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DESCRIPTION OF SECURITIES

The material terms and provisions of our common stock and warrants being issued in this offering are summarized below. The following descriptions are subject to, and qualified in their entirety by reference to, the Certificate of Incorporation, our Amended and Restated By-Laws (the “By-Laws”), form of common stock certificate and form of warrant, each of which will be filed as an exhibit to the registration statement, of which this prospectus is a part.

General

Our certificate of incorporation (as amended, the “Certificate of Incorporation”) authorizes us to issue 100,000,000 shares of our common stock, par value $0.001 per share, and 10,000,000 shares of preferred stock, par value $0.001 per share. As of September 23, 2013, we had issued:

49,737,826 shares of common stock, including shares of restricted common stock that have been issued but remain subject to forfeiture;

2,342,500 shares of common stock issuable upon exercise of warrants at a weighted average exercise price of $2.50 per share; and

4,511,815 shares of common stock issuable upon exercise of outstanding stock options.

Common Stock

Dividend Rights

Holders of our common stock are entitled to receive dividends, if any, as may be declared from time to time by our Board of Directors out of funds legally available therefor. We never have declared or paid cash dividends on any of our common stock and currently do not anticipate paying any cash dividends after the offering or in the foreseeable future.

Voting Rights

Each holder of our common stock is entitled to one vote for each share held of record on all matters submitted to a vote of the stockholders, including the election of directors. Our stockholders do not have cumulative voting rights in the election of directors. Accordingly, holders of a plurality of the voting shares are able to elect all of the directors standing for election.

Liquidation

In the event of our liquidation, dissolution or winding up, holders of our common stock will be entitled to share ratably in the assets legally available for distribution to stockholders after the payment of all of our debts and other liabilities.

Rights and Preferences

Holders of our common stock have no preemptive, conversion, subscription or other rights, and there are no redemption or sinking fund provisions applicable to our common stock. The rights, preferences and privileges of the holders of our common stock are subject to, and may be adversely affected by, the rights of the holders of shares of any series of our preferred stock that we may designate in the future.

Holders

As of September 23, 2013, there were 25 holders of record of our common stock. This does not reflect the number of persons or entities who held stock in nominee or street name through various brokerage firms.

Preferred Stock

Our Board of Directors has the authority, within the limitations and restrictions of our Certificate of Incorporation, to issue up to 10,000,000 shares of preferred stock in one or more series and to fix the powers, preferences and rights thereof without further action by our stockholders. These rights, preferences and privileges could include dividend rights, conversion rights, voting rights, terms of redemption, liquidation preferences, sinking fund terms and the number of shares constituting any series or the designation of such series, any or all of which may be greater than the rights of common stock. The issuance of preferred stock could have the effect of delaying, deferring or preventing a change of control of us or other corporate action. In addition, the issuance of preferred stock could adversely affect the voting power of holders of common stock and the likelihood that such holders will receive dividend payments and payments upon liquidation. In some circumstances, the issuance of preferred stock could have the effect of decreasing the market price of our common stock. No shares of preferred stock are outstanding, and we do not currently intend to issue any shares of preferred stock.

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Warrants

Term. The warrants are exercisable beginning on the date of original issuance and at any time up to the date that is five years after such date.

Anti-Dilution Protection. The exercise price of the warrants is subject to a weighted average anti-dilution adjustment upon the issuance of any common stock, securities convertible into common stock or certain other issuances at a price below the then-existing exercise price of the warrants, with certain exceptions. The terms of the warrants, including these anti-dilution protections, may make it difficult for us to raise additional capital at prevailing market terms in the future.

Exercise Price. The exercise price of the warrants is $ per whole share of common stock. The exercise price is subject to adjustment in the event of certain stock dividends and distributions, stock splits, stock combinations, stock issuances, reclassifications or similar events affecting our common stock, as well as the anti-dilution protection described above.

Exercisability. Holders may exercise the warrants beginning on the date of issuance and at any time during the term of the warrant. The warrants will be exercisable, at the option of each holder, in whole or in part, by delivering to us a duly executed exercise notice accompanied by payment in full for the number of shares of our common stock purchased upon such exercise (except in the case of a cashless exercise as discussed below); provided, however, that a holder (together with its affiliates) may not exercise any portion of the warrant to the extent that the holder would own more than 4.99% of the outstanding common stock after exercise, except that upon at least 61 days’ prior notice from the holder to us, the holder may increase the amount of ownership of outstanding stock after exercising the holder’s warrants up to 9.99% of the number of shares of our common stock outstanding immediately after giving effect to the exercise, as such percentage ownership is determined in accordance with the terms of the warrants.

