UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON,Washington, D.C. 20549
FORM 10-Q
QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended March 31, 2020
OR
For the quarterly period ended June 30, 2019
OR
TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the transition period from to
Commission file number: 001-33105

tmglogo.jpg
The Meet Group, Inc.
(Exact name of registrant as specified in its charter)
Delaware86-0879433
(State or other jurisdictionOther Jurisdiction of Incorporation or Organization)(I.R.S. Employer
incorporation or organization)Identification No.)
100 Union Square Drive 
New Hope, Pennsylvania18938
(Address of principal executive offices)(Zip Code)
100 Union Square Drive, New Hope, Pennsylvania18938
(Address of Principal Executive Office)

Registrant’s telephone number: (215) Telephone Number: (215) 862-1162
Securities registered pursuant to Section 12(b) of the Exchange Act:
Securities registered pursuant to Section 12(b) of the Exchange Act
Title of each class Trading Symbol(s) Name of each exchange on which registered
Common Stock MEET NASDAQ


Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.    Yes No
Yes ☒ No ☐
Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T during the preceding 12 months (or for such shorter period that the registrant was required to submit such files).    Yes No
Yes ☒ No ☐
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company” and “emerging growth company” in Rule 12b-2 of the Exchange Act.
Large accelerated filer    ☐    Accelerated filer    ☑    Non-accelerated filer    
Large accelerated filer ☐ Accelerated filer ☒ 
Non-accelerated filer ☐Smaller reporting company ☐ 
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 comply with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act.
Smaller reporting company    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 comply with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐
Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes      No
Yes ☐ No ☒
Class Outstanding as of July 29, 2019May 1, 2020
Common Stock, $0.001 par value per share 76,257,633
71,803,638 shares







THE MEET GROUP, INC. AND SUBSIDIARIES
INDEXTABLE OF CONTENTS


 
 
 
 
 
PART II. OTHER INFORMATION
CERTIFICATIONS
INDEX TO EXHIBITS







PART I. FINANCIAL INFORMATION

ItemITEM 1.    Financial StatementsFINANCIAL STATEMENTS

THE MEET GROUP, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE SHEETS

(in thousands, except par value and share data)
(Unaudited)  (Unaudited)  
June 30,
2019
 December 31,
2018
March 31, 2020 December 31, 2019
ASSETS   
CURRENT ASSETS:   
Assets:   
Current assets:   
Cash and cash equivalents$26,052,704
 $28,365,725
$32,110
 $27,241
Accounts receivable, net of allowance of $1,363,319 and $383,579 at June 30, 2019 and December 31, 2018, respectively24,347,153
 27,148,484
Accounts receivable, net23,966
 25,234
Prepaid expenses and other current assets6,063,452
 4,911,057
5,820
 6,062
Total current assets56,463,309
 60,425,266
61,896
 58,537
Deferred tax assets16,211
 16,233
Property and equipment, net3,047
 3,625
Operating lease right-of-use assets7,138
 7,034
Intangible assets, net26,945
 29,305
Goodwill157,388,320
 148,132,873
155,693
 156,687
Property and equipment, net4,027,033
 4,633,764
Operating lease right-of-use assets, net5,498,822
 
Intangible assets, net34,648,534
 36,558,439
Deferred taxes15,318,336
 15,648,572
Other assets1,584,348
 2,453,255
850
 1,300
Total assets$274,928,702
 $267,852,169
$271,780
 $272,721
LIABILITIES AND STOCKHOLDERS’ EQUITY   
CURRENT LIABILITIES:   
Liabilities and stockholders' equity:   
Current liabilities:   
Accounts payable$5,402,910
 $9,071,193
$7,518
 $5,346
Accrued liabilities19,030,861
 19,112,303
18,915
 20,090
Current portion of long-term debt15,000,000
 18,566,584
3,500
 3,500
Current portion of capital lease obligations101,446
 134,067
Current portion of operating lease liabilities2,203,055
 
2,527
 2,081
Current portion of finance lease obligations9
 10
Deferred revenue4,677,161
 4,620,690
3,563
 3,884
Total current liabilities46,415,433
 51,504,837
36,032
 34,911
Long-term capital lease obligations, less current portion12,005
 58,683
Long-term debt, less current portion, net17,681,962
 18,087,956
Long-term operating lease liabilities, less current portion3,341,631
 
Long-term derivative liability231,092
 940,216
Long-term debt, net29,523
 30,375
Long-term operating lease liabilities4,723
 5,024
Long-term finance lease obligations48
 53
Long-term derivative liabilities477
 1,451
Deferred tax liabilities2,888
 2,773
Other liabilities848,334
 39,651

 894
Total liabilities68,530,457
 70,631,343
73,691
 75,481
Commitments and contingencies (see Note 7)
 
STOCKHOLDERS’ EQUITY:   
Preferred stock, $.001 par value; authorized - 5,000,000 shares; no shares issued and outstanding at June 30, 2019 and December 31, 2018
 
Common stock, $.001 par value; authorized - 100,000,000 shares; 76,227,583 and 74,697,526 shares issued and outstanding at June 30, 2019 and December 31, 2018, respectively76,228
 74,700
Commitments and contingencies


 


Stockholders' equity:   
Preferred stock, $0.001 par value; authorized - 5,000,000 shares; no shares issued and outstanding as of March 31, 2020 and December 31, 2019
 
Series A junior participating preferred stock, $0.001 par value; authorized - 200,000 shares; no shares issued and outstanding as of March 31, 2020 and December 31, 2019
 
Common stock, $0.001 par value; authorized - 100,000,000 shares; 71,185,492 and 70,756,013 shares issued and outstanding as of March 31, 2020 and December 31, 2019, respectively71
 71
Additional paid-in capital425,075,744
 419,455,818
434,622
 430,959
Accumulated deficit(216,814,600) (220,276,025)(234,073) (231,441)
Accumulated other comprehensive loss(1,939,127) (2,033,667)(2,531) (2,349)
Total stockholders’ equity206,398,245
 197,220,826
198,089
 197,240
Total liabilities and stockholders’ equity$274,928,702
 $267,852,169
$271,780
 $272,721


See notes to condensed consolidated financial statements.






THE MEET GROUP, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE (LOSS) INCOME (LOSS)
THREE AND SIX MONTHS ENDED JUNE 30, 2019 AND 2018
(UNAUDITED)

(in thousands, except share and per share data)
 Three Months Ended June 30, Six Months Ended June 30,
 2019 2018 2019 2018
Revenues$52,000,104
 $42,801,745
 $101,513,341
 $80,439,538
Operating costs and expenses:       
Sales and marketing9,059,530
 7,753,486
 16,900,396
 14,801,479
Product development and content30,149,797
 24,411,288
 61,273,172
 46,512,825
General and administrative5,892,437
 5,154,103
 10,820,219
 10,623,281
Depreciation and amortization3,430,018
 3,505,180
 6,628,122
 7,134,783
Acquisition and restructuring25,454
 1,036,602
 504,449
 4,386,553
Total operating costs and expenses48,557,236
 41,860,659
 96,126,358
 83,458,921
Income (loss) from operations3,442,868
 941,086
 5,386,983
 (3,019,383)
Other income (expense):       
Interest income27,605
 2,742
 59,994
 9,950
Interest expense(328,196) (671,294) (731,060) (1,278,980)
Gain (loss) on foreign currency transactions(2,380) 4,216
 (67,589) 107,259
Other(787) 28,571
 2,762
 21,627
Total other expense(303,758) (635,765) (735,893) (1,140,144)
Income (loss) before income tax expense3,139,110
 305,321
 4,651,090
 (4,159,527)
Income tax expense(935,284) (540,593) (1,189,665) (288,406)
Net income (loss)$2,203,826
 $(235,272) $3,461,425
 $(4,447,933)
        
Basic and diluted net income (loss) per common stockholder:       
Basic net income (loss) per common stockholder$0.03
 $
 $0.05
 $(0.06)
Diluted net income (loss) per common stockholder$0.03
 $
 $0.04
 $(0.06)
        
Weighted average shares outstanding:       
Basic75,648,621
 72,753,487
 75,250,562
 72,369,619
Diluted78,508,559
 72,753,487
 78,656,115
 72,369,619
        
Comprehensive income (loss):       
Net income (loss)$2,203,826
 $(235,272) $3,461,425
 $(4,447,933)
Other comprehensive income (loss):       
Reclassification of (gains) losses on derivative financial instruments, net of tax of $106,221, $832,995, $240,254 and $508,691, respectively232,239
 (1,831,921) (543,598) (1,053,778)
Unrealized gains (losses) on derivative financial instruments, net of tax of $50,362, $834,099, $335,560 and $416,203, respectively(131,905) 1,858,182
 695,763
 1,097,056
Foreign currency translation adjustment263,173
 (952,438) (57,625) (584,085)
Other comprehensive income (loss)363,507
 (926,177) 94,540
 (540,807)
Comprehensive income (loss)$2,567,333
 $(1,161,449) $3,555,965
 $(4,988,740)
 Three Months Ended March 31,
 2020 2019
Revenue$55,066
 $49,513
Operating costs and expenses:   
Sales and marketing7,714
 7,841
Product development and content37,671
 31,123
General and administrative5,030
 4,928
Depreciation and amortization2,820
 3,198
Acquisition, restructuring and other3,370
 479
Total operating costs and expenses56,605
 47,569
(Loss) income from operations(1,539) 1,944
Other income (expense):   
Interest income13
 32
Interest expense(396) (403)
Loss on foreign currency transactions(7) (65)
Loss on disposal of assets(108) 
Other items of income, net2
 4
Total other expense(496) (432)
(Loss) income before income tax expense(2,035) 1,512
Income tax expense(373) (254)
Net (loss) income$(2,408) $1,258
    
Basic and diluted net (loss) income per share:   
Basic net (loss) income per share$(0.03) $0.02
Diluted net (loss) income per share$(0.03) $0.02
    
Weighted-average shares outstanding:   
Basic71,001,906
 74,848,080
Diluted71,001,906
 78,799,248
    
Comprehensive (loss) income:   
Net (loss) income$(2,408) $1,258
Other comprehensive loss:   
Reclassification of gains on derivative financial instruments, net of tax of $274 and $346, respectively(597) (776)
Unrealized gains on derivative financial instruments, net of tax of $454 and $386, respectively822
 828
Foreign currency translation adjustment(407) (321)
Other comprehensive loss(182) (269)
Comprehensive (loss) income$(2,590) $989


See notes to condensed consolidated financial statements.






THE MEET GROUP, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS EQUITY
THREE AND SIX MONTHS ENDED JUNE 30, 2019 AND 2018(UNAUDITED)
(UNAUDITED)(in thousands, except share data)
 Common Stock 
Additional
Paid-in
Capital
 
Accumulated
Deficit
 
Accumulated
Other
Comprehensive
Loss
 
Total
Stockholders
Equity
 Shares Amount    
Balance-March 31, 201975,270,035
 $75,272
 $422,471,569
 $(219,018,426) $(2,302,634) $201,225,781
Stock-based compensation expense
 
 2,865,336
 
 
 2,865,336
Exercise of stock options5,597
 4
 21,724
 
 
 21,728
Issuance of common stock for vested RSAs951,951
 952
 (952) 
 
 
RSAs withheld to cover taxes
 
 (281,933) 
 
 (281,933)
Other comprehensive income
 
 
 
 363,507
 363,507
Net income
 
 
 2,203,826
 
 2,203,826
Balance-June 30, 201976,227,583
 $76,228
 $425,075,744
 $(216,814,600) $(1,939,127) $206,398,245
            
Balance-December 31, 201874,697,526
 $74,700
 $419,455,818
 $(220,276,025) $(2,033,667) $197,220,826
Stock-based compensation expense
 
 5,290,053
 
 
 5,290,053
Exercise of stock options157,334
 156
 702,561
 
 
 702,717
Issuance of common stock for vested RSAs1,372,723
 1,372
 (1,372) 
 
 
RSAs withheld to cover taxes
 
 (371,316) 
 
 (371,316)
Other comprehensive income
 
 
 
 94,540
 94,540
Net income
 
 
 3,461,425
 
 3,461,425
Balance-June 30, 201976,227,583
 $76,228
 $425,075,744
 $(216,814,600) $(1,939,127) $206,398,245
            
Balance-March 31, 201872,106,997
 $72,104
 $410,105,207
 $(225,632,074) $(739,168) $183,806,069
Stock-based compensation expense
 
 2,090,870
 
 
 2,090,870
Exercise of stock options131,051
 131
 232,285
     232,416
Issuance of common stock for vested RSAs883,914
 883
 (883) 
 
 
RSAs withheld to cover taxes
 
 (213,520) 
 
 (213,520)
Other comprehensive loss
 
 
 
 (926,177) (926,177)
Net loss
 
 
 (235,272) 
 (235,272)
Balance-June 30, 201873,121,962
 $73,118
 $412,213,959
 $(225,867,346) $(1,665,345) $184,754,386
            
Balance-December 31, 201771,915,018
 $71,918
 $408,029,068
 $(221,435,888) $(1,124,538) $185,540,560
Adoption of ASC Topic 606
 
 
 16,475
 
 16,475
Stock-based compensation expense
 
 4,259,795
 
 
 4,259,795
Exercise of stock options131,051
 131
 232,285
 
 
 232,416
Issuance of common stock for vested RSAs1,075,893
 1,069
 (1,069) 
 
 
RSAs withheld to cover taxes
 
 (306,120) 
 
 (306,120)
Other comprehensive loss
 
 
 
 (540,807) (540,807)
Net loss
 
 
 (4,447,933) 
 (4,447,933)
Balance-June 30, 201873,121,962
 $73,118
 $412,213,959
 $(225,867,346) $(1,665,345) $184,754,386
 Common Stock Additional
Paid-in
Capital
 Accumulated
Deficit
 Accumulated
Other
Comprehensive
Loss
 
Total
Stockholders

Equity
 Shares Amount    
Balance as of January 1, 202070,756,013
 $71
 $430,959
 $(231,441) $(2,349) $197,240
Accounting Standards Update No. 2016-13
 
 
 (159) 
 (159)
Stock-based compensation expense
 
 3,185
 
 
 3,185
Exercise of stock options162,841
 
 564
 
 
 564
Issuance of common stock for vested restricted stock awards279,573
 
 
 
 
 
Restricted stock awards withheld to cover taxes
 
 (86) 
 
 (86)
Repurchase and retirement of common stock(12,935) 
 
 (65) 
 (65)
Other comprehensive loss
 
 
 
 (182) (182)
Net loss
 
 
 (2,408) 
 (2,408)
Balance as of March 31, 202071,185,492
 $71
 $434,622
 $(234,073) $(2,531) $198,089
            
Balance as of January 1, 201974,697,526
 $75
 $419,456
 $(220,276) $(2,034) $197,221
Stock-based compensation expense
 
 2,425
 
 
 2,425
Exercise of stock options151,737
 
 681
 
 
 681
Issuance of common stock for vested restricted stock awards420,772
 1
 (1) 
 
 
Restricted stock awards withheld to cover taxes
 
 (89) 
 
 (89)
Other comprehensive loss
 
 
 
 (269) (269)
Net income
 
 
 1,258
 
 1,258
Balance as of March 31, 201975,270,035
 $76
 $422,472
 $(219,018) $(2,303) $201,227


See notes to condensed consolidated financial statements.






THE MEET GROUP, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
SIX MONTHS ENDED JUNE 30, 2019 AND 2018 
(UNAUDITED)

(in thousands)
 Six Months Ended June 30,
 2019 2018
Cash flows from operating activities:   
Net income (loss)$3,461,425
 $(4,447,933)
Adjustments to reconcile net income (loss) to net cash provided by operating activities:   
Depreciation and amortization6,628,122
 7,134,783
Amortization right-of-use assets1,293,657
 
Stock-based compensation expense5,290,053
 4,259,795
Deferred taxes268,015
 (441,417)
(Gain) loss on foreign currency transactions67,589
 (107,259)
Bad debt expense909,140
 290,426
Amortization of loan origination costs94,006
 164,313
Change in contingent consideration obligations63,667
 
Changes in operating assets and liabilities:   
Accounts receivable2,414,200
 2,141,980
Prepaid expenses, other current assets and other assets(483,916) (2,426,711)
Accounts payable and accrued liabilities(6,019,870) 2,344,109
Deferred revenue(19,276) 686,332
Net cash provided by operating activities13,966,812
 9,598,418
Cash flows from investing activities:   
Purchase of property and equipment(687,725) (256,391)
Acquisition of business, net of cash acquired(11,807,925) 
Net cash used in investing activities(12,495,650) (256,391)
Cash flows from financing activities:   
Proceeds from exercise of stock options702,717
 232,416
Payments of capital leases(77,507) (142,043)
Proceeds from borrowings of debt7,000,000
 
Payments for restricted stock awards withheld for taxes(371,316) (306,120)
Payments of contingent consideration
 (5,000,000)
Payments on long-term debt(11,066,584) (7,500,000)
Net cash used in financing activities(3,812,690) (12,715,747)
Change in cash and cash equivalents prior to effects of foreign currency exchange rate(2,341,528) (3,373,720)
Effect of foreign currency exchange rate (translation)28,507
 (256,818)
Net decrease in cash and cash equivalents(2,313,021) (3,630,538)
Cash and cash equivalents at beginning of period28,365,725
 25,052,995
Cash and cash equivalents at end of period$26,052,704
 $21,422,457
Supplemental disclosure of cash flow information:   
Cash paid for interest$630,130
 $1,110,448
 Three Months Ended March 31,
 2020 2019
Cash flows from operating activities:   
Net (loss) income$(2,408) $1,258
Adjustments to reconcile net (loss) income to net cash provided by operating activities:
  
Depreciation and amortization2,820
 3,198
Amortization of right-of-use assets635
 695
Stock-based compensation expense3,185
 2,425
Deferred tax expense (benefit)9
 (147)
Loss on disposal of assets108
 
Loss on foreign currency transactions7
 65
Provision for expected credit losses82
 325
Non-cash interest expense120
 38
Changes in derivative financial instruments171
 
Changes in contingent consideration obligations23
 16
Changes in operating assets and liabilities:   
Accounts receivable944
 1,187
Prepaid expenses, other current assets and other assets768
 (774)
Accounts payable and accrued liabilities(638) (5,009)
Deferred revenue(275) 85
Net cash provided by operating activities5,551
 3,362
Cash flows from investing activities:
  
Purchases of property and equipment(87) (283)
Acquisition of business, net of cash acquired
 (11,808)
Net cash used in investing activities(87) (12,091)
Cash flows from financing activities:   
Proceeds from exercise of stock options564
 681
Repurchases of common stock(65) 
Payments of finance leases(5) (41)
Proceeds from revolving loan
 7,000
Payments for restricted stock awards withheld for taxes(86) (89)
Payments of term loan(875) (7,317)
Net cash (used in) provided by financing activities(467) 234
Change in cash and cash equivalents prior to effect of foreign currency exchange rate4,997
 (8,495)
Effect of foreign currency exchange rate(128) (60)
Net increase (decrease) in cash and cash equivalents4,869
 (8,555)
Cash and cash equivalents as of beginning of period27,241
 28,366
Cash and cash equivalents as of end of period$32,110
 $19,811
Supplemental disclosure of cash flow information:   
Cash paid for interest$123
 $361
Cash paid for income taxes$973
 $297


See notes to condensed consolidated financial statements.






THE MEET GROUP, INC. AND SUBSIDIARIES
NOTES TO CONDENSEDTHE CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)


Note 1—1 —Description of Business, Basis of Presentation and Summary of Significant Accounting Policies


Description of Business

The Meet Group, Inc. (the “Company,(“Company, or “The Meet Group,” “us,” or “we”Group”) is a leading provider of interactive livestreaminglive-streaming solutions. We leverageThe Company leverages a powerful live-streaminglive video platform (“Live”), empowering ourits global community to forge meaningful connections. OurThe Company’s primary appsapplications (“apps”) are MeetMe®, LOVOO®, Skout®, Tagged®, LOVOO® and Growlr®.


We operateThe Company operates location-based social networks for meeting new people primarily on mobile platforms, including on iPhone, Android, iPad and other tablets that facilitate interactions among users and encourage users to connect, communicate and engage with each other. Over the past two years, we have transformed our business from an advertising based revenue model to one where the majority of our revenue is derived from user pay monetization and subscriptions.

The fastest growing component of user pay monetization comes from in-app purchases, including virtual gifts associated with our live video product.

We began developing our live video platform in 2016 with the belief that we could successfully pair live-streaming and dating – a model that we had seen work effectively for Asian dating app providers. We first launched video on MeetMe early in 2017, and, in October of 2017, we began to monetize the feature by enabling gifting within the video streams. During this time period, weCompany also executed on our strategy of acquiring other properties: Skout, Inc. (“Skout”), Ifwe Inc. (“if(we)”) and Lovoo GmbH (“Lovoo”) – where we believed our live-streaming platform would fit naturally. We then integrated live video into each app. We launched the monetized video platform on Skout in the fourth quarter of 2017, Tagged in the second quarter of 2018 and Lovoo beginning in the second quarter of 2018. We have also continued to add features and enhancements intended to drive video engagement and increase monetization for all the apps. Live video has become the fastest growing revenue product in our history.

We also offeroffers online marketing capabilities, which enable marketers to display their advertisements on ourits apps. We offer significant scale to our advertising partners, with hundreds of millions of daily impressions across our active global user base, and sophisticated data science for effective targeting. We work with our advertisers and advertising networks to maximize the effectiveness of their campaigns by optimizing advertisement formats and placements.

Just as Facebook has established itself as the social network of friends and family, and LinkedIn as the social network of colleagues and business professionals, The Meet Group is creating the social entertainment network not of the people you know, but of the people you want to know. Nimble, fast-moving and already in more than 100 countries, we are challenging the dominant player in our space, Match Group, Inc., and differentiating ourselves with live video, which is not offered by many of our direct competitors. Modeled after the video products offered by Asian dating app providers, but enhanced in order to appeal to Western audiences, our live video product is aimed at the nexus of entertainment and community, where we believe our apps exhibit natural strength.

Our vision extends beyond dating and entertainment. We focus on building quality products to satisfy the universal need for human connection among all people, everywhere – not just paying subscribers. We believe meeting new people is a basic human need, especially for users aged 18-34, when so many long-lasting relationships are made. We use advanced technology to engineer serendipitous connections among people who otherwise might never have met – a sort of digital coffeehouse where everyone belongs. Over the years, The Meet Group’s apps have originated untold numbers of chats, shares, good friendships, dates, romantic relationships – even marriages.

We believe that we have significant growth opportunities enabled through our social entertainment platform. We believe our scale provides unique advantages to grow video monetization, while also establishing a high density of users within the geographic regions we serve. As The Meet Group’s networks grow and the number of users in a location increases, we believe that users who are seeking to meet new people will incrementally benefit from the quantity of relevant connections.


Basis of Presentation 


The Company’s unaudited condensed consolidated financial statements are prepared in accordance with accounting principlesU.S. generally accepted in the U.S.accounting principles (“GAAP”). The condensed consolidated financial statements include the accounts of all subsidiaries and affiliates in which the Company holds a controlling financial interest as of the date of the condensed consolidated financial statements.


The condensed consolidated financial statements include the accounts of The Meet Group and its wholly-owned subsidiaries. All intercompany accounts and transactions have been eliminated in consolidation.




Unaudited Interim Financial Information


The unaudited condensed consolidated financial statements have been prepared by the Company and reflect all normal, recurring adjustments that, in the opinion of management, are necessary for a fair presentation of the interim financial information. The results of operations for the interim periods presented are not necessarily indicative of the results to be expected for any subsequent quarter or for the year ending December 31, 2019.2020. Certain information and footnote disclosures normally included in financial statements prepared in accordance with GAAP have been condensed or omitted under the rules and regulations of the U.S. Securities and Exchange Commission (“SEC”). These unaudited condensed consolidated financial statements and notes included herein should be read in conjunction with the audited consolidated financial statements and notes included therein in the Company’s Annual Report on Form 10-K for the year ended December 31, 2018,2019, which was filed with the SEC on March 8, 2019.12, 2020.

Merger Agreement

On March 5, 2020, the Company entered into a definitive agreement to be acquired by ProSiebenSat.1 Media SE’s and General Atlantic Coöperatief U.A.’s joint company, NCG – NUCOM GROUP SE, a European stock corporation (“NuCom”), through eHarmony Holding, Inc., a subsidiary of NuCom’s platform company Parship Group GmbH (“Buyer”). Pursuant to the Agreement and Plan of Merger (“Merger Agreement”), by and among the Company, Buyer, Holly Merger Sub, Inc., a Delaware corporation and a direct, wholly-owned subsidiary of Buyer (“Merger Sub”), and NuCom, solely for the purpose of guaranteeing Buyer’s obligations under the Merger Agreement, Merger Sub shall merge with and into the Company (“Merger”). As a result of the Merger, the separate corporate existence of Merger Sub shall cease, the Company shall continue as the surviving corporation in the Merger (“Surviving Corporation”) and the Surviving Corporation shall become a wholly-owned subsidiary of Buyer. The Company recorded $3.1 million of acquisition, restructuring and other expenses related to the Merger Agreement during the three months ended March 31, 2020.

