f10q0312a1_snapinteractive.htm

SNAP INTERACTIVE, INC.

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

(Unaudited)

	Three Months Ended
	March 31,
	2012			2011
		(As Restated)			(As Restated)
Cash flows from operating activities:
Net loss	$	(2,995,636	)	$	(2,277,346	)
Adjustments to reconcile net loss to net cash used in operating activities:
Depreciation and amortization		32,740			5,444
Amortization of investment premium		3,212			-
Stock-based compensation expense		285,283			60,092
Mark-to-market adjustment on warrant liability		1,288,375			1,356,600
Loss on disposal of fixed assets		-			454
Changes in operating assets and liabilities:
Restricted cash		(105,000	)		-
Credit card holdback receivable		(14,642	)		(92,669	)
Accounts receivable		(607,861	)		(62,204	)
Prepaid expense		(83,716	)		(79,662	)
Security deposit		19,520			-
Accounts payable and accrued expenses		326,146			(70,939	)
Deferred revenue		291,672			455,109
Net cash used in operating activities		(1,559,907	)		(705,121	)

Cash flows from investing activities:
Purchase of fixed assets		(2,677	)		(24,337	)
Repayment of note receivable issued to employee		8,664			-
Reclassification of investments maturing in less than 90 days		1,753,850			-
Redemption of investments		1,250,000			-
Net cash provided by (used in) investing activities		3,009,837			(24,337	)

Cash flows from financing activities:
Proceeds from issuance of common stock		-			7,915,700
Net cash provided by financing activities		-			7,915,700

Net (decrease) increase in cash and cash equivalents		1,449,930			7,186,242

Cash and cash equivalents at beginning of year		2,397,828			3,018,876

Cash and cash equivalents at end of period	$	3,847,758		$	10,205,118

Supplemental disclosure of cash flow information:

Cash paid for interest	$	-		$	-
Cash paid for taxes	$	11,030		$	60

The accompanying notes are an integral part of these condensed consolidated financial statements.

SNAP INTERACTIVE, INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(Unaudited)

1. Basis of Presentation

The accompanying unaudited condensed consolidated financial statements include the accounts of Snap Interactive, Inc. and its wholly owned subsidiaries, eTwine, Inc. and Snap Mobile Limited. The condensed consolidated financial statements included in this report have been prepared in accordance with accounting principles generally accepted in the United States of America (“GAAP”) and the rules and regulations of the Securities and Exchange Commission (the “SEC”) for interim financial information. Accordingly, the financial statements contained herein do not include all the information necessary for a comprehensive presentation of financial position and results of operations. The Company believes that the disclosures are adequate to make the information presented not misleading.

The financial statements contained herein should be read in conjunction with the Company’s audited consolidated financial statements and the related notes to the audited consolidated financial statements included in the Company’s Amendment No. 1 to Annual Report on Form 10-K/A for the year ended December 31, 2011, filed with the SEC on December 7, 2012.

Certain amounts from prior periods have been reclassified to conform to the current period presentation.

In the opinion of management, the accompanying unaudited condensed consolidated financial data contains all normal and recurring adjustments necessary to present fairly the consolidated financial condition, results of operations, and changes in cash flows of the Company for the interim periods presented. The Company’s historical results are not necessarily indicative of future operating results, and the results for the three months ended March 31, 2012, are not necessarily indicative of results to be expected for the year ending December 31, 2012, or for any other period.

Restatement of Previously Issued Consolidated Financial Statements

We have restated our consolidated financial statements as described in “Note 2. Restatement of Certain Consolidated Financial Statements.”

Note 2. Restatement of Certain Consolidated Financial Statements

Our Consolidated Balance Sheets as of March 31, 2012 and December 31, 2011, our Consolidated Statements of Changes in Stockholders' Equity for the three months ended March 31, 2012, our Consolidated Statements of Operations for the three months ended March 31, 2012 and our Consolidated Statements of Cash Flows for the three months ended March 31, 2012 and 2011 have been restated to correct the accounting for warrants issued as part of the Company’s January 2011 equity financing. The Company has determined that, as prescribed under Accounting Standards Codification 480, Distinguishing Liabilities from Equity, these warrants should have been classified as liabilities on the Company’s Consolidated Balance Sheet because, according to the warrants' terms, a fundamental transaction could give rise to an obligation of the Company to pay cash to its warrant holders. The proper accounting for this warrant liability requires the liability to be recorded at fair value on the Company’s Consolidated Balance Sheet, with corresponding changes in such fair value to be recognized in earnings on the Company’s Consolidated Statements of Operations in each subsequent period.

Accordingly, the Company has restated the financial statements referenced above to correct this error. The correction of this error did not impact the operating results of the Company or its overall liquidity. The effects of the restatement on the Company’s consolidated financial statements are set forth in the tables below:

Consolidated Balance Sheet as of March 31, 2012:

	As Originally Reported			Effect of Restatement			As Restated
Warrant liability	$	-		$	2,225,375		$	2,225,375
Total liabilities		5,710,686			2,225,375			7,936,061
Additional paid-in capital		11,517,147			(2,975,000	)		8,542,147
Accumulated deficit		(7,430,004	)		749,625			(6,680,379	)
Total stockholders' equity		4,125,723			(2,225,375	)		1,900,348

Consolidated Balance Sheet as of December 31, 2011:

	As Originally Reported			Effect of Restatement			As Restated
Warrant liability	$	-		$	937,000		$	937,000
Total liabilities		5,092,870			937,000			6,029,870
Additional paid-in capital		11,231,864			(2,975,000	)		8,256,864
Accumulated deficit		(5,722,743	)		2,038,000			(3,684,743	)
Total stockholders' equity		5,547,701			(937,000	)		4,610,701

Consolidated Statements of Operations for the Three Months Ended March 31, 2012:

	As Originally Reported			Effect of Restatement			As Restated
Mark-to-market adjustment on warrant liability	$	-		$	(1,288,375	)	$	(1,288,375	)
Net loss before income tax		(1,707,261	)		(1,288,375	)		(2,995,636	)
Net loss		(1,707,261	)		(1,288,375	)		(2,995,636	)
Net loss per share - Basic and diluted		(0.04	)		(0.03	)		(0.08	)

Consolidated Statements of Operations for the Three Months Ended March 31, 2011:

	As Originally Reported			Effect of Restatement			As Restated
Mark-to-market adjustment on warrant liability	$	-		$	(1,356,600	)	$	(1,356,600	)
Net loss before income tax		(920,746	)		(1,356,600	)		(2,277,346	)
Net loss		(920,746	)		(1,356,600	)		(2,277,346	)
Net loss per share - Basic and diluted		(0.02	)		(0.04	)		(0.06	)

Consolidated Statement of Changes in Stockholders' Equity for the Three Months Ended March 31, 2012:

	As Originally Reported			Effect of Restatement			As Restated
Additional paid-in capital as of March 31, 2012	$	11,517,147		$	(2,975,000	)	$	8,542,147
Accumulated deficit as of March 31, 2012		(7,430,004	)		749,625			(6,680,379	)
Total stockholders' equity as of March 31, 2012		4,125,723			(2,225,375	)		1,900,348
Additional paid-in capital as of December 31, 2011		11,231,864			(2,975,000	)		8,256,864
Accumulated deficit as of December 31, 2011		(5,722,743	)		2,038,000			(3,684,743	)
Total stockholders' equity as of December 31, 2011		5,547,701			(937,000	)		4,610,701

Consolidated Statements of Cash Flows for the Three Months Ended March 31, 2012:

	As Originally Reported			Effect of Restatement			As Restated
Net loss	$	(1,707,261	)	$	(1,288,375	)	$	(2,995,636	)
Mark-to-market adjustment on warrant liability		-			1,288,375			1,288,375

Consolidated Statements of Cash Flows for the Three Months Ended March 31, 2011:

	As Originally Reported			Effect of Restatement			As Restated
Net loss	$	(920,746	)	$	(1,356,600	)	$	(2,277,346	)
Mark-to-market adjustment on warrant liability		-			1,356,600			1,356,600

3. Summary of Significant Accounting Policies

During the three months ended March 31, 2012, there were no material changes to the Company’s significant accounting policies from those disclosed in the Company’s Amendment No. 1 to Annual Report on Form 10-K/A for the year ended December 31, 2011, except as disclosed below.

