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Document and Entity Information
 6 Months Ended
Jun. 30, 2013
 Aug. 08, 2013
Document and Entity Information [Abstract]
Entity Registrant Name SPARK NETWORKS INC
Entity Central Index Key 0001314475
Document Type 10-Q
Document Period End Date Jun 30, 2013
Amendment Flag false
Document Fiscal Year Focus 2013
Document Fiscal Period Focus Q2
Current Fiscal Year End Date --12-31
Entity Filer Category Smaller Reporting Company
Entity Common Stock, Shares Outstanding 23,755,253
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Consolidated Balance Sheets (USD $)
In Thousands, unless otherwise specified		 Jun. 30, 2013
 Dec. 31, 2012
Current assets:
Cash and cash equivalents $ 18,407 $ 10,458
Restricted cash 1,363 1,232
Accounts receivable 1,330 1,510
Deferred tax asset, net - current 10 8
Prepaid expenses and other 1,455 861
Total current assets 22,565 14,069
Property and equipment, net 3,623 3,133
Goodwill 9,029 8,861
Intangible assets, net 2,147 2,143
Deferred tax asset, net - non-current 4 5
Other assets 328 153
Total assets 37,696 28,364
Current liabilities:
Accounts payable 1,263 1,093
Accrued liabilities 4,512 5,339
Deferred revenue 9,024 8,128
Deferred tax liability - current 257 257
Total current liabilities 15,056 14,817
Deferred tax liability - non-current 1,582 1,413
Other liabilities 1,438 588
Total liabilities 18,076 16,818
Commitments and contingencies (Note 9)      
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 23,574,416 and 20,945,364 shares of Common Stock issued and outstanding at June 30, 2013 and December 31, 2012, respectively: 24 21
Additional paid-in-capital 69,122 54,857
Accumulated other comprehensive income 734 712
Accumulated deficit (50,260) (44,044)
Total stockholders' equity 19,620 11,546
Total liabilities and stockholders' equity $ 37,696 $ 28,364
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Consolidated Balance Sheets (Parenthetical) (USD $)
 Jun. 30, 2013
 Dec. 31, 2012
Common stock, par value $ 0.001 $ 0.001
Common stock, shares authorized 100,000,000 100,000,000
Common stock, shares issued 23,574,416 20,945,364
Common stock, shares outstanding 23,574,416 20,945,364
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
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Consolidated Statements of Operations and Comprehensive Loss (Unaudited) (USD $)
Share data in Thousands, except Per Share data, unless otherwise specified		 3 Months Ended 6 Months Ended
Jun. 30, 2013
 Jun. 30, 2012
 Jun. 30, 2013
 Jun. 30, 2012
Consolidated Statements of Operations and Comprehensive Loss [Abstract]
Revenue $ 17,581,000 $ 15,046,000 $ 34,844,000 $ 29,601,000
Cost and expenses:
Cost of revenue (exclusive of depreciation shown separately below) 14,770,000 10,976,000 28,427,000 22,824,000
Sales and marketing 1,287,000 983,000 2,549,000 1,956,000
Customer service 688,000 622,000 1,391,000 1,235,000
Technical operations 267,000 355,000 599,000 705,000
Development 793,000 844,000 1,584,000 1,690,000
General and administrative 2,274,000 2,052,000 5,208,000 4,290,000
Depreciation 472,000 413,000 925,000 816,000
Amortization of intangible assets          13,000
Impairment of long-lived assets 265,000    265,000   
Total cost and expenses 20,816,000 16,245,000 40,948,000 33,529,000
Operating loss (3,235,000) (1,199,000) (6,104,000) (3,928,000)
Interest (income) expense and other, net (43,000) 113,000 (96,000) (14,000)
Loss before income taxes (3,192,000) (1,312,000) (6,008,000) (3,914,000)
Provision (benefit) for income taxes 84,000 (311,000) 208,000 (1,200,000)
Net loss (3,276,000) (1,001,000) (6,216,000) (2,714,000)
Net loss per share - basic and diluted $ (0.15) $ (0.05) $ (0.29) $ (0.13)
Weighted average shares outstanding - basic and diluted 22,485 20,625 21,745 20,611
Comprehensive loss $ (3,274,000) $ (1,048,000) $ (6,194,000) $ (2,723,000)
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Consolidated Statements of Operations and Comprehensive Loss (Unaudited) (Parenthetical) (USD $)
In Thousands, unless otherwise specified		 3 Months Ended 6 Months Ended
Jun. 30, 2013
 Jun. 30, 2012
 Jun. 30, 2013
 Jun. 30, 2012
Stock-based compensation:
Stock-based compensation $ 382 $ 403
Cost of revenue
Stock-based compensation:
Stock-based compensation    2    4
Sales and marketing
Stock-based compensation:
Stock-based compensation 37 18 71 38
Customer service
Stock-based compensation:
Stock-based compensation    1    1
Technical operations
Stock-based compensation:
Stock-based compensation 1 30 2 60
Development
Stock-based compensation:
Stock-based compensation 3 10 7 21
General and administrative
Stock-based compensation:
Stock-based compensation $ 153 $ 138 $ 302 $ 279
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Consolidated Statements of Cash Flows (Unaudited) (USD $)
In Thousands, unless otherwise specified		 6 Months Ended
Jun. 30, 2013
 Jun. 30, 2012
Cash flows from operating activities:
Net loss $ (6,216) $ (2,714)
Adjustments to reconcile net loss to cash used in operating activities:
Deferred taxes 168 (1,268)
Depreciation and amortization 925 829
Impairment of long-lived assets 265   
Stock-based compensation 382 403
Foreign exchange (gain) loss on intercompany loan (116) 119
Income received from legal judgment    (151)
Changes in operating assets and liabilities:
Restricted cash (131) (170)
Accounts receivable 180 31
Prepaid expenses and other assets (443) 290
Accounts payable and accrued liabilities (791) (423)
Deferred revenue 896 1,105
Other 90 15
Net cash used in operating activities (4,791) (1,934)
Cash flows from investing activities:
Purchases of property and equipment (1,176) (1,201)
Purchases of intangible assets (3) (26)
Sale of property and other assets    520
Net cash used in investing activities (1,179) (707)
Cash flows from financing activities:
Net proceeds from exercise of stock options 1,661 240
Net proceeds from issuance of common stock 12,258   
Net cash provided by financing activities 13,919 240
Net increase (decrease) in cash 7,949 (2,401)
Cash and cash equivalents at beginning of period 10,458 15,106
Cash and cash equivalents at end of period 18,407 12,705
Supplemental disclosure of non-cash investing and activities:
Operating lease incentives $ 751   
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The Company and Summary of Significant Accounting Policies
 6 Months Ended
Jun. 30, 2013
The Company and Summary of Significant Accounting Policies [Abstract]
The Company and Summary of Significant Accounting Policies
1. The Company and Summary of Significant Accounting Policies

