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Document and Entity Information
 9 Months Ended
Sep. 30, 2012
 Nov. 13, 2012
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, 2012
Amendment Flag false
Document Fiscal Year Focus 2012
Document Fiscal Period Focus Q3
Current Fiscal Year End Date --12-31
Entity Filer Category Smaller Reporting Company
Entity Common Stock, Shares Outstanding 20,771,166
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Consolidated Balance Sheets (USD $)
In Thousands, unless otherwise specified		 Sep. 30, 2012
 Dec. 31, 2011
Current assets:
Cash and cash equivalents $ 10,974 $ 15,106
Restricted cash 1,175 958
Accounts receivable, net of allowance of $0 and $1, respectively 1,418 1,146
Deferred tax asset - current 45 44
Prepaid expenses and other 1,093 1,164
Total current assets 14,705 18,418
Property and equipment, net 3,138 2,839
Goodwill 8,576 8,683
Intangible assets, net 2,142 1,900
Deferred tax asset - non-current 6,950 5,641
Deposits and other assets 155 455
Total assets 35,666 37,936
Current liabilities:
Accounts payable 549 952
Accrued liabilities 3,375 4,046
Deferred revenue 7,773 5,723
Deferred tax liability-current 203 203
Total current liabilities 11,900 10,924
Deferred tax liability 1,312 1,219
Other liabilities - non-current 1,141 1,141
Total liabilities 14,353 13,284
Commitments and contingencies (Note 8)      
Stockholders' equity:
Authorized capital stock consists of 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 and 100,000,000 shares of Common Stock, $0.001 par value, with 20,769,471 and 20,594,670 shares of Common Stock issued and outstanding at September 30, 2012 and December 31, 2011, respectively: 21 21
Additional paid-in-capital 54,129 53,014
Accumulated other comprehensive income 669 672
Accumulated deficit (33,506) (29,055)
Total stockholders' equity 21,313 24,652
Total liabilities and stockholders' equity $ 35,666 $ 37,936
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Consolidated Balance Sheets (Parenthetical) (USD $)
In Thousands, except Share data, unless otherwise specified		 Sep. 30, 2012
 Dec. 31, 2011
Accounts receivable allowance $ 0 $ 1
Common stock, par value $ 0.001 $ 0.001
Common stock, shares authorized 100,000,000 100,000,000
Common stock, shares issued 20,769,471 20,594,670
Common stock, shares outstanding 20,769,471 20,594,670
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 $)
In Thousands, except Per Share data, unless otherwise specified		 3 Months Ended 9 Months Ended
Sep. 30, 2012
 Sep. 30, 2011
 Sep. 30, 2012
 Sep. 30, 2011
Consolidated Statements of Operations [Abstract]
Revenue $ 15,871 $ 12,677 $ 45,472 $ 35,632
Cost and expenses:
Cost of revenue (exclusive of depreciation shown separately below) 12,901 7,373 35,725 20,535
Sales and marketing 1,020 923 2,976 2,660
Customer service 652 531 1,887 1,441
Technical operations 362 336 1,067 1,086
Development 859 643 2,549 2,067
General and administrative 2,260 2,435 6,550 6,997
Depreciation 426 341 1,242 977
Amortization of intangible assets 90 13 281
Impairment of long-lived assets and other assets 45 45
Total cost and expenses 18,480 12,717 52,009 36,089
Operating loss (2,609) (40) (6,537) (457)
Interest (income) expense and other, net (36) 120 (50) 18
Loss before income taxes (2,573) (160) (6,487) (475)
(Benefit) provision for income taxes (836) 78 (2,036) 28
Net loss (1,737) (238) (4,451) (503)
Net loss per share - basic and diluted $ (0.08) $ (0.01) $ (0.22) $ (0.02)
Weighted average shares outstanding-basic and diluted 20,699 20,595 20,683 20,592
Comprehensive Loss $ (1,731) $ (387) $ (4,454) $ (577)
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Consolidated Statements of Operations and Comprehensive Loss (Unaudited) (Parenthetical) (USD $)
In Thousands, unless otherwise specified		 3 Months Ended 9 Months Ended
Sep. 30, 2012
 Sep. 30, 2011
 Sep. 30, 2012
 Sep. 30, 2011
Stock-based compensation:
Stock-based compensation $ 599 $ 723
Cost of revenue
Stock-based compensation:
Stock-based compensation 2 2 6 6
Sales and marketing
Stock-based compensation:
Stock-based compensation 17 17 55 65
Customer service
Stock-based compensation:
Stock-based compensation 1
Technical operations
Stock-based compensation:
Stock-based compensation 29 30 89 88
Development
Stock-based compensation:
Stock-based compensation 10 10 31 32
General and administrative
Stock-based compensation:
Stock-based compensation $ 138 $ 124 $ 417 $ 532
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Consolidated Statements of Cash Flows (Unaudited) (USD $)
In Thousands, unless otherwise specified		 9 Months Ended
Sep. 30, 2012
 Sep. 30, 2011
Cash flows from operating activities:
Net loss $ (4,451) $ (503)
Adjustments to reconcile net loss to cash (used in) provided by operating activities:
Depreciation and amortization 1,255 1,258
Foreign exchange loss on intercompany loan 77 205
Impairment of long-lived assets and other assets 45
Stock-based compensation 599 723
Income from asset received from legal judgment (151) (247)
Deferred taxes (1,217) 49
Other 19 4
Changes in operating assets and liabilities:
Accounts receivable (272) (115)
Restricted cash (217) 70
Prepaid expenses and other assets 150 (220)
Accounts payable and accrued liabilities (1,115) (82)
Deferred revenue 2,050 1,088
Net cash (used in) provided by operating activities (3,273) 2,275
Cash flows from investing activities:
Purchases of property and equipment (1,639) (1,179)
Purchases of intangible assets (256) (352)
Sale of property and other assets 520
Net cash used in investing activities (1,375) (1,531)
Cash flows from financing activities:
Proceeds from issuance of common stock 516 22
Net cash provided by financing activities 516 22
Net Change in cash (4,132) 766
Cash and cash equivalents at beginning of period 15,106 13,901
Cash and cash equivalents at end of period 10,974 14,667
Supplemental disclosure of cash flow information:
Cash paid for income taxes $ 43 $ 139
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The Company and Summary of Significant Accounting Policies
 9 Months Ended
Sep. 30, 2012
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.