No Fractional Shares. No fractional shares or scrip representing fractional shares shall be issued upon the exercise of the warrants. As to any fraction of a share which the holder would otherwise be entitled to purchase upon such exercise, we shall, at our election, either pay a cash adjustment in respect of such final fraction in an amount equal to such fraction multiplied by the exercise price of the warrant or round up to the next whole share.

Cashless Exercise. If, at the time a holder exercises its warrant, there is no effective registration statement registering, or the prospectus contained therein is not available for an issuance of shares underlying the warrant to the holder, then in lieu of making the cash payment otherwise contemplated to be made to us upon such exercise in payment of the aggregate exercise price, the holder may elect instead to receive upon such exercise (either in whole or in part) the net number of shares of common stock determined according to a formula set forth in the warrant.

Transferability. Subject to applicable securities laws and the restrictions on transfer set forth in the warrant, the warrant may be transferred, in whole or in part, at the option of the holder upon surrender of the warrant to us together with the appropriate executed instruments of transfer.

Authorized Shares. During the period the warrants are outstanding, we will reserve from our authorized and unissued common stock a sufficient number of shares of common stock that are issuable upon the exercise of the warrants.

Exchange Listing. We do not plan on making an application to list the warrants on any securities exchange or other trading system.

Fundamental Transactions. In the event of any fundamental transaction, as described in the warrants, including any merger with or into another entity, sale of all or substantially all of our assets, tender offer or exchange offer, reclassification of our common stock, reorganization or recapitalization, then upon any subsequent exercise of a warrant, the holder shall have the right to receive as alternative consideration, for each share of our common stock that would have been issuable upon such exercise immediately prior to the occurrence of such fundamental transaction, the number of shares of common stock of the successor or acquiring corporation or of us, if we are the surviving corporation, and any additional consideration receivable upon or as a result of such transaction by a holder of the number of shares of our common stock for which the warrant is exercisable immediately prior to such event. In addition, in the event of a fundamental transaction in which the amount of the alternate consideration is less than the exercise price of the warrant, then we or any successor entity shall pay at the holder’s option, exercisable at any time concurrently with or within ninety (90) days after the consummation of the fundamental transaction, an amount of cash equal to the value of the warrant as determined in accordance with the Black Scholes option pricing model, subject to certain limitations.

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Right as a Stockholder. Except as otherwise provided in the warrants or by virtue of such holder’s ownership of shares of our common stock, the holders of the warrants do not have the rights or privileges of holders of our common stock, including any voting rights, until they exercise their warrants.

Waivers and Amendments. Any term of the warrants issued in the offering may be amended or waived with our written consent and the written consent of the holder of the warrant.

Investor Warrants

In January 2011, we issued 15 warrants to certain accredited investors to purchase an aggregate of 2,125,000 shares of common stock (the “Investor Warrants”). Of these Investor Warrants, 13 warrants to purchase an aggregate of 2,087,500 shares of common stock were outstanding as of September 23, 2013. The Investor Warrants are exercisable until January 19, 2016 at an exercise price of $2.50 per share. The number of shares of common stock to be received upon the exercise of the Investor Warrants and the exercise price of the Investor Warrants are subject to adjustment for reverse and forward stock splits, stock dividends, stock combinations and other similar transactions that occur after January 19, 2011. The holders of the Investor Warrants are entitled to registration rights with respect to the shares issuable upon exercise as described under the caption “Registration Rights”.

Placement Agent Warrants

Rodman & Renshaw LLC acted as our exclusive placement agent in connection with the private placement that closed on January 19, 2011. For the their services in connection with the offering, (1) we paid a cash placement fee equal to 6% of the aggregate purchase price paid by investors that were placed securities in the offering, and we agreed to pay a cash fee equal to 6% of the aggregate cash exercise price to be received by us upon the exercise of the Investor Warrants, payable only in the event of our receipt of any proceeds of such cash exercise, and (2) we issued three (3) warrants to Rodman & Renshaw LLC, Noam Rubinstein and Craig Schwabe to purchase an aggregate of 255,000 shares of our common (the “Placement Warrants”) with the same terms, including the same exercise price, as the Investor Warrants. The number of shares of common stock to be received upon the exercise of the Placement Warrants and the exercise price of the Placement Warrants are subject to adjustment for reverse and forward stock splits, stock dividends, stock combinations and other similar transactions that occur after January 19, 2011.