The Company

The common stock of Spark Networks, Inc., a Delaware corporation (the “Company”), is traded on the NYSE MKT.

The Company is a leading global media business, focused on creating iconic niche-focused brands that build and strengthen the communities they serve. Core properties are primarily online dating websites accessible via desktop and mobile devices that enable adults to meet, participate in a community and form relationships with like-minded individuals by utilizing many features on its websites, such as detailed profiles, onsite email centers, real-time chat rooms, instant messaging services, suggested matches, interactive games and advanced searching tools. Today, the Company’s largest and most recognizable websites are ChristianMingle.com and JDate.com. The Company also operates several international websites and maintains physical operations in both the United States and Israel.

Membership on the online dating websites is free and allows registered members to create their own detailed profiles and access searchable databases of member profiles. On the majority of the websites, the ability to initiate most communication with other members requires the payment of monthly subscription fees, which represents the primary source of revenue. The Company offers a variety of subscription plans based upon subscription length and features. Subscriptions renew automatically until subscribers terminate them. The Company also receives incremental revenue from online advertising sales and offline events.

The Company has evaluated all subsequent events through the date the consolidated financial statements were issued.

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 preparation of consolidated financial statements in conformity with generally accepted accounting principles in the United States (“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, the Company 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, accounting for business combinations, legal contingencies, income taxes and stock-based compensation. In addition, the Company uses assumptions when employing the Black-Scholes option valuation model to calculate the fair value of granted stock-based awards. The Company bases its estimates of the carrying value of certain assets and liabilities on historical experience and on various other assumptions that are believed to be reasonable under the circumstances, when these carrying values are not readily available from other sources. Actual results may differ from these estimates.

The consolidated financial statements on 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, 2012. Certain information and footnote disclosures normally included in financial statements prepared in accordance with GAAP have been condensed or omitted pursuant to such rules and regulations. The consolidated balance sheet as of December 31, 2012 was derived from the Company’s audited consolidated financial statements for the year ended December 31, 2012.

