lov-8ka_20170807.htm

 

 

 

 

 

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, D.C. 20549

 

FORM 8-K/A

Amendment No. 1

 

CURRENT REPORT

Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934

Date of Report (Date of earliest event reported): August 7, 2017

 

Spark Networks, Inc.

(Exact name of Registrant as Specified in Its Charter)

 

 

Delaware

001-32750

20-8901733

(State or Other Jurisdiction

of Incorporation)

(Commission File Number)

(IRS Employer

Identification No.)

 

 

 

11150 Santa Monica Boulevard, Suite 600

Los Angeles, California

 

90025

(Address of Principal Executive Offices)

 

(Zip Code)

Registrant’s Telephone Number, Including Area Code: (310) 893-0550

Not Applicable

(Former Name or Former Address, if Changed Since Last Report)

 

Indicate by check mark whether the registrant is an emerging growth company as defined in as defined in Rule 405 of the Securities Act of 1933 (§ 230.405 of this chapter) or Rule 12b-2 of the Securities Exchange Act of 1934 (§ 240.12b-2 of this chapter).

Emerging growth company 

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. 

Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions (see General Instructions A.2. below):

X

Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)

Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)

Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))

Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))

 

 

 

 


 

Explanatory Note

 

This Form 8-K/A (this “Form 8-K/A”) is being filed to amend the Current Report on Form 8-K filed by Spark Networks, Inc. (the “Company”) under Items 2.02, 8.01, and 9.01 on August 7, 2017 (the “Original Form 8-K”). The Company had furnished a press release announcing its financial results for the second quarter 2017 as Exhibit 99.1 in Item 9.01 to the Original Form 8-K. Due to a production error, the previously furnished press release contained incorrect information for ARPU metrics within the tables presenting Segment Results From Operations and Key Quarterly Metrics. This Form 8-K/A is being filed to furnish the Company’s second quarter 2017 earnings release with corrected ARPU metrics within such tables.

 

Item 2.02

Results of Operations and Financial Condition

Item 8.01

Other Events

On August 7, 2017, Spark Networks, Inc. issued a press release announcing its second quarter 2017 results. The Company issued a corrected version of the release on August 8, 2017. A copy of the corrected version of the press release is furnished hereto as Exhibit 99.1 and the information therein is incorporated herein by reference.

 

Item 9.01

Financial Statements and Exhibits.

(d) Exhibits

 

 

 

 

 

99.1

 

Corrected Press Release of Spark Networks, Inc.

 

 

 


 

SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.

 

 

 

 

 

 

 

 

SPARK NETWORKS, INC.

 

 

Date: August 8, 2017

 

 

 

 

 

 

 

By:

 

/s/ Robert W. O’Hare

 

 

Name:

 

Robert W. O’Hare

 

 

Title:

 

Chief Financial Officer

 

 

 


 

Exhibit Index

99.1

 

Corrected Press Release of Spark Networks, Inc.

 

 

 

lov-ex991_6.htm

 

Exhibit 99.1

 

CORRECTION: SPARK NETWORKS® REPORTS SECOND QUARTER 2017 RESULTS

In the news release, "Spark Networks® Reports Second Quarter 2017 Results," issued August 7, 2017 by Spark Networks, Inc. (NYSE American: LOV), we are advised by the company that, due to a production error, the previously furnished press release contained incorrect information for ARPU metrics within the tables presenting Segment Results From Operations and Key Quarterly Metrics. This press release corrects ARPU metrics within these tables.

LOS ANGELES, CA / ACCESSWIRE / August 8, 2017 -- Spark Networks, Inc. (NYSE American: LOV) today reported results for the second quarter of 2017.

“With our recent relaunch of JDate on our new technology platform we reached a major strategic milestone, and are well on our way toward completing the launch of Christian Mingle later this quarter,” said Danny Rosenthal, Chief Executive Officer of Spark Networks.  “We expect that the release of the new platform will quickly translate into operational cost savings and increased marketing efficiency and effectiveness.

“In Q2, we saw our second consecutive quarter of revenue stability within the Jewish Networks.  These results, when combined with our new platform, position us to make the data-driven marketing investments necessary to drive future growth and value creation.”