The Company expects the Merger to close in the second half of 2020, subject to the satisfaction of all closing conditions.



Summary of Significant Accounting Policies

Use of Estimates


The preparation of the Company’s consolidated financial statements in conformity with GAAP requires the Company to make estimates and assumptions that affect the reported amounts of assets and liabilities and the disclosure of contingent assets and liabilities at the date of the condensed consolidated financial statements and the reported amounts of revenues and expenses during the reporting period. Significant estimates and assumptions are required in revenue recognition, accounting forthe determination of business combinations accounts receivable valuation, the fair value of financial instruments,and contingent consideration arrangements, income taxes, the valuation of long-lived assets, valuation of deferred taxincluding property and equipment, definite-lived intangible assets income taxes, contingencies,and goodwill and intangible assets, video broadcaster fees and stock-based compensation.accounting for contingencies. Some of these judgments can be subjective and complex, and, consequently, actual results may differ from these estimates. The Company’s estimates are often are based on complex judgments, probabilities and assumptions that it believes to beare reasonable but that are inherently uncertain and unpredictable. For any given individual estimate or assumption made by the Company, there may also be other estimates or assumptions that are reasonable.


The Company regularly evaluates its estimates and assumptions using historical experience and other factors, including the economic environment. As future events and their effects cannot be determined with precision, the Company’s estimates and assumptions may prove to be incomplete or inaccurate, or unanticipated events and circumstances may occur that might cause it to change those estimates and assumptions. Market conditions, such as illiquid credit markets, volatile equity markets, dramatic fluctuations in foreign currency rates and economic downturn, can increase the uncertainty already inherent in its estimates and assumptions. The Company adjusts its estimates and assumptions when facts and circumstances indicate the need for change. Those changes generally will be reflected in the Company’s condensed consolidated financial statements on a prospective basis unless they are required to be treated retrospectively under the relevant accounting standard. It is possible that other professionals, applying reasonable judgment to the same facts and circumstances, could develop and support a range of alternative estimated amounts. The Company is also subject to other risks and uncertainties that may cause actual results to differ from estimated amounts, such as changes in competition, litigation, legislation and regulations.


During the three and six months ended June 30, 2019, the Company started to take breakage on video broadcaster rewards based on historical levels of activity of video broadcasters and their corresponding video broadcaster reward balances. Based on this analysis, the Company reduced its accrual for video broadcaster rewards by $1.9 million. This reduction of expense is recognized in product development and content expense in the condensed consolidated statements of operations and comprehensive income (loss) for the three and six months ended June 30, 2019. The Company will continue to regularly evaluate the likelihood of a user redeeming video broadcaster rewards and adjust breakage accordingly.

Fair Value Measurements

The fair values of the Company’s financial instruments reflect the amounts that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date (exit price).

The carrying amounts of the Company’s financial instruments of cash, cash equivalents, accounts receivable, accounts payable, accrued liabilities and deferred revenue approximate fair value due to their short maturities. The Company has evaluated the estimated fair value of financial instruments using available market information and management’s estimates. The use of different market assumptions and/or estimation methodologies could have a significant effect on the estimated fair value amounts.

In addition, the Company carries its contingent consideration liabilities related to acquisitions at fair value. In accordance with the three-tier fair value hierarchy, the Company determined the fair value of its contingent consideration liabilities using the income approach with assumed discount rates and payment probabilities. The income approach uses Level 3, or unobservable inputs as defined under the accounting guidance for fair value measurements. At June 30, 2019, the Company’s contingent consideration liability had a fair value of $1.8 million. See Note 2—Acquisitions for more information regarding the Company’s contingent consideration liability.



The Company carries a term loan facility with an outstanding balance at June 30, 2019 and December 31, 2018 of $25.9 million and $36.9 million, respectively. As part of the Growlr Acquisition (as defined in Note 2—Acquisitions), the Company drew down $7.0 million on its revolving credit facility. The outstanding balance on the Company’s revolving credit facility at June 30, 2019 was $7.0 million. The outstanding balances of the Company’s term loan and revolving credit facilities as of June 30, 2019 and December 31, 2018 approximate fair value due to the variable market interest rates and relatively short maturity associated with them. See Note 6—Long-Term Debt for more information regarding the Company’s credit facilities.

The Company leases its operating facilities in the U.S. and Germany under certain noncancelable operating leases that expire through 2023. The Company also leases certain fixed assets under capital leases that expire through 2021. The capital leases are for the Company's data centers, printers and other furniture in the Company's German offices. The outstanding balance of operating and finance leases as of June 30, 2019 and December 31, 2018 approximates fair value due to their relatively short maturities.

The Company records all derivatives on the balance sheet at fair value.  The accounting for changes in the fair value of derivatives depends on the intended use of the derivative, whether the Company has elected to designate a derivative in a hedging relationship and apply hedge accounting and whether the hedging relationship has satisfied the criteria necessary to apply hedge accounting. Derivatives designated and qualifying as a hedge of the exposure to changes in the fair value of an asset, liability, or firm commitment attributable to a particular risk, such as interest rate risk, are considered fair value hedges. Derivatives designated and qualifying as a hedge of the exposure to variability in expected future cash flows, or other types of forecasted transactions, are considered cash flow hedges. Derivatives may also be designated as hedges of the foreign currency exposure of a net investment in a foreign operation. Hedge accounting generally provides for the matching of the timing of gain or loss recognition on the hedging instrument with the recognition of the changes in the fair value of the hedged asset or liability that are attributable to the hedged risk in a fair value hedge or the earnings effect of the hedged forecasted transactions in a cash flow hedge. The Company may enter into derivative contracts that are intended to economically hedge certain of its risk, even though hedge accounting does not apply or the Company elects not to apply hedge accounting.

The Company is measuring the credit risk of its derivative financial instruments that are subject to master netting agreements on a net basis by counterparty portfolio. See Note 10—Derivatives and Hedging Activities for further details.

Foreign Currency

The functional currency of our foreign subsidiaries is the local currency. The financial statements of these subsidiaries are translated to U.S. dollars using period-end rates of exchange for assets and liabilities and average quarterly rates of exchange for revenues and expenses. Translation gains (losses) are recorded in accumulated other comprehensive income (loss) as a component of stockholders’ equity. Net gains and losses resulting from foreign exchange transactions are included in other income (expense).

Net Income (Loss) per Share

Basic net income (loss) per share is computed by dividing net income (loss) attributable to common stockholders by the weighted average number of common shares outstanding. Diluted net income (loss) per share is computed by dividing net income (loss) attributable to common stockholders by the weighted average number of common shares and common stock equivalents outstanding, calculated under the treasury stock method for options, unvested restricted stock awards (“RSAs”), unvested in-the-money performance share units (“PSUs”) and warrants using the average market prices during the period.



The following table shows the computation of basic and diluted net income (loss) per share for the following:

 Three Months Ended June 30, Six Months Ended June 30,
 2019 2018 2019 2018
Numerator:       
Net income (loss)$2,203,826
 $(235,272) $3,461,425
 $(4,447,933)
        
Denominator:       
Weighted-average shares outstanding— basic75,648,621
 72,753,487
 75,250,562
 72,369,619
Effect of dilutive securities2,859,938
 
 3,405,553
 
Weighted-average shares outstanding— diluted78,508,559
 72,753,487
 78,656,115
 72,369,619
 

   

  
Basic income (loss) per share$0.03
 $
 $0.05
 $(0.06)
Diluted income (loss) per share$0.03
 $
 $0.04
 $(0.06)

The following table summarizes the number of dilutive securities, which may dilute future earnings per share, outstanding for each of the periods presented, but not included in the calculation of diluted earnings per share:

 Three Months Ended June 30, Six Months Ended June 30,
 2019 2018 2019 2018
Stock options2,876,703
 5,081,890
 2,700,275
 5,081,890
Unvested RSAs2,741,221
 3,805,547
 2,372,049
 3,805,547
Unvested PSUs146,483
 1,046,350
 146,467
 1,046,350
Total5,764,407
 9,933,787
 5,218,791
 9,933,787

Significant Customers and Concentration of Credit Risk

Financial instruments that potentially subject the Company to significant concentrations of credit risk consist primarily of cash, cash equivalents, and accounts receivable. The Company invests its excess cash in high-quality, liquid money market funds maintained by major U.S. banks and financial institutions. The Company has not experienced any losses on its cash and cash equivalents, including money market funds.

The Company performs ongoing credit evaluations of its customers and generally does not require collateral. The Company has no recent history of significant losses from uncollectible accounts. During the six months ended June 30, 2019 and 2018, two customers, both of which were advertising aggregators (which represent thousands of advertisers) and customer payment processors, comprised approximately 61% and 49% of total revenues, respectively. Two and three customers, which were advertising aggregators and customer payment processors, comprised approximately 44% and 36% of accounts receivable as of June 30, 2019 and December 31, 2018, respectively.

The Company does not expect its current or future credit risk exposure to have a significant impact on its operations, however, there can be no assurance that the Company’s business will not experience any adverse impact from credit risk in the future.



Recent IssuedRecently-issued Accounting Standards


Recently-adopted Accounting Standards

In FebruaryJune 2016, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update (“ASU”) No. 2016-02, Leases2016-13, Financial Instruments — Credit Losses (Topic 842). The new standard establishes a right-of-use326): Measurement of Credit Losses on Financial Instruments (“ROU”ASU No. 2016-13”), which requires the measurement and recognition of expected credit losses for certain financial assets, including trade accounts receivable. ASU No. 2016-13 replaces the existing incurred loss impairment model with an expected loss model that requires the use of relevant information, including an entity’s historical experience, current conditions and other reasonable and supportable forecasts that affect collectability over the life of a lessee to record a ROU asset and a lease liability on the balance sheet for all leases with terms longer than 12 months. Leases will be classified as either finance or operating, with classification affecting the pattern of expense recognitionfinancial asset. The amendments in the income statement. ASU No. 2016-02 is2016-13 are effective for annual periodsfiscal years beginning after December 15, 2018, and annual and2019, including interim periods thereafter, with earlywithin those fiscal years. Early adoption was permitted. A modified retrospective transition approach is an option for lessees for capital and operating leases existing at, or entered into after, the beginning of the earliest comparative period presented in the financial statements, with certain practical expedients available. In July 2018, the FASB issued ASU No. 2018-11, Leases (Topic 842), which adds an optional transition method allowing entities to apply the new lease accounting rules through a cumulative-effect adjustment to the opening balance of retained earnings in the initial year of adoption.


The Company adopted ASU No. 2016-02 as of2016-13 on January 1, 2019, using the transition method per ASU No. 2018-11 issued2020, which resulted in July 2018 wherein entities were allowedan increase of $0.2 million to initially apply the new leases standard at adoption date and recognizeits allowance for credit losses that was recognized as a cumulative effect adjustment to the opening balance of retained earnings in the period of adoption. Accordingly, all periods prior to January 1, 2019 were presented in accordance with the previous ASC Topic 840, Leases, and noits accumulated deficit under a modified retrospective adjustments were made to the comparative periods presented. Finance leases were not impacted by the adoption of ASC 842, as finance lease liabilities and the corresponding ROU assets were already recorded in the balance sheet under the previous guidance, ASC 840.

The Company elected the package of practical expedients permitted under the new standard which, among other things, allowed the Company to not reassess the lease classification, the lease identification and the initial direct costs for any existing leases. Further, as permitted by the standard, the Company made an accounting policy election not to record ROU assets or lease liabilities for leases with a term of 12 months or less. Instead, consistent with legacy accounting guidance, the Company will recognize payments for such leases in the consolidated statement of operations on a straight-line basis over the lease term. Upon adoption on January 1, 2019, this standard resulted in the recognition of additional assets of $3.2 million and liabilities of $3.3 million on its accompanying condensed consolidated balance sheet.transition method. The new standard did not have a materialmaterially impact on the Company’s results of operations or cash flows.


In August 2018, the FASB issued ASU No. 2018-13, Fair Value Measurement (Topic 820): Disclosure Framework—Framework — Changes to the Disclosure Requirements for Fair Value Measurement(“ASU No. 2018-13”). This amendmentstandard removes, modifies and makes certain additions to the disclosure requirements onfor fair value measurement. The amendments in ASU No. 2018-13 are effective for fiscal years beginning after on December 15, 2019, and interim periods within those fiscal years. Early adoption was permitted. The Company adopted ASU No. 2018-13 on January 1, 2020, and it did not have a material impact to its consolidated financial statement disclosures.

Accounting Standards Issued and Not Yet Adopted

In December 2019, the FASB issued ASU No. 2019-12, Income Taxes (Topic 740): Simplifying the Accounting for Income Taxes (“ASU No. 2019-12”). This standard simplifies the accounting for income taxes by removing certain exceptions to the general principles in Accounting Standards Codification Topic 740, Income Taxes, and clarifies and amends certain existing guidance. The amendments in ASU No. 2019-12 are effective for fiscal years beginning after December 15, 2020, and interim periods within those fiscal years. Early adoption is permitted. The Company is currently evaluating the impact that the adoption of this new standard will have on its consolidated financial statements.

Note 2—Acquisitions

Growlr

On March 5, 2019, the Company acquired 100% of the issued and outstanding units of Initech, LLC, a privately held company that owns and operates Growlr (“Growlr”), a leading same-sex social app, for cash consideration of $11.8 million, plus an earnout of up to $2.0 million (the “Growlr Acquisition”). The Growlr Acquisition was funded by $4.8 million of cash on hand and a draw down of $7.0 million from the Company’s Revolving Credit Facility. See Note 6—Long-Term Debt for further details on the Revolving Credit Facility. The earnout of $2.0 million is to be paid in annual $1.0 million installments over the next two years if certain revenue metrics are achieved in each year. The Company expects goodwill to be deductible for tax purposes.

The acquisition-date fair value of the consideration transferred is as follows:
 At March 5, 2019
  
Cash consideration (1)
$11,807,925
Contingent consideration1,718,000
Total consideration$13,525,925
(1) Cash consideration includes a $1.0 million escrow payment to be paid out 18 months from the date of the transaction.



The following is the preliminary purchase price allocation as of the March 5, 2019 acquisition date:

 At March 5, 2019
Accounts receivable$544,632
Intangible assets3,480,000
Accrued expenses and other current liabilities(10,000)
Deferred revenue(102,058)
Net assets acquired3,912,574
Goodwill9,613,351
Total consideration$13,525,925

The preliminary fair values of the Growlr trademarks were determined using an income approach. The preliminary fair value of software acquired, which represents the primary platform on which the Growlr apps operate, was determined using a cost approach. The preliminary fair value of customer relationships was determined using an excess earnings approach. The amounts assigned to the identifiable intangible assets are as follows:

 Fair Value Weighted Average
Amortization Period
(Years)
Trademark$1,200,000
 10.0
Software865,000
 3.0
Customer relationships1,415,000
 3.6
Total identifiable intangible assets$3,480,000
 5.7

The operatingposition, results of Growlr for the period from March 5, 2019 to June 30, 2019 are included in the Company’s consolidated statements of operations and comprehensive income (loss) for the three and six months ended June 30, 2019. Results include revenues of $0.9 million and $1.1 million and net income of approximately $0.2 million for eachcash flows.



Impact of the three and six months ended June 30, 2019 respectively. Novel Coronavirus

The Company incurred a total of $0.3 million in transaction costs in connection with the Growlr Acquisition, which were included in acquisition and restructuring costs within the consolidated statement of operations and comprehensive income (loss) for the six months ended June 30, 2019.

The following pro forma information shows the results of the Company’s operations for the three and six months ended June 30, 2019 and 2018 as if the Growlr Acquisition had occurred on January 1, 2018. The pro forma information is presented for informational purposes only and is not necessarily indicative of what would have occurred if the Growlr Acquisition had been made as of that date.

 Three Months Ended June 30, Six Months Ended June 30,
 2019 2018 2019 2018
Revenues$52,232,377
 $43,978,616
 $102,819,067
 $82,788,321
Net income (loss)2,387,322
 26,823
 4,052,879
 (3,904,885)

Note 3—Fair Value Measurements

Accounting Standards Codification (“ASC”) Topic 820, Fair Value Measurement establishes a fair value hierarchy for instruments measured at fair value that distinguishes between assumptions based on market data (observable inputs) and the Company’s own assumptions (unobservable inputs). Observable inputs are inputs that market participants would use in pricing the asset or liability based on market data obtained from sources independent of the Company. Unobservable inputs are inputs that reflect the Company’s assumptions about the inputs that market participants would use in pricing the asset or liability, and are developed based on the best information available in the circumstances.

ASC 820 identifies fair value as the exchange price, or exit price, representing the amount that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants. As a basis for considering market participant assumptions in fair value measurements, ASC 820 establishes a three-tier fair value hierarchy that distinguishes among the following:



Level 1—Valuations based on unadjusted quoted prices in active markets for identical assets or liabilities that the Company has the ability to access.

Level 2—Valuations based on quoted prices for similar assets or liabilities in active markets, quoted prices for identical or similar assets or liabilities in markets that are not active and models for which all significant inputs are observable, either directly or indirectly.

Level 3—Valuations based on inputs that are unobservable and significant to the overall fair value measurement.

To the extent that the valuation is based on models or inputs that are less observable or unobservable in the market, the determination of fair value requires more judgment. Accordingly, the degree of judgment exercised by the Company in determining fair value is greatest for instruments categorized in Level 3. A financial instrument’s level within the fair value hierarchy is based on the lowest level of any input that is significant to the fair value measurement.

Derivative Financial Instruments

Currently, the Company uses an interest rate swap, interest rate cap and a cross currency swapto manage its interest raterisk. The valuation of these instruments is determined using widely accepted valuation techniques, including discounted cash flow analysis on the expected cash flows of each derivative. This analysis reflects the contractual terms of the derivatives, including the period to maturity, and uses observable market-based inputs, including interest rate curves and implied volatilities. The fair values of the interest rate swap and the cross currency swap are determined using the market standard methodology of netting the discounted future fixed cash receipts (or payments) and the discounted expected variable cash payments (or receipts). The variable cash payments (or receipts) are based on an expectation of future interest rates (forward curves) derived from observable market interest rate curves.

The fair value of the interest rate cap is determined using the market standard methodology of discounting the future expected cash receipts that would occur if variable interest rates rise above the strike rate of the cap. The variable interest rates used in the calculation of projected receipts on the cap are based on an expectation of future interest rates derived from observable market interest rate curves and volatilities.

To comply with the provisions of ASC 820, the Company incorporates credit valuation adjustments to appropriately reflect both its nonperformance risk and the respective counterparty’s nonperformance risk in the fair value measurements. In adjusting the fair value of the Company’s derivative contracts for the effect of nonperformance risk, the Company has considered the impact of netting and any applicable credit enhancements, such as collateral postings, thresholds, mutual puts and guarantees. The Company made an accounting policy election to measure the credit risk of its derivative financial instruments that are subject to master netting agreements on a net basis by counterparty portfolio.

Although the Company has determined that the majority of the inputs used to value its derivatives fall within Level 2 of the fair value hierarchy, the credit valuation adjustments associated with its derivatives utilize Level 3 inputs, such as estimates of current credit spreads to evaluate the likelihood of default by the Company and its counterparties. The Company has determined thatclosely monitoring the impact of the credit valuation adjustments made to2019 novel coronavirus (“COVID-19”) on all aspects of its derivative contracts, which determinationbusiness. COVID-19 was baseddeclared a global pandemic by the World Health Organization on March 11, 2020 and the U.S. President declared the COVID-19 outbreak a national emergency. While the COVID-19 pandemic has had minimal impact on the fair value of each individual contract, was not significantCompany’s operations and financial results to date, the overall valuation. As a result, allfuture impacts of the pandemic and any resulting economic impact are largely unknown and rapidly evolving. It is possible that the COVID-19 pandemic, the measures taken by the governments of countries affected and the resulting economic impact may negatively impact the Company’s derivativesresults of operations, cash flows and financial position as well as its vendors, advertising partners and users.

Note 2 — Credit Risk and Allowance for Credit Losses

The Company is exposed to significant concentrations of credit risk for certain of its financial assets, including cash, cash equivalents and accounts receivable.

Cash and Cash Equivalents

Cash is carried on the Company’s consolidated balance sheets at amortized cost and consists primarily of U.S. dollars and euros held in insured depository accounts with major U.S. and international banks and financial institutions. The Company believes its risk of credit losses for cash is remote, and, accordingly, its allowance for credit losses was insignificant as of June 30, 2019March 31, 2020 and December 31, 2018 were classified as Level 22019. As of the fair value hierarchy. See Note 10—DerivativesMarch 31, 2020 and Hedging Activities for further discussionDecember 31, 2019, $25.4 million and $19.7 million of cash exceeded depository insurance limits, respectively.

The Company invests certain of its cash in cash equivalents that are high-quality, liquid money market funds maintained by major U.S. and international banks and financial institutions, and it does not have a history of any losses on derivative financial instruments.



Recurring Fair Value Measurements

Itemsits cash and/or cash equivalents. The Company’s cash equivalents are measured at fair value on its consolidated balance sheets using Level 1 inputs of the fair value hierarchy.

Accounts Receivable, Net

Accounts receivable are carried on the Company’s consolidated balance sheets at amortized cost, net of an allowance for expected credit losses. The Company extends credit in the normal course of business to both U.S. and international customers on a recurringnon-collateralized basis include money market mutual funds, derivativesunder payment terms that typically range from 30 to 120 days. Accounts receivable are written-off in the period that management determines they are uncollectible.

The following table sets forth the composition of accounts receivable, net as of March 31, 2020 and hedging instrumentsDecember 31, 2019:
(in thousands)March 31, 2020 December 31, 2019
Accounts receivable$24,476
 $25,503
Less: Allowance for credit losses(510) (269)
Accounts receivable, net$23,966
 $25,234


The Company estimates an allowance for credit losses on its accounts receivable using historical information, current events and contingent consideration. Duringreasonable and supportable forecasts of future events. Such information includes, but is not limited to, the periods presented,Company’s historical collections trends, its customers’ credit histories and other financial information, customer type, customer-specific circumstances, industry, peer and economic data. To estimate the allowance for credit losses, the Company has not changed the manner in which it values assets and liabilitiesuses an aging method that are measured at fair value using Level 3 inputs. The following fair value hierarchy table presents information aboutassigns a provision for expected credit losses to each majoraging category of the Company’s financial assets and liabilities measured at fair value onaccounts receivable, including current accounts, which increases as accounts age and/or extend past their due dates. The Company does not have a recurring basis:significant history of material losses from uncollectible accounts.


 
Quoted Prices
in Active
Markets for
Identical
Items
(Level 1)
 
Significant Other
Observable
Inputs
(Level 2)
 
Significant
Unobservable
Inputs
(Level 3)
 Total
June 30, 2019       
Assets       
Money market$8,164,197
 $
 $
 $8,164,197
Derivative assets
 762,757
 
 762,757
Total assets$8,164,197
 $762,757
 $
 $8,926,954
Liabilities       
Contingent consideration$
 $
 $1,781,667
 $1,781,667
Derivative liability
 231,092
 
 231,092
Total liabilities$
 $231,092
 $1,781,667
 $2,012,759
December 31, 2018       
Assets       
Money market$7,639,866
 $
 $
 $7,639,866
Derivative asset
 972,784
 
 972,784
Total assets$7,639,866
 $972,784
 $
 $8,612,650
Liabilities       
Derivative liability$
 $940,216
 $
 $940,216
Total liabilities$
 $940,216
 $
 $940,216


The following table sets forth a summary of the changes in the fair valueCompany’s allowance for credit losses related to accounts receivable for the three months ended March 31, 2020 and 2019:
  Three Months Ended March 31,
(in thousands) 2020 2019
Balance as of January 1 $428
 $384
Provision for expected credit losses 82
 325
Balance as of March 31 $510
 $709


Concentration of Credit Risk

Three customers, which were advertising aggregators or payment processors representing thousands of advertisers, comprised 63% and 42% of the Company’s contingent consideration liability, which represents a recurring measurement that is classified within Levelaccounts receivable as of March 31, 2020 and December 31, 2019, respectively.