 
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Adoption of New Accounting Principles
 6 Months Ended
Jun. 30, 2013
Adoption of New Accounting Principles [Abstract]
Adoption of New Accounting Principles
2. Adoption of New Accounting Principles

Effective January 1, 2013, the Company adopted Accounting Standards Update (“ASU”) No. 2013-02, “Reporting of Amounts Reclassified Out of Accumulated Other Comprehensive Income”. The adoption of ASU 2013-02 concerns presentation and disclosure only, and did not have an impact on the Company’s consolidated financial position or results of operations.

 
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Net Loss Per Share
 6 Months Ended
Jun. 30, 2013
Net Loss Per Share [Abstract]
Net Loss Per Share
3. Net Loss Per Share

The Company calculates and presents the net loss per share on both a basic and diluted basis. 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.

 

                                 
    For the Three Months Ended
June 30,		     For the Six Months Ended
June 30,		  
    2013     2012     2013     2012  
    (in thousands except per share data)  

Net Loss Per Share of Common Stock – Basic and Diluted

                                

Net loss applicable to common stock

   $ (3,276 )    $ (1,001 )    $ (6,216 )    $ (2,714 ) 

Weighted average shares outstanding - basic and diluted

     22,485       20,625       21,745       20,611  
   

 

 

    

 

 

    

 

 

    

 

 

  

Net Loss Per Share – Basic and Diluted

   $ (0.15 )    $ (0.05 )    $ (0.29 )    $ (0.13 ) 
   

 

 

    

 

 

    

 

 

    

 

 

  

All stock options for both periods have been excluded from the diluted weighted average shares outstanding calculation because they would have been anti-dilutive.

 
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Revolving Credit Facility
 6 Months Ended
Jun. 30, 2013
Revolving Credit Facility [Abstract]
Revolving Credit Facility
4. Revolving Credit Facility

As of June 30, 2013, 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 February 14, 2014.

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%. In the event the Company elects to borrow under a base rate loan, the interest rate is increased to the prime rate plus 1%. The Company pays a 0.25% per annum commitment fee on all funds not utilized under the facility, measured on a daily basis.

On April 25, 2013, the parties executed a Fifth Amendment to the Credit Agreement (the “Amendment”). The Amendment, among other things, updated the financial covenants regarding the requirement to maintain a minimum consolidated adjusted EBITDA, minimum consolidated net liquidity and minimum consolidated revenue during different periods. The Credit Agreement also contains covenants regarding Jewish Networks minimum contribution and the Company’s ability to repurchase or redeem equity interests or issue dividends up to a specified amount, as well as other covenants, with exceptions, including restrictions on debt, liens and investments. A default could cause any outstanding amounts to become immediately due and payable and prohibit the Company from obtaining further credit under the Credit Agreement.

The Company was compliant with the Credit Agreement’s customary affirmative and negative covenants, as of June 30, 2013.

As of June 30, 2013, there was no outstanding amount under the Credit Agreement. In connection with the original Credit Agreement and the first five amendments thereto, the Company paid deferred financing costs of approximately $446,000 and $111,000, respectively. Costs associated with both the original Credit Agreement and the first five amendments thereto were included in prepaid expenses and other, and other assets. The deferred financing costs are amortized to interest (income) expense and other, net in the Consolidated Statements of Operations and Comprehensive Loss over the full term of the Credit Agreement. Amortization expense for the deferred financing costs for the three and six months ended June 30, 2013 were $9,000 and $17,000, respectively. Amortization expense for the deferred financing costs for the three and six months ended June 30, 2012 were $6,000 and $10,000, respectively.

 
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Stockholders' Equity
 6 Months Ended
Jun. 30, 2013
Stockholders' Equity /Accumulated Other Comprehensive Income [Abstract]
Stockholders' Equity
5. Stockholders’ Equity

On May 7, 2013, the Company issued 2,140,000 shares of its common stock at $6.25 per share in an underwritten public offering. The proceeds to the Company, net of $1.1 million of underwriting fees and offering expenses, were $12.3 million.

 
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Stock-Based Compensation
 6 Months Ended
Jun. 30, 2013
Stock-Based Compensation [Abstract]
Stock-Based Compensation
6. Stock-Based Compensation

Re-Pricing of Employees Options

In 2009, the Company offered to re-price options for certain employees. These employees could surrender their existing options in exchange for a like number of options with a new grant date, a lower exercise price, a lower number of vested options and a modified vesting schedule. The exchange of options was treated as a synthetic re-pricing, which includes a cancellation and replacement of equity instruments. The incremental expense was approximately $1.0 million and was being recognized over the four year vesting term of the newly issued options. The incremental expense recognized for the three and six months ended June 30, 2012 was $43,000 and $86,000, respectively. The incremental expense was fully amortized as of December 31, 2012.

