View Filing Data

Document and Entity Information - shares	9 Months Ended
Document and Entity Information - shares	Sep. 30, 2015	Oct. 31, 2015
Document And Entity Information [Abstract]
Entity Registrant Name	SPARK NETWORKS INC
Entity Central Index Key	0001314475
Document Type	10-Q
Document Period End Date	Sep. 30, 2015
Amendment Flag	false
Document Fiscal Year Focus	2015
Document Fiscal Period Focus	Q3
Trading Symbol	LOV
Current Fiscal Year End Date	--12-31
Entity Filer Category	Accelerated Filer
Entity Common Stock, Shares Outstanding		25,690,893

Consolidated Balance Sheets - USD ($) $ in Thousands	Sep. 30, 2015	Dec. 31, 2014
Current assets:
Cash and cash equivalents	$ 14,442	$ 11,696
Restricted cash	823	1,056
Accounts receivable (net of allowance for doubtful accounts of $99 and $0 at September 30, 2015 and December 31, 2014, respectively)	1,133	1,308
Deferred tax asset – current	9	11
Prepaid expenses and other	766	1,516
Total current assets	17,173	15,587
Property and equipment, net	5,346	4,072
Goodwill	8,522	8,575
Intangible assets, net	2,439	2,469
Deferred tax asset – non-current	68	68
Deposits and other assets	127	234
Total assets	33,675	31,005
Current liabilities:
Accounts payable	1,664	1,300
Accrued liabilities	4,785	3,948
Deferred revenue	6,307	7,092
Deferred tax liability – current	601	496
Total current liabilities	13,357	12,836
Deferred tax liability – non-current	1,593	1,607
Other liabilities	609	807
Total liabilities	15,559	15,250
Commitments and contingencies (Note 10)
Stockholders’ equity:
10,000,000 shares of Preferred Stock, $0.001 par value, 450,000 of which are designated as Series C Junior Participating Cumulative Preferred Stock, with no shares of Preferred Stock issued or outstanding
100,000,000 shares of Common Stock, $0.001 par value, with 25,260,191 and 24,556,182 shares issued and outstanding at September 30, 2015 and December 31, 2014, respectively:	25	25
Additional paid-in-capital	75,082	72,522
Accumulated other comprehensive income	754	759
Accumulated deficit	(57,745)	(57,551)
Total stockholders’ equity	18,116	15,755
Total liabilities and stockholders’ equity	$ 33,675	$ 31,005

Consolidated Balance Sheets (Parenthetical) - USD ($) $ in Thousands	Sep. 30, 2015	Dec. 31, 2014
Accounts receivable, allowance for doubtful accounts	$ 99	$ 0
Common stock, par value	$ 0.001	$ 0.001
Common stock, shares authorized	100,000,000	100,000,000
Common stock, shares issued	25,260,191	24,556,182
Common stock, shares outstanding	25,260,191	24,556,182
Preferred stock, shares authorized	10,000,000	10,000,000
Preferred stock, par value	$ 0.001	$ 0.001
Preferred stock, shares issued	0	0
Preferred stock, shares outstanding	0	0
Designated as Series C Junior Participating Cumulative Preferred Stock
Preferred stock, shares authorized	450,000	450,000

Consolidated Statements of Operations and Comprehensive Income (Loss) - USD ($) shares in Thousands, $ in Thousands	3 Months Ended		9 Months Ended
	Sep. 30, 2015	Sep. 30, 2014	Sep. 30, 2015	Sep. 30, 2014
Income Statement [Abstract]
Net Revenue	$ 11,682	$ 15,008	$ 37,430	$ 47,381
Cost and expenses:
Cost of revenue (exclusive of depreciation shown separately below)	5,593	7,004	19,058	28,234
Sales and marketing	1,144	1,368	2,895	4,299
Customer service	769	738	2,239	2,289
Technical operations	210	276	636	917
Development	1,053	886	2,978	2,645
General and administrative	2,933	4,446	7,704	11,472
Depreciation	562	518	1,607	1,558
Amortization of intangible assets	10	10	30	30
Impairment of long-lived assets	26	103	132	103
Total cost and expenses	12,300	15,349	37,279	51,547
Operating income (loss)	(618)	(341)	151	(4,166)
Interest expense and other, net	191	340	79	323
Income (loss) before income taxes	(809)	(681)	72	(4,489)
Provision for income taxes	13	288	266	507
Net loss	(822)	(969)	(194)	(4,996)
Other comprehensive loss, net of tax:
Foreign currency translation adjustment	0	(27)	(5)	(16)
Comprehensive loss	$ (822)	$ (996)	$ (199)	$ (5,012)
Net loss per share—basic and diluted	$ (0.03)	$ (0.04)	$ (0.01)	$ (0.21)
Weighted average shares outstanding – basic and diluted	25,188	24,035	24,991	23,936

Consolidated Statements of Operations and Comprehensive Income (Loss) (Parenthetical) - USD ($) $ in Thousands	3 Months Ended		9 Months Ended
	Sep. 30, 2015	Sep. 30, 2014	Sep. 30, 2015	Sep. 30, 2014
Stock-Based Compensation
Stock-based compensation			$ 512	$ 613
Cost of revenue
Stock-Based Compensation
Stock-based compensation		$ 3		3
Sales and marketing
Stock-Based Compensation
Stock-based compensation	$ 11	23	19	99
Development
Stock-Based Compensation
Stock-based compensation	5		8
General and administrative
Stock-Based Compensation
Stock-based compensation	$ 159	$ 259	$ 485	$ 511

Consolidated Statements of Cash Flows - USD ($) $ in Thousands	9 Months Ended
	Sep. 30, 2015	Sep. 30, 2014
Cash flows from operating activities:
Net loss	$ (194)	$ (4,996)
Adjustments to reconcile net loss to cash provided by (used in) operating activities:
Depreciation and amortization	1,637	1,588
Impairment of long-lived assets	132	103
Foreign currency exchange loss (gain) on intercompany loan	39	(284)
Stock-based compensation	512	613
Deferred taxes	93	137
Bad debt expense	99
Changes in operating assets and liabilities:
Accounts receivable	76	112
Restricted cash	233	172
Prepaid expenses and other assets	866	1,487
Accounts payable and accrued liabilities	863	(1,739)
Deferred revenue	(785)	(921)
Other liabilities	(198)	(51)
Net cash provided by (used in) operating activities	3,373	(3,779)
Cash flows from investing activities:
Purchases of property and equipment	(2,675)	(1,631)
Purchases of intangible assets		(242)
Net cash used in investing activities	(2,675)	(1,873)
Cash flows from financing activities:
Proceeds from exercise of stock options	2,933	1,730
Repurchases of common stock	(885)	(1,492)
Net cash provided by financing activities	2,048	238
Net increase (decrease) in cash and cash equivalents	2,746	(5,414)
Cash and cash equivalents at beginning of period	11,696	14,723
Cash and cash equivalents at end of period	14,442	9,309
Supplemental disclosure of cash flow information:
Cash paid for income taxes	95	$ 36
Supplemental disclosure of non-cash investing activities:
Purchases of property and equipment recorded in accounts payable and accrued liabilities	$ 338

The Company and Summary of Significant Accounting Policies

9 Months Ended

Sep. 30, 2015

Accounting Policies [Abstract]

The Company and Summary of Significant Accounting Policies

1.	The Company and Summary of Significant Accounting Policies

The Company

Spark Networks, Inc. (the “Company” or “we”), is a leader in creating communities that help individuals form life-long relationships with others that share their interests and values. The Company’s core properties, ChristianMingle and JDate, are communities geared towards singles of the Christian and Jewish faiths. Through the Company’s websites and mobile applications, the Company helps members search for and communicate with other like-minded individuals.

Membership to the Company’s online and web services, which includes the posting of a personal profile and photos, and access to its database of profiles, is free. The Company charges a fee (typically, one, three or six month subscription fees) to members, allowing them to initiate communication with other members and subscribers using the Company’s onsite communication tools, including anonymous email, instant messenger, chat rooms and message boards. For most of the Company’s services, two-way communications through the Company’s email platform can only take place between paying members.

Basis of Presentation

The accompanying consolidated financial statements include the accounts of the parent company and all of its majority-owned subsidiaries. All significant intercompany transactions and balances have been eliminated in consolidation.

The accompanying unaudited consolidated interim financial statements reflect all adjustments, consisting of only normal recurring items, which, in the opinion of management, are necessary for a fair presentation of the results of operations for the periods shown. The results of operations for such periods are not necessarily indicative of the results expected for the full year or for any future periods.

The consolidated financial statements in this Form 10-Q should be read in conjunction with the consolidated financial statements and related notes included in the Company’s Annual Report on Form 10-K for the year ended December 31, 2014 (the “2014 Annual Report”). Certain information and footnote disclosures normally included in financial statements prepared in accordance with generally accepted accounting principles in the United States (“GAAP”) have been condensed or omitted pursuant to such rules and regulations. The consolidated balance sheet as of December 31, 2014 was derived from the Company’s audited consolidated financial statements for the year ended December 31, 2014.