Warrant Liability

The Company issued common stock warrants in January 2011 in conjunction with an equity financing. In accordance with Accounting Standards Codification (“ASC”) 480, Distinguishing Liabilities from Equity (“ASC 480”), the fair value of these warrants is classified as a liability on the Company’s Consolidated Balance Sheets because, according to the warrants' terms, a fundamental transaction could give rise to an obligation of the Company to pay cash to its warrant holders. Corresponding changes in the fair value of the warrants are recognized in earnings on the Company’s Consolidated Statements of Operations in each subsequent period.

Newly Adopted Accounting Pronouncements

In October 2009, the Financial Accounting Standards Board (the “FASB”) issued revised authoritative guidance (Accounting Standards Update (“ASU”) No. 2009-13) covering Multiple-Deliverable Revenue Arrangements. The revised authoritative guidance amends the previous guidance on arrangements with multiple deliverables to (1) provide updated guidance on whether multiple deliverables exist, how the deliverables in an arrangement should be separated, and how consideration should be allocated, (2) require an entity to allocate revenue in an arrangement using estimated selling prices ("ESP") of each deliverable if a vendor does not have vendor-specific objective evidence ("VSOE") or third-party evidence of selling price ("TPE"), (3) eliminate the residual allocation method which will be replaced by the relative selling price allocation method for all arrangements, and (4) significantly expand the disclosure requirements. The revised authoritative guidance is effective for new or materially modified arrangements in fiscal years beginning on or after June 15, 2010. The Company adopted this revised authoritative guidance prospectively for new or materially modified arrangements beginning January 1, 2011. The adoption of this revised authoritative guidance update did not have a significant impact on the Company’s consolidated financial statements. Additionally, the Company does not currently foresee any changes to its services or pricing practices that will have a significant effect on its consolidated financial statements in periods after the initial adoption.

On May 12, 2011, the FASB issued revised authoritative guidance (ASU No. 2011-04) covering fair value measurements and disclosures. The amended guidance include provisions for (1) the application of concepts of "highest and best use" and "valuation premises", (2) an option to measure groups of offsetting assets and liabilities on a net basis, (3) incorporation of certain premiums and discounts in fair value measurements, and (4) measurement of the fair value of certain instruments classified in stockholders' equity. The revised guidance is effective for interim and annual periods beginning after December 15, 2011. The Company adopted this revised authoritative guidance prospectively for new or materially modified arrangements beginning January 1, 2012. The adoption of this revised authoritative guidance update did not have a significant impact on the Company’s consolidated financial statements.

On June 16, 2011, the FASB issued revised authoritative guidance (ASU No. 2011-05) covering the presentation of comprehensive income, which revises the manner in which entities present comprehensive income in their financial statements. The revised guidance removes the presentation options in the current guidance and requires entities to report components of comprehensive income in either a continuous statement of comprehensive income, or two separate but consecutive statements. The revised authoritative guidance does not change the items that must be reported in other comprehensive income. The revised guidance is effective for interim and fiscal years beginning after December 15, 2011. The Company adopted this revised authoritative guidance prospectively for new or materially modified arrangements beginning January 1, 2012. The adoption of this revised authoritative guidance update did not have a significant impact on the Company’s consolidated financial statements.

On September 15, 2011, the FASB issued authoritative guidance (ASU 2011-08) which gives entities the option of performing a qualitative assessment of goodwill prior to calculating the fair value of a reporting unit in “step 1” of the goodwill impairment test. If the entity determines, on the basis of qualitative factors, that the fair value of a reporting unit is more likely than not less than the carrying amount, the two-step impairment test is required to be performed. The guidance is effective for all entities for annual and interim goodwill impairment tests performed for fiscal years beginning after December 15, 2011. The Company adopted this revised authoritative guidance prospectively for new or materially modified arrangements beginning January 1, 2012. The adoption of this revised authoritative guidance update did not have a significant impact on the Company’s consolidated financial statements.

SNAP INTERACTIVE, INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(unaudited)

4. Restricted Cash

During the first quarter of 2012, the Company established a credit line with Chase bank related to its corporate credit cards, which required the Company to place a cash collateral guarantee of 105% of the monthly credit line of $100,000 in a CD for twelve months with an assignment of deposit hold placed on the CD for the card collateral. Accordingly, the Company has reported $105,000 as restricted cash on the balance sheet as of March 31, 2012.

5. Accounts Receivable, Net

Accounts receivable, net consisted of the following at March 31, 2012 and December 31, 2011:

	March 31,			December 31,
	2012			2011
	(unaudited)
Accounts receivable	$	1,147,927		$	665,154
Less: Allowance for doubtful accounts		-			(123,392	)
Less: Reserve for future chargebacks		(59,876	)		(61,572	)
Total accounts receivable, net	$	1,088,051		$	480,190

Payments for subscriptions and point purchases typically settle several days after the date of purchase. As of March 31, 2012, the amount of unsettled transactions from payment processors amounted to $489,591 as compared to $220,272 at December 31, 2011. These amounts are included in our accounts receivable.

During the quarter ended March 31, 2012, one of the Company’s credit card processors experienced a technical problem in processing transactions for the Company, which resulted in the delayed settlement of certain recurring subscription payments. Because of the delay, approximately $500,000 of transactions that would have normally settled during February or March 2012 settled in April 2012. These transactions are included in revenue net of any estimated chargebacks or refunds for the three months ended March 31, 2012, with a corresponding amount included in accounts receivable on the balance sheet.

6. Investments and Fair Value Measurements

As of March 31, 2012, the Company invested in marketable securities consisting solely of government securities, which are classified as held-to-maturity and carried at amortized cost. At March 31, 2012, the Company also invested in certificates of deposit.

The fair value framework under the FASB’s guidance requires the categorization of assets and liabilities into three levels based upon the assumptions used to measure the assets or liabilities. Level 1 provides the most reliable measure of fair value, whereas Level 3, if applicable, generally would require significant management judgment. The three levels for categorizing assets and liabilities under the fair value measurement requirements are as follows:

	●	Level 1: Fair value measurement of the asset or liability using observable inputs such as quoted prices in active markets for identical assets or liabilities;
	●	Level 2: Fair value measurement of the asset or liability using inputs other than quoted prices that are observable for the applicable asset or liability, either directly or indirectly, such as quoted prices for similar (as opposed to identical) assets or liabilities in active markets and quoted prices for identical or similar assets or liabilities in markets that are not active; and

●

Level 3: Fair value measurement of the asset or liability using unobservable inputs that reflect the Company’s own assumptions regarding the applicable asset or liability.

The following table summarizes those assets and liabilities measured at fair value on a recurring basis as of March 31, 2012 and December 31, 2011:

	March 31, 2012 (As Restated)								December 31, 2011
	(Unaudited)								(As Restated)
	Level 1		Level 2		Level 3		Total		Level 1		Level 2		Level 3		Total
Cash equivalents:
U.S. government securities(1)	$	497,677	$	—	$	—	$	497,677	$	—	$	—	$	—	$	—
Certificate of deposits		1,250,000		—		—		1,250,000		—		—		—		—
Total cash equivalents	$	1,747,677	$	—	$	—	$	1,747,677	$	—	$	—	$	—	$	—
Short-term investments:
U.S. government securities(2)	$	2,502,638	$	—	$	—	$	2,502,638	$	3,506,205	$	—	$	—	$	3,506,205
Certificate of deposits		975,000		—		—		975,000		2,975,000		—		—		2,975,000
Total short-term investments	$	3,477,638	$	—	$	—	$	3,477,638	$	6,481,205	$	—	$	—	$	6,481,205
Common stock warrants:
Common stock warrants	$	—	$	—	$	2,225,375	$	2,225,375	$	—	$	—	$	937,000	$	937,000
Total common stock warrants	$	—	$	—	$	2,225,375	$	2,225,375	$	—	$	—	$	937,000	$	937,000

(1) Includes amortization premium paid of $6,173 as of March 31, 2012.

(2) Includes amortization premiums paid of $5,773 and $8,733 as of March 31, 2012 and December 31, 2011, respectively.