Employee Stock Option Plans

On July 9, 2007, pursuant to the completion of the Scheme of Arrangement, the Company adopted the Spark Networks, Inc. 2007 Omnibus Incentive Plan (the “2007 Plan”) originally authorizing and reserving 2.5 million options with annual increases. In connection with the Company’s Scheme of Arrangement, the 2004 Share Option Plan was frozen; however, all outstanding options previously granted thereunder continue in full force and effect.

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 may be determined by the Compensation Committee.

The exercise price for stock options may be determined by the Compensation Committee in its discretion, but may not be lower than 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 June 30, 2013, total unrecognized compensation cost related to non-vested stock options was $1.6 million. This cost is expected to be recognized over a weighted-average period of 3 years. The following table describes option activity for the three months ended March 31, 2013, and June 30, 2013:

 

                 
    Number of
Shares		     Weighted
Average
Price per Share		  
    (in thousands)        

Outstanding at December 31, 2012

     3,829     $ 3.88  

Granted

     100       7.25  

Exercised

     (52 )      3.19  

Forfeited

     (15 )      7.28  

Expired

     (3 )      3.00  
   

 

 

          

Outstanding at March 31, 2013

     3,859     $ 3.96  

Granted

     42       7.90  

Exercised

     (437 )      3.34  

Forfeited

     —         —    

Expired

     —         —    
   

 

 

          

Outstanding at June 30, 2013

     3,464     $ 4.09  

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.

 
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Accumulated Other Comprehensive Income
 6 Months Ended
Jun. 30, 2013
Stockholders' Equity /Accumulated Other Comprehensive Income [Abstract]
Accumulated Other Comprehensive Income
7. Accumulated Other Comprehensive Income

The following table summarizes the changes in accumulated balances of other comprehensive income for the three months ended March 31, 2013 and June 30, 2013.

 

         
    Foreign
Currency
Translation		  
    (all balances are
in thousands,
net of $0 tax)		  

Balance at December 31, 2012

   $ 712  

Other comprehensive income before reclassifications

     20  

Amounts reclassified from accumulated other comprehensive income

     —    
   

 

 

  

Balance at March 31, 2013

   $ 732  

Other comprehensive income before reclassifications

     2  

Amounts reclassified from accumulated other comprehensive income

     —    
   

 

 

  

Balance at June 30, 2013

   $ 734  

There were no reclassifications out of accumulated other comprehensive income for the six months ended June 30, 2013.

 
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Segment Information
 6 Months Ended
Jun. 30, 2013
Segment Information [Abstract]
Segment Information
8. Segment Information

The Company has four operating 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 offline activities and HurryDate events and subscriptions.

 

 

                                 
    Three Months Ended
June 30,		     Six Months Ended
June 30,		  
(in thousands)   2013     2012     2013     2012  

Revenue

                                

Jewish Networks

   $ 6,460     $ 6,452     $ 12,912     $ 13,032  

Christian Networks

     10,260       7,505       20,168       14,358  

Other Networks

     775       995       1,590       2,027  

Offline & Other Businesses

     86       94       174       184  
   

 

 

    

 

 

    

 

 

    

 

 

  

Total revenue

   $ 17,581     $ 15,046     $ 34,844     $ 29,601  
   

 

 

    

 

 

    

 

 

    

 

 

  

Direct marketing expenses

                                

Jewish Networks

     776       647       1,527       1,448  

Christian Networks

     12,866       9,205       24,588       19,000  

Other Networks

     152       251       351       563  

Offline & Other Businesses

     31       37       57       67  
   

 

 

    

 

 

    

 

 

    

 

 

  

Total direct marketing expenses

   $ 13,825     $ 10,140     $ 26,523     $ 21,078  
   

 

 

    

 

 

    

 

 

    

 

 

  

Unallocated operating expenses

     6,991       6,105       14,425       12,451  
   

 

 

    

 

 

    

 

 

    

 

 

  

Operating loss

   $ (3,235 )    $ (1,199 )    $ (6,104 )    $ (3,928 ) 
   

 

 

    

 

 

    

 

 

    

 

 

  

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.

