$	187

See accompanying notes.

TECHTARGET, INC.

Notes to Consolidated Financial Statements

(In thousands, except share and per share data, where otherwise noted or instances where expressed in millions)

1. Organization and Operations

TechTarget, Inc. and its subsidiaries (the “Company”) is a leading provider of specialized online content and brand advertising that brings together buyers and sellers of corporate information technology (“IT”) products. The Company sells customized marketing programs and services that enable IT vendors to reach corporate IT decision makers who are actively researching specific IT purchases. In addition, the Company offers a number of data analytics solutions that help their customers more efficiently target their sales efforts. The Company operates a network of over 150 websites, each of which focuses on a specific IT sector, such as storage, security or networking. During the critical stages of the purchase decision process, these content offerings meet IT professionals’ needs for expert, peer and IT vendor information, and provide a platform on which IT vendors can launch targeted marketing campaigns which generate measurable, high return on investment (“ROI”). As IT professionals have become increasingly specialized, they have come to rely on the Company’s sector-specific websites for purchasing decision support. The Company’s content enables IT professionals to navigate the complex and rapidly changing IT landscape where purchasing decisions can have significant financial and operational consequences. Based upon the logical clustering of users’ respective job responsibilities and the marketing focus of the products that the Company’s customers are advertising, the Company’s key marketing opportunities and audience extensions are currently addressed using nine distinct media groups: Application Architecture and Development; Channel; CIO/IT Strategy; Data Center and Virtualization Technologies; Business Applications and Analytics; Networking; Security; Storage; and TechnologyGuide.

2. Summary of Significant Accounting Policies

The accompanying consolidated financial statements reflect the application of certain significant accounting policies as described below and elsewhere in these Notes to Consolidated Financial Statements.

Principles of Consolidation

The accompanying Consolidated Financial Statements include the accounts of the Company and its wholly-owned subsidiaries, which are comprised of KnowledgeStorm, Inc., Bitpipe, Inc., TechTarget Securities Corporation (“TSC”), TechTarget Limited, TechTarget (HK) Limited (“TTGT HK”), TechTarget (Beijing) Information Technology Consulting Co. Ltd. (“TTGT Consulting”), TechTarget (Australia) Pty Ltd., TechTarget (Singapore) Pte Ltd., E-Magine Médias SAS (“LeMagIT”) and TechTarget Germany GmbH. KnowledgeStorm, Inc. and Bitpipe, Inc. feature websites that provide in-depth vendor generated content targeted to corporate IT professionals. TSC is a Massachusetts corporation. TechTarget Limited is a subsidiary doing business principally in the United Kingdom. TTGT HK is a subsidiary incorporated in Hong Kong in order to facilitate the Company’s activities in the Asia-Pacific region. Additionally, through its wholly-owned subsidiaries, TTGT HK and TTGT Consulting, the Company effectively controls a variable interest entity (“VIE”), Keji Wangtuo Information Technology Co., Ltd., (“KWIT”), which was incorporated under the laws of the People’s Republic of China (“PRC”). TechTarget (Australia) Pty Ltd. and TechTarget (Singapore) Pte Ltd. are the entities through which the Company does business in Australia and Singapore, respectively; LeMagIT and TechTarget Germany GmbH, both wholly-owned subsidiaries of TechTarget Limited, are entities through which the Company does business in France and Germany, respectively.

PRC laws and regulations prohibit or restrict foreign ownership of Internet-related services and advertising businesses. To comply with these foreign ownership restrictions, the Company operates its websites and provides online advertising services in the PRC through KWIT. The Company entered into certain exclusive agreements with KWIT and its shareholders through TTGT HK, which obligated TTGT HK to absorb all of the risk of loss from KWIT’s activities and entitled TTGT HK to receive all of their residual returns. In addition, the Company entered into certain agreements with the authorized parties through TTGT HK, including Management and Consulting Services, Voting Proxy, Equity Pledge and Option Agreements. On December 31, 2011, TTGT HK assigned all of its rights and obligations to the newly formed wholly foreign-owned enterprise (“WFOE”), TTGT Consulting. The WFOE is established and existing under the laws of the PRC, and is wholly owned by TTGT HK.

Based on these contractual arrangements, the Company consolidates the financial results of KWIT as required by Accounting Standards Codification (“ASC”) subtopic 810-10, Consolidation: Overall, because the Company holds all the variable interests of KWIT through the WFOE, which is the primary beneficiary of KWIT. Despite the lack of technical majority ownership, there exists a parent-subsidiary relationship between the Company and the VIE through the aforementioned agreements, whereby the equity holders of KWIT assigned all of their voting rights underlying their equity interest in KWIT to the WFOE. In addition, through the other aforementioned agreements, the Company demonstrates its ability and intention to continue to exercise the ability to obtain substantially all of the profits and absorb all of the expected losses of KWIT. All significant intercompany accounts and transactions between the Company, its subsidiaries, and KWIT have been eliminated in consolidation.

Basis of Presentation

The accompanying unaudited consolidated financial statements have been prepared in accordance with accounting principles generally accepted in the United States of America (generally accepted accounting principles, or “GAAP”) for interim financial information and with the instructions to Form 10-Q and Rule 10-01 of Regulation S-X. Accordingly, they do not include all of the information and footnotes required by accounting principles generally accepted in the United States of America for complete financial statements. All adjustments, which, in the opinion of management, are considered necessary for a fair presentation of the results of operations for the periods shown, are of a normal recurring nature and have been reflected in the consolidated financial statements. The results of operations for the periods presented are not necessarily indicative of results to be expected for any other interim periods or for the full year. The information included in these consolidated financial statements should be read in conjunction with “Management’s Discussion and Analysis of Financial Condition and Results of Operations” contained in this Quarterly Report on Form 10-Q and the consolidated financial statements and accompanying notes included in the Company’s Annual Report on Form 10-K for the year ended December 31, 2014.

Reclassifications

Beginning in the third quarter of 2014, the Company changed its presentation of transactional gains and losses arising from the impact of currency exchange rate fluctuations on transactions in foreign currency that is different from the local functional currency in order to better reflect the non-operating nature of these gains and losses, and is now including them in Other Income on the Consolidated Statements of Operations and Comprehensive Income. Previously, these gains and losses were included in the Company’s operating expenses as General and Administrative expense. Amounts in the prior periods’ financial statements have been reclassified to conform to the current presentation. In the three and six months ended June 30, 2014, this resulted in an increase to Other Income and an increase in General and Administrative expense equal to $110 and $130, respectively.

Use of Estimates

The preparation of financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosures of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. On an ongoing basis, the Company evaluates its estimates, including those related to revenue, long-lived assets, goodwill, the allowance for doubtful accounts, stock-based compensation, earnouts, self-insurance accruals and income taxes. Estimates of the carrying value of certain assets and liabilities are based on historical experience and on various other assumptions that the Company believes to be reasonable. Actual results could differ from those estimates.

Revenue Recognition

The Company generates substantially all of its revenue from the sale of targeted advertising campaigns, which are delivered via its network of websites, data analytics solutions and events. Revenue is recognized only when the price is fixed or determinable, persuasive evidence of an arrangement exists, the service is performed and collectability of the resulting receivable is reasonably assured.

The majority of the Company’s online media sales involve multiple product offerings, which are described in more detail below. Because neither vendor-specific objective evidence of fair value nor third party evidence of fair value exists for all elements in the Company’s bundled product offerings, the Company uses an estimated selling price which represents management’s best estimate of the stand-alone selling price for each deliverable in an arrangement. The Company establishes

best estimates considering multiple factors including, but not limited to, class of client, size of transaction, available media inventory, pricing strategies and market conditions. The Company believes the use of the best estimate of selling price allows revenue recognition in a manner consistent with the underlying economics of the transaction. The Company uses the relative selling price method to allocate consideration at the inception of the arrangement to each deliverable in a multiple element arrangement. The relative selling price method allocates any discount in the arrangement proportionately to each deliverable on the basis of the deliverable’s best estimated selling price. Revenue is then recognized as delivery occurs.

The Company evaluates all deliverables of an arrangement at inception and each time an item is delivered, to determine whether they represent separate units of accounting. Based on this evaluation, the arrangement consideration is measured and allocated to each of these elements.

Online Offerings

Core Online

Lead Generation. As part of its lead generation campaign offerings, the Company will guarantee a minimum number of qualified leads to be delivered over the course of the advertising campaign. The Company determines the content necessary to achieve performance guarantees. Scheduled end dates of advertising campaigns sometimes need to be extended, pursuant to the terms of the arrangement, to satisfy lead guarantees. The Company estimates a revenue reserve necessary to adjust revenue recognition for extended advertising campaigns. These estimates are based on the Company’s experience in managing and fulfilling these offerings. The customer generally has cancellation privileges which normally require advance notice by the customer and require proportional payment by the customer for the portion of the campaign provided by the Company. Additionally, the Company offers sales incentives to certain customers, primarily in the form of volume rebates, which are classified as a reduction of revenues and are calculated based on the terms of the specific customer’s contract. The Company accrues for these sales incentives based on contractual terms and historical experience. The Company recognizes revenue on contracts where pricing is based on cost per lead during the period in which leads are delivered to its customers and on duration-based campaigns revenue is recognized ratably over the duration of the campaign, which is usually less than six months.

Branding. Branding consists mostly of banner revenue, which is recognized in the period in which the banner impressions, engagements or clicks occur.

Custom Content Creation. Custom content revenue is recognized when the creation is completed and delivered to the customer, with the exception of microsites which are recognized over the period during which they are live.

Content Sponsorships. Content sponsorship revenue is recognized ratably over the period in which the related content asset is available on the Company’s websites.

List Rentals. List rental revenue is recognized in the period in which the delivery of the list is made to the Company’s customer.

Third Party Revenue Sharing Arrangements. Revenue from third party revenue sharing arrangements is recognized on a net basis in the period in which the services are performed. For certain third party agreements where the Company is the primary obligor, revenue is recognized on a gross basis in the period in which the services are performed.

IT Deal Alert™ This suite of products includes IT Deal Alert: Qualified Sales Opportunities™, IT Deal Alert: Priority Engine™ (formerly called Account Watch) and IT Deal Alert: Deal Data™, which was introduced in 2015. Qualified Sales Opportunities revenue is recognized when the opportunity is delivered to the Company’s customer, Priority Engine revenue is recognized ratably over the duration of the service and Deal Data revenue is recognized upon delivery.

Events

Revenue from vendor-sponsored events, whether sponsored exclusively by a single vendor or in a multi-vendor sponsored event, is recognized upon completion of the event in the period the event occurs. The majority of the Company’s events are free to qualified attendees; however, certain events are based on a paid attendee model. The Company recognizes revenue for paid attendee events upon completion of the event.

Amounts collected or billed prior to satisfying the above revenue recognition criteria are recorded as deferred revenue. The Company excludes from its deferred revenue and accounts receivable balances amounts for which it has billed in advance prior to the start of a campaign or the delivery of services.

Fair Value of Financial Instruments

Financial instruments consist of cash and cash equivalents, short- and long-term investments, accounts receivable, accounts payable and contingent consideration. Due to their short-term nature and liquidity, the carrying value of these instruments, with the exception of contingent consideration, approximates their estimated fair values. See Note 3 for further information on the fair value of the Company’s investments. The fair value of contingent consideration was estimated using a discounted cash flow method.

Long-lived Assets, Goodwill and Indefinite-lived Intangible Assets

Long-lived assets consist primarily of property and equipment, capitalized software, goodwill and other intangible assets. The Company reviews long-lived assets, including property and equipment and finite intangible assets, for impairment whenever events or changes in circumstances indicate that the carrying amount of an asset may not be recoverable. Conditions that would trigger an impairment assessment include, but are not limited to, a significant adverse change in legal factors or business climate that could affect the value of an asset or an adverse action or a significant decrease in the market price. A specifically identified intangible asset must be recorded as a separate asset from goodwill if either of the following two criteria is met: (1) the intangible asset acquired arises from contractual or other legal rights; or (2) the intangible asset is separable. Accordingly, intangible assets consist of specifically identified intangible assets. Goodwill is the excess of any purchase price over the estimated fair value of net tangible and intangible assets acquired.

Goodwill and indefinite-lived intangible assets are not amortized but are reviewed annually for impairment or more frequently if impairment indicators arise. Separable intangible assets that are not deemed to have an indefinite life are amortized over their estimated useful lives, which range from three to ten years, using methods of amortization that are expected to reflect the estimated pattern of economic use, and are reviewed for impairment when events or changes in circumstances suggest that the assets may not be recoverable. Consistent with the Company’s determination that it has only one reporting segment, it has been determined that there is only one reporting unit and goodwill is tested for impairment at the entity level. The Company performs its annual test of impairment of goodwill as of December 31st of each year and whenever events or changes in circumstances suggest that the carrying amount may not be recoverable using the two step process required by ASC 350, Intangibles – Goodwill and Other (“ASC 350”). The first step of the impairment test is to identify potential impairment by comparing the reporting unit’s fair value with its net book value (or carrying amount), including goodwill. The fair value is estimated based on a market value approach. If the fair value of the reporting unit exceeds its carrying amount, the reporting unit’s goodwill is not considered to be impaired and the second step of the impairment test is not performed. Whenever indicators of impairment become present, the Company would perform the second step and compare the implied fair value of the reporting unit’s goodwill, as defined by ASC 350, to its carrying value to determine the amount of the impairment loss, if any. As of December 31, 2014, the date of the Company’s annual goodwill impairment review, there were no indications of impairment based on the step one analysis, and the Company’s estimated fair value exceeded its goodwill carrying value by a significant margin. There were no indications of impairment as of June 30, 2015.

Based on the aforementioned evaluation, the Company believes that, as of the balance sheet date presented, none of the Company’s goodwill or other long-lived assets were impaired. The Company did not have any intangible assets with indefinite lives as of June 30, 2015 or December 31, 2014.

Allowance for Doubtful Accounts

The Company offsets gross trade accounts receivable with an allowance for doubtful accounts. The allowance for doubtful accounts is the Company’s best estimate of the amount of probable credit losses in its existing accounts receivable. The allowance for doubtful accounts is reviewed on a regular basis, and all past due balances are reviewed individually for collectability. Account balances are charged against the allowance after all means of collection have been exhausted and the potential for recovery is considered remote. Provisions for doubtful accounts are recorded in general and administrative expense.

Property and Equipment

Property and equipment are stated at cost. Property and equipment acquired through acquisitions of businesses are initially recorded at fair value. Depreciation is calculated on the straight-line method over the estimated useful lives of the assets, based on the month the assets are placed in service.

Internal-Use Software and Website Development Costs

The Company capitalizes costs incurred during the development of its website applications and infrastructure as well as certain costs relating to internal-use software. The estimated useful life of costs capitalized is evaluated for each specific project. Capitalized internal-use software and website development costs are reviewed for recoverability whenever events or changes in circumstances indicate that the carrying amount of the asset may not be recoverable. An impairment loss would be recognized only if the carrying amount of the asset is not recoverable and exceeds its fair value. The Company capitalized internal-use software and website development costs of $0.7 million for each of the three months ended June 30, 2015 and 2014, and $1.5 million and $1.7 million for the six months ended June 30, 2015 and 2014, respectively.

Income Taxes

The Company’s deferred tax assets and liabilities are recognized based on temporary differences between the financial reporting and income tax bases of assets and liabilities using statutory rates. A valuation allowance is established against net deferred tax assets if, based upon the weight of available evidence, it is more likely than not that some or all of the deferred tax assets will not be realized. The Company records a liability for unrecognized tax benefits resulting from uncertain tax positions taken or expected to be taken in a tax return using a “more likely than not” threshold as required by the provisions of ASC 740-10, Accounting for Uncertainty in Income Taxes.

The Company recognizes any interest and penalties related to unrecognized tax benefits in income tax expense.

Stock-Based Compensation

The Company has two stock-based employee compensation plans which are more fully described in Note 11. Stock-based compensation cost is measured at the grant date based on the fair value of the award and is recognized in the Consolidated Statement of Operations and Comprehensive Income using the straight-line method over the vesting period of the award or using the accelerated method if the award is contingent upon performance goals. The Company uses the Black-Scholes option-pricing model to determine the fair value of stock option awards.

Comprehensive Income

Comprehensive income includes all changes in equity during a period, except those resulting from investments by stockholders and distributions to stockholders. The Company’s comprehensive income includes changes in the fair value of the Company’s unrealized gains (losses) on available for sale securities and foreign currency translation.

There were no material reclassifications out of accumulated other comprehensive income in the periods ended June 30, 2015 or 2014.

Foreign Currency

The functional currency for each of the Company’s subsidiaries is the local currency of the country in which it is incorporated. All assets and liabilities are translated into U.S. dollar equivalents at the exchange rate in effect on the balance sheet date or at a historical rate. Revenues and expenses are translated at average exchange rates. Translation gains or losses are recorded in stockholders’ equity as an element of accumulated other comprehensive income.

Net Income Per Share

Basic earnings per share is computed based on the weighted average number of common shares and vested, undelivered restricted stock awards outstanding during the period. Because the holders of unvested restricted stock awards do not have nonforfeitable rights to dividends or dividend equivalents, the Company does not consider these awards to be participating securities that should be included in its computation of earnings per share under the two-class method. Diluted earnings per

share is computed using the weighted average number of common shares and vested, undelivered restricted stock awards outstanding during the period, plus the dilutive effect of potential future issuances of common stock relating to stock option programs and other potentially dilutive securities using the treasury stock method. In calculating diluted earnings per share, the dilutive effect of stock options and restricted stock awards is computed using the average market price for the respective period. In addition, the assumed proceeds under the treasury stock method include the average unrecognized compensation expense and assumed tax benefit of stock options and restricted stock awards that are in-the-money. This results in the “assumed” buyback of additional shares, thereby reducing the dilutive impact of stock options and restricted stock awards.

Recent Accounting Pronouncements

In May 2014, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update No. 2014-09, Revenue from Contracts with Customers (Topic 606) (“ASU 2014-09”), which supersedes the revenue recognition requirements in ASC 605, Revenue Recognition. ASU 2014-09 is based on the principle that revenue is recognized to depict the transfer of goods or services to customers in an amount that reflects the consideration to which the entity expects to be entitled in exchange for those goods or services. ASU 2014-09 also requires additional disclosure about the nature, amount, timing and uncertainty of revenue and cash flows arising from customer contracts, including significant judgments and changes in judgments and assets recognized from costs incurred to obtain or fulfill a contract. This new guidance is effective for annual reporting periods (including interim reporting periods within those periods) beginning after December 15, 2016 (January 1, 2017 for the Company); early adoption is not permitted. Entities have the option of using either a full retrospective or a modified approach to adopt the guidance. On July 9, 2015, the FASB voted to delay the effective date of the new revenue standard by one year but to permit entities to choose to adopt the standard as of the original effective date. The Company is in the process of determining the potential effects on the consolidated financial statements.

3. Fair Value Measurements

The Company measures certain financial assets and liabilities at fair value on a recurring basis, including cash equivalents, short- and long-term investments and contingent consideration. The fair value of these financial assets and liabilities was determined based on three levels of input as follows:

•

Level 1. Quoted prices in active markets for identical assets and liabilities;

•

Level 2. Observable inputs other than quoted prices in active markets; and

•

Level 3. Unobservable inputs.

The fair value hierarchy of the Company’s financial assets and liabilities carried at fair value and measured on a recurring basis is as follows:


			Fair Value Measurements at Reporting Date Using
	June 30, 2015		Quoted Prices in Active Markets for Identical Assets (Level 1)		Significant Other Observable Inputs (Level 2)		Significant Unobservable Inputs (Level 3)
Assets:
Money market funds(1)	$	1,896	$	1,896	$	—	$	—
Short-term investments(2)		2,144		—		2,144		—
Long-term investments(2)		15,975		—		15,975		—

Total assets	$	20,015	$	1,896	$	18,119	$	—


Liabilities:
Contingent consideration - current(3)	$	1,189	$	—	$	—	$	1,189

Total liabilities	$	1,189	$	—	$	—	$	1,189


			Fair Value Measurements at Reporting Date Using
	December 31, 2014		Quoted Prices in Active Markets for Identical Assets (Level 1)		Significant Other Observable Inputs (Level 2)		Significant Unobservable Inputs (Level 3)
Assets:
Money market funds(1)	$	1,071	$	1,071	$	—	$	—
Short-term investments(2)		5,480		—		5,480		—
Long-term investments(2)		13,428		—		13,428		—

Total assets	$	19,979	$	1,071	$	18,908	$	—

Liabilities:
Contingent consideration – non-current(3)	$	1,114	$	—	$	—	$	1,114

Total liabilities	$	1,114	$	—	$	—	$	1,114

(1)	Included in cash and cash equivalents on the accompanying consolidated balance sheets; valued at quoted market prices in active markets.

(2)	Short- and long-term investments consist of municipal bonds and government agency bonds; their fair value is calculated using an interest rate yield curve for similar instruments.

(3)

The Company’s valuation techniques and Level 3 inputs used to estimate the fair value of contingent consideration payable in connection with the LeMagIT acquisition are described in Note 5. During the six months ended June 30, 2015 the contingent consideration was reclassified from non-current to current liabilities as the final payment is expected to be made in the first quarter of 2016. During the six months ended June 30, 2015 and 2014, the contingent consideration increased by approximately $172 and $188, respectively, when it was remeasured to fair value. The remainder of the change in this balance was caused by foreign currency fluctuations.

4. Cash, Cash Equivalents and Investments

Cash and cash equivalents consist of highly liquid investments with maturities of three months or less at date of purchase. Cash equivalents are carried at cost, which approximates their fair market value. Cash and cash equivalents consisted of the following:


	June 30, 2015		December 31, 2014

Cash	$	17,267	$	18,204
Money market funds		1,896		1,071

Total cash and cash equivalents	$	19,163	$	19,275

The Company’s short- and long-term investments are accounted for as available for sale securities. These investments are recorded at fair value with the related unrealized gains and losses included in accumulated other comprehensive income, a component of stockholders’ equity, net of tax. The unrealized loss, net of taxes, was $5 and $20 as of June 30, 2015 and December 31, 2014, respectively. Realized gains and losses on the sale of these investments are determined using the specific identification method. There were no realized gains or losses during the three or six months ended June 30, 2015 or 2014.