SNAP INTERACTIVE, INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(unaudited)

Interest earned on debt securities is recorded to “Interest income, net” on the Consolidated Statement of Operations. The Company is classifying these short-term investments as held-to-maturity and has recorded them at amortized cost on the Consolidated Balance Sheet. The gross unrecognized holding gains and losses for the three months ended March 31, 2012 were not material. The following table summarizes the amortized cost, fair value, and weighted average yield of marketable securities and certificates of deposit as of March 31, 2012 (unaudited):

Security Type	Maturity	Consolidated Balance Sheet Classification	Amortized Cost		Fair Value		Yield
Government Securities	30 Days	Cash and cash equivalents	$	503,850	$	500,330		0.48	%
Certificates of Deposit	81 to 90 Days	Cash and cash equivalents		1,250,000		1,249,552		0.25	%
Government Securities	91 to 214 Days	Investments (short-term)		2,508,411		2,503,025		0.48	%
Certificates of Deposit	97 to 272 Days	Investments (short-term)		975,000		975,048		0.25	%
		Total	$	5,237,261	$	5,227,955

The Company’s warrant liability is carried at fair value and was classified as Level 3 in the fair value hierarchy due to the use of significant unobservable inputs. In order to calculate fair value, the Company used a custom model developed with the assistance of an independent third-party valuation expert. This model, at each measurement date, calculated the fair value of the warrant liability using a Monte-Carlo style simulation, as the value of certain features of the warrant liability would not be captured by the standard Black-Scholes model.

The following table summarizes the values of certain assumptions used in the aforementioned custom model to estimate the fair value of the warrant liability at March 31, 2012 and December 31, 2011:

	March 31,			December 31,
	2012			2011
	(Unaudited)
Stock price	$	1.53		$	0.65
Strike price	$	2.50		$	2.50
Remaining contractual term (years)		3.8			4.1
Volatility		207.6	%		215.5	%
Adjusted volatility		110.3	%		125.5	%
Risk-free rate		0.7	%		0.6	%
Dividend yield		0.0	%		0.0	%

SNAP INTERACTIVE, INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(unaudited)

7. Fixed Assets and Intangible Assets

Fixed assets and intangible assets consisted of the following at March 31, 2012 and December 31, 2011:

	March 31,				December 31,
	2012				2011
	(Unaudited)
Computer equipment		$	139,825			$	143,461
Furniture and fixtures			165,365				159,051
Leasehold improvements			329,156				329,156
Software			7,342				7,342
Website domain name			24,938				24,938
Website costs			40,500				40,500
Total fixed assets			707,126				704,448
Less: Accumulated depreciation and amortization			(158,726	)			(125,985	)
Total fixed assets and intangible assets, net		$	548,400			$	578,463

The Company only holds fixed assets in the United States. Depreciation and amortization expense for the three months ended March 31, 2012 was $32,740 compared to $5,444 for the three months ended March 31, 2011.

8. Accrued Expenses and Other Current Liabilities

Accrued expenses and other current liabilities consisted of the following at March 31, 2012 and December 31, 2011:

	March 31,		December 31,
	2012		2011
	(Unaudited)
Compensation and benefits	$	187,500	$	817,656
Deferred rent		96,547		102,114
Other accrued expenses		6,221		6,853
Total accrued expenses and other current liabilities	$	290,268	$	926,623

9. Notes Receivable

At March 31, 2012, the Company had notes receivable in the aggregate amount of $130,137 due from one current and two former employees. The Company paid taxes on stock-based compensation on the employees’ behalf during 2011 in exchange for these notes, and the outstanding amounts on the notes are secured by pledged stock certificates. The notes are due at various times during 2021 and bear interest rates between 2.80% and 3.57% per annum.

SNAP INTERACTIVE, INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(unaudited)

10. Stock-Based Compensation

The Snap Interactive, Inc. 2011 Amended and Restated Long-Term Incentive Plan (the “Plan”) was adopted, effective as of May 24, 2011, and subsequently amended and restated the Plan in its entirety on October 21, 2011. Awards under the Plan may include incentive stock options, nonqualified stock options, stock appreciation rights (“SARs”), restricted shares of common stock, restricted stock units, performance stock, dividend equivalent rights, and other stock-based awards and cash-based incentive awards. The maximum number of shares of common stock that may be delivered pursuant to awards granted under the Plan is 7,500,000 shares, of which 100% may be delivered pursuant to incentive stock options.

The following table summarizes the weighted average values of the assumptions used in the Black-Scholes pricing model to estimate the fair value of the options granted during the period presented:

	Three Months Ended March 31, 2012
Expected volatility		118.66%-127.55	%
Expected life of option	4 Years
Risk free interest rate		1.87%-1.89	%
Expected dividend yield		-	%

The following table summarizes all stock options granted to employees, consultants and investors during the three months ended March 31, 2012, and the related changes during the period.

	Number of Options			Weighted Average Exercise Price
Stock Options:
Balance at December 31, 2011		8,293,955
Granted		515,000		$	1.72
Exercised		-
Forfeited		(77,000	)		0.63
Balance at March 31, 2012		8,731,955
Options exercisable at March 31, 2012		6,185,000		$	0.45

Of the total options granted, 6,185,000 are fully vested, exercisable and non-forfeitable under most circumstances.

SNAP INTERACTIVE, INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(unaudited)

The following table summarizes information about outstanding stock options for the Company as of March 31, 2012:

Options Outstanding					Options Exercisable
Range of Exercise Price	Number Outstanding at March 31, 2012	Weighted Average Remaining Contractual Life		Weighted Average Exercise Price	Number Exercisable at March 31, 2012		Weighted Average Exercise Price
$0.00 - 0.13	4,650,000	0.72	$	0.13	4,575,000	$	0.13
$0.17 - 4.00	4,081,955	4.81	$	0.90	1,535,000	$	0. 77

On January 13, 2012, the Company granted an option to purchase 180,000 shares of common stock at an exercise price of $1.00 per share. The option vests equally over a four-year period. The fair value was estimated using the Black-Scholes option pricing model with the following assumptions:

Expected life:	4 years
Expected volatility:		119.80	%
Risk free interest rate:		1.89	%
Expected dividends:		0	%

On January 17, 2012, the Company granted an option to purchase 35,000 shares of common stock at an exercise price of $1.01 per share. The option vests equally over a four-year period. The fair value was estimated using the Black-Scholes option pricing model with the following assumptions:

Expected life:	4 years
Expected volatility:		118.66	%
Risk free interest rate:		1.87	%
Expected dividends:		0	%

On January 30, 2012, the Company granted an option to purchase 150,000 shares of common stock at an exercise price of $1.47 per share. The option vests equally over a four-year period. The fair value was estimated using the Black-Scholes option pricing model with the following assumptions:

Expected life:	4 years
Expected volatility:		127.55	%
Risk free interest rate:		1.87	%
Expected dividends:		0	%

On January 30, 2012, the Company granted an option to purchase 150,000 shares of common stock at an exercise price of $3.00 per share. The option vests equally over a four-year period. The fair value was estimated using the Black-Scholes option pricing model with the following assumptions:

Expected life:	4 years
Expected volatility:		127.55	%
Risk free interest rate:		1.87	%
Expected dividends:		0	%

SNAP INTERACTIVE, INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(unaudited)

11. Common Stock Purchase Warrants

Equity Financing

In January 2011, we completed an equity financing that raised gross proceeds of $8,500,000 from the issuance of 4,250,000 units to certain accredited investors. Each unit consisted of (i) one share of common stock at a price of $2.00 per share and (ii) one warrant to purchase 0.5 shares of common stock that was exercisable for five years from the date of issuance. The warrants are exercisable any time on or before January 19, 2016 and have an exercise price of $2.50 per share. We received $7,915,700 in net proceeds from the equity financing after deducting offering expenses of $584,300. The exercise price of the warrants and number of shares of common stock to be received upon the exercise of the warrants are subject to adjustment for reverse and forward stock splits, stock dividends, stock combinations and other similar transactions that occur after January 19, 2011.

We also issued warrants to purchase up to 255,000 shares of our common stock to the placement agent in January 2011 in connection with the equity financing as additional consideration for its services. These warrants have the same terms, including exercise price, registration rights and expiration, as the warrants issued to the investors in the equity financing.