 
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Commitments and Contingencies
 6 Months Ended
Jun. 30, 2013
Commitments and Contingencies [Abstract]
Commitments and Contingencies
9. Commitments and Contingencies

Legal Proceedings

Please refer to the Company’s Annual Report on Form 10-K for the year ended December 31, 2012 and 2013 10-Q filings for a description of litigation and claims.

B.E. Technology, L.L.C. v. Spark Networks, Inc.

As previously reported on our Form 10-K for the year ended December 31, 2012, on September 22, 2012, B.E. Technology, L.L.C. commenced a lawsuit against Spark Networks, Inc. in the Western District of Tennessee, B.E. Technology, L.L.C. v. Spark Networks, Inc., for alleged infringement of U.S. Patent No. 6,628,314. The patent is entitled “Computer Interface Method And Apparatus With Targeted Advertising.” The Complaint alleged that “Spark Networks has infringed at least claim 11 of the ‘314 patent by using a method of providing demographically targeted advertising,” and seeks damages and an injunction. On December 31, 2012, Spark filed an Answer to the Complaint denying that the ‘314 patent was infringed by Spark and alleging, among other things, that the patent was invalid. On January 7, 2013, B.E. Technology served its Initial Infringement Contentions asserting that Spark had infringed claims 11, 12, 13, 15, 18, 19 and 20. The parties entered into a confidential settlement agreement and the case was dismissed with prejudice on July 19, 2013.

 

Werner, et al. v. Spark Networks, Inc. and Spark Networks USA, LLC

On July 19, 2013, Aaron Werner (“Plaintiff”), on behalf of himself and all other similarly situated individuals, filed a putative class action Complaint in the Superior Court for the State of California, County of Los Angeles alleging a single claim seeking an injunction and statutory, general and compensatory, treble and punitive damages as well as attorneys’ fees and costs and pre-judgment interest based on the allegation that Spark Networks’ ChristianMingle website violates California’s Unruh Civil Rights Act by allegedly discriminating based on sexual orientation.

The Company has additional existing legal claims and may encounter future legal claims in the normal course of business. In the Company’s opinion, the resolutions of the existing legal claims are not expected to have a material impact on its financial position or results of operations. The Company believes it has accrued appropriate amounts, where necessary, in connection with the above litigation.

Operating Leases

On February 1, 2013, the Company entered into an office lease at a new location, which expires on October 31, 2018. The Company has relocated to the new office space. Free rent, scheduled rent increases and rent credits are accounted for on a straight-line basis through the life of the lease. Lease incentives, including tenant improvements and parking credits, were capitalized and are amortized on a straight-line basis through the life of the lease. As of June 30, 2013, the remaining commitments under the lease expiring on July 31, 2013 and October 31, 2018 were $43,000 and $2.6 million, respectively.

 
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Income Taxes
 6 Months Ended
Jun. 30, 2013
Income Taxes [Abstract]
Income Taxes
10. Income Taxes

The Company did not recognize tax benefit for losses incurred in the six months ended June 30, 2013, as the Company recorded a valuation allowance against deferred tax assets. The Company recorded a provision for income tax of $208,000 for the six months ended June 30, 2013 which consists of $131,000 of deferred tax related to an increase in the deferred tax liability associated with tax deductible amortization of goodwill and other indefinite lived intangibles, $32,000 of foreign and state current tax and $45,000 related to interest accrued on its unrecognized tax benefits.

 
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Related Party Transactions
 6 Months Ended
Jun. 30, 2013
Related Party Transactions [Abstract]
Related Party Transactions
11. Related Party Transactions

Please refer to the Company’s Annual Report on Form 10-K for the year ended December 31, 2012 and the Company’s Quarterly Report on Form 10-Q for the period ended March 31, 2013 for a description of related parties transactions.

 
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Impairment of Long-lived Assets
 6 Months Ended
Jun. 30, 2013
Asset Impairment Charges [Abstract]
Impairment of Long-lived Assets
12. Impairment of Long-lived Assets

In the second quarter of 2013, the Company impaired $265,000, the full unamortized balance of capitalized software development costs related to certain web-based products that failed to perform to Company standards.

 
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Subsequent Events
 6 Months Ended
Jun. 30, 2013
Subsequent Events [Abstract]
Subsequent Events
13. Subsequent Events

The Company evaluated subsequent events through the date this Form 10-Q was filed with the Securities and Exchange Commission.