Use of Estimates

The preparation of consolidated financial statements in conformity with GAAP requires management to make estimates, judgments and assumptions that affect the reported amounts of assets, liabilities, revenues and expenses and related disclosure of contingent assets and liabilities. On an ongoing basis, management evaluates its estimates, including those related to revenue recognition, cost of revenue, prepaid advertising, website and software development costs, goodwill, intangible and other long-lived assets, legal contingencies, income taxes and stock-based compensation. In addition, management uses assumptions when employing the Black-Scholes option valuation model to calculate the fair value of granted stock-based awards. Management bases its estimates of the carrying value of certain assets and liabilities on historical experience and on various other assumptions that it believes to be reasonable under the circumstances, when these carrying values are not readily available from other sources. Actual results may differ from these estimates.

Adoption of New Accounting Principles

9 Months Ended

Sep. 30, 2015

New Accounting Pronouncements And Changes In Accounting Principles [Abstract]

Adoption of New Accounting Principles

2.	Adoption of New Accounting Principles

In May 2014, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update (“ASU”) 2014-09, Revenue from Contracts with Customers. ASU 2014-09 provides for a single, principles-based model for revenue recognition that replaces the existing revenue recognition guidance. In July 2015, the FASB deferred the effective date by one year for annual reporting periods beginning after December 15, 2017 (including interim reporting periods within those periods). Early adoption as of the original effective date of December 15, 2016 (including interim reporting periods within those periods) is permitted. The amendments may be applied retrospectively to each prior period presented or retrospectively with the cumulative effect recognized as of the date of initial application. Management is currently assessing the impact the guidance will have upon adoption.

In May 2014, the FASB issued ASU 2014-12, Accounting for Share-Based Payments When the Terms of an Award Provide That a Performance Target Could Be Achieved After the Requisite Service Period. The guidance requires that a performance target that affects vesting and that could be achieved after the requisite service period, be treated as a performance condition. A reporting entity should apply existing guidance in Topic 718, Compensation – Stock Compensation, as it relates to awards with performance conditions that affect vesting to account for such awards. The performance target should not be reflected in estimating the grant-date fair value of the award. Compensation cost should be recognized in the period in which it becomes probable that the performance target will be achieved and should represent the compensation cost attributable to the period(s) for which the requisite service has already been rendered. If the performance target becomes probable of being achieved before the end of the requisite service period, the remaining unrecognized compensation cost should be recognized prospectively over the remaining requisite service period. The total amount of compensation cost recognized during and after the requisite service period should reflect the number of awards that are expected to vest and should be adjusted to reflect those awards that ultimately vest. The requisite service period ends when the employee can cease rendering service and still be eligible to vest in the award if the performance target is achieved. The updated guidance is effective for annual periods and interim periods within those annual periods beginning after December 15, 2015. Earlier adoption is permitted. Management is currently assessing the impact the guidance will have upon adoption.

In August 2014, the FASB issued ASU 2014-15, Presentation of Financial Statements—Going Concern (Subtopic 205-40) – Disclosure of Uncertainties about an Entity’s Ability to Continue as a Going Concern. The guidance requires entities to evaluate their ability to continue as a going concern within one year after the date that the financial statements are issued. Disclosure is required if there is substantial doubt about an entity’s ability to continue as a going concern. The guidance in ASU No. 2014-15 is effective for the annual period ending after December 15, 2016, and for annual periods and interim periods thereafter, with early application permitted. Management will evaluate the circumstances at the time of adoption for any additional disclosures.

In April 2015, the FASB issued ASU 2015-03, Simplifying the Presentation of Debt Issuance Costs. The guidance changes the presentation of debt issuance costs in financial statements. An entity should present such costs in the balance sheet as a direct deduction from the related debt liability rather than as an asset. Amortization of the costs will continue to be reported as interest expense. This guidance is effective for annual reporting periods beginning after December 15, 2015, with early adoption permitted. Management does not expect that the adoption of this ASU will have a material impact on the consolidated financial statements.

In April 2015, the FASB issued ASU 2015-05, Customer's Accounting for Fees Paid in a Cloud Computing Arrangement, which includes amendments that provide guidance to customers about whether a cloud computing arrangement includes a software license. If a cloud computing arrangement includes a software license, the customer should account for the software license element of the arrangement consistent with the acquisition of other software licenses. If the arrangement does not include a software license, the customer should account for a cloud computing arrangement as a service contract. This guidance is effective for annual periods beginning after December 15, 2015, with early adoption permitted. The amendment may be adopted either prospectively to all arrangements entered into or materially modified after the effective date or retrospectively. Management is currently assessing the impact the guidance will have upon adoption.

In August 2015, the FASB issued ASU 2015-15, Presentation and Subsequent Measurement of Debt Issuance Costs Associated with Line-of-Credit Arrangements – Amendments to SEC Paragraphs Pursuant to Staff Announcement at June 18, 2015 EITF Meeting, which addresses the lack of guidance in ASU 2015-03 for debt issuance costs related to line of credit arrangements. This ASU adds SEC paragraphs pursuant to the SEC Staff Announcement at the June 18, 2015 Emerging Issues Task Force (EITF) meeting about the presentation and subsequent measurement of debt issuance costs associated with line of credit arrangements. Given the absence of authoritative guidance, the SEC staff would not object to an entity deferring and presenting debt issuance costs as an asset and subsequently amortizing the deferred debt issuance costs ratably over the term of the line of credit arrangement, regardless of whether there are any outstanding borrowings on the line of credit arrangement. Management does not expect that adoption of this guidance will have a material impact on the consolidated financial statements.

- Definition

The entire disclosure of changes in accounting principles, including adoption of new accounting pronouncements, that describes the new methods, amount and effects on financial statement line items.

+ References

Reference 1: http://www.xbrl.org/2003/role/presentationRef
-Publisher FASB
-Name Accounting Standards Codification
-Glossary Change in Accounting Principle
-URI http://asc.fasb.org/extlink&oid=6507316

Reference 2: http://www.xbrl.org/2003/role/presentationRef
-Publisher FASB
-Name Accounting Standards Codification
-Glossary Direct Effects of a Change in Accounting Principle
-URI http://asc.fasb.org/extlink&oid=6510796

Reference 3: http://www.xbrl.org/2003/role/presentationRef
-Publisher FASB
-Name Accounting Standards Codification
-Topic 250
-SubTopic 10
-Section 50
-Paragraph 3
-URI http://asc.fasb.org/extlink&oid=28359718&loc=d3e22583-107794

Reference 4: http://www.xbrl.org/2003/role/presentationRef
-Publisher FASB
-Name Accounting Standards Codification
-Glossary Indirect Effects of a Change in Accounting Principle
-URI http://asc.fasb.org/extlink&oid=6515603

Reference 5: http://www.xbrl.org/2003/role/presentationRef
-Publisher FASB
-Name Accounting Standards Codification
-Topic 250
-SubTopic 10
-Section 50
-Paragraph 2
-URI http://asc.fasb.org/extlink&oid=28359718&loc=d3e22580-107794

Reference 6: http://www.xbrl.org/2003/role/presentationRef
-Publisher FASB
-Name Accounting Standards Codification
-Topic 270
-SubTopic 10
-Section S99
-Paragraph 1
-Subparagraph (SX 210.10-01.(b)(6))
-URI http://asc.fasb.org/extlink&oid=27015980&loc=d3e46468-122699

Reference 7: http://www.xbrl.org/2003/role/presentationRef
-Publisher FASB
-Name Accounting Standards Codification
-Glossary Accounting Change
-URI http://asc.fasb.org/extlink&oid=6503790

Reference 8: http://www.xbrl.org/2003/role/presentationRef
-Publisher FASB
-Name Accounting Standards Codification
-Topic 250
-SubTopic 10
-Section 50
-Paragraph 1
-URI http://asc.fasb.org/extlink&oid=28359718&loc=d3e22499-107794

Reference 9: http://www.xbrl.org/2003/role/presentationRef
-Publisher FASB
-Name Accounting Standards Codification
-Glossary Retrospective Application
-URI http://asc.fasb.org/extlink&oid=6523989

Reference 10: http://www.xbrl.org/2003/role/presentationRef
-Publisher FASB
-Name Accounting Standards Codification
-Topic 270
-SubTopic 10
-Section 45
-Paragraph 13
-URI http://asc.fasb.org/extlink&oid=6372559&loc=d3e765-108305

Reference 11: http://www.xbrl.org/2003/role/presentationRef
-Publisher FASB
-Name Accounting Standards Codification
-Topic 270
-SubTopic 10
-Section 45
-Paragraph 12
-URI http://asc.fasb.org/extlink&oid=6372559&loc=d3e725-108305

Reference 12: http://www.xbrl.org/2003/role/presentationRef
-Publisher SEC
-Name Regulation S-X (SX)
-Number 210
-Section 01
-Paragraph b
-Subparagraph 6
-Article 10

+ Details

Net Loss Per Share

9 Months Ended

Sep. 30, 2015

Earnings Per Share [Abstract]

Net Loss Per Share

3.	Net Loss Per Share

Basic net loss per share is computed by dividing net loss available to common stockholders by the weighted average number of shares of common stock outstanding.

	Three Months Ended September 30,						Nine Months Ended September 30,
(in thousands, except per share data)	2015			2014			2015			2014
Net Loss Per Share of Common Stock – Basic and Diluted
Net loss applicable to common stock	$	(822	)	$	(969	)	$	(194	)	$	(4,996	)
Weighted average shares outstanding – basic and diluted		25,188			24,035			24,991			23,936
Net Loss Per Share – Basic and Diluted	$	(0.03	)	$	(0.04	)	$	(0.01	)	$	(0.21	)

For the three and nine months ended September 30, 2015 and 2014, all stock options outstanding during each period have been excluded from the diluted weighted average shares outstanding calculation because they would have been anti-dilutive.