As previously announced on May 2, 2017, Spark Networks, Inc. entered into a definitive agreement with Affinitas GmbH (“EliteSingles”), which operates premium online dating platforms EliteSingles, eDarling and Attractive World to combine in a stock-for-stock merger.  Spark continues to expect the transaction to close in the fourth quarter of 2017, subject to Spark shareholder approval and the satisfaction of certain other customary closing conditions.

In light of the pending merger, Spark will not host a conference call to review its second quarter 2017 results.

Key Quarterly Metrics

  

Q2 2017

 

Q1 2017

 

Q2 2016

 

Revenue

$6.6 Million

 

$7.3 Million

 

$9.1 Million

 

Contribution1

$6.0 Million

 

$5.8 Million

 

$7.6 Million

 

Net Loss

$(2.5) Million

 

$(2.1) Million

 

$329 Thousand

 

Adjusted EBITDA2

$1.2 Million

 

$131 Thousand

 

$1.4 Million

 

Cash Balance

$9.8 Million

 

$10.8 Million

 

$3.1 Million

 

Period Ending Subs3

 

111,371

 

 

119,540

 

 

183,678

 

Avg. Paying Subs3

 

114,925

 

 

130,441

 

 

189,938

 

ARPU

 

$19.12

 

 

$18.38

 

 

$15.70

 

 

 


 

Second Quarter 2017 Financial Results

Revenue:  For the second quarter of 2017, total revenue was $6.6 million, a decrease of 27% compared to the year ago period, and a 9% decrease from the prior quarter.  The year over year and sequential decreases were primarily driven by a decrease in average paying subscribers, reflecting reduced direct marketing investment in the Jewish and Christian Networks. These decreases were partially offset by year over year and sequential increases in ARPU of 22% and 4%, respectively.

Contribution:  Contribution was $6.0 million in the quarter, a decrease of 22% compared to the year ago period, and a 2% increase from the prior quarter. Our contribution margin increased to 90% from 80% in the prior quarter and increased from 84% in the year ago period. Total direct marketing expenses decreased 53% to $690,000 in the second quarter of 2017 as compared to $1.5 million in the prior year period.

Net Loss:  Net Loss was $(2.5) million in the quarter, compared to Net Income of $329,000 in the year ago period and a Net Loss of $(2.1) million in the prior quarter.

Adjusted EBITDA:  For the second quarter of 2017, Adjusted EBITDA was $1.2 million, a decrease of $(283,000) versus the year ago period and an increase of $1.0 million from the prior quarter.  

Cash:  Cash used in operating activities in the second quarter was $440,000.  At June 30, 2017, the Company had $9.8 million in cash and cash equivalents, compared to $10.8 million at the end of the prior quarter. At quarter end, the Company had no outstanding debt.

 

 

 


 

SPARK NETWORKS, INC.

SEGMENT4 RESULTS FROM OPERATIONS
(in thousands except subscriber and ARPU information)

Q2 2017

 

 

Q1 2017

 

 

Q4 2016

 

 

Q3 2016

 

 

Q2 2016

 

 

Q2 '17 v. Q2 '16

 

 

Q2 '17 v. Q1 '17

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Revenue

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Jewish Networks

$

3,137

 

 

$

3,148

 

 

$

3,136

 

 

$

3,322

 

 

$

3,628

 

 

 

-13.5

%

 

 

-0.4

%

Christian Networks

 

3,371

 

 

 

3,813

 

 

 

4,262

 

 

 

4,673

 

 

 

5,044

 

 

 

-33.2

%

 

 

-11.6

%

Other Networks

 

134

 

 

 

286

 

 

 

335

 

 

 

385

 

 

 

413

 

 

 

-67.6

%

 

 

-53.2

%

Offline & Other Businesses

 

(2

)

 

 

17

 

 

 

10

 

 

 

11

 

 

 

13

 

 

 

-115.7

%

 

 

-111.8

%

Total Revenue

$

6,640

 

 

$

7,264

 

 

$

7,743

 

 

$

8,391

 

 

$

9,098

 

 

 

-27.0

%

 

 

-8.6

%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Direct Mktg. Exp.