On July 1, 2013, the Company acquired certain digital media assets of a company, which comprises a business, for total consideration of $410,000. $348,500 was paid upon closing, with the remaining amount scheduled for payment after a year from the closing date, subject to certain terms and conditions. The acquired assets will expand the Company’s product offerings.

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The Company and Summary of Significant Accounting Policies (Policies)
 6 Months Ended
Jun. 30, 2013
The Company and Summary of Significant 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 preparation of consolidated financial statements in conformity with generally accepted accounting principles in the United States (“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, the Company 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, accounting for business combinations, legal contingencies, income taxes and stock-based compensation. In addition, the Company uses assumptions when employing the Black-Scholes option valuation model to calculate the fair value of granted stock-based awards. The Company bases its estimates of the carrying value of certain assets and liabilities on historical experience and on various other assumptions that are believed to be reasonable under the circumstances, when these carrying values are not readily available from other sources. Actual results may differ from these estimates.

The consolidated financial statements on 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, 2012. Certain information and footnote disclosures normally included in financial statements prepared in accordance with GAAP have been condensed or omitted pursuant to such rules and regulations. The consolidated balance sheet as of December 31, 2012 was derived from the Company’s audited consolidated financial statements for the year ended December 31, 2012.

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Net Loss Per Share (Tables)
 6 Months Ended
Jun. 30, 2013
Net Loss Per Share [Abstract]
Net loss per share of both basic and diluted

The Company calculates and presents the net loss per share on both a basic and diluted basis. 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.

 

                                 
    For the Three Months Ended
June 30,		     For the Six Months Ended
June 30,		  
    2013     2012     2013     2012  
    (in thousands except per share data)  

Net Loss Per Share of Common Stock – Basic and Diluted

                                

Net loss applicable to common stock

   $ (3,276 )    $ (1,001 )    $ (6,216 )    $ (2,714 ) 

Weighted average shares outstanding - basic and diluted

     22,485       20,625       21,745       20,611  
   

 

 

    

 

 

    

 

 

    

 

 

  

Net Loss Per Share – Basic and Diluted

   $ (0.15 )    $ (0.05 )    $ (0.29 )    $ (0.13 ) 
   

 

 

    

 

 

    

 

 

    

 

 

  
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Stock-Based Compensation (Tables)
 6 Months Ended
Jun. 30, 2013
Stock-Based Compensation [Abstract]
Stock options activity

The following table describes option activity for the three months ended March 31, 2013, and June 30, 2013:

 

                 
    Number of
Shares		     Weighted
Average
Price per Share		  
    (in thousands)        

Outstanding at December 31, 2012

     3,829     $ 3.88  

Granted

     100       7.25  

Exercised

     (52 )      3.19  

Forfeited

     (15 )      7.28  

Expired

     (3 )      3.00  
   

 

 

          

Outstanding at March 31, 2013

     3,859     $ 3.96  

Granted

     42       7.90  

Exercised

     (437 )      3.34  

Forfeited

     —         —    

Expired

     —         —    
   

 

 

          

Outstanding at June 30, 2013

     3,464     $ 4.09  
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Accumulated Other Comprehensive Income (Tables)
 6 Months Ended
Jun. 30, 2013
Stockholders' Equity /Accumulated Other Comprehensive Income [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 months ended March 31, 2013 and June 30, 2013.

 

         
    Foreign
Currency
Translation		  
    (all balances are
in thousands,
net of $0 tax)		  

Balance at December 31, 2012

   $ 712  

Other comprehensive income before reclassifications

     20  

Amounts reclassified from accumulated other comprehensive income

     —    
   

 

 

  

Balance at March 31, 2013

   $ 732  

Other comprehensive income before reclassifications

     2  

Amounts reclassified from accumulated other comprehensive income

     —    
   

 

 

  

Balance at June 30, 2013

   $ 734  
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Segment Information (Tables)
 6 Months Ended
Jun. 30, 2013
Segment Information [Abstract]
Summary of segment information
                                 
    Three Months Ended
June 30,		     Six Months Ended
June 30,		  
(in thousands)   2013     2012     2013     2012  

Revenue

                                

Jewish Networks

   $ 6,460     $ 6,452     $ 12,912     $ 13,032  

Christian Networks

     10,260       7,505       20,168       14,358  

Other Networks

     775       995       1,590       2,027  

Offline & Other Businesses

     86       94       174       184  
   

 

 

    

 

 

    

 

 

    

 

 

  

Total revenue

   $ 17,581     $ 15,046     $ 34,844     $ 29,601  
   

 

 

    

 

 

    

 