Revolving Credit Facility

9 Months Ended

Sep. 30, 2015

Debt Disclosure [Abstract]

Revolving Credit Facility

4.	Revolving Credit Facility

The Company and its wholly owned subsidiary, Spark Networks USA, LLC, have a $15.0 million revolving credit facility with Bank of America, which was entered into on February 14, 2008 with subsequent amendments (the “Credit Agreement”). The Credit Agreement matures on March 14, 2016.

The per annum interest rate under the Credit Agreement is LIBOR, or the Eurodollar Rate (as defined in the Credit Agreement) under certain circumstances, plus 2.00%. In the event the Company elects to borrow under a base rate loan, the interest rate is increased to the prime rate plus 1.00%. The Company pays a 0.25% per annum commitment fee on all funds not utilized under the facility, measured on a daily basis.

On September 8, 2015, the Company entered into a Ninth Amendment to the Credit Agreement (the “Ninth Amendment”), to modify certain financial covenants and to require cash collateralization of all outstanding loans and letter of credit obligations under the credit agreement.

The following table details, per the Ninth Amendment, the minimum consolidated adjusted EBITDA for each six month period, and the minimum contribution for each rolling four quarter period, for the quarters ending:

Quarter ending	Minimum Consolidated Adjusted EBITDA		Minimum Contribution
September 30, 2015	$	(0.5) million	$	15.5 million
December 31, 2015	$	(2.0) million	$	15.0 million

The Credit Agreement also imposes limitations on capital expenditures in the ordinary course of business, subject to certain exceptions, provided that for fiscal 2015, the capital expenditure limitation shall be $3.5 million.

The Company was compliant with all of the Credit Agreement’s covenants as of September 30, 2015.

As of September 30, 2015, there were no outstanding borrowings under the Credit Agreement. The deferred financing costs are amortized to interest expense and other, net in the Consolidated Statements of Operations and Comprehensive Income (Loss) through the maturity of the Credit Agreement on March 14, 2016. Amortization expense for the deferred financing costs for the three and nine months ended September 30, 2015 was $5,000 and $11,000, respectively. Amortization expense for the deferred financing costs for the three and nine months ended September 30, 2014 was $3,000 and $9,000, respectively. The unamortized balance of deferred financing costs was $14,000 as of September 30, 2015.

Impairment of Long-lived Assets

9 Months Ended

Sep. 30, 2015

Goodwill And Intangible Assets Disclosure [Abstract]

Impairment of Long-lived Assets

5.	Impairment of Long-lived Assets

During the three and nine months ended September 30, 2015, the Company impaired $26,000 and $132,000, respectively, of long-lived assets primarily related to the full unamortized balance of capitalized software development costs associated with certain products that failed to perform to Company standards. During the three and nine months ended September 30, 2014, the Company impaired $103,000 of long-lived assets primarily related to the full unamortized balance of capitalized software development costs associated with certain mobile products.

Stockholders' Equity

9 Months Ended

Sep. 30, 2015

Equity [Abstract]

Stockholders' Equity

6.	Stockholders’ Equity

On December 12, 2013, the Company’s Board of Directors authorized the repurchase of up to $5.0 million of the Company’s common stock. The repurchases may be made from time to time in the open market, in privately negotiated transactions, or otherwise, including pursuant to a Rule 10b5-1 plan, at prices that the Company deems appropriate and subject to market conditions, applicable law, including Rule 10b-18 of the Securities Exchange Act of 1934, as amended, and other factors deemed relevant in the Company’s sole discretion. The Company is not obligated to repurchase any dollar amount or any number of shares of common stock, and the program may be suspended, discontinued or modified at any time, for any reason and without notice. During the nine months ended September 30, 2015, the Company repurchased 288,284 shares of common stock for $885,000. Since December 12, 2013, the Company has repurchased 559,401 shares of common stock for $2.4 million. All stock repurchased has been retired.

- Definition

The entire disclosure for shareholders' equity comprised of portions attributable to the parent entity and noncontrolling interest, including other comprehensive income. Includes, but is not limited to, balances of common stock, preferred stock, additional paid-in capital, other capital and retained earnings, accumulated balance for each classification of other comprehensive income and amount of comprehensive income.

+ References

Reference 1: http://www.xbrl.org/2003/role/presentationRef
-Publisher FASB
-Name Accounting Standards Codification
-Topic 235
-SubTopic 10
-Section S99
-Paragraph 1
-Subparagraph (SX 210.4-08.(d),(e))
-URI http://asc.fasb.org/extlink&oid=26873400&loc=d3e23780-122690

Reference 2: http://www.xbrl.org/2003/role/presentationRef
-Publisher FASB
-Name Accounting Standards Codification
-Topic 505
-SubTopic 10
-Section 50
-Paragraph 4
-URI http://asc.fasb.org/extlink&oid=6928386&loc=d3e21484-112644

Reference 3: http://www.xbrl.org/2003/role/presentationRef
-Publisher FASB
-Name Accounting Standards Codification
-Topic 310
-SubTopic 10
-Section S99
-Paragraph 2
-Subparagraph (SAB TOPIC 4.E)
-URI http://asc.fasb.org/extlink&oid=27010918&loc=d3e74512-122707

Reference 4: http://www.xbrl.org/2003/role/presentationRef
-Publisher FASB
-Name Accounting Standards Codification
-Topic 505
-SubTopic 10
-Section 50
-Paragraph 5
-URI http://asc.fasb.org/extlink&oid=6928386&loc=d3e21488-112644

Reference 5: http://www.xbrl.org/2003/role/presentationRef
-Publisher FASB
-Name Accounting Standards Codification
-Topic 210
-SubTopic 10
-Section S99
-Paragraph 1
-Subparagraph (SX 210.5-02.29-31)
-URI http://asc.fasb.org/extlink&oid=6877327&loc=d3e13212-122682

Reference 6: http://www.xbrl.org/2003/role/presentationRef
-Publisher FASB
-Name Accounting Standards Codification
-Topic 505
-SubTopic 10
-Section S99
-Paragraph 4
-Subparagraph (SAB TOPIC 4.C)
-URI http://asc.fasb.org/extlink&oid=27012166&loc=d3e187143-122770

Reference 7: http://www.xbrl.org/2003/role/presentationRef
-Publisher FASB
-Name Accounting Standards Codification
-Topic 505
-SubTopic 10
-Section 50
-Paragraph 6
-URI http://asc.fasb.org/extlink&oid=6928386&loc=d3e21506-112644

Reference 8: http://www.xbrl.org/2003/role/presentationRef
-Publisher FASB
-Name Accounting Standards Codification
-Topic 505
-SubTopic 10
-Section S99
-Paragraph 1
-Subparagraph (SX 210.3-04)
-URI http://asc.fasb.org/extlink&oid=27012166&loc=d3e187085-122770

Reference 9: http://www.xbrl.org/2003/role/presentationRef
-Publisher FASB
-Name Accounting Standards Codification
-Topic 505
-SubTopic 30
-Section 50
-Paragraph 2
-URI http://asc.fasb.org/extlink&oid=6405834&loc=d3e23285-112656

Reference 10: http://www.xbrl.org/2003/role/presentationRef
-Publisher FASB
-Name Accounting Standards Codification
-Topic 505
-SubTopic 10
-Section 50
-Paragraph 3
-URI http://asc.fasb.org/extlink&oid=6928386&loc=d3e21475-112644

Reference 11: http://www.xbrl.org/2003/role/presentationRef
-Publisher FASB
-Name Accounting Standards Codification
-Glossary Preferred Stock
-URI http://asc.fasb.org/extlink&oid=6521494

Reference 12: http://www.xbrl.org/2003/role/presentationRef
-Publisher FASB
-Name Accounting Standards Codification
-Topic 505
-SubTopic 10
-Section 50
-Paragraph 2
-URI http://asc.fasb.org/extlink&oid=6928386&loc=d3e21463-112644

Reference 13: http://www.xbrl.org/2003/role/presentationRef
-Publisher FASB
-Name Accounting Standards Codification
-Topic 505
-SubTopic 10
-Section 50
-Paragraph 11
-URI http://asc.fasb.org/extlink&oid=6928386&loc=d3e21564-112644

Reference 14: http://www.xbrl.org/2003/role/presentationRef
-Publisher SEC
-Name Regulation S-X (SX)
-Number 210
-Section 08
-Paragraph d
-Article 4

Reference 15: http://www.xbrl.org/2003/role/presentationRef
-Publisher SEC
-Name Regulation S-X (SX)
-Number 210
-Section 02
-Paragraph 29, 30, 31
-Article 5

Reference 16: http://www.xbrl.org/2003/role/presentationRef
-Publisher SEC
-Name Staff Accounting Bulletin (SAB)
-Number Topic 4
-Section E

Reference 17: http://www.xbrl.org/2003/role/presentationRef
-Publisher SEC
-Name Regulation S-X (SX)
-Number 210
-Section 08
-Article 4

Reference 18: http://www.xbrl.org/2003/role/presentationRef
-Publisher SEC
-Name Staff Accounting Bulletin (SAB)
-Number Topic 4
-Section C

Reference 19: http://www.xbrl.org/2003/role/presentationRef
-Publisher SEC
-Name Regulation S-X (SX)
-Number 210
-Section 04
-Article 3

+ Details

Stock-Based Compensation

9 Months Ended

Sep. 30, 2015

Equity [Abstract]

Stock-Based Compensation

7.	Stock-Based Compensation

Employee Stock Option Plans

On July 9, 2007, pursuant to the completion of the Scheme of Arrangement, the Company adopted the 2007 Omnibus Incentive Plan (the “2007 Plan”). Pursuant to the 2007 Plan’s “evergreen” provision, on the first day of each calendar year beginning in 2009, the number of shares reserved and available for issuance will be increased by an amount equal to the lesser of (i) 2,000,000 shares, (ii) four percent (4%) of the number of outstanding shares of Company common stock on the last day of the immediately preceding fiscal year or (iii) an amount determined by the Board of Directors. As of September 30, 2015, the 2007 Plan had 5.9 million shares authorized for issuance.