On December 31, 2010, Spark Networks Limited (“SNUK”) distributed its shareholdings in each of HurryDate, LLC; MingleMatch, Inc.; Kizmeet, Inc.; SN Holdco, LLC; SN Events, Inc.; Reseaux Spark Canada Ltd. and Spark SocialNet, Inc. by transferring its shares in those companies to Spark Networks, Inc. Spark Networks, Inc. subsequently transferred all of its shares in the same companies to LOV USA, LLC, a newly formed and wholly owned subsidiary of Spark Networks, Inc. SNUK continues to hold all of the shares of Spark Networks (Israel) Limited, VAP AG and JDate Limited. In addition, SNUK now holds all of the shares of Spark Networks USA, LLC, a newly formed subsidiary into which SNUK has transferred all of its United States based assets.

The Company and its consolidated subsidiaries provide online personals services in the United States and internationally, whereby adults are able to post information about themselves (“profiles”) on the Company’s Web sites and search and contact other individuals who have posted profiles.

Membership to the Company’s online services, which includes the posting of a personal profile and photos, and access to its database of profiles, is free. The Company typically charges a subscription fee for varying subscription lengths (typically, one, three, six and twelve months) to members, allowing them to initiate communication with other members and subscribers utilizing 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 subscribers.

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

Basis of Presentation

The consolidated financial statements include the accounts of the Company and all of its majority owned subsidiaries. All significant intercompany accounts and transactions have been eliminated.

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 on-going basis, the Company evaluates its estimates, including those related to uncollectible receivables, the useful lives of long-lived assets including property and equipment, goodwill and other intangible assets, income taxes, and contingencies. 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, 2011. 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, 2011 was derived from the Company’s audited financial statements for the year ended December 31, 2011.

 
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Adoption of New Accounting Principles
 9 Months Ended
Sep. 30, 2012
Adoption of New Accounting Principles [Abstract]
Adoption of New Accounting Principles
2. Adoption of New Accounting Principles

Effective January 1, 2012, the Company adopted Accounting Standards Update (“ASU”) No. 2011-04, “Amendments to Achieve Common Fair Value Measurement and Disclosure Requirements in U.S. GAAP and International Financial Reporting Standards (“IFRS”).” The adoption of ASU 2011-04 did not have a significant impact on the Company’s consolidated financial position or results of operations.