 

    

 

 

  

Direct marketing expenses

                                

Jewish Networks

     776       647       1,527       1,448  

Christian Networks

     12,866       9,205       24,588       19,000  

Other Networks

     152       251       351       563  

Offline & Other Businesses

     31       37       57       67  
   

 

 

    

 

 

    

 

 

    

 

 

  

Total direct marketing expenses

   $ 13,825     $ 10,140     $ 26,523     $ 21,078  
   

 

 

    

 

 

    

 

 

    

 

 

  

Unallocated operating expenses

     6,991       6,105       14,425       12,451  
   

 

 

    

 

 

    

 

 

    

 

 

  

Operating loss

   $ (3,235 )    $ (1,199 )    $ (6,104 )    $ (3,928 ) 
   

 

 

    

 

 

    

 

 

    

 

 

  
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Net Loss Per Share (Details) (USD $)
In Thousands, except Per Share data, unless otherwise specified		 3 Months Ended 6 Months Ended
Jun. 30, 2013
 Jun. 30, 2012
 Jun. 30, 2013
 Jun. 30, 2012
Net Loss Per Share of Common Stock - Basic and Diluted
Net loss applicable to common stock $ (3,276) $ (1,001) $ (6,216) $ (2,714)
Weighted average shares outstanding - basic and diluted 22,485 20,625 21,745 20,611
Net Loss Per Share - Basic and Diluted $ (0.15) $ (0.05) $ (0.29) $ (0.13)
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Revolving Credit Facility (Details Textual) (USD $)
 3 Months Ended 6 Months Ended
Jun. 30, 2013
 Jun. 30, 2012
 Jun. 30, 2013
 Jun. 30, 2012
Revolving Credit Facility (Additional Textual) [Abstract]
Revolving credit facility $ 15,000,000 $ 15,000,000
Credit facility initiation date Feb 14, 2008
Maturity date of credit agreement Feb 14, 2014
Date of Execution of Fifth Amendment to the Credit Agreement Apr 25, 2013
Per annum interest rate under credit agreement LIBOR or Eurodollar Rate plus 2%
Variable interest rate on credit agreement 2.00%
Interest rate on base rate loan 1.00%
Commitment fee per annum 0.25%
Outstanding amounts under credit agreement 0 0
Amortization expense 9,000 6,000 17,000 10,000
Base rate loan, Interest Rate Description Prime Rate plus 1%
Original Credit Agreement [Member]
Revolving Credit Facility (Textual) [Abstract]
Deferred financing costs 446,000 446,000
Credit Agreement Amendment [Member]
Revolving Credit Facility (Textual) [Abstract]
Deferred financing costs $ 111,000 $ 111,000
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Stockholders' Equity (Details Textual) (USD $)
 0 Months Ended 1 Months Ended 6 Months Ended
May 07, 2013
 May 31, 2013
 Jun. 30, 2013
 Jun. 30, 2012
Stockholders' Equity (Textual) [Abstract]
Common stock share issued in an underwritten public offering 2,140,000
Common stock issued price per share in an underwritten public offering $ 6.25
Underwriting fees and offering expenses for Common stock issued $ 12,300,000
Net proceeds from issuance of common stock $ 1,100,000 $ 12,258,000   
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Stock-Based Compensation (Details) (USD $)
In Thousands, except Per Share data, unless otherwise specified		 3 Months Ended
Jun. 30, 2013
 Mar. 31, 2013
Stock options activity
Beginning Balance, Number of Shares 3,859 3,829
Granted, Number of Shares 42 100
Exercised, Number of Shares (437) (52)
Forfeited, Number of Shares    (15)
Expired, Number of Shares    (3)
Ending Balance, Number of Shares 3,464 3,859
Beginning Balance, Weighted Average Price per Share $ 3.96 $ 3.88
Granted, Weighted Average Price per Share $ 7.9 $ 7.25
Exercised, Weighted Average Price per Share $ 3.34 $ 3.19
Forfeited, Weighted Average Price per Share    $ 7.28
Expired, Weighted Average Price per Share    $ 3
Ending Balance, Weighted Average Price per Share $ 4.09 $ 3.96
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Stock-Based Compensation (Details Textual) (USD $)
Share data in Millions, except Per Share data, unless otherwise specified		 3 Months Ended 6 Months Ended 12 Months Ended
Jun. 30, 2012
 Jun. 30, 2013
 Jun. 30, 2012
 Dec. 31, 2009
 Jul. 09, 2007
Stock-Based Compensation (Additional Textual) [Abstract]
Incremental expense $ 1,000,000
Incremental expense, period recognized 4 years
Incremental expense recognized 43,000 86,000
Options authorized and reserved 2.5