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Jewish Networks

$

259

 

 

$

570

 

 

$

316

 

 

$

420

 

 

$

372

 

 

 

-30.4

%

 

 

-54.6

%

Christian Networks

 

405

 

 

 

803

 

 

 

316

 

 

 

750

 

 

 

1,001

 

 

 

-59.5

%

 

 

-49.6

%

Other Networks

 

26

 

 

 

60

 

 

 

41

 

 

 

60

 

 

 

105

 

 

 

-75.2

%

 

 

-56.7

%

Total Direct Mktg. Exp.

$

690

 

 

$

1,433

 

 

$

673

 

 

$

1,230

 

 

$

1,478

 

 

 

-53.3

%

 

 

-51.8

%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Contribution

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Jewish Networks

$

2,878

 

 

$

2,578

 

 

$

2,820

 

 

$

2,902

 

 

$

3,256

 

 

 

-11.6

%

 

 

11.6

%

Christian Networks

 

2,966

 

 

 

3,009

 

 

 

3,946

 

 

 

3,923

 

 

 

4,043

 

 

 

-26.6

%

 

 

-1.4

%

Other Networks

 

108

 

 

 

227

 

 

 

294

 

 

 

325

 

 

 

308

 

 

 

-64.9

%

 

 

-52.3

%

Offline & Other Businesses

 

(2

)

 

 

17

 

 

 

10

 

 

 

11

 

 

 

13

 

 

 

-119.7

%

 

 

-114.8

%

Total Contribution

$

5,950

 

 

$

5,831

 

 

$

7,070

 

 

$

7,161

 

 

$

7,620

 

 

 

-21.9

%

 

 

2.0

%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Period Ending Subs

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Jewish Networks

 

47,487

 

 

 

47,236

 

 

 

51,519

 

 

 

52,952

 

 

 

59,868

 

 

 

-20.7

%

 

 

0.5

%

Christian Networks

 

57,947

 

 

 

65,146

 

 

 

82,163

 

 

 

95,047

 

 

 

112,895

 

 

 

-48.7

%

 

 

-11.1

%

Other Networks

 

5,937

 

 

 

7,158

 

 

 

8,690

 

 

 

10,234

 

 

 

10,915

 

 

 

-45.6

%

 

 

-17.1

%

Total Period Ending Subs.

 

111,371

 

 

 

119,540

 

 

 

142,372

 

 

 

158,233

 

 

 

183,678

 

 

 

-39.4

%

 

 

-6.8

%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Average Paying Subs.

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Jewish Networks

 

47,278

 

 

 

48,823

 

 

 

52,493

 

 

 

57,684

 

 

 

61,732

 

 

 

-23.4

%

 

 

-3.2

%

Christian Networks

 

60,972

 

 

 

73,627

 

 

 

88,774

 

 

 

105,108

 

 

 

117,024

 

 

 

-47.9

%

 

 

-17.2

%

Other Networks

 

6,675

 

 

 

7,991

 

 

 

9,408

 

 

 

10,772

 

 

 

11,182

 

 

 

-40.3

%

 

 

-16.5

%

Total Avg. Paying Subs.

 

114,925

 

 

 

130,441

 

 

 

150,675

 

 

 

173,564

 

 

 

189,938

 

 

 

-39.5

%

 

 

-11.9

%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

ARPU

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Jewish Networks

$

21.80

 

 

$

21.07

 

 

$

19.68

 

 

$

18.79

 

 

$

19.33

 

 

 

12.8

%

 

 

3.5

%

Christian Networks

 

18.43

 

 

 

17.23

 

 

 

15.74

 

 

 

14.60

 

 

 

14.09

 

 

 

30.8

%

 

 

7.0

%

Other Networks

 

6.54

 

 

 

11.91

 

 

 

11.55

 

 

 

11.69

 

 

 

12.15

 

 

 

-46.2

%

 

 

-45.1

%

Total ARPU5

$

19.12

 

 

$

18.34

 

 

$

16.85

 

 

$

15.81

 

 

$

15.70

 

 

 

21.8

%

 

 

4.3

%

 

 

 


 

Distribution of New Subscription Purchases6

 

Q2 2017

 

 

Q1 2017

 

 

Q4 2016

 

 

Q3 2016

 

 

Q2 2016

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Jewish Networks

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

1 month plans

 