Note 3 — Prepaid Expenses and Other Current Assets

The following table sets forth the composition of prepaid expenses and other current assets as of March 31, 2020 and December 31, 2019:
(in thousands)March 31, 2020 December 31, 2019
Value-added tax and income tax receivables$1,786
 $1,312
Fair value of derivative assets655
 583
Prepaid insurance402
 659
Prepaid support contracts555
 443
Prepaid service providers1,606
 1,765
Prepaid advertising404
 680
Other prepaid expenses and other current assets412
 620
Total prepaid expenses and other current assets$5,820
 $6,062


Note 4 — Property and Equipment, Net

The following table sets forth the composition of the fair value hierarchy, wherein fair valueCompany’s property and equipment, net as of March 31, 2020 and December 31, 2019:
(in thousands)March 31, 2020 December 31, 2019
Servers, computer equipment and software$14,930
 $14,901
Office furniture and equipment879
 863
Leasehold improvements677
 671
Total property and equipment16,486
 16,435
Less: Accumulated depreciation(13,439) (12,810)
Total property and equipment, net$3,047
 $3,625


Depreciation expense was $0.6 million for each of the three months ended March 31, 2020 and 2019.

Note 5 —Leases

The Company has operating leases for its operating facilities, data center storage facilities and certain data storage equipment in the U.S. and Germany, and finance leases for certain data centers, printers and other furniture in its German offices. The Company's lease terms include options to extend or terminate the lease and the Company includes these options in the lease term when it is estimated using significant unobservable inputs:reasonably certain to exercise that option.



The following table sets forth the Company’s lease costs for the three months ended March 31, 2020 and 2019:

Contingent
Consideration
Balance as of December 31, 2018$
Amounts acquired1,718,000
Accretion63,667
Balance as of June 30, 2019$1,781,667
  Three Months Ended March 31,
(in thousands) 2020 2019
Lease costs:    
Operating lease cost(1)
 $723
 $725
     
Finance lease cost:    
Depreciation expense $5
 $2
Interest on lease liabilities 1
 2
Total finance lease cost $6
 $4
(1) Short-term lease costs were immaterial.

The following table sets forth the supplemental cash flow information for the Company’s leases for the three months ended March 31, 2020 and 2019:
 Three Months Ended March 31,
(in thousands)2020 2019
Cash paid for amounts included in the measurement of lease liabilities:   
Operating cash flows for operating leases$683
 $738
Operating cash flows for finance leases$1
 $2
Financing cash flows for finance leases$5
 $41
    
Right-of-use assets obtained in exchange for lease obligations:   
Operating leases$794
 $4,070


The following table sets forth the Company’s aggregate future lease payments for operating and finance leases as of March 31, 2020:
(in thousands)    
Years Ending December 31, Operating Leases Finance Leases
Remaining in 2020 $2,167
 $9
2021 2,459
 12
2022 1,109
 12
2023 585
 12
2024 549
 12
Thereafter 1,163
 9
Total minimum lease payments 8,032
 66
Less: Amount representing interest 782
 9
Present value of minimum lease payments 7,250
 57
Less: Current portion 2,527
 9
Long-term portion $4,723
 $48



The Company determinedfollowing table sets forth the fair value of its contingent consideration liabilities using the income approach with assumedCompany’s weighted-average remaining lease terms and discount rates and payment probabilities. as of March 31, 2020:
Weighted-average Remaining Lease Terms and Discount Rates
Weighted-average remaining lease terms (years):
Operating leases4.27
Finance leases5.50
Weighted-average discount rates:
Operating leases4.41%
Finance leases3.06%


Note 6 — Intangible Assets, Net

The income approach uses Level 3, or unobservable inputs, as defined underfollowing table sets forth the accounting guidance, for fair value measurements. Based oncomposition of the Company’s projected results, the Company estimated the probability of success to be 100% for the contingent consideration related to the Growlr Acquisitionintangible assets, net as of June 30, 2019. The contingent consideration is recorded in accrued expensesMarch 31, 2020 and other long-term liabilities on the accompanying condensed consolidated balance sheet as of June 30, 2019.

The Company recognizes transfers between levels of the fair value hierarchy as of the end of the reporting period. There were no transfers within the levels of the fair value hierarchy during the six months ended June 30, 2019 and as of the year ended December 31, 2018.



Note 4— Intangible Assets and Goodwill

Intangible assets consist of the following:

2019:
June 30, 2019March 31, 2020
Gross Carrying Amount Accumulated Amortization Net Carrying Amount
(in thousands)Gross Carrying Amount Accumulated Amortization Net Carrying Amount
Trademarks and domain names$35,798,758
 $(15,474,450) $20,324,308
$35,381
 $(18,266) $17,115
Customer relationships15,293,096
 (8,629,061) 6,664,035
15,183
 (10,621) 4,562
Software19,578,444
 (11,918,253) 7,660,191
19,537
 (14,269) 5,268
Total$70,670,298
 $(36,021,764) $34,648,534
Total intangible assets, net$70,101
 $(43,156) $26,945
 December 31, 2019
(in thousands)Gross Carrying Amount Accumulated Amortization Net Carrying Amount
Trademarks and domain names$35,602
 $(17,423) $18,179
Customer relationships15,248
 (10,081) 5,167
Software19,561
 (13,602) 5,959
Total intangible assets, net$70,411
 $(41,106) $29,305

 December 31, 2018
 Gross Carrying Amount Accumulated Amortization Net Carrying Amount
Trademarks and domain names$34,636,802
 $(13,406,226) $21,230,576
Customer relationships13,901,313
 (7,130,285) 6,771,028
Software18,722,187
 (10,165,352) 8,556,835
Total$67,260,302
 $(30,701,863) $36,558,439


Amortization expense was approximately $2.8$2.2 million and $3.0$2.6 million for the three months ended June 30,March 31, 2020 and 2019, and 2018, respectively, and $5.3 million and $6.0 million forrespectively.

The following table sets forth the six months ended June 30, 2019 and 2018, respectively.

AnnualCompany’s annual future amortization expense on intangible assets for the Company’s intangible assets isnext five years and thereafter as follows:

of March 31, 2020:
(in thousands) Amortization
Years Ending December 31, Expense
Remaining in 2020 $6,349
2021 7,058
2022 4,120
2023 2,723
2024 2,160
Thereafter 4,535
Total amortization expense $26,945




Year ending December 31,
Amortization
Expense
Remaining in 2019$5,210,855
20208,590,701
20217,108,018
20224,164,598
20232,762,863
Thereafter6,811,499
Total$34,648,534


Note 7 —Goodwill

The changesfollowing table sets forth the change in the carrying amount of goodwill for the six months ended June 30, 2019 are as follows:

 June 30, 2019
Balance at December 31, 2018$148,132,873
Goodwill acquired from Growlr Acquisition9,613,351
Foreign currency translation adjustments(357,904)
Balance at June 30, 2019$157,388,320



Note 5— Property and Equipment

Property and equipment consist of the following:
 June 30,
2019
 December 31,
2018
Servers, computer equipment and software$14,287,458
 $13,656,176
Office furniture and equipment621,800
 574,559
Leasehold improvements648,134
 646,123
 15,557,392
 14,876,858
Less accumulated depreciation(11,530,359) (10,243,094)
Property and equipment - net$4,027,033
 $4,633,764

Property and equipment depreciation expense was approximately $0.7 million and $0.6 millionCompany’s goodwill for the three months ended June 30, 2019 and 2018, respectively, and $1.3 million and $1.1 million for the six months ended June 30, 2019 and 2018, respectively.March 31, 2020:

(in thousands)Goodwill
Balance as of January 1, 2020$156,687
Foreign currency translation adjustment(994)
Balance as of March 31, 2020$155,693


Note 6—Long-Term Debt8 — Accrued Liabilities


The following table sets forth the composition of the Company’s accrued liabilities as of March 31, 2020 and December 31, 2019:
(in thousands)March 31, 2020 December 31, 2019
Accrued broadcaster fees, net of breakage$5,994
 $5,350
Accrued professional fees2,551
 1,889
Accrued employee-related costs2,710
 4,803
Accrued service providers337
 940
Accrued advertising1,472
 2,315
Accrued current tax payable717
 1,209
Accrued value-added, sales, use and other taxes1,691
 1,472
Contingent consideration917
 
Other accrued expenses2,526
 2,112
Total accrued liabilities$18,915
 $20,090


Note 9 —Debt

The following table sets forth the composition of the Company’s debt as of March 31, 2020 and December 31, 2019:
(in thousands)March 31, 2020 December 31, 2019
Term loan facility$33,250
 $34,125
Less: Debt discount, net(174) (192)
Less: Debt issuance costs, net(53) (58)
Net carrying amount33,023
 33,875
Less: Current portion3,500
 3,500
Long-term debt, net$29,523
 $30,375


Credit Facilities


On September 18, 2017, in connection withFor the Company’s acquisition of all ofthree months ended March 31, 2020, the outstanding shares of Lovoo (the “Lovoo Acquisition”), the Company entered into an amended and restated credit agreement (the “Amended and Restated Credit Agreement”) with the several banks and other financial institutions party thereto and JPMorgan Chase Bank, N.A., as administrative agent (the “Agent”), amending and restating the Credit Agreement, dated March 3, 2017. The Amended and Restated Credit Agreement provides for a $20.0 million revolving credit facility (the “Revolving Credit Facility”) and a $60.0 million delayed draw term loan facility (the “Term Loan Facility,” and together with the “Revolving Credit Facility”, the “Credit Facilities”). On October 18, 2017, the Company drew down $60.0 million from its Term Loan Facility in connection with the Lovoo Acquisition. Fees and direct costs incurred when the Company entered into the Credit Facilities were $0.6 million. Fees and direct costs incurred are offset against long-term debt on the accompanying condensed consolidated balance sheets.

On March 7, 2018, the Company entered into an amendment to the Amended and Restated Credit Agreement, that among other things, amends the definition of “Applicable Rate” and “EBITDA” and makes certain changes to the financial covenants. On July 27, 2018, the Company entered into an amendment to the Amended and Restated Credit Agreement that amends the Company’s obligation to use certain of its excess cash flow to prepay its obligations under the Credit Agreement by limiting the applicable period for the fiscal year ended December 31, 2017 to the period commencing October 31, 2017 and ended December 31, 2017. The Company made an excess cash flow payment of approximately $4.3 million in the third quarter of 2018.

In March 2019, the Company made an excess cash flow payment of $3.6 million related to the fiscal year end December 31, 2018. On March 5, 2019, in connection with the Growlr Acquisition, as discussed in Note 2—Acquisitions, the Company drew down $7.0 million from its Revolving Credit Facility. Borrowings on the Revolving Credit Facility are included in long-term debt, less current portion, net, on the accompanying condensed consolidated balance sheets.

The Company intends to use the remaining proceeds of the Revolving Credit Facility to finance working capital needs and for general corporate purposes. Amounts under the Revolving Credit Facility may be borrowed, repaid and re-borrowed from time to time until the maturity date of the Credit Agreement on September 18, 2020. The Term Loan Facility is subject to quarterly payments of principal in an amount equal to $3,750,000 commencing December 31, 2017 and continuing through maturity. At the Company’s election, loans made under the Credit Facilities will bear interest at either (i) a base rate (“Base Rate”) plus an applicable margin or (ii) a London interbank offered rate (“LIBO Rate”) plus an applicable margin, subject to adjustment if an event of default under the Amended and Restated Credit Agreement has occurred and is continuing. The Base Rate means the highest of (a) the Agent’s “prime rate,” (b) the federal funds effective rate plus 0.50% and (c) the LIBO Rate for an interest period of one month plus 1%. The Company’s present and future domestic subsidiaries (the “Guarantors”) will guarantee the obligations of the Company and its subsidiaries under the Credit Facilities. The obligations of the Company and its subsidiaries under the Credit Facilities are secured by all of the assets of the Company and the Guarantors, subject to certain exceptions and exclusions as set forth in the Amended and Restated Credit Agreement and other loan documents.



The Credit Facilities consist of the following:

 June 30, 2019 December 31, 2018
Credit Facilities   
Term Loan Facility$25,873,574
 $36,940,158
Revolving Credit Facility7,000,000
 
Total Credit Facilities32,873,574
 36,940,158
Less: Debt discount, net(191,612) (285,618)
Net carrying amount$32,681,962
 $36,654,540
Less: current portion15,000,000
 18,566,584
Long-term debt, net$17,681,962
 $18,087,956

The weighted averageweighted-average interest rate on the Credit Facilities at June 30, 2019Company’s term loan facility amounted to 3.69%, and the unused commitment fee on the Company’s revolving credit facility was 5.83%.0.25% per annum. There were 0 outstanding borrowings under the Company’s revolving credit facility as of March 31, 2020.

The Company was in compliance with its debt covenants as of March 31, 2020.



Scheduled Principal Payments

The following table sets forth the Company’s minimum future principal payments under the credit facilities as of March 31, 2020:
(in thousands) Minimum
Years Ending December 31, Principal Payments
Remaining in 2020 $2,625
2021 3,500
2022 27,125
Total minimum principal payments $33,250


Note 7— 10—Commitments and Contingencies


Cloud Data Storage


The Company stores a portion of its user and business data using Amazon Web Services in the U.S. with a minimum commitment agreement that expires in 2021. Lovoo stores2021, and a majority of its user and business data in the Google Cloud Platform in Germany under a noncancelablenon-cancelable minimum commitment agreement that expires in 2023.


A summary ofThe following table sets forth the minimum future commitments requiredcommitment payments under the Company’s cloud data storage contracts as of June 30, 2019 are as follows:

March 31, 2020:
  
Minimum
Commitment
Payments
(in thousands) 
Years Ending December 31, 
Remaining in 2020 $3,814
2021 6,862
2022 1,023
2023 1,125
Total minimum commitment payments $12,824

For the Years Ending December 31, Cloud Data Storage
Remaining in 2019 $2,654,058
2020 5,706,469
2021 6,895,895
2022 1,057,227
2023 1,162,950
Thereafter 
Total minimum lease payments $17,476,599

Credit Facility

A summary of minimum future principal payments under our Credit Facilities as of June 30, 2019 are as follows: 
For the Years Ending December 31, 
Credit Facilities(1)
Remaining in 2019 $7,500,000
2020 25,373,574
Total minimum loan payments $32,873,574
(1)
Interest rates on the Credit Facilities are variable in nature, however, the Company is party to a fixed-pay amortizing interest rate swap having a remaining notional amount of $18.8 million and a non-amortizing interest rate cap with a notional amount of $10.7 million. If interest rates were to remain at the June 30, 2019 level, we would receive interest payments of $0.04 million in 2019 and $0.02 millionin2020 of net settlements on the fixed-pay amortizing interest rate swap and non-amortizing interest rate cap.


Litigation


From time to time, we arethe Company is party to certain legal proceedings that arise in the ordinary course of, and are incidental to, ourits business. We operate ourThe Company operates its business online, which is subject to extensive regulation by U.S. federal and state and foreign governments. Future events or circumstances, currently unknown to management, will determine whether the resolution of pending or threatened litigation or claims will ultimately have a material effect on ourthe Company’s consolidated financial position, liquidity or results of operations in any future reporting periods.


Note 11—Stockholders’ Equity

Tax Benefits Preservation Plan

In connection with the execution of the Merger Agreement, the Company entered into an amendment to its Tax Benefits Preservation Plan to render it inapplicable to the Merger Agreement, the execution thereof and the performance or consummation of the transactions contemplated thereby, including, without limitation, the Merger.




Retirement PlanStock-based Compensation Expense


The Company maintains The Meet Group, Inc. 401(k) Retirement Plan (the “Plan”), which is a savings and investment plan intended to be qualified underfollowing table sets forth the Internal Revenue Code. The Plan covers the majorityallocation of the employees of the Company. In January 2014, the Company began providing matching contributions to the Plan, based on a participant’s contribution. The Company’s 401(k) matchstock-based compensation expense totaled $0.4 million for each of the six months ended June 30, 2019 and 2018, respectively. The expense is included in sales and marketing, product development and content, and general and administrative expenses in the condensed consolidated statements of operations and comprehensive (loss) income (loss).for the three months ended March 31, 2020 and 2019:

 Three Months Ended March 31,
(in thousands)2020 2019
Sales and marketing$124
 $70
Product development and content1,928
 1,500
General and administrative1,133
 855
Total stock-based compensation expense$3,185
 $2,425

Note 8— Stockholders’ Equity

Preferred Stock

The total number of shares of preferred stock, $.001 par value, that the Company is authorized to issue is 5,000,000.

The Board of Directors may, without further action by the stockholders, issue a series of preferred stock and fix the rights and preferences of those shares, including the dividend rights, dividend rates, conversion rights, exchange rights, voting rights, terms of redemption, redemption price or prices, liquidation preferences, the number of shares constituting any series and the designation of such series.


As of June 30, 2019March 31, 2020, there was $0.1 million, $14.0 million and December 31, 2018 there were no shares$3.0 million of preferredtotal unrecognized stock-based compensation expense, which is expected to be recognized over a weighted-average vesting period of 0.3 years, 1.4 years and 1.9 years for the Company’s stock issued and outstanding.

Common Stock

The total number of shares of common stock, $0.001 par value, that the Company is authorized to issue is 100,000,000.

The Company issued shares of common stock of 157,334 and 1,079,496 related to exercises of stock options, and 1,372,723 and 1,591,662 related to restricted stock awards in the six months ended June 30, 2019(“RSAs”) and the year ended December 31, 2018,performance share units (“PSUs”), respectively.


On June 14, 2019, the Company announced that its Board of Directors had approved a share repurchase program that authorizes the Company to purchase up to $30.0 million of common stock in the open market or through negotiated transactions intended to comply with SEC Rule 10b-18, which may be facilitated through one or more 10b5-1 share repurchase plans with a third party broker. The share repurchase program is effective through 2021. During the three and six months ended June 30, 2019, the Company did not repurchase any shares under this program.Stock Options


Stock-Based Compensation

The fair value ofStock-based compensation expense for stock options iswas estimated on the date of grant using the Black-Scholes option pricing model, based on weighted average assumptions. Expected volatility is based on historical volatility of the Company’s common stock. The risk-free rate is based on the U.S. Treasury yield curve in effect over the expected term at the time of grant. Compensation expense is recognizedand amortized on a straight-line basis over the requisite service period of the award. The Company uses the simplified method to determine the expected option term since the Company’s stock option exercise experience does not provide a reasonable basis upon which to estimate the expected option term.

The Company began granting RSAs to its employees in April 2013.based on their fair value. The fair value of RSAs is determinedstock options was estimated on the grant date using the fair valueBlack-Scholes option pricing model, based on weighted-average assumptions. Stock options generally vest over a three-year period with 33% vesting at the end of year one and the remaining vesting annually thereafter. The Company has not awarded any stock options since November 2017.

The following table sets forth the Company’s common stock onoptions activity for the datethree months ended March 31, 2020:
  Number of Stock Options 
Weighted-
average
Exercise Price
 
Weighted-
average
Remaining
Contractual Life
(Years)
 Aggregate Intrinsic Value
(in thousands, except share and per share data)
Stock Options
    
Outstanding as of January 1, 2020 3,680,146
 $3.60
    
Exercised (162,841) 3.47
    
Forfeited or expired (85,000) 3.65
    
Outstanding as of March 31, 2020 3,432,305
 $3.61
 4.8 $7,791
Exercisable as of March 31, 2020 3,333,817
 $3.60
 4.7 $7,607


The total intrinsic values of grant. stock options exercised during the three months ended March 31, 2020 and 2019 were $0.4 million and $0.2 million, respectively. The Company recorded stock-based compensation expense related to its stock options of $0.2 million and $0.4 million and for the three months ended March 31, 2020 and 2019, respectively.

Restricted Stock Awards

Stock-based compensation expense for RSAs is amortizedrecognized on a straight-line basis over the requisite service period. RSAs generally vest over a three-year period with 33% vesting at the end of year one year and the remaining vesting annually thereafter.



The following table sets forth the Company’s RSA activity for the three months ended March 31, 2020:
  Number of  
  Restricted Stock Weighted-average
Restricted Stock Awards Awards Stock Price
Outstanding as of January 1, 2020 4,036,398
 $4.85
Granted 620,277
 5.51
Vested (295,389) 5.18
Forfeited or expired (112,723) 5.57
Outstanding as of March 31, 2020 4,248,563
 $4.90


Shares are forfeited if not vested within three years from the date of grant. The Company recorded stock-based compensation expense related to its RSAs of $2.5 million and $1.9 million for the three months ended March 31, 2020 and 2019, respectively.

Performance Share Units

The Company began granting PSUs to certain employees in April and July 2018. PSUs are based on a relative Total Shareholder Returntotal shareholder return (“TSR”) metric over a performance period spanning three years from the grant date of the PSU. PSU awardsPSUs will vest at the end of the performance period and will be paid immediately in shares of common stock. Stock-based compensation expense for PSUs is estimated on the date of grant and amortized on a straight-line basis over the performance period. PSU awardsPSUs are forfeited if the participant is no longer employed on the third anniversary of the grant date, except in the event of an involuntary termination, death, disability or change in control. The Company estimated the fair value of the PSU awards using a Monte-Carlo simulation model utilizing several key assumptions including expected Company and Russell 2000 Peer Group share price volatility, correlation coefficients between peers, the risk-free rate of return, the expected dividend yield and other award design features.



The assumptions used in calculating the fair value of stock-based awards represent the Company’s best estimates, but these estimates involve inherent uncertainties and the application of management judgment. As a result, if factors change and the Company uses different assumptions, the Company’s stock-based compensation expense could be materially different in the future.

Stock-based compensation expense is recognized on a straight-line basis over the requisite service period of all awards given by the Company. Stock-based compensation expense includes incremental stock-based compensation expense and is allocated on the condensed consolidated statements of operations and comprehensive income (loss) as follows:

 Three Months Ended June 30, Six Months Ended June 30,
 2019 2018 2019 2018
Sales and marketing$106,323
 $112,222
 $176,498
 $230,769
Product development and content1,642,931
 1,161,863
 3,142,324
 2,275,930
General and administrative1,116,082
 816,785
 1,971,231
 1,753,096
Total stock-based compensation expense$2,865,336
 $2,090,870
 $5,290,053
 $4,259,795

As of June 30, 2019, there was approximately $1.0 million, $16.9 million and $3.5 million of total unrecognized compensation cost which is expected to be recognized over a weighted-average vesting period of approximately of 0.8 years, 2.2 years and 2.5 years relating to stock options, RSAs and PSUs, respectively.

Stock Compensation Plans

2018 Omnibus Incentive Plan

On June 1, 2018, the Company’s stockholders approved the 2018 Omnibus Incentive Plan (the “2018 Plan”), providing for the issuance of up to 8.8 million shares of the Company’s common stock, including approximately 0.3 million shares previously approved by the Company’s stockholders under the Company’s Amended and Restated 2012 Omnibus Incentive Plan (the “2012 Plan”), minus one share of common stock for every one share of common stock that was subject to an option granted after April 9, 2018 but before June 1, 2018 under the 2012 Plan, plus an additional number of shares of common stock equal to the number of options previously granted under the 2012 Plan and the Amended and Restated 2006 Stock Incentive Plan (the “2006 Stock Plan”) that either terminate, expire, or are forfeited after April 9, 2018 and any restricted stock awards that either terminate, expire, or are forfeited equal to the number of awards granted under the 2012 Plan and 2006 Stock Plan multiplied by the fungible ratio of 1.4. As of June 30, 2019, there were approximately 3.4 million shares of common stock available for grant.

Restricted Stock Awards Under 2018 Plan

A summary of RSA activity under the 2018 Plan during the six months ended June 30, 2019 is as follows:

RSAs 
Number of
RSAs
 
Weighted-Average
Stock Price
Outstanding at December 31, 2018 1,677,227
 $4.18
Granted 2,289,591
 5.34
Vested (606,623) 4.16
Forfeited or expired (85,961) 4.90
Outstanding and unvested at June 30, 2019 3,274,234
 4.97

Shares are forfeited if not vested within three years from the date of grant and vest in three equal annual increments. The Company recorded stock-based compensation expense related to RSAs under the 2018 Plan of approximately $1.6 million and $0.1 million for the three months ended June 30, 2019 and 2018, respectively, and $2.5 million and $0.1 million for the six months ended June 30, 2019 and 2018, respectively.



Performance Share Awards Under 2018 Omnibus Incentive Plan

PSU share payouts range from a threshold of 33% to a maximum of 170% based on the relative ranking of the Company’s TSR as compared to the TSR of the companies in the Russell 2000 Peer Group.peer group. The PSU award stipulates certain limitations to the payout in the event the payout reaches a defined ceiling level or the Company’s TSR is negative.