Short- and long-term investments consisted of the following:


	June 30, 2015
	Cost		Gross Unrealized Gains		Gross Unrealized Losses			Estimated Fair Value
Short- and long-term investments:
Government agency bonds	$	5,023	$	7	$	—		$	5,030
Municipal bonds		13,104		—		(15	)		13,089

Total short- and long-term investments	$	18,127	$	7	$	(15	)	$	18,119


	December 31, 2014
	Cost		Gross Unrealized Gains		Gross Unrealized Losses			Estimated Fair Value
Short- and long-term investments:
Government agency bonds	$	6,632	$	—	$	(14	)	$	6,618
Municipal bonds		12,307		4		(21	)		12,290

Total short- and long-term investments	$	18,939	$	4	$	(35	)	$	18,908

The Company had nine debt securities in an unrealized loss position at June 30, 2015. All of these securities have been in such a position for no more than 12 months. The unrealized loss on these securities was approximately $18 and the fair value was $9.7 million. The Company uses specific identification when reviewing these investments for impairment. Because the Company does not intend to sell the investments that are in an unrealized loss position and it is not likely that the Company will be required to sell any investments before recovery of their cost basis, the Company does not consider these investments with an unrealized loss to be other-than-temporarily impaired at June 30, 2015.

Municipal and government agency bonds have contractual maturity dates that range from July 2016 to February 2018. All income generated from these investments is recorded as interest income.

5. Acquisition

LeMagIT

On December 17, 2012, the Company purchased all of the outstanding shares of its French partner, E-Magine Médias SAS, for approximately $2.2 million in cash plus a potential future earnout valued at $0.7 million at the time of the acquisition. Approximately $1.2 million of the cash payment was made at closing, with the remainder being paid in two equal installments in 2013 and 2014. The earnout is subject to certain revenue growth targets and the payment will be adjusted based on actual results. If all targets are met, the total purchase price, including the earnout, shall not exceed $5.2 million, depending on exchange rates at the time of calculation. The installment payments have been recorded at present value using a discount rate of 10%. At June 30, 2015, the earnout is included in current liabilities at net present value in the Company’s consolidated balance sheet (see Note 3).

6. Intangible Assets

Intangible assets subject to amortization as of June 30, 2015 and December 31, 2014 consist of the following:


		As of June 30, 2015
	Estimated Useful Lives (Years)	Gross Carrying Amount		Accumulated Amortization			Net

Customer, affiliate and advertiser relationships	5 – 9	$	7,082	$	(5,956	)	$	1,126
Developed websites, technology and patents	10		1,243		(534	)		709
Trademark, trade name and domain name	5 – 8		1,846		(1,657	)		189
Proprietary user information database and Internet traffic	3 – 5		1,264		(1,120	)		144
Non-compete agreements	3		78		(67	)		11

Total intangible assets		$	11,513	$	(9,334	)	$	2,179


		As of December 31, 2014
	Estimated Useful Lives (Years)	Gross Carrying Amount		Accumulated Amortization			Net
Customer, affiliate and advertiser relationships	5 – 9	$	7,079	$	(5,480	)	$	1,599
Developed websites, technology and patents	10		1,361		(499	)		862
Trademark, trade name and domain name	5 – 8		1,859		(1,598	)		261
Proprietary user information database and Internet traffic	3 – 5		1,270		(1,024	)		246
Non-compete agreements	3		85		(58	)		27

Total intangible assets		$	11,654	$	(8,659	)	$	2,995

Intangible assets are amortized over their estimated useful lives, which range from three to ten years, using methods of amortization that are expected to reflect the estimated pattern of economic use. The remaining amortization expense will be recognized over a weighted-average period of approximately 2.1 years. Amortization expense was $0.3 million and $0.5 million for the three months ended June 30, 2015 and 2014, respectively, and $0.7 million and $0.9 million for the six months ended June 30, 2015 and 2014, respectively. Amortization expense is recorded within operating expenses as the intangible assets consist of customer-related assets and website traffic that the Company considers to be in support of selling and marketing activities. The change in the gross carrying amount of intangible assets during the six months ended June 30, 2015, was due to foreign currency translation.

The Company expects amortization expense of intangible assets to be as follows:


Years Ending December 31:	Amortization Expense

2015 (July 1st – December 31st)	$	681
2016		864
2017		166
2018		103
2019		87
Thereafter		278

	$	2,179

7. Net Income Per Common Share

A reconciliation of the numerator and denominator used in the calculation of basic and diluted net income per common share is as follows:


	For the Three Months Ended June 30,				For the Six Months Ended June 30,
	2015		2014		2015		2014
	(Unaudited)
Numerator:
Net income	$	2,829	$	1,303	$	3,176	$	1,438

Denominator:
Basic:
Weighted average shares of common stock outstanding		33,268,089		32,890,770		33,201,859		32,787,509

Diluted:
Weighted average shares of common stock outstanding		33,268,089		32,890,770		33,201,859		32,787,509
Effect of potentially dilutive shares(1)		1,721,388		1,130,981		1,753,752		1,039,020

Total weighted average shares of common stock outstanding		34,989,477		34,021,751		34,955,611		33,826,529

Net Income Per Common Share:
Basic net income per common share	$	0.09	$	0.04	$	0.10	$	0.04

Net Income Per Common Share:
Diluted net income per common share	$	0.08	$	0.04	$	0.09	$	0.04

(1)

In calculating diluted earnings per share, 0.5 million shares related to outstanding stock options and unvested restricted stock awards were excluded for each of the three and six months ended June 30, 2015, and 2.9 million and 3.0 million shares related to outstanding stock options and unvested restricted stock awards were excluded for the three and six months ended June 30, 2014, respectively, because they were anti-dilutive.

8. Bank Demand Loan Payable

The Company’s $5.0 million revolving credit facility was amended and restated in its entirety in June 2015. The new credit facility (the “Amended and Restated Credit Agreement”) is a discretionary $5.0 million demand revolving line. At the Company’s option, the Amended and Restated Credit Agreement bears interest at either the prime rate less 1.00% or the London Interbank Offered Rate (“LIBOR”) plus the applicable LIBOR margin. The applicable LIBOR margin is based on the ratio of total funded debt to earnings before interest, other income and expense, income taxes, depreciation, and amortization (“EBITDA”) for the preceding four fiscal quarters. As of June 30, 2015, the applicable LIBOR margin was 1.25%. Unless earlier payment is required by an event of default, all principal and unpaid interest will be due and payable on the interest payment date; however, there is an automatic rollover provision for all loans for which LIBOR is elected by the Company. Borrowings, if any, under the Amended and Restated Credit agreement would be collateralized by a security interest in substantially all assets of the Company. There are no financial covenant requirements and no unused line fees under the Amended and Restated Credit Agreement. At June 30, 2015, there were no amounts outstanding under the Amended and Restated Credit Agreement.

As of December 31, 2014, prior to the Amended and Restated Credit Agreement, the Company had a $5.0 million term revolving credit facility (the “Credit Agreement”). Covenants governing the Credit Agreement included the maintenance of certain financial ratios. At December 31, 2014, the Company was in compliance with all covenants under the Credit Agreement. The Company was also required to pay an unused line fee on the daily unused amount of the Credit Agreement at a per annum rate based on the ratio of total funded debt to EBITDA for the preceding four fiscal quarters. At December 31, 2014 there were no amounts outstanding under the Credit Agreement.

9. Commitments and Contingencies

Operating Leases

The Company conducts its operations in leased office facilities under various noncancelable operating lease agreements that expire through March 2020. In August 2009, the Company entered into an agreement to lease approximately 87,875 square feet of office space in Newton, Massachusetts. The lease commenced in February 2010 and has a term of ten years. The Company is receiving certain rent concessions over the life of the lease. In November 2010, the Newton lease was amended to include an additional 8,400 square feet of office space. The amended lease commenced in March 2011 and runs concurrently with the term of the original lease. The Company is receiving certain rent concessions over the life of the amended lease.

Certain of the Company’s operating leases include lease incentives and escalating payment amounts and are renewable for varying periods. The Company is recognizing the related rent expense on a straight-line basis over the term of the lease taking into account the lease incentives and escalating lease payments.

Future minimum lease payments under the Company’s noncancelable operating leases at June 30, 2015 are as follows:


Years Ending December 31:	Minimum Lease Payments
2015 (July 1st – December 31st)	$	2,196
2016		4,247
2017		3,712
2018		3,831
2019		3,833
Thereafter		572

	$	18,391

Net Worth Tax Contingency

In late March 2010, the Company received a letter from the Department of Revenue of the Commonwealth of Massachusetts (the “MA DOR”) requesting documentation demonstrating that TSC has been classified by the MA DOR as a Massachusetts security corporation for the 2006 and 2007 tax years. Following subsequent correspondence with the MA DOR and a settlement conference on March 22, 2011, the Company received a Notice of Assessment from the MA DOR with respect to additional excise taxes on net worth related to TSC. Based on the Company’s previous assessment that it was probable that the MA DOR would require an adjustment to correct TSC’s tax filings such that it will be treated as a Massachusetts business corporation for the applicable years, the Company recorded a liability representing its best estimate at that time of the potential net worth tax exposure. The tax benefits available to a Massachusetts security corporation are comprised of (i) a different rate structure (1.32% on gross investment income vs. 9.5% on net income) (See Note 13) and (ii) exemption from the 0.26% excise tax on net worth. As of the date of the ruling, the Company had recorded a liability of approximately $257 to account for the tax differential in all open years, including penalties and interest. On August 17, 2011, the Company filed Applications for Abatement with the MA DOR. In January 2012, the Company filed Petitions for Formal Procedure with the Massachusetts Appellate Tax Board (the “ATB”). A trial took place in April 2014, and in May 2015 the ATB ruled in favor of the MA DOR. During the second quarter of 2015, the Company accepted an amnesty offer from the MA DOR and paid all amounts due relating to the years in dispute.

Litigation

From time to time and in the ordinary course of business, the Company may be subject to various claims, charges, and litigation. At June 30, 2015 and December 31, 2014, the Company did not have any pending claims, charges, or litigation that it expects would have a material adverse effect on its consolidated financial position, results of operations, or cash flows.

10. Comprehensive Income

Comprehensive income includes all changes in equity during a period, except those resulting from investments by stockholders and distributions to stockholders. For the three and six months ended June 30, 2015 and 2014 the Company’s comprehensive income is as follows:


	For the Three Months Ended June 30,						For the Six Months Ended June 30,
	2015			2014			2015			2014
	(Unaudited)

Net income	$	2,829		$	1,303		$	3,176		$	1,438
Other comprehensive (loss) income:
Unrealized (loss) gain on investments (net of tax effect of $(2), $(1), $9 and $(2), respectively)		(5	)		(2	)		15			(3	)
Unrealized (loss) gain on foreign currency exchange		(4	)		(5	)		(156	)		25

Other comprehensive (loss) income		(9	)		(7	)		(141	)		22

Total comprehensive income	$	2,820		$	1,296		$	3,035		$	1,460

11. Stock-Based Compensation

Stock Option Plans

In September 1999, the Company approved a stock option plan (the “1999 Plan”) that provided for the issuance of shares of common stock incentives. The 1999 Plan provided for the granting of incentive stock options (“ISOs”), nonqualified stock options (“NSOs”), and stock grants. These incentives were offered to the Company’s employees, officers, directors, consultants, and advisors. Each option is exercisable at such times and subject to such terms as determined by the Company’s Board of Directors (the “Board”); grants generally vest over a four year period, and expire no later than ten years after the grant date.

In April 2007, the Board approved the 2007 Stock Option and Incentive Plan (the “2007 Plan”), which was approved by the stockholders of the Company and became effective upon the consummation of the Company’s IPO in May 2007. Effective upon the consummation of the IPO, no further awards were made pursuant to the 1999 Plan, but any outstanding awards under the 1999 Plan remain in effect and continue to be subject to the terms of the 1999 Plan. The 2007 Plan allows

the Company to grant ISOs, NSOs, stock appreciation rights, deferred stock awards, restricted stock and other awards. Under the 2007 Plan, stock options may not be granted at less than fair market value on the date of grant, and grants generally vest over a four year period. Stock options granted under the 2007 Plan expire no later than ten years after the grant date. At the time of the establishment of the 2007 Plan, the Company reserved for issuance an aggregate of 2,911,667 shares of common stock plus an additional annual increase to be added automatically on January 1 of each year, beginning on January 1, 2008, equal to the lesser of (a) 2% of the outstanding number of shares of common stock (on a fully-diluted basis) on the immediately preceding December 31 and (b) such lower number of shares as may be determined by the Compensation Committee of the Board of Directors of the Company. The number of shares available for issuance under the 2007 Plan is subject to adjustment in the event of a stock split, stock dividend or other change in capitalization. Generally, shares that are forfeited or canceled from awards under the 2007 Plan also will be available for future awards. To date, 7,432,772 shares have been added to the 2007 Plan in accordance with the automatic annual increase. In addition, shares subject to stock options returned to the 1999 Plan, as a result of their expiration, cancellation or termination, are automatically made available for issuance under the 2007 Plan. As of June 30, 2015, a total of 2,374,875 shares were available for grant under the 2007 Plan.

Accounting for Stock-Based Compensation

The Company uses the Black-Scholes option pricing model to calculate the grant date fair value of an award.

The expected volatility of options granted has been determined using a weighted average of the historical volatility of the Company’s stock for a period equal to the expected life of the option. The risk-free interest rate is based on a zero coupon United States treasury instrument whose term is consistent with the expected life of the stock options. The Company has not paid and does not anticipate paying cash dividends on its shares of common stock; therefore, the expected dividend yield is assumed to be zero. The Company applied an estimated annual forfeiture rate in determining the expense recorded in each period.

A summary of the stock option activity under the Company’s stock option plans for the six months ended June 30, 2015 is presented below:


Year-to-Date Activity	Options Outstanding			Weighted- Average Exercise Price Per Share		Weighted- Average Remaining Contractual Term in Years		Aggregate Intrinsic Value

Options outstanding at December 31, 2014		3,347,657		$	7.86
Granted		2,500			11.28
Exercised		(294,739	)		6.79
Forfeited		—			—
Cancelled		—			—

Options outstanding at June 30, 2015		3,055,418		$	7.97		2.1	$	5,154

Options exercisable at June 30, 2015		3,054,168		$	7.97		2.1	$	5,151

Options vested or expected to vest at June 30, 2015 (1)		3,055,282		$	7.97		2.1	$	5,154

(1)	In addition to the vested options, the Company expects a portion of the unvested options to vest at some point in the future. Options expected to vest is calculated by applying an estimated forfeiture rate to the unvested options.

During the six months ended June 30, 2015 and 2014, the total intrinsic value of options exercised (i.e. the difference between the market price at exercise and the price paid by the employee to exercise the options) was $1.4 million and $0.7 million, respectively, and the total amount of cash received from exercise of these options was $2.0 million and $1.8 million, respectively.

Restricted Stock Awards

Restricted stock awards are valued at the market price of a share of the Company’s common stock on the date of grant. A summary of the restricted stock award activity under the 2007 Plan for the six months ended June 30, 2015 is presented below:


Year-to-Date Activity	Shares			Weighted- Average Grant Date Fair Value Per Share		Aggregate Intrinsic Value

Nonvested outstanding at December 31, 2014		2,279,167		$	5.83
Granted		178,800			11.67
Vested		(269,580	)		8.67
Forfeited		(54,803	)		10.75

Nonvested outstanding at June 30, 2015		2,133,584		$	5.97	$	19,053

The total grant date fair value of restricted stock awards that vested during the six months ended June 30, 2015 and 2014 was $2.6 million and $1.8 million, respectively.

As of June 30, 2015, there was $8.6 million of total unrecognized compensation expense related to stock options and restricted stock awards which is expected to be recognized over a weighted average period of 1.6 years.

Accrued Stock-Based Compensation

The Company had approximately $1.4 million included in accrued compensation expenses on its Consolidated Balance Sheet as of December 31, 2014 for stock-based compensation related to restricted stock awards that had been approved as of that date but were not granted until the first quarter of 2015. This non-cash compensation expense was recorded as part of stock compensation expense in the Company’s Consolidated Statement of Comprehensive Income for the year ended December 31, 2014. There were no such accruals as of June 30, 2015.

12. Stockholders’ Equity

Reserved Common Stock

As of June 30, 2015, the Company has reserved 7,738,878 shares of common stock for options outstanding and restricted stock awards that have not been issued as well as those available for grant under the stock option plans.

Common Stock Repurchase Program

In August 2014, the Company announced that its Board of Directors had authorized a $20 million stock repurchase program (the “Repurchase Program”), whereby the Company is authorized to repurchase the Company’s common stock from time to time on the open market or in privately negotiated transactions. In May 2015, the Board of Directors amended the program to authorize an additional $10 million to be used for such purchases. The Company has elected to implement a Rule 10b5-1 trading plan, which permits shares to be repurchased when the Company might otherwise be precluded from doing so under insider trading laws. The timing and amount of any repurchases that are not made pursuant to the Rule 10b5-1 trading plan will be determined based on an evaluation of market conditions and other factors. The Repurchase Program may be suspended or discontinued at any time.

During the six months ended June 30, 2015, the Company repurchased 410,439 shares of common stock for $3.8 million pursuant to the Repurchase Program. During the year ended December 31, 2014, the Company repurchased 1,551,224 shares of common stock for $15.0 million pursuant to the Repurchase Program.

Repurchased shares are recorded under the cost method and are reflected as treasury stock in the accompanying Consolidated Balance Sheets. All repurchased shares were funded with cash on hand.

Share Repurchase

On December 9, 2014, the Company entered into a Purchase Agreement with TCV V, L.P. (“TCV V”) and TCV Member Fund, L.P. (“TCV Member Fund” and collectively with TCV V, “TCV”), both related parties, pursuant to which the Company agreed to repurchase from TCV 1,000,000 shares of the Company’s common stock for an aggregate price of approximately $9.8 million. The purchase price per share of common stock was equal to 97% of the closing price of the common stock on the Nasdaq Global Market on December 8, 2014. The repurchase closed on December 10, 2014, and these shares are included in the 1,551,224 shares of common stock purchased under the Repurchase Program discussed above. A member of the Company’s board of directors is also a member of the general partner of TCV, which holds more than 5% of the voting securities of the Company.

Secondary Offering

In May 2014, the Company completed a secondary public offering of 5,750,000 shares of common stock at a price of $6.25 per share. All of the shares sold in the secondary public offering were sold by selling stockholders and the Company did not receive any proceeds from the offering. The Company incurred fees of approximately $0.5 million related to legal, accounting and other fees in connection with the secondary public offering, which are included in general and administrative expenses in the Statement of Operations and Comprehensive Income.

13. Income Taxes

The Company’s effective income tax rate before discrete items was 40.9% and 43.6% for the six months ended June 30, 2015 and 2014, respectively. The lower rate in 2015 as compared to 2014 is primarily due to the impact of non-deductible expenses. The Company recognized income tax benefits for discrete items of $0.9 million and $0.4 million during the six months ended June 30, 2015 and 2014, respectively. The effective income tax rate is based upon the estimated annual effective tax rate in compliance with ASC 740, Income Taxes, and other related guidance. The Company updates the estimate of its annual effective tax rate at the end of each quarterly period. The Company’s estimate takes into account estimations of annual pre-tax income, the geographic mix of pre-tax income and its interpretations of tax laws. The Company’s practice is to recognize interest and/or penalties related to income tax matters in income tax expense. These amounts were not material in the six months ended June 30, 2015.

In March 2010, the Company received a letter from the MA DOR requesting documentation demonstrating that TSC, a wholly-owned subsidiary of the Company, has been classified by the MA DOR as a Massachusetts security corporation. Based on subsequent correspondence with the MA DOR, the Company determined that it was more likely than not that the MA DOR would require an adjustment to correct TSC’s tax filings such that it will be treated as a Massachusetts business corporation for the applicable years. The Company recorded a tax reserve for approximately $0.4 million. The tax benefits available to a Massachusetts security corporation are comprised of (i) a different rate structure (1.32% on gross investment income vs. 9.5% on net income) and (ii) exemption from the 0.26% excise tax on net worth (see Note 9). As of the date of the ruling, the Company had recorded a current liability of approximately $677 to account for the tax differential in all open years, which included penalties and interest for the potential state income tax liability arising from the difference between the income tax rates applicable to security corporations and business corporations in Massachusetts. On August 17, 2011, the Company filed Applications for Abatement with the MA DOR. In January 2012, the Company filed Petitions under Formal Procedure with the ATB. A trial took place in April 2014, and in May 2015 the ATB ruled in favor of the MA DOR. During the second quarter of 2015, the Company accepted an amnesty offer from the MA DOR and paid all amounts due relating to the years in dispute.

There are no income tax examinations currently in process.

14. Segment Information

The Company views its operations and manages its business as one operating segment based on factors such as how the Company manages its operations and how its executive management team reviews results and makes decisions on how to allocate resources and assess performance.

Geographic Data

Net sales to unaffiliated customers by geographic area* were as follows:


	Three Months Ended June 30,				Six Months Ended June 30,
	2015		2014		2015		2014
	(Unaudited)

North America	$	23,096	$	20,099	$	41,612	$	38,397
International		6,661		6,049		11,803		10,728

Total	$	29,757	$	26,148	$	53,415	$	49,125

Long-lived assets** by geographic area were as follows:


	June 30, 2015		December 31, 2014
North America	$	99,576	$	100,042
International		5,590		6,147

Total	$	105,166	$	106,189

*	based on current customer billing address; does not consider the geo-targeted, or target audience, location of the campaign

**	comprised of property and equipment, net; goodwill; and intangible assets, net

Item 2.

Management’s Discussion and Analysis of Financial Condition and Results of Operations

The following discussion and analysis of our financial condition and results of operations should be read in conjunction with the consolidated financial statements and accompanying notes included elsewhere in this Quarterly Report on Form 10-Q. This discussion and analysis contains forward-looking statements that involve risks, uncertainties and assumptions. Our actual results could differ materially from those anticipated in these forward-looking statements as a result of various factors. Please refer to our “Forward-Looking Statements” section on page 36.