Common Stock Issued for Warrants Exercised

In April 2011, we issued 37,500 shares of our common stock and received net proceeds of $88,125 after an investor exercised common stock warrants issued in our equity financing at an exercise price of $2.50 per share.

Warrant Liability

In connection with the transaction, the Company recorded a warrant liability on its Consolidated Balance Sheet based on the estimated fair value of the common stock warrant at the issuance date. The warrants are valued at the end of each reporting period with changes recorded as a mark to market adjustment on warrant liability on the Company's Consolidated Statement of Operations. The fair value of these warrants was $2,225,375 and $937,000 at March 31, 2012 and December 31, 2011, respectively, based on a model developed with the assistance of an independent third-party valuation expert.

The mark-to-market expense on these warrants was $1,288,375 and $1,356,600 for the three months ended March 31, 2012 and March 31, 2011, respectively, and was not presented within loss from operations.

The following table summarizes warrant activity for the three months ended March 31, 2012:

	Number of Warrants		Weighted Average Exercise Price
Stock Warrants:
Balance at December 31, 2011		2,342,500	$	2.50
Granted		-
Exercised		-
Forfeited		-
Balance at March 31, 2012		2,342,500	$	2.50
Warrants exercisable at March 31, 2012		2,342,500	$	2.50

SNAP INTERACTIVE, INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(unaudited)

12. Net Loss Per Share

Basic net loss per share is computed based upon the weighted average common shares outstanding as defined by ASC No. 260, Earnings Per Share. Diluted net loss per share includes the dilutive effects of stock options, warrants and stock equivalents. To the extent stock options, stock equivalents and warrants are antidilutive, they are excluded from the calculation of diluted net loss per share. For the three months ended March 31, 2012, 8,731,955 shares issuable upon the exercise of stock options and warrants were not included in the computation of diluted net loss per share because their inclusion would be antidilutive. For the three months ended March 31, 2011, 8,200,000 shares issuable upon the exercise of stock options and warrants and 525,555 shares issuable upon the conversion of convertible debt, were not included in the computation of net loss per share because their inclusion would be antidilutive.

The following table provides a reconciliation of the numerator and denominator used in computing basic and diluted net loss per common share:

	Three Months Ended
	March 31,
	2012			2011
	(As Restated)			(As Restated)
Numerator:
Net loss	$	(2,995,636	)	$	(2,277,346	)
Denominator:
Basic shares:
Weighted-average common shares outstanding		38,580,261			37,046,034
Diluted shares:
Weighted-average shares used to compute basic net loss per share		38,580,261			37,046,034
Add: Weighted average shares assumed to be issued upon conversion of convertible notes as of the date of issuance		-			-
Warrants and options as of beginning of period		-			-
Weighted-average shares used to compute diluted net loss per share		38,580,261			37,046,034

Net loss per share:
Basic	$	(0.08	)	$	(0.06	)
Diluted	$	(0.08	)	$	(0.06	)

SNAP INTERACTIVE, INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(unaudited)

13. Related Party Transactions

During the three months ended March 31, 2012, there were no material changes to the Company’s transactions with related parties from those disclosed in the Company’s Amendment No. 1 to Annual Report on Form 10-K/A for the year ended December 31, 2011, except for the following:

During the first quarter of 2012, 5,150,000 shares of restricted stock granted to the Company’s Chief Executive Officer and Co-Founder were issued in certificate form. These shares have voting rights, but are not tradable and therefore not considered outstanding as they are not vested. Accordingly, 5,150,000 shares are noted as issued on the balance sheet. These shares are excluded from the Company’s calculation of earnings per share.

14. Commitments

Operating Lease Agreements

On February 25, 2009, the Company executed a three-year non-cancelable operating lease for its corporate office space. The lease began on April 1, 2009 and expired on March 31, 2012. Total base rent due during the term of the lease was $313,680.

On May 23, 2011, the Company executed a 46-month non-cancelable operating lease for its new corporate office space. The lease began on June 1, 2011 and expires on March 30, 2015. Total base rent due during the term of the lease is $973,595. The Company can terminate the final five months of the lease with eight months' prior notice and the payment of unamortized costs.

Rent expense for three months ended March 31, 2012 and 2011 was $91,663 and $27,671, respectively.

At March 31, 2012, future minimum payments under non-cancelable operating leases were as follows:

	March 31, 2012
2012	$	208,339
2013		284,336
2014		291,444
2015		74,373
2016		-
Thereafter		-
Total	$	858,492

15. Subsequent Events

On April 30, 2012, the Company authorized the issuance of 45,000 options having an exercise price of $1.42 per share. The options will vest equally over a four-year period beginning on the first anniversary of the date of grant.

On May 2, 2012, the Company authorized the issuance of 35,000 options having an exercise price of $1.45 per share. The options will vest equally over a four-year period beginning on the first anniversary of the date of grant.

On May 7, 2012, the Company authorized the issuance of 50,000 options having an exercise price of $1.39 per share. The options will vest equally over a four-year period beginning on the first anniversary of the date of grant.

On May 10, 2012, the Company authorized the issuance of 90,000 options having an exercise price of $1.61 per share. The options will vest equally over a four-year period beginning on the first anniversary of the date of grant.

ITEM 2. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

This Management’s Discussion and Analysis of Financial Condition and Results of Operations is intended to provide a reader of our financial statements with a narrative from the perspective of our management on our financial condition, results of operations, liquidity, and certain other factors that may affect our future results. The following discussion and analysis should be read in conjunction with: (i) the accompanying unaudited condensed consolidated financial statements and notes thereto for the three months ended March 31, 2012, and with our consolidated financial statements and notes thereto for the year ended December 31, 2011 included in our Amendment No. 1 to Annual Report on Form 10-K/A filed with the Securities and Exchange Commission (the “SEC”) on December 7, 2012, and (ii) the discussion under the caption “Management’s Discussion and Analysis of Financial Condition and Results of Operations” of our Amendment No. 1 to Annual Report on Form 10-K/A. Aside from certain information as of December 31, 2011, all amounts herein are unaudited.

Forward-Looking Statements

In addition to historical financial information, the following discussion and analysis contains forward-looking statements that involve risks, uncertainties and assumptions. Our results and the timing of selected events may differ materially from those anticipated in these forward-looking statements as a result of many factors, including those discussed under “Item 1A. Risk Factors” of our Amendment No. 1 to Annual Report on Form 10-K/A. See “Forward-Looking Statements.”

Overview

We are an Internet company providing services in the rapidly expanding social networking and online dating markets. We have developed, own and operate a dating and social networking software application under the AreYouInterested.com brand that can be accessed on Facebook®, mobile devices such as iPhone® and Android®, as well as a stand-alone website. Our product is fully integrated across all gateways and incorporates the Facebook Connect® integration, which allows users to “connect” their Facebook identity and friends to any website. Since August 2007, AreYouInterested.com has been one of the leading dating applications on Facebook based on: (i) number of daily active users, (ii) number of monthly active users, and (iii) number of net installations (“installs”).

We primarily generate revenue from subscription fees and, as of May 7, 2012, had approximately 136,000 active subscribers. We consider a subscriber to be “active” if he or she has pre-paid for current access to premium features and the term of the subscriber’s subscription period has not yet expired. The number of our daily and monthly active users as publicly reported by AppData®, which includes non-paying users and paying subscribers, varies greatly on a daily and monthly basis, respectively, and is greater than the number of our active subscribers for the same measurement period.

We announced in February 2012 that we are focusing on rebuilding the AreYouInterested.com brand around interest-based matching and social discovery. With our network of more than 60 million net installs as of May 7, 2012 of the AreYouInterested.com application on Facebook Platform alone, along with the overwhelming amount of data that we have accumulated for several years across multiple platforms, we believe that leveraging this net install base and data in conjunction with Facebook Platform’s real-time application programming interface (“API”) allows us to create a one-of-a-kind experience for users looking to meet people with similar interests. When reporting net installations, we include the number of users that have downloaded and installed our application and exclude users that have chosen to uninstall our application. While these installs do not represent the number of paying subscribers, we believe that our resulting user base would be prohibitively expensive to replicate through traffic acquisition alone for even well-funded start-up Facebook dating applications and constitutes a significant obstacle to attracting new users and generating significant revenue.