Awards under the 2007 Plan may include incentive stock options, nonqualified stock options, stock appreciation rights (“SARs”), restricted shares of common stock, restricted stock units, performance stock or unit awards, other stock-based awards and cash-based incentive awards.

The Compensation Committee may grant an award to a participant. The terms and conditions of the award, including the quantity, price, vesting periods and other conditions on exercise will be determined by the Compensation Committee.

The exercise price for stock options will be determined by the Compensation Committee in its discretion, but may not be less than 100% of the closing sale price of one share of the Company’s common stock on the NYSE MKT (or any other applicable exchange on which the stock is listed) on the date when the stock option is granted. Additionally, in the case of incentive stock options granted to a holder of more than 10% of the total combined voting power of all classes of stock of the Company on the date of grant, the exercise price may not be less than 110% of the closing sale price of one share of common stock on the date the stock option is granted.

As of September 30, 2015, total unrecognized compensation cost related to non-vested stock options was $708,000. This cost is expected to be recognized over a weighted-average period of 2 years.

The following table describes option activity for the three months ended March 31, 2015, June 30, 2015, and September 30, 2015:

	Number of Shares		Weighted Average Exercise Price per Share
	(in thousands)
Outstanding at December 31, 2014		2,146	$	4.30
Granted		—		—
Exercised		(434)		3.08
Forfeited		(44)		7.31
Expired		(13)		7.64
Outstanding at March 31, 2015		1,655	$	4.51
Granted		1,908		8.37
Exercised		(448)		3.10
Forfeited		(28)		7.24
Expired		(18)		7.64
Outstanding at June 30, 2015		3,069	$	7.08
Granted		—		—
Exercised		(146)		3.00
Forfeited		(86)		8.00
Expired		(281)		6.86
Outstanding at September 30, 2015		2,556	$	7.30

Trigger Price Options

Trigger price options awarded under the 2007 Plan entitle the shareholder the right to receive common stock or the value thereof in the future subject to restrictions imposed in connection with the award.

During the nine months ended September 30, 2015, the Company entered into agreements with several executive officers and employees whereby the Company granted 1,908,000 trigger price options to the participants at an aggregate fair value of $434,000. These options vest immediately provided that the Company’s per share stock price closed at or above the applicable trigger prices detailed in the table below for twenty (not necessarily consecutive) business days after the grant date and prior to December 31, 2017.

The following table details the trigger price options granted during the nine month period ended September 30, 2015:


	Options Granted	Trigger Price		Exercise Price
Tranche 1	318,000	$	6.00	$	5.25
Tranche 2	636,000	$	10.00	$	7.50
Tranche 3	954,000	$	13.50	$	10.00

Compensation expense is recognized over the requisite service period of two years. For the three and nine months ended September 30, 2015, compensation expense for trigger price options was $64,000 and $121,000, respectively. We have determined the fair value of the options as of the grant dates using a Monte Carlo simulation model. The Monte Carlo simulation model utilizes multiple input variables to estimate the probability that market conditions will be achieved. The input variables include stock price volatility and risk-free interest rate to estimate the probability of satisfying the market conditions and the resulting fair value of the award.

As of September 30, 2015, there was $304,000 of unrecognized compensation cost related to trigger price options which will be fully recognized by June 30, 2017.

Restricted Stock Awards

Restricted shares awarded under the 2007 Plan entitle the shareholder the right to vote the restricted shares, the right to receive and retain cash dividends paid or distributed with respect to the restricted shares, and all other rights as a holder of outstanding shares of the Company’s common stock.

During 2014, the Company awarded 125,000 performance-based restricted shares to an executive officer that vest over a period of two years. In order for these performance awards to vest, certain objectives and conditions must be met. Upon achieving the performance condition, the non-vested performance awards partially vest on the first anniversary as defined in the executive’s employment agreement and the remainder on the second anniversary. The executive does not need to remain employed with the Company for the awards to vest. The Company did not award any performance-based restricted stock during the three and nine months ended September 30, 2015. Further, 25,000 of the previously awarded performance-based restricted stock awards were granted during the nine months ended September 30, 2015.

Compensation expense is recognized over the requisite service period of two years and will be adjusted in subsequent reporting periods if the assessed probability or estimated level of achievement of the performance goals changes. For the three and nine months ended September 30, 2015, compensation expense was $27,000 and $176,000, respectively. Considerable judgment is required in assessing the probability and estimated level of achievement of the performance goals. Accordingly, use of different assumptions or estimates could result in different compensation expense.

The Company recognizes share-based compensation on a graded or straight-line basis depending on the terms of the award.

As of September 30, 2015, there was $67,000 of unrecognized compensation cost related to unvested restricted stock awards which will be fully recognized by December 31, 2016.

Restricted Stock Units

Restricted stock units (“RSUs”) awarded under the 2007 Plan entitle the shareholder the right to receive common stock or the value thereof in the future subject to restrictions imposed in connection with the award.

During the nine months ended September 30, 2015, the Company entered into agreements with several executive officers and employees whereby the Company may grant up to 240,000 RSUs based upon the achievement of certain performance-based goals at the discretion of our Compensation Committee. In order for these RSUs to be granted, the Company’s annual revenue and adjusted earnings before interest, depreciation, amortization, and income tax expense (“Adjusted EBITDA”) must exceed a minimum amount; depending upon the Company’s actual annual revenue and Adjusted EBITDA, additional restricted stock may be earned up to a maximum amount. Upon achievement of the performance condition, the non-vested performance awards will vest on December 31, 2016.

Compensation expense is recognized over the requisite service period of two years and will be adjusted in subsequent reporting periods if the estimated level of achievement of the performance goals changes. For the three and nine months ended September 30, 2015, compensation expense for RSUs was $44,000 and $97,000, respectively, which is based on management’s estimated level of achievement of the performance goals. Achievement of this estimated level of performance would result in the grant of 76,000 restricted stock units. Considerable judgment is required in assessing the estimated level of achievement of the performance goals. Accordingly, use of different assumptions or estimates could result in different compensation expense.

As of September 30, 2015, there was $202,000 of unrecognized compensation cost related to RSUs which will be fully recognized by December 31, 2016.

Stockholder Rights Plan

In July 2007, the Company adopted a stockholder rights plan. The rights accompany each share of common stock of the Company and are evidenced by ownership of common stock. The rights are not exercisable except upon the occurrence of certain takeover-related events. Once triggered, the rights would entitle the stockholders, other than a person qualifying as an “Acquiring Person” pursuant to the rights plan, to purchase additional common stock at a 50% discount to their fair market value. The rights issued under the rights plan may be redeemed by the board of directors at a nominal redemption price of $0.001 per right, and the board of directors may amend the rights in any respect until the rights are triggered.

Accumulated Other Comprehensive Income

9 Months Ended

Sep. 30, 2015

Equity [Abstract]

Accumulated Other Comprehensive Income

8.	Accumulated Other Comprehensive Income

The following table summarizes the changes in accumulated balances of other comprehensive income for the three and nine months ended September 30, 2015.

	Foreign Currency Translation
	(in thousands, net of $0 tax)
Balance at December 31, 2014	$	759
Other comprehensive income (expense) before reclassifications		2
Amounts reclassified from accumulated other comprehensive income		—
Balance at March 31, 2015	$	761
Other comprehensive income (expense) before reclassifications		(7	)
Amounts reclassified from accumulated other comprehensive income		—
Balance at June 30, 2015	$	754
Other comprehensive income (expense) before reclassifications		0
Amounts reclassified from accumulated other comprehensive income		—
Balance at September 30, 2015	$	754

There were no reclassifications out of accumulated other comprehensive income for the three and nine months ended September 30, 2015.

- Definition

The entire disclosure for comprehensive income, which includes, but is not limited to, 1) the amount of income tax expense or benefit allocated to each component of other comprehensive income, including reclassification adjustments, 2) the reclassification adjustments for each classification of other comprehensive income and 3) the ending accumulated balances for each component of comprehensive income.