Overview

Background

We are a leading provider of specialized online content and brand advertising that brings together buyers and sellers of corporate IT products. We sell customized marketing programs and services that enable IT vendors to reach corporate IT decision makers who are actively researching specific IT purchases. In addition, we offer a number of data analytics solutions that help our customers more efficiently target their sales efforts.

IT professionals have become increasingly specialized, and rely on our network of over 150 websites, each of which focuses on a specific IT sector such as storage, security or networking, for key decision support information tailored to their specific areas of responsibility. We work with our advertising customers to develop customized marketing programs, often providing them with multiple offerings in order to target their desired audience of IT professionals more effectively. Our service offerings address the lead generation, project opportunity information, and branding objectives of our advertising customers.

We enable IT professionals to navigate the complex and rapidly-changing IT landscape where purchasing decisions can have significant financial and operational consequences. Our content strategy includes three primary sources which IT professionals use to assist them in their pre-purchase research: independent content provided by our professionals, vendor-generated content provided by our customers and user-generated, or peer-to-peer, content. In addition to utilizing our independent content, registered members are able to conduct their pre-purchase research by accessing extensive vendor content across our network of websites. Our network of websites also allows users to seamlessly interact and contribute content, which is highly valued by IT professionals during their research process.

We had approximately 15.3 million registered members as of December 31, 2014. The targeted nature of our user base enables IT vendors to reach a specialized audience efficiently because our content is highly segmented and aligned with the IT vendors’ specific products. Since our founding in 1999, we have developed a broad customer base. We deliver advertising campaigns for approximately 1,200 customers annually.

Executive Summary

Our revenue for the three months ended June 30, 2015 grew approximately 14%, to $29.8 million, when compared with the same period in 2014. This growth was primarily driven by two factors: continued growth of international revenue from our online products and further adoption of our new IT Deal Alert^TM offerings. Both of these factors remain key areas of focus for our management team, and we believe they may contribute to our continued revenue growth. IT Deal Alert is a suite of services that leverages our proprietary audience activity data to enable us to identify purchase intent among our audience of IT professionals. At the same time, our international business is benefitting from the continued shift in adoption of online tools from traditional print sources by IT professionals in markets outside of North America. The foreign currency issues that affected our customers’ behavior in Q1 have stabilized. While the situation is still challenging for our largest customers, there is less volatility, which is better for us.

Business Trends

The following discussion highlights key trends affecting our business.

•

Macro-economic Conditions and Industry Trends. Because most of our customers are IT vendors, the success of our business is intrinsically linked to the health, and subject to the market conditions, of the IT industry. In the three months ended June 30, 2015, we did not see any meaningful improvement in the IT market and many of our customers continue to be revenue-challenged. This fact, coupled with caution on the part of our largest clients

because of foreign currency concerns, has continued to put pressure on marketing budgets. Our growth continues to be driven in large part by the return on the investments we made in our direct international operations during the downturn as well as our data analytics suite of products, IT Deal Alert, which continues to drive market share gains for us. While we will continue to invest in these growth areas, management will continue to carefully control discretionary spending such as travel and entertainment, and the filling of new and replacement positions, in an effort to maintain profit margins and cash flow.

•

Customer Demographics. While currency concerns appear to have stabilized a bit, our large multi-national customers, who have a significant amount of their revenue outside the US, continue to be cautious. In the three months ended June 30, 2015, online revenues from our top 12 global customers, which have the most international exposure, increased by approximately 13% compared to the same period a year ago. Online revenues from our mid-sized customers (our next largest 100 customers, who have less exposure internationally) increased by approximately 19% year over year. Revenues attributable to our smaller customers, which tend to be venture capital-backed start-ups that primarily operate in North America, increased by approximately 30% over the prior year period. All three customer segments continued to report a challenging environment, and this translated into our customers remaining cautious with their marketing expenditures.

Sources of Revenues

We sell advertising programs to IT vendors targeting a specific audience within a particular IT sector or sub-sector. We maintain multiple points of contact with our customers to provide support throughout their organizations and their customers’ IT sales cycles. As a result, our customers often run multiple advertising programs with us in order to target their desired audience of IT professionals more effectively. There are multiple factors that can impact our customers’ advertising objectives and spending with us, including but not limited to, IT product launches, increases or decreases to their advertising budgets, the timing of key industry marketing events, responses to competitor activities and efforts to address specific marketing objectives such as creating brand awareness or generating sales leads. Our services are generally delivered under short-term contracts that run for the length of a given advertising program, typically less than six months.

The majority of our revenue is derived from the delivery of our online offerings. Online revenue represented 93% and 90% of total revenues for the three months ended June 30, 2015 and 2014, respectively, and 95% and 93% of total revenues for the six months ended June 30, 2015 and 2014, respectively. In the three months ended June 30, 2015, lead generation and branding remained our primary sources of revenue, while project opportunity information, driven by growth in our IT Deal Alert products, contributed approximately 21% of online revenue as compared with approximately 17% for the same period in 2014.

We use both online and event offerings to provide IT vendors with numerous touch points to reach key IT decision makers and to provide IT professionals with highly specialized content across multiple forms of media. We are experienced in assisting advertisers to develop custom advertising programs that maximize branding and ROI. The following is a description of the services we offer:

Online Offerings

Core Online. Our network of websites forms the core of our content platform. Our websites provide IT professionals with comprehensive decision support information tailored to their specific areas of responsibility and purchasing decisions. Through our websites, we offer a variety of online media offerings to connect IT vendors to IT professionals.

Lead Generation. Our lead generation offerings allow IT vendors to maximize ROI by capturing qualified sales leads from the distribution and promotion of content to our audience of IT professionals. All of our lead generation campaigns offer the Activity Intelligence™ Dashboard, a technology platform that gives our customers’ marketers and sales representatives a real-time view of their prospects, which includes insights on the research activities of technology buying teams, including at an account level. Lead generation offerings may also include an additional service, TechTarget Re-Engage (formerly called Nurture & Qualify), which helps both technology marketers and their sales teams to identify highly active prospects, detect emerging projects, retarget interested buying teams, and accelerate engagement with specific accounts.

Our lead generation offerings may also include the syndication of the following:

•

White Papers. White papers are technical documents created by IT vendors to describe business or technical problems which are addressed by the vendors’ products or services. As part of a lead generation campaign, we post white papers on our relevant websites and our users receive targeted promotions about these content assets. Prior to viewing white papers, our registered members and visitors supply their corporate contact information and agree to receive further information from the vendor. The corporate contact and other qualification information for these leads are supplied to the vendor in real time through our proprietary lead management software.

•

Webcasts, Podcasts, Videocasts and Virtual Trade Shows. Webcasts, podcasts, videocasts, virtual trade shows and similar content bring informational sessions directly to attendees’ desktops and mobile devices. As is the case with white papers, our users supply their corporate contact and qualification information to the webcast, podcast, videocast or virtual trade show sponsor when they view or download the content. Sponsorship includes access to the registrant information and visibility before, during and after the event.

Branding. Our branding offerings provide IT vendors exposure to targeted audiences of IT professionals actively researching information related to their products and services and include display advertising (including banners) and custom offerings. Display advertising can be purchased on specific websites within our network and against specific audience or technology segments. Through an offering called Spoke™, we can also provide our advertisers with brand exposure to our audience outside of our network of owned and operated websites, with the same types of targeting criteria available within our network. These offerings give IT vendors the ability to increase their brand awareness to highly specialized IT sectors.

Custom Content Creation. In support of our advertisers’ lead generation programs, we will sometimes create white papers, case studies, webcasts, videos or even entire microsites to our customers’ specifications through our Custom Media team. These customized content assets are then promoted to our audience in the context of the advertisers’ lead generation programs. Our custom offerings allow customers to have content or entire microsites created that focus on topics related to their marketing objectives and include promotion of these vehicles to our users, which includes IT professionals and buyers of IT products.

Content Sponsorships. IT vendors, or groups of vendors, pay us to sponsor independent editorially created content vehicles on specific technology topics where the registrant information is then provided to all participating sponsors. In some cases, these vehicles are supported by multiple sponsors in a single segment, with the registrant information provided to all participating sponsors. Because these offerings are editorially driven, advertisers get the benefit of association with independently created content as well as access to qualified sales leads that are researching the topic.

List Rentals. We also offer IT vendors the ability to message registered members on topics related to their interests by renting our e-mail and postal lists of registered members, which is organized using specific criteria such as company size, geography or job title.

Third Party Revenue Sharing Arrangements. We have revenue sharing arrangements with certain third parties to allow for the licensing of our online content, for the renting of our database of opted-in e-mail subscribers and to allow advertising from customers of certain third parties to be made available to our website visitors. In each of these arrangements we are paid a share of the resulting revenue.

IT Deal Alert. IT Deal Alert is a suite of services for advertisers that leverages the detailed purchase intent data that we collect about end-user IT organizations. Through proprietary scoring methodologies, we use this data to help advertisers identify and prioritize accounts whose content consumption around specific IT topics indicates that they are “in-market” for a particular product or service. We also use the data directly to identify and further profile accounts’ upcoming purchase plans.

•

IT Deal Alert: Qualified Sales Opportunities is a product that profiles specific in-progress purchase projects, including information on scope and purchase considerations.

•

IT Deal Alert: Priority Engine™ (formerly called Account Watch) is a subscription service powered by our Activity Intelligence platform, which integrates with salesforce.com. The service delivers information to allow marketers and sales personnel to identify accounts actively researching new technology purchases, and to reach active prospects within those organizations that are relevant to the purchase. We sell this service in approximately 80 technology-specific segments.

•

IT Deal Alert: Deal Data™ is a customized solution aimed at sales intelligence and data scientist functions within our customers that makes our Activity Intelligence data directly consumable by the customer’s internal applications. Deal Data was introduced in the first quarter of 2015 and did not represent a significant percentage of our revenue in the first or second quarter of 2015.

Events

Events revenue represented 7% and 10% of total revenues for the three months ended June 30, 2015 and 2014, respectively, and 5% and 7% of total revenues for the six months ended June 30, 2015 and 2014, respectively. Most of our media groups operate revenue-generating events. The majority of our events are free to IT professionals and are sponsored by IT vendors. Attendees are pre-screened based on event-specific criteria such as sector-specific budget size, company size, or job title. We offer three types of events: multi-day conferences, single-day seminars and custom events. Multi-day conferences provide independent content provided by our professionals to our attendees and allow vendors to purchase exhibit space and other sponsorship offerings that enable interaction with the attendees. We also hold single-day seminars on various topics in major cities. These seminars provide independent content provided by our professionals on key sub-topics in the sectors we serve, are free to qualified attendees, and offer multiple vendors the ability to interact with specific, targeted audiences actively focused on buying decisions. Our custom events differ from our seminars in that they are exclusively sponsored by a single IT vendor and the content is driven primarily by the sole sponsor.

Our key strategic initiatives include:

Geographic – During the quarter ended June 30, 2015, approximately 33% of our online revenues were derived from international geo-targeted campaigns (“international”), where our target audience is outside North America. International online revenue (which also includes international IT Deal Alert revenue of $1.2 million as discussed below) increased by approximately 23% in the three months ended June 30, 2015 as compared to the same period a year ago. We continue to execute very well internationally as we continue to deepen our relatively new relationships with our customers in the United Kingdom, France, Germany, Australia, Singapore, China and Latin America. Although currency issues seemed to stabilize during the quarter, which caused less volatility to our customers’ marketing budgets, our largest customers continue to be cautious.

Product – IT Deal Alert revenues were approximately $5.8 million in the quarter ended June 30, 2015, up from approximately $4.1 million in the same period in 2014. This includes international IT Deal Alert revenue of $1.2 million, which is also included in international revenues discussed above. In the second quarter of 2015, we had over 260 active customers utilizing our IT Deal Alert service; this is up from 230 customers in the first quarter of 2015. We expect IT Deal Alert to continue to be a meaningful growth driver through 2015.

Revenue changes for the three and six months ended June 30, 2015 as compared to the same periods in 2014 were as follows:


	Three months ended June 30,				Growth rate			Six months ended June 30,				Growth rate
	2015		2014		Growth rate			2015		2014		Growth rate
	($’s in thousands)							($’s in thousands)

Total Online	$	27,736	$	23,652		17	%	$	50,784	$	45,732		11	%


Total Online by Geographic Area:
North America:
North America Core Online		13,982		12,802		9	%		25,562		25,289		1	%
North America IT Deal Alert		4,552		3,388		34	%		9,075		6,465		40	%

Total North America Online		18,534		16,190		14	%		34,637		31,754		9	%

International:
International Core Online		7,981		6,771		18	%		14,358		12,950		11	%
International IT Deal Alert		1,221		691		77	%		1,789		1,028		74	%

Total International Online		9,202		7,462		23	%		16,147		13,978		16	%

Total Online by Product:
Core Online:
North America Core Online		13,982		12,802		9	%		25,562		25,289		1	%
International Core Online		7,981		6,771		18	%		14,358		12,950		11	%

Total Core Online		21,963		19,573		12	%		39,920		38,239		4	%

IT Deal Alert:
North America IT Deal Alert		4,552		3,388		34	%		9,075		6,465		40	%
International IT Deal Alert		1,221		691		77	%		1,789		1,028		74	%

Total IT Deal Alert		5,773		4,079		42	%		10,864		7,493		45	%

Total Events	$	2,021	$	2,496		-19	%	$	2,631	$	3,393		-22	%


Total Revenues	$	29,757	$	26,148		14	%	$	53,415	$	49,125		9	%

Cost of Revenues, Operating Expenses and Other

Expenses consist of cost of online and event revenues, selling and marketing, product development, general and administrative, depreciation, amortization and net interest and other expenses. Personnel-related costs are a significant component of each of these expense categories except for depreciation, amortization and net interest and other related expenses.

Cost of Online Revenues. Cost of online revenues consist primarily of: salaries and related personnel costs; member acquisition expenses (primarily keyword purchases from leading Internet search sites); freelance writer expenses; website hosting costs; vendor expenses associated with the delivery of webcast, podcast, videocast and similar content, and list rental offerings; stock-based compensation expenses; facility expenses and other related overhead.

Cost of Events Revenues. Cost of events revenues consist primarily of: direct expenses, including site, food and beverages for the event attendees and event speaker expenses; salaries and related personnel costs; travel-related expenses; stock-based compensation expenses; facilities expenses and other related overhead.

Selling and Marketing. Selling and marketing expenses consist primarily of: salaries and related personnel costs; sales commissions; travel-related expenses; stock-based compensation expenses; facility expenses and other related overhead. Sales commissions are recorded as expense when earned by the employee, based on recorded revenue.

Product Development. Product development includes the creation and maintenance of our network of websites, advertiser offerings and technical infrastructure. Product development expense consists primarily of salaries and related personnel costs; stock-based compensation expenses; facility expenses and other related overhead.

General and Administrative. General and administrative expenses consist primarily of: salaries and related personnel costs; facility expenses and related overhead; accounting, legal and other professional fees; and stock-based compensation expenses.

Depreciation. Depreciation expense consists of the depreciation of our property and equipment. Depreciation of property and equipment is calculated using the straight-line method over their estimated useful lives, ranging from two to ten years.

Amortization of Intangible Assets. Amortization of intangible assets expense consists of the amortization of intangible assets recorded in connection with our acquisitions. Separable intangible assets that are not deemed to have an indefinite life are amortized over their estimated useful lives, which range from three to ten years, using methods that are expected to reflect the estimated pattern of economic use.

Interest and Other Income (Expense), Net. Interest income (expense), net consists primarily of interest income earned on cash, cash equivalents and short- and long-term investments less any interest expense incurred. We historically have invested our cash in money market accounts, municipal bonds and government agency bonds. Other income (expense), net consists of non-operating gains or losses, primarily related to foreign currency exchange.

Application of Critical Accounting Policies and Use of Estimates

The discussion of our financial condition and results of operations is based upon our consolidated financial statements, which have been prepared in accordance with accounting principles generally accepted in the United States. The preparation of these financial statements requires us to make estimates, judgments and assumptions that affect the reported amount of assets, liabilities, revenues and expenses and related disclosure of contingent assets and liabilities. On an ongoing basis, we evaluate our estimates, including those related to revenue, long-lived assets, goodwill, allowance for doubtful accounts, stock-based compensation, contingent liabilities, self-insurance accruals and income taxes. We based our estimates of the carrying value of certain assets and liabilities on historical experience and on various other assumptions that we believe to be reasonable. In some cases, changes in the accounting estimates are reasonably likely to occur from period to period. Our actual results may differ from these estimates under different assumptions or conditions.

We believe the following critical accounting policies affect our more significant judgments used in the preparation of our consolidated financial statements. See the notes to our consolidated financial statements for information about these critical accounting policies as well as a description of our other accounting policies.

Revenue Recognition

We generate substantially all of our revenue from the sale of targeted advertising campaigns, which we deliver via our network of websites, data analytics solutions and events. In all cases, we recognize revenue only when the price is fixed or determinable, persuasive evidence of an arrangement exists, the service is performed and collectability of the resulting receivable is reasonably assured.

The majority of our online media sales involve multiple product offerings. Although each of our online media offerings can be sold separately, most of our online media sales involve multiple online offerings. Because objective evidence of fair value does not exist for all elements in our bundled product offerings, we use a best estimate of selling price of individual deliverables in the arrangement in the absence of vendor-specific objective evidence or other third-party evidence of fair value. We establish best estimates considering multiple factors including, but not limited to, class of client, size of transaction, available media inventory, pricing strategies and market conditions. We believe the use of the best estimate of selling price allows revenue recognition in a manner consistent with the underlying economics of the transaction. We apply a relative selling price method to allocate arrangement consideration at the inception of the arrangement to each deliverable in a multiple element arrangement. Revenue is then recognized as delivery occurs.

We evaluate all deliverables of an arrangement at inception and each time an item is delivered, to determine whether they represent separate units of accounting. Based on this evaluation, the arrangement consideration is measured and allocated to each of these elements.

Online Offerings

Core Online

Lead Generation. As part of our lead generation campaign offerings, we may guarantee a minimum number of qualified leads to be delivered over the course of the advertising campaign. We determine the content necessary to achieve performance guarantees. Scheduled end dates of advertising campaigns sometimes need to be extended, pursuant to the terms of the arrangement, to satisfy lead guarantee obligations. We estimate a revenue reserve necessary to adjust revenue recognition for extended advertising campaigns. These estimates are based on our experience in managing and fulfilling these offerings. The customer generally has cancellation privileges which normally require advance notice by the customer and require proportional payment by the customer for the portion of the campaign that has been provided. Additionally, we offer sales incentives to certain customers, primarily in the form of volume rebates, which are classified as a reduction of revenues and are calculated based on the terms of the specific customer’s contract. We accrue for these sales incentives based on contractual terms and historical experience. We recognize revenue from cost per lead advertising during the period in which leads are delivered to our customers and from duration-based campaigns over the duration of the campaign, which is typically less than six months.

Branding. Branding consists mostly of banner revenue, which is recognized in the period in which the banner impressions, engagements or clicks occur.

Custom Content Creation. Custom content revenue is recognized when the creation is completed and delivered to the customer, with the exception of microsites which are recognized over the period during which they are live.

Content Sponsorships. Content sponsorship revenue is recognized ratably over the period in which the related content vehicle is available on our websites.

List Rentals. List rental revenue is recognized in the period in which delivery of the list is made to our customers.

Third Party Revenue Sharing Arrangements. Revenue from third party revenue sharing arrangements is recognized on a net basis in the period in which the services are performed. For certain third party agreements where we are the primary obligor, revenue is recognized on a gross basis in the period in which the services are performed.

IT Deal Alert IT Deal Alert is a suite of products which includes Qualified Sales Opportunities, Priority Engine (formerly called Account Watch) and Deal Data, which was introduced in the first quarter of 2015. Qualified Sales Opportunities revenue is recognized when the opportunity is delivered to the customer, Priority Engine revenue is recognized ratably over the duration of the service and Deal Data revenue is recognized upon delivery.

Events

We recognize revenue from events in the period in which the event occurs. The majority of our events are free to qualified attendees; however, certain events are based on a paid attendee model. We recognize revenue for paid attendee events upon completion of the event.

Amounts collected or billed prior to satisfying the above revenue recognition criteria are recorded as deferred revenue.

Long-Lived Assets

Our long-lived assets consist primarily of property and equipment, capitalized software, goodwill and other intangible assets. Goodwill and other intangible assets have arisen principally from our acquisitions. The amount assigned to intangible assets is subjective and based on our estimates of the future benefit of the intangible assets using accepted valuation techniques, such as discounted cash flow and replacement cost models. Our long-lived assets, other than goodwill, are amortized over their estimated useful lives, which we determine based on the consideration of several factors including the period of time the asset is expected to remain in service. Intangible assets are amortized over their estimated useful lives, which range from three to ten years, using methods of amortization that are expected to reflect the estimated pattern of

economic use. Consistent with our determination that we have only one reporting segment, we have determined that there is only one reporting unit and test goodwill for impairment at the entity level. We evaluate the carrying value and remaining useful lives of long-lived assets, other than goodwill, whenever indicators of impairment are present. We evaluate the carrying value of goodwill annually using the two step process required by ASC 350, Intangibles – Goodwill and Other (“ASC 350”). The first step of the impairment test is to identify potential impairment by comparing the reporting unit’s fair value with its net book value (or carrying amount), including goodwill. The fair value is estimated based on a market value approach. If the fair value of the reporting unit exceeds its carrying amount, the reporting unit’s goodwill is not considered to be impaired and the second step of the impairment test is not performed. Whenever indicators of impairment are present, we would perform the second step and compare the implied fair value of the reporting unit’s goodwill, as defined by ASC 350, to its carrying value to determine the amount of the impairment loss, if any. As of December 31, 2014, the date of our last annual goodwill impairment review, there were no indications of impairment based on our step one analysis, and our estimated fair value exceeded our carrying value by a significant margin. There were no indications of impairment in our goodwill or intangible assets at June 30, 2015.

Fair Value of Financial Instruments

Financial instruments consist of cash and cash equivalents, short- and long-term investments, accounts receivable, accounts payable and contingent consideration. Due to their short-term nature and liquidity, the carrying value of these instruments, with the exception of contingent consideration, approximates their estimated fair values. The fair value of contingent consideration was estimated using a discounted cash flow method.