Effective January 1, 2012, the Company adopted ASU No. 2011-05, “Presentation of Comprehensive Income.” The adoption of ASU 2011-05 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
 9 Months Ended
Sep. 30, 2012
Net Loss Per Share [Abstract]
Net Loss Per Share
3. Net Loss Per Share

The Company calculates and presents the net loss per share of both basic and diluted 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)   2012     2011     2012     2011  

Net Loss Per Share of Common Stock– Basic and Diluted

                                

Net loss applicable to common stock

   $ (1,737 )    $ (238 )    $ (4,451 )    $ (503 ) 
         

Weighted average shares outstanding-basic and diluted

     20,699       20,595       20,683       20,592  
   

 

 

    

 

 

    

 

 

    

 

 

  

Net Loss Per Share – Basic and Diluted

   $ (0.08 )    $ (0.01 )    $ (0.22 )    $ (0.02 ) 
   

 

 

    

 

 

    

 

 

    

 

 

  

All stock options for all periods presented, 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
 9 Months Ended
Sep. 30, 2012
Revolving Credit Facility [Abstract]
Revolving Credit Facility
4. Revolving Credit Facility

As of September 30, 2012, the Company and its wholly-owned subsidiary, Spark Networks USA, LLC, as well as subsidiaries as guarantors, had 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.

As of September 30, 2012, there were no outstanding amounts under the Credit Agreement.

On May 7, 2012, the parties executed a Fourth Amendment to the Credit Agreement (the “Amendment”). The Amendment, among other things, changes the per annum interest rate under the Credit Agreement. Pursuant to the Amendment, 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%. Under the Amendment, the Company pays a 0.25% per annum commitment fee on all funds not utilized under the facility, measured on a daily basis.

The Amendment removed the requirement that the Company maintain a certain consolidated leverage ratio and consolidated fixed charge coverage ratio. The Amendment also updated the financial covenants regarding the requirement to maintain a minimum consolidated adjusted EBITDA, Jewish Networks minimum contribution, minimum consolidated net liquidity and minimum consolidated revenue during different periods. The Amendment permits the Company to repurchase or redeem equity interests or issue dividends of up to $4.5 million during the term of the Credit Agreement. The Credit Agreement also contains 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 September 30, 2012.

In connection with the original Credit Agreement and the first four amendments thereto, the Company paid deferred financing costs of approximately $446,000 and $105,000, respectively. Costs associated with both the original Credit Agreement and the first four amendments thereto were included in prepaid expenses and other, and deposits and other assets. The deferred financing costs are amortized to interest expense in the Consolidated Statements of Operations over the full term of the Credit Agreement. Amortization expense for the deferred financing costs for the three and nine months ended September 30, 2012 were $7,000 and $17,000, respectively. The amortization of the deferred financing costs for the three and nine months ended September 30, 2011 were $4,000 and $53,000, respectively.

 
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Stockholders' Equity
 9 Months Ended
Sep. 30, 2012
Stockholders' Equity [Abstract]
Stockholders' Equity
5. Stockholders’ Equity

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 is being recognized over the four year vesting term of the newly issued options. The incremental expenses recognized for the three and nine months ended September 30, 2012 and 2011 were $43,000 and $129,000, respectively.

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”) authorizing and reserving 2.5 million options. 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 (of the Board of Directors) may grant to a participant an award. 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, 2012, total unrecognized compensation cost related to unvested stock options was $755,000. This cost is expected to be recognized over a weighted-average period of two years. The following table describes option activity for the three and nine months ended September 30, 2012:

 

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

Outstanding at December 31, 2011

     3,583     $ 3.14  

Granted

     100       4.18  

Exercised

     (2 )      2.37  

Forfeited

     —         —    

Expired

     (4 )      3.00  
   

 

 

          

Outstanding at March 31, 2012

     3,677     $ 3.16  

Granted

     25       4.41  

Exercised

     (78 )      3.00  

Forfeited

     (11 )      2.88  

Expired

     (7 )      5.41  
   

 

 

          

Outstanding at June 30, 2012

     3,606     $ 3.17  

Granted

     —         —    

Exercised

     (94 )      2.93  

Forfeited

     (2 )      3.00  

Expired

     —         —    
   

 

 

          

Outstanding at September 30, 2012

     3,510     $ 3.18  

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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Segment Information
 9 Months Ended
Sep. 30, 2012
Segment Information [Abstract]
Segment Information
6. Segment Information

During the first quarter of 2012, the Company’s management modified the internal reporting of its operating segments to: (1) Jewish Networks, which consists of JDate.com, JDate.co.uk, JDate.fr, JDate.co.il, Cupid.co.il, and their respective co-branded Web sites; (2) Christian Networks, which now 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 properties which are primarily made up 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. The Company believes the new segments will provide investors with greater transparency into the performance of the business. Prior period amounts presented in this Quarterly Report on Form 10-Q have been reclassified to conform to the current period presentation.