The Company estimatedfollowing table sets forth the fair value ofCompany’s PSU activity for the PSU awards at the date of grant using a Monte-Carlo simulation model utilizing several key assumptions including expected Company and Russell 2000 Peer Group share price volatility, correlation coefficients between peers, the risk-free rate of return, the expected dividend yield and other award design features.

A summary of PSU awards under the 2018 Plan during the sixthree months ended June 30, 2019 is as follows:

March 31, 2020:
  Number of  
  Performance Share Weighted-average
Performance Share Units Units Stock Price
Outstanding as of January 1, 2020 1,086,100
 $4.34
Granted 60,000
 6.61
Outstanding as of March 31, 2020 1,146,100
 $4.46

PSUs Number of
PSUs
 Weighted-Average
Stock Price
Outstanding at December 31, 2018 60,000
 $4.65
Granted 416,100
 6.18
Vested 
 
Forfeited or expired 
 
Outstanding at June 30, 2019 476,100
 5.99


The Company recorded stock-based compensation expense related to its PSUs under the 2018 Plan of approximately $0.2 million for each of the three and six months ended June 30, 2019.

Amended and Restated 2012 Omnibus Incentive Plan

On December 16, 2016, the Company’s stockholders approved the 2012 Plan, providing for the issuance of up to 10.5 million shares of the Company’s common stock, including approximately 2.1 million shares previously approved by the Company’s stockholders under the Company’s 2006 Stock Plan, less one share of common stock for every one share of common stock that was subject to an option or other award granted after December 31, 2011 under the 2006 Stock Plan, plus an additional number of shares of common stock equal to the number of shares previously granted under the 2006 Stock Plan that either terminate, expire, or are forfeited after December 31, 2011. As of June 1, 2018, grants are no longer issued from the 2012 Plan.

A summary of stock option activity under the 2012 Plan during the six months ended June 30, 2019 is as follows:

Options 
Number of
Stock
Options
 
Weighted-
Average
Exercise
Price
 
Weighted
Average
Remaining
Contractual Life
 
Aggregate
Intrinsic Value
Outstanding at December 31, 2018 2,447,315
 $3.27
    
Granted 
 
    
Exercised (106,903) 4.33
    
Forfeited or expired (8,333) 5.35
    
Outstanding at June 30, 2019 2,332,079
 3.22
 6.6 $1,714,956
Exercisable at June 30, 2019 2,028,441
 3.04
 6.4 1,642,040

The total intrinsic values of options exercised under the 2012 Plan was $0.2 million during each of the six months ended June 30, 2019 and 2018. The Company recorded stock-based compensation expense related to options under the 2012 Plan of approximately $0.3$0.4 million and $0.4$0.2 million for the three months ended June 30,March 31, 2020 and 2019, and 2018, respectively, and $0.6 million and $0.8 million for the six months ended June 30, 2019 and 2018, respectively.



Restricted Stock Awards Under Amended and Restated 2012 Omnibus Incentive Plan

A summary of RSA activity under the 2012 Plan during the six months ended June 30, 2019 is as follows:

RSAs 
Number of
RSAs
 
Weighted-Average
Stock Price
Outstanding at December 31, 2018 1,166,535
 $3.58
Granted 
 
Vested (758,337) 3.30
Forfeited or expired (10,066) 4.73
Outstanding and unvested at June 30, 2019 398,132
 4.08

Shares are forfeited if not vested within three years from the date of grant and vest in three equal annual increments. The Company recorded stock-based compensation expense related to RSAs under the 2012 Plan of approximately $0.4 million and $1.1 million for the three months ended June 30, 2019 and 2018, respectively, and $1.1 million and $2.2 million for the six months ended June 30, 2019 and 2018, respectively.

Performance Share Awards Under Amended and Restated 2012 Omnibus Incentive Plan

PSU share payouts range from a threshold of 33% to a maximum of 170% based on the relative ranking of the Company’s TSR as compared to the TSR of the companies in the Russell 2000 Peer Group. The PSU award stipulates certain limitations to the payout in the event the payout reaches a defined ceiling level or the Company’s TSR is negative. The Company estimated the fair value of the PSU awards at the date of grant using a Monte-Carlo simulation model utilizing several key assumptions including expected Company and Russell 2000 Peer Group share price volatility, correlation coefficients between peers, the risk-free rate of return, the expected dividend yield and other award design features.

A summary of PSU awards under the 2012 Plan during the six months ended June 30, 2019 is as follows:

PSUs Number of
PSUs
 Weighted-Average
Stock Price
Outstanding at December 31, 2018 550,000
 $2.94
Granted 
 
Vested 
 
Forfeited or expired 
 
Outstanding at June 30, 2019 550,000
 2.94

The Company recorded stock-based compensation expense related to PSUs under the 2012 Plan of approximately $0.1 million and $0.3 million for the three and six months ended June 30, 2019, respectively, and $0.1 million in each of the three and six months ended June 30, 2018.

Amended and Restated 2006 Stock Incentive Plan

On June 27, 2007, the Company’s stockholders approved the 2006 Stock Plan, providing for the issuance of up to 3.7 million shares of common stock plus an additional number of shares of common stock equal to the number of shares previously granted under the 1998 Stock Option Plan that either terminate, expire, or lapse after the date of the Board of Directors’ approval of the 2006 Stock Plan. All options granted and outstanding have been fully expensed prior to 2016.



A summary of stock option activity under the 2006 Stock Plan during the six months ended June 30, 2019 is as follows:

Options 
Number of
Stock
Options
 
Weighted-
Average
Exercise
Price
 
Weighted Average
Remaining
Contractual Life
 
Aggregate Intrinsic
Value
Outstanding at December 31, 2018 1,074,411
 $4.00
    
Granted 
 
    
Exercised (23,764) 3.78
    
Forfeited or expired 
 
    
Outstanding at June 30, 2019 1,050,647
 4.00
 2.3 $25,200
Exercisable at June 30, 2019 1,006,468
 4.02
 2.3 25,200

The total intrinsic values of options exercised under the 2006 Stock Plan were $0.05 million during the six months ended June 30, 2019. No options under the 2006 Stock Plan were exercised during the six months ended June 30, 2018.

Amended and Restated 2016 Inducement Omnibus Incentive Plan

On October 3, 2016, in connection with the closing of the acquisition of Skout, the Company’s Board of Directors adopted the 2016 Inducement Omnibus Incentive Plan in accordance with NASDAQ Listing Rule 5635(c)(4). At the closing of the acquisition of Skout, the Company granted stock options to purchase an aggregate of up to 355,000 shares of its common stock to 25 former Skout employees as an inducement material to becoming non-executive employees of the Company. On February 27, 2017, the Company amended and restated the 2016 Inducement Omnibus Incentive Plan (as so amended and restated, the “2016 Stock Plan”) and authorized an additional 2,000,000 shares of common stock under the 2016 Stock Plan. At the closing of the acquisition of if(we), the (“if(we) Acquisition”), the Company granted options to purchase an aggregate of up to 75,000 shares of its common stock and restricted stock awards representing an aggregate of 717,500 shares of common stock to 83 former if(we) employees as an inducement material to becoming non-executive employees of the Company. At the closing of the Lovoo Acquisition, the Company granted restricted stock awards representing an aggregate of 531,500 shares of common stock to 96 former Lovoo employees as an inducement material to becoming non-executive employees of the Company.

Options Under The 2016 Stock Plan

A summary of stock option activity under the 2016 Stock Plan during the six months ended June 30, 2019 is as follows:

Options 
Number of
Stock
Options
 
Weighted-
Average
Exercise
Price
 
Weighted-
Average
Remaining
Contractual Life
 
Aggregate
Intrinsic Value
Outstanding at December 31, 2018 444,168
 $5.10
    
Granted 
 
    
Exercised (26,667) 5.69
    
Forfeited or expired (97,501) 5.02
    
Outstanding at June 30, 2019 320,000
 5.07
 7.6 $
Exercisable at June 30, 2019 213,333
 5.07
 7.6 

The total intrinsic values of options exercised under the 2016 Stock Plan were $0.01 million during the six months ended June 30, 2019. No options under the 2016 Stock Plan were exercised during the six months ended June 30, 2018. The Company recorded stock-based compensation expense related to options under the 2016 Stock Plan of approximately $0.1 million for each of the three months ended June 30, 2019 and 2018 and $0.2 million for each of the six months ended June 30, 2019 and 2018.



Restricted Stock Awards Under The 2016 Stock Plan

A summary of RSA activity under the 2016 Stock Plan during the six months ended June 30, 2019 is as follows:

RSAs 
Number of
RSAs
 
Weighted-Average
Stock Price
Outstanding at December 31, 2018 474,686
 $4.25
Granted 
 
Vested (93,332) 5.25
Forfeited or expired (63,002) 3.83
Outstanding and unvested at June 30, 2019 318,352
 4.04

Shares are forfeited if not vested within three years from the date of grant, and vest in three equal annual increments. The Company recorded stock-based compensation expense related to RSAs under the 2016 Stock Plan of approximately $0.2 million and $0.3 million for the three months ended June 30, 2019 and 2018, respectively, and $0.4 million and $0.7 million for the six months ended June 30, 2019 and 2018, respectively.


Note 9— Income Taxes

The Company recorded a net income tax expense of approximately $0.9 million and $0.5 million for the three months ended June 30, 2019 and 2018, respectively. The net income tax expense recorded during the three months ended June 30, 2019 is primarily related to the mix of earnings between the US and Germany, the estimated GILTI tax and the discrete tax impact of stock based compensation.

The Company recorded a net income tax expense of approximately $1.2 million and $0.3 million for the six months ended June 30, 2019 and 2018, respectively. The net income tax expense recorded during the six months ended June 30, 2019 is primarily related to the mix of earnings between the US and Germany and the estimated GILTI tax, partially offset by discrete tax benefits related to an excess benefit on stock-based compensation.

For the six months ended June 30, 2019, the Company’s effective tax rate (“ETR”) from operations is 25.6%, compared to 1.0% for the six months ended June 30, 2018. The difference between the Company’s ETR and the current U.S. statutory rate of 21%, as well as the difference in the ETR for the six months ended June 30, 2019 compared to the six months ended June 30, 2018, are primarily related to permanent addback items, the difference in tax rates between the U.S. and Germany, the discrete tax impact of stock-based compensation and income during the six months ended June 30, 2019 as opposed to loss during the six months ended June 30, 2018.

As of each reporting date, management considers new evidence, both positive and negative, that could affect its view of the future realization of deferred tax assets (primarily federal and state net operating losses (“NOLs”). As of June 30, 2019 and December 31, 2018, the Company has a valuation allowance related to acquired state NOLs that the Company believes it is not more likely than not will be realized.

During the three and six months ended June 30, 2019 and 2018, the Company had no material changes in uncertain tax positions.

Note 10— 12—Derivatives and Hedging Activities


Risk Management Objective of Using Derivatives


The Company is exposed to certain riskrisks arising from both its business operations and economic conditions. The Company principally manages its exposures to a wide variety of business and operational risks through management of its core business activities. The Company manages economic risks, including interest rate, liquidity and credit risk primarily by managing the amount, sources and duration of its assets and liabilities and the use of derivative financial instruments. Specifically, the Company enters into derivative financial instruments to manage exposures that arise from business activities that result in the receipt or payment of future known and uncertain cash amounts, the value of which are determined by interest rates. The Company’s derivative financial instruments are used to manage differences in the amount, timing and duration of the Company’s known or expected cash receipts and its known or expected cash payments principally related to the Company’s borrowings.




Certain of the Company’s foreign operations expose the Companyit to fluctuations of foreign exchange rates. These fluctuations may impact the value of the Company’s cash receipts and payments in terms of the Company’sits functional currency. The Company enters into derivative financial instruments to protect the value or fix the amount of certain liabilities in terms of its functional currency, the U.S. dollar.


Cash Flow Hedges of
Interest Rate Risk Management


The Company’s objectives in using interest rate derivatives are to add stability to interest expense and to manage its exposure to interest rate movements. To accomplish this objective, the Company primarily uses interest rate swaps and caps as part of its interest rate risk management strategy. Interest rate swaps designated as cash flow hedges involve the receipt of variable amounts from a counterparty in exchange for the Company making fixed-rate payments over the life of the agreements without exchange of the underlying notional amount. Interest rate caps designated as cash flow hedges involve the receipt of variable amounts from a counterparty if interest rates rise above the strike rate on the contract in exchange for an up-front premium. During 20192020 and 2018,2019, such derivatives were used to hedge the variable cash flows associated with the Company’s existing variable-rate debt.

ForPrior to March 5, 2020, the Company’s interest rate derivatives were designated and that qualifyqualified as cash flow hedges of interest rate risk, where the gain or loss on the derivative iswas recorded in accumulated other comprehensive income (loss)or loss and subsequently reclassified into interest expense in the same period(s) during whichperiod that the hedged transaction affectsaffected earnings. Gains and losses on the derivative representingthat represented hedge components excluded from the assessment of effectiveness arewere recognized over the life of the hedge on a systematic and rational basis, as documented at hedge inception in accordance with the Company’s accounting policy election. The earnings recognition of excluded components iswas presented in interest expense. Amounts reported in accumulated other comprehensive income (loss)or loss related to derivatives will bewere reclassified to interest expense as interest payments arewere made on the Company’s variable-rate debt. Between June 30, 2019

On March 5, 2020, given the potential for changes in the Company’s future expected interest payments that were hedged by these interest rate derivatives as a result of the Merger Agreement, such derivatives no longer qualified as cash flow hedges and June 30, 2020,were dedesignated as such. Following this dedesignation, all changes in the Company estimatesfair values of the Company’s interest rate derivatives are recognized as a component of interest expense in the consolidated statements of operations and comprehensive (loss) income. The cumulative remaining unrealized gains at the dedesignation date that an additional $0.01 millionwere previously recognized in accumulated other comprehensive loss will be reclassified as an increaseamortized to interest expense.expense in the consolidated statements of operations and comprehensive (loss) income over the remaining contractual terms for the Company’s interest rate derivatives.


As of June 30, 2019,The following table sets forth the Company had the followingCompany’s outstanding interest rate derivatives that were not designated as cash flow hedgesa hedging instrument of interest rate risk:

risk as of March 31, 2020:
(in thousands) Number of Instruments At Inception Notional As of March 31, 2020 Notional Weighted-average
Maturity Date
(Years)
Interest Rate Derivatives    
Interest rate swaps 2 $57,185 $22,560 1.76
Interest rate cap 1 $15,000 $10,690 0.47

  Number of At Inception At June 30, 2019
Interest Rate Derivative Instruments Notional Notional
Interest rate swaps 1 $45,000,000 $18,750,000
Interest rate caps 1 $15,000,000 $10,690,158


Cash Flow Hedges of Foreign Exchange Risk Management


The Company is exposed to fluctuations in various foreign currencies against its functional currency, the U.S. dollar. The Company uses foreign currency derivatives including cross-currency interest rate swaps to manage its exposure to fluctuations in the USD-EURU.S. dollar to euro exchange rate. Cross-currency interest rate swaps involve exchanging fixed ratefixed-rate interest payments for fixed ratefixed-rate interest receipts, both of which will occur at the USD-EURU.S. dollar to euro forward exchange rates in effect upon entering into the instrument. The Company designates these derivatives as cash flow hedges of foreign exchange risks.


For derivatives that are designated and that qualify as cash flow hedges of foreign exchange risk, the gain or loss on the derivative is recorded in accumulated other comprehensive income (loss) and subsequently reclassified in the period(s) during whichperiod that the hedged transaction affects earnings within the same income statement line item as the earnings effect of the hedged transaction. During the next 12 months, the Company estimates that an additional $0.7$0.6 million will be reclassified as a decrease to interest expense.



As of June 30, 2019,The following table sets forth the Company had the followingCompany’s outstanding foreign currency derivatives that were used to hedge itsdesignated as cash flow hedges of foreign exchange risks:risk as of March 31, 2020:
(in thousands) Number of Instruments At Inception Notional As of March 31, 2020 Notional Weighted-average
Maturity Date
(Years)
Foreign Currency Derivative    
Cross-currency swap 1 €35,963 $39,750 2.41
    (amortizing to €35,058 as of March 31, 2020) (amortizing to $38,750 as of March 31, 2020)  


The following table sets forth the effect of the Company’s cash flow hedge accounting on its other comprehensive loss for the three months ended March 31, 2020 and 2019:
Foreign Currency Derivative Number of Instruments Pay Fixed Notional Receive Fixed Notional
Cross-currency interest rate swap 1 €42,000,517 $48,750,000
    (amortizing to €35,969,673 as of June 30, 2019) (amortizing to $41,750,000 as of June 30, 2019)
(in thousands)    
Location of Loss (Gain) Reclassified from Other Comprehensive Loss into Income or Loss 
Amount of Loss (Gain) Reclassified from Other Comprehensive Loss into
 Income or Loss

 
  Three Months Ended March 31,
  2020 2019
Interest expense $14
 $(53)
Interest expense on foreign currency transactions (122) (203)
Foreign currency transactions (763) (866)
Total gain reclassified $(871) $(1,122)
(in thousands) Amount of (Loss) Gain Recognized in Other Comprehensive Loss from Derivatives
Derivatives in Cash Flow Hedging Relationships 
  Three Months Ended March 31,
  2020 2019
Interest rate products $(583) $(61)
Cross-currency swap 1,859
 1,275
Total unrealized gain $1,276
 $1,214

The following table sets forth the effect of the Company’s derivative financial instruments on its consolidated statements of operations for the three months ended March 31, 2020 and 2019:
 Interest Expense
 Three Months Ended March 31,
(in thousands)2020 2019
Total amounts of interest expense presented in the consolidated statements of operations$(396) $(403)
Loss on derivatives not designated as a hedging instrument:   
Amount of loss related to changes in fair values of interest rate derivatives not designated as a hedging instrument$(171) $
    
Gain on cash flow hedging relationships:   
Amount of gain reclassified from accumulated other comprehensive loss into income or loss$(125) $(256)
Amount of loss reclassified from accumulated other comprehensive loss into income or loss as a result of a forecasted transaction being no longer probable of occurring$17
 $
 Foreign Currency Transactions
 Three Months Ended March 31,
(in thousands)2020 2019
Total amounts of loss on foreign currency transactions presented in the consolidated statements of operations$(7) $(65)
Gain on cash flow hedging relationships:   
Amount of gain reclassified from accumulated other comprehensive loss into income or loss$(763) $(867)




Fair Value of Derivative Financial Instruments

The following table below presentssets forth the fair value of the Company’s derivative financial instruments, as well as their classification on the consolidated balance sheetsheets, as of June 30, 2019March 31, 2020 and December 31, 2018.

2019:
    Fair Value of Derivative Financial Instruments
    Asset Derivatives Liability Derivatives
    March 31, 2020 December 31, 2019 March 31, 2020 December 31, 2019
(in thousands) Balance Sheet Location Fair Value Fair Value Fair Value Fair Value
Derivatives not designated as hedging instruments:          
Interest rate products Accrued liabilities $
 $
 $(288) $
Interest rate products Long-term derivative liabilities 
 
 (477) 
           
Derivatives designated as hedging instruments:          
Interest rate products Prepaid expenses and other current assets / Accrued liabilities 
 15
 
 (12)
Interest rate products Long-term derivative liabilities 
 
 
 (9)
Cross-currency swap Prepaid expenses and other current assets 655
 568
 
 
Cross-currency swap Other assets / Long-term derivative liabilities 162
 
 
 (1,442)
Total derivative financial instruments   $817
 $583
 $(765) $(1,463)

    Fair Value of Derivative Instruments
    Asset Derivatives Liability Derivatives
    June 30, 2019 December 31, 2018 June 30, 2019 December 31, 2018
Derivatives Designated as Hedging Instruments Balance Sheet Location Fair Value Fair Value Fair Value Fair Value
Interest rate products Prepaid expenses and other current assets $1,451
 $166,058
 $
 $
Interest rate products Other assets - non-current 368
 53,355
 (3,540) 
Cross currency contract Prepaid expenses and other current assets 760,939
 753,371
 
 
Cross currency contract Other assets - non-current / Long-term liability 
 
 (227,552) (940,216)
Total derivatives designated as hedging instruments   $762,758
 $972,784
 $(231,092) $(940,216)


The tables below presents the effect of cash flow hedge accounting on accumulated other comprehensive income (loss) for the three and six months ended June 30, 2019 and 2018.

Derivatives in Subtopic 815-20 Hedging Relationships Amount of Gain (Loss) Recognized in OCI on Derivatives
  Three Months Ended June 30, Six Months Ended June 30,
  2019 2018 2019 2018
Derivatives in Cash Flow Hedging Relationships        
Interest rate products $(70,188) $95,236
 $(130,997) $363,785
Cross currency contract (112,079) 2,597,045
 1,162,320
 1,149,474
Total $(182,267) $2,692,281
 $1,031,323
 $1,513,259

Location of Gain (Loss) Reclassified from Accumulated OCI into Income Amount of Gain (Loss) Reclassified from Accumulated OCI into Income
  Three Months Ended June 30, Six Months Ended June 30,
  2019 2018 2019 2018
Interest expense $30,673
 $17,297
 $83,214
 $(20,982)
Interest expense 200,025
 218,805
 402,850
 438,305
Gain (loss) on foreign currency transactions (569,158) 2,428,813
 297,788
 1,145,146
Total $(338,460) $2,664,915
 $783,852
 $1,562,469



The table below presents the effectfair value of the Company’s derivative financial instruments is determined using widely-accepted valuation techniques, including a discounted cash flows analysis on the income statement forexpected cash flows of each derivative. This analysis reflects the threecontractual terms of the derivatives, including the period to maturity, and six months ended June 30, 2019uses observable market-based inputs, including interest rate curves and 2018.implied volatilities. The fair values of the interest rate swaps and the cross-currency swap are determined using the market-standard methodology of netting the discounted future fixed cash receipts (or payments) and the discounted expected variable cash payments (or receipts). The variable cash payments (or receipts) are based on an expectation of future interest rates (forward curves) derived from observable market interest rate curves.


The fair value of the interest rate cap is determined using the market-standard methodology of discounting the future expected cash receipts that would occur if variable interest rates rise above the strike rate of the cap. The variable interest rates used in the calculation of projected receipts on the cap are based on an expectation of future interest rates derived from observable market interest rate curves and volatilities.
 Three Months Ended June 30, Six Months Ended June 30,
 2019 2019
 Interest Expense Foreign Currency Adjustment Interest Expense Foreign Currency Adjustment
Total amounts of income and expense line items presented in the statement of financial performance in which the effects of fair value or cash flow hedges are recorded$(328,196) $(2,380) $(731,060) $(67,589)
Gain (loss) on cash flow hedging relationships in Subtopic 815-20       
Interest contracts       
Amount of gain (loss) reclassified from accumulated other comprehensive income (loss) into income$230,698
 $(569,158) $486,064
 $297,788
Amount of gain (loss) reclassified from accumulated other comprehensive income (loss) into income as a result that a forecasted transaction is no longer probable of occurring$
 $
 $
 $

 Three Months Ended June 30, Six Months Ended June 30,
 2018 2018
 Interest Expense Foreign Currency Adjustment Interest Expense Foreign Currency Adjustment
Total amounts of income and expense line items presented in the statement of financial performance in which the effects of fair value or cash flow hedges are recorded$(671,294) $4,216
 $(1,278,980) $107,259
Gain or (loss) on cash flow hedging relationships in Subtopic 815-20       
Interest contracts       
Amount of gain or (loss) reclassified from accumulated other comprehensive income into income$236,103
 $2,428,813
 $417,324
 $1,145,146
Amount of gain or (loss) reclassified from accumulated other comprehensive income into income as a result that a forecasted transaction is no longer probable of occurring$
 $
 $
 $

As of June 30, 2019,The Company incorporates credit valuation adjustments to appropriately reflect both its non-performance risk and the respective counterparty’s non-performance risk in the fair value measurements. In adjusting the fair value of the Company’s derivative contracts for the effect of non-performance risk, the Company has considered the impact of netting and any applicable credit enhancements, such as collateral postings, thresholds, mutual puts and guarantees. The Company made an accounting policy election to measure the credit risk of its derivative financial instruments that are subject to master netting agreements on a net basis by counterparty portfolio.

Although the Company has determined that the majority of the inputs used to value its derivatives fall within Level 2 of the fair value hierarchy, the credit valuation adjustments associated with its derivatives utilize Level 3 inputs, such as estimates of current credit spreads to evaluate the likelihood of default by the Company and its counterparties. The Company has determined the impact of the credit valuation adjustments made to its derivative contracts, which determination was based on the fair value of each individual contract, was not significant to the overall valuation. As a result, all of the Company’s derivatives held as of March 31, 2020 and 2019 were classified as Level 2 within the fair value hierarchy.