Allowance for Doubtful Accounts

We offset gross trade accounts receivable with an allowance for doubtful accounts. The allowance for doubtful accounts is our best estimate of the amount of probable credit losses in our existing accounts receivable. We review our allowance for doubtful accounts on a regular basis, and all past due balances are reviewed individually for collectability. Account balances are charged against the allowance after all means of collection have been exhausted and the potential for recovery is considered remote. Provisions for doubtful accounts are recorded in general and administrative expense. If our historical collection experience does not reflect our future ability to collect outstanding accounts receivable, our future provision for doubtful accounts could be materially affected. To date, we have not incurred any write-offs of accounts receivable significantly different than the amounts reserved.

The allowance for doubtful accounts was $1.3 million at June 30, 2015 and $1.0 million at December 31, 2014.

Stock-Based Compensation

We measure stock-based compensation at the grant date based on the fair value of the award and recognize stock-based compensation in our results of operations using the straight-line method over the vesting period of the award or using the accelerated method if the award is contingent upon performance goals. We use the Black-Scholes option pricing model to determine the fair value of stock option awards.

The expected volatility of options granted has been determined using a weighted average of the historical volatility of our stock for a period equal to the expected life of the option. The risk-free interest rate is based on a zero coupon United States treasury instrument whose term is consistent with the expected life of the stock options. We have not paid and do not anticipate paying cash dividends on our shares of common stock; therefore, the expected dividend yield is assumed to be zero. We applied an estimated annual forfeiture rate in determining the expense recorded in each period.

Internal-Use Software and Website Development Costs

We capitalize costs of materials, consultants and compensation and related expenses of employees who devote time to the development of internal-use software and website applications and infrastructure involving developing software to operate our websites. However, we expense as incurred website development costs for new features and functionalities since it is not probable that they will result in additional functionality until they are both developed and tested with confirmation that they are more effective than the current set of features and functionalities on our websites. Our judgment is required in determining the point at which various projects enter the state at which costs may be capitalized, in assessing the ongoing value of the capitalized costs and in determining the estimated useful lives over which the costs are amortized, which is generally three years. To the extent that we change the manner in which we develop and test new features and functionalities

related to our websites, assess the ongoing value of capitalized assets or determine the estimated useful lives over which the costs are amortized, the amount of website development costs we capitalize and amortize in future periods would be impacted. We review capitalized internal-use software and website development costs for recoverability whenever events or changes in circumstances indicate that the carrying amount of the asset may not be recoverable. We would recognize an impairment loss only if the carrying amount of the asset is not recoverable and exceeds its fair value. We capitalized internal-use software and website development costs of $0.7 million for each of the three months ended June 30, 2015 and 2014, and $1.5 million and $1.7 million for the six months ended June 30, 2015 and 2014, respectively.

Income Taxes

We are subject to income taxes in both the United States and foreign jurisdictions, and we use estimates in determining our provision for income taxes. We recognize deferred tax assets and liabilities based on temporary differences between the financial reporting and income tax bases of assets and liabilities using statutory rates.

Our deferred tax assets are comprised primarily of book to tax differences on stock-based compensation, timing of deductions for deferred rent and accrued expenses, and net operating loss (“NOL”) carryforwards. As of December 31, 2014, we had state NOL carryforwards of approximately $20.5 million, which may be used to offset future taxable income. The NOL carryforwards expire through 2035. We also had foreign NOL carryforwards of $1.1 million, which may be used to offset future taxable income in foreign jurisdictions until they expire, through 2019.

Net Income (Loss) Per Share

We calculate basic earnings per share (“EPS”) by dividing earnings available to common shareholders for the period by the weighted average number of common shares and vested, undelivered restricted stock awards outstanding during the period. Because the holders of unvested restricted stock awards do not have nonforfeitable rights to dividends or dividend equivalents, we do not consider these awards to be participating securities that should be included in our computation of earnings per share under the two-class method. Diluted EPS is computed using the weighted-average number of common shares and vested, undelivered restricted stock awards outstanding during the period, plus the dilutive effect of potential future issuances of common stock relating to stock option programs and other potentially dilutive securities using the treasury stock method. In calculating diluted EPS, the dilutive effect of stock options and restricted stock awards is computed using the average market price for the respective period. In addition, the assumed proceeds under the treasury stock method include the average unrecognized compensation expense and assumed tax benefit of stock options and restricted stock awards that are in-the-money. This results in the “assumed” buyback of additional shares, thereby reducing the dilutive impact of stock options and restricted stock awards.

Results of Operations

The following table sets forth our results of operations for the periods indicated:


	Three Months Ended June 30,								Six Months Ended June 30,
	2015				2014				2015				2014
	($ in thousands)
Revenues:
Online	$	27,736	93	%	$	23,652	90	%	$	50,784	95	%	$	45,732	93	%
Events		2,021	7			2,496	10			2,631	5			3,393	7

Total revenues		29,757	100			26,148	100			53,415	100			49,125	100
Cost of revenues:
Online		6,719	23			6,149	24			13,248	25			12,239	25
Events		877	3			979	3			1,332	2			1,526	3

Total cost of revenues		7,596	26			7,128	27			14,580	27			13,765	28

Gross profit		22,161	74			19,020	73			38,835	73			35,360	72

Operating expenses:
Selling and marketing		10,958	37			10,007	38			21,299	40			19,753	40
Product development		2,032	7			1,742	7			3,808	7			3,347	7
General and administrative		3,591	12			3,884	14			6,611	12			7,236	14
Depreciation		1,016	3			1,012	4			2,024	4			2,001	4
Amortization of intangible assets		344	1			454	2			717	1			905	2

Total operating expenses		17,941	60			17,099	65			34,459	65			33,242	67

Operating income		4,220	14			1,921	8			4,376	8			2,118	5
Interest income, net		250	1			99		*		87		*		109		*

Income before provision for income taxes		4,470	15			2,020	8			4,463	8			2,227	5
Provision for income taxes		1,641	6			717	3			1,287	2			789	2

Net income	$	2,829	10	%	$	1,303	5	%	$	3,176	6	%	$	1,438	3	%

*	Not meaningful

Comparison of Three Months Ended June 30, 2015 and 2014

Revenues


	Three Months Ended June 30,
	2015		2014		Increase (Decrease)			Percent Change
	($ in thousands)
Revenues:
Online	$	27,736	$	23,652	$	4,084			17	%
Events		2,021		2,496		(475	)		(19	)

Total revenues	$	29,757	$	26,148	$	3,609			14	%

Online. The increase in online revenues in the second quarter of 2015 was primarily attributable to a $1.7 million increase in revenues from new product offerings, primarily IT Deal Alert, increases in lead generation and branding offerings, and continued international expansion, each as compared to the same quarter in the prior year.

Events. The decrease in events revenues in the second quarter of 2015 is primarily due to a reduction in the number of seminars that we conducted as compared to the same quarter in the prior year.

Cost of Revenues and Gross Profit


	Three Months Ended June 30,
	2015			2014			Increase (Decrease)			Percent Change
	($ in thousands)
Cost of revenues:
Online	$	6,719		$	6,149		$	570			9	%
Events		877			979			(102	)		(10	)

Total cost of revenues	$	7,596		$	7,128		$	468			7	%

Gross profit	$	22,161		$	19,020		$	3,141			17	%

Gross profit percentage		74	%		73	%

Cost of Online Revenues. The increase in cost of online revenues in the second quarter of 2015 was primarily attributable to additional costs related to new product offerings as compared to the same quarter in the prior year.

Cost of Events Revenues. The decrease in cost of events revenues in the second quarter of 2015 was primarily due to decreases in variable direct and employee-related costs as a result of the decrease in the number of events that we conducted as compared to the same quarter in the prior year.

Gross Profit. Our gross profit is equal to the difference between our revenues and our cost of revenues for the period. Gross profit for the second quarter of 2015 was 74% as compared to 73% in the second quarter of 2014. Online gross profit increased by $3.5 million, primarily attributable to the increase in online revenues as compared to the same period a year ago, along with our ability to support this revenue growth with our fixed cost base. Events gross profit decreased by $0.4 million, primarily as a result of the lower events revenues as compared to the same period in the prior year. Because the majority of our costs are labor-related, we expect our gross profit to fluctuate from period to period based on changes in the total revenues for the period. The relative contribution of online and events revenues to our total revenues will also cause fluctuation in our gross profit from period to period.

Operating Expenses and Other


	Three Months Ended June 30,
	2015		2014		Increase (Decrease)			Percent Change
	($ in thousands)
Operating expenses:
Selling and marketing	$	10,958	$	10,007	$	951			10	%
Product development		2,032		1,742		290			17
General and administrative		3,591		3,884		(293	)		(8	)
Depreciation		1,016		1,012		4				*
Amortization of intangible assets		344		454		(110	)		(24	)

Total operating expenses	$	17,941	$	17,099	$	842			5	%

Interest and other income, net	$	250	$	99	$	151			153	%

Provision for income taxes	$	1,641	$	717	$	924			129	%

Selling and Marketing. Selling and marketing expenses increased for the three months ended June 30, 2015 as compared to the three months ended June 30, 2014 primarily due to increased investment in product innovation as well as increased costs due to international expansion.

Product Development. The increase in product development expense for the three months ended June 30, 2015 as compared to the three months ended June 30, 2014 was primarily caused by a reduction in the amount of these costs that were capitalized year over year as some resources were allocated to non-capitalized projects due to our priorities, including product development efforts toward new products.

General and Administrative. The decrease in general and administrative expense for the three months ended June 30, 2015 as compared to the three months ended June 30, 2014 was primarily caused by fees related to a secondary public offering in the second quarter of 2014, offset in part by increased corporate taxes and compensation-related expenses.

Depreciation and Amortization of Intangible Assets. Depreciation expense was relatively flat year over year. The decrease in amortization of intangible assets expense was attributable to certain intangible assets becoming fully amortized during 2014.

Interest and Other Income, Net. The increase in interest and other income, net, for the three months ended June 30, 2015 as compared to the three months ended June 30, 2014 is primarily due to the favorable effect of foreign currency exchange rates in countries where we record accounts receivable and accounts payable in the normal course of business. Other income in the second quarter of 2015 was $0.2 million compared to $0.1 million in the second quarter of 2014. Interest income (expense) was relatively flat year over year.

Provision for Income Taxes. Our effective income tax rate before discrete items was 40.9% and 43.9% for the three months ended June 30, 2015 and 2014, respectively. The lower rate in 2015 as compared to 2014 is primarily due to the impact of non-deductible expenses. We recognized income tax benefits for discrete items of $87,000 and $0.4 million during the three months ended June 30, 2015 and 2014, respectively. Our effective income tax rate is based upon the estimated annual effective tax rate in compliance with ASC 740, Income Taxes, and other related guidance. We update the estimate of our annual effective tax rate at the end of each quarterly period. Our estimate takes into account estimations of annual pre-tax income, the geographic mix of pre-tax income and interpretations of tax laws.

Reclassifications. Beginning in the third quarter of 2014, we changed the presentation of transactional gains and losses arising from the impact of currency exchange rate fluctuations on transactions in foreign currency that is different from the local functional currency in order to better reflect the non-operating nature of these gains and losses, and are now including them in Other Income (Expense) on the Consolidated Statements of Operations and Comprehensive Income. Previously, these gains and losses were included in our operating expenses as General and Administrative expense. Amounts in the prior periods’ consolidated financial statements have been reclassified to conform to the current presentation. In the second quarter and first half of 2014, this resulted in an increase to Other Income and an increase in General and Administrative expense equal to $110,000 and $130,000, respectively.

Comparison of Six Months Ended June 30, 2015 and 2014

Revenues


	Six Months Ended June 30,
	2015		2014		Increase (Decrease)			Percent Change
	($ in thousands)
Revenues:
Online	$	50,784	$	45,732	$	5,052			11	%
Events		2,631		3,393		(762	)		(22	)

Total revenues	$	53,415	$	49,125	$	4,290			9	%

Online. The increase in online revenues in the six months ended June 30, 2015 was primarily attributable to a $3.4 million increase in revenues from new product offerings, primarily IT Deal Alert, increases in lead generation and branding offerings, and continued international expansion, each as compared to the same period in the prior year.

Events. The decrease in events revenues in the six months ended June 30, 2015 is primarily due to a reduction in the number of custom events and, to a lesser extent, seminars that we conducted as compared to the same period in the prior year.

Cost of Revenues and Gross Profit


	Six Months Ended June 30,
	2015			2014			Increase (Decrease)			Percent Change
	($ in thousands)
Cost of revenues:
Online	$	13,248		$	12,239		$	1,009			8	%
Events		1,332			1,526			(194	)		(13	)

Total cost of revenues	$	14,580		$	13,765		$	815			6	%

Gross profit	$	38,835		$	35,360		$	3,475			10	%

Gross profit percentage		73	%		72	%

Cost of Online Revenues. The increase in cost of online revenues in the six months ended June 30, 2015 was primarily attributable to additional costs related to sales of new product offerings as compared to the same period in the prior year.

Cost of Events Revenues. The decrease in cost of events revenues in the six months ended June 30, 2015 was primarily due to decreases in variable direct and employee-related costs as a result of the decrease in the number of events that we conducted as compared to the same period in the prior year.

Gross Profit. Our gross profit is equal to the difference between our revenues and our cost of revenues for the period. Gross profit for the first half of 2015 was 73% as compared to 72% in the first half of 2014. Online gross profit increased by $4.0 million, primarily attributable to the increase in online revenues as compared to the same period a year ago, along with our ability to support this revenue growth with our fixed cost base. Events gross profit decreased by $0.6 million, primarily as a result of the lower events revenues as compared to the same period in the prior year. Because the majority of

our costs are fixed, we expect our gross profit to fluctuate from period to period based on changes in the total revenues for the period. The relative contribution of online and events revenues to our total revenues will also cause fluctuation in our gross profit from period to period.

Operating Expenses and Other


	Six Months Ended June 30,
	2015		2014		Increase (Decrease)			Percent Change
	($ in thousands)
Operating expenses:
Selling and marketing	$	21,299	$	19,753	$	1,546			8	%
Product development		3,808		3,347		461			14
General and administrative		6,611		7,236		(625	)		(9	)
Depreciation		2,024		2,001		23			1
Amortization of intangible assets		717		905		(188	)		(21	)

Total operating expenses	$	34,459	$	33,242	$	1,217			4	%

Interest and other income, net	$	87	$	109	$	(22	)		(20	)%

Provision for income taxes	$	1,287	$	789	$	498			63	%

Selling and Marketing. Selling and marketing expenses increased year over year, primarily due to increased investment in product innovation as well as variable compensation-related expenses caused by the increase in revenues and increased costs due to international expansion.

Product Development. The increase in product development expense for the six months ended June 30, 2015 as compared to the same period in the prior year was primarily caused by a reduction in the amount of these costs that were capitalized year over year as some resources were allocated to non-capitalized projects due to our priorities, including product development efforts toward new products.

General and Administrative. The decrease in general and administrative expense for the six months ended June 30, 2015 as compared to the six months ended June 30, 2014 was primarily caused by fees related to a secondary public offering in the second quarter of 2014, as well as decreased legal fees, offset in part by increased corporate taxes and compensation-related expenses.

Interest and Other Income, Net. The decrease in interest and other income, net, for the six months ended June 30, 2015 as compared to the same period in the prior year is primarily due to the unfavorable effect of foreign currency exchange rates in countries where we record accounts receivable and accounts payable in the normal course of business during the first half of the year. Other income in the first half of 2015 was $66,000 compared to $0.1 million in 2014. Interest income (expense) was relatively flat year over year.

Provision for Income Taxes. Our effective income tax rate before discrete items was 40.9% and 43.6% for the six months ended June 30, 2015 and 2014, respectively. The lower rate in 2015 as compared to 2014 is primarily due to the impact of non-deductible expenses. We recognized income tax benefits for discrete items of $0.9 million and $0.4 million during the six months ended June 30, 2015 and 2014, respectively. Our effective income tax rate is based upon the estimated annual effective tax rate in compliance with ASC 740, Income Taxes, and other related guidance. We update the estimate of our annual effective tax rate at the end of each quarterly period. Our estimate takes into account estimations of annual pre-tax income, the geographic mix of pre-tax income and interpretations of tax laws.

Seasonality

The timing of our revenues is affected by seasonal factors. Our revenues are seasonal primarily as a result of the annual budget approval process of many of our customers, the normal timing at which our customers have their new product

introductions, and the historical decrease in advertising and events activity in summer months. Events revenue may vary depending on which quarters we produce the event, which may vary when compared to previous periods. The timing of revenues in relation to our expenses, much of which does not vary directly with revenue, has an impact on the cost of online revenues, selling and marketing, product development, and general and administrative expenses as a percentage of revenue in each calendar quarter during the year.

The majority of our expenses are personnel-related and include salaries, stock-based compensation, benefits and incentive-based compensation plan expenses. As a result, we have not experienced significant seasonal fluctuations in the timing of our expenses period to period.

Liquidity and Capital Resources

Resources

As of June 30, 2015, we had $40.9 million of working capital, and our cash and cash equivalents totaled $19.2 million. Our cash, cash equivalents and investments decreased $0.9 million during the first half of 2015 as compared to the first half of 2014, primarily from cash used by our investing activities, offset in part by cash provided by our operating activities and our financing activities. We believe that our existing cash, cash equivalents, and investments, our cash flow from operating activities and available bank borrowings will be sufficient to meet our anticipated cash needs for at least the next 12 months. Our future working capital requirements will depend on many factors, including the operations of our existing business, our potential strategic expansion internationally, possible repurchases of our common stock under our stock repurchase program, future acquisitions we might undertake, and the expansion into complementary businesses. To the extent that our cash and cash equivalents, investments and cash flow from operating activities are insufficient to fund our future activities, we may need to raise additional funds through bank credit arrangements or public or private equity or debt financings. We also may need to raise additional funds in the event we determine in the future to effect one or more additional acquisitions of businesses.


	June 30, 2015		December 31, 2014
	($ in thousands)

Cash, cash equivalents and investments	$	37,282	$	38,183

Accounts receivable, net	$	28,902	$	23,200

Cash, Cash Equivalents and Investments

Our cash, cash equivalents and investments at June 30, 2015 were held for working capital purposes and were invested primarily in money market accounts, municipal bonds and government agency bonds. We do not enter into investments for trading or speculative purposes.

Accounts Receivable, Net

Our accounts receivable balance fluctuates from period to period, which affects our cash flow from operating activities. The fluctuations vary depending on the timing of our service delivery and billing activity, cash collections, and changes to our allowance for doubtful accounts. We use days sales outstanding (“DSO”) as one measurement of the quality and status of our receivables. We define DSO as net accounts receivable at quarter end divided by total revenue for the applicable period, multiplied by the number of days in the applicable period. DSO was 88 days for the quarter ended June 30, 2015 and 70 days at December 31, 2014. The increase in DSO is primarily due to the timing of payments from customers.

Cash Flows


	Six Months Ended June 30,
	2015			2014
	($ in thousands)
Net cash provided by operating activities	$	972		$	8,238

Net cash used in investing activities	$	(1,229	)	$	(2,220	)

Net cash provided by financing activities	$	170		$	2,216

Operating Activities

Cash provided by operating activities primarily consists of net income adjusted for certain non-cash items including depreciation and amortization, the provision for bad debt, stock-based compensation, deferred income taxes, and the effect of changes in working capital and other activities. Cash provided by operating activities for the six months ended June 30, 2015 was $1.0 million compared to cash provided by operating activities of $8.2 million in the six months ended June 30, 2014.

The decrease in cash provided by operating activities in the six months ended June 30, 2015 as compared to the six months ended June 30, 2014 is primarily a result of changes in operating assets and liabilities of $(6.1) million in the first half of 2015 compared to $1.3 million in the first half of 2014. Significant components of the changes in assets and liabilities in the first half of 2015 included an increase in accounts receivable of $6.1 million, as evidenced by the increase in DSO during the period, a $1.8 million decrease in income taxes payable, and a $0.8 million decrease in accrued compensation, primarily resulting from annual bonuses from 2014 that were paid in the first quarter of 2015. These changes were offset in part by an increase in deferred revenue of $2.6 million. Additionally, tax benefits relating to excess stock-based compensation deductions are presented as financing cash flows. Cash outflows from tax benefits related to stock-based compensation deductions were $2.0 million and $0.5 million in the six months ended June 30, 2015 and 2014, respectively.

Investing Activities

Cash used in investing activities in the six months ended June 30, 2015 was $1.2 million; $1.9 million relates to the purchase of property and equipment, made up primarily of website development costs, computer equipment and related software and internal-use development costs, offset in part by $0.7 million related to the conversion of long-term investments into cash equivalents. Cash used in investing activities in the six months ended June 30, 2014 was $2.1 million for the purchase of property and equipment, made up primarily of website development costs, computer equipment and related software and internal-use development costs, and $0.1 million related to the conversion of cash equivalents into long-term investments.

Financing Activities

We received proceeds from the exercise of stock options in the amounts of $2.0 million and $1.8 million in the six months ended June 30, 2015 and 2014, respectively. Additionally, tax benefits relating to excess stock-based compensation deductions are presented as financing cash flows. Cash inflows from tax benefits related to stock-based compensation deductions were $2.0 million and $0.5 million in the six months ended June 30, 2015 and 2014, respectively. These inflows were offset in part by $3.8 million used for the repurchase of shares under our stock repurchase program in the first half of 2015.

Stock Repurchase Program

In August 2014, we announced that our Board of Directors authorized a $20 million stock repurchase program (the “Repurchase Program”). Under the Repurchase Program, we are authorized to repurchase our common stock from time to time on the open market or in privately negotiated transactions. In May 2015, the Board of Directors amended the program to authorize an additional $10 million to be used for such purchases. We have elected to implement a Rule 10b5-1 trading plan, which permits shares to be repurchased when we might otherwise be precluded from doing so under insider trading laws. The timing and amount of any repurchases that are not made pursuant to the Rule 10b5-1 trading plan will be determined based on an evaluation of market conditions and other factors. The Repurchase Program may be suspended or discontinued at any time. During the six months ended June 30, 2015, we repurchased 410,439 shares of common stock for $3.8 million pursuant to the Repurchase Program. During the year ended December 31, 2014 we repurchased 1,551,224 shares of common stock for approximately $15.0 million pursuant to the Repurchase Program.