+ References

Reference 1: http://www.xbrl.org/2003/role/presentationRef
-Publisher FASB
-Name Accounting Standards Codification
-Topic 220
-SubTopic 10
-Section 45
-Paragraph 15
-URI http://asc.fasb.org/extlink&oid=36458714&loc=d3e689-108580

Reference 2: http://www.xbrl.org/2003/role/presentationRef
-Publisher FASB
-Name Accounting Standards Codification
-Topic 220
-SubTopic 10
-Section 45
-Paragraph 1A
-URI http://asc.fasb.org/extlink&oid=36458714&loc=SL7669619-108580

Reference 3: http://www.xbrl.org/2003/role/presentationRef
-Publisher FASB
-Name Accounting Standards Codification
-Topic 220
-SubTopic 10
-Section 45
-Paragraph 12
-URI http://asc.fasb.org/extlink&oid=36458714&loc=d3e640-108580

Reference 4: http://www.xbrl.org/2003/role/presentationRef
-Publisher FASB
-Name Accounting Standards Codification
-Topic 220
-SubTopic 10
-Section 45
-Paragraph 17
-URI http://asc.fasb.org/extlink&oid=36458714&loc=d3e716-108580

Reference 5: http://www.xbrl.org/2003/role/presentationRef
-Publisher FASB
-Name Accounting Standards Codification
-Topic 220
-SubTopic 10
-Section 45
-Paragraph 16
-URI http://asc.fasb.org/extlink&oid=36458714&loc=d3e709-108580

Reference 6: http://www.xbrl.org/2003/role/presentationRef
-Publisher FASB
-Name Accounting Standards Codification
-Topic 505
-SubTopic 10
-Section S99
-Paragraph 1
-Subparagraph (SX 210.3-04)
-URI http://asc.fasb.org/extlink&oid=27012166&loc=d3e187085-122770

Reference 7: http://www.xbrl.org/2003/role/presentationRef
-Publisher FASB
-Name Accounting Standards Codification
-Topic 220
-SubTopic 10
-Section 45
-Paragraph 11
-URI http://asc.fasb.org/extlink&oid=36458714&loc=d3e637-108580

Reference 8: http://www.xbrl.org/2003/role/presentationRef
-Publisher FASB
-Name Accounting Standards Codification
-Topic 220
-SubTopic 10
-Section 45
-Paragraph 14
-URI http://asc.fasb.org/extlink&oid=36458714&loc=d3e681-108580

Reference 9: http://www.xbrl.org/2003/role/presentationRef
-Publisher FASB
-Name Accounting Standards Codification
-Glossary Reclassification Adjustments
-URI http://asc.fasb.org/extlink&oid=6522872

+ Details

Segment Information

9 Months Ended

Sep. 30, 2015

Segment Reporting [Abstract]

Segment Information

9.	Segment Information

Segment reporting requires the use of the management approach in determining operating segments. The management approach considers the internal organization and reporting used by our chief operating decision maker for making operating decisions and assessing performance. The Company’s financial reporting includes detailed data on four separate reportable segments: (1) Jewish Networks, which consists of JDate.com, JDate.co.uk, JDate.fr, JDate.co.il, Cupid.co.il and their respective co-branded websites; (2) Christian Networks, which consists of ChristianMingle.com, ChristianMingle.co.uk, ChristianMingle.com.au, Believe.com, ChristianCards.net, DailyBibleVerse.com and Faith.com; (3) Other Networks, which consists of Spark.com and related other general market websites, as well as other properties which are primarily composed of sites targeted towards various religious, ethnic, geographic and special interest groups; and (4) Offline & Other Businesses, which consists of revenue generated from iMinistries and offline activities from HurryDate events and subscriptions.

	Three Months Ended September 30,						Nine Months Ended September 30,
(in thousands)	2015			2014			2015		2014
Revenue
Jewish Networks	$	4,613		$	5,724		$	14,639	$	17,743
Christian Networks		6,581			8,672			21,294		27,660
Other Networks		466			533			1,423		1,713
Offline & Other Businesses		22			79			74		265
Total revenue	$	11,682		$	15,008		$	37,430	$	47,381

Direct marketing expenses
Jewish Networks	$	619		$	628		$	1,963	$	2,436
Christian Networks		3,664			5,293			13,452		22,470
Other Networks		141			107			389		364
Offline & Other Businesses		—			19			—		72
Total direct marketing expenses	$	4,424		$	6,047		$	15,804	$	25,342

Unallocated operating expenses		7,876			9,302			21,475		26,205
Operating Income (Loss)	$	(618	)	$	(341	)	$	151	$	(4,166	)

Due to the Company’s integrated business structure, cost and expenses, other than direct marketing expenses, are not allocated to the individual reporting segments. As such, the Company does not measure operating profit or loss by segment for internal reporting purposes. Assets are not allocated to the different business segments for internal reporting purposes.

- Definition

The entire disclosure for reporting segments including data and tables. Reportable segments include those that meet any of the following quantitative thresholds a) it's reported revenue, including sales to external customers and intersegment sales or transfers is 10 percent or more of the combined revenue, internal and external, of all operating segments b) the absolute amount of its reported profit or loss is 10 percent or more of the greater, in absolute amount of 1) the combined reported profit of all operating segments that did not report a loss or 2) the combined reported loss of all operating segments that did report a loss c) its assets are 10 percent or more of the combined assets of all operating segments.

+ References

Reference 1: http://www.xbrl.org/2003/role/presentationRef
-Publisher FASB
-Name Accounting Standards Codification
-Topic 280
-SubTopic 10
-Section 50
-Paragraph 34
-URI http://asc.fasb.org/extlink&oid=6534315&loc=d3e8981-108599

Reference 2: http://www.xbrl.org/2003/role/presentationRef
-Publisher FASB
-Name Accounting Standards Codification
-Topic 280
-SubTopic 10
-Section 50
-Paragraph 41
-URI http://asc.fasb.org/extlink&oid=6534315&loc=d3e9038-108599

Reference 3: http://www.xbrl.org/2003/role/presentationRef
-Publisher FASB
-Name Accounting Standards Codification
-Topic 280
-SubTopic 10
-Section 50
-Paragraph 33
-URI http://asc.fasb.org/extlink&oid=6534315&loc=d3e8971-108599

Reference 4: http://www.xbrl.org/2003/role/presentationRef
-Publisher FASB
-Name Accounting Standards Codification
-Topic 280
-SubTopic 10
-Section 50
-Paragraph 12
-URI http://asc.fasb.org/extlink&oid=6534315&loc=d3e8595-108599

Reference 5: http://www.xbrl.org/2003/role/presentationRef
-Publisher FASB
-Name Accounting Standards Codification
-Topic 280
-SubTopic 10
-Section 50
-Paragraph 1
-URI http://asc.fasb.org/extlink&oid=6534315&loc=d3e8380-108599

Reference 6: http://www.xbrl.org/2003/role/presentationRef
-Publisher FASB
-Name Accounting Standards Codification
-Topic 280
-SubTopic 10
-Section 50
-Paragraph 32
-URI http://asc.fasb.org/extlink&oid=6534315&loc=d3e8933-108599

Reference 7: http://www.xbrl.org/2003/role/presentationRef
-Publisher FASB
-Name Accounting Standards Codification
-Topic 280
-SubTopic 10
-Section 50
-Paragraph 26
-URI http://asc.fasb.org/extlink&oid=6534315&loc=d3e8844-108599

Reference 8: http://www.xbrl.org/2003/role/presentationRef
-Publisher FASB
-Name Accounting Standards Codification
-Topic 280
-SubTopic 10
-Section 50
-Paragraph 35
-URI http://asc.fasb.org/extlink&oid=6534315&loc=d3e8984-108599

Reference 9: http://www.xbrl.org/2003/role/presentationRef
-Publisher FASB
-Name Accounting Standards Codification
-Topic 280
-SubTopic 10
-Section 50
-Paragraph 40
-URI http://asc.fasb.org/extlink&oid=6534315&loc=d3e9031-108599

Reference 10: http://www.xbrl.org/2003/role/presentationRef
-Publisher FASB
-Name Accounting Standards Codification
-Topic 280
-SubTopic 10
-Section 50
-Paragraph 42
-URI http://asc.fasb.org/extlink&oid=6534315&loc=d3e9054-108599

Reference 11: http://www.xbrl.org/2003/role/presentationRef
-Publisher FASB
-Name Accounting Standards Codification
-Topic 280
-SubTopic 10
-Section 50
-Paragraph 10
-URI http://asc.fasb.org/extlink&oid=6534315&loc=d3e8538-108599

Reference 12: http://www.xbrl.org/2003/role/presentationRef
-Publisher FASB
-Name Accounting Standards Codification
-Topic 280
-SubTopic 10
-Section 50
-Paragraph 29
-URI http://asc.fasb.org/extlink&oid=6534315&loc=d3e8864-108599

Reference 13: http://www.xbrl.org/2003/role/presentationRef
-Publisher FASB
-Name Accounting Standards Codification
-Topic 280
-SubTopic 10
-Section 50
-Paragraph 31
-URI http://asc.fasb.org/extlink&oid=6534315&loc=d3e8924-108599

Reference 14: http://www.xbrl.org/2003/role/presentationRef
-Publisher FASB
-Name Accounting Standards Codification
-Topic 280
-SubTopic 10
-Section 50
-Paragraph 30
-URI http://asc.fasb.org/extlink&oid=6534315&loc=d3e8906-108599

+ Details

Commitments and Contingencies

9 Months Ended

Sep. 30, 2015

Commitments And Contingencies Disclosure [Abstract]

Commitments and Contingencies

10.	Commitments and Contingencies

Legal Proceedings

ISYSTEMS v. Spark Networks, Inc. et al.