We rely upon application development processes that are designed to enable us to rapidly and cost effectively develop our application to meet the expectations and preferences of users and the requirements of the third party platforms on which we offer our product. Expanding our presence on mobile platforms is currently a core objective for us. Although revenue opportunities on our mobile products are still in their early stages, we are investing heavily in engineering and user acquisition on our mobile products while we continue to develop such products and user acquisition costs are inexpensive. We believe that our mobile dating and social discovery application will offer significant opportunities in the future and have increased the resources allocated to this product with the goal of positioning us as a leading provider of our product. A primary component of our mobile initiatives is to continue creating a seamless experience for users of our product across multiple platforms. We believe that this approach will better position us to be a leading provider of mobile dating services in the future as web browsing and web activity shifts to smartphones and other mobile devices. As a result of these efforts, we are starting to see meaningful traction with our mobile product line, as nearly 15% of logins in March 2012 to AreYouInterested.com were made through a mobile device.

We believe we provide value to the third party platforms on which we operate by creating and maintaining user engagement on, and integrating with, the platforms, driving traffic to the platforms to generate advertising revenue for such platforms, including through the placement of advertisements on our application pages, and by directly purchasing advertising from the platforms.

Recent product highlights for the first quarter of 2012 include:

●	Adding 3.8 million new profiles to the AreYouInterested.com brand;
●	Our AreYouInterested.com iPhone application was downloaded approximately 750,000 times from the iPhone App Store;
●	Increasing mobile engagement to 15% of all unique logins during March 2012; and
●	During March 2012, we averaged over 550,000 daily sessions or visits to our mobile AreYouInterested.com platforms (including iPhone, mobile web, and Android sessions).

During the remainder of 2012, our business objectives include:

●	Rebuilding the AreYouInterested.com brand around interest-based matching and social discovery;

●	Continuing to integrate and expand the overall product offering between the AreYouInterested.com Facebook application, AreYouInterested.com website and AreYouInterested.com iPhone and Android applications for an enhanced user experience across all platforms;

●	Increasing the amount of resources devoted to mobile initiatives and increasing usage and engagement on our mobile products;

●	Refining our marketing and statistical tracking tools; and

●	Identifying and exploring new opportunities in our rapidly evolving industry.

How We Generate Revenue

We generate the majority of our revenue through subscription fees and premium sales on our AreYouInterested.com application. Most of our revenue is generated from subscriptions originating on our AreYouInterested.com Facebook dating application, and an increasing amount of our revenue is generated through subscription sales on mobile platforms. While growing the subscription base of AreYouInterested.com on the web remains an objective, one of our core objectives for AreYouInterested.com will continue to be focused on developing mobile gateways to access AreYouInterested.com and user acquisition on mobile products. We also generate a small portion of our revenue through advertisements on our products and, until we discontinued the option in February 2012, we generated revenue from the sale of “points” that were used to purchase virtual gifts on the application and access certain other premium features.

Our users have a variety of methods by which to purchase subscriptions to AreYouInterested.com. Users can pay by credit card, PayPal, Boku (a mobile payment provider) or as an In-App purchase through Apple Inc.’s iPhone App Store. Pursuant to Apple Inc.’s terms of service, Apple Inc. retains 30% of the revenue that is generated from sales on our iPhone application through In-App purchases in the United States. Regardless of which payment method is utilized, users may access the AreYouInterested.com product through any of the gateways we offer.

We recognize revenue from monthly premium subscription fees in the month in which the services are provided. Revenues are presented net of refunds, credits, and known and estimated credit card chargebacks. During 2011, subscriptions were offered in durations of one-, three- and six-month terms. A twelve-month subscription term was added in February 2012. Longer-term plans (those with durations longer than one month) are generally available at discounted monthly rates. All subscription fees, however, are collected at the time of purchase regardless of the length of the subscription term. Revenues from multi-month subscriptions are recognized over the length of the subscription term rather than when the subscription is purchased. Pursuant to our terms of service, subscriptions automatically renew for periods of the same length as the original subscription term until subscribers terminate them.

During the first quarter of 2012 and 2011, we recognized revenue from the direct sale of “points” over two months. Users could either purchase or earn points by performing activities, such as by browsing profiles that could be used in exchange for accessing certain premium features on our applications. Determining whether the criteria for spending points had been satisfied often involved management making assumptions and judgments that may have an impact on the timing and amount of revenue we recognized in each period. In February 2012, we discontinued the sale of points and decided to focus solely on subscription and advertising revenues.

We recognize advertising revenue as earned on a click-through, impression and registration or subscription basis.

Key Metrics

Our management relies on certain performance indicators to manage and assess our business. The key performance indicators set forth below help us evaluate growth trends, establish budgets, measure the effectiveness of our advertising and marketing efforts and assess operational efficiencies. We discuss revenue and net cash used in operating activities under ‟Results of Operations” and ‟Liquidity and Capital Resources” below. Deferred revenue, another measure of our performance, is discussed below.

	Three Months Ended
	March 31,
	2012			2011
Consolidated Statements of Operations Data:
Revenue	$	5,745,452		$	3,736,905

Consolidated Balance Sheets Data:
Deferred revenue at period end	$	3,430,078		$	2,393,024

Consolidated Statements of Cash Flows Data:
Net cash used in operating activities	$	(1,559,907	)	$	(705,121	)

Deferred Revenue

Revenues from multi-month subscriptions are recognized over the length of the subscription term rather than when the subscription is purchased. Because a significant amount of the Company’s subscription sales occurred from subscriptions with a term of six or more months, the Company apportions that revenue over the duration of the subscription term even though it is collected in full at the time of purchase. The difference between the gross cash receipts collected and the recognized revenue from those sales during that reporting period will appear as deferred revenue.

Results of Operations

The following table sets forth Consolidated Statements of Operations data for each of the periods indicated as a percentage of total revenues.

	Three Months Ended
	March 31,
	2012			2011
	(As Restated)			(As Restated)
Revenue		100.0	%		100.0	%
Costs and expenses:
Programming, hosting and technology		20.1	%		12.2	%
Compensation		11.4	%		6.4	%
Professional fees		2.6	%		3.3	%
Advertising and marketing		78.7	%		90.2	%
General and administrative		17.1	%		12.9	%
Total costs and expenses		129.9	%		124.9	%
Loss from operations		(29.9	)%		(24.9	)%
Interest income, net		0.1	%		0.2	%
Mark-to-market adjustment on warrant liability		(22.4	)%		(36.3	)%
Other income		0.0	%		0.1	%
Net loss before income tax		(52.1	)%		(60.9	)%
Provision for income taxes		0.0	%		0.0	%
Net loss		(52.1	)%		(60.9	)%

Three Months Ended March 31, 2012 Compared to Three Months Ended March 31, 2011

Revenue

Revenue increased to $5,745,452 for the three months ended March 31, 2012, from $3,736,905 for the three months ended March 31, 2011. The increase in revenue is due primarily to an increase in subscription sales on the AreYouInterested.com brand in the three months ended March 31, 2012 as compared to the three months ended March 31, 2011, which we believe resulted in part from our increased advertising and marketing expense. The following table sets forth the Company’s revenue for the three months ended March 31, 2012, compared to the three months ended March 31, 2011, the percentage increase or decrease between those periods, and the percentage of total revenue that each represented for those periods:

										% Revenue
	Three Months Ended									Three Months Ended
	March 31,									March 31,
	2012		2011		Increase		% Increase			2012			2011
Subscription/points	$	5,586,038	$	3,723,567	$	1,862,471		50.0	%		97.2	%		99.6	%
Advertising		159,414		13,338		146,076		1,095.2	%		2.8	%		0.4	%
Total revenue	$	5,745,452	$	3,736,905	$	2,008,547		53.7	%		100.0	%		100.0	%

Subscription/points – The results for the three months ended March 31, 2012 reflect an increase in subscription/points revenue of $1,862,471, or 50.0%, as compared to the three months ended March 31, 2011. The increase in subscription/points revenue for the three months ended March 31, 2012, was primarily driven by an increase in our subscriber base as compared to the prior year period. Subscription/points revenue as a percentage of total revenue was 97.2% for the three months ended March 31, 2012, as compared to 99.6% for the three months ended March 31, 2011.