54.7%

 

 

 

51.6%

 

 

 

45.7%

 

 

 

32.6%

 

 

 

28.2%

 

3 month plans

 

19.5%

 

 

 

19.2%

 

 

 

20.4%

 

 

 

18.4%

 

 

 

19.2%

 

6 month plans

 

25.8%

 

 

 

29.2%

 

 

 

33.9%

 

 

 

49.0%

 

 

 

52.6%

 

 

 

100.0%

 

 

 

100.0%

 

 

 

100.0%

 

 

 

100.0%

 

 

 

100.0%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Christian Networks

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

1 month plans

 

58.2%

 

 

 

55.1%

 

 

 

52.7%

 

 

 

36.5%

 

 

 

39.2%

 

3 month plans

 

24.8%

 

 

 

25.0%

 

 

 

27.0%

 

 

 

22.4%

 

 

 

25.7%

 

6 month plans

 

17.0%

 

 

 

19.9%

 

 

 

20.3%

 

 

 

41.1%

 

 

 

35.1%

 

 

 

100.0%

 

 

 

100.0%

 

 

 

100.0%

 

 

 

100.0%

 

 

 

100.0%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Other Networks

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

1 month plans

 

57.4%

 

 

 

55.0%

 

 

 

60.1%

 

 

 

51.1%

 

 

 

52.2%

 

3 month plans

 

11.3%

 

 

 

12.2%

 

 

 

10.5%

 

 

 

9.5%

 

 

 

10.8%

 

6 month plans

 

31.3%

 

 

 

32.8%

 

 

 

29.4%

 

 

 

39.4%

 

 

 

37.1%

 

 

 

100.0%

 

 

 

100.0%

 

 

 

100.0%

 

 

 

100.0%

 

 

 

100.0%

 

Composition of Average Paying Subscriber Base7

 

Q2 2017

 

 

Q1 2017

 

 

Q4 2016

 

 

Q3 2016

 

 

Q2 2016

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Jewish Networks

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

First Time Subscribers

 

21.2%

 

 

 

21.7%

 

 

 

22.0%

 

 

 

23.7%

 

 

 

24.6%

 

Winback Subscribers

 

25.8%

 

 

 

28.1%

 

 

 

33.0%

 

 

 

34.6%

 

 

 

34.0%

 

Renewal Subscribers

 

53.0%

 

 

 

50.2%

 

 

 

44.9%

 

 

 

41.7%

 

 

 

41.4%

 

Total

 

100.0%

 

 

 

100.0%

 

 

 

100.0%

 

 

 

100.0%

 

 

 

100.0%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Christian Networks

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

First Time Subscribers

 

32.7%

 

 

 

35.2%

 

 

 

37.2%

 

 

 

39.9%

 

 

 

42.0%

 

Winback Subscribers

 

21.0%

 

 

 

21.4%

 

 

 

25.1%

 

 

 

26.4%

 

 

 

26.0%

 

Renewal Subscribers

 

46.3%

 

 

 

43.4%

 

 

 

37.7%

 

 

 

33.7%

 

 

 

32.0%

 

Total

 

100.0%

 

 

 

100.0%

 

 

 

100.0%

 

 

 

100.0%

 

 

 

100.0%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Other Networks

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

First Time Subscribers

 

27.0%

 

 

 

28.0%

 

 

 

29.8%

 

 

 

32.7%

 

 

 

33.0%

 

Winback Subscribers

 

22.6%

 

 

 

21.6%

 

 

 

22.2%

 

 

 

22.9%

 

 

 

22.4%

 

Renewal Subscribers

 

50.4%

 

 

 

50.4%

 

 

 

48.0%

 

 

 

44.4%

 

 

 

44.6%

 

Total

 

100.0%

 

 

 

100.0%

 

 

 

100.0%

 

 

 

100.0%

 

 

 

100.0%

 

 

 

 


 