Accrued Stock-Based Compensation

We had approximately $1.4 million included in accrued compensation expenses on our Consolidated Balance Sheet as of December 31, 2014 for stock-based compensation related to restricted stock awards that had been earned as of that date but were not granted until the first quarter of 2015, at which time the value of the awards was reclassified from accrued compensation to additional paid-in capital. This non-cash compensation expense was recorded as part of stock-based compensation expense in our Consolidated Statement of Comprehensive Income (Loss) for the year ended December 31, 2014. There were no such accruals as of June 30, 2015.

Term Loan and Credit Facility Borrowings

We currently have a discretionary $5.0 million demand revolving line available to us; no borrowings have been made against this line as of June 30, 2015.

Capital Expenditures

We have made capital expenditures primarily for computer equipment and related software needed to host our websites, internal-use software development costs, as well as for leasehold improvements and other general purposes to support our growth. Our capital expenditures totaled $1.9 million and $2.1 million for the six months ended June 30, 2015 and 2014, respectively. A majority of our capital expenditures in the first half of 2015 were internal-use development costs and, to a lesser extent, computer equipment and related software. We are not currently party to any purchase contracts related to future capital expenditures.

Off-Balance Sheet Arrangements

We do not have any off-balance sheet arrangements.

Recent Accounting Pronouncements

See Note 2 to the Consolidated Financial Statements for recent accounting pronouncements that could have an effect on us.

Forward Looking Statements

Certain information included in this Quarterly Report on Form 10-Q may contain “forward-looking statements” within the meaning of Section 27A of the Securities Act of 1933 and Section 21E of the Securities Exchange Act of 1934. All statements, other than statements of historical facts, included or referenced in this Quarterly Report on Form 10-Q that address activities, events or developments which we expect will or may occur in the future are forward-looking statements, including statements regarding the intent, belief or current expectations of the Company and members of our management team. The words “will,” “believe,” “intend,” “expect,” “anticipate,” “project,” “estimate,” “predict” and similar expressions are also intended to identify forward-looking statements. Such statements may include those regarding guidance on our future financial results and other projections or measures of our future performance; our expectations concerning market opportunities and our ability to capitalize on them; and the amount and timing of the benefits expected from acquisitions, new products or services and other potential sources of additional revenue. Such forward-looking statements are not guarantees of future performance and involve risks and uncertainties. These statements speak only as of the date of this Quarterly Report on Form 10-Q and are based on our current plans and expectations, and they involve risks and uncertainties that could cause actual future events or results to be different than those described in or implied by such forward-looking statements. These risks and uncertainties include, but are not limited to, those relating to: market acceptance of our products and services, including continued increased sales of our IT Deal Alert offerings and continued increased international growth; relationships with customers, strategic partners and employees; difficulties in integrating acquired businesses; changes in economic or regulatory conditions or other trends affecting the Internet, Internet advertising and information technology industries; and other matters included in our filings with the Securities and Exchange Commission, including those detailed under Part II, Item 1A, “Risk Factors” of this Quarterly Report on Form 10-Q and in our Annual Report on Form 10-K for the year ended December 31, 2014. Actual results may differ materially from those contemplated by the forward-looking statements. We undertake no obligation to update our forward-looking statements to reflect future events or circumstances.

Item 3.

Quantitative and Qualitative Disclosures About Market Risk

Market risk represents the risk of loss that may impact our financial position due to adverse changes in financial market prices and rates. Our market risk exposure is primarily a result of fluctuations in foreign exchange rates and interest rates. We do not hold or issue financial instruments for trading purposes.

Foreign Currency Exchange Risk

We currently have subsidiaries in the United Kingdom, Hong Kong, Australia, Singapore, Germany and France. Additionally, we have a wholly foreign-owned enterprise formed under the laws of the People’s Republic of China (“PRC”), and a variable interest entity in Beijing, PRC. Approximately 22% of our revenues for the three months ended June 30, 2015 were derived from customers with billing addresses outside of North America and our foreign exchange gains/losses were not significant. We currently believe our exposure to foreign currency exchange rate fluctuations is financially immaterial and therefore have not entered into foreign currency hedging transactions. We continue to review this issue and may consider hedging certain foreign exchange risks through the use of currency futures or options in the future. The volatility of exchange rates depends on many factors that we cannot forecast with reliable accuracy. Our continued international expansion increases our exposure to exchange rate fluctuations and as a result such fluctuations could have a significant impact on our future results of operations.

Interest Rate Risk

At June 30, 2015, we had cash, cash equivalents and investments totaling $37.3 million. These amounts were invested primarily in money market accounts, municipal bonds and government agency bonds. The cash, cash equivalents and investments were held for working capital purposes. We do not enter into investments for trading or speculative purposes. Due to the short-term nature of these investments, we believe that we do not have any material exposure to changes in the fair value of our investment portfolio as a result of changes in interest rates. Declines in interest rates, however, would reduce future investment income.

Our exposure to market risk also relates to the amount of interest expense we would have to pay if we were to utilize our Amended and Restated Credit Agreement. The advances under this credit facility bear a variable rate of interest determined as a function of the lender’s prime rate or LIBOR. At June 30, 2015, there were no amounts outstanding under our revolving credit facility.

Item 4.

Controls and Procedures

Disclosure Controls and Procedures

The Company is required to maintain disclosure controls and procedures that are designed to ensure that information required to be disclosed in its reports under the Securities Exchange Act of 1934 is recorded, processed, summarized and reported within the time periods specified in the SEC’s rules and forms, and that such information is accumulated and communicated to management, including the Company’s Chief Executive Officer (Principal Executive Officer) and Chief Financial Officer (Principal Financial Officer) as appropriate, to allow timely decisions regarding required disclosure.

As of June 30, 2015, management, under the supervision of the Chief Executive Officer and Chief Financial Officer, conducted an evaluation of disclosure controls and procedures. Based on that evaluation, the Chief Executive Officer and Chief Financial Officer concluded that the Company’s disclosure controls and procedures were effective at the reasonable assurance level as of June 30, 2015.

Changes in Internal Control over Financial Reporting

There were no changes to our internal control over financial reporting that occurred during the quarter ended June 30, 2015 that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.

PART II—OTHER INFORMATION

Item 1.

Legal Proceedings

We are not currently a party to any material legal proceedings and we are not aware of any pending or threatened litigation against us that could have a material adverse effect on our business, operating results or financial condition. On January 6, 2012, we filed Petitions under Formal Procedure with the Massachusetts Appellate Tax Board (the “ATB”) in connection with the classification of our wholly-owned subsidiary, TechTarget Securities Corporation, and assessments made by the Massachusetts Department of Revenue (“MA DOR”), as described in Note 9 in the accompanying consolidated financial statements. A trial took place in April 2014, and in May 2015 the ATB ruled in favor of the MA DOR. Concurrently, we received an amnesty offer with respect to the tax years in dispute. During the second quarter of 2015, we accepted the amnesty offer and paid all amounts due relating to the years in dispute.

Item 1A.

Risk Factors

Our business is subject to a number of risks, including those identified in Item 1A – “Risk Factors” of our Annual Report on Form 10-K for the year ended December 31, 2014, that could have a material effect on our business, results of operations, financial condition and/or liquidity and that could cause our operating results to vary significantly from period to period. As of June 30, 2015, there have been no material changes to the risk factors disclosed in our Annual Report on Form 10-K for the year ended December 31, 2014. We may disclose changes to any risk factors presented or disclose additional factors from time to time in our future filings with the Securities and Exchange Commission.

Item 2.

Unregistered Sales of Equity Securities and Use of Proceeds

(a)

Sales of Unregistered Securities

None.

(b)

Use of Proceeds from Registered Securities

None.

(c)

Purchases of Equity Securities by the Issuer and Affiliated Purchasers

The following table provides information about purchases by the Company during the quarter ended June 30, 2015 of equity securities that are registered by the Company pursuant to Section 12 of the Securities Exchange Act of 1934.


Period	Total Number of Shares Purchased		Average Price Paid Per Share *		Total Number of Shares Purchased as Part of Publicly Announced Plans or Programs(1)		Approximate Dollar Value of Shares that May Yet Be Purchased Under the Plans or Programs
April 1, 2015 – April 30, 2015		—	$	—		—	$	15,064,191
May 1, 2015 –May 31, 2015		183,014	$	9.42		183,014	$	13,339,754
June 1, 2015 – June 30, 2015		227,425	$	9.06		227,425	$	11,278,511

Total (2)		410,439	$	9.22		410,439	$	11,278,511

⁽¹⁾

On August 5, 2014, the Board of Directors announced the approval of a Stock Repurchase Program (the “Repurchase Program”), which authorized the Company to purchase up to $20 million of shares of its common stock from time to time on the open market or in privately negotiated transactions. In May 2015, the Board of Directors approved an additional $10 million of shares that may be purchased.

⁽²⁾	All shares were repurchased under the Repurchase Program.

*	Price excludes commission of approximately $0.02 per share.

Item 3.

Defaults Upon Senior Securities

None.

Item 4.

Mine Safety Disclosures

None.

Item 5.

Other Information

None.

Item 6.

Exhibits

The exhibits listed in the Exhibit Index immediately preceding the exhibits are filed as part of this Quarterly Report on Form 10-Q and such Exhibit Index is incorporated herein by reference.

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.


	TECHTARGET, INC. (Registrant)

Date: August 7, 2015	By:	/s/ GREG STRAKOSCH

		Greg Strakosch, Chief Executive Officer
		(Principal Executive Officer)

Date: August 7, 2015	By:	/s/ JANICE KELLIHER

		Janice Kelliher, Chief Financial Officer and Treasurer
		(Principal Accounting and Financial Officer)

Exhibit Index


Exhibit No.		Description of Exhibit

10.1		Amended and Restated Credit Facility Agreement between the Registrant and Citizens Bank, National Association, dated June 23, 2015.

10.2		Revolving Promissory Note between the Registrant and Citizens Bank, National Association, dated June 23, 2015.

31.1		Certification of Greg Strakosch, Chief Executive Officer of TechTarget, Inc., pursuant to Rules 13a-14(a) and 15d-14(a) of the Securities Exchange Act of 1934, dated August 7, 2015.

31.2		Certification of Janice Kelliher, Chief Financial Officer and Treasurer of TechTarget, Inc., pursuant to Rules 13a-14(a) and 15d-14(a) of the Securities Exchange Act of 1934, dated August 7, 2015.

32.1		Certifications of Greg Strakosch, Chief Executive Officer of TechTarget, Inc. and Janice Kelliher, Chief Financial Officer and Treasurer of TechTarget, Inc. pursuant to 18 U.S.C. Section 1350, dated August 7, 2015.

101.INS		XBRL Instance Document*

101.SCH		XBRL Taxonomy Extension Schema Document*

101.CAL		XBRL Taxonomy Extension Calculation Linkbase Document*

101.DEF		XBRL Taxonomy Extension Definition Linkbase Document*

101.LAB		XBRL Taxonomy Extension Label Linkbase Document*

101.PRE		XBRL Taxonomy Extension Presentation Linkbase Document*

Attached as Exhibit 101 to this report are the following documents formatted in XBRL (Extensible Business Reporting Language): (i) Consolidated Balance Sheets as of June 30, 2015 and December 31, 2014, (ii) Consolidated Statements of Operations and Comprehensive Income for the three and six months ended June 30, 2015 and June 30, 2014, (iii) Consolidated Statements of Cash Flows for the six months ended June 30, 2015 and June 30, 2014 and (iv) Notes to Consolidated Financial Statements.

Exhibit 10.1

AMENDED AND RESTATED

CREDIT FACILITY AGREEMENT

This Amended and Restated Credit Facility Agreement dated as of June 23, 2015 (“this Agreement”) between TECHTARGET, INC., a Delaware corporation with its principal place of business at 275 Grove Street, Newton MA 02466 (the “Borrower”) and CITIZENS BANK, NATIONAL ASSOCIATION, a national banking association having its principal place of business at 28 State Street, Boston, Massachusetts 02109 (the “Bank”), amends and restates in its entirety the Credit Facility Agreement dated as of August 30, 2006 between the Borrower and Citizens Bank of Massachusetts, predecessor in interest to the Bank, as previously modified by First Amendment dated August 30, 2007, Second Amendment dated December 18, 2008, Third Amendment dated December 17, 2009, and Fourth Amendment dated as of August 30, 2011 (the “Prior Agreement”).

1. Definitions. In addition to the terms defined above or elsewhere defined in this Agreement, as used in this Agreement the following terms shall have the following respective meanings (such meanings, as well as the meanings of other terms defined elsewhere in this Agreement, to be equally applicable to both the singular and plural forms of the terms defined, where the context permits):

“Applicable LIBOR Margin” means the applicable margin as set forth in Section 2.3 below.

“Applicable Prime Rate Margin” means one (1%) percent applied as a reduction to the Prime Rate.

“Assets under Management and Deposits” means the sum of (a) Borrower’s assets under management with the Bank or its affiliates including the Bank’s Wealth Management group plus (b) demand deposit accounts, certificates of deposit, money market accounts and savings accounts of Borrower held by the Bank or the Bank’s affiliates, as averaged over the period of each calendar quarter commencing with the quarter commencing October 1, 2014 to determine a daily average.

“Business Day” means:

(a)

any day which is neither a Saturday or Sunday nor a legal holiday on which commercial banks are authorized or required to be closed in Boston, Massachusetts.

(b)

when such term is used to describe a day on which a payment or prepayment is to be made in respect of a LIBOR Rate Loan, any day which is: (i) neither a Saturday or Sunday nor a legal holiday on which commercial banks are authorized or required to be closed in New York City; and (ii) a London Banking Day; and

(c)

when such term is used to describe a day on which an interest rate determination is to be made in respect of a LIBOR Rate Loan, any day which is a London Banking Day.

“Capital Transactions” means sales or other disposition of those items of property, plant or equipment which are properly classified as non-current or capital in accordance with GAAP.

“Collateral” shall mean all collateral at any time granted to Bank under the Security Agreements or under the Pledge Agreement(s) or cash collateral provided under Section 2.2.

“Conditions of Lending” shall have the meaning set forth in Section 10 below.

“Credit Line” shall mean a discretionary demand revolving line of credit in the maximum amount of $5,000,000 established under this Agreement.

“Default” shall mean an event or occurrence which, with the giving of notice or lapse of time or both, would constitute an Event of Default.

“EBITDA” shall mean the sum of revenues from operations of the specified entity less all costs and expenses other than interest, taxes, non-cash compensation expense and depreciation and amortization and excluding any Capital Transactions from revenues and expenses, all as determined in accordance with GAAP. EBITDA from businesses acquired by Borrower shall be included in the calculation of EBITDA of Borrower on an actual and reported basis, and not pro-forma.

“Event of Default” shall have the meaning set forth in Section 13 hereof.

“Financial Statements” shall mean the balance sheet(s), income statement(s) and statement(s) of cash flow for the Borrower identified on Schedule 11.7.

“Foreign Subsidiaries” shall mean all Subsidiaries formed in a jurisdiction other than the United States and which neither are (a) qualified as foreign entities with any jurisdiction within the United States and (b) are not conducting business within the United States.

“GAAP” shall mean generally accepted accounting principles which are consistent with the principles promulgated or adopted by the Financial Accounting Standards Board and/or its predecessors as in effect from time to time.

“Guarantors” shall mean all Subsidiaries required to issue Guaranties pursuant to Section 12A.9 below.

“Hedging Contracts” means interest rate swap agreements, interest rate cap agreements and interest rate collar agreements, or any other agreements or arrangements entered into between the Borrower and the Bank and designed to protect the Borrower against fluctuations in interest rates or currency exchange rates.

“Hedging Obligations” means, with respect to the Borrower, all liabilities of the Borrower to the Bank under Hedging Contracts.

“Interest Payment Date” means (a) relative to any LIBOR Rate Loan having an Interest Period of three months or less, the last Business Day of such Interest Period, and as to any LIBOR Rate Loan having an Interest Period longer than three months, each Business Day which is three months, or a whole multiple thereof, after the first day of such Interest Period and the last day of such Interest Period and (b) relative to any Prime Rate Loan, is the last day of any calendar month.

“Interest Period” shall have the meaning set forth in Section 2.3 below.

“Interest Rate Options” shall mean the selection by Borrower of LIBOR Rate Loan or a Prime Rate Loan as set forth in Section 2.3.4 and Section 2.3.5.

“Letters of Credit” shall mean all commercial and standby letters of credit which the Bank may in its discretion issue following the Borrower’s application therefor, and the payment of all applicable fees in connection therewith.

“LIBOR Rate” means, relative to any LIBOR Period, the offered rate for deposits of U.S. Dollars in an amount approximately equal to the corresponding principal amount of a LIBOR Rate Loan for a one-month period which the ICE Benchmark Administration Limited (or any successor administrator of LIBOR rates) fixes as its LIBOR rate at approximately 11:00 a.m. London time on the day that is two London Banking Days prior to the commencement of such LIBOR Period, rounded upward to the nearest one-eighth (1/8^th) of one percent. If such day is not a London Banking Day, the LIBOR Rate shall be determined on the next preceding day which is a London Banking Day. If for any reason the Bank cannot determine such offered rate fixed by the then-current administrator of LIBOR rates, the Bank may, in its sole but reasonable discretion, use an alternative method to select a rate calculated by the Bank to reflect its cost of funds.

“LIBOR Rate Loan” means any Loan the rate of interest applicable to which is based upon the LIBOR Rate.

“LIBOR Lending Rate” means, relative to any LIBOR Rate Loan to be made, continued or maintained as, or converted into, a LIBOR Rate Loan for any Interest Period, a rate per annum determined pursuant to the following formula:


LIBOR Lending Rate	=	LIBOR Rate
		(1.00 - LIBOR Reserve Percentage)

“LIBOR-Reference Banks Loan” means any Loan the rate of interest applicable to which is based upon the LIBOR-Reference Banks Rate.

“LIBOR-Reference Banks Lending Rate” means, relative to a LIBOR-Reference Banks Rate Loan for any Interest Period, a rate per annum determined pursuant to the following formula:


		LIBOR-Reference Banks Lending Rate LIBOR-Reference Banks Rate
		(1.00 - LIBOR Reserve Percentage)

“LIBOR-Reference Banks Rate” means relative to any Interest Period for LIBOR-Reference Banks Loans, the rate for which deposits in U.S. Dollars are offered by the Reference Banks to prime banks in the London interbank market in an amount approximately equal to the amount requested LIBOR-Reference Banks Loan at approximately 11:00 a.m., London time on the day that is two London Banking Days prior to the beginning of such Interest Period. The Bank will request the principal London office of each of the Reference Banks to provide a quotation of its rate. If at least two such quotations are provided, the rate for such date will be the arithmetic mean of the quotations. If fewer than two quotations are provided as requested, the rate for such date will be the arithmetic mean of the rates quoted by major banks in New York City selected by the Bank, at approximately 11:00 a.m. New York City time for loans in U.S. Dollars to leading European banks for such Interest Period and in an amount approximately equal to the amount requested LIBOR-Reference Banks Loan.

“LIBOR Reserve Percentage” means, relative to any day of any Interest Period for LIBOR Rate Loans, the maximum aggregate (without duplication) of the rates (expressed as a decimal fraction) of reserve requirements (including all basic, emergency, supplemental, marginal and other reserves and taking into account any transitional adjustments or other scheduled changes in reserve requirements) under any regulations of the Board of Governors of the Federal Reserve System (the “Board”) or other governmental authority having jurisdiction with respect thereto as issued from time to time and then applicable to assets or liabilities consisting of “Eurocurrency Liabilities”, as currently defined in Regulation D of the Board, having a term approximately equal or comparable to such Interest Period.

“Loan Documents” shall mean this Agreement, the Revolving Note, the Security Agreement, the Pledge Agreement, the Perfection Certificate, and each Guaranty executed by a Guarantor, and any all other documents, instruments, and agreements executed in connection with this Agreement.

“Loans” shall mean, collectively, amounts advanced pursuant to the Credit Line and amounts advanced pursuant to Letters of Credit.

“London Banking Day” means a day on which dealings in US dollar deposits are transacted in the London interbank market.

“Obligations” shall mean all obligations of the Borrower to the Bank, whether such obligations are now existing or hereafter arising, direct or indirect, primary or secondary, including but not limited to the Revolving Note, Letters of Credit, all outstanding amounts advanced by the Bank under any Letters of Credit and all other obligations under this Agreement and the other Loan Documents. Obligations include all Hedging Obligations, all obligations of the Borrower arising under any ACH Contract and any commodity or equity swap, foreign exchange transactions, currency swap, cross currency rate swap, currency option, or similar transactions now or hereafter entered into between the Borrower and the

Bank. “ACH Contract” means all obligations of the Borrower to the Bank under any Automated Clearing House (“ACH”) Agreements relating to the processing of ACH transactions, together with all fees, expenses, charges and other amounts owing by or chargeable to the Borrower under the ACH Agreements and all liabilities to the Lender to repay overdrafts and other amounts due to the Lender under any existing or future agreements relating to cash management services.

“Perfection Certificate” shall mean the Certificate of Borrower delivered to Bank by the Borrower in connection with the Prior Agreement.

“Permitted Encumbrance(s)” shall have the meaning set forth in Section 12B.2.

“Pledge Agreement” means the Pledge Agreements of even date with the Prior Agreement from Borrower to the Bank by which outstanding ownership interests of TechTarget Securities Corporation and Tech Target Limited are pledged to the Bank. Pledge Agreement shall also include all Pledge Agreements hereafter entered into between Borrower or any of its Subsidiaries and the Bank pursuant to Section 12A.9 below.

“Prime Rate” means the rate of interest announced by Bank in Boston, Massachusetts from time to time as its “Prime Rate.” The Borrower acknowledges that the Bank may make loans to its customers above, at or below the Prime Rate. Interest accruing by reference to the Prime Rate shall be calculated on the basis of actual days elapsed and a 360-day year.

“Prime Rate Loan” means any Loan for the period(s) when the rate of interest applicable to such Loan is calculated by reference to the Prime Rate.