As of March 31, 2020, the fair value of the Company’s derivatives was in a net liability position related to these agreements,of $0.8 million for its contracts, which includesincluded accrued interest but excludesexcluded any adjustment for nonperformance risk, was $0.002 million.non-performance risk. As of June 30, 2019,March 31, 2020, the Company had not posted any collateral related to these agreements.contracts. If the Company had breached any of credit-risk related provisions at June 30, 2019,as of March 31, 2020, it could have been required to settle its obligations under the agreementscontracts at their termination value of $0.002$0.8 million.
Note 11— 13—Revenue


The Company recognizes revenue when controlDisaggregation of the promised good or service is transferred to the customer in an amount that the Company expects to be entitled in exchange for the good or service.Revenue




The following table presentssets forth the Company’s revenuesrevenue disaggregated by revenue source for the three and six months ended June 30, 2019March 31, 2020 and 2018:

2019:
 Three Months Ended June 30, Six Months Ended June 30,
 2019 2018 2019 2018
 $ % $ % $ % $ %
User pay revenue$36,921,301
 71.0% $25,570,553
 59.7% $72,746,410
 71.7% $47,976,083
 59.6%
Advertising15,078,803
 29.0% 17,231,192
 40.3% 28,766,931
 28.3% 32,463,455
 40.4%
Total revenue$52,000,104
 100.0% $42,801,745
 100.0% $101,513,341
 100.0% $80,439,538
 100.0%
 Three Months Ended March 31,
 2020 2019
(in thousands)$ % $ %
User pay revenue:  
   
Video$28,633
 52.0% $20,229
 40.9%
Subscription and other in-app products14,395
 26.1% 15,596
 31.5%
Total user pay revenue43,028
 78.1% 35,825
 72.4%
Advertising revenue12,038
 21.9% 13,688
 27.6%
Total revenue$55,066
 100.0% $49,513
 100.0%


User Pay RevenueSignificant Customers


User payDuring the three months ended March 31, 2020 and 2019, three customers, all of which were advertising aggregators or payment processors representing thousands of advertisers, comprised 73% and 61% of total revenue, is earned from in-app purchase productsrespectively.

Contract Assets and subscriptions sold to mobile application and website users. Contract Liabilities

The Company offers in-app products such as Credits, Points, Gold, Icebreakers, Flash! and Shout! (collectively,following table sets forth the “In-App Products”). Users purchase the In-App Products to exchange forcomposition of the Company’s virtual products. The In-App Products allow users to engage with other users on the applicationscontract assets and in live video. They also put users in the spotlight, helping them get more attention from the community in order to meet more people faster. Platform users do not own the In-App Products but have a limited right to use the In-App Products on virtual products offered for sale on the Company’s platforms. In-App Products may be used to purchase virtual gifts for other users. These virtual gifts are received by other usersliabilities as of March 31, 2020 and converted into Diamonds. Diamonds represent an intermediary currency that the Company manages. Diamonds can either be converted back into credits or may be used to claim rewards, including in some instances cash rewards. The In-App Products are not transferable, cannot be sold or exchanged outside of our platforms, are not redeemable for any sum of money, cannot be gifted to other users and can only be used on our platforms. The In-App Products are recorded in deferred revenue when purchased and recognized as revenue over time when: (i) the In-App Products are used by the customer; or (ii) the Company determines the likelihood of the In-App Products being redeemed by the customer is remote (breakage) and there is not a legal obligation to remit the unredeemed In-App Products to the relevant jurisdiction. The breakage rate is based upon Company-specific historical redemption patterns. Breakage is recognized in revenue as the In-App Products are used on a pro rata basis over a three or six-month period (life of the user) beginning at the date of the sale and are included in revenue in the condensed consolidated statements of operations and comprehensive income (loss). Breakage recognized during each of the three and six months ended June 30, 2019 and 2018 was $0.9 million and $1.6 million, respectively. For MeetMe+, Tagged, Skout and Lovoo subscription based products, the Company recognizes revenue over the term of the subscription.December 31, 2019:

(in thousands)March 31, 2020 December 31, 2019
Assets:   
Accounts receivable$24,476
 $25,503
Total contract assets$24,476
 $25,503
Liabilities: 
  
Deferred revenue$3,563
 $3,884
Total contract liabilities$3,563
 $3,884

Under ASC 606, user pay revenue has a single performance obligation. Subscriptions provide customers with premium access to the application and include credits on MeetMe+, while In-App Product purchases are satisfied by standing ready to allow users to exchange the In-App Products for virtual products. The consideration received for these services is fixed at the time of purchase. The customer simultaneously receives and consumes the benefits of user pay features as the Company performs the services. Revenue is recorded in deferred revenue when purchased by customer and recognized as revenue over time as the performance obligation is satisfied.

Advertising Revenue

Advertising revenue is comprised of mobile and web advertising. Within each revenue stream, the Company has one performance obligation to publish advertisements as specified by the respective contracts. The amount of consideration that the Company expects to receive for the services is variable based on the volume of advertisement impressions. The Company does not offer any discounts or free impressions and has not historically experienced any collectability issues.


The Company also recognizes revenue from cross-platform/social theater and cost-per-action (“CPA”) offers. Each of these revenue streams has one performance obligation. For cross-platform/social theater contracts, the consideration promised is fixed per ad campaign and term, and required services to be delivered. However, the monthly revenue could vary depending on the actual delivery of impressions throughout the contract term. These contracts are typically based on cost per thousand rates and number of impressions served due to traffic volume and the specific ad campaign. For CPA offers, the consideration promised is variable based on a revenue share rate, and/or based on the number of actions delivered per the agreement. As such, the Company recognizes all actual advertising revenues from impressions or actions delivered on a monthly basis rather than estimating revenue at the beginning of the period.

The Company has transactions with several partners that qualify for principal agent considerations. The Company recognizes revenue, net of amounts retained by the third-party partners, pursuant to revenue sharing agreements with advertising networks.


The form of the agreements is such that the Company provides services in exchange for a fee. The Company determines only the fee for providing its services to advertising agencies and has no latitude in establishing prices with third party advertisers.
In instances where the Company works directly with an advertiser, revenue is recognized on a gross basis. The Company is the primary obligor in arrangements made with direct advertisers, as there is no third-party facilitating or managing the sales process. The Company is solely responsible for determining price, product or service specifications, and which advertisers to use. The Company assumes all credit risk in the sales arrangements made with direct advertisers.

The Company has determined that the performance obligation under the advertising revenue streams is recognized ratably over time utilizing the “Right to Invoice” practical expedient as customers simultaneously consume and receive benefits of the advertisement impressions.

Deferred Revenue

The Company records deferred revenue when the consideration for a good or service is received in advance of its performing the obligation. TheCompany’s deferred revenue balance for the sixthree months ended June 30, 2019March 31, 2020 increased $72.7by $42.5 million due to subscription and in-app purchases consideration received in advance of providing the good or serviceservices to the customers.subscription and in-app purchases’ customers, including in-app purchases related to video. This amount was offset by $72.7$42.8 million of revenue recognized from deferred revenue due to performance obligations satisfied during the sixthree months ended June 30, 2019.March 31, 2020.





Note 12— Leases14 — Net (Loss) Income per Share


The following table sets forth the computation of the Company’s basic and diluted net (loss) income per share for the three months ended March 31, 2020 and 2019:
 Three Months Ended March 31,
(in thousands, except share and per share data)2020 2019
Numerator:   
Net (loss) income$(2,408) $1,258
Denominator:   
Weighted-average shares outstanding — basic71,001,906
 74,848,080
Effect of dilutive securities
 3,951,168
Weighted-average shares outstanding — diluted71,001,906
 78,799,248
Basic net (loss) income per share$(0.03) $0.02
Diluted net (loss) income per share$(0.03) $0.02


Basic net (loss) income per share is computed by dividing net (loss) income by the weighted-average number of common shares outstanding. Diluted net (loss) income per share is computed by dividing net (loss) income by the weighted-average number of common shares and common stock equivalents outstanding, calculated using the treasury stock method for options, RSAs and unvested in-the-money PSUs using the average market price during the period.

For the three months ended March 31, 2020, all of the stock-based compensation awards were excluded from the calculation of net loss per share because their inclusion would have an anti-dilutive effect. For the three months ended March 31, 2019, 1.1 million shares of the Company’s stock-based compensation awards that could potentially dilute basic net income per share in the future were excluded from the calculation of diluted net income per share as their effect would have been anti-dilutive.

Note 15 — Retirement Plan

The Company has operating leasesmaintains The Meet Group, Inc. 401(k) Retirement Plan (“401(k) Plan”), which is a savings and investment plan intended to be qualified under of the Internal Revenue Code. The 401(k) Plan covers the majority of the employees of the Company. In January 2014, the Company began providing employer-matching contributions to the 401(k) Plan based on a participant’s contribution. The Company’s employer-matching contributions expense totaled $0.2 million for its corporate officeseach of the three months ended March 31, 2020 and data centers2019. This expense is included in sales and marketing expenses, product development and content expenses and general and administrative expenses in the consolidated statements of operations and comprehensive (loss) income.

Note 16 — Income Taxes

Income tax expense was $0.4 million and $0.3 million for the three months ended March 31, 2020 and 2019, respectively. For the three months ended March 31, 2020, the Company’s effective tax rate (“ETR”) was (18.3)%, compared with an ETR of 16.8% for the three months ended March 31, 2019. The increase in the Company’s income tax expense and ETR for the three months ended March 31, 2020 were primarily attributable to certain non-deductible transaction costs incurred in connection with the Merger Agreement, the geographic mix of earnings between the U.S. and Germany, which has a higher statutory tax rate, and finance leases fora decrease in windfall tax benefits on stock-based compensation. These increases were partially offset by the discrete impact of certain data centers, printersdeductible transaction costs incurred in connection with the Merger Agreement.
As of each reporting date, management considers new evidence, both positive and other furniture innegative, that could affect its German offices. The Company's lease terms include options to extend or terminateview of the leasefuture realization of deferred tax assets, primarily U.S. federal and state net operating loss carryforwards (“NOLs”). As of March 31, 2020 and December 31, 2019, the Company includes these optionshad a partial valuation allowance related to certain acquired state NOLs that it believes are more-likely-than-not to remain unutilized.

During each of the three months ended March 31, 2020 and 2019, the Company had 0 material changes in uncertain tax positions.



The Coronavirus Aid, Relief and Economic Security Act (“CARES Act”) was signed into law on March 27, 2020. The CARES Act made significant changes to U.S. federal tax law, including a five-year carryback of NOLs for the 2018, 2019 and 2020 tax years, and a temporary increase in the lease term when it is reasonably certainlimitation of interest deductibility for the 2019 and 2020 tax years. Due to exercise that option.the Company's historical NOLs and limited interest deductibility, the provisions of the CARES Act are not expected to have a material impact to its financial position, results of operations or cash flows.


Note 17—Fair Value Measurements

The carrying amounts of the Company’s financial instruments of cash and certain cash equivalents, accounts receivable, accounts payable, accrued liabilities and deferred revenue approximate their fair values due to their short maturities. The Company determines,has evaluated the estimated fair values of these financial instruments using available market information and management’s estimates. The use of different market assumptions and/or estimation methodologies could have a significant effect on the estimated fair value amounts.

The outstanding balance of the Company’s term loan facility as of March 31, 2020 and December 31, 2019 approximates fair value due to its variable market interest rate and relative short maturity.

Items measured at fair value on a recurring basis include the inception of a contract, if the arrangement is a lease and whether it meets the classification criteria for a finance or operating lease. ROU assets represent the Company's right to use an underlying asset during the lease term and lease liabilities represent the Company's obligation to make lease payments arising from the lease. ROUCompany’s money market funds, derivative assets and lease liabilities and contingent consideration. During the periods presented, the Company has not changed the manner in which it values assets and liabilities that are recognizedmeasured at commencement date based on the presentfair value of fixed lease payments over the lease term. ROU assets also include any advance lease payments and exclude lease incentives. As mostusing Level 3 inputs of the Company's operating leases do not provide an implicit rate, the Company uses its incremental borrowing rate based on information available at commencement date in determining the presentfair value of lease payments. Finance lease agreements generally include an interest rate that is used to determine the present value of future lease payments. Operating fixed lease expense and finance lease depreciation expense are recognized on a straight-line basis over the lease term.hierarchy.

Operating Leases

The Company leases its operating facilities, data center storage facilities and certain data storage equipment in the U.S. and Germany under certain noncancelable operating leases that expire at various times through 2022. These leases are renewable at the Company’s option.

Capital Leases

The Company leases certain fixed assets under capital leases that expire at various times through 2021. The capital leases are for the Company’s computer equipment and printers in its German offices. Principal and interest are payable monthly at interest rates ranging from 4.7% to 7.0% per annum, rates varying based on the type of leased asset.  The Company did not enter into any new capital lease agreements during the six months ended June 30, 2019.




The following table presentssets forth the fair value hierarchy information for each major category of the Company’s lease costsassets and liabilities measured at fair value on a recurring basis as of March 31, 2020 and December 31, 2019:
(in thousands)
Quoted Prices
in Active
Markets for
Identical
Items
(Level 1)
 
Significant Other
Observable
Inputs
(Level 2)
 
Significant
Unobservable
Inputs
(Level 3)
 Total
March 31, 2020       
Assets:       
Money market funds$12,090
 $
 $
 $12,090
Derivative assets
 817
 
 817
Total assets$12,090
 $817
 $
 $12,907
Liabilities:       
Contingent consideration$
 $
 $(917) $(917)
Derivative liabilities
 (765) 
 (765)
Total liabilities$
 $(765) $(917) $(1,682)
December 31, 2019       
Assets:       
Money market funds$7,108
 $
 $
 $7,108
Derivative assets
 583
 
 583
Total assets$7,108
 $583
 $
 $7,691
Liabilities:       
Contingent consideration$
 $
 $(894) $(894)
Derivative liabilities
 (1,463) 
 (1,463)
Total liabilities$
 $(1,463) $(894) $(2,357)




Fair Value of Contingent Consideration

The following table sets forth a summary of changes in the fair value of the Company’s contingent consideration liability for the acquisition of Initech, LLC as of March 31, 2020:
(in thousands)
Contingent
Consideration
Balance as of December 31, 2019$894
Accretion23
Balance as of December 31, 2020$917


The Company’s contingent consideration liability represents its contingent performance obligations related to the acquisition of Initech, LLC on March 5, 2019 and is measured at fair value using the income approach with assumed discount rates and payment probabilities. These assumptions are based on unobservable inputs in the market, which represents a Level 3 measurement within the fair value hierarchy. The Company assesses these estimates on an ongoing basis as additional data impacting the assumptions is obtained. The fair value of the Company’s contingent consideration liability is recognized on its consolidated balance sheets within accrued liabilities as of March 31, 2020 and within other liabilities as of December 31, 2019 and any changes therein are recognized within acquisition, restructuring and other expenses in the consolidated statements of operations and comprehensive (loss) income for the three and six months ended June 30, 2019:March 31, 2020 and 2019.




 Three Months Ended Six Months Ended
 June 30, 2019 June 30, 2019
Lease Costs:   
Operating lease cost*$655,033
 $1,380,269
    
Finance lease cost:   
Amortization of right-of-use assets$
 $1,518
Interest on lease liabilities1,444
 3,746
Total finance lease cost$1,444
 $5,264

* Short term lease costs were immaterial.

Supplemental cash flow information is as follows:
 Six Months Ended
 June 30, 2019
Cash paid for amounts included in the measurement of lease liabilities: 
Operating cash flows from operating leases$1,373,309
Operating cash flows from finance leases3,746
Financing cash flows from finance leases77,507
  
Right-of-use assets obtained in exchange for lease obligations: 
Operating leases6,440,016

The aggregate future lease payments for ROU assets and finance leases as of June 30, 2019 are as follows:

For the Years Ending December 31, ROU Assets Financing
Remaining in 2019 $1,308,078
 $79,173
2020 2,107,386
 32,065
2021 1,816,930
 4,773
2022 559,110
 
2023 43,559
 
Thereafter 
 
Total minimum lease payments 5,835,063
 116,011
Less: amount representing interest 290,377
 2,560
Total present value of minimum payments 5,544,686
 113,451
Less: current portion 2,203,055
 101,446
Long-term obligations $3,341,631
 $12,005

Weighted average remaining lease terms and discount rates were as follows:

Weighted average remaining lease term (years)June 30, 2019
Operating leases2.67
Finance leases0.81
Weighted average discount rate
Operating leases4.87%
Finance leases5.56%



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


Company Overview

The Meet Group, Inc. (“Company,” “The Meet Group,” “us” or “we”) is a leading provider of interactive live-streaming solutions.  We leverage a powerful live video platform (“Live”), empowering our global community to forge meaningful connections. Our primary applications (“apps”) are MeetMe®, Skout®, Tagged®, LOVOO® and Growlr®.

We operate location-based social networks for meeting new people — primarily on mobile platforms, including on iPhone, Android, iPad and other tablets — that facilitate interactions among users and encourage users to connect, communicate and engage with each other. Over the past three years we have transformed our business from an advertising-based revenue model to one where the majority of our revenue is derived from user pay monetization and subscriptions. The fastest-growing component of user pay monetization comes from in-app purchases, including virtual gifts associated with Live.

We began developing Live in 2016 with the belief that we could successfully pair live streaming and dating — a model that we had seen work effectively for Asian dating app providers. We first launched Live on the MeetMe app in early 2017, and, in October 2017, we began to monetize the feature by enabling virtual gifting within live video broadcasts. During this time period, we also executed on our strategy of acquiring other properties — Skout, Inc. (“Skout”), Ifwe, Inc. (“if(we)”) and LOVOO GmbH (“LOVOO”) — where we believed Live would fit naturally. We launched the monetized version of Live on the Skout app in the fourth quarter of 2017, and the Tagged and LOVOO apps in the second quarter of 2018. We have also continued to add features and enhancements intended to drive video engagement and increase monetization across all of our apps, and we recently launched and intend to monetize Live on the Growlr app — which we acquired in 2019 as part of our acquisition of Initech LLC (“Initech”) — in 2020. Live has become the fastest-growing revenue product in our history.

Looking ahead, we intend to leverage Live by making it available to third-party apps (and users of third-party apps) as a video-as-a-service platform (“vPaaS”). With vPaaS, we intend that users of Live will appear on and be able to interact with users of other mobile apps and vice versa, leading to mutually-beneficial revenue-share arrangements with the owners of these other third-party apps.

We also offer online marketing capabilities, which enable marketers to display their advertisements on our apps. We offer significant scale to our advertising partners, delivering more than 10 billion monthly advertising impressions across our active global user base, and sophisticated programmatic strategies for effective targeting. We work with advertising partners to maximize the effectiveness of their campaigns by optimizing advertisement formats and placements for maximum performance and return on investment.

Just as Facebook has established itself as the social network of friends and family, and LinkedIn has established itself as the social network of colleagues and business professionals, we have created the social entertainment network not of the people you know, but of the people you want to know. Nimble, fast-moving and already in more than 100 countries, we are differentiating ourselves from other dating brands with Live, which is not offered by many of our direct competitors. Modeled after the live video platforms offered by Asian dating app providers, but enhanced in order to appeal to Western audiences, Live is aimed at the nexus of entertainment and community, where we believe our apps exhibit a natural strength.

Our vision extends beyond dating and entertainment. We focus on building quality products to satisfy the universal need for human connection among all people, everywhere — not just paying subscribers. We believe meeting new people is a basic human need, especially for users aged 18 to 34, when so many long-lasting relationships are made. We use advanced technology to engineer serendipitous connections among people who otherwise might never have met — a sort of digital coffeehouse, where everyone belongs. Over the years, our apps have originated untold numbers of chats, shares, good friendships, dates and romantic relationships — even marriages.

We believe we have significant growth opportunities enabled through our social entertainment platform. We believe our scale provides unique advantages to grow video monetization, while also establishing a high density of users within the geographic regions we serve. As our networks grow and the number of users in a location increases, we believe that users who are seeking to meet new people will incrementally benefit from the quantity of relevant connections.




Cautionary Note Regarding Forward-LookingForward-looking Statements


Management’sCertain statements in this “Management’s Discussion and Analysis of Financial Condition and Results of OperationsOperations” (“MD&A”) is set forth below. Certain statements inand the rest of this reportQuarterly Report on Form 10-Q (“Quarterly Report”) may be considered to be “forward-looking statements” as that term is defined in the U.S. Private Securities Litigation Reform Act of 1995.

In particular, these forward-looking statements include, among others, statements about:


Liquidity;liquidity;
Capitalcapital expenditures;
Opportunitiesopportunities for our business;
Growthgrowth of our business; and
Anticipationsanticipations and expectations regarding mobile usage and monetization.

the closing of the transactions contemplated by the Merger Agreement (defined below), including the Merger (defined below); and
the potential impact of the 2019 novel coronavirus (“COVID-19”).

All statements other than statements of historical facts contained in this report,Quarterly Report, including statements regarding our future financial position, liquidity, business strategy, plans and objectives of management for future operations, are forward-looking statements. The words “believe,” “may,” “estimate,” “continue,” “anticipate,” “intend,” “should,” “plan,” “could,” “target,” “potential,” “is likely,” “expect” and similar expressions, as they relate to us, are intended to identify forward-looking statements. We have based these forward-looking statements largely on our current expectations and projections about future events and financial trends that we believe may affect our financial condition, results of operations, business strategy and financial needs.


Important factors that could cause actual results to differ from those in the forward-looking statements include users’ willingness to try new product offerings and engage in our Appapp upgrades and new features, the risk that unanticipated events affect the functionality of our Appapps with popular mobile operating systems, any changes in such operating systems that degrade our App’sapps’ functionality and other unexpected issues which could adversely affect usage on mobile devices, the risk that the mobile advertising market will not grow, the ongoing existence of such demand and the willingness of our users to complete mobile offers or pay for Credits, Points, Gold, and Icebreakers, Flash! and Shout!. Any forward-looking statement made by us in this reportQuarterly Report speaks only as of the date on which it is made. Factors or events that could cause our actual results to differ may emerge from time to time, and it is not possible for us to predict all of them. We undertake no obligation to publicly update any forward-looking statement, whether as a result of new information, future developments or otherwise, except as may be required by law.


YouOne should read the following discussion in conjunction with our audited historical consolidated financial statements. MD&A contains forward-looking statements that reflect our plans, estimates and beliefs. Our actual results could differ materially from those discussed in the forward-looking statements. Factors that could cause or contribute to these differences include those discussed elsewhere in “Risk Factors,” located at Part II,“Part I, Item 1A of this report and— Risk Factors” included in our Annual Report on Form 10-K (“Annual Report”) for the year ended December 31, 2018.2019. Additional risks that we do not presently know or that we currently believe are immaterial could materially and adversely affect any of our business, financial position, future results or prospects.


This MD&A is provided as a supplement to, and should be read in conjunction with, our audited consolidated financial statements,“Consolidated Financial Statements” and the related notes thereto and the MD&A included in our Annual Report on Form 10-K for the year ended December 31, 2018 (“Annual Report”),2019, as well as our condensed consolidated financial statementsunaudited “Consolidated Financial Statements” and the accompanyingrelated notes thereto included elsewhere in this report.Quarterly Report.




Company OverviewMerger Agreement


The MeetOn March 5, 2020, we announced that we entered into a definitive agreement to be acquired by ProSiebenSat.1 Media SE’s and General Atlantic Coöperatief U.A.’s joint company, NCG – NUCOM GROUP SE, a European stock corporation (“NuCom”), through eHarmony Holding, Inc., a subsidiary of NuCom’s platform company Parship Group GmbH (“Buyer”). Pursuant to the Agreement and Plan of Merger (“Merger Agreement”), dated as of March 5, 2020, by and among us, Buyer, Holly Merger Sub, Inc. (the “Company,” “The Meet Group,” “us,” or “we”, a Delaware corporation and a direct, wholly-owned subsidiary of Buyer (“Merger Sub”), and NuCom, solely for the purpose of guaranteeing Buyer’s obligations under the Merger Agreement as set forth therein, and upon the terms and subject to the conditions thereof and in accordance with Section 251 of the General Corporation Law of the State of Delaware, Merger Sub shall merge with and into us (“Merger”). As a result of the Merger, the separate corporate existence of Merger Sub shall cease, we shall continue as the surviving corporation in the Merger (“Surviving Corporation”) isand the Surviving Corporation shall become a leading providerwholly-owned subsidiary of interactive livestreaming solutions.  We leverageBuyer. Pursuant to the Merger Agreement, we filed a powerful live-streaming video platform, empowering our global communitydefinitive proxy statement and notice of a special meeting to forge meaningful connections. Our primary apps are MeetMe®, LOVOO®, Skout®, Tagged®solicit stockholder approval of the Merger Agreement with the U.S. Securities and Growlr®.Exchange Commission (“SEC”) on April 22, 2020.