Advertising – The results for the three months ended March 31, 2012 reflect an increase in advertising revenue of $146,076, or 1,095.2%, as compared to the three months ended March 31, 2011. The increase in advertising revenue for the three months ended March 31, 2012 was primarily driven by an increase in revenue received from online advertising campaigns as compared to the prior year period. Advertising revenue as a percentage of total revenue was 2.8% for the three months ended March 31, 2012, as compared to 0.4% for the three months ended March 31, 2011. Advertising revenue is dependent on traffic as well as the level of inventory placed on our products. At this time, the Company does not actively manage its advertising revenue.

Costs and Expenses

Total costs and expenses for the three months ended March 31, 2012 reflect an increase in costs and expenses of $2,793,131, or 59.8%, as compared to the three months ended March 31, 2011. The following table presents costs and expenses for the three months ended March 31, 2012, as compared to the three months ended March 31, 2011:

	Three Months Ended
	March 31,
	2012		2011		Increase		% Increase
Programming, hosting and technology	$	1,156,328	$	454,639	$	701,689		154.3	%
Compensation		652,140		238,436		413,704		173.5	%
Professional fees		148,317		121,577		26,740		22.0	%
Advertising and marketing		4,520,241		3,371,958		1,148,283		34.1	%
General and administrative		984,220		481,505		502,715		104.4	%
Total costs and expenses	$	7,461,246	$	4,668,115	$	2,793,131		59.8	%

Programming, Hosting and Technology – The results for the three months ended March 31, 2012 reflect an increase in programming, hosting and technology expense of $701,689, or 154.3%, as compared to the three months ended March 31, 2011. The increase in product development expense for the three months ended March 31, 2012, was primarily driven by increased salary expenses due to expansion of our engineering and development staff as well as increased expenses related to hosting, bandwidth, and server optimization related to email deliverability. Because the markets for our application are characterized by rapid technological change, particularly in the technical capabilities of mobile phones and changing end-user preferences, continuous investment is required to innovate and to regularly update our dating and social networking application and our stand-alone website. Programming, hosting and technology expense as a percentage of revenue was 20.1% for the three months ended March 31, 2012, as compared to 12.2% for the three months ended March 31, 2011.

Compensation – The results for the three months ended March 31, 2012 reflect an increase in compensation expense, which excludes the cost of developers and programmers included in programming, hosting and technology expense above, of $413,704, or 173.5%, as compared to the three months ended March 31, 2011. The increase in compensation expense for the three months ended March 31, 2012, was primarily driven by an increase in stock-based compensation expense and increased headcount in management and support areas compared to the first quarter of 2011. We anticipate experiencing further increases in compensation expense as we expect to hire additional employees during the remainder of 2012. Compensation expense as a percentage of revenue was 11.4% for the three months ended March 31, 2012, as compared to 6.4% for the three months ended March 31, 2011.

Professional fees – The results for the three months ended March 31, 2012 reflect an increase in professional fees of $26,740, or 22.0%, as compared to the three months ended March 31, 2011. The increase in professional fees for the three months ended March 31, 2012, was primarily driven by an increase in professional fees, including increased legal fees, particularly in the areas of intellectual property, trademarks, consumer privacy and regulatory compliance, as well as increased accounting fees as a result of the overall expansion of our business. Professional fees as a percentage of revenue was 2.6% for the three months ended March 31, 2012, as compared to 3.3% for the three months ended March 31, 2011.

Advertising and Marketing – The results for the three months ended March 31, 2012 reflects an increase in advertising and marketing expense of $1,148,283, or 34.1%, as compared to the three months ended March 31, 2011. The increase in advertising and marketing expense for the three months ended March 31, 2012, as compared to the prior year period, was primarily driven by an increase in user acquisition campaigns. We anticipate experiencing a lower of level of advertising and marketing expense during the second quarter of 2012 as we focus on the development of our redesigned AreYouInterested.com product but expect that our advertising and marketing expense for 2012 will exceed our advertising and marketing expense for 2011 as we continue efforts to expand our user base following the anticipated release of our redesigned product. Advertising and marketing as a percentage of revenue was 78.7% for the three months ended March 31, 2012, as compared to 90.2% for the three months ended March 31, 2011.

General and Administrative – The results for the three months ended March 31, 2012 reflect an increase in general and administrative expense of $502,715, or 104.4%, as compared to the three months ended March 31, 2011. The increase in general and administrative expense for the three months ended March 31, 2012, as compared to the prior year period, was primarily driven by increases in transaction fees related to accepting subscription payments, including credit card processing fees and foreign currency transaction fees. General and administrative expense also increased due to increased insurance expense, recruiting expense, and increased costs associated with the overall expansion of our business. General and administrative expense as a percentage of revenue was 17.1% for the three months ended March 31, 2012, as compared to 12.9% for the three months ended March 31, 2011.

Non-Operating Expense

The following table presents the components of non-operating expense for the three months ended March 31, 2012, as compared to the three months ended March 31, 2011:

	Three Months Ended
	March 31,						Increase			% Increase
	2012			2011			(Decrease)			(Decrease)
	(As Restated)			(As Restated)
Interest income, net	$	8,533		$	6,555		$	1,978			30.2	%
Mark-to-market adjustment on warrant liability		(1,288,375	)		(1,356,600	)		(68,225	)		(5.0	%)
Other income		-			3,909			(3,909	)		(100.0	%)
Total non-operating expense	$	(1,279,842	)		(1,346,136	)	$	(66,294	)		(4.9	%)

Interest Income, net

Interest income, net for the three months ended March 31, 2012 increased by $1,978 or 30.2%, as compared to $6,555 for the three months ended March 31, 2011. Interest income, net represented 0.1% and 0.2% of total revenue for the three months ended March 31, 2012 and 2011, respectively.

Mark-to-Market Adjustment on Warrant Liability

Our warrant liability is marked-to-market at each reporting period, with changes in fair value reported in earnings. The mark-to-market expense of $1,288,375 and $1,356,600 for the three months ended March 31, 2012 and March 31, 2011, respectively, represent the changes in fair value of the warrant liability during those periods.

Other Income

We earned no other income for the three months ended March 31, 2012, as compared to $3,909 earned for the three months ended March 31, 2011. Other income represented 0.0% and 0.1% of total revenue for the three months ended March 31, 2012 and 2011, respectively.

Liquidity and Capital Resources

	Three Months Ended
	March 31,
	2012				2011

Consolidated Statements of Cash Flows Data:
Net cash used in operating activities		$	(1,559,907	)		$	(705,121	)
Net cash provided by (used in) investing activities			3,009,837				(24,337	)
Net cash provided by financing activities			-				7,915,700
Net increase in cash and cash equivalents		$	1,449,930			$	7,186,242

We have historically financed our operations through cash generated from our January 2011 financing, subscription fees received from our AreYouInterested.com application and online dating website, fees for premium features on our application and revenues derived from advertisements purchased on our application.

As of March 31, 2012, we had $3,847,758 in cash and cash equivalents compared to $2,397,828 as of December 31, 2011. As of March 31, 2012, we had $7,426,901 in overall liquidity including investments, as compared to $8,879,033 as of December 31, 2011, a decrease of 16.4%. Historically, our working capital has been generated through operations and equity offerings. If we continue to grow and expand our operations, our need for working capital will increase. For the remainder of 2012, we do not anticipate being profitable because, with the exception of the second quarter of 2012, we intend to increase our marketing and advertising expenditures versus the prior year period to acquire new users and we expect to hire additional employees. We further expect that our cash and cash equivalents will decrease throughout the remainder of 2012. We intend to finance our growth with cash on hand, cash provided from operations, borrowings, debt or equity offerings, or some combination thereof. We believe that our cash provided from operations, cash on hand and investments will provide sufficient capital to fund our operations for the next twelve months.

A significant portion of our expenses is related to user acquisition costs. Our marketing and advertising expenses are primarily spent on channels where we can estimate the return on investment without long-term commitments. Accordingly, we can adjust our marketing and advertising expenditures quickly based on the expected return on investment, which provides flexibility and enables us to manage our marketing and advertising expense.

Operating Activities

Net cash used in operating activities was $1,559,907 for the three months ended March 31, 2012, as compared to net cash used in operating activities of $705,121 for the three months ended March 31, 2011. This increase of $854,786 is primarily a result of the increase in net loss, particularly from increases in advertising and marketing expense, general and administrative expense, and programming, hosting and technology expense as described above, as well as an increase in accounts receivable. These uses of cash were offset in part by sources of cash from increases in deferred revenue and accounts payable and accrued expenses.