Registration Rights

Certain holders of our common stock and warrants are entitled to registration rights with respect to their shares under the Securities Act. These registration rights are set forth in our Registration Rights Agreement, dated as of January 12, 2011 (the “Registration Rights Agreement”), pursuant to which we agreed to register with the SEC the resale of (1) 100% of the shares of common stock issued in our January 2011 private placement, (2) all shares issuable upon exercise of the Investor Warrants and (3) any securities issued or then issuable upon any stock split, dividend or other distribution, recapitalization or similar event with respect to the foregoing (the “Registrable Securities”). We agreed to keep the registration statement pursuant to which we registered the Registrable Securities effective under the Securities Act until all Registrable Securities covered by such registration statement have been sold, thereunder or pursuant to Rule 144, or may be sold without volume or manner-of-sale restrictions pursuant to Rule 144 and without the requirement that we be in compliance with the current public information requirement under Rule 144. In the event that we do not maintain the effectiveness of the registration statement during that time frame, we are required to pay liquidated damages to the holders of Registrable Securities in an amount equal to (1) the product of (A) 1.5% multiplied by (B) the quotient of (i) the holder’s Registrable Securities that are not covered by an effective registration statement divided by (ii) the total number of such holder’s Registrable Securities multiplied by and (2) the aggregate purchase price paid by the holder under the purchase agreement.

The registration statement required as described above was orginally filed on February 11, 2011, declared effective on April 8, 2011 and remains in effect.

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Anti-Takeover Effects of Delaware Law and Our Certificate of Incorporation and By-Laws

Section 203 of the Delaware General Corporation Law

We are subject to the “business combination” provisions of Section 203 of the Delaware General Corporation Law (the “DGCL”). In general, Section 203 of the DGCL prohibits a publicly held Delaware corporation from engaging in various “business combination” transactions with an interested stockholder for a period of three (3) years after the date of the transaction in which the person became an interested stockholder, unless:

the transaction is approved by the corporation’s Board of Directors prior to the date the interested stockholder became an interested stockholder;

upon the consummation of the transaction which resulted in the stockholder becoming an interested stockholder, the stockholder owned at least 85% of the voting stock of the corporation outstanding at the time the transaction commenced; or

on or subsequent to such date the business combination is approved by the corporation’s Board of Directors and authorized at an annual or special meeting of the corporation’s stockholders, and not by written consent, by the affirmative vote of at least 66 2/3% of the outstanding voting stock which is not owned by the interested stockholder.

In general, a “business combination” is defined to include mergers, asset sales and other transactions resulting in financial benefit to a stockholder and an “interested stockholder” is a person who, together with affiliates and associates, owns or, within three years prior to the determination of interested stockholder status, previously owned 15% or more of a corporation’s outstanding voting stock. The statute could prohibit or delay mergers, takeover or change in control attempts and, accordingly, may discourage attempts to acquire us even though such a transaction may offer our stockholders the opportunity to sell their stock at a price above the prevailing market price.

Certificate of Incorporation and By-Laws

So long as Clifford Lerner maintains a majority of the voting power of our common stock, he will control all matters submitted to our stockholders for a vote, as well as our overall management and direction, which may have the effect of delaying, deferring or discouraging another person from acquiring control of us.

After such time that Mr. Lerner does not maintain a majority of the voting power of our common stock, the provisions of Delaware law, our Certificate of Incorporation and By-Laws may have the effect of delaying, deferring or discouraging another person from acquiring control of us. Our Certificate of Incorporation and By-Laws provide the following defensive measures:

our stockholders do not have cumulative voting rights and, therefore, a plurality of the votes cast in any election of directors will be able to elect all of our directors;

our Board of Directors may issue shares of preferred stock and determine the price and other terms of those shares, including preferences and voting rights, without stockholder approval;

only our Board of Directors may fill vacancies created by expansion of our board or the resignation or removal of a director;

our stockholders must comply with advance notice provisions in our By-Laws to bring business before or nominate directors for election at a stockholder meeting; and

a majority stockholder vote is required for the alteration, amendment or repeal of the foregoing provisions of our By-Laws by stockholders, and our Board of Directors may amend the By-Laws by the holders of a majority of our shares of common stock that are outstanding.

Transfer Agent and Registrar

The transfer agent and registrar for our common stock is Corporate Stock Transfer, Inc.