We operate location-based social networks for meeting new people, primarily on mobile platforms, including on iPhone, Android, iPadAt the effective time of the Merger, and other tablets, that facilitate interactions among userssubject to the terms and encourage users to connect, communicate and engage with each other. Overconditions of the past two years, we have transformed our business from an advertising based revenue model to one where the majorityMerger Agreement, all shares of our revenue is derived from user pay monetizationcommon stock, other than (i) shares with respect to which appraisal rights are properly exercised and subscriptions. The fastest growing component of user pay monetization comes from in-app purchases, including virtual gifts associated with our live video product.



We began developing our live video platform in 2016 with the belief that we could successfully pair live-streaming and dating – a model that we had seen work effectively for Asian dating app providers. We first launched video on MeetMe early in 2017, and, in October of 2017, we began to monetize the feature by enabling gifting within the video streams. During this time period, we also executed on our strategy of acquiring other properties: Skout, Inc. (“Skout”), Ifwe Inc. (“if(we)”) and Lovoo GmbH (“Lovoo”) – where we believed our live-streaming platform would fit naturally. We then integrated live video into each app. We launched the monetized video platform on Skoutnot withdrawn under Delaware law, or (ii) as otherwise provided in the fourth quarterMerger Agreement, will automatically be converted into the right to receive $6.30 in cash, without interest. Additionally, (i) each outstanding stock option to acquire shares of 2017, Taggedour common stock, (ii) each outstanding share of restricted stock and (iii) each outstanding restricted stock unit that is subject to performance-based vesting will be cancelled in exchange for a cash payment, as established in the Merger Agreement.

We expect the Merger will be completed in the second half of 2020, subject to the satisfaction of all closing conditions.

Impact of the 2019 Novel Coronavirus

We are closely monitoring the impact of the COVID-19 pandemic on all aspects of our business. In the first quarter of 2018 and Lovoo beginning2020, we took a number of precautionary measures designed to help minimize the risk of the spread of the virus to our employees, including suspending all non-essential travel worldwide for our employees, temporarily closing our offices in the second quarterU.S. and Germany and requiring all employees to work remotely.

In March 2020, we experienced an increase in demand for our services as more people around the world practiced social distancing. We saw an increase in the demand for Live, which was partially offset by a slight decrease in demand for our dating products. As a result of 2018. We havethese shifts in users’ behavior, video daily active users (“vDAU”) and average daily video revenue per video daily active user (“vARPDAU”) increased, yielding an increase in video revenue.

Starting in March 2020, we also continuedsaw lower industry demand for advertising, which we attribute to add featuresthe global macroeconomic effects of the COVID-19 pandemic. As a result of this lower demand for advertising, advertising rates within the industry declined for the three months ended March 31, 2020, and enhancements intended to drive video engagement and increase monetization for all the apps. Live video has become the fastest growing revenue productwe saw a decrease in our history.advertising revenue. Our advertising products yield a higher margin when compared to Live and our dating products. Given the differential in margin, if this increased customer demand for Live and lower advertising rates continues, we expect our margins may be negatively impacted for the duration of 2020 or longer unless offset by rising Live revenue and we are unable to predict the duration or degree of such impact with any certainty.


We also offer online marketing capabilities, which enable marketers to display their advertisements onThis situation is changing rapidly, and additional impacts may arise that we are not aware of currently. As a result, the effects of COVID-19 may not be fully reflected in our apps. We offer significant scale to our advertising partners, with hundreds of millions of daily impressions across our active global user base, and sophisticated data sciencefinancial results until future periods. One should review “Part II, Item 1A —Risk Factors” in this Quarterly Report for effective targeting. We work with our advertisers and advertising networks to maximize the effectiveness of their campaigns by optimizing advertisement formats and placements.

Just as Facebook has established itself as the social network of friends and family, and LinkedIn as the social network of colleagues and business professionals, The Meet Group is creating the social entertainment network nota description of the people you know, but of the people you want to know. Nimble, fast-moving and already in more than 100 countries, we are challenging the dominant player in our space, Match Group, Inc., and differentiating ourselves with live video, which is not offered by many of our direct competitors. Modeled after the video products offered by Asian dating app providers, but enhanced in order to appeal to Western audiences, our live video product is aimed at the nexus of entertainment and community, where we believe our apps exhibit natural strength.

Our vision extends beyond dating and entertainment. We focus on building quality products to satisfy the universal need for human connection among all people, everywhere – not just paying subscribers. We believe meeting new people is a basic human need, especially for users aged 18-34, when so many long-lasting relationships are made. We use advanced technology to engineer serendipitous connections among people who otherwise might never have met – a sort of digital coffeehouse where everyone belongs. Over the years, The Meet Group’s apps have originated untold numbers of chats, shares, good friendships, dates, romantic relationships – even marriages.

We believematerial risks that we have significant growth opportunities enabled through our social entertainment platform. We believe our scale provides unique advantages to grow video monetization, while also establishing a high density of users within the geographic regions we serve. As The Meet Group’s networks grow and the number of userscurrently face in a location increases, we believe that users who are seeking to meet new people will incrementally benefit from the quantity of relevant connections.connection with COVID-19.


Operating Metrics


We measure website and applicationapp activity in terms of monthly active users (“MAUs”) and daily active users (“DAUs”). We define aan MAU as a registered user of one of our platforms who has logged in and visited within the last month of measurement. We define a DAU as a registered user of one of our platforms who has logged in and visited within the day of measurement. We define a vDAU as a registered user of one of our platforms who has logged in and visited Live, either as a broadcaster or a viewer, on the day of measurement. For the quartersthree months ended June 30,March 31, 2020 and 2019, and 2018, the total MAUs were approximately 18.2418.63 million and 15.9417.59 million, respectively, and total DAUs were approximately 5.124.75 million and 4.754.93 million and total vDAUs were 0.95 million and 0.88 million, respectively.



The following table sets forth our average MAU, DAU and vDAU for the three months ended March 31, 2020 and 2019:
 Monthly Average for the Quarter Ended
 June 30,
 2019 2018
MAU18,241,668
 15,935,099
 Average for the
 Three Months Ended March 31,
(in thousands)2020 2019
MAU18,628
 17,585
DAU4,749
 4,931
vDAU954
 876


      For the Quarter Ended
 June 30,
 2019 2018
DAU5,118,282
 4,747,788



SecondFirst Quarter of 20192020 Highlights


Revenue: Our revenue was $55.1 million for the three months ended March 31, 2020, up 11.2% from $49.5 million for the three months ended March 31, 2019.
Total revenue was $52.0 million for the second quarter of 2019, up 22% from $42.8 million in the second quarter of 2018.
Net Loss: We incurred a net loss of $2.4 million for the three months ended March 31, 2020, which was primarily attributable to $3.1 million of acquisition, restructuring and other expenses related to the Merger Agreement and the aforementioned impacts of the COVID-19 pandemic. Our comparative net income for the three months ended March 31, 2019 was $1.3 million.


Adjusted EBITDA: Our adjusted earnings before interest, taxes, depreciation and amortization (“Adjusted EBITDA”) was $7.9 million for the three months ended March 31, 2020, down 2.9% from $8.1 million for the three months ended March 31, 2019. For the definition of Adjusted EBITDA, please refer to the heading “Non-GAAP Financial Measure” included in this MD&A.
Net income for the second quarter of 2019 was $2.2 million. Adjusted EBITDA was $9.8 million for the second quarter of 2019. (See the important discussion about the presentation of non-GAAP financial measures, and reconciliation from the most directly comparable GAAP financial measures, below.)
Cash and Cash Equivalents: We had cash and cash equivalents of $32.1 million as of March 31, 2020.

Cash and cash equivalents totaled $26.1 million at June 30, 2019.


Trends in Our Metrics


In addition to MAUs and DAUs, we measure activity on the Company’sour apps in terms of average revenue per user (“ARPU”) and, average daily revenue per daily active user (“ARPDAU”). and vARPDAU. We define ARPU as the quarterly revenue per average MAU. We define ARPDAU as the average daily revenue per DAU. We define vARPDAU as the average daily video revenue per vDAU. We define a mobile MAU as a user who accessed our sites by one of our mobile applicationsapps or by the mobile optimized version of our websites for MeetMe, Skout and Lovoo,LOVOO, whether on a mobile phone or tablet during the month of measurement. We define a mobile DAU as a user who accessed our sites by one of our mobile applicationsapps or by the mobile optimized version of our websites for MeetMe, Skout and Lovoo,LOVOO, whether on a mobile phone or tablet during the day of measurement.


InFor the quarterthree months ended June 30, 2019, the CompanyMarch 31, 2020, we averaged 16.1716.63 million mobile MAUs and 18.2418.63 million total MAUs, compared to 13.65with 15.18 million mobile MAUs and 15.9417.59 million total MAUs inon average for the quarterthree months ended June 30, 2018, a netMarch 31, 2019, which amounted to an increase of 2.521.45 million, or 18%9.6%, for mobile MAUs, and a netan increase of 2.301.04 million, or 14%5.9%, for total MAUs. Mobile DAUs were 4.56averaged 4.25 million for the quarterthree months ended June 30, 2019,March 31, 2020, compared to 4.13 millionwith average mobile DAUs of 4.35 million for the quarterthree months ended June 30, 2018,March 31, 2019, which amounted to a net increasedecrease of approximately 0.430.10 million, total MAUs, or 10%. For2.3%, for mobile DAUs. In the quarterthree months ended June 30, 2019, the CompanyMarch 31, 2020, we averaged 5.124.75 million total DAUs, compared to 4.75with 4.93 million total DAUs on average in the three months ended March 31, 2019, which amounted to a decrease of 0.18 million, or 3.7%, for total DAUs. In the quarterthree months ended June 30, 2018, a netMarch 31, 2020, we averaged 0.95 million vDAUs, compared with 0.88 million vDAUs on average in the three months ended March 31, 2019, which amounted to an increase of approximately 0.370.08 million, total DAUs, or 8%.8.9%, for vDAUs.


chart-59f445ced4e95958bf4.jpgchart-7c9344f044e05a728e9.jpg
chart-22162b3a877353a5982.jpgchart-09d1d7b76c5450eda5f.jpgThe following graphs set forth our average DAU, mobile DAU, MAU, mobile MAU and vDAU by quarter from the three months ended March 31, 2019 to the three months ended March 31, 2020:

chart-b336e5a31839516e96a.jpgchart-e7e420b4064e588e9c2.jpg
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In the quarterthree months ended June 30, 2019, the CompanyMarch 31, 2020, we earned an averageARPU of $1.53 ARPU$1.21 on the web and $2.90 ARPUAPRU of $3.04 on our mobile applications,apps, compared to $1.67with ARPU of $1.45 on the web and $2.61 inARPU of $2.89 on our mobile apps for the three months ended March 31, 2019, which amounted to a decrease of $0.24, or 16.6%, on the web and an increase of $0.15, or 5.2%, on our mobile apps. In the three months ended March 31, 2020, we earned ARPDAU of $0.07 on the web and ARPDAU of $0.13 on our mobile apps, compared with APRDAU of $0.08 on the web and ARPDAU of $0.11 on our mobile apps for the three months ended March 31, 2019, which amounted to a decrease of $0.01, or 12.5%, on the web and an increase of $0.02, or 18.2%, on our mobile apps. In the three months ended March 31, 2020, we earned vARPDAU of $0.33, compared with vARPDAU of $0.26 for the three months ended March 31, 2019, which amounted to an increase of $0.07, or 26.9%.

The following graphs set forth our web ARPU, mobile ARPU, for the quarter ended June 30, 2018. In the quarter ended June 30, 2019, the Company earned an average of $0.079 in web ARPDAU, and $0.113 in mobile ARPDAU comparedand vARPDAU by quarter from the three months ended March 31, 2019 to $0.092 in web ARPDAU and $0.095 in mobile ARDAU for the quarterthree months ended June 30, 2018.March 31, 2020:

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chart-d553d2eb4de052628db.jpgchart-13f2fb4500bf5db0b3c.jpgAs our business continues to evolve and as subscription and in-app purchases contribute to a larger portion of revenue, we may choose to report new or additional metrics that are more closely tied to key business drivers or stop reporting metrics that are no longer relevant.


Factors Affecting Our Performance


We believe the following factors affect our performance: 
Number of MAUs, DAUs and vDAUs: We believe our ability to grow web and mobile MAUs, DAUs and vDAUs affects our revenue and financial results by influencing the number of advertisements we are able to show, the value of those advertisements and the volume of subscriptions and in-app purchases, as well as our expenses and capital expenditures.

User Engagement: We believe changes in user engagement patterns affect our revenue and financial performance. Specifically, the number of visits and the amount of time spent by each MAU, DAU or vDAU generates affects the number of advertisements we are able to display and therefore the rate at which we are able to monetize our active user base. In addition, the number of users that make in-app purchases and the amounts that they purchase directly impact our revenue. We continue to create new features and enhance existing features to drive additional engagement. The percent of MAU and DAU that engage with our video products and their conversion to paying users also affects the amount of in-app purchases revenue we are able to earn.
Number of MAUs and DAUs: We believe our ability to grow web and mobile MAUs and DAUs affects our revenue and financial results by influencing the number of advertisements we are able to show, the value of those advertisements, and the volume of subscriptions and in-app purchases, as well as our expenses and capital expenditures.
Advertising Rates: We believe our revenue and financial results are materially dependent on industry trends, and any changes to the cost per thousand advertising impressions could affect our revenue and financial results. In 2017, we experienced declining advertising rates, which negatively affected our revenue. In 2018, we saw some stabilization in advertising rates and a return to normal seasonality in advertising trends. In 2019, we saw continued stabilization in advertising rates and another year of typical seasonality. We expect to continue investing in new types of advertising and new placements. Additionally, we are prioritizing initiatives that generate revenue directly from users, including new in-app purchases products and a premium subscription product, in part to reduce our dependency on advertising revenue.

User Geography: The geography of our users influences our revenue and financial results because we currently monetize users in distinct geographies at varying average rates. For example, ARPU in the U.S. and Canada is significantly higher than in Latin America.

New User Sources: The percentage of our new users that are acquired through inorganic, paid sources impacts our financial performance, specifically with regard to ARPU for web and mobile. Inorganically-acquired users tend to have lower engagement rates, tend to generate fewer visits and advertisement impressions and to be less likely to make in-app purchases. When paid marketing campaigns are ongoing, our overall usage and traffic increases due to the influx of inorganically-acquired users, but the rate at which we monetize the average active user overall declines as a result.

Advertisement Inventory Management: Our revenue trends are affected by advertisement inventory management changes affecting the number, size or prominence of advertisements we display. In general, more prominently-displayed advertising units generate more revenue per impression.

Apple App Store and Google Play Store: Our mobile apps are distributed through the Apple App Store and the Google Play Store. Our business will suffer if we are unable to maintain good relationships with Apple and Google, if their terms and conditions or pricing change to our detriment, if we violate, or either company believes that we have violated, its terms and conditions or if either of these platforms are unavailable for a prolonged period of time.

Seasonality: Historically, advertising spending has been seasonal with a peak in the fourth quarter of each year. With the decline in advertising rates in 2017, we did not experience this seasonality consistent with prior years. In 2018 and 2019, we saw some stabilization in advertising rates and a return to normal seasonality in advertising trends. We believe this seasonality in advertising spending affects our quarterly results, which historically have reflected a growth in advertising revenue between the third and fourth quarters and a decline in advertising revenue between the fourth and subsequent first and second quarters each year. Growth trends in web and mobile MAUs, DAUs and vDAUs affect our revenue and financial results by influencing the number of advertisements we are able to show, the value of those advertisements, the volume of payments transactions and our expenses and capital expenditures.



Business Combinations: Acquisitions have been an important part of our growth strategy. In 2016 and 2017, we acquired three companies (Skout, if(we) and LOVOO), representing four significant brands for our portfolio (Skout, Tagged, Hi5 and LOVOO). In 2019, we acquired Initech and the Growlr app. Our ability to integrate acquired apps into our portfolio will impact our financial performance. As a consequence of the contributions of these businesses and acquisition-related expenses, our consolidated results of operations may not be comparable between periods.
User Engagement: We believe changes in user engagement patterns affect our revenue and financial performance. Specifically, the number of visits and the amount of time spent by each MAU or DAU generates affects the number of advertisements we are able to display and therefore the rate at which we are able to monetize our active user base. In addition, the number of users that make in-app purchases and the amounts that they purchase directly impact our revenue. We continue to create new features and enhance existing features to drive additional engagement. The percent of MAU and DAU that engage with our video products and their conversion to paying users also affects the amount of in-app purchase revenue we are able to earn.
The Merger: Failure to complete the previously announced Merger could adversely impact the market price of our common stock as well as our business and operating results. This risk, as well as other risks associated with the Merger, are identified further in “Part I, Item 1A — Risk Factors” included in our Annual Report for the year ended December 31, 2019.

COVID-19: While the COVID-19 pandemic has had a minimal impact on our operations and financial results to date, the future impacts of the pandemic and any resulting economic impact are largely unknown and rapidly evolving. It is possible that the COVID-19 pandemic, the measures taken by the governments of countries affected and the resulting economic impact may negatively impact our results of operations, cash flows and financial position as well as our vendors, advertising partners and users. As a result, the effects of COVID-19 may not be fully reflected in our financial results until future periods. Refer to “Part II, Item 1A — Risk Factors” in this Quarterly Report for a description of the material risks that the Company currently faces in connection with COVID-19. The impact of the COVID-19 pandemic may also exacerbate other risks discussed in “Part I, Item 1A — Risk Factors” included in the Company’s Annual Report for the year ended December 31, 2019.

Advertising Rates: We believe our revenue and financial results are materially dependent on industry trends, and any changes to the revenue we earn per thousand advertising impressions could affect our revenue and financial results. In 2017, we experienced declining advertising rates, which negatively affected our revenue. In 2018, we saw some stabilization in advertising rates and a return to normal seasonality in advertising trends. We expect to continue investing in new types of advertising and new placements. Additionally, we are prioritizing initiatives that generate revenue directly from users, including new in-app purchases products and a premium subscription product, in part to reduce our dependency on advertising revenue.

User Geography: The geography of our users influences our revenue and financial results because we currently monetize users in distinct geographies at varying average rates. For example, ARPU in the U.S. and Canada is significantly higher than in Latin America.



New User Sources: The percentage of our new users that are acquired through inorganic, paid sources impacts our financial performance, specifically with regard to ARPU for web and mobile. Inorganically acquired users tend to have lower engagement rates, tend to generate fewer visits and ad impressions and tend to be less likely to make in-app purchases. When paid marketing campaigns are ongoing, our overall usage and traffic increases due to the influx of inorganically acquired users, but the rate at which we monetize the average active user overall declines as a result.

Ad Inventory Management: Our revenue trends are affected by advertisement inventory management changes affecting the number, size, or prominence of advertisements we display. In general, more prominently displayed advertising units generate more revenue per impression. Our Social Theater campaign expenses are materially dependent on the percentage of Social Theater campaigns that run on MeetMe versus the percentage that run on other networks. We work to maximize the share of Social Theater campaigns that run on MeetMe and run campaigns on other networks only when necessary.

Google Play Store and Apple App Store: Our mobile applications are distributed through the Google Play Store and the Apple App Store. Our business will suffer if we are unable to maintain good relationships with Google and Apple, if their terms and conditions or pricing change to our detriment, if we violate, or either company believes that we have violated, its terms and conditions, or if either of these platforms are unavailable for a prolonged period of time.

Increased Social Theater Competition: A significant portion of the revenue generated by the Social Theater is derived from advertising campaigns, powered by Social Theater technology, that run on networks other than The Meet Group networks. A recent increase in competitors offering similar technology solutions, and in some cases their own cross-platform distribution networks, has made it more difficult to compete on price and win business. We expect this downward pressure on price to continue and impact our operating results in the future.

Seasonality: Historically, advertising spending has traditionally been seasonal with a peak in the fourth quarter of each year. With the decline in advertising rates in 2017, we did not experience this seasonality consistent with prior years. In 2018, we saw some stabilization in advertising rates and a return to normal seasonality in advertising trends. We believe that this seasonality in advertising spending affects our quarterly results, which historically have reflected a growth in advertising revenue between the third and fourth quarters and a decline in advertising spending between the fourth and subsequent first and second quarters each year. Growth trends in web and mobile MAUs and DAUs affect our revenue and financial results by influencing the number of advertisements we are able to show, the value of those advertisements, the volume of payments transactions, as well as our expenses and capital expenditures.

Business Combinations: Acquisitions have been an important part of our growth strategy. During the two years in the period ended December 31, 2017, we acquired three companies (Skout, if(we) and Lovoo), representing four significant brands for our portfolio (Skout, Tagged, Hi5 and Lovoo). We also acquired Growlr in March 2019. Our ability to integrate acquired apps into our portfolio will impact our financial performance. As a consequence of the contributions of these businesses and acquisition-related expenses, our consolidated results of operations may not be comparable between periods.

Growth trends in web and mobile MAUs and DAUs affect our revenue and financial results by influencing the number of advertisements we are able to show, the value of those advertisements, the volume of payments transactions, as well as our expenses and capital expenditures.


Changes in user engagement patterns from web to mobile, international diversification and the rollout of our live video productLive also affect our revenue and financial performance. We believe that overall engagement as measured by the percentage of users who create content (such as video broadcasts, status posts, messages or photos) or generate feedback increases as our user base grows. We continue to create new and improved features to drive social sharing and increase monetization.


We believe our revenue trends are also affected by advertisement inventory management changes affecting the number, size or prominence of the advertisements we display and traditional seasonality. Social Theater is a revenue product for the MeetMe platform and on third-party sites. Social Theater growth may be affected by large brand penetration, the ability to grow the advertiser base, and advertiser spending budgets.




Critical Accounting Policies and Estimates


Our critical accounting policies and estimates are described in Part II, Item 7, “Management’s Discussion and Analysis of Financial Condition and Results of Operations” ofthe MD&A included in our Annual Report filed withfor the SEC on March 8,year ended December 31, 2019. We believe there have been no new critical accounting policies, or material changes to our existing critical accounting policies and estimates during the sixthree months ended June 30, 2019, compared to those discussed in our Annual Report, except for our adoption of the new lease standard.

Leases

We determine, at the inception of a contract, if the arrangement is a lease and whether it meets the classification criteria for a finance or operating lease. Right-of-use (“ROU”) assets represent our right to use an underlying asset during the lease term and lease liabilities represent our obligation to make lease payments arising from the lease. ROU assets and lease liabilities are recognized at commencement date based on the present value of fixed lease payments over the lease term. ROU assets also include any advance lease payments and exclude lease incentives. As most of our operating leases do not provide an implicit rate, we use our incremental borrowing rate based on information available at commencement date in determining the present value of lease payments. Finance lease agreements generally include an interest rate that is used to determine the present value of future lease payments. Operating fixed lease expense and finance lease depreciation expense are recognized on a straight-line basis over the lease term.March 31, 2020.
 
Recent Accounting Pronouncements


For detailed information regarding recently issuedrecently-adopted and recently-issued accounting pronouncements and thetheir actual or expected impact onimpacts to our unaudited consolidated financial statements, see Note 1—1 —Description of Business, Basis of Presentation and Summary of Significant Accounting Policies in the accompanying notes to the condensed consolidated financial statementsunaudited “Consolidated Financial Statements” and the related notes thereto included elsewhere in this Quarterly Report on Form 10-Q.