“Reference Banks” means four major banks in the London interbank market as selected by the Bank.

“Revolving Note” shall mean the promissory note described in Section 2.1.2 hereof.

“Security Agreements” shall mean the Security Agreement of Borrower dated as of the date of the Prior Agreement and executed by Borrower for the benefit of Bank, as it may be amended from time to time. Security Agreements shall also include all Security Agreements hereafter entered into between Borrower or any of its Subsidiaries and the Bank pursuant to Section 12A.9 below.

“Subordinated Debt” shall mean indebtedness to a third party which has been subordinated to the Borrower’s indebtedness to the Bank by an agreement satisfactory to the Bank in form and substance.

“Subsidiary” shall mean the list of companies set forth on Exhibit A to the disclosure schedules, as the same may be amended from to time to time to reflect subsidiaries hereafter formed or acquired. Exhibit A shall be deemed to be updated to reflect the list of subsidiaries filed as an exhibit to the Borrower’s Annual Report on Form 10-K.

“Total Funded Debt” means all liabilities for borrowed money, including but not limited to liabilities under this Agreement and all liabilities for leases required to be capitalized under GAAP.

All accounting terms not specifically defined in this Agreement shall be construed in accordance with GAAP, and all financial data submitted pursuant to this Agreement and all financial records kept by the Borrower shall be prepared (except as hereinafter expressly provided) and kept in accordance with such principles.

2. Revolving Loans.

2.1.1 Subject to Bank’s discretion, including its determination that the Borrower has satisfied all terms and conditions of this Agreement, including but not limited to the Conditions of Lending, the Bank shall make Loans to the Borrower and/or provide Letters of Credit under the Credit Line up to a maximum principal amount outstanding including the undrawn amount of the Letters of Credit of not more than the maximum amount of the Credit Line. All Loans and all Obligations in respect of Letters of Credit are secured by the Collateral and are guaranteed pursuant to the Guarantees, which are in turn secured by Security Agreements or Pledge Agreements.

2.1.2 All Loans and advances under Letters of Credit issued under the Credit Line shall be payable on demand and evidenced by the promissory note from the Borrower to the Bank of even date herewith (the “Revolving Note”). Within the Credit Line, the Borrower may borrow, repay, and reborrow (without penalty or premium), subject to the Bank’s discretion and the limitations and conditions set forth in this Agreement.

2.1.3 To the extent that the sum of the aggregate principal amount of the Loans outstanding plus Letters of Credit outstanding exceeds the maximum amount of the Credit Line at any time, such excess shall be due and payable immediately upon demand from the Bank.

2.1.4 Each Loan under the Credit Line shall be in an amount of not less than $250,000. The Borrower will give the Bank written, telecopied or telephonic notice specifying the amount and date of each borrowing hereunder; provided, however, that notice given by telephone hereunder shall be followed by prompt written confirmation thereof by the Borrower. Provided that all conditions, including the Conditions of Lending, set forth in this Agreement have been satisfied and Bank in its discretion determines to make the requested Loan, the proceeds thereof will be made available to the Borrower on the same Business Day as notice is received if notice is received before 1:00 p.m. Boston time, and if received thereafter, the Loan will be made on the next Business Day.

2.2 Letters of Credit. Subject to the terms and conditions of this Agreement including but not limited to the Conditions of Lending set forth in Section 10 below and within the Credit Line, on application by the Borrower, the Bank may in its discretion issue for the benefit of the Borrower commercial or standby Letters of Credit in an aggregate amount outstanding at any time which, when added to the outstanding principal balance of

the Loans, shall not exceed the maximum amount of the Credit Line and expiring no later than 365 days after the date of issuance, unless extended in accordance with the terms thereof. The Borrower’s obligations to the Bank under the Letters of Credit shall be deemed to be obligations to the Bank and shall be secured pursuant to the Borrower’s Security Agreement and guaranteed by the Guarantors and secured by the Security Agreements of the respective Guarantors. Amounts drawn on a Letter of Credit shall be deemed to be a Loan to the Borrower for purposes of this Agreement and evidenced by the Revolving Note. Fees for Letters of Credit will be at the rate of one percent per annum of the issuance amount, payable quarterly in advance, if Assets Under Management and Deposits for the immediately preceding calendar quarter are more than $25,000,000, and otherwise will be one and one-half (1.5%) percent per annum of the issuance amount. Letter of Credit fees will be adjusted quarterly to reflect Assets Under Management and Deposits for the immediately preceding calendar quarter. The Bank’s then applicable fees with respect to letters of credit issued by the Bank shall also apply, including but not limited to, issuance, transfer, negotiation, correspondent and draw fees and any other fees specified under the terms of the application for said Letter of Credit. Fees shall be payable as specified by the Bank. If the Credit Line is terminated for any reason while a Letter of Credit is outstanding, so long as such Letter of Credit is outstanding, the Borrower shall pledge to the Bank additional collateral consisting of cash deposited with the Bank in an aggregate amount of not less than 100% of the aggregate outstanding undrawn amount of each such Letter of Credit.

2.3 Interest.

2.3.1 Interest Generally. Interest on the outstanding principal amount of any Loan when classified: (i) as a LIBOR Rate Loan, shall accrue during each Interest Period at a rate equal to the sum of the LIBOR Lending Rate for such Interest Period plus the Applicable LIBOR Margin and be payable on each Interest Payment Date, (ii) as a LIBOR-Reference Banks Rate Loan, shall accrue during each Interest Period at a rate equal to the sum of the LIBOR-Reference Banks Lending Rate for such Interest Period plus the Applicable LIBOR Margin and be payable on each Interest Payment Date, and (iii) as a Prime Rate Loan, shall accrue during each Interest Period at a rate equal to the Prime Rate minus the Applicable Prime Rate Margin and be payable on each Interest Payment Date.

As used herein, the term Applicable LIBOR Margin shall mean the margin determined according to the following table determined by reference to the ratio of Total Funded Debt to EBITDA for the preceding four fiscal quarters of the Borrower:


Level	Total Funded Debt to EBITDA Ratio	Applicable LIBOR Margin

I	Greater than or equal to 2.0:1		1.50	%
II	Less than 2.0:1 but greater than or equal to 1.0:1		1.375	%
III	Less than 1.0:1		1.25	%

2.3.2 Interest Period Applicable to the Revolving Note. For purposes of this Agreement in respect to borrowings under the Revolving Note the term “Interest Period” shall mean

(i)

initially, the period beginning on (and including) the date on which such LIBOR Rate Loan is made or continued as, or converted into, a LIBOR Rate Loan pursuant to Section 2.3.4 or 2.3.5 and ending on (but excluding) the day which numerically corresponds to such date one, two, three or six months thereafter (or, if such month has no numerically corresponding day, on the last Business Day of such month), in each case as the Borrower may select in its notice pursuant to Section 2.3.4 or 2.3.5; and

(ii)

thereafter, each period commencing on the last day of the next preceding Interest Period applicable to such LIBOR Rate Loan and ending one, two, three or six months thereafter, as selected by the Borrower by irrevocable notice to the Bank not less than two Business Days prior to the last day of the then current Interest Period with respect thereto;

provided, however, that

(a)

the Borrower shall not be permitted to select Interest Periods for LIBOR Rate Loans to be in effect at any one time which have expiration dates occurring on more than five (5) different dates;

(b)

Interest Periods commencing on the same date for LIBOR Rate Loans comprising part of the same advance under this agreement shall be of the same duration;

(c)

Interest Periods for LIBOR Rate Loans in connection with which Borrower has or may incur Hedging Obligations with the Bank shall be of the same duration as the relevant periods set under the applicable Hedging Contracts;

(d)

if such Interest Period would otherwise end on a day which is not a Business Day, such Interest Period shall end on the next following Business Day unless such day falls in the next calendar month, in which case such Interest Period shall end on the first preceding Business Day; and

(e)

no Interest Period may end later than the termination of this Agreement.

2.3.3. Special Provisions Regarding Repayment of Loans; Automatic Rollover of LIBOR Rate Loan. During the period(s) a Loan is classified as a LIBOR Rate Loan, it shall mature and become payable in full on the last day of each Interest Period. Upon maturity the Loan shall automatically be continued as a LIBOR Rate Loan with an equal Interest Period in an amount equal to the expiring LIBOR Rate Loan LESS any principal amount repaid, provided, however, that no portion of the outstanding principal amount of a LIBOR Rate Loan may be continued as a LIBOR Rate Loan when any Default or Event of Default has occurred and is continuing. If any Default or Event of Default has occurred and is continuing (if the Bank does not otherwise elect to exercise any right to demand payment of such Loan), the maturing LIBOR Rate Loan shall automatically be continued as a Prime Rate Loan.

2.3.4. Making of LIBOR Loan Elections. By delivering a borrowing request to the Bank on or before 10:00 a.m. New York time on a Business Day, the Borrower may from time to time irrevocably request, on not less than two nor more than five Business Days’ notice, that a LIBOR Rate Loan be made in a minimum amount of $500,000 and integral multiples of $250,000 with an Interest Period of one, two, three or six months. On the terms and subject to the conditions of this agreement, each LIBOR Rate Loan shall be made available to the Borrower no later than 11:00 a.m. New York time on the first day of the applicable Interest Period by deposit to the account of the Borrower as shall have been specified in its borrowing request.

2.3.5. Continuation and Conversion Elections. By delivering a continuation/conversion notice to the Bank on or before 10:00 a.m., New York time, on a Business Day, the Borrower may from time to time irrevocably elect, on not less than two nor more than five Business Days’ notice, that all, or any portion in an aggregate minimum amount of $500,000 and integral multiples of $250,000 of any Prime Rate Loan or of a LIBOR Rate Loan be converted on the last day of an Interest Period into a LIBOR Rate Loan with a different Interest Period, or continued on the last day of an Interest Period as a LIBOR Rate Loan with a similar Interest Period, provided, however, that no portion of the outstanding principal amount of any LIBOR Rate Loans may be converted to, or continued as, LIBOR Rate Loans when any Default or Event of Default has occurred and is continuing, and no portion of the outstanding principal amount of any LIBOR Rate Loans may be converted to LIBOR Rate Loans of a different duration if such LIBOR Rate Loans relate to any Hedging Obligations. If any Default or Event of Default has occurred and is continuing (if the Bank does not otherwise elect to exercise any right to terminate the Credit Line and demand payment of the Loans), or in the absence of delivery of a continuation/conversion notice with respect to any LIBOR Rate Loan at least two Business Days before the last day of the then current Interest Period with respect thereto, each maturing LIBOR Rate Loan shall automatically be continued as a Prime Rate Loan.

2.3.6 Repayments, Continuations and Conversions. LIBOR Rate Loans shall mature and become payable in full on the last day of the Interest Period relating to such LIBOR Rate Loan. Prior to the termination of this Agreement, upon the maturity of a LIBOR Rate Loan under this Section 2.3.6, it may be continued for an additional Interest Period or may be converted to a Prime Rate Loan (if there exists no Default or Event of Default and the Bank does not otherwise elect to exercise any right to terminate the Credit Line and demand payment of the Loans).

2.3.7 Voluntary Prepayment of LIBOR Rate Loans. LIBOR Rate Loans maybe prepaid upon the terms and conditions set forth herein. For LIBOR Rate Loans in connection with which the Borrower has or may incur Hedging Obligations, additional obligations may be associated with prepayment, in accordance with the terms and conditions of the applicable Hedging Contracts. The Borrower shall give the Bank, no later than 10:00 a.m., New York City time, at least four (4) Business Days notice of any proposed

prepayment of any LIBOR Rate Loans, specifying the proposed date of payment of such LIBOR Rate Loans, and the principal amount to be paid. Each partial prepayment of the principal amount of LIBOR Rate Loans shall be in an integral multiple of $250,000 and accompanied by the payment of all charges outstanding on such LIBOR Rate Loans and of all accrued interest on the principal repaid to the date of payment. Borrower acknowledges that prepayment or acceleration of a LIBOR Rate Loan during an Interest Period shall result in the Bank incurring additional costs, expenses and/or liabilities and that it is extremely difficult and impractical to ascertain the extent of such costs, expenses and/or liabilities. Therefore, all full or partial prepayments of LIBOR Rate Loans shall be accompanied by, and the Borrower hereby promises to pay, on each date a LIBOR Rate Loan is prepaid or the date all sums payable hereunder become due and payable, by acceleration or otherwise, in addition to all other sums then owing, an amount (“LIBOR Rate Loan Prepayment Fee”) determined by the Bank pursuant to the following formula:

(a)

the then current rate for United States Treasury securities (bills on a discounted basis shall be converted to a bond equivalent) with a maturity date closest to the end of the Interest Period as to which prepayment is made, subtracted from

(b)

the LIBOR Lending Rate plus the Applicable Margin applicable to the LIBOR Rate Loan being prepaid.

If the result of this calculation is zero or a negative number, then there shall be no LIBOR Rate Loan Prepayment Fee. If the result of this calculation is a positive number, then the resulting percentage shall be multiplied by:

(a)

the amount of the LIBOR Rate Loan being prepaid.

The resulting amount shall be divided by:

(b)

360

and multiplied by:

(c)

the number of days remaining in the Interest Period as to which the prepayment is being made.

Said amount shall be reduced to present value calculated by using the referenced United States Treasury securities rate and the number of days remaining in the Interest Period for the LIBOR Rate Loan being prepaid. The resulting amount of these calculations shall be the LIBOR Rate Loan Prepayment Fee.

2.3.8. LIBOR Rate Lending Unlawful. If the Bank shall determine (which determination shall, upon notice thereof to the Borrower be conclusive and binding on the Borrower) that the introduction of or any change in or in the interpretation of any law, rule, regulation or guideline, (whether or not having the force of law) makes it unlawful, or any central bank or other governmental authority asserts that it is unlawful, for the Bank to make,

continue or maintain any LIBOR Rate Loan as, or to convert any Loan into, a LIBOR Rate Loan of a certain duration, all LIBOR Rate Loans of such type shall automatically convert into LIBOR-Reference Banks Loans at the end of the then current Interest Periods with respect thereto or sooner, if required by such law or assertion. For purposes of this agreement, in the event of such a conversion, all LIBOR-Reference Banks Rate Loans shall be treated (except as to interest rate) as equivalent to a LIBOR Rate Loan of similar amount and Interest Period. For greater certainty, all provisions of this agreement relating to LIBOR Rate Loans shall apply equally to LIBOR-Reference Banks Loans, including, but not limited to the manner in which LIBOR-Reference Banks Loans are requested, continued, converted, the manner in which interest accrues, is payable, principal payments are made, whether voluntary or involuntary, as well as any penalties, increased costs or taxes associated with any of the foregoing.

2.3.9 Substitute Rate. If the Bank shall have determined that

(a)

US dollar deposits in the relevant amount and for the relevant Interest Period are not available to the Bank in the London interbank market;

(b)

by reason of circumstances affecting the Bank in the London interbank, adequate means do not exist for ascertaining the LIBOR Rate applicable hereunder to LIBOR Rate Loans of any duration, or

(c)

LIBOR no longer adequately reflects the Bank’s cost of funding Loans.

Then, upon notice from the Bank to the Borrower, all LIBOR Rate Loans shall automatically convert to LIBOR-Reference Banks Loans.

2.3.10. Special LIBOR Indemnities. In addition to the LIBOR Rate Loan Prepayment Fee, the Borrower agrees to reimburse the Bank (without duplication) for any increase in the cost to the Bank, or reduction in the amount of any sum receivable by the Bank, in respect, or as a result of:

(a)

any conversion or repayment or prepayment of the principal amount of any LIBOR Rate Loans on a date other than the scheduled last day of the Interest Period applicable thereto;

(b)

any Loans not being made as LIBOR Rate Loans in accordance with the borrowing request thereof;

(c)

any LIBOR Rate Loans not being continued as, or converted into, LIBOR Rate Loans in accordance with the continuation/conversion notice thereof, or

(d)

any costs associated with marking to market any Hedging Obligations that (in the reasonable determination of the Bank) are required to be terminated as a result of any conversion, repayment or prepayment of the principal amount of any LIBOR Rate Loan on a date other than the scheduled last day of the Interest Period applicable thereto.

The Bank shall promptly notify the Borrower in writing of the occurrence of any such event, such notice to state, in reasonable detail, the reasons therefor and the additional amount required fully to compensate the Bank for such increased cost or reduced amount. Such additional amounts shall be payable by the Borrower to the Bank within five days of its receipt of such notice, and such notice shall, in the absence of manifest error, be conclusive and binding on the Borrower. The Borrower understands, agrees and acknowledges the following: (i) the Bank does not have any obligation to purchase, sell and/or match funds in connection with the use of LIBOR Rate as a basis for calculating the rate of interest on a LIBOR Rate Loan, (ii) the LIBOR Rate may be used merely as a reference in determining such rate, and (iii) the Borrower has accepted the LIBOR Rate as a reasonable and fair basis for calculating such rate, the LIBOR Rate Prepayment Fee, and other funding losses incurred by the Bank. Borrower further agrees to pay the LIBOR Rate Prepayment Fee and other funding losses, if any, whether or not the Bank elects to purchase, sell and/or match funds.

2.4. Increased Costs. If on or after the date hereof the adoption of any applicable law, rule or regulation or guideline (whether or not having the force of law), or any change therein, or any change in the interpretation or administration thereof by any governmental authority, central bank or comparable agency charged with the interpretation or administration thereof, or compliance by the Bank with any request or directive (whether or not having the force of law) of any such authority, central bank or comparable agency:

(a)

shall subject the Bank to any tax, duty or other charge with respect to its LIBOR Rate Loans or its obligation to make LIBOR Rate Loans, or shall change the basis of taxation of payments to the Bank of the principal of or interest on its LIBOR Rate Loans or any other amounts due under this agreement in respect of its LIBOR Rate Loans or its obligation to make LIBOR Rate Loans (except for the introduction of, or change in the rate of, tax on the overall net income of the Bank or franchise taxes, imposed by the jurisdiction (or any political subdivision or taxing authority thereof) under the laws of which the Bank is organized or in which the Bank’s principal executive office is located); or

(b)

shall impose, modify or deem applicable any reserve, special deposit or similar requirement (including, without limitation, any such requirement imposed by the Board of Governors of the Federal Reserve System of the United States) against assets of, deposits with or for the account of, or credit extended by, the Bank or shall impose on the Bank or on the London interbank market any other condition affecting its LIBOR Rate Loans or its obligation to make LIBOR Rate Loans;

and the result of any of the foregoing is to increase the cost to the Bank of making or maintaining any LIBOR Rate Loan, or to reduce the amount of any sum received or receivable by the Bank under this Agreement with respect thereto, by an amount deemed by the Bank to be material, then, within 15 days after demand by the Bank, the Borrower shall pay to the Bank such additional amount or amounts as will compensate the Bank for such increased cost or reduction.

2.5. Taxes. All payments by the Borrower of principal of, and interest on, the LIBOR Rate Loans and all other amounts payable hereunder shall be made free and clear of and without deduction for any present or future income, excise, stamp or franchise taxes and other taxes, fees, duties, withholdings or other charges of any nature whatsoever imposed by any taxing authority, but excluding franchise taxes and taxes imposed on or measured by the Bank’s net income or receipts (such non-excluded items being called “Taxes”). In the event that any withholding or deduction from any payment to be made by the Borrower hereunder is required in respect of any Taxes pursuant to any applicable law, rule or regulation, then the Borrower will

(a)

pay directly to the relevant authority the full amount required to be so withheld or deducted;

(b)

promptly forward to the Bank an official receipt or other documentation satisfactory to the Bank evidencing such payment to such authority; and

(c)

pay to the Bank such additional amount or amounts as is necessary to ensure that the net amount actually received by the Bank will equal the full amount the Bank would have received had no such withholding or deduction been required.

Moreover, if any Taxes are directly asserted against the Bank with respect to any payment received by the Bank hereunder, the Bank may pay such Taxes and the Borrower will promptly pay such additional amount (including any penalties, interest or expenses) as is necessary in order that the net amount received by the Bank after the payment of such Taxes (including any Taxes on such additional amount) shall equal the amount the Bank would have received had not such Taxes been asserted.

If the Borrower fails to pay any Taxes when due to the appropriate taxing authority or fails to remit to the Bank the required receipts or other required documentary evidence, the Borrower shall indemnify the Bank for any incremental Taxes, interest or penalties that may become payable by the Bank as a result of any such failure.

2.6 Records. Loans under the Credit Line and repayments thereunder shall be entered on the Bank’s records, provided however, that the failure to enter any such transaction, or the inaccuracy of any such entry, shall not relieve the Borrower from any obligations to the Bank, whether under the Revolving Note or otherwise.

2.7 Reports from Bank. After the end of each month, Bank will render to the Borrower a statement of the Borrower’s loan account with Bank hereunder. Each statement shall be considered correct and to have been accepted by the Borrower and shall be presumed correct, in the absence of manifest error, in respect of all charges, debits and credits of any nature contained therein under this Agreement, and the closing balance shown therein, unless the Borrower notifies Bank in writing of any discrepancy within thirty (30) days from the date of any such statement.

2.8 Capital Requirements. If after the date hereof the Bank determines that (a) the adoption of or change in any law, rule, regulation or guideline regarding capital requirements

for banks or bank holding companies, or any change in the interpretation or application thereof by any governmental authority charged with the administration thereof, or (b) compliance by the Bank or its parent bank holding company with any guideline, request or directive of any such entity regarding capital adequacy (whether or not having the force of law), has the effect of reducing the return on the Bank’s or such holding company’s capital as a consequence of the Bank’s willingness to make Loans hereunder to a level below that which the Bank or such holding company could have achieved but for such adoption, change or compliance (taking into consideration the Bank’s or such holding company’s then existing policies with respect to capital adequacy and assuming the full utilization of such entity’s capital) by any amount reasonably deemed by the Bank to be material, then the Bank shall promptly notify the Borrower in writing. The Borrower agrees to pay to the Bank the amount of such reduction in the return on capital, within 30 days after receipt of written notice and demand from the Bank for the payment of such reduction in return, including presentation by the Bank of a statement to the effect that the request to the Borrower for payment is consistent with requests being made by the Bank to other borrowers of the Bank with credit facilities of a similar nature to the Credit Line and of a size in the category of the Maximum Amount, and setting forth in reasonable detail the Bank’s calculation thereof, which statement shall be deemed true and correct absent objection in writing by the Borrower that error has occurred in such calculation. If such objection is made, the Bank will consider the objection and resolve any error. In determining such amount, the Bank may use any reasonable averaging and attribution methods.