During the quarter ended March 31, 2012, one of the Company’s credit card processors experienced a technical problem in processing transactions for the Company, which resulted in the delayed settlement of certain recurring subscription payments. Because of the delay, approximately $500,000 of transactions that would have normally settled during February or March 2012 settled in April 2012, which negatively impacted the Company’s net cash used in operating activities for the quarter ended March 31, 2012. Substantially all of the affected transactions were settled in April 2012 and there will be a corresponding benefit to the Company’s net cash used in operating activities for the quarter ending June 30, 2012.

Net cash used in operating activities during the three months ended March 31, 2012, was $1,559,907, and consisted of $1,386,026 in cash used in operations and a net decrease in our operating assets and liabilities of $173,881. Significant items impacting cash flow in the quarter included increased cash outlays relating to advertising and marketing spend, an increase in salaries and related benefits associated with the growth of our business, our annual bonus payment of $604,000 paid in February 2012 and the delay in credit card collections noted above. These uses of cash were offset in part by increased collections on subscription revenue streams and payments received from the growth of advertising revenue during the quarter.

Net cash used in operating activities during the three months ended March 31, 2011, were $705,121, primarily as a result of $854,756 in cash used in operations, partially offset by a net increase in our operating assets and liabilities of $149,635. Significant items impacting cash flow in the quarter included increased cash outlays relating to advertising and marketing spend, and increases in salaries and related benefits associated with the growth of our business, and our annual bonus payment of approximately $500,000 paid in February 2011. These uses of cash were offset in part by an increase in collections on subscription revenue streams.

Investing Activities

Cash provided by (used in) investing activities for the three months ended March 31, 2012 and 2011 was $3,009,837 and ($24,337), respectively. Cash used in investing activities included purchases of property and equipment during the three months ended March 31, 2012 and 2011, which totaled $2,677 and $24,337, respectively, and consisted primarily of computers and servers. We continue to invest in technology hardware and software to support our growth. Purchases of property and equipment may vary from period to period due to the timing of the expansion of our operations and software development.

Redemption of investments during the three months ended March 31, 2012, totaled $1,250,000 and consisted primarily of redemptions of our certificates of deposit purchased in the prior year. Investments maturing in 90 days or less contributed $1,753,850 to cash and cash equivalents during three months ended March 31, 2012. Cash of $8,664 was also received during the first quarter of 2012 through the partial repayment of a note receivable issued to an employee.

Financing Activities

Cash provided by financing activities for the three months ended March 31, 2012 and 2011 was $0 and $7,915,700, respectively. Cash provided by financing activities for the first quarter of 2011 is attributable to proceeds from the issuance of common stock and warrants in January 2011, net of stock offering costs.

Off-Balance Sheet Arrangements

As of March 31, 2012, we did not have any off-balance sheet arrangements.

Contractual Obligations and Commitments

During the three months ended March 31, 2012, there were no material changes to the Company’s contractual obligations and commitments from those disclosed in “Note 9. Commitments” in the Notes to the Condensed Consolidated Financial Statements included in our Amendment No. 1 to Annual Report on Form 10-K/A for the year ended December 31, 2011, filed with the SEC on December 7, 2012, which is hereby incorporated by reference herein.

Critical Accounting Policies and Estimates

The discussion and analysis of our financial condition and results of operations are based upon our condensed consolidated financial statements which have been prepared in accordance with GAAP. The preparation of these financial statements requires us to make estimates and judgments that affect the reported amounts of assets, liabilities, revenues and expenses, and related disclosure of contingent assets and liabilities on an ongoing basis. We evaluate these estimates including those related to the determination of the fair value of stock options and non-cash capital stock issuances, future chargebacks and refunds on subscription revenue, collectability of accounts receivable, and the valuation allowance on deferred tax assets. Actual results may differ from those estimates under different assumptions or conditions.

During the three months ended March 31, 2012, there were no material changes to our significant accounting policies from those contained in our Amendment No. 1 to Annual Report on Form 10-K/A for the year ended December 31, 2011, filed with the SEC on December 7, 2012, which is hereby incorporated by reference herein, other than those disclosed below.

Recently Adopted Accounting Pronouncements

In October 2009, the FASB issued revised authoritative guidance (ASU No. 2009-13) covering Multiple-Deliverable Revenue Arrangements. The revised authoritative guidance amends the previous guidance on arrangements with multiple deliverables to (1) provide updated guidance on whether multiple deliverables exist, how the deliverables in an arrangement should be separated, and how consideration should be allocated, (2) require an entity to allocate revenue in an arrangement using estimated selling prices ("ESP") of each deliverable if a vendor does not have vendor-specific objective evidence ("VSOE") or third-party evidence of selling price ("TPE"), (3) eliminate the residual allocation method which will be replaced by the relative selling price allocation method for all arrangements, and (4) significantly expand the disclosure requirements. The revised authoritative guidance is effective for new or materially modified arrangements in fiscal years beginning on or after June 15, 2010. The Company adopted this revised authoritative guidance prospectively for new or materially modified arrangements beginning January 1, 2011. The adoption of this revised authoritative guidance update did not have a significant impact on the Company’s consolidated financial statements. Additionally, the Company does not currently foresee any changes to its services or pricing practices that will have a significant effect on its consolidated financial statements in periods after the initial adoption.

ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

Not applicable.

ITEM 4. CONTROLS AND PROCEDURES

Restatement of Previously Issued Financial Statements

As we announced on November 15, 2012, our Board of Directors determined that previously issued consolidated financial statements for the year ended December 31, 2011 as filed on our Annual Report on Form 10-K and the quarterly periods ended March 31, 2012 and June 30, 2012 as filed in our Quarterly Reports on Form 10-Q would need to be restated (as described below).

Evaluation of Disclosure Controls and Procedures

Our management, including our chief executive officer and chief financial officer, evaluated the effectiveness of our disclosure controls and procedures (as defined in Rules 13a-15(e) or 15d-15(e) under the Securities Exchange Act of 1934, as amended (the ‟Exchange Act”)) as of the end of the period covered by this report. Our management does not expect that our disclosure controls and procedures will prevent all error and all fraud. In designing and evaluating the disclosure controls and procedures, management recognized that any controls and procedures, no matter how well designed and operated, can provide only reasonable assurance of achieving the desired control objectives. In addition, the design of disclosure controls and procedures must reflect the fact that there are resource constraints and that management is required to apply its judgment in evaluating the benefits of possible controls and procedures relative to their costs.

Based on that evaluation, our chief executive officer and chief financial officer concluded in our original Quarterly Report on Form 10-Q for the quarter ended March 31, 2012 that our disclosure controls and procedures were not effective to provide reasonable assurance that information we are required to disclose in reports that we file or submit under the Exchange Act is recorded, processed, summarized and reported within the time periods specified in the SEC’s rules and forms, and that such information is accumulated and communicated to our management, including our chief executive officer and chief financial officer, as appropriate, to allow timely decisions regarding required disclosure. Subsequent to the evaluation made in the original filing and in connection with the restatement of our financial statements included in this Amendment No. 1 to Quarterly Report on Form 10-Q/A, our management has re-evaluated, under the supervision and with the participation of our chief executive officer and chief financial officer, the effectiveness of our disclosure controls and procedures. Based upon that re-evaluation, our chief executive officer and chief financial officer concluded that because of the material weaknesses in the internal control over financial reporting discussed below, our disclosure controls and procedures were not effective as of March 31, 2012.

A material weakness is a deficiency, or combination of deficiencies, in internal control over financial reporting, such that there is a reasonable possibility that a material misstatement of the Company’s annual or interim financial statements will not be prevented or detected on a timely basis. In its assessment of the effectiveness of internal control over financial reporting as of March 31, 2012, the Company determined that the following items constituted material weaknesses:

●	The Company does not have policies and procedures in place to ensure the timely review, disclosure and accurate financial reporting for significant agreements and transactions.

●	The Company does not have an independent audit committee in place, which would provide oversight of the Company’s officers, operations and financial reporting function.