Report.
Results of Operations




Comparison of Our Operating Results for the three months ended June 30,Three Months Ended March 31, 2020 and 2019 and 2018


The following table sets forth our condensedunaudited consolidated statements of operations for the three months ended June 30,March 31, 2020 and 2019, and 2018 that is used in the following discussions of our results of operations:
Three Months Ended June 30, Change From Prior YearThree Months Ended March 31, Change From Prior Year
2019 2018 ($) %
Revenues$52,000,104
 $42,801,745
 $9,198,359
 21.5 %
(in thousands)2020 2019 ($) %
Revenue$55,066
 $49,513
 $5,553
 11.2 %
Operating costs and expenses:              
Sales and marketing9,059,530
 7,753,486
 1,306,044
 16.8 %7,714
 7,841
 (127) (1.6)%
Product development and content30,149,797
 24,411,288
 5,738,509
 23.5 %37,671
 31,123
 6,548
 21.0 %
General and administrative5,892,437
 5,154,103
 738,334
 14.3 %5,030
 4,928
 102
 2.1 %
Depreciation and amortization3,430,018
 3,505,180
 (75,162) (2.1)%2,820
 3,198
 (378) (11.8)%
Acquisition and restructuring costs25,454
 1,036,602
 (1,011,148) (97.5)%
Acquisition, restructuring and other3,370
 479
 2,891
 603.5 %
Total operating costs and expenses48,557,236
 41,860,659
 6,696,577
 16.0 %56,605
 47,569
 9,036
 19.0 %
Income from operations3,442,868
 941,086
 2,501,782
 265.8 %
(Loss) income from operations(1,539) 1,944
 (3,483) (179.2)%
Other income (expense):              
Interest income27,605
 2,742
 24,863
 906.7 %13
 32
 (19) (59.4)%
Interest expense(328,196) (671,294) 343,098
 51.1 %(396) (403) 7
 (1.7)%
Gain (loss) on foreign currency adjustment(2,380) 4,216
 (6,596) (156.5)%
Other(787) 28,571
 (29,358) 102.8 %
Loss on foreign currency transactions(7) (65) 58
 (89.2)%
Loss on disposal of assets(108) 
 (108) (100.0)%
Other items of income, net2
 4
 (2) (50.0)%
Total other expense(303,758) (635,765) 332,007
 52.2 %(496) (432) (64) 14.8 %
Income before income tax expense3,139,110
 305,321
 2,833,789
 928.1 %
(Loss) income before income tax expense(2,035) 1,512
 (3,547) (234.6)%
Income tax expense(935,284) (540,593) (394,691) (73.0)%(373) (254) (119) 46.9 %
Net income (loss)$2,203,826
 $(235,272) $2,439,098
 1,036.7 %
Net (loss) income$(2,408) $1,258
 $(3,666) (291.4)%



Revenue

Revenues


Our revenues were approximately $52.0revenue was $55.1 million for the three months ended June 30, 2019,March 31, 2020, which represented an increase of $9.2$5.6 million, or 21.5%11.2%, compared to $42.8with revenue of $49.5 million for the three months ended June 30, 2018. March 31, 2019.

The following table presentssets forth our revenuesrevenue disaggregated by revenue source for the three months ended June 30, 2019March 31, 2020 and 2018:

2019:
 Three Months Ended June 30,
 2019 2018
 ($) % ($) %
User pay revenue$36,921,301
 71.0% $25,570,553
 59.7%
Advertising15,078,803
 29.0% 17,231,192
 40.3%
Total revenue$52,000,104
 100.0% $42,801,745
 100.0%
 Three Months Ended March 31,
 2020 2019
(in thousands)$ % $ %
User pay revenue:       
Video$28,633
 52.0% $20,229
 40.9%
Subscription and other in-app products14,395
 26.1% 15,596
 31.5%
Total user pay revenue43,028
 78.1% 35,825
 72.4%
Advertising revenue12,038
 21.9% 13,688
 27.6%
Total revenue$55,066
 100.0% $49,513
 100.0%


The increase in revenue isfor the three months ended March 31, 2020 was primarily attributable to a $11.4$7.2 million increase in user pay revenue, which was partially offset by a $2.2$1.7 million decrease in advertising revenue. The increase in user pay revenue is attributedwas primarily attributable to increased adoptionthe continued growth and improved monetization of MeetMeusers on Live Skout Live and Tagged Live. In addition,across all of our apps, as well as the increase in user pay revenue is attributeddemand for our services as more people around the world practiced social distancing in response to the adoption of Lovoo Live, which went live in the second quarter of 2018.COVID-19 pandemic. The decrease in advertising revenue iswas primarily dueattributable to the decrease in the number oflower advertising impressionsrates for the three months ended June 30, 2019March 31, 2020, and 2018.lower industry demand for advertising starting in March 2020, which were both negatively impacted by the global macroeconomic effects of the COVID-19 pandemic.



Operating Costs and Expenses


Sales and Marketing: Sales and marketing expenses decreased $0.1 million, or 1.6%, to $7.7 million for the three months ended March 31, 2020, compared with sales and marketing expenses of $7.8 million for the three months ended March 31, 2019. The decrease in sales and marketing expenses for the three months ended March 31, 2020 was primarily attributable to a $0.4 million decrease in user acquisition expense and a $0.2 million decrease in employee-related expense, which were partially offset by a $0.4 million increase in other sales and marketing expense and a $0.1 million increase in stock-based compensation expense.

Product Development and Content: Product development and content expenses increased $6.5 million, or 21.0%, to $37.7 million for the three months ended March 31, 2020, compared with product development and content expenses of $31.1 million for the three months ended March 31, 2019. The increase in product development and content expenses for the three months ended March 31, 2020 was primarily attributable to an increase in variable mobile content costs, net of broadcaster rewards breakage, of $3.8 million due to increased revenue from Live, a $0.9 million increase in safety moderation expense, a $0.7 million increase in employee-related expense, a $0.6 million increase in technical operations expense, a $0.4 million increase in stock-based compensation expense and a $0.1 million increase in other product development and content expense.

General and Administrative: General and administrative expenses were largely unchanged at $5.0 million for the three months ended March 31, 2020, compared with general and administrative expenses of $4.9 million for the three months ended March 31, 2019. The slight increase in general and administrative expenses for the three months ended March 31, 2020 was primarily attributable to a $0.3 million increase in stock-based compensation expense, which was partially offset by a $0.2 million decrease in the provision for expected credit losses.

Depreciation and Amortization: Depreciation and amortization expense decreased $0.4 million, or 11.8%, to $2.8 million for the three months ended March 31, 2020, compared with depreciation and amortization expense of $3.2 million for the three months ended March 31, 2019. The decrease in depreciation and amortization expense for the three months ended March 31, 2020 was primarily attributable to lower amortization expense for certain intangible assets acquired in our acquisitions of if(we) and LOVOO, which was partially offset by higher amortization expense for the intangible assets acquired in our acquisition of Initech.

Acquisition, Restructuring and Other: Acquisition, restructuring and other expenses amounted to $3.4 million for the three months ended March 31, 2020, compared with acquisition, restructuring and other expenses of $0.5 million for the three months ended March 31, 2019. Acquisition, restructuring and other expenses for the three months ended March 31, 2020 were primarily attributable to investment banking, legal, professional service and other transaction-related costs incurred in connection with the Merger Agreement. Further, we expect to continue to incur Merger-related costs, and acquisition, restructuring and other expenses could increase if we incur litigation-related expenses associated with our defense against legal claims related to the Merger. Acquisition, restructuring and other expenses for the three months ended March 31, 2019 were primarily attributable to legal, professional service and other transaction-related costs incurred in connection with our acquisition of Initech.

Sales and Marketing: Sales and marketing expenses increased approximately $1.3 million, or 16.8%, to $9.1Interest Expense

Interest expense was largely unchanged at $0.4 million for the three months ended June 30, 2019 from $7.8 millionMarch 31, 2020 and 2019. Interest expense for the three months ended June 30, 2018. The net increaseMarch 31, 2020 was primarily attributable to $0.3 million in salesinterest charges for our credit facilities, a $0.2 million unrealized loss for the changes in the fair values of our dedesignated interest rate derivatives and marketing expenses is due to increased advertising spend of approximately $1.0$0.1 million to attract more users toin other non-cash interest expense, which were partially offset by $0.2 million in counterparty receipts from our apps.

Product Development and Content: Product development and content expenses increased approximately $5.7 million, or 23.5%, to $30.1 millioncross-currency swap. Interest expense for the three months ended June 30,March 31, 2019 from $24.4 million for the three months ended June 30, 2018. The net increase in product development and content expense iswas primarily attributable to an increase in mobile content costs of $7.3 million due to the increased adoption of MeetMe Live, Skout Live, Tagged Live and Lovoo Live offset by a reduction for video broadcaster reward breakage of $1.9 million during the three months ended June 30, 2019.

General and Administrative: General and administrative expenses increased approximately $0.7 million, or 14.3%, to $5.9 million for the three months ended June 30, 2019 from $5.2 million for the three months ended June 30, 2018. The increase in general and administrative expense is primarily attributable to the increase in the accounts receivable allowance and stock based compensation of $0.6 million and $0.3 million, respectively. The increase isin interest charges for our prior credit facilities, which was partially offset by a decrease$0.2 million in travel related expenses of $0.1 million and office related expenses due to the closing ofcounterparty receipts from our office in San Francisco, CA of approximately $0.1 million.cross-currency swap.


Depreciation and Amortization Expense:Depreciation and amortization expenses decreased approximately $0.1 million, or 2.1%, to $3.4 million for the three months ended June 30, 2019 from $3.5 million for the three months ended June 30, 2018. The decrease in depreciation and amortization expense is primarily attributable to lower amortization of intangibles related to the if(we) Acquisition and the Lovoo Acquisition, partially offset by the amortization of the intangibles related to the Growlr Acquisition.

Acquisition and Restructuring Costs:Acquisition and restructuring costs decreased approximately $1.0 million, or 97.5%, to $0.03 million for the three months ended June 30, 2019 from $1.0 million for the three months ended June 30, 2018. Acquisition and restructuring costs include the transaction costs, including legal and diligence costs for acquisitions, the accrual of the exit cost of non-cancellable leases and employee exit and relocation costs. The decrease in acquisition and restructuring costs is mainly due to a decrease in severance costs in the three months ended June 30, 2019.

Comparison of Stock-Based Compensation and Income Taxes

Stock-Based Compensation

Stock-based compensation expense, included in the operating expense by category, increased approximately $0.8 million to $2.9 million for the three months ended June 30, 2019 from $2.1 million for the three months ended June 30, 2018. Stock-based compensation expense represented 5.9% and 5.0% of operating expenses for the three months ended June 30, 2019 and 2018, respectively.



As of June 30, 2019, there was approximately $1.0 million, $16.9 million and $3.5 million of total unrecognized compensation cost which is expected to be recognized over a weighted-average vesting period of approximately of 0.8 years, 2.2 years and 2.5 years relating to stock options, RSAs and PSUs, respectively.

 Three Months Ended June 30, Change from Prior Year
 2019 2018 ($)
Sales and marketing$106,323
 $112,222
 $(5,899)
Product development and content1,642,931
 1,161,863
 481,068
General and administrative1,116,082
 816,785
 299,297
Total stock-based compensation expense$2,865,336
 $2,090,870
 $774,466

InterestTax Expense


InterestIncome tax expense decreased approximatelywas $0.4 million toand $0.3 million for the three months ended June 30,March 31, 2020 and 2019, from $0.7respectively. For the three months ended March 31, 2020, our effective tax rate (“ETR”) was (18.3)%, compared with an ETR of 16.8% for the three months ended March 31, 2019. The increase in our income tax expense and ETR for the three months ended March 31, 2020 were primarily attributable to certain non-deductible transaction costs incurred in connection with the Merger Agreement, the geographic mix of earnings between the U.S. and Germany, which has a higher statutory tax rate, and a decrease in windfall tax benefits on stock-based compensation. These increases were partially offset by the discrete impact of certain deductible transaction costs incurred in connection with the Merger Agreement.


Comparison of Our Stock-based Compensation Expense for the Three Months Ended March 31, 2020 and 2019

Stock-based compensation expense, included in our operating costs and expenses by category, increased $0.8 million, or 31.3%, to $3.2 million for the three months ended June 30, 2018. The decrease in interest expense is due to a lower debt balance and a lower effective interest rate during the three months ended June 30, 2019.

Income Tax Expense

We recorded a net income taxMarch 31, 2020, compared with stock-based compensation expense of approximately $0.9 million and $0.5$2.4 million for the three months ended June 30, 2019March 31, 2019. Stock-based compensation expense represented 5.6% and 2018, respectively. Our effective tax rate from operations5.1% of operating costs and expenses for the three months ended June 30,March 31, 2020 and 2019, was lower than the effective tax rate for the three months ended June 30, 2018 due to permanent addback items, the difference in tax rates between the U.S. and Germany and the discrete tax impact of stock based compensation. During the three months ended June 30, 2019, we had more book income and less additional tax expense related to stock based compensation as compared to the three months ended June 30, 2018.respectively.

Comparison of the six months ended June 30, 2019 and 2018


The following table sets forth the allocation of stock-based compensation expense in our condensedunaudited consolidated statements of operations and comprehensive (loss) income for the sixthree months ended June 30, 2019March 31, 2020 and 2018 that is used in the following discussions of our results of operations:2019:
 Six Months Ended June 30, Change From Prior Year
 2019 2018 ($) %
Revenues$101,513,341
 $80,439,538
 $21,073,803
 26.2 %
Operating costs and expenses:       
Sales and marketing16,900,396
 14,801,479
 2,098,917
 14.2 %
Product development and content61,273,172
 46,512,825
 14,760,347
 31.7 %
General and administrative10,820,219
 10,623,281
 196,938
 1.9 %
Depreciation and amortization6,628,122
 7,134,783
 (506,661) (7.1)%
Acquisition and restructuring504,449
 4,386,553
 (3,882,104) (88.5)%
Total operating costs and expenses96,126,358
 83,458,921
 12,667,437
 15.2 %
Income (loss) from operations5,386,983
 (3,019,383) 8,406,366
 278.4 %
Other income (expense):       
Interest income59,994
 9,950
 50,044
 503.0 %
Interest expense(731,060) (1,278,980) 547,920
 42.8 %
Gain (loss) on foreign currency transactions(67,589) 107,259
 (174,848) (163.0)%
Other2,762
 21,627
 (18,865) (87.2)%
Total other expense(735,893) (1,140,144) 404,251
 35.5 %
Income (loss) before income tax expense4,651,090
 (4,159,527) 8,810,617
 211.8 %
Income tax expense(1,189,665) (288,406) (901,259) (312.5)%
Net income (loss)$3,461,425
 $(4,447,933) $7,909,358
 177.8 %
 Three Months Ended March 31, 
Change from
Prior Year
(in thousands)2020 2019 ($)
Sales and marketing$124
 $70
 $54
Product development and content1,928
 1,500
 428
General and administrative1,133
 855
 278
Total stock-based compensation expense$3,185
 $2,425
 $760




Liquidity and Capital Resources
Revenues

Cash Flows
Our revenues were approximately $101.5 million for the six months ended June 30, 2019, an increase of $21.1 million or 26.2% compared to $80.4 million for the six months ended June 30, 2018.
The following table presentssets forth the changes in our revenues disaggregated by revenue sourcecash and cash equivalents for the sixthree months ended June 30, 2019March 31, 2020 and 2018:2019:
 Six Months Ended June 30,
 2019 2018
 $ % $ %
User pay revenue$72,746,410
 71.7% $47,976,083
 59.6%
Advertising28,766,931
 28.3% 32,463,455
 40.4%
Total revenue$101,513,341
 100.0% $80,439,538
 100.0%
 Three Months Ended March 31,
(in thousands)2020 2019
Net cash provided by operating activities$5,551
 $3,362
Net cash used in investing activities(87) (12,091)
Net cash (used in) provided by financing activities(467) 234
Change in cash and cash equivalents prior to effect of foreign currency exchange rate$4,997
 $(8,495)



Operating Activities

We received $5.6 million and $3.4 million in cash flows from our operating activities for the three months ended March 31, 2020 and 2019, respectively. The increase in revenue isour operating cash flows for the three months ended March 31, 2020 was primarily attributable to a $24.8$5.3 million increase in user pay revenue,working capital inflows, which was partially offset by a $3.7 million decrease in advertising revenue. The increasenet income.

Investing Activities

We used $0.1 million and $12.1 million in user pay revenue is attributed tocash flows for our investing activities for the continued growth in revenue on the Company’s Live platform across all of our apps in the sixthree months ended June 30,March 31, 2020 and 2019, compared torespectively. For the sixthree months ended June 30, 2018. The second quarterMarch 31, 2020, our cash used for investing activities was fully attributable to $0.1 million in purchases of property and equipment. For the three months ended March 31, 2019, reflects a full quarterour cash used for investing activities was fully attributable to cash consideration payments of revenue$11.8 million for Lovoo Live as it went liveour acquisition of Initech, and $0.3 million in the second quarterpurchases of 2018. The decreaseproperty and equipment.

Financing Activities

We used $0.5 million in advertising revenue is primarily due to the decrease in the number of advertising impressionscash flows for our financing activities for the sixthree months ended June 30, 2019 compared toMarch 31, 2020 and received $0.2 million in cash flows from our financing activities for the sixthree months ended June 30, 2018.

Operating Costs and Expenses

Sales and Marketing: Sales and marketing expenses increased approximately $2.1 million, or 14.2%, to $16.9 million forMarch 31, 2019. For the sixthree months ended June 30, 2019 from $14.8 millionMarch 31, 2020, our cash used for the six months ended June 30, 2018. The net increase in sales and marketing expenses is due to increased user acquisition spend of approximately $1.8 million to attract more users to our apps.

Product Development and Content: Product development and content expenses increased approximately $14.8 million, or 31.7%, to $61.3 million for the six months ended June 30, 2019 from $46.5 million for the six months ended June 30, 2018. The net increase in product development and content expense is attributable to the increase in mobile content costs of $16.6 million due to the increased adoption on MeetMe Live, Skout Live, Tagged Live and Lovoo Live offset by a reduction for video broadcaster reward breakage of $1.9 million during the six months ended June 30, 2019.

General and Administrative: General and administrative expenses increased $0.2 million or 1.9%, to $10.8 million for the six months ended June 30, 2019 from $10.6 million for the six months ended June 30, 2018. The net increase in general and administrative expense is primarily due to increase in stock based compensation of approximately $0.2 million and other general administrative costs of $0.5 million offset by a decrease in office related expenses of approximately $0.3 million and travel related costs of $0.2 million. The increase in other general and administrative costs isfinancing activities was primarily attributable to an increase to the accounts receivable allowance.

Depreciation and Amortization: Depreciation and amortization expenses decreased $0.5payments of $0.9 million or 7.1%, to $6.6 million for the six months ended June 30, 2019 from $7.1 million for the six months ended June 30, 2018. The decrease in depreciation and amortization expense is primarily attributable to lower amortization of intangibles related to the if(we) Acquisition and the Lovoo Acquisition,on our term loan facility, which was partially offset by the amortization of the intangibles related to the Growlr Acquisition.

Acquisition and Restructuring: Acquisition and restructuring expenses decreased $3.9 million or 88.5%, to $0.5 million for the six months ended June 30, 2019 from $4.4 million for the six months ended June 30, 2018. Acquisition and restructuring costs include the employee retention bonuses in connection with the acquisitions, employee related restructuring costs, the accrual of the exit cost of non-cancellable leases and employee exit and relocation costs. The decrease in acquisition and restructuring costs is mainly due to a decrease in severance costs, partially offset by transaction costs from the Growlr Acquisition of approximately $0.3 million.



Comparison of Stock-Based Compensation and Income Taxes

Stock Based Compensation

Stock-based compensation expense, included in the operating expense by category, increased approximately $1.0 million to $5.3 million for the six months ended June 30, 2019 from $4.3 million for the six months ended June 30, 2018. Stock-based compensation expense represented 5.5% and 5.1% of operating expenses for the six months ended June 30, 2019 and 2018, respectively.

As of June 30, 2019, there was approximately $1.0 million, $16.9 million and $3.5 million of total unrecognized compensation cost which is expected to be recognized over a weighted-average vesting period of approximately of 0.8 years, 2.2 years and 2.5 years relating to stock options, RSAs and PSUs, respectively.

 Six Months Ended June 30, Change from Prior Year
 2019 2018 ($)
Sales and marketing$176,498
 $230,769
 $(54,271)
Product development and content3,142,324
 2,275,930
 866,394
General and administrative1,971,231
 1,753,096
 218,135
Total stock-based compensation expense$5,290,053
 $4,259,795
 $1,030,258

Interest Expense

Interest expense decreased approximately $0.6 million to $0.7 million for the six months ended June 30, 2019 from $1.3 million for the six months ended June 30, 2018. The decrease in interest expense is due to a lower debt balance, partially offset by a higher effective interest rate during the six months ended June 30, 2019.

Income Tax Expense

Income tax expense was $1.2 million and $0.3 million for the six months ended June 30, 2019 and 2018, respectively. For the six months ended June 30, 2019, our ETR from operations was 25.6%, compared to 1.0% for the six months ended June 30, 2018. The difference between our ETR and the current U.S. statutory rate of 21%, as well as the difference in the ETR for the six months ended June 30, 2019 compared to the six months ended June 30, 2018, are primarily related to permanent addback items, the difference in tax rates between the U.S. and Germany, the discrete tax impact of stock-based compensation and income during the six months ended June 30, 2019 as opposed to loss during the six months ended June 30, 2018.

Liquidity and Capital Resources

 Six Months Ended June 30,
 2019 2018
Net cash provided by operating activities$13,966,812
 $9,598,418
Net cash used in investing activities(12,495,650) (256,391)
Net cash used in financing activities(3,812,690) (12,715,747)
 $(2,341,528) $(3,373,720)

Net cash provided by operations was approximately $14.0 million for the six months ended June 30, 2019 compared to approximately $9.6 million for the six months ended June 30, 2018.

For the six months ended June 30, 2019, net cash provided by operations consisted primarily of net income of approximately $3.5 million adjusted for certain non-cash expenses of approximately $6.6 million of depreciation and amortization expense, $5.3 million related to stock-based compensation expense, $1.3 million of amortization of right-of-use assets and $0.9 million of bad debt expense. Additionally, changes in working capital decreased net cash provided by operations. These changes included decreases in accounts payable and accrued liabilities of $6.0 million and increases of $0.5 million in prepaid expenses, other current assets and other assets, offset by a decrease in accounts receivable of approximately $2.4 million resulting from collections.



Net cash used in investing activities in the six months ended June 30, 2019 was primarily due to the Growlr Acquisition of approximately $11.8 million and $0.7 million of capital expenditures for computer equipment to increase capacity and improve performance.

Net cash used in financing activities in the six months ended June 30, 2019 of approximately $3.8 million was due to $7.0 million of proceeds from borrowings from our Revolving Credit Facility and $0.7 million of proceedsreceived from the exercise of employee stock options. TheseFor the three months ended March 31, 2019, our cash received from financing activities was primarily attributable to a $7.0 million draw on our prior revolving credit facility to finance a portion of our acquisition of Initech and $0.7 million in proceeds received from the exercise of employee stock options, which were partially offset by $11.1payments of $7.3 million of debt payments and $0.4 million of payments for restricted stock awards withheld for taxes.on our prior term loan facility.



Cash and Cash Equivalents

The following table sets forth our cash and cash equivalents as a percentage of our total assets as of March 31, 2020 and December 31, 2019:
June 30,
2019
 December 31,
2018
(in thousands)March 31, 2020 December 31, 2019
Cash and cash equivalents$26,052,704
 $28,365,725
$32,110
 $27,241
Total assets$274,928,702
 $267,852,169
$271,780
 $272,721
Percentage of total assets9.5% 10.6%11.8% 10.0%


Our cash balancesand cash equivalents are kept liquid to support our growing infrastructure needs for operational expansion. The majority of our cash isand cash equivalents are concentrated in two large financial institutions.


As of June 30,March 31, 2020 and December 31, 2019, we had positive working capital of approximately $10.0 million. 

On September 18, 2017, in connection with the Lovoo Acquisition, we entered into an Amended and Restated Credit Agreement with the several banks and other financial institutions party thereto and JPMorgan Chase Bank, N.A., as the Agent, amending and restating the Credit Agreement, dated March 3, 2017. The Amended and Restated Credit Agreement provides a Revolving Credit Facility for $20.0$25.9 million and a Term Loan Facility of $60.0 million. On October 18, 2017, we drew down $60.0$23.6 million, fromrespectively. We define working capital as total current assets less total current liabilities as shown on our Term Loan Facility in connection with the Lovoo Acquisition. Fees and direct costs incurred when the Company entered into the Credit Facilities were $0.6 million. Fees and direct costs incurred are offset against long-term debt on the accompanying condensed consolidated balance sheets.


On March 7, 2018, we entered into an amendmentSources of Liquidity

Our primary sources of liquidity are cash generated from operations, available cash, accounts receivable and borrowings under our credit facilities, which are described in further detail in “Note 9 —Debt to the Amended and Restated Credit Agreement, that among other things, amends the definition of “Applicable Rate” and “EBITDA” and makes certain changes to the financial covenants. On July 27, 2018, we entered into an amendment to the Amended and Restated Credit Agreement that amends“Consolidated Financial Statements” included in our obligation to use certain of our excess cash flow to prepay our obligations under the Credit Agreement by limiting the applicable periodAnnual Report for the fiscal year ended December 31, 20172019. We believe these sources are sufficient to the period commencing October 31, 2017fund our planned operations and ended December 31, 2017. In conjunction with this amendment, we made an excess cash flow principal payment of approximately $4.3 million in the third quarter of 2018. See Note 6—Long-Term Debtfor details on an amendment to the Amended and Restated Credit Agreement.