Forward-Looking Statements

This document contains forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. All statements other than statements of historical fact are forward-looking statements. These forward-looking statements involve known and unknown risks, uncertainties, and other factors that may cause Spark’s or EliteSingles’ or the combined company’s performance or achievements to be materially different from those of any expected future results, performance, or achievements. Forward-looking statements speak only as of the date they are made, and neither Spark nor EliteSingles assumes any duty to update forward-looking statements. We caution readers that a number of important factors could cause actual results to differ materially from those expressed in, or implied or projected by, such forward-looking statements. Such forward-looking statements include, but are not limited to, statements about the expected completion of the launch of Christin Mingle and the Company’s transition roadmap, statements about the Company’s positioning to make investments to drive future growth and value creation, statements about the anticipated timing of the closing of the Company’s pending business combination transaction with EliteSingles, statements about the expected benefits of such business combination transaction, including future financial and operating results, the combined company’s plans, objectives, expectations and intentions and other statements that are not historical facts.  The following factors, among others, could cause actual results to differ from those set forth in the forward-looking statements: (i) the possibility that the proposed transaction does not close when expected or at all because required regulatory, shareholder or other approvals and other conditions to closing are not received or satisfied on a timely basis or at all; (ii) changes in Spark’s share price before closing, including as a result of the financial performance of EliteSingles prior to closing, or more generally due to broader stock market movements, and the performance of peer group companies; (iii) the risk that the benefits from the transaction may not be fully realized or may take longer to realize than expected, including as a result of changes in general economic and market conditions, interest and exchange rates, monetary policy, laws and regulations and their enforcement, and the degree of competition in the geographic and business areas in which Spark and EliteSingles operate; (iv) the ability to promptly and effectively integrate the businesses of Spark and EliteSingles; (v) the reaction to the transaction of the companies’ customers, employees and counterparties; (vi) diversion of management time on merger-related issues; (vii) lower-than-expected revenues, credit quality deterioration or a reduction in net earnings; and (viii) other risks that are described in Spark’s public filings with the SEC. For more information, see the risk factors described in Spark’s Annual Reports on Form 10-K, Quarterly Reports on Form 10-Q and other filings with the SEC.

 

 


 

How to Find Further Information

This communication does not constitute an offer to sell or a solicitation of an offer to sell or a solicitation of an offer to buy any securities or a solicitation of any vote or approval, nor shall there be any sale of securities in any jurisdiction in which such offer, solicitation or sale would be unlawful prior to registration or qualification under the securities laws of any such jurisdiction. No offering of securities shall be made except by means of a prospectus meeting the requirements of Section 10 of the Securities Act of 1933, as amended, and otherwise in accordance with applicable law. This communication is being made in respect of the proposed business combination transaction between the Company and EliteSingles. The proposed transaction will be submitted to the shareholders of the Company for their consideration. In connection with the proposed transaction, the new entity and EliteSingles will file with the SEC a registration statement on Form F-4 that will include the proxy statement of the Company that also constitutes a prospectus of the Company.  After the registration statement has been declared effective by the SEC, a definitive proxy statement/prospectus will be mailed to each Company stockholder entitled to vote at the Company’s stockholder meeting. INVESTORS ARE URGED TO READ THE PROXY STATEMENT/PROSPECTUS AND ANY OTHER DOCUMENTS RELATING TO THE TRANSACTION FILED WITH THE SEC CAREFULLY AND IN THEIR ENTIRETY IF AND WHEN THEY BECOME AVAILABLE BECAUSE THEY WILL CONTAIN IMPORTANT INFORMATION ABOUT THE PROPOSED TRANSACTION. Investors may obtain copies of the proxy statement/prospectus (when available) and all other documents filed with the SEC regarding the proposed transaction, free of charge, at the SEC’s website (http://www.sec.gov). Investors may also obtain these documents, free of charge, from the Company’s website (www.spark.net) under the link “Investor Relations” and then under the tab “SEC Filings” or by directing request to investor@spark.net.

Participants in Solicitation

The Company and its directors, executive officers and other members of management and employees may be deemed to be “participants” in the solicitation of proxies from the Company’s stockholders in connection with the proposed transaction. Information regarding the persons who may, under the rules of the SEC, be deemed participants in the solicitation of the Company’s stockholders in connection with the proposed transaction and a description of their direct and indirect interest, by security holdings or otherwise, will be set forth in the proxy statement/prospectus filed with the SEC in connection with the proposed transaction. You can find information about the Company’s executive officers and directors in its definitive proxy statement filed with the SEC on March 31, 2017 and in its Annual Report on Form 10-K filed with the SEC on March 22, 2017. You can also obtain free copies of these documents from the Company using the contact information above.