2.9 Calculating the Ratio of Total Funded Debt to EBITDA. For purposes of calculating the ratio of Total Funded Debt to EBITDA under Section 2.3, the Bank shall utilize the Borrower’s financial statements for the most recently completed fiscal quarter, accompanied by a calculation in reasonable detail of such ratio submitted at the time the Borrower requests a Loan. The Applicable LIBOR Margin in effect with respect to a Loan shall change in the event the ratio of Total Funded Debt to EBITDA as next reported to Bank changes such that a different Applicable LIBOR Margin would apply. If a party determines in good faith or obtains knowledge that information contained in any such calculation was untrue or incorrect in any respect and that the ratio on which the Applicable LIBOR Margin for any particular period was determined was inaccurate and, as a consequence thereof, the Applicable LIBOR Margin was incorrect, the parties shall recalculate the Applicable LIBOR Margin for such period.

3. Principal Bank of Deposit and Lockbox; Minimum Deposit Balances. To enable the Bank to properly monitor the Credit Line and the financial condition of the Borrower, Borrower and each Guarantor will maintain Bank as depository for the depository accounts of Borrower and each Guarantor, as the case may be, including its operating accounts.

4. Availability of Funds. Except as otherwise provided in Section 2 hereof or in any disbursement letter signed by the Borrower and accepted by the Bank, proceeds of Loans shall be credited by the Bank to the general deposit account of the Borrower with the Bank or shall otherwise be paid to the Borrower as the Borrower may specify in its notice of borrowing.

5. Use of Loan Proceeds. Borrower covenants that the Loans will be used exclusively by Borrower for working capital and general corporate purposes.

6. Payments to Bank. All payments of principal, interest and any other sums payable hereunder or under the Credit Line shall be made to the Bank at its principal office in immediately available funds. The Bank may charge the primary operating deposit account of Borrower at the Bank (other than payroll, escrow or trust accounts) with the amount of all payments of interest, principal, letter of credit fees, and LIBOR breakage fees and will notify the Borrower of the amount so charged.

7. Expenses. In connection with the preparation, amendment or interpretation of this Agreement and other documentation relating to the Loans and the collection of the Obligations made pursuant hereto, the Borrower agrees to pay upon the signing hereof all reasonable costs and expenses (including, without limitation, reasonable legal fees of the Bank in connection with origination of the Credit Line and the original documentation hereof, and to pay within forty-five days after invoicing the reasonable costs and expenses (including reasonable legal fees) of the Bank in connection with any amendment hereto or to any of the other Loan Documents or any waiver hereunder or thereunder or with interpreting, enforcing or exercising any rights or remedies under this Agreement or any of the other Loan Documents, all whether or not legal action is instituted. In addition, the Borrower shall pay any and all recording or filing fees, payable or determined to be payable in connection with the execution and delivery of this Agreement and each of the Loan Documents.

8. Additional Security. Borrower grants to the Bank a security interest in and with respect to any and all deposits or other sums at any time or times credited by or due from the Bank to the Borrower (other than payroll, escrow or trust accounts) and any and all securities, instruments or other personal property of the Borrower in the possession of the Bank (other than payroll, escrow or trust accounts), to secure the payment and performance of all Obligations. If a Default has occurred and is continuing, the Bank may apply such deposits or other sums credited by, due from or held by it, toward the satisfaction of any and all such Obligations then due and owing (by reason of their maturity, their acceleration or otherwise) whether or not other collateral or security is available to the Bank and will promptly inform the Borrower of such application of deposits or other sums. If a Default has occurred and is continuing, any and all rights to require Bank to exercise its rights or remedies with respect to any other collateral which secures the Obligations, prior to exercising its right of setoff with respect to such deposits, credits or other property of Borrower, are hereby knowingly, voluntarily and irrevocably waived.

9. Further Actions; Inspections and Audits. The Borrower will, from time to time, at the reasonable request of the Bank, execute and deliver all such further instruments and take such further action as the Bank may reasonably require to effectuate more perfectly the intent of this Agreement. The Borrower shall permit the Bank, or its representatives, at any reasonable time and from to time (but unless an Event of Default exists, following prior notice and only during normal business hours at mutually agreeable times), to perform such audits, examinations and inspections as Bank reasonably deems necessary in order to insure

compliance with this Agreement. The Borrower will pay the Bank’s customary charges for such audits, examinations and inspections; provided, however, that Borrower shall not be obligated to reimburse Bank for the charges of more than one (1) audit every year while no Events of Default are continuing.

10. Conditions of Lending. Borrower shall not be entitled to request that Bank advance funds pursuant to the Credit Line or to issue Letters of Credit unless Bank shall have determined in its discretion, that Borrower has satisfied the following conditions precedent, which together may be called the Conditions of Lending:

10.1 That the statements, representations and warranties of the Borrower contained herein are and continue to be true in all material respects, other than representations and warranties which expressly pertain to a specific date and which are no longer true and correct due to determination of such representation and warranty as of or for another date or period; that no Default or Event of Default has occurred and is continuing; and that each request for an Loan or for issuance of a Letter of Credit shall constitute and be deemed to be a representation and warranty to the Bank as to the accuracy and completeness in all material respects of each of the foregoing set forth in this Section 10.1 as of the date of such request and that upon the request of the Bank, the Borrower shall deliver to the Bank a certificate, in form and substance satisfactory to Bank, certifying as to the foregoing on the date of each Loan or issuance of a Letter of Credit.

10.2 The Borrower shall have delivered to the Bank, at the time of the execution of this Agreement, a duly authorized and executed Revolving Note.

10.3 Borrower shall have delivered to the Bank, at the time of the execution of this Agreement, confirmations that the Security Agreement and Pledge Agreement secure the Revolving Note.

10.4 TechTarget Limited shall have delivered to the Bank a confirmation that its Guaranty applies to the Obligations of the Borrower under the Revolving Note, and that its Security Agreement secures such Obligations under its Guaranty.

10.5 The Borrower shall have delivered to the Bank at the time of execution hereof, or at such other times as shall be reasonably requested by Bank, such other documents relating to the Credit Line as the Bank may reasonably require, all in form and substance satisfactory to the Bank.

11. Particular Representations. Borrower represents and warrants as follows, each of which warranties and representations shall be deemed repeated at the time of each Loan:

11.1 Borrower is a duly organized and validly existing corporation organized in the State of Delaware, and has been duly qualified as a foreign corporation in the Commonwealth of Massachusetts and each other jurisdiction set forth on Schedule 11.1. Borrower is not required to qualify to do business as a foreign entity in any jurisdiction other than as set forth on Schedule 11.1 inasmuch as the character of its business and the

ownership of its property, as now conducted or owned, either does not require such qualification or the failure to be so qualified would not reasonably be expected to have a material adverse effect upon the financial condition of the Borrower. Borrower has conducted its business at all times since the date of the Prior Agreement under the name “TechTarget, Inc.,” and not under any other name or tradename. Set forth in Schedule 11.1 are all locations at which Borrower or any Subsidiary conducts business. No Subsidiaries of the Borrower have net assets in excess of $1,000, are generating revenues or are conducting business operations other than TechTarget Securities Corporation and TechTarget Limited.

11.2 The Borrower and its Subsidiaries have all requisite corporate power and authority to conduct its business and to own its assets as such business is now conducted or proposed to be conducted.

11.3 The execution, delivery and performance by the Borrower of this Agreement, the Revolving Note, the confirmation of the Security Agreement and the Pledge Agreement and all other Loan Documents, and the execution by each Guarantor of its confirmation of its Guaranty and its Security Agreement are within its corporate powers, and have been duly authorized by all necessary corporate action, and do not and will not:

(a)

Violate any provision of such Borrower’s or Subsidiary’s organizational documents or by-laws;

(b)

Constitute or result in a breach of or default by it under or conflict with any statute or other law or, to the extent it is a party thereto or bound thereby, any order, regulation or ruling of any court or other tribunal or of any governmental or administrative authority or agency or, other than as applicable provisions have been waived or consent given in writing by the party to be bound by the waiver or consent, any indenture, agreement, lease, instrument or other undertaking to which it is a party or by which it or its properties or assets may be bound, except for such breach, default or conflict which would not be reasonably expected to result in a material adverse effect on the Borrower.

(c)

Result in the imposition of any liens or encumbrances, other than those created by this Agreement, the Revolving Note, the Security Agreements, the Pledge Agreement or any other Loan Document, on any of its property or assets.

11.4 Except as set forth in Schedule 11.4 hereto, there are no actions, suits, investigations or proceedings pending or, to the knowledge of Borrower, threatened, against Borrower, any Subsidiary or any of the assets of Borrower or any Subsidiary, by or before any court or other tribunal or any governmental or administrative authority or agency, which, if determined adversely, would, singly or in the aggregate, reasonably be expected to have a material adverse effect on the financial condition or business of Borrower and the Subsidiaries or materially and adversely affect the ability of Borrower to perform the obligations required of it under this Agreement or under the Loan Documents.

11.5 Borrower is not engaged in the business of extending credit for the purpose of purchasing or carrying margin stock (within the meaning of Regulation U of the Board of Governors of the Federal Reserve System), and no part of any proceeds of the Loans will be used to purchase or carry any margin stock or to extend credit to others for the purpose of purchasing or carrying any margin stock.

11.6 Borrower and each Subsidiary possess all material licenses and authorizations from government agencies as may be necessary to conduct its business as now conducted or proposed to be conducted. To the knowledge of Borrower, neither it nor any Subsidiary is in material default under any statute or other law or under any order, regulation or ruling of any court or other tribunal or any government agency, the enforcement of which would reasonably be expected to have a material adverse effect upon the financial condition or business of Borrower and the Subsidiaries, nor does Borrower have knowledge that it or any Subsidiary is in violation of indenture, agreement, lease, instrument or other undertaking, which indenture, agreement, lease, instrument or undertaking is material to the business or financial affairs of the Borrower and the Subsidiaries.

11.7 Borrower represents and warrants to the Bank that the Financial Statements are complete and correct in all material respects and fairly present its financial condition as at the dates so indicated therein and in the case of statements of operations, statements of cash flow or tax returns, the results of its operations for the period ending on such dates. Borrower is not secondarily liable, whether as a guarantor, surety co-borrower, endorser or otherwise, for obligations of any person or entity except as set forth in the Financial Statements and except for endorsements of negotiable instruments in the ordinary course of Borrower’s business.

11.8 All federal income tax returns, and, to the best of its knowledge, all other tax returns, required by law to be filed by Borrower or any Subsidiary through the date of this Agreement have been filed within applicable time periods or extensions therefor, and all taxes shown thereon as due and payable, including any interest or penalties thereon, have been duly paid or adequate provision for the payment thereof has been made, or to the extent disclosed to the Bank in writing, are being contested in good faith. Provision has been made for any other taxes due and payable by Borrower and any Subsidiary in amounts reasonably deemed adequate by Borrower for such purposes.

11.9 Borrower and each Subsidiary has good and marketable title to its property shown on the Financial Statements, free of liens, except liens permitted under this Agreement and except for those liens listed on Schedule 11.9 hereto.

11.10 Neither Borrower nor any Subsidiary has incurred nor anticipates incurring, any material “accumulated funding deficiency” within the meaning of the Employee Retirement Income Security Act of l974 (“ERISA”) or any liability to the Pension Benefit Guaranty Corporation (“PBGC”) established under such Act (or any successor thereto under such Act) in connection with any employee benefit plan (or other class of benefit which the PBGC has elected to insure) established or maintained by Borrower or any Subsidiary.

11.11 This Agreement, the Revolving Note, the confirmation of the Security Agreement and the Pledge Agreement and each and all other Loan Documents executed by Borrower or any of the Guarantors constitute, or will constitute when delivered, legal, valid and binding obligations of the Borrower and the Guarantors, and subject to bankruptcy, insolvency, reorganization, moratorium and other laws affecting the enforcement or priority of creditors’ rights generally, now or hereafter in effect, and subject to the provision that equitable remedies shall be within the discretion of the Court having jurisdiction to exercise the same, are enforceable in accordance with their respective terms.

11.12 This Agreement and the other Loan Documents, certificates and written statements furnished by or on behalf of Borrower to the Bank in connection with or pursuant to this Agreement did not and do not contain any untrue statement of a material fact concerning Borrower or any Subsidiary when made or omitted to state a material fact necessary in order to make the statements contained herein and therein with respect to Borrower and its Subsidiaries not misleading when made. To its knowledge, there is no fact (other than facts relating to general economic conditions) which materially adversely affects the business, operations, affairs, conditions, properties or assets of Borrower and its Subsidiaries which has not been set forth in a document, certificate or written statement furnished to the Bank by or on behalf of Borrower prior to or on the date of delivery hereof.

12. Particular Covenants.

A. Affirmative Covenants. So long as this Agreement shall be in effect and until payment in full of all Obligations, the Borrower agrees as follows as to itself and each Subsidiary:

12A.1 Borrower and each Subsidiary will operate its business in the usual course, will maintain its legal existence as a corporation and will maintain its foreign qualification, if any, and good standing in each jurisdiction in which it is required to do so unless failure to maintain such qualification or good standing would not have a material adverse effect upon the financial condition of Borrower or such Subsidiary.

12A.2 Borrower and each Subsidiary will maintain proper records and accounts.

12A.3 At any time that the Borrower’s financial statements are not available on the EDGAR website of the Securities and Exchange Commission, Borrower will furnish to the Bank reports as follows, each such report to be in form consolidated with all Subsidiaries and on a consolidating basis for Borrower and for all Subsidiaries:

(a) Quarterly, within forty-five (45) days after the end of each of the first three fiscal quarters of the Borrower, a management-prepared consolidated balance sheet for Borrower and the Subsidiaries and a consolidated statement of income and expense, and consolidated statement of cash flow for the month then ended and year to date and with consolidating data for Borrower and each Subsidiary, (with such detail as the Bank may reasonably require), certified to fairly present the financial condition of Borrower by its Chief

Financial Officer, subject to normal year end audit adjustments and the absence of footnotes. Such report shall be accompanied by any other material submitted to the Securities and Exchange Commission on Form 10-Q.

(b) Within ninety (90) days after the end of each fiscal year of Borrower, a consolidated financial statement for such year for Borrower and the Subsidiaries, consolidated statement of income and expense and a consolidated statement of cash flow, in accordance with GAAP, with an audit report thereon by an independent certified public accountant selected by Borrower and reasonably satisfactory to Bank, such statements to including consolidating data in respect of Borrower and all Subsidiaries. Such report shall be accompanied by any other material submitted to the Securities and Exchange Commission on Form 10-K.

(c) promptly, notice of: (i) any event constituting a Default or Event of Default of which Borrower is aware; (ii) the institution or commencement of any action, suit, proceeding or investigation against Borrower or any Subsidiary or any of their assets which, if determined adversely, could reasonably be expected to have a material adverse effect on its financial condition or business; (iii) any judgment, award, decree, order or determination relating thereto against Borrower or any Subsidiary involving a sum in excess of $100,000 and not covered by insurance, or granting injunctive relief materially affecting the conduct of the business of Borrower; (iv) the imposition or creation of any lien or encumbrance asserted against any asset of Borrower or any Subsidiary except a security interest in favor of the Bank or a Permitted Encumbrance;

(d) Concurrently with the filing thereof, all reports submitted to the Securities and Exchange Commission or applicable stock exchanges, and concurrently with the transmittal thereof, all reports and other materials transmitted to its stockholders; and

(e) Upon request of the Bank, such other or additional financial information as to Borrower or any Subsidiary as the Bank may reasonably require.

12A.4 Borrower will cause to be maintained workers’ compensation insurance for personnel performing services for Borrower or any Subsidiary in such amounts as may be required by law; and at all times maintain public liability coverage in amounts, limits and types and with provisions and with insurers as may be consistent with prudent companies in similar circumstances carrying on similar businesses. Borrower shall also maintain casualty insurance coverage and other insurance coverages on the properties and business of Borrower and its Subsidiaries including the collateral described in the Security Agreements and business interruption insurance in amounts and types and with provisions as are usually carried by others in similar circumstances and engaged in similar businesses. Borrower will furnish to the Bank such written evidence of the insurance required by this subsection as the Bank may reasonably require.

12A.5 Promptly notify the Bank upon the occurrence, or if practicable, prior to the occurrence, of any change in the identity of the persons holding the positions of Chief Executive Officer, President and Chief Financial Officer in Borrower’s executive management.

12A.6 Pay all principal and interest under the Revolving Note as and when due, and all other Obligations, as and when due.

12A.7 Except as may be being contested by Borrower or a Subsidiary in good faith and by diligent action, comply with all statutes, laws, orders, rules and regulations of all government agencies the noncompliance with which could have a material adverse effect upon the financial condition or business or assets of Borrower or the value of the Collateral.

12A.8 Cause the proceeds of each Loan to be used in accordance with the provisions of Section 5 of this Agreement.

12A.9 At such time as a Subsidiary possesses or acquires assets in excess of $1,000, or commences to conduct business operations, or generates revenues, Borrower shall notify the Bank and (a) if the Subsidiary is a Foreign Subsidiary, shall promptly deliver to the Bank a pledge agreement substantially in the form of the Pledge Agreement covering 66 2/3% of the outstanding ownership interest of the Borrower or as to any other Subsidiary, 100% of the outstanding ownership interest in such Subsidiary, together with such deliveries as the Bank may reasonably require, to provide the Bank with a perfected senior pledge and security interest in such ownership interest and (b) if the Subsidiary is not a Foreign Subsidiary, shall promptly deliver to the Bank a guaranty by such Subsidiary of the Obligations in the form reasonably required by the Bank and a security agreement substantially in the form of the Security Agreement covering all of the business assets of such Subsidiary, together with such other documents as the Bank may reasonably require to provide the Bank with a perfected senior pledge and security interest in such assets.

12A.10 Notify the Bank not later than 30 days prior to any change in the name of the Borrower or any Subsidiary or of Borrower’s principal executive offices.

B. Negative Covenants. So long as this Agreement shall be in effect, and until payment in full of all Obligations, neither the Borrower nor any Subsidiary, without the written consent of the Bank:

12B.1 Fail to pay when due any material tax liability or fail to pay or discharge any and all material taxes, assessments and governmental charges before they become payable with penalty, unless and to the extent that such items are being contested in good faith and by appropriate action.

12B.2 Pledge or otherwise encumber any of its property or securities nor permit any lien to exist on any of the assets of Borrower or any Subsidiary; excluding, however, from this covenant the following “Permitted Encumbrances”: (a) liens incurred in the ordinary course of Borrower’s or the Subsidiary’s existing business to secure statutory obligations, and other similar obligations not incurred in connection with the borrowing of money; (b) liens for taxes, fees, assessments or other charges or levies of government

agencies not delinquent or being contested in good faith by appropriate proceedings; (c) liens in favor of the Bank; (d) liens existing on the date hereof, if any, and disclosed on Schedule 12B.2; (e) deposits or escrows in connection with the purchase of goods or services made in the ordinary course of business; (f) liens arising by operation of law to secure lessors under leases or rental agreements; and (g) liens in the nature of purchase money security interests securing indebtedness in connection with the acquisition of vehicles and office equipment not exceeding $1,000,000 in the aggregate at any time outstanding and provided such security interest applies only to the asset acquired in such transaction and secures no other indebtedness.

12B.3 Merge or consolidate with any person or entity unless Borrower is the survivor or successor; nor sell, lease, transfer, assign or otherwise dispose of all or substantially all of the assets of Borrower or any Subsidiary.

12B.4 Guaranty or become surety for the obligations of any person, partnership, corporation, trust or other entity except (a) in favor of the Bank or (b) endorsements of negotiable instruments for deposit or collection or similar transactions in the ordinary course of business.

12B.5 Incur indebtedness for borrowed money from any source other than the Bank, except (a) indebtedness existing on the date hereof, if any, and disclosed on Schedule 12B.5, and refinancings thereof; (b) indebtedness that is subordinated to the Obligations, which indebtedness and the terms of subordination shall be acceptable to the Bank and (c) indebtedness secured by purchase money security interests to the extent permitted by Section 12B.2 above.

12B.6 Fail to pay its trade creditors, generally, in accordance with customary payment terms, unless and to the extent payments are being contested by Borrower or such Subsidiary in good faith.

12B.7 Change its name, or conduct business under any name other than its present name, or change its jurisdiction of organization without providing the Bank with a minimum of thirty (30) days prior notice thereof.

12B.8 Fail to maintain in full force and effect all permits and licenses from government agencies except for those permits and licenses the failure of which to maintain would not be reasonably expected to result in a material adverse effect on Borrower or such Subsidiary.

12B.9 Fail to comply in all material respects with all laws, regulations, ordinances and requirements of all government agencies, the enforcement of which could have a material adverse effect upon the business, operations or financial condition of Borrower or such Subsidiary.

12B.10 Pay dividends or distributions to stockholders or otherwise make payments of cash or other property to any of Borrower’s stockholders or entities affiliated

with Borrower through direct or indirect ownership except compensation paid in the ordinary course of business for services rendered except that a Subsidiary may pay dividends to the Borrower.

12B.11 Invest or loan or permit the investment or loan of any of the assets of the Borrower or any Subsidiary in or to any person, partnership, corporation, trust or other entity other than in or to any Guarantor except that the foregoing limitation shall not apply to: (a) the purchase of certificates of deposit or other Bank obligations; (b) marketable direct obligations of the United States of America or issues unconditionally guaranteed by the United States of America or issued by any agency thereof and backed by the full faith and credit of the United States of America, in each case maturing within one year from the date of acquisition thereof; (c) commercial paper maturing no more than 180 days from the date of issuance thereof and having at the date of issuance the highest rating attainable from either Standard & Poors Corporation or by Moody’s Investors Services; (d) advances to officers and employees for reasonable expenses which are properly reimbursable by the Borrower and (e) investments in marketable debt securities maturing in more than 180 days and rated Baa3 or above by Moody’s Investors Services or BBB or above by Standard & Poors Corporation. The extension of credit to customers for goods sold and delivered or services rendered is not an investment or loan for purposes of this Section 12B.11.