 

 

                                 
    Three Months Ended
September 30,		     Nine Months  Ended
September 30,		  
(in thousands)   2012     2011     2012     2011  

Revenue

                                

Jewish Networks

   $ 6,385     $ 6,724     $ 19,417     $ 20,354  

Christian Networks

     8,495       4,624       22,853       10,790  

Other Networks

     903       1,218       2,929       3,821  

Offline & Other Businesses

     88       111       273       667  
   

 

 

    

 

 

    

 

 

    

 

 

  

Total Revenue

   $ 15,871     $ 12,677     $ 45,472     $ 35,632  
   

 

 

    

 

 

    

 

 

    

 

 

  

Direct Marketing

                                

Jewish Networks

   $ 829     $ 936     $ 2,277     $ 2,460  

Christian Networks

     10,920       5,112       29,920       13,053  

Other Networks

     213       432       776       2,113  

Offline & Other Businesses

     29       32       96       463  
   

 

 

    

 

 

    

 

 

    

 

 

  

Total Direct Marketing Expenses

   $ 11,991     $ 6,512     $ 33,069     $ 18,089  
   

 

 

    

 

 

    

 

 

    

 

 

  

Unallocated operating expenses

     6,489       6,205       18,940       18,000  
   

 

 

    

 

 

    

 

 

    

 

 

  

Operating loss

   $ (2,609 )    $ (40 )    $ (6,537 )    $ (457 ) 
   

 

 

    

 

 

    

 

 

    

 

 

  

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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Income on Possession of Assets
 9 Months Ended
Sep. 30, 2012
Income on Possession of Assets [Abstract]
Income on Possession of Assets
7. Income on Possession of Assets

In the third quarter of 2011, the Company became the record title owner of real property purchased in a sheriff’s sale to partially satisfy the Company’s outstanding judgment against Will Knedlik.

On June 15, 2012, the Company sold the real property. Based upon the net proceeds of the transaction, the Company realized a total gain of $398,000, with $247,000 of the gain being recognized in the third quarter of 2011 and $151,000 upon the sale of the real property, in the second quarter of 2012.

 
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Commitments and Contingencies
 9 Months Ended
Sep. 30, 2012
Commitments and Contingencies [Abstract]
Commitments and Contingencies
8. 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 December 1, 2008, Spark Networks filed a Motion to Dismiss the Complaint, or, Alternatively, for Summary Judgment. On September 10, 2009, the Court granted Spark Networks’ motion and dismissed the case with prejudice. On September 22, 2009, ISYSTEMS filed a motion to vacate the order dismissing the action and requesting leave to amend its complaint. On October 26, 2009, the Court granted ISYSTEMS’ motion and ISYSTEMS filed its Amended Complaint on November 25, 2009. On January 19, 2010, Spark Networks filed a Motion to Dismiss the Amended Complaint, or Alternatively, for Summary Judgment. The Court granted Spark Networks’ Motion to Dismiss on June 28, 2010 and entered a judgment in favor of Spark Networks. On July 25, 2010, ISYSTEMS filed a motion to vacate the order granting the motion to dismiss, which was denied by the Court on August 11, 2010. On September 10, 2010, ISYSTEMS filed a notice of appeal of the district court’s order and judgment to the United States Court of Appeals for the Fifth Circuit. On June 13, 2011, the United States Court of Appeals for the Fifth Circuit issued its opinion affirming the District Court’s judgment. On June 29, 2011, ISYSTEMS filed a Petition for Rehearing with the United States Court of Appeals for the Fifth Circuit, which was granted. Oral argument was held on December 8, 2011. Per the Fifth Circuit’s request, the parties submitted supplemental briefs on December 16, 2011. On March 21, 2012, the Fifth Circuit issued its opinion affirming the District Court’s dismissal of certain claims and reversing the dismissal of certain other claims. On April 19, 2012, the matter was remanded back to the District Court. On September 4, 2012, Spark Networks filed their Answer to the Complaint. By written order dated August 30, 2012, the Court set the action for trial on February 24, 2014.