About Spark Networks, Inc.:

The Spark Networks portfolio of consumer Web sites includes, among others, JDate®.com (www.jdate.com), ChristianMingle®.com (www.christianmingle.com), JSwipe (www.jswipeapp.com), CROSSPATHS (www.crosspathsapp.com), LDSSingles (www.ldssingles.com), BlackSingles.com® (www.blacksingles.com), and SilverSingles®.com (www.silversingles.com).

For More Information

Investors:

Robert O’Hare

rohare@spark.net

1 “Contribution” is defined as revenue, net of credits and credit card chargebacks, less direct marketing.

 

 


 

2 The Company reports Adjusted EBITDA as a supplemental measure to generally accepted accounting principles ("GAAP"). This non-GAAP measure is one of the primary metrics by which we evaluate the performance of our businesses, budget, forecast and compensate management. We believe this measure provides management and investors with a consistent view, period to period, of the core earnings generated from on-going operations and excludes the impact of: (i) non-cash items such as stock-based compensation, asset impairments, non-cash currency translation adjustments related to an inter-company loan and (ii) one-time items that have not occurred in the past two years and are not expected to recur in the next two years. Adjusted EBITDA should not be construed as a substitute for net income (loss) (as determined in accordance with GAAP) for the purpose of analyzing our operating performance or financial position, as Adjusted EBITDA is not defined by GAAP. A reconciliation of the Adjusted EBITDA for the three and six months ended June 30, 2017 can be found in the table below.

“Adjusted EBITDA” is defined as earnings before interest, taxes, depreciation, amortization, stock-based compensation, impairment of intangible and long-lived assets, non-cash currency translation adjustments for an inter-company loan and non-recurring legal and acquisition costs.

3 "Paying Subscribers" are defined as individuals who have paid a monthly fee for access to communication and website features beyond those provided to our members. Period ending subscribers for each quarter represent the paying subscriber count as of the last day of the period. Average paying subscribers for each month are calculated as the sum of the paying subscribers at the beginning and end of the month, divided by two. Average paying subscribers for periods longer than one month are calculated as the sum of the average paying subscribers for each month, divided by the number of months in such period. The calculation excludes results from the Company’s HurryDate business due to its relative size.

4 In accordance with Segment Reporting guidance, the Company’s financial reporting includes detailed data on four separate operating segments. The Jewish Networks segment consists of JDate, JDate.co.il, JDate.fr, JDate.co.uk, and JSwipe. The Christian Networks segment consists of ChristianMingle, CrossPaths, ChristianMingle.co.uk, ChristianMingle.com.au, Believe.com, and Faith.com. The Other Networks segment consists of LDSSingles.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. The Offline & Other Businesses segment consists of revenue generated from offline activities and HurryDate events and subscriptions.

5 ARPU is defined as average revenue per user per month. Total ARPU excludes results from the Company’s HurryDate business due to its relative size.

6 One month plans may also include a small amount of two month plans.  Three month plans may include a small amount of four month plans.  Six month plans may include a small amount of twelve month plans.

7 Represents the composition of average paying subscribers in the period.  First Time Subscribers are defined as those subscribers that have never purchased a subscription from the Company for that reporting segment. Winback Subscribers are defined as those individuals who have purchased a subscription from the Company for that reporting segment, allowed their subscription to lapse, and subsequently purchased a subscription from the Company for that reporting segment.  Renewal Subscribers are defined as those subscribers that have auto-renewed a subscription from the Company for that reporting segment.  Figures exclude results from JSwipe and CrossPaths.

 

 


 

SPARK NETWORKS, INC.