In March 2019, we made an excess cash flow payment of $3.6 million related to the fiscal year end December 31, 2018. On March 5, 2019, in connection with the Growlr Acquisition, as discussed in Note 2—Acquisitions, the Company drew down $7.0 million frommeet our Revolving Credit Facility. Borrowings on the Revolving Credit Facility are included in long-term debt, less current portion, net, on the accompanying condensed consolidated balance sheets.

We intend to use the remaining proceeds of the Revolving Credit Facility to finance working capital needs and for general corporate purposes. Amounts under the Revolving Credit Facility may be borrowed, repaid and re-borrowed from time to time until the maturity date of the Credit Agreement on September 18, 2020. The Term Loan Facility is subject to quarterly payments of principal in an amount equal to $3,750,000 commencing December 31, 2017 and continuing through maturity. At our election, loans made under the Credit Facilities will bear interest at either (i) Base Rate plus an applicable margin or (ii) LIBO Rate plus an applicable margin, subject to adjustment if an event of default under the Amended and Restated Credit Agreement has occurred and is continuing. The Base Rate means the highest of (a) the Agent’s “prime rate,” (b) the federal funds effective rate plus 0.50% and (c) the LIBO Rate for an interest period of one month plus 1%. The Company’s Guarantors will guarantee the obligations of the Company and its subsidiaries under the Credit Facilities. Our obligations under the Credit Facilities are secured by all of our assets and the Guarantors, subject to certain exceptions and exclusions as set forth in the Amended and Restated Credit Agreement and other loan documents.

contractual obligations. As of June 30, 2019,March 31, 2020, we had an outstanding balance of $25.9$33.3 million on our Term Loan Facility.term loan facility. The weighted averageweighted-average interest rate at June 30, 2019as of March 31, 2020 was 5.83%3.69%. Remaining unamortizedWe also have a revolving credit facility with a borrowing capacity of $25.0 million, of which, there were no outstanding borrowings as of March 31, 2020. Unused commitment fees and direct costs incurred for our Credit Facilities were $0.2 million. As of June 30, 2019, we had an outstanding balance of $7.0 million on our Revolving Credit Facility.revolving credit facility were 0.25% per annum as of March 31, 2020.



Capital Expenditures

We did not enter into any new capital lease agreements for the six months ended June 30, 2019. As of June 30, 2019, capital leases that were previously assumed in connection with the Lovoo Acquisition had approximately $0.1 million in principal amount of capital lease indebtedness, all of which are due by 2021.


We have budgeted capital expenditures of approximately $1.8$3.5 million for the remainder of 2019,2020, which we believe will support ourthe growth of our domestic and international business through increased capacity, performance improvement and expanded content.


Off-BalanceOff Balance Sheet Arrangements


As of June 30, 2019,March 31, 2020, we did not have any relationships with unconsolidated entities or financial partners, such as entities often referred to as structured finance or special purpose entities, established for the purpose of facilitating off-balanceoff balance sheet arrangements or other contractually narrowcontractually-narrow or limited purposes. As such, we are not materially exposed to any financing, liquidity, market or credit risk that could arise if we had engaged in such relationships.


Non-GAAP - Financial Measure


The following discussion and analysis includes both financial measures in accordance with GAAP,U.S. generally accepted accounting principles (“GAAP”), as well as Adjusted EBITDA (defined below), which is a non-GAAP financial measure. Generally, a non-GAAP financial measure is a numerical measure of a company’s performance, financial position or cash flows that either excludes or includes amounts that are not normally included or excluded in the most directly comparable measure calculated and presented in accordance with GAAP. Non-GAAP financial measures should be viewed as supplemental to, and should not be considered as alternatives to, net income, operating income and cash flowflows from operating activities, liquidity or any other financial measures. They may not be indicative of our historical operating results nor are they intended to be predictive of potential future results. Investors should not consider non-GAAP financial measures in isolation or as substitutes for performance measures calculated in accordance with GAAP.


We believe that both management and stockholders benefit from referring to Adjusted EBITDA (defined below) in planning, forecasting and analyzing future periods. We use this non-GAAP financial measure in evaluating our financial and operational decision makingdecision-making and as a means to evaluate period-to-periodperiod to period comparison.



We define Adjusted EBITDA as earningsnet income (or loss) from operations before interest expense, benefit from or provision for income taxes, depreciation and amortization expense, stock-based compensation changes in warrant obligations, nonrecurringexpense, non-recurring acquisition, restructuring or other expenses, gain or loss on disposals of assets,foreign currency transactions, gain or loss on foreign currency transactionssale or disposal of assets, provision for expected credit losses outside the normal range and goodwill and long-lived asset impairment charges, if any.charges. We exclude stock-based compensation expense because it is non-cash in nature. We believe Adjusted EBITDA is an important measure of our operating performance because it allows management, investors and analysts to evaluate and assess our core operating results from period to period after removing the impact of acquisition relatedacquisition-related costs, and other items of a non-operational nature that affect comparability. We recognize that Adjusted EBITDA has inherent limitations because of the excluded items.


We have included a reconciliation of our net (loss) income, (loss), which is the most comparable financial measure calculated in accordance with GAAP to Adjusted EBITDA. We believe that providing this non-GAAP financial measure, together with the reconciliation fromto GAAP, helps investors make comparisons between us and other companies. In making any comparisons to other companies, investors need to be aware that companies use different non-GAAP measures to evaluate their financial performance. Investors should pay close attention to the specific definition being used and to the reconciliation between such measure and the corresponding GAAP measure provided by each company under applicable SEC rules.




The following table presentssets forth a reconciliation of net (loss) income, (loss), a GAAP financial measure, to Adjusted EBITDA:

EBITDA for the three months ended March 31, 2020 and 2019:
 Three Months Ended June 30, Six Months Ended June 30,
ADJUSTED EBITDA2019 2018 2019 2018
Net income (loss)$2,203,826
 $(235,272) $3,461,425
 $(4,447,933)
Interest expense328,196
 671,294
 731,060
 1,278,980
Income tax expense935,284
 540,593
 1,189,665
 288,406
Depreciation and amortization3,430,018
 3,505,180
 6,628,122
 7,134,783
Stock-based compensation expense2,865,336
 2,090,870
 5,290,053
 4,259,795
Acquisition and restructuring25,454
 1,036,602
 504,449
 4,386,553
(Gain) loss on foreign currency transactions2,380
 (4,216) 67,589
 (107,259)
ADJUSTED EBITDA$9,790,494
 $7,605,051
 $17,872,363
 $12,793,325
 Three Months Ended March 31,
(in thousands)2020 2019
Net (loss) income$(2,408) $1,258
Interest expense396
 403
Income tax expense373
 254
Depreciation and amortization expense2,820
 3,198
Stock-based compensation expense3,185
 2,425
Acquisition, restructuring and other3,370
 479
Loss on disposal of assets108
 
Loss on foreign currency transactions7
 65
Adjusted EBITDA$7,851
 $8,082


ItemITEM 3.    QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK.RISK


The primary objectiveInterest rates on our term loan facility are variable in nature; however, we are party to two fixed-pay amortizing interest rate swaps having a combined remaining notional amount of our investment activities is$22.6 million and a non-amortizing interest rate cap with a notional amount of $10.7 million. If interest rates were to preserve principal whileremain at the same time maximizing yields without significantly increasing risk. Our cash balance asMarch 31, 2020 level, we would make interest payments of June 30, 2019 was held$0.1 million in insured depository accounts, of which $20.02020, $0.2 million exceeded insurance limits.in 2021 and $0.1 million in 2022 for net settlements on the fixed-pay amortizing interest rate swaps and non-amortizing interest rate cap.


ItemITEM 4.    CONTROLS AND PROCEDURES


Evaluation of Disclosure Controls and Procedures.

Procedures
With the participation of our Chief Executive Officer (“CEO”) and Chief Financial Officer (“CFO”), we have evaluated the effectiveness of our disclosure controls and procedures (as such term is defined in Rules 13a-15(e) and 15d-15(e) under the Securities Exchange Act of 1934)1934 (“Exchange Act”)), as of the end of the period covered by this report.Quarterly Report. Based upon such evaluation, our Chief Executive OfficerCEO and Chief Financial OfficerCFO have concluded that our disclosure controls and procedures are effective as of the end of the period covered by this report.Quarterly Report.


Changes in Internal Controls Over Financial Reporting

There was no change in our internal controlcontrols over financial reporting that occurred during the fiscal quarterthree months ended June 30, 2019, noted during the evaluation of controls as of the end of the period covered by this report,March 31, 2020 that has materially affected, or is reasonably likely to materially affect, our internal controlcontrols over financial reporting. We have not experienced any impact to our internal controls over financial reporting despite the fact that most of our employees are working remotely due to the COVID-19 pandemic. We are continually monitoring and assessing the COVID-19 situation on our internal controls to minimize the impact on their design and operating effectiveness.



Limitations on the Effectiveness of Controls and Procedures and Internal Controls over Financial Reporting

A control system,In designing and evaluating the disclosure controls and procedures and internal controls over financial reporting, management recognizes that any controls and procedures, no matter how well designed and operated, can provide only reasonable not absolute, assurance thatof achieving the control system’s objectives will be met. The Company’s management, including its Principal Executive Officer and its Principal Financial Officer, do not expect that the Company’s disclosuredesired controls will prevent or detect all errors and all fraud. Further,objectives. In addition, the design of a control systemdisclosure controls and procedures and internal controls over financial reporting must reflect the fact that there are resource constraints and that management is required to apply judgment in evaluating the benefits of possible controls must be consideredand procedures relative to their costs. Because of the inherent limitations in all control systems, no evaluation of controls can provide absolute assurance that all control issues and instances of fraud, if any, within the Company have been detected. These inherent limitations include the realities that judgments in decision-making can be faulty, and that breakdowns can occur because of simple error or mistake. Controls can also be circumvented by the individual acts of some persons, by collusion of two or more people, or by management override of the controls. The design of any system of controls is based in part upon certain assumptions about the likelihood of future events, and there can be no assurance that any design will succeed in achieving its stated goals under all potential future conditions. Over time, controls may become inadequate because of changes in conditions or deterioration in the degree of compliance with associated policies or procedures. Because of the inherent limitations in a cost-effective control system, misstatements due to error or fraud may occur and not be detected.






PART II. OTHER INFORMATION


ItemITEM 1.    Legal ProceedingsLEGAL PROCEEDINGS


From time to time, we are party to certain legal proceedings that arise in the ordinary course and are incidental to our business. There are currently no such pending proceedings to which we are a party

Since April 6, 2020, three putative class actions, (i) Post v. The Meet Group, Inc., et al., No. 1:20-cv-00479-LPS, (ii) Paskowitz v. The Meet Group, Inc., et al., No. 1:20-cv-00481-LPS and (iii) Mowry v. The Meet Group, Inc. et al., No. 2:20-cv-02092, and seven individual actions, (i) Wang v. The Meet Group, Inc., et al., No. 1:20-cv-00475-LPS, (ii) Bayer v. The Meet Group, Inc., et al., No. 1:20-cv-02873-AKH, (iii) Gurian v. The Meet Group, Inc., et al., No. 1:20-cv-02855-AKH, (iv) Cole v. The Meet Group, Inc., et al., No. 1:20-cv-02987, (v) Justus v. The Meet Group, Inc., et al., No 2:20-cv-04314, (vi) Respler v. The Meet Group, Inc., et al., No. 3:20-cv-02841-JSC and (vii) Miles v. The Meet Group, et al., No. 1:20-cv-03301 were filed by purported stockholders of the Company against us and the members of the Board of the Directors (“Board”). Post, Paskowitz and Wang were filed in the U.S. District Court for the District of Delaware; Bayer, Gurian, Cole, and Miles were filed in the U.S. District Court for the Southern District of New York; Justus was filed in the U.S. District Court for the District of New Jersey; Respler was filed in the U.S. District Court for the Northern District of California; and Mowry was filed in U.S. District Court for the Eastern District of Pennsylvania. The complaints generally allege that our management believes will havepreliminary proxy statement filed with the SEC on April 2, 2020 or definitive proxy statement filed with the SEC on April 22, 2020 (collectively, “Proxy Statement”) contained false or misleading statements regarding the Merger in violation of Sections 14(a) and 20(a) of the Exchange Act and that the Board breached its fiduciary duty of candor/disclosure. The specific allegations include that the Proxy Statement misstated or omitted material information regarding our financial projections, certain confidentiality agreements between us and potential acquirers, potential conflicts of interest, analyses performed by our financial advisor and the fee payable to our financial advisor in connection with the Merger. The actions seek, among other things, to (i) enjoin us and the Board from proceeding with obtaining the stockholder approval for the Merger Agreement and the Merger at the special meeting or consummating the transactions contemplated by the Merger Agreement, including the Merger; (ii) cause us and the Board to disseminate revised disclosures; (iii) rescind, to the extent already implemented, the Merger Agreement; and (iv) recover any damages suffered by the plaintiffs as a material adverse effectresult of the false or misleading statements or the consummation of the transactions contemplated by the Merger Agreement, including the Merger. We believe that the claims are without merit and intend to vigorously defend against them.

On December 5, 2019, Blanca Yolanda Vargas served a complaint on us that she filed on November 27, 2019 in Kern County Superior Court, California accusing us of the wrongful death of her son at the hand of someone he allegedly first met on the Company’s consolidated financial positionMeetMe app. We filed a Demurrer on February 25, 2020, which is scheduled for a hearing on June 1, 2020. It is not possible at this time to reasonably assess the outcome of this litigation or resultsto estimate a loss or range of operations. However, futureloss, if any, due to the fact that we believe the plaintiff’s allegations are without merit and we intend to defend against them vigorously.

On January 30, 2020, we received a letter from Representative Raja Krishnamoorthi, Chairman of the U.S. House of Representatives Subcommittee on Economic and Consumer Policy (“Subcommittee”), requesting that we produce certain documents and information from the period January 2018 to the present to assist the Subcommittee in its investigation of underage use of dating apps across the industry. We responded with the requested documents and information on February 13, 2020, and we expect to file additional documents and information as the investigation proceeds.

Future events or circumstances, currently unknown to management, will determine whether the resolution of pending or threatened litigation or claims will ultimately have a material effect on our consolidated financial position, liquidity or results of operations in any future reporting periods. See Note 7—10—Commitments and Contingenciesto the unaudited condensed consolidated financial statements contained“Consolidated Financial Statements” included elsewhere in this reportQuarterly Report for information on specific matters, if any.


ItemITEM 1A.    Risk FactorsRISK FACTORS


Our Annual Report on Form 10-K for the year ended December 31, 20182019 filed with the SEC on March 8, 201912, 2020 includes detailed discussions of our risk factors under the headingsheading “Part I, Item 1A. Risk Factors” and “Part II, Item 1A. Risk Factors” respectively. YouFactors.” Set forth below are certain risk factors in addition to those previously disclosed in our Annual Report for the year ended December 31, 2019, which we are including in this Quarterly Report. One should carefully consider the risk factors discussed in our Annual Report on Form 10-K,for the year ended December 31, 2019 and those set forth below, as well as the other information in this report,Quarterly Report, which could materially harm our business, financial condition, results of operations and/or the value of our common shares.



Our business, operations and financial results are subject to interruptions, delays or failures resulting from global or national health epidemics or concerns.

Our business, operations and financial results could be negatively impacted by global or national health epidemics or concerns, including the recent COVID-19 pandemic, impacting the markets and communities in which we and our employees, vendors, advertising partners and users operate. In December 2019, a disease referred to as COVID-19 was reported and has spread to many countries worldwide, including the U.S. and Germany.

The ongoing global COVID-19 pandemic has impacted, and may continue to impact, our business and the businesses of our vendors and advertising partners, and there is substantial uncertainty in the nature and degree of its continued effects over time. Starting in March 2020, we have seen lower industry demands for advertising and lower advertising rates, which we attribute to the global macroeconomic effects of the COVID-19 pandemic. Lower demands for advertising and lower advertising rates now and in the future could result in decrease in our advertising revenue, which could harm our margins and business.

In response to the COVID-19 pandemic, many U.S. state and local and foreign governments have put in place, and others in the future may put in place, quarantines, executive orders, shelter-in-place orders and similar government orders and restrictions in order to control the spread of the disease. Such orders or restrictions, or the perception that such orders or restrictions could occur, have resulted in business closures, work stoppages, slowdowns and delays, work-from-home policies, travel restrictions and cancellation or postponement of events, among other effects that could negatively impact productivity and disrupt our operations and those of our vendors, advertising partners and users of the apps. We have implemented a work-from-home policy for substantially all of our employees in the U.S. and Germany, and we may take further actions that alter our operations as may be required by U.S. federal, state, local or foreign authorities, or which we determine are in our best interests. In addition, much of our content moderation services are performed in India, where technical infrastructure lags behind that of the U.S and Germany. Both of our moderation centers in Delhi and Bangalore have closed in response to state and local business closures, forcing employees there to work from their homes. Such disruptions could negatively impact our ability to run our apps, which could harm our business.

While most of our operations can be performed remotely, there is no guarantee that we will be as effective while working remotely because our team is dispersed, many employees may have additional personal needs to attend to (such as looking after children as a result of school closures or family who become sick), and employees may become sick themselves and be unable to work. Decreased effectiveness of our team could affect our results due to our inability to meet in person with vendors, other service providers and advertising partners, delays in responsiveness, or other impacts on productivity that could harm our business.

The global impact of COVID-19 continues to rapidly evolve, and we will continue to monitor the situation closely. The ultimate impact of the COVID-19 pandemic or a similar health epidemic is highly uncertain and subject to change. We do not yet know the full extent of potential delays or impacts on our business, operations, financial results or the global economy as a whole, and the effects of COVID-19 may not be fully reflected in our financial results until future periods. While the spread of COVID-19 may eventually be contained or mitigated, there is no guarantee that a future outbreak of this or any other widespread epidemics will not occur, or that the global economy will recover, either of which could harm our business.

ITEM 1B.    UNRESOLVED STAFF COMMENTS

None.




ItemITEM 2.    Unregistered SalesUNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS

The following table sets forth the purchases of Equity Securitiesour issued and Useoutstanding common stock during each month of Proceedsthe quarter ended March 31, 2020:

(c)
      Total Number of Shares Purchased as Part of Publicly Announced Program
(2)
 Approximate Dollar Value of Shares That May Yet Be Purchased Under the Program
(3)
(in thousands, except per share data) Total Number of Shares Repurchased (1)(2) Average Price Paid per Share
(3)
  
    
Period    
January 1-31, 2020 12,935
 $5.00
 12,935
 $7,604
February 1-29, 2020 
 $
 
 $
March 1-31, 2020 
 $
 
 $
Total 12,935
 $5.00
 12,935
 $7,604
(1)On June 14, 2019, we announced that our Board had approved a share repurchase program that authorizes us to purchase up to $30.0 million of our issued and outstanding common stock (“Share Repurchase Program”). Under the Share Repurchase Program, we may, from time to time, at our discretion and subject to other legal, regulatory and market conditions, purchase shares of our issued and outstanding common stock in the open market or through negotiated transactions intended to comply with SEC Rule 10b-18, which may be facilitated through one or more 10b5-1 share repurchase plans with a third-party broker.
(2)The total number of shares purchased under the Share Repurchase Program is determined using trade dates for the related transactions.
(3)The average price paid per share and approximate dollar value of shares that may yet be purchased under the Share Repurchase Program exclude fees, commissions and other charges for the related transactions.

During the three months ended June 30, 2019, the Company did not repurchase any shares under the share repurchase plan announced June 14, 2019.


ItemITEM 3.    Defaults upon Senior SecuritiesDEFAULTS UPON SENIOR SECURITIES


Not applicable.


ItemITEM 4.    Mine Safety Disclosures.MINE SAFETY DISCLOSURES


Not applicable.


ItemITEM 5.    Other InformationOTHER INFORMATION


Not applicable.








ItemITEM 6.    EXHIBITS


Filed or
Furnished
Herewith
Incorporated by Reference
Exhibit No.Exhibit DescriptionFormDateNumber
Certification of Principal Executive Officer (Section 302)Filed
Certification of Principal Financial Officer (Section 302)Filed
Certification of Principal Executive Officer (Section 906)Furnished*
Certification of Principal Financial Officer (Section 906)Furnished*
101.INSXBRL Instance Document**
101.SCHXBRL Taxonomy Extension Schema Document**
101.CALXBRL Taxonomy Extension Calculation Linkbase Document**
101.DEFXBRL Taxonomy Extension Definition Linkbase Document**
101.LABXBRL Taxonomy Extension Label Linkbase Document**
101.PREXBRL Taxonomy Extension Presentation Linkbase Document**
    Incorporated by Reference 
Filed or
Furnished
Herewith
Exhibit No. Exhibit Description Form Date Number 
 Agreement and Plan of Merger, dated as of March 5, 2020, by and among The Meet Group, Inc., a Delaware corporation, eHarmony Holding, Inc., a Delaware corporation, Holly Merger Sub, Inc., a Delaware corporation and direct, wholly owned Subsidiary of Buyer and NCG NuCom Group SE, a European stock corporation. † 8-K 3/5/2020 2.1  
 Amendment No. 1, dated as of March 5, 2020, to the Tax Benefits Preservation Plan, dated as of October 4, 2019, by and between The Meet Group, Inc. and Action Stock Transfer Corporation, as Rights Agent. 8-K 3/5/2020 4.1  
 Form of Transaction Bonus Agreement. 8-K 3/5/2020 10.1  
 Amendment to Employee Performance Share Award Agreements, effective as of the date immediately prior to the consummation of the Contemplated Transactions, amending the Employee Performance Share Award Agreements, dated as of April 9, 2018 and April 4, 2019, by and between The Meet Group, Inc. and Geoff Cook. 8-K 3/5/2020 10.2  
 Amendment No. 4 to Employment Agreement, amending the Employment Agreement between The Meet Group, Inc. and Geoff Cook. 8-K 3/5/2020 10.3  
 Amendment No. 5 to Employment Agreement amending the Employment Agreement between The Meet Group, Inc. and Geoff Cook. 8-K 3/5/2020 10.4  
 Amendment No. 1 to Employment Agreement, dated as of March 2, 2018, by and between The Meet Group, Inc. and James Bugden. 8-K 3/5/2020 10.5  
 Amendment No. 1 to Employment Agreement, dated as of March 2, 2018, by and between The Meet Group, Inc. and Michael Johnson. 8-K 3/5/2020 10.6  
 Certification of Chief Executive Officer, pursuant to Rule 13a-14(a)/15d-14(a), as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.       Filed
 Certification of Chief Financial Officer, pursuant to Rule 13a-14(a)/15d-14(a), as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.       Filed
 Certification of Chief Executive Officer, pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.       Furnished*
 Certification of Chief Financial Officer, pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.       Furnished*
101 The following materials from The Meet Group, Inc. on Quarterly Report on Form 10-Q for the quarter ended March 31, 2020, formatted in Inline XBRL (Extensible Business Reporting Language): (i) the Consolidated Balance Sheets, (ii) the Consolidated Statements of Operations and Comprehensive (Loss) Income, (iii) the Consolidated Statements of Changes in Stockholders’ Equity, (iv) the Consolidated Statements of Cash Flows, and (v) Notes to the Consolidated Financial Statements.       **
104 Cover Page Interactive Data File (formatted in Inline XBRL and contained in Exhibit 101).       **


Certain schedules and exhibits to this agreement have been omitted pursuant to Item 601 (b)(2) of Regulation S-K. The Company will furnish the omitted schedules and exhibits to the SEC upon request.

* This exhibit is being furnished rather than filed and shall not be deemed incorporated by reference into any filing, in accordance with Item 601 of Regulation S-K.


** Attached as Exhibit 101 to this reportThe XBRL instance document does not appear in the Interactive Data File because its XBRL tags are embedded within the Company’s financial statements for the quarter ended June 30, 2019 formatted inInline XBRL (eXtensible Business Reporting Language). The XBRL-related information in Exhibit 101 in this report shall not be deemed “filed” or a part of a registration statement or prospectus for purposes of Sections 11 or 12 of the Securities Act of 1933, and is not filed for purposes of Section 18 of the Securities Exchange Act of 1934, or otherwise subject to the liabilities of those sections.document.






SIGNATURES


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


 THE MEET GROUP, INC.
   
July 31, 2019May 6, 2020By:/s/Geoffrey Cook
  Geoffrey Cook
  Chief Executive Officer
  (Principal Executive Officer)
   
July 31, 2019May 6, 2020By:/s/James Bugden
  James Bugden
  Chief Financial Officer
  (Principal Financial Officer and Principal Accounting Officer)




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