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

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., Civil Action No. 2:12-cv-02832-cgc, 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 alleges 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.

Kirby, et al. v. Spark Networks USA, LLC

On October 16, 2012, Kristina Kirby, Christopher Wagner and Jamie Carper (collectively referred to as “Plaintiffs”), on behalf of themselves and all other similarly situated, filed a Complaint in the Superior Court for the State of California, County of Los Angeles (Case No. BC493892) alleging claims against Spark Networks USA, LLC for violations of California Business & Professions Code section 17529.5. Plaintiffs allege that certain e-mail communications advertising websites of Spark Networks USA, LLC and received by Plaintiffs violate a California statute prohibiting false and deceptive e-mail communications (namely, California Business & Professions Code section 17529.5). Plaintiffs generally allege that they seek damages in excess of $25,000. No trial date has been set.

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.

 
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Income Taxes
 9 Months Ended
Sep. 30, 2012
Income Taxes [Abstract]
Income Taxes
9. Income Taxes

The $2.0 million benefit for income taxes for the nine months ended September 30, 2012 consists primarily of a $2.2 million tax benefit related to the United States operations offset by a $114,000 deferred tax expense related to an increase in the deferred tax liability associated with our Israeli subsidiary’s tax deductible goodwill amortization and by $39,000 of income tax expense related to interest accrued on its unrecognized tax benefits.

 
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Related Party Transaction
 9 Months Ended
Sep. 30, 2012
Related Party Transactions [Abstract]
Related Party Transaction
10. Related Party Transactions

In December 2011, the Company entered into an agreement with Latisys-Irvine, Inc., a colocation and data center provider to provide colocation, cages, connectivity and other related equipment and services. Great Hill Partners, an owner of more than 5% of the Company’s stock, has informed the Company that it has an ownership position in Latisys-Irvine, Inc.

In January 2012, the Company entered into an agreement with Ultra Unlimited Corp., a software development firm, to develop and initially operate a website for the Company and to provide the Company with certain software. The Chief Executive Officer of Ultra Unlimited Corp. is the brother of Michael Kumin, a director of the Company. Michael Kumin and Jonathan Bulkeley, also a director of the Company, have informed the Company that they are individual investors in Ultra Unlimited Corp.

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The Company and Summary of Significant Accounting Policies (Policies)
 9 Months Ended
Sep. 30, 2012
The Company and Summary of Significant Accounting Policies [Abstract]
Basis of Presentation

Basis of Presentation

The consolidated financial statements include the accounts of the Company and all of its majority owned subsidiaries. All significant intercompany accounts and transactions have been eliminated.

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 on-going basis, the Company evaluates its estimates, including those related to uncollectible receivables, the useful lives of long-lived assets including property and equipment, goodwill and other intangible assets, income taxes, and contingencies. 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, 2011. 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, 2011 was derived from the Company’s audited financial statements for the year ended December 31, 2011.

Presentation of Comprehensive Income

Effective January 1, 2012, the Company adopted ASU No. 2011-05, “Presentation of Comprehensive Income.” The adoption of ASU 2011-05 concerns presentation and disclosure only, and did not have an impact on the Company’s consolidated financial position or results of operations.

Fair value measurements and disclosure

Effective January 1, 2012, the Company adopted Accounting Standards Update (“ASU”) No. 2011-04, “Amendments to Achieve Common Fair Value Measurement and Disclosure Requirements in U.S. GAAP and International Financial Reporting Standards (“IFRS”).” The adoption of ASU 2011-04 did not have a significant impact on the Company’s consolidated financial position or results of operations.

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Net Loss Per Share (Tables)
 9 Months Ended
Sep. 30, 2012
Net Loss Per Share [Abstract]
Net loss per share of both basic and diluted
                                 
    Three Months Ended
September 30,		     Nine Months  Ended
September 30,		  
(in thousands except per share data)   2012     2011     2012     2011  

Net Loss Per Share of Common Stock– Basic and Diluted

                                

Net loss applicable to common stock

   $ (1,737 )    $ (238 )    $ (4,451 )    $ (503 ) 
         

Weighted average shares outstanding-basic and diluted

     20,699       20,595       20,683       20,592  
   

 

 

    

 

 

    

 

 

    

 

 

  

Net Loss Per Share – Basic and Diluted

   $ (0.08 )    $ (0.01 )    $ (0.22 )    $ (0.02 ) 
   