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MATERIAL U.S. FEDERAL INCOME AND ESTATE TAX

CONSIDERATIONS FOR NON-U.S. HOLDERS

The following is a general discussion of the material U.S. federal income and estate tax consequences to a non-U.S. holder of the acquisition, ownership and disposition of our common stock and warrants. For purposes of this discussion, a non-U.S. holder is any beneficial owner of our common stock and warrants, other than a partnership (or entity treated as a partnership for U.S. federal income tax purposes), that is not for U.S. federal income tax purposes any of the following:

an individual citizen or resident of the United States;

a corporation (or other entity treated as a corporation for U.S. federal income tax purposes) created or organized in the United States or under the laws of the United States or any state or the District of Columbia;

an estate whose income is subject to U.S. federal income tax regardless of its source; or

a trust (i) the administration of which is subject to the primary supervision of a U.S. court and which has one or more U.S. persons who have the authority to control all substantial decisions of the trust or (ii) which has made a valid election to be treated as a U.S. person.

If a partnership (or an entity treated as a partnership for U.S. federal income tax purposes) holds our common stock and warrants, the tax treatment of a partner in the partnership will generally depend on the status of the partner and upon the activities of the partnership. Accordingly, we urge partnerships that hold our common stock and warrants and partners in such partnerships to consult their own tax advisors regarding the tax treatment of acquiring and holding our common stock and warrants.

This discussion assumes that a non-U.S. holder will hold our common stock and warrants as a capital asset (generally, property held for investment). This discussion does not address all aspects of U.S. federal income taxation or any aspects of state, local or non-U.S. taxation, nor does it consider any U.S. federal income tax considerations that may be relevant to non-U.S. holders which may be subject to special treatment under U.S. federal income tax laws, including, without limitation, U.S. expatriates, controlled foreign corporations, passive foreign investment companies, insurance companies, tax-exempt or governmental organizations, dealers in securities or currency, banks or other financial institutions, and investors that hold our common stock or warrants as part of a hedge, straddle or conversion transaction. Furthermore, the following discussion is based on current provisions of the Internal Revenue Code of 1986, as amended (the “Code”), and Treasury Regulations and administrative and judicial interpretations thereof, all as in effect on the date hereof, and all of which are subject to change, possibly with retroactive effect.

We urge each prospective investor to consult a tax advisor regarding the U.S. federal, state, local and non-U.S. income and other tax consequences of acquiring, holding and disposing of shares of our common stock and warrants.

Allocation of Purchase Price

A non-U.S holder’s aggregate tax basis for its common stock and warrants should be allocated among such common stock and warrants in proportion to their relative fair market values at the time of acquisition.

Dividends on Common Stock

If we pay dividends on our common stock, those payments will constitute dividends for U.S. tax purposes to the extent paid from our current or accumulated earnings and profits, as determined under U.S. federal income tax principles. To the extent those dividends exceed our current and accumulated earnings and profits, the dividends will constitute a return of capital and will first reduce a holder’s adjusted tax basis in its common stock, but not below zero, and then will be treated as gain from the sale of the common stock (see “— Gain on Disposition of Common Stock”).

Any dividend paid out of earnings and profits to a non-U.S. holder of our common stock generally will be subject to U.S. withholding tax either at a rate of 30% of the gross amount of the dividend or such lower rate as may be specified by an applicable tax treaty. To receive the benefit of a reduced treaty rate, a non-U.S. holder generally must provide us with an Internal Revenue Service (“IRS”) Form W-8BEN certifying qualification for the reduced rate. A non-U.S. holder eligible for a reduced rate of U.S. federal withholding tax pursuant to an applicable income tax treaty may obtain a refund of any excess amounts withheld by timely filing an appropriate claim for refund with the IRS.

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Notwithstanding the foregoing, dividends received by a non-U.S. holder that are effectively connected with a U.S. trade or business conducted by the non-U.S. holder will be exempt from such withholding tax. To obtain this exemption, the non-U.S. holder must provide us with an IRS Form W-8ECI properly certifying such exemption. Such effectively connected dividends, although not subject to withholding tax, generally will be subject to U.S. federal income tax on a net income basis at the same graduated U.S. tax rates generally applicable to U.S. persons, net of certain deductions and credits, subject to any applicable tax treaty providing otherwise. In addition to the income tax described above, dividends received by corporate non-U.S. holders that are effectively connected with a U.S. trade or business of the corporate non-U.S. holder may be subject to a branch profits tax at a rate of 30% or such lower rate as may be specified by an applicable tax treaty.