On July 11, 2008, ISYSTEMS initiated a lawsuit against Spark Networks, Inc. and Spark Networks Limited (collectively, “Spark Networks”) and other parties in the United States District Court, Northern District of Texas, Dallas Division. The lawsuit was filed in response to an arbitration award ordering the transfer of the domain name, JDATE.NET, to Spark Networks Limited from ISYSTEMS. Spark Networks was apprised of the lawsuit after ISYSTEMS unsuccessfully attempted to utilize the filing of the lawsuit to prevent the domain transfer to Spark Networks Limited. On September 4, 2012, Spark Networks filed its Answer to the Complaint. On January 22, 2014, the Court entered an Amended Scheduling Order continuing the commencement of the trial to July 21, 2014. The matter was tried before the Honorable David C. Godbey from July 21-22, 2014. On September 19, 2014, the Court issued a Final Judgment in favor of Spark Networks and that ISystems takes nothing by its claims which were dismissed with prejudice. On October 17, 2014, ISystems filed a Motion for a New Trial. By written order dated January 13, 2015, the Court denied ISystems’ Motion for a New Trial. On February 12, 2015, ISystems filed a Notice of Appeal for the Court’s Judgment in favor of Spark Networks and other rulings by the Court. On April 23, 2015, ISystems filed a motion to reopen the appeal which was granted the same day. On July 22, 2015, United States Court of Appeals for the Fifth Circuit Clerk entered an order dismissing ISystems' appeal due to ISystems’ failure to timely file its opening brief and record excerpts.

California Unruh Act Litigation- Werner, et al. v. Spark Networks, Inc. and Spark Networks USA, LLC and Wright, et al. v. Spark Networks, Inc., Spark Networks USA, LLC, et al.

On July 19, 2013, Aaron Werner, on behalf of himself and all other similarly situated individuals, filed a putative Class Action Complaint (the “Werner Complaint”) in the Superior Court for the State of California, County of Los Angeles against Spark Networks, Inc. and Spark Networks USA, LLC (collectively “Spark Networks”). The Werner Complaint alleges that Spark Networks’ website ChristianMingle.com violates California’s Unruh Civil Rights Act (the “Unruh Act”) by allegedly discriminating on the basis of sexual orientation. The Werner Complaint requests the following relief: an injunction, statutory, general, compensatory, treble and punitive damages, attorneys’ fees and costs, pre-judgment interest, and an award for any other relief the Court deems just and appropriate. On December 23, 2013, Richard Wright, on behalf of himself and all other similarly situated individuals, filed a putative Class Action Complaint (the “Wright Complaint”) in the Superior Court for the State of California, County of San Francisco against Spark Networks, Inc. The Wright Complaint alleges that Spark Networks, Inc.’s commercial dating services including ChristianMingle.com, LDSSingles.com, CatholicMingle.com, BlackSingles.com, MilitarySinglesConnection.com and AdventistSinglesConnection.com violate the Unruh Act by allegedly intentionally and arbitrarily discriminating on the basis of sexual orientation. The Wright Complaint requests the following relief: a declaratory judgment, a preliminary and permanent injunction, statutory penalties, reasonable attorneys’ fees and costs, pre-judgment interest, and an award for any other relief the Court deems just and appropriate. A motion filed by Spark Networks to coordinate the two matters in Los Angeles Superior Court was granted, and the parties have resumed discovery in preparation for filing cross-motions for summary judgment, which are set to be heard on May 9, 2016.

Israeli Consumer Actions Ben-Jacob vs. Spark Networks (Israel) Ltd., Gever vs. Spark Networks (Israel) Ltd. and Korland vs. Spark Networks (Israel) Ltd.

Three class action law suits have been filed in Israel alleging inter alia violations of the Israel Consumer Protection Law of 1981. Spark Networks (Israel) Ltd. (“Spark Israel”) was served with a Statement of Claim and a Motion to Certify it as a Class Action in the Ben-Jacob action on January 14, 2014. The plaintiff alleges that Spark Israel refused to cancel her subscription and provide a refund for unused periods and claims that such a refusal is in violation of the Consumer Protection Law. Spark Israel was served with a Statement of Claim and a motion to Certify it as a Class Action in the Gever action on January 21, 2014. The plaintiff alleges that Spark Israel renewed his one month subscription without receiving his positive agreement in advance and claims that such renewal is prohibited under the Consumer Protection Law and its regulations. Spark Israel was served with a Statement of Claim and a Motion to Certify it as a Class Action in the Korland action on February 12, 2014. The plaintiff alleges that Spark Israel refused to give her a full refund and charged her the price of a one month subscription to the JDate website in violation of the Consumer Protection Law. In each of these three cases, the plaintiff is seeking personal damages and damages on behalf of a defined group. On May 8, 2014, the Court granted Spark Israel’s motion to consolidate all three cases. All three cases are now consolidated and will be litigated jointly. Spark Israel’s combined response to these motions to certify the class actions was filed November 1, 2014, and the plaintiffs responded to the combined response. The parties had a hearing before the judge on December 24, 2014. Following the hearing the judge ordered that the pleadings filed by the parties be transferred to the Israel Consumer Council (“ICC”) so that the ICC can provide its position as to the parties’ allegations within 90 days. The ICC issued its opinion on April 1, 2015. Following the filing of the ICC opinion, the parties filed briefs addressing the ICC opinion. A hearing regarding the motions to certify the class actions is set for November 4, 2015.

Spark Networks USA, LLC v. Smooch Labs Inc.

Spark Networks USA, LLC (“Spark Networks”) filed a complaint against Smooch Labs Inc. (“Smooch Labs”) on November 12, 2014 in the United States District Court for the Southern District of New York. The complaint pertains to Smooch Labs’ infringement of Spark Networks’ U.S. Patent No. 5,950,200 (“the ’200 patent”) and Spark Networks’ J-Family of trademarks through the development, use, and license of Smooch Labs’ mobile application “Jswipe”, as well as other violations of Spark Networks’ rights under Federal law and New York State law. On February 13, 2015, Smooch Labs filed its Amended Answer, Affirmative Defense and Counterclaims. Spark Networks filed its Answer to Smooch Labs' Counterclaims on March 2, 2015. After conducting discovery for several months, and meeting with a neutral mediator, the parties mutually agreed to drop their respective cases. On October 14, 2015, Spark Networks announced the acquisition of Smooch Labs as a subsidiary, where the Smooch Lab founders will play an active role in managing the JSwipe product and expanding Spark Networks’ mobile dating capabilities. On October 16, 2015, the District Court entered the parties’ joint Stipulation of Dismissal of all claims and counterclaims, without attorneys’ fees or costs to either party.

Please refer to the Company’s 2014 Annual Report for the year ended December 31, 2014 and Forms 10-Q for the three months ended March 31, 2015 and June 30, 2015 for a description of additional litigation and claims.

We intend to defend vigorously against each of the above lawsuits. At this time, management does not believe the above matters, either individually or in the aggregate, will have a material adverse effect on the Company’s results of operations or financial condition and believes the recorded legal accruals as of September 30, 2015 are adequate in light of the probable and estimable liabilities. However, no assurance can be given that these matters will be resolved in our favor.

We have additional existing legal claims and may encounter future legal claims in the normal course of business. In our opinion, the resolutions of the existing legal claims are not expected to have a material impact on our financial position or results of operations.

Operating Leases

The Company leases its office and data center facilities under operating lease agreements, providing for annual minimum lease payments as follows:


Year Ending December 31 (amounts in thousands)
Remainder of 2015	$	207
2016		841
2017		786
2018		562
2019 and thereafter		—
Total	$	2,396

Income Taxes

9 Months Ended

Sep. 30, 2015

Income Tax Disclosure [Abstract]

Income Taxes

11.	Income Taxes

During the three months ended September 30, 2015, the Company recorded a provision for income tax of $13,000, which consists of $25,000 of deferred tax related to an increase in the deferred tax liability associated with tax deductible amortization of goodwill and other indefinite lived intangibles, a $31,000 decrease to foreign and state current taxes payable and $19,000 related to interest accrued on unrecognized tax benefits. The Company recorded a provision for income tax of $266,000 for the nine months ended September 30, 2015, which consists of $105,000 of deferred tax related to an increase in the deferred tax liability associated with tax deductible amortization of goodwill and other indefinite lived intangibles, $105,000 of foreign and state current taxes payable and $56,000 related to interest accrued on unrecognized tax benefits.

The Company’s year-to-date September 30, 2015 and 2014 effective tax rate was less than the U.S. statutory rate of 34% primarily due to the utilization of losses not previously benefitted due to the Company’s valuation allowance.

Related Party Transactions

9 Months Ended

Sep. 30, 2015

Related Party Transactions

12.	Related Party Transactions

There were no related party transactions during the nine months ended September 30, 2015.

During the three months ended September 30, 2014, the Company reimbursed Osmium Partners, LLC and 402 Capital, LLC and paid certain of its vendors for costs incurred in connection with a proxy contest to take control over the Company’s Board of Directors. For the nine months ended September 30, 2014, the Company paid for approximately $509,000 of the costs incurred by Osmium Partners, LLC and 402 Capital, LLC.

- Definition

The entire disclosure for related party transactions. Examples of related party transactions include transactions between (a) a parent company and its subsidiary; (b) subsidiaries of a common parent; (c) and entity and its principal owners; and (d) affiliates.

+ References + Details

Subsequent Events

9 Months Ended

Sep. 30, 2015

Subsequent Events [Abstract]

Subsequent Events

13.	Subsequent Events

On October 14, 2015, the Company completed the acquisition of all the outstanding shares of Smooch Labs, an unrelated third party and owner of dating app, JSwipe. The Company believes that this acquisition will help expand the Company’s Jewish-focused dating platforms with an additional mobile application. The purchase consideration for the acquisition of $7.0 million paid at closing included a combination of $6.0 million in cash on hand and approximately 315,000 shares of the Company’s common stock valued at $1.0 million based on the Company’s common stock price as reported on the NYSE on the acquisition date. In addition to the amounts paid at closing, the purchase consideration also included contingent earnout consideration of up to a maximum of an additional $10.0 million to be paid with a combination of one-third cash and two-thirds stock based upon Smooch Lab’s performance against certain agreed-upon operating objectives for the periods ending December 31, 2016, and December 31, 2017.