 

 

    

 

 

    

 

 

    

 

 

  
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Stockholders' Equity (Tables)
 9 Months Ended
Sep. 30, 2012
Stockholders' Equity [Abstract]
Option activity

The following table describes option activity for the three and nine months ended September 30, 2012:

 

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

Outstanding at December 31, 2011

     3,583     $ 3.14  

Granted

     100       4.18  

Exercised

     (2 )      2.37  

Forfeited

     —         —    

Expired

     (4 )      3.00  
   

 

 

          

Outstanding at March 31, 2012

     3,677     $ 3.16  

Granted

     25       4.41  

Exercised

     (78 )      3.00  

Forfeited

     (11 )      2.88  

Expired

     (7 )      5.41  
   

 

 

          

Outstanding at June 30, 2012

     3,606     $ 3.17  

Granted

     —         —    

Exercised

     (94 )      2.93  

Forfeited

     (2 )      3.00  

Expired

     —         —    
   

 

 

          

Outstanding at September 30, 2012

     3,510     $ 3.18  
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Segment Information (Tables)
 9 Months Ended
Sep. 30, 2012
Segment Information [Abstract]
Segment information
                                 
    Three Months Ended
September 30,		     Nine Months  Ended
September 30,		  
(in thousands)   2012     2011     2012     2011  

Revenue

                                

Jewish Networks

   $ 6,385     $ 6,724     $ 19,417     $ 20,354  

Christian Networks

     8,495       4,624       22,853       10,790  

Other Networks

     903       1,218       2,929       3,821  

Offline & Other Businesses

     88       111       273       667  
   

 

 

    

 

 

    

 

 

    

 

 

  

Total Revenue

   $ 15,871     $ 12,677     $ 45,472     $ 35,632  
   

 

 

    

 

 

    

 

 

    

 

 

  

Direct Marketing

                                

Jewish Networks

   $ 829     $ 936     $ 2,277     $ 2,460  

Christian Networks

     10,920       5,112       29,920       13,053  

Other Networks

     213       432       776       2,113  

Offline & Other Businesses

     29       32       96       463  
   

 

 

    

 

 

    

 

 

    

 

 

  

Total Direct Marketing Expenses

   $ 11,991     $ 6,512     $ 33,069     $ 18,089  
   

 

 

    

 

 

    

 

 

    

 

 

  

Unallocated operating expenses

     6,489       6,205       18,940       18,000  
   

 

 

    

 

 

    

 

 

    

 

 

  

Operating loss

   $ (2,609 )    $ (40 )    $ (6,537 )    $ (457 ) 
   

 

 

    

 

 

    

 

 

    

 

 