12C. Waiver of Covenants. The Bank may, in its sole discretion, waive any one or more of the covenants contained in this Section 12, either in a particular instance or generally. No waiver shall be effective unless the same is set forth in a written instrument executed by a duly authorized officer of the Bank, and then only to the extent specifically set forth therein.

13. Events of Default. The occurrence of any one or more of the following events (including the expiration of any grace period specifically provided therefor) shall constitute an Event of Default under this Agreement:

13.1 (a) Any default in any payment of interest or principal due under the Revolving Note, (b) any default in any other payment due the Bank which continues uncured for more than five (5) days after notice from the Bank, or (c) any default under Sections 12A.4, 12A.6 (after expiration of applicable cure periods under clause (b), if any), 12A.8, 12A.9, 12A.10, 12B.2, (other than liens or encumbrances imposed by third parties without the consent or agreement of the Borrower), 12B.3, 12B.4, 12B.5, 12B.6, 12B.7, 12B.10 or 12B.11.

13.2 Any default in the observance or performance of any covenant or agreement contained in this Agreement (other than defaults described in Section 13.1 above) and the continuance of such default unremedied for a period of thirty (30) days after written notice from the Bank.

13.3 Any representation or warranty made herein or hereafter to the Bank proving to have been false, inaccurate or incomplete in any material respect when made.

13.4 If voluntary or involuntary proceedings under the United States Bankruptcy Code, as amended from time to time (the “Bankruptcy Code”), shall be commenced by or against the Borrower or any Subsidiary or bankruptcy, receivership, insolvency, reorganization, dissolution, liquidation or other similar proceedings shall be instituted by or against the Borrower or any Subsidiary with respect to all or any part of Borrower’s or any Subsidiary’s property under the Bankruptcy Code or other law of the United States or of any state or other competent jurisdiction, and if such proceedings are instituted against the Borrower or any Subsidiary, if Borrower or such Subsidiary shall consent thereto or shall fail to cause the same to be discharged or vacated within ninety (90) days.

13.5 The occurrence of an “Event of Default” (or if the term “Event of Default” is not utilized therein, the occurrence of a default which default continues beyond any applicable cure periods) under the Revolving Note, the Security Agreements, the Pledge Agreement or under any other Loan Document.

13.6 If the Borrower or any Subsidiary shall default in the payment of any obligation, other than those relating to the Credit Line, for borrowed money to the Bank, or to any other person or entity, beyond any applicable grace period, or shall fail to observe or perform any provision contained in any instrument evidencing, relating to or securing any such obligation, which failure permits the holder of such obligation to declare the same due prior to its stated maturity, unless Borrower or such Subsidiary is contesting such default or failure in good faith by appropriate proceedings commenced and prosecuted with due diligence. This Section 13.6 shall apply to obligations to creditors other than the Bank only if and to the extent that such obligations which are in default exceed $100,000 in the aggregate.

Then, upon the occurrence of any such Event of Default and during the continuance thereof:

(1) the Bank may notify Borrower that it declines to make further Loans to the Borrower and to issue further Letters of Credit under this Agreement, and upon the giving of such notice any obligation of the Bank to make Loans to the Borrower or to issue Letters of Credit or to provide other financial accommodations to the Borrower under any other agreement shall cease and terminate;

(2) thirty (30) days after such notice, all amounts outstanding under the Revolving Note and all other Obligations shall forthwith become due and payable without presentment, demand, protest or notice of any kind, all of which are expressly hereby waived, unless such Event of Default is one described in Section 13.4, in which case all such amounts shall be and become immediately due and payable; and

(3) the Bank shall be entitled to pursue any or all remedies available under any instruments executed in connection with the Loans or Letters of Credit available under applicable law, in such order as the Bank may determine in its sole discretion.

14. Miscellaneous.

14.1 No failure or delay by the Bank in exercising any right or remedy hereunder or under any Loan Document shall operate as a waiver thereof, nor shall any single or partial exercise of any such right or remedy preclude any other or further exercise thereof or the exercise of any other right or remedy hereunder or thereunder. No amendment, modification, termination or waiver of any provision of this Agreement or any Loan Document shall in any event be effective unless the same shall be set forth in a writing signed by the Bank and Borrower, and then only to the extent specifically set forth therein. All of the rights and remedies of the Bank hereunder and under any Loan Document are cumulative and not exclusive of any other rights and remedies under other agreements of the Borrower with the Bank or under applicable law, and all such rights and remedies may be exercised singly or concurrently.

14.2 The Borrower agrees to indemnify and hold harmless the Bank from and against any and all costs, expenses, judgments and claims, including reasonable attorneys’ fees, arising out of any suit brought against the Borrower and/or the Bank by reason of, relating to or in connection with the execution, delivery or performance of this Agreement and any other Loan Document; or by reason of, or in connection with, any credit extended under this Agreement or any other Loan Documents, except any costs, expenses, judgments and claims arising out of the Bank’s gross negligence or bad faith in fact. The obligations of the Borrower under this Section shall survive payment of the Obligations.

14.3 No notice to or demand upon the Borrower in any instance, shall entitle the Borrower to any other or further notice or demand under similar or other circumstances, unless expressly required by law or this Agreement. The Bank shall be entitled to rely upon any instrument or communication in any form believed by it to be genuine and to have been signed or sent by an authorized officer or representative of the Borrower as evidenced by the most recent incumbency and authorization certificate furnished to the Bank.

14.4 All notices, demands and other communications by one party hereunder to the other shall be in writing and shall be deemed effective three days after being sent by certified or registered mail, return receipt requested, postage prepaid, or one business day after being sent by recognized overnight delivery service, or when receipt is acknowledged if sent by facsimile, telecopy or other electronic transmission device, and addressed to the other party as set forth below:

If to Borrower:

TechTarget, Inc.

275 Grove Street

Newton MA 02466

Attn: General Counsel

If to the Bank:

Citizens Bank, National Association

28 State Street, 14^th Floor

Boston, MA 02109

Attn: William M. Clossey

Senior Vice President

with a copy to:

Cornelius J. Chapman

Burns & Levinson LLP

125 Summer Street

Boston, MA 02110

or to such other address of which notice is given in the same manner. The financial statements described in Section 12 may be sent to the Bank by ordinary mail or delivered to it.

14.5 Bank shall have the unrestricted right at any time or from time to time, without the Borrower’s consent, to assign all or any portion of its rights and obligations hereunder to one or more banks or other financial institutions (each, an “Assignee”) and the Borrower agrees that it shall execute, or cause to be executed such other documents, including without limitation, amendments to this Agreement and to any other Loan Documents as Bank shall deem necessary to effect the foregoing. In addition, at the request of Bank and any such Assignee, the Borrower shall issue one or more new promissory notes, as applicable, to any such Assignee and, if Bank has retained any of its rights and obligations hereunder following such assignment, to Bank, which new promissory notes shall be issued in replacement of, but not in discharge of, the liability evidenced by the promissory note held by Bank prior to such assignment and shall reflect the amount of the respective loans held by such Assignee and Bank after giving effect to such assignment. Upon the execution and delivery of appropriate assignment documentation, amendments and any other documentation required by Bank in connection with such assignment, and the payment by Assignee of the purchase price agreed to by Bank, and such Assignee, such Assignee shall be a party to this Agreement and shall have all of the rights and obligations of Bank hereunder (and under any and all other guaranties, documents, instruments and agreements executed in connection herewith) to the extent that such rights and obligations have been assigned by Bank pursuant to the assignment documentation between Bank and such Assignee, and Bank shall be released from its obligations hereunder and thereunder to a corresponding extent.

14.6 Bank may at any time pledge or assign all or any portion of its rights under the Revolving Note, this Agreement, and the other Loan Documents to any of the twelve (12) Federal Reserve Banks organized under Section 4 of the Federal Reserve Act, 12 U.S.C. Section 341. No such pledge or assignment or enforcement thereof shall release Bank from its obligations under the Loan Documents.

14.7 Bank shall have the unrestricted right any time and from time to time, and without the consent of or notice to the Borrower, to grant to one or more banks or other financial institutions (each, a “Participant”) participation interests in Bank’s obligation to lend hereunder and/or any or all of the loans held by Bank hereunder. In the event of any such grant by Bank of a participation interest to a Participant, whether or not upon notice to the Borrower, Bank shall remain responsible for the performance of its obligations hereunder and the servicing of the Loans and the Borrower shall continue to deal solely and directly with Bank in connection with Bank’s rights and obligations hereunder.

14.8 Bank may furnish any information concerning the Borrower in its possession from time to time to prospective Assignees and Participants, provided that Bank shall require any such prospective Assignee or Participant to agree in writing to maintain the confidentiality of such information. Bank will use reasonable efforts, consistent with the Bank’s normal procedures, to maintain the confidentiality of information concerning the Borrower, but nothing herein contained shall prevent disclosures required by law, required by court order or subpoena, or disclosures to auditors and to regulatory authorities.

14.9 This Agreement may be executed in any number of counterparts, each of which shall be deemed an original as against any party whose signature appears thereon, and all of which shall together constitute one and the same instrument. This Agreement shall become binding when one or more counterparts hereof, individually or taken together, shall bear the signatures of all of the parties reflected hereon as the signatures.

14.10 This Agreement shall become effective when executed by the Borrower and the Bank and thereafter shall be binding upon and inure to the benefit of the Borrower and the Bank and their respective successors and assigns, except that the Borrower cannot assign its rights hereunder or any interest herein without the prior written consent of the Bank.

14.11 All of the covenants, representations and warranties herein shall survive the execution and delivery of this Agreement and the making of the Loans so long as any Obligations of the Borrower remain outstanding, and may be relied upon by the Bank. All covenants, representations and warranties contained in any certificate, statement, report or other document delivered by or on behalf of the Borrower as provided herein or otherwise in connection with the transactions contemplated hereby shall be deemed to have been made in this Agreement.

14.12 All Exhibits and Schedules hereto are hereby incorporated into and made a part of this Agreement.

14.13 Headings are included in this Agreement for convenience of reference only and shall not be deemed to have any legal or other significance whatsoever.

14.14 This Agreement and all other Loan Documents shall be deemed to be contracts under the laws of The Commonwealth of Massachusetts and shall for all purposes be governed by and construed in accordance with the laws of said Commonwealth, and without regard to conflict of laws principles applied by such courts.

14.15 The Borrower irrevocably submits to the non-exclusive jurisdiction of any Federal or State court sitting in Boston, Massachusetts over any situation or proceeding arising out of or relating to this Agreement. The Borrower irrevocably waives, to the fullest extent it any effectively do so under applicable law, any objection it may have or hereafter have to the laying of the venue of any such suit, action or proceeding brought in any such court and any claim that the same has been brought in an inconvenient forum.

14.16 THE BORROWER AND BANK EACH HEREBY KNOWINGLY, VOLUNTARILY AND INTENTIONALLY WAIVES ANY RIGHT IT MAY HAVE OR HEREAFTER HAVE TO A TRIAL BY JURY IN RESPECT OF ANY SUIT, ACTION OR PROCEEDING ARISING OUT OF OR RELATING TO THIS AGREEMENT OR ANY OTHER LOAN DOCUMENTS CONTEMPLATED TO BE EXECUTED IN CONNECTION HEREWITH OR ANY COURSE OF CONDUCT, COURSE OF DEALINGS, STATEMENTS (WHETHER VERBAL OR WRITTEN) OR ACTIONS OF ANY PARTY. THIS WAIVER CONSTITUTES A MATERIAL INDUCEMENT FOR BANK TO MAKE THE LOANS CONTEMPLATED HEREUNDER. The Borrower hereby certifies that neither Bank nor any of its representatives, agents or counsel has represented, expressly or otherwise, that Bank would not, in the event of any such suit, action or proceeding, seek to enforce this waiver of right to trial by jury. The Borrower acknowledges that it has read the provisions of this Agreement and in particular, this Paragraph; has consulted legal counsel; understands the rights it is granting in this Agreement and is waiving in this Paragraph in particular; and makes the above waiver knowingly, voluntarily and intentionally.

14.17 EXCEPT AS MAY BE PROHIBITED BY LAW, EACH OF THE PARTIES HERETO HEREBY WAIVES ANY RIGHT IT MAY HAVE TO CLAIM OR RECOVER IN ANY PROCEEDINGS ANY SPECIAL, EXEMPLARY, PUNITIVE OR CONSEQUENTIAL DAMAGES OTHER THAN OR IN ADDITION TO, ACTUAL DAMAGES.

14.18 This Agreement and the Loan Documents contain the entire agreement between the parties and supersede any prior agreements (oral or written), and may not be amended, revised, waived, discharged, released or terminated orally but only by a written instrument or instruments executed by the party against which enforcement of the amendment, revision, waiver, discharge, release or termination is asserted.

14.19 If any provision hereof shall be determined to be invalid or unenforceable, such determination shall not affect the validity or enforceability of any other provision hereof.

14.20 This Agreement may be executed in a number of counterparts, each such counterpart being deemed an original and all such counterparts together constituting one single instrument.

EXECUTED as an agreement under seal as of the date first written above.


BORROWER:

TECHTARGET, INC.

By:		/s/ Greg Strakosch
Name:		Greg Strakosch
Title:		Chief Executive Officer

BANK:

CITIZENS BANK, NATIONAL ASSOCIATION

By:		/s/ William M. Clossey
Name:		William M. Clossey
Title:		Senior Vice President

Exhibit 10.2

REVOLVING PROMISSORY NOTE

$5,000,000.00

June 23, 2015

Boston, Massachusetts

1. Definitions. As used herein, the following terms shall have the following meanings:


Borrower:		TechTarget, Inc.

Bank:		Citizens Bank, National Association

Credit Facility Agreement:		This Note is issued pursuant to the terms, provisions and conditions of that certain Amended and Restated Credit Facility Agreement (hereinafter, as it may hereafter be amended by agreement of the parties thereto, the “Credit Facility Agreement”) of even date by and between the Borrower and the Bank and evidences the Loans made by or on behalf of the Bank pursuant thereto. Capitalized terms used herein which are not otherwise specifically defined shall have the same meaning herein as in the Credit Facility Agreement. This Note is the Revolving Note referred to in the Credit Facility Agreement.

Principal Balance:		Up to Five Million Dollars ($5,000,000.00).

Interest Rate:		Interest on the outstanding Principal Balance shall be payable at the rates specified in the Credit Facility Agreement.

		Upon any Event of Default (as defined below), whether or not the holder has elected to exercise any other rights under this Note, and also after the Principal Balance of the Note shall become due and payable (on the Maturity Date or otherwise), the Interest Rate on all outstanding amounts shall accrue at a floating annual rate equal to the Prime Rate plus four Percentage Points (4.0%) (the “Default Interest Rate”).

2. Promise to Pay. ON DEMAND, for value received, the Borrower promises to pay to the order of the Bank at its office in Boston, Massachusetts (or to such other person(s) or at such other place(s) as the holder of this Note may from time to time designate in writing), the Principal Balance, with interest at the Interest Rate computed on the outstanding Principal Balance.

3. Right of Prepayment. Principal may be prepaid in full or in part, as specified and permitted, and on the prepayment terms set forth, in the Credit Facility Agreement.

4. Late Payment. If any payment of principal or of interest is not paid within fifteen (15) days after its due date, the Borrower shall pay the holder on demand a late charge of five (5%) percent of the amount not so paid. Late charges are not interest and shall not be subject to refund or rebate or credited against any other amount due. Late charges will apply only to installments of principal or interest, and not to any amount due by reason of maturity or acceleration.

5. Holder’s Costs and Expenses. The Borrower will pay within forty-five (45) days after demand by Bank, all reasonable attorneys’ fees, out-of-pocket expenses incurred by the Bank’s attorneys and all costs incurred by the Bank, which costs and expenses are directly related to the preservation, protection, collection, or enforcement of any of the Bank’s rights against the Borrower or any such endorser or guarantor and against any collateral given the Bank to secure this Note or any extension or other indulgence, with respect to the loan evidenced by this Note (whether or not suit is instituted by or against the Bank).

6. Interest. Notwithstanding any other provision in this Note, the total liability for payments of interest and payments in the nature of interest, including without limitation, all charges, fees or any sums which may at any time be deemed to be interest, shall not exceed the amount which holder may lawfully collect. If the total liability for payments of interest and payments in the nature of interest, including without limitation, all charges, fees or other sums which may at any time be deemed to be interest, shall, for any reason whatsoever, result in an effective rate of interest, which for any month or other interest payment period exceeds the amount which holder may lawfully collect, all sums in excess of those lawfully collectible as interest for the period in question shall, without further notice to any party hereto, either at the election of the holder (a) be applied as a premium-free reduction of the Principal Balance immediately upon receipt of such sums by holder, with the same force and effect as though Borrower had specifically designated such excess sums to be so applied to the reduction of the Principal Balance, (b) be treated as cash collateral for future payments hereunder or (c) returned to the Borrower; provided, however, that Holder may, at any time, and from time to time, elect, by notice in writing to Borrower, to waive, reduce or limit the collection of any sums (or refund to Borrower any sums collected) in excess of those lawfully collectible as interest rather than accept such sums as prepayment of the Principal Balance.

7. Responsibility of Persons. The Borrower and every other party liable on this Note, whether as endorser, guarantor, surety or otherwise, waives presentment, demand, protest, suretyship defenses and all other defenses in the nature thereof.

8. Waiver and Changes. No delay or omission by the holder in exercising any right under this Note or under any of the other Loan Documents shall operate as a waiver of such right, or of any other right of the holder, nor shall any delay, omission or waiver on any one occasion be deemed to be a bar to or waiver of the same or of any other right on any future occasion. This Note may be changed only by an agreement in writing.

9. Notice. All notices, demands, requests and other communications required under this Note shall be in writing and shall be deemed to have been properly given when given in the manner specified in the Credit Facility Agreement. Any party may designate a change of address by written notice to the other, given in the foregoing manner at least five (5) business days before such change of address is to become effective.

10. Remedies Cumulative. The remedies of holder, as provided in this Note and the other Loan Documents, shall be cumulative and concurrent and may be pursued singly, successively or together, at the sole discretion of holder, and may be exercised as often as occasion therefor shall occur; and the failure to exercise any such right or remedy shall in no event be construed as a waiver or release thereof.

11. Enforceability of This Note. The determination that one or more provisions of this Note are invalid or unenforceable under law shall not affect the validity or enforceability of the remaining provisions of this Note.

12. Participations. Borrower acknowledges that holder may, in its sole discretion, sell all or any part of its interest in the loan as evidenced by this Note, provided, however, that any party acquiring all or a participation interest in this Note shall be bound by the terms and conditions of this Note and such acquisition shall be subject to all other Loan Documents.

13. Headings. Headings in this Note are included for convenience of the parties only and shall not constitute a part of this Note for any other purpose or be utilized in the interpretation hereof.

14. Set-off Any and all deposits or other sums at any time credited by or due from Bank to the Borrower shall at all times constitute security for this Note and any other obligations of the undersigned to Bank and, after any Default under the Credit Agreement, may be applied or set off by Bank against such obligations whether or not other collateral is available to Bank.

15. Governing Law This Note shall be governed and construed in accordance with the laws of The Commonwealth of Massachusetts.

Executed as a sealed instrument under Massachusetts law.


TECHTARGET, INC.

By		/s/ Greg Strakosch
Print name:		Greg Strakosch
Title:		Chief Executive Officer

Exhibit 31.1

CERTIFICATION OF PRINCIPAL EXECUTIVE OFFICER PURSUANT TO

SECURITIES EXCHANGE ACT RULES 13a-14(a) AND 15d-14(a),

AS ADOPTED PURSUANT TO

SECTION 302 OF THE SARBANES-OXLEY ACT OF 2002

I, Greg Strakosch, certify that:

1.	I have reviewed this Quarterly Report on Form 10-Q of TechTarget, Inc.;

2.	Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

3.	Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;

The registrant’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:

(a)

Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

(b)

Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;

(c)

Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and

(d)

Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and

5.	The registrant’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):

(a)

All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and

(b)

Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.

Date: August 7, 2015

/s/ GREG STRAKOSCH

Greg Strakosch

Chief Executive Officer

Exhibit 31.2

CERTIFICATION OF PRINCIPAL FINANCIAL OFFICER PURSUANT TO

SECURITIES EXCHANGE ACT RULES 13a-14(a) AND 15d-14(a),

AS ADOPTED PURSUANT TO

SECTION 302 OF THE SARBANES-OXLEY ACT OF 2002

I, Janice Kelliher, certify that:

1.	I have reviewed this Quarterly Report on Form 10-Q of TechTarget, Inc.;

2.	Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

3.	Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;

(a)

(b)

(c)

(d)

5.	The registrant’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):

(a)

(b)

Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.

Date: August 7, 2015

/s/ JANICE KELLIHER

Janice Kelliher

Chief Financial Officer and Treasurer

Exhibit 32.1

CERTIFICATION OF PRINCIPAL EXECUTIVE OFFICER AND

PRINCIPAL FINANCIAL OFFICER PURSUANT TO

18 U.S.C. SECTION 1350, AS ADOPTED PURSUANT TO

SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002

Each of Greg Strakosch and Janice Kelliher hereby certifies, pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, in his or her capacity as Chief Executive Officer and Chief Financial Officer and Treasurer, respectively of TechTarget, Inc. (the Company), that, to his or her knowledge, the Quarterly Report of the Company on Form 10-Q for the period ended June 30, 2015 as filed with the Securities and Exchange Commission (the Report) fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934 and that the information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company.


Date: August 7, 2015	By:	/s/ GREG STRAKOSCH
		Greg Strakosch
		Chief Executive Officer

Date: August 7, 2015	By:	/s/ JANICE KELLIHER
		Janice Kelliher
		Chief Financial Officer and Treasurer

Serious News for Serious Traders! Try StreetInsider.com Premium Free!

SEC Filings

Receive full access to all new and archived articles, unlimited portfolio tracking, e-mail alerts, custom newswires and RSS feeds - and more!

Large Accelerated Filer

Accelerated Filer

Non-Accelerated Filer

¨ (Do not check if a smaller reporting company)

Smaller Reporting Company