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Document And Entity Information
 3 Months Ended
Mar. 31, 2012
 May 11, 2012
Document And Entity Information [Abstract]
Document Type 10-Q
Amendment Flag false
Document Period End Date Mar 31, 2012
Document Fiscal Period Focus Q1
Document Fiscal Year Focus 2012
Entity Registrant Name SPARK NETWORKS INC
Entity Central Index Key 0001314475
Current Fiscal Year End Date --12-31
Entity Filer Category Smaller Reporting Company
Entity Common Stock, Shares Outstanding 20,596,857
Trading Symbol lov
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Consolidated Balance Sheets (USD $)
In Thousands, unless otherwise specified		 Mar. 31, 2012
 Dec. 31, 2011
Assets
Cash and cash equivalents $ 12,517 $ 15,106
Restricted cash 1,095 958
Accounts receivable, net of allowance of $1 and $1, respectively 1,003 1,146
Deferred tax asset - current 44 44
Prepaid expenses and other 1,129 1,164
Total current assets 15,788 18,418
Property and equipment, net 3,025 2,839
Goodwill 8,859 8,683
Intangible assets, net 1,911 1,900
Deferred tax asset - non-current 5,639 5,641
Deposits and other assets 426 455
Total assets 35,648 37,936
Liabilities and Stockholders' Equity
Accounts payable 880 952
Accrued liabilities 2,191 4,046
Deferred revenue 6,753 5,723
Deferred tax liability- current 203 203
Total current liabilities 10,027 10,924
Deferred tax liability 1,293 1,219
Other liabilities - non-current 1,141 1,141
Total liabilities 12,461 13,284
Commitments and contingencies (Note 7)      
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 20,596,857 and 20,594,670 shares of Common Stock issued and outstanding at March 31, 2012 and December 31, 2011, respectively: 21 21
Additional paid-in-capital 53,224 53,014
Accumulated other comprehensive income 710 672
Accumulated deficit (30,768) (29,055)
Total stockholders' equity 23,187 24,652
Total liabilities and stockholders' equity $ 35,648 $ 37,936
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Consolidated Balance Sheets (Parenthetical) (USD $)
In Thousands, except Share data, unless otherwise specified		 Mar. 31, 2012
 Dec. 31, 2011
Accounts receivable, allowance $ 1 $ 1
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
Common stock, shares authorized 100,000,000 100,000,000
Common stock, par value $ 0.001 $ 0.001
Common stock, shares issued 20,596,857 20,594,670
Common stock, shares outstanding 20,596,857 20,594,670
Designated As Series C Junior Participating Cumulative Preferred Stock [Member]
Preferred stock, shares authorized 450,000 450,000
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Consolidated Statements Of Operations And Comprehensive Loss (USD $)
In Thousands, except Per Share data, unless otherwise specified		 3 Months Ended
Mar. 31, 2012
 Mar. 31, 2011
Consolidated Statements Of Operations And Comprehensive Loss [Abstract]
Revenue $ 14,555 $ 10,960
Cost and expenses:
Cost of revenue (exclusive of depreciation shown separately below) 11,848 5,815
Sales and marketing 973 900
Customer service 613 461
Technical operations 350 414
Development 846 745
General and administrative 2,238 2,363
Depreciation 403 290
Amortization of intangible assets 13 98
Total cost and expenses 17,284 11,086
Operating loss (2,729) (126)
Interest and other (income) expenses, net (127) (57)
Loss before income taxes (2,602) (69)
(Benefit) provision for income taxes (889) 115
Net loss (1,713) (184)
Net loss per share - basic and diluted $ (0.08) $ (0.01)
Weighted average shares outstanding - basic and diluted 20,596 20,587
Comprehensive loss $ (1,675) $ (149)
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Consolidated Statements Of Operations And Comprehensive Loss (Parenthetical) (USD $)
In Thousands, unless otherwise specified		 3 Months Ended
Mar. 31, 2012
 Mar. 31, 2011
Stock-based compensation;
Stock-based compensation $ 204 $ 261
Cost Of Revenue [Member]
Stock-based compensation;
Stock-based compensation 2 2
Sales And Marketing [Member]
Stock-based compensation;
Stock-based compensation 20 34
Customer Service [Member]
Stock-based compensation;
Stock-based compensation      
Technical Operations [Member]
Stock-based compensation;
Stock-based compensation 30 31
Development [Member]
Stock-based compensation;
Stock-based compensation 11 12
General And Administrative [Member]
Stock-based compensation;
Stock-based compensation $ 141 $ 182
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Consolidated Statements Of Cash Flows (USD $)
In Thousands, unless otherwise specified		 3 Months Ended
Mar. 31, 2012
 Mar. 31, 2011
Cash flows from operating activities:
Net loss $ (1,713) $ (184)
Adjustments to reconcile net loss to cash (used in) provided by operating activities:
Depreciation and amortization 416 388
Foreign exchange gain on intercompany loan (125) (84)
Other 7 2
Stock-based compensation 204 261
Deferred taxes 76 45
Changes in operating assets and liabilities:
Accounts receivable 143 236
Restricted cash (137) 169
Prepaid expenses and other assets 51 (156)
Accounts payable and accrued liabilities (1,875) (1,041)
Deferred revenue 1,030 647
Net cash (used in) provided by operating activities (1,923) 283
Cash flows from investing activities:
Purchases of property and equipment (649) (283)
Purchases of intangible assets (23) (13)
Net cash used in investing activities (672) (296)
Cash flows from financing activities:
Proceeds from issuance of common stock 6
Net cash provided by financing activities 6
Net decrease in cash (2,589) (13)
Cash and cash equivalents at beginning of period 15,106 13,901
Cash and cash equivalents at end of period 12,517 13,888
Supplemental disclosure of cash flow information:
Cash paid for income taxes $ 21 $ 31
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The Company And Summary Of Significant Accounting Policies
 3 Months Ended
Mar. 31, 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 Amex.