  
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Net Loss Per Share (Details) (USD $)
In Thousands, except Per Share data, unless otherwise specified		 3 Months Ended 9 Months Ended
Sep. 30, 2012
 Sep. 30, 2011
 Sep. 30, 2012
 Sep. 30, 2011
Net Loss Per Share of Common Stock Basic and Diluted
Net loss applicable to common stock $ (1,737) $ (238) $ (4,451) $ (503)
Weighted average shares outstanding-basic and diluted 20,699 20,595 20,683 20,592
Net Loss Per Share-Basic and Diluted $ (0.08) $ (0.01) $ (0.22) $ (0.02)
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Revolving Credit Facility (Details) (USD $)
 3 Months Ended 9 Months Ended
Sep. 30, 2012
 Sep. 30, 2011
 Sep. 30, 2012
 Sep. 30, 2011
 May 07, 2012
Revolving Credit Facility (Textual) [Abstract]
Commitment fee per annum 0.25%
Revolving credit facility $ 15,000,000 $ 15,000,000
Credit facility initiation date Feb 14, 2008
Per annum interest rate under the Credit Agreement LIBOR or Eurodollar Rate +2.00%
Interest rate on base rate loan 1.00%
Repurchase of equity 4,500,000
Amortization expense 7,000 4,000 17,000 53,000
Maturity Date of Credit Agreement Feb 14, 2014
Outstanding amounts under the credit agreement 0 0
Original Credit Agreement [Member]
Line of Credit Facility [Line Items]
Deferred financing costs 446,000 446,000
Credit Agreement Amendment [Member]
Line of Credit Facility [Line Items]
Deferred financing costs $ 105,000 $ 105,000
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Stockholders' Equity (Details) (USD $)
In Thousands, except Per Share data, unless otherwise specified		 3 Months Ended
Sep. 30, 2012
 Jun. 30, 2012
 Mar. 31, 2012
Option activity
Beginning Balance, Number of Shares 3,606 3,677 3,583
Granted, Number of Shares    25 100
Exercised, Number of Shares (94) (78) (2)
Forfeited, Number of Shares (2) (11)   
Expired, Number of Shares    (7) (4)
Ending Balance, Number of Shares 3,510 3,606 3,677
Beginning Balance, Weighted Average Price Per Share $ 3.17 $ 3.16 $ 3.14
Granted, Weighted Average Price Per Share    $ 4.41 $ 4.18
Exercised, Weighted Average Price Per Share $ 2.93 $ 3 $ 2.37
Forfeited, Weighted Average Price Per Share $ 3 $ 2.88   
Expired, Weighted Average Price Per Share    $ 5.41 $ 3
Ending Balance, Weighted Average Price Per Share $ 3.18 $ 3.17 $ 3.16
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Stockholders' Equity (Details Textual) (USD $)
Share data in Millions, except Per Share data, unless otherwise specified		 3 Months Ended 9 Months Ended
Sep. 30, 2012
 Sep. 30, 2011
 Sep. 30, 2012
 Sep. 30, 2011
 Jul. 09, 2007
Stockholders' Equity (Textual) [Abstract]
Incremental expense $ 1,000,000
Incremental expense, period recognized 4 years
Incremental Expense Recognized 43,000 43,000 129,000 129,000
Options authorized and reserved 2.5
Exercise Price for stock options not be less than100% of the closing sale price
Percentage of exercise price for stock options 100.00%
Incentive stock options granted more than 10% of the total combined voting power
Percentage of incentive stock options granted 10.00%
Exercise Price, incentive stock options, description price is NOT to be less than110% of the closing sale price
Percentage of exercise price 110.00%
Unrecognized compensation cost related to unvested stock options $ 755,000 $ 755,000
Compensation cost expected to be recognized 2 years
Discount on purchase of additional common shares 50.00%
Redemption price per right $ 0.001
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Segment Information (Details) (USD $)
In Thousands, unless otherwise specified		 3 Months Ended 9 Months Ended
Sep. 30, 2012
 Sep. 30, 2011
 Sep. 30, 2012
 Sep. 30, 2011
Segments information
Revenue $ 15,871 $ 12,677 $ 45,472 $ 35,632
Direct marketing 11,991 6,512 33,069 18,089
Unallocated operating expenses 6,489 6,205 18,940 18,000
Operating loss (2,609) (40) (6,537) (457)
Jewish Networks [Member]
Segments information
Revenue 6,385 6,724 19,417 20,354
Direct marketing 829 936 2,277 2,460
Christian Networks [Member]
Segments information
Revenue 8,495 4,624 22,853 10,790
Direct marketing 10,920 5,112 29,920 13,053
Other Networks [Member]
Segments information
Revenue 903 1,218 2,929 3,821
Direct marketing 213 432 776 2,113
Offline & Other Businesses [Member]
Segments information
Revenue 88 111 273 667
Direct marketing $ 29 $ 32 $ 96 $ 463
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Income on Possession of Assets (Details) (USD $)
 3 Months Ended
Jun. 30, 2012
 Sep. 30, 2011
 Jun. 15, 2012
Income on Possession of Assets (Textual) [Abstract]
Total Gain $ 398,000
Partial gain recognized $ 151,000 $ 247,000
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Commitments And Contingencies (Details) (Minimum [Member], USD $)
 9 Months Ended
Sep. 30, 2012
Minimum [Member]
Commitments and Contingencies (Textual) [Abstract]
Damages in excess $ 25,000
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Income Taxes (Details) (USD $)
 3 Months Ended 9 Months Ended
Sep. 30, 2012
 Sep. 30, 2011
 Sep. 30, 2012
 Sep. 30, 2011
Income Taxes (Textual) [Abstract]
Benefit for income taxes $ (836,000) $ 78,000 $ (2,036,000) $ 28,000
Tax benefit related to united states operations 2,200,000
Deferred tax liability associated with Israeli 114,000
Income tax expense on its unrecognized tax benefits $ 39,000
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Related Party Transactions (Details)
 Dec. 31, 2011
Related Party Transactions (Textual) [Abstract]
Great Hill Partners, Majority shareholders more than 5%
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