Management is currently evaluating the allocation of the purchase price to the acquired assets and assumed liabilities. It is not practicable to disclose the preliminary purchase price allocation or the unaudited combined financial information given the short period of time between the acquisition and the issuance of these unaudited interim consolidated financial statements.

The Company and Summary of Significant Accounting Policies (Policies)	9 Months Ended
	Sep. 30, 2015
Accounting Policies [Abstract]
Basis of Presentation	Basis of Presentation The accompanying consolidated financial statements include the accounts of the parent company and all of its majority-owned subsidiaries. All significant intercompany transactions and balances have been eliminated in consolidation. The accompanying unaudited consolidated interim financial statements reflect all adjustments, consisting of only normal recurring items, which, in the opinion of management, are necessary for a fair presentation of the results of operations for the periods shown. The results of operations for such periods are not necessarily indicative of the results expected for the full year or for any future periods. The consolidated financial statements in this Form 10-Q should be read in conjunction with the consolidated financial statements and related notes included in the Company’s Annual Report on Form 10-K for the year ended December 31, 2014 (the “2014 Annual Report”). Certain information and footnote disclosures normally included in financial statements prepared in accordance with generally accepted accounting principles in the United States (“GAAP”) have been condensed or omitted pursuant to such rules and regulations. The consolidated balance sheet as of December 31, 2014 was derived from the Company’s audited consolidated financial statements for the year ended December 31, 2014.
Use of Estimates	Use of Estimates The preparation of consolidated financial statements in conformity with GAAP requires management to make estimates, judgments and assumptions that affect the reported amounts of assets, liabilities, revenues and expenses and related disclosure of contingent assets and liabilities. On an ongoing basis, management evaluates its estimates, including those related to revenue recognition, cost of revenue, prepaid advertising, website and software development costs, goodwill, intangible and other long-lived assets, legal contingencies, income taxes and stock-based compensation. In addition, management uses assumptions when employing the Black-Scholes option valuation model to calculate the fair value of granted stock-based awards. Management bases its estimates of the carrying value of certain assets and liabilities on historical experience and on various other assumptions that it believes to be reasonable under the circumstances, when these carrying values are not readily available from other sources. Actual results may differ from these estimates.

Net Loss Per Share (Tables)

9 Months Ended

Sep. 30, 2015

Earnings Per Share [Abstract]

Net Loss Per Share of Both Basic and Diluted

Basic net loss per share is computed by dividing net loss available to common stockholders by the weighted average number of shares of common stock outstanding.

	Three Months Ended September 30,						Nine Months Ended September 30,
(in thousands, except per share data)	2015			2014			2015			2014
Net Loss Per Share of Common Stock – Basic and Diluted
Net loss applicable to common stock	$	(822	)	$	(969	)	$	(194	)	$	(4,996	)
Weighted average shares outstanding – basic and diluted		25,188			24,035			24,991			23,936
Net Loss Per Share – Basic and Diluted	$	(0.03	)	$	(0.04	)	$	(0.01	)	$	(0.21	)

Revolving Credit Facility (Tables)

9 Months Ended

Sep. 30, 2015

Debt Disclosure [Abstract]

Minimum Consolidated Adjusted EBITDA and Minimum Contribution

Quarter ending	Minimum Consolidated Adjusted EBITDA		Minimum Contribution
September 30, 2015	$	(0.5) million	$	15.5 million
December 31, 2015	$	(2.0) million	$	15.0 million

Stock-Based Compensation (Tables)

9 Months Ended

Sep. 30, 2015

Equity [Abstract]

Stock Options Activity

The following table describes option activity for the three months ended March 31, 2015, June 30, 2015, and September 30, 2015:

	Number of Shares		Weighted Average Exercise Price per Share
	(in thousands)
Outstanding at December 31, 2014		2,146	$	4.30
Granted		—		—
Exercised		(434)		3.08
Forfeited		(44)		7.31
Expired		(13)		7.64
Outstanding at March 31, 2015		1,655	$	4.51
Granted		1,908		8.37
Exercised		(448)		3.10
Forfeited		(28)		7.24
Expired		(18)		7.64
Outstanding at June 30, 2015		3,069	$	7.08
Granted		—		—
Exercised		(146)		3.00
Forfeited		(86)		8.00
Expired		(281)		6.86
Outstanding at September 30, 2015		2,556	$	7.30

Schedule of Trigger Price Options Granted

The following table details the trigger price options granted during the nine month period ended September 30, 2015:


	Options Granted	Trigger Price		Exercise Price
Tranche 1	318,000	$	6.00	$	5.25
Tranche 2	636,000	$	10.00	$	7.50
Tranche 3	954,000	$	13.50	$	10.00

Accumulated Other Comprehensive Income (Tables)

9 Months Ended

Sep. 30, 2015

Equity [Abstract]

Summary of Changes in Accumulated Balances of Other Comprehensive Income

The following table summarizes the changes in accumulated balances of other comprehensive income for the three and nine months ended September 30, 2015.

	Foreign Currency Translation
	(in thousands, net of $0 tax)
Balance at December 31, 2014	$	759
Other comprehensive income (expense) before reclassifications		2
Amounts reclassified from accumulated other comprehensive income		—
Balance at March 31, 2015	$	761
Other comprehensive income (expense) before reclassifications		(7	)
Amounts reclassified from accumulated other comprehensive income		—
Balance at June 30, 2015	$	754
Other comprehensive income (expense) before reclassifications		0
Amounts reclassified from accumulated other comprehensive income		—
Balance at September 30, 2015	$	754

Segment Information (Tables)

9 Months Ended

Sep. 30, 2015

Segment Reporting [Abstract]

Summary of Segment Information

	Three Months Ended September 30,						Nine Months Ended September 30,
(in thousands)	2015			2014			2015		2014
Revenue
Jewish Networks	$	4,613		$	5,724		$	14,639	$	17,743
Christian Networks		6,581			8,672			21,294		27,660
Other Networks		466			533			1,423		1,713
Offline & Other Businesses		22			79			74		265
Total revenue	$	11,682		$	15,008		$	37,430	$	47,381

Direct marketing expenses
Jewish Networks	$	619		$	628		$	1,963	$	2,436
Christian Networks		3,664			5,293			13,452		22,470
Other Networks		141			107			389		364
Offline & Other Businesses		—			19			—		72
Total direct marketing expenses	$	4,424		$	6,047		$	15,804	$	25,342

Unallocated operating expenses		7,876			9,302			21,475		26,205
Operating Income (Loss)	$	(618	)	$	(341	)	$	151	$	(4,166	)

Commitments and Contingencies (Tables)

9 Months Ended

Sep. 30, 2015

Commitments And Contingencies Disclosure [Abstract]

Summary of Leases of Office and Data Center Facilities under Operating Lease Agreements

The Company leases its office and data center facilities under operating lease agreements, providing for annual minimum lease payments as follows:


Year Ending December 31 (amounts in thousands)
Remainder of 2015	$	207
2016		841
2017		786
2018		562
2019 and thereafter		—
Total	$	2,396

Net Loss Per Share (Details) - USD ($) $ / shares in Units, shares in Thousands, $ in Thousands	3 Months Ended		9 Months Ended
	Sep. 30, 2015	Sep. 30, 2014	Sep. 30, 2015	Sep. 30, 2014
Net Loss Per Share of Common Stock – Basic and Diluted
Net loss applicable to common stock	$ (822)	$ (969)	$ (194)	$ (4,996)
Weighted average shares outstanding – basic and diluted	25,188	24,035	24,991	23,936
Net loss per share—basic and diluted	$ (0.03)	$ (0.04)	$ (0.01)	$ (0.21)

- Definition

The portion of profit or loss for the period, net of income taxes, which is attributable to the parent.