●	Management failed to identify, value and disclose the impact of common stock warrants and the resulting liability, which resulted in this restatement in Amendment No. 1 to Quarterly Report on Form 10-Q/A for the quarter ended March 31, 2012.

●	Management did not disclose warrants issued in connection with an equity financing in a timely manner.

Changes in Internal Control over Financial Reporting

There have been no changes in our internal control over financial reporting (as defined in Rules 13a-15(f) or 15d-15(f) under the Exchange Act) during the period covered by this report that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.

PART II: OTHER INFORMATION

ITEM 1. LEGAL PROCEEDINGS

To the best of our knowledge, there are no material pending legal proceedings to which we are a party or of which any of our property is the subject.

ITEM 1A. RISK FACTORS

There were no material changes to the Risk Factors disclosed in “Item 1A. Risk Factors” of our Amendment No. 1 to Annual Report on Form 10-K/A for the year ended December 31, 2011, except for the following risk factors. For more information concerning our risk factors, please refer to “Item 1A. Risk Factors” of our Amendment No. 1 to Annual Report on Form 10-K/A.

We have identified material weaknesses in our internal control over financial reporting. These material weaknesses, if not corrected, could affect the reliability of our financial statements and have other adverse consequences.

Under Section 404 of the Sarbanes-Oxley Act of 2002, we are required to furnish a report by our management on internal control over financial reporting. This report must contain, among other matters, an assessment of the effectiveness of our internal control over financial reporting, including a statement as to whether or not our internal control over financial reporting is effective. This assessment must include disclosure of any material weaknesses in our internal control over financial reporting identified by our management.

We have identified material weaknesses in our internal control over financial reporting as of March 31, 2012, as disclosed in “Item 4. Controls and Procedures.” We determined that we had a material weakness with respect to warrant liability, which resulted in a restatement of our financial statements for the year ended December 31, 2011, and for the quarter ended March 31, 2012. Failure to have effective internal controls could impair our ability to produce accurate financial statements on a timely basis and could lead to a restatement of our financial statements. If, as a result of deficiencies in our internal controls, we cannot provide reliable financial statements, our business decision processes may be adversely affected, our business and operating results could be harmed, investors could lose confidence in our reported financial information, the price of our common stock could decrease and our ability to obtain additional financing, or additional financing on favorable terms, could be adversely affected. In addition, failure to maintain effective internal control over financial reporting could result in investigations or sanctions by regulatory authorities.

We intend to take action to remediate the material weaknesses and improve the effectiveness of our internal control over financial reporting. However, we can give no assurances that the measures we may take will remediate the material weaknesses identified or that any additional material weaknesses will not arise in the future due to our failure to implement and maintain adequate internal control over financial reporting. In addition, even if we are successful in strengthening our controls and procedures, those controls and procedures may not be adequate to prevent or identify irregularities or ensure the fair presentation of our financial statements included in our periodic reports filed with the Securities and Exchange Commission (the “SEC”).

The restatement of our financial statements has subjected us to additional risks and uncertainties, including the increased possibility of legal proceedings.

As a result of the restatement of our financial statements for the year ended December 31, 2011 and our financial statements for the quarter ended March 31, 2012, we have become subject to additional risks and uncertainties, including, among others, increased professional fees and expenses, the increased possibility of legal proceedings, the review of the SEC and other regulatory bodies which could cause investors to lose confidence in our reported financial information and could subject us to civil or criminal penalties, shareholder class actions or derivative actions. We could face monetary judgments, penalties or other sanctions that could have a material adverse effect on our business, financial condition and results of operations and could cause our stock price to decline.

ITEM 2. UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS

None.

ITEM 3. DEFAULTS UPON SENIOR SECURITIES

None.

ITEM 4. MINE SAFETY DISCLOSURES

None.

ITEM 5. OTHER INFORMATION

None.

ITEM 6. EXHIBITS

(a) Exhibits required by Item 601 of Regulation S-K.

Exhibit Number		Description
3.1		Certificate of Incorporation, dated July 19, 2005 (incorporated by reference to Exhibit 3.1 to the Registration Statement on Form S-1 of the Company filed on February 11, 2011 by the Company with the SEC).
3.2		Amendment to Certificate of Incorporation, dated November 20, 2007 (incorporated by reference to Exhibit 3.2 to the Registration Statement on Form S-1 of the Company filed on February 11, 2011 by the Company with the SEC).
3.3		Amended and Restated By-Laws of Snap Interactive, Inc., as amended April 19, 2012 (incorporated by reference to Exhibit 3.1 to the Current Report on Form 8-K of the Company filed April 25, 2012, by the Company with the SEC).
31.1 *		Certification of the Chief Executive Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.
31.2 *		Certification of the Chief Financial Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.
32.1 *		Certification of the Chief Executive Officer and Chief Financial Officer pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.
101†		The following materials from the Company’s Amendment No. 1 to Quarterly Report on Form 10-Q/A for the quarter ended March 31, 2012, formatted in XBRL (eXtensible Business Reporting Language), (i) Condensed Consolidated Balance Sheets, (ii) Condensed Consolidated Statement of Operations, (iii) Condensed Consolidated Statement of Changes in Stockholders’ Equity, (iv) Condensed Consolidated Statements of Cash Flows and (v) Notes to Condensed Consolidated Financial Statements.

*Filed herewith.

† Pursuant to Rule 406T of Regulation S-T, the Interactive Data Files on Exhibit 101 hereto are deemed not filed or part of a registration statement or prospectus for purposes of Section 11 or 12 of the Securities Act of 1933, as amended, are deemed not filed for purposes of Section 18 of the Securities Exchange Act of 1934, as amended, and otherwise are not subject to liability under those sections.

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, thereunto duly authorized.

	SNAP INTERACTIVE, INC.

Date: December 7, 2012	By:	/s/ Clifford Lerner
		Clifford Lerner Chief Executive Officer (Principal Executive Officer)

Date: December 7, 2012	By:	/s/ Jon D. Pedersen, Sr.
		Jon D. Pedersen, Sr. Chief Financial Officer (Principal Financial and Accounting Officer)

Delaware		20-3191847
(State or other jurisdiction of incorporation or organization)		(I.R.S. Employer Identification No.)

Large accelerated filer	o	Accelerated filer	o
Non-accelerated filer	o	Smaller reporting company	þ
(Do not check if a smaller reporting company)

Class		Outstanding at May 10, 2012
Common Stock, par value $0.001 per share		43,730,261

		Page Number

PART I. FINANCIAL INFORMATION

ITEM 1.	Financial Statements

	Condensed Consolidated Balance Sheets as of March 31, 2012 (Unaudited) and December 31, 2011	1

	Condensed Consolidated Statements of Operations for the Three Months Ended March 31, 2012 and 2011 (Unaudited)	2

	Condensed Consolidated Statement of Changes in Stockholders’ Equity for the Three Months Ended March 31, 2012 (Unaudited)	3

	Condensed Consolidated Statements of Cash Flows for the Three Months Ended March 31, 2012 and 2011 (Unaudited)	4

	Notes to Condensed Consolidated Financial Statements (Unaudited)	5

ITEM 2.	Management's Discussion and Analysis of Financial Condition and Results of Operations	16

ITEM 3.	Quantitative and Qualitative Disclosures About Market Risk	23

ITEM 4.	Controls and Procedures	23

PART II. OTHER INFORMATION

ITEM 1.	Legal Proceedings	24

ITEM 1A.	Risk Factors	24

ITEM 2.	Unregistered Sales of Equity Securities and Use of Proceeds	24

ITEM 3.	Defaults Upon Senior Securities	24

ITEM 4.	Mine Safety Disclosures	24

ITEM 5.	Other Information	24

ITEM 6.	Exhibits	25

SIGNATURES		26

	Common Stock				Additional Paid- in Capital		Accumulated			Stockholders’
	Shares		Amount		Additional Paid- in Capital		Deficit			Equity
Balance at December 31, 2011, as restated		38,580,261	$	38,580	$	8,256,864	$	(3,684,743	)	$	4,610,701

Stock options granted for services		-		-		207,846		-			207,846

Stock-based compensation		-		-		77,437		-			77,437

Net loss		-		-		-		(2,995,636	)		(2,995,636	)

Balance at March 31, 2012, as restated		38,580,261	$	38,580	$	8,542,147	$	(6,680,379	)	$	1,900,348