Conditions for fixing minimum exercise price for stock options Not be lower than the closing sale price
Minimum voting power for fixing desired exercise price for incentive stock options More than 10% of the total combined voting power
Conditions for fixing minimum exercise price for incentive stock options Price may not be less than 110% of the closing sale price
Unrecognized compensation cost related to non-vested stock options $ 1,600,000
Compensation cost expected to be recognized 3 years
Discount on purchase of additional common shares 50.00%
Redemption price per right $ 0.001
Minimum [Member]
Stock-Based Compensation (Textual) [Abstract]
Percentage of incentive stock options granted 10.00%
Percentage of exercise price 110.00%
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Accumulated Other Comprehensive Income (Details) (USD $)
In Thousands, unless otherwise specified		 6 Months Ended 3 Months Ended
Jun. 30, 2013
 Jun. 30, 2013
Accumulated Translation Adjustment [Member]
 Mar. 31, 2013
Accumulated Translation Adjustment [Member]
Summary of changes in accumulated balances of other comprehensive income
Beginning Balance $ 712 $ 732 $ 712
Other comprehensive income before reclassifications 2 20
Amounts reclassified from accumulated other comprehensive income 0      
Ending Balance $ 734 $ 734 $ 732
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Accumulated Other Comprehensive Income (Details Textual) (USD $)
In Thousands, unless otherwise specified		 6 Months Ended
Jun. 30, 2013
Accumulated Other Comprehensive Income (Textual) [Abstract]
Amounts reclassified from accumulated other comprehensive income $ 0
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Segment Information (Details) (USD $)
In Thousands, unless otherwise specified		 3 Months Ended 6 Months Ended
Jun. 30, 2013
 Jun. 30, 2012
 Jun. 30, 2013
 Jun. 30, 2012
Summary of segment information
Total revenue $ 17,581 $ 15,046 $ 34,844 $ 29,601
Total direct marketing expenses 13,825 10,140 26,523 21,078
Unallocated operating expenses 6,991 6,105 14,425 12,451
Operating loss (3,235) (1,199) (6,104) (3,928)
Jewish Networks [Member]
Summary of segment information
Total revenue 6,460 6,452 12,912 13,032
Total direct marketing expenses 776 647 1,527 1,448
Christian Networks [Member]
Summary of segment information
Total revenue 10,260 7,505 20,168 14,358
Total direct marketing expenses 12,866 9,205 24,588 19,000
Other Networks [Member]
Summary of segment information
Total revenue 775 995 1,590 2,027
Total direct marketing expenses 152 251 351 563
Offline and Other Businesses [Member]
Summary of segment information
Total revenue 86 94 174 184
Total direct marketing expenses $ 31 $ 37 $ 57 $ 67
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Segment Information (Details Textual)
 6 Months Ended
Jun. 30, 2013
Segments
Segment Information (Textual) [Abstract]
Number of separate reportable segments 4
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Commitments and Contingencies (Details Textual) (USD $)
 6 Months Ended
Jun. 30, 2013
Current Lease One [Member]
Commitments and Contingencies (Textual) [Abstract]
Operating lease commitments $ 43,000
Lease for office space expires Jul 31, 2013
New Lease Two [Member]
Commitments and Contingencies (Textual) [Abstract]
Operating lease commitments $ 2,600,000
Lease for office space expires Oct 31, 2018
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Income Taxes (Details) (USD $)
 3 Months Ended 6 Months Ended
Jun. 30, 2013
 Jun. 30, 2012
 Jun. 30, 2013
 Jun. 30, 2012
Income Taxes (Textual) [Abstract]
Provision for Income tax $ 84,000 $ (311,000) $ 208,000 $ (1,200,000)
Deferred tax 131,000
Current income tax 32,000
Income tax related to interest accrued on its unrecognized tax benefits $ 45,000 $ 45,000
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Impairment of Long-lived Assets (Details Textual) (USD $)
 3 Months Ended
Jun. 30, 2013
Asset Impairment Charges [Abstract]
Impairment of Capitalized software development costs $ 265,000
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Subsequent Events (Details Textual) (USD $)
 6 Months Ended
Jun. 30, 2013
Subsequent Events [Abstract]
Acquired assets $ 410,000
Payment for acquired assets $ 348,500
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