+ References + Details

Revolving Credit Facility (Details Textual) - Revolving Credit Facility - USD ($)	3 Months Ended		9 Months Ended		12 Months Ended
	Sep. 30, 2015	Sep. 30, 2014	Sep. 30, 2015	Sep. 30, 2014	Dec. 31, 2015
Line Of Credit Facility [Line Items]
Outstanding amounts under credit agreement	$ 0		$ 0
Amortization of Financing Costs	5,000	$ 3,000	11,000	$ 9,000
Unamortized deferred finance cost	14,000		14,000
Credit Agreement
Line Of Credit Facility [Line Items]
Revolving credit facility	$ 15,000,000		$ 15,000,000
Credit facility initiation date			Feb. 14, 2008
Maturity date of credit agreement			Mar. 14, 2016
Commitment fee per annum			0.25%
Base rate loan, Interest Rate Description			The per annum interest rate under the Credit Agreement is LIBOR, or the Eurodollar Rate (as defined in the Credit Agreement) under certain circumstances, plus 2.00%. In the event the Company elects to borrow under a base rate loan, the interest rate is increased to the prime rate plus 1.00%.
Credit Agreement \| LIBOR Or Eurodollar Rate
Line Of Credit Facility [Line Items]
Line of credit, percentage points added to the reference rate			2.00%
Credit Agreement \| Prime Rate
Line Of Credit Facility [Line Items]
Line of credit, percentage points added to the reference rate			1.00%
Credit Facility Agreement Ninth Amendment \| Scenario, Forecast \| Maximum
Line Of Credit Facility [Line Items]
Limitations on capital expenditures					$ 3,500,000

Revolving Credit Facility - Minimum Consolidated Adjusted EBITDA and Minimum Contribution (Details) - Credit Facility Agreement Ninth Amendment - USD ($)	6 Months Ended		12 Months Ended
	Dec. 31, 2015	Sep. 30, 2015	Dec. 31, 2015	Sep. 30, 2015
Line Of Credit Facility [Line Items]
Minimum Consolidated Adjusted EBITDA		$ (500,000)
Minimum Contribution				$ 15,500,000
Scenario, Forecast
Line Of Credit Facility [Line Items]
Minimum Consolidated Adjusted EBITDA	$ (2,000,000)
Minimum Contribution			$ 15,000,000

Impairment of Long-lived Assets (Details Textual) - USD ($) $ in Thousands	3 Months Ended		9 Months Ended
	Sep. 30, 2015	Sep. 30, 2014	Sep. 30, 2015	Sep. 30, 2014
Goodwill And Intangible Assets Disclosure [Abstract]
Impairment of long-lived assets	$ 26	$ 103	$ 132	$ 103

Stockholders' Equity (Details Textual) - Common Stock - USD ($)	9 Months Ended	22 Months Ended
	Sep. 30, 2015	Sep. 30, 2015	Dec. 12, 2013
Class Of Stock [Line Items]
Repurchased and retired common stock, shares	288,284	559,401
Repurchased and retired common stock, value	$ 885,000	$ 2,400,000
Maximum
Class Of Stock [Line Items]
Authorized to repurchase of common stock			$ 5,000,000

Stock-Based Compensation (Details Textual) - USD ($)		3 Months Ended	9 Months Ended		12 Months Ended
Stock-Based Compensation (Details Textual) - USD ($)	Jul. 09, 2007	Sep. 30, 2015	Sep. 30, 2015	Sep. 30, 2014	Dec. 31, 2014
Share Based Compensation Arrangement By Share Based Payment Award [Line Items]
Exercise Price for stock options			The exercise price for stock options will be determined by the Compensation Committee in its discretion, but may not be less than 100% of the closing sale price of one share of the Company’s common stock on the NYSE MKT (or any other applicable exchange on which the stock is listed) on the date when the stock option is granted. Additionally, in the case of incentive stock options granted to a holder of more than 10% of the total combined voting power of all classes of stock of the Company on the date of grant, the exercise price may not be less than 110% of the closing sale price of one share of common stock on the date the stock option is granted.
Unrecognized compensation cost		$ 708,000	$ 708,000
Unrecognized compensation cost, weighted-average period of recognition			2 years
Stock-based compensation			$ 512,000	$ 613,000
Discount on purchase of additional common shares			50.00%
Redemption price per right			$ 0.001
Minimum
Share Based Compensation Arrangement By Share Based Payment Award [Line Items]
Percentage of closing sale price on grant date			100.00%
Percentage of combined voting power			10.00%
Percentage of market closing sale price			110.00%
Employee Stock Option Plans
Share Based Compensation Arrangement By Share Based Payment Award [Line Items]
Compensation arrangement terms of award, description			On July 9, 2007, pursuant to the completion of the Scheme of Arrangement, the Company adopted the 2007 Omnibus Incentive Plan (the “2007 Plan”). Pursuant to the 2007 Plan’s “evergreen” provision, on the first day of each calendar year beginning in 2009, the number of shares reserved and available for issuance will be increased by an amount equal to the lesser of (i) 2,000,000 shares, (ii) four percent (4%) of the number of outstanding shares of Company common stock on the last day of the immediately preceding fiscal year or (iii) an amount determined by the Board of Directors. As of September 30, 2015, the 2007 Plan had 5.9 million shares authorized for issuance.
Annual other increase in number of shares reserved and available for issuance	2,000,000
Percentage of number of shares outstanding	4.00%
Number of shares authorized for issuance		5,900,000	5,900,000
Trigger Price Options
Share Based Compensation Arrangement By Share Based Payment Award [Line Items]
Share based compensation arrangement options grants			1,908,000
Share based compensation arrangement options grants, aggregate fair value			$ 434,000
Option vesting, threshold trading business days			20 days
Expiration date			Dec. 31, 2017
Stock-based compensation		$ 64,000	$ 121,000
Compensation expense is recognized requisite service period			2 years
Unrecognized compensation cost		304,000	$ 304,000
Unrecognized compensation cost, recognition date			Jun. 30, 2017
Restricted Stock
Share Based Compensation Arrangement By Share Based Payment Award [Line Items]
Stock-based compensation		$ 27,000	$ 176,000
Compensation expense is recognized requisite service period			2 years
Performance-based restricted stock			25,000		125,000
Performance-based restricted stock awards/units		0	0
Unrecognized compensation cost		$ 67,000	$ 67,000
Unrecognized compensation cost, recognition date			Dec. 31, 2016
Restricted Stock Units
Share Based Compensation Arrangement By Share Based Payment Award [Line Items]
Stock-based compensation		44,000	$ 97,000
Compensation expense is recognized requisite service period			2 years
Unrecognized compensation cost		$ 202,000	$ 202,000
Unrecognized compensation cost, recognition date			Dec. 31, 2016
Performance-based restricted stock awards/units			76,000
Restricted Stock Units \| Maximum
Share Based Compensation Arrangement By Share Based Payment Award [Line Items]
Performance-based restricted stock awards/units			240,000

Stock-Based Compensation (Details) - $ / shares shares in Thousands	3 Months Ended			9 Months Ended
	Sep. 30, 2015	Jun. 30, 2015	Mar. 31, 2015	Sep. 30, 2015
Stock Options Activity, Weighted Average Price per Share
Beginning Balance, Weighted Average Exercise Price per Share	$ 7.08	$ 4.51	$ 4.30	$ 4.30
Granted, Weighted Average Exercise Price per Share		8.37
Exercised, Weighted Average Exercise Price per Share	3.00	3.10	3.08
Forfeited, Weighted Average Exercise Price per Share	8.00	7.24	7.31
Expired, Weighted Average Exercise Price per Share	6.86	7.64	7.64
Ending Balance, Weighted Average Exercise Price per Share	$ 7.30	$ 7.08	$ 4.51	$ 7.30
Stock Options Activity, Number of Shares
Beginning Balance, Number of Shares	3,069	1,655	2,146	2,146
Granted, Number of Shares		1,908
Exercised, Number of Shares	(146)	(448)	(434)
Forfeited, Number of Shares	(86)	(28)	(44)
Expired, Number of Shares	(281)	(18)	(13)
Ending Balance, Number of Shares	2,556	3,069	1,655	2,556

Stock-Based Compensation (Details 1) - $ / shares	3 Months Ended	9 Months Ended
Stock-Based Compensation (Details 1) - $ / shares	Jun. 30, 2015	Sep. 30, 2015
Share Based Compensation Arrangement By Share Based Payment Award [Line Items]
Exercise Price	$ 8.37
Trigger Price Options
Share Based Compensation Arrangement By Share Based Payment Award [Line Items]
Options Granted, shares		1,908,000
Tranche 1 \| Trigger Price Options
Share Based Compensation Arrangement By Share Based Payment Award [Line Items]
Options Granted, shares		318,000
Trigger Price		$ 6.00
Exercise Price		$ 5.25
Tranche 2 \| Trigger Price Options
Share Based Compensation Arrangement By Share Based Payment Award [Line Items]
Options Granted, shares		636,000
Trigger Price		$ 10.00
Exercise Price		$ 7.50
Tranche 3 \| Trigger Price Options
Share Based Compensation Arrangement By Share Based Payment Award [Line Items]
Options Granted, shares		954,000
Trigger Price		$ 13.50
Exercise Price		$ 10.00

Accumulated Other Comprehensive Income (Details) - USD ($)	3 Months Ended			9 Months Ended
	Sep. 30, 2015	Jun. 30, 2015	Mar. 31, 2015	Sep. 30, 2015
Accumulated Other Comprehensive Income Loss [Line Items]
Beginning Balance			$ 759,000	$ 759,000
Amounts reclassified from accumulated other comprehensive income	$ 0			0
Ending Balance	754,000			754,000
Foreign Currency Translation
Accumulated Other Comprehensive Income Loss [Line Items]
Beginning Balance	754,000	$ 761,000	759,000	759,000
Other comprehensive income (expense) before reclassifications	0	(7,000)	2,000
Ending Balance	$ 754,000	$ 754,000	$ 761,000	$ 754,000

- Definition

Accumulated change in equity from transactions and other events and circumstances from non-owner sources, net of tax effect, at period end. Excludes Net Income (Loss), and accumulated changes in equity from transactions resulting from investments by owners and distributions to owners. Includes foreign currency translation items, certain pension adjustments, unrealized gains and losses on certain investments in debt and equity securities, other than temporary impairment (OTTI) losses related to factors other than credit losses on available-for-sale and held-to-maturity debt securities that an entity does not intend to sell and it is not more likely than not that the entity will be required to sell before recovery of the amortized cost basis, as well as changes in the fair value of derivatives related to the effective portion of a designated cash flow hedge.

+ References + Details