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
 3 Months Ended
Mar. 31, 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
 3 Months Ended
Mar. 31, 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.

 

     For the Three Months Ended March 31,  
     2012     2011  
     (in thousands except per share data)  

Net Loss Per Share of Common Stock – Basic and Diluted

     

Net loss applicable to common stock

    $ (1,713 )    $ (184 ) 

Weighted average shares outstanding – basic and diluted

      20,596        20,587   
  

 

 

    

 

 

  

Net Loss Per Share – Basic and Diluted

    $ (0.08 )    $ (0.01 ) 
  

 

 

    

 

 

  

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
 3 Months Ended
Mar. 31, 2012
Revolving Credit Facility [Abstract]
Revolving Credit Facility
4. Revolving Credit Facility

As of March 31, 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 March 31, 2012, there was no outstanding amount 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 removes 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 $4,500,000 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 to obtain further credit under the Credit Agreement.

 

The Company was compliant with the Credit Agreement's customary affirmative and negative covenants, as of March 31, 2012.

In connection with the original Credit Agreement and the first three amendments thereto, the Company paid deferred financing costs of approximately $446,000 and $80,000, respectively. Costs associated with both the original Credit Agreement and the first three 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 months ended March 31, 2012 and March 31, 2011 were $4,000 and $16,000, respectively.
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Stockholders' Equity
 3 Months Ended
Mar. 31, 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 million and is being recognized over the four year vesting term of the newly issued options. The incremental expense recognized for each of the three month periods ended March 31, 2012 and 2011 was $43,000.

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 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 Amex (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 March 31, 2012, total unrecognized compensation cost related to unvested stock options was $1.1 million. 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, 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   

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
 3 Months Ended
Mar. 31, 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 consists of ChristianMingle.com, ChristianMingle.co.uk, ChristianMingle.com.au and Believe.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 10Q have been reclassified to conform to the current period presentation.

 

     Three Months Ended
March 31,		  
(in thousands)    2012      2011  

Revenue

      

Jewish Networks

    $ 6,580       $ 6,899   

Christian Networks

      6,853         2,623   

Other Networks

      1,031         1,331   

Offline & Other Businesses

      91         107   
  

 

 

     

 

 

  

Total Revenue

    $ 14,555       $ 10,960   
  

 

 

     

 

 

  

Direct Marketing Expenses

      

Jewish Networks

      801         659   

Christian Networks

      9,795         3,433   

Other Networks

      312         918   

Offline & Other Businesses

      30         30   
  

 

 

     

 

 

  

Total Direct Marketing Expenses

    $ 10,938       $ 5,040   
  

 

 

     

 

 

  

Unallocated operating expenses

      6,346         6,046   
  

 

 

     

 

 

  

Operating loss

    $ 2,729       $ 126   
  

 

 

     

 

 

  

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
 3 Months Ended
Mar. 31, 2012
Commitments And Contingencies [Abstract]
Commitments And Contingencies
7. Commitments and Contingencies

Legal Proceedings

Please refer to the Company's Annual Report on Form 10-K for the year ended December 31, 2011 for a description of litigation and claims.

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
 3 Months Ended
Mar. 31, 2012
Income Taxes [Abstract]
Income Taxes
8. Income Taxes

The benefit for income taxes for the three months ended March 31, 2012 consists primarily of a $941,000 income tax benefit for losses incurred by our domestic operations, offset by a $39,000 income tax expense related to the deferred tax liability associated with our Israeli subsidiary's tax deductible goodwill amortization and the absence of a corresponding deferred tax asset due to a valuation allowance. Additionally, the Company recorded approximately $13,000 of income tax expense related to interest accrued on its unrecognized tax benefits.
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Related Party Transactions
 3 Months Ended
Mar. 31, 2012
Related Party Transactions [Abstract]
Related Party Transactions
9. 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 provide the Company with certain software. The Chief Executive Officer of Ultra UnlimitedCorp. is the brother of Michael Kumin, a director of the Company, and 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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