CONSOLIDATED BALANCE SHEETS
(in thousands, except share data)

 

 

June 30,

 

 

December 31,

 

 

 

2017

 

 

2016

 

Assets

 

 

 

 

 

 

 

 

Current assets:

 

 

 

 

 

 

 

 

Cash and cash equivalents

 

$

9,808

 

 

$

11,360

 

Restricted cash

 

 

380

 

 

 

454

 

Accounts receivable

 

 

438

 

 

 

525

 

Prepaid expenses and other

 

 

540

 

 

 

1,408

 

Total current assets

 

 

11,166

 

 

 

13,747

 

Property and equipment, net

 

 

2,221

 

 

 

4,494

 

Goodwill

 

 

11,136

 

 

 

10,523

 

Intangible assets, net

 

 

2,840

 

 

 

2,950

 

Deposits and other assets

 

 

90

 

 

 

103

 

Total assets

 

$

27,453

 

 

$

31,817

 

Liabilities and Stockholders' Equity

 

 

 

 

 

 

 

 

Current liabilities:

 

 

 

 

 

 

 

 

Accounts payable

 

$

1,158

 

 

$

819

 

Accrued liabilities

 

 

2,858

 

 

 

2,590

 

Deferred revenue

 

 

3,143

 

 

 

4,005

 

Total current liabilities

 

 

7,159

 

 

 

7,414

 

Deferred tax liability - non-current

 

 

2,274

 

 

 

2,092

 

Other liabilities

 

 

98

 

 

 

246

 

Total liabilities

 

 

9,531

 

 

 

9,752

 

Commitments and Contingencies

 

 

 

 

 

 

 

 

Stockholders' equity:

 

 

 

 

 

 

 

 

10,000,000 shares of Preferred Stock authorized, $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 authorized, $0.001 par value, with 32,176,023 and 31,983,545 shares of Common Stock issued and outstanding at June 30, 2017 and December 31, 2016:

 

 

32

 

 

 

32

 

Additional paid-in-capital

 

 

87,543

 

 

 

87,198

 

Accumulated other comprehensive income

 

 

869

 

 

 

713

 

Accumulated deficit

 

 

(70,522

)

 

 

(65,878

)

Total stockholders' equity

 

 

17,922

 

 

 

22,065

 

Total liabilities and stockholders' equity

 

$

27,453

 

 

$

31,817

 

 

 

 


 

SPARK NETWORKS, INC.

CONSOLIDATED STATEMENTS OF OPERATIONS
(unaudited, in thousands, except per share data)

Three Months Ended June 30,

 

 

Six Months Ended June 30,

 

 

2017

 

 

2016

 

 

2017

 

 

2016

 

Revenue

$

6,640

 

 

$

9,098

 

 

$

13,904

 

 

$

18,957

 

Cost and expenses:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Cost of revenue (exclusive of depreciation shown separately below)

 

1,684

 

 

 

2,653

 

 

 

4,038

 

 

 

8,882

 

Sales and marketing

 

561

 

 

 

1,380

 

 

 

1,211

 

 

 

2,832

 

Customer service

 

586

 

 

 

840

 

 

 

1,221

 

 

 

1,833

 

Technical operations

 

280

 

 

 

305

 

 

 

499

 

 

 

602

 

Development

 

904

 

 

 

1,180

 

 

 

1,619

 

 

 

2,210

 

General and administrative

 

3,664

 

 

 

2,004

 

 

 

6,898

 

 

 

4,515

 

Depreciation

 

1,666

 

 

 

746

 

 

 

3,374

 

 

 

1,458

 

Amortization of intangible assets

 

49

 

 

 

78

 

 

 

98

 

 

 

156

 

Impairment of intangible and long-lived assets

 

15

 

 

 

52

 

 

 

24

 

 

 

91

 

Total cost and expenses

 

9,409

 

 

 

9,238

 

 

 

18,982

 

 

 

22,579

 

Operating loss

 

(2,769

)

 

 

(140

)

 

 

(5,078

)

 

 

(3,622

)

Interest (income) expense and other, net

 

(111

)

 

 

114

 

 

 

(342

)

 

 

(27

)

Loss before income tax benefit

 

(2,658

)

 

 

(254

)

 

 

(4,736

)

 

 

(3,595

)

Income tax benefit

 

(139

)

 

 

(583

)

 

 

(92

)

 

 

(516

)

Net (loss) income

 

(2,519

)

 

 

329

 

 

 

(4,644

)

 

 

(3,079

)

Net (loss) earnings per share - basic and diluted

$

(0.08

)

 

$

0.01

 

 

$

(0.14

)

 

$

(0.12