Tax Consequences of Exercise or Lapse of Warrants

A non-U.S. holder will not recognize gain or loss upon exercise of a warrant. The tax basis of each share of common stock acquired upon exercise of a warrant will equal the sum of the warrant’s exercise price plus the tax basis of the warrant exercised. The holding period of any share of common stock acquired through the exercise of a warrant will begin with the date of exercise. If a warrant is allowed to lapse unexercised, the non-U.S. holder will not recognize a capital loss unless such holder is otherwise subject to U.S. federal income tax.

Gain on Disposition of Common Stock or Warrants

A non-U.S. holder generally will not be subject to U.S. federal income tax on any gain realized upon the sale or other disposition of our common stock or warrants unless:

the gain is effectively connected with a U.S. trade or business of the non-U.S. holder and, if required by an applicable tax treaty, is attributable to a U.S. permanent establishment maintained by such non-U.S. holder;

the non-U.S. holder is an individual who is present in the United States for a period or periods aggregating 183 days or more during the calendar year in which the sale or disposition occurs and certain other conditions are met; or

we are or have been a U.S. real property holding corporation (“USRPHC”) for U.S. federal income tax purposes and the non-U.S. holder holds or has held, directly or indirectly, at any time within the shorter of the five-year period preceding the disposition or the non-U.S. holder’s holding period, more than 5% of our common stock. Generally, a corporation is a U.S. real property holding corporation if the fair market value of its U.S. real property interests equals or exceeds 50% of the sum of the fair market value of its worldwide real property interests and its other assets used or held for use in a trade or business.

In the case of a non-U.S. holder described in the first bullet point immediately above, the gain will be subject to U.S. federal income tax on a net income basis generally in the same manner as if the non-U.S. holder were a U.S. person as defined under the Code (unless an applicable income tax treaty provides otherwise), and a non-U.S. holder that is a foreign corporation may be subject to an additional branch profits tax equal to 30% of its effectively connected earnings and profits attributable to such gain (or at such lower rate as may be specified by an applicable income tax treaty). In the case of an individual non-U.S. holder described in the second bullet point immediately above, except as otherwise provided by an applicable income tax treaty, the gain, which may be offset by certain U.S.-source capital losses, will be subject to a flat 30% tax.

We believe we are not and do not anticipate becoming a USRPHC for U.S. federal income tax purposes. If, however, we are or become a USRPHC, so long as our common stock is considered to be regularly traded on an established securities market, only a non-U.S. holder who actually or constructively holds or held (at any time during the shorter of the five year period ending on the date of disposition or the non-U.S. holder’s holding period) more than 5% of our common stock will be subject to U.S. federal income tax, under the third bullet point immediately above, on the disposition of our common stock. Each non-U.S. holder should consult with its tax advisor about the consequences that could result if we are, or become, a USRPHC.

Backup Withholding and Information Reporting

Generally, we must report annually to the IRS the amount of dividends paid to each non-U.S. holder, and the amount, if any, of tax withheld with respect to those dividends. A similar report is sent to each non-U.S. holder. These information reporting requirements apply even if withholding was not required. Pursuant to tax treaties or other agreements, the IRS may make its reports available to tax authorities in the recipient’s country of residence.

Payments of dividends to a non-U.S. holder may be subject to backup withholding (at a rate of 28%) unless the non-U.S. holder establishes an exemption, for example, by properly certifying its non-U.S. status on an IRS Form W-8BEN or another appropriate version of IRS Form W-8. Notwithstanding the foregoing, backup withholding also may apply if we have actual knowledge, or reason to know, that the beneficial owner is a U.S. person that is not an exempt recipient.

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Payments of the proceeds from sale or other disposition by a non-U.S. holder of our common stock or warrants effected outside the United States by or through a foreign office of a broker generally will not be subject to information reporting or backup withholding. However, information reporting will apply to those payments if the broker does not have documentary evidence that the holder is a non-U.S. holder, an exemption is not otherwise established, and the broker has certain relationships with the United States.

Payments of the proceeds from a sale or other disposition by a non-U.S. holder of our common stock or warrants effected by or through a U.S. office of a broker generally will be subject to information reporting and backup withholding (at a rate of 28%) unless the non-U.S. holder establishes an exemption, for example, by properly certifying its non-U.S. status on an IRS Form W-8BEN or another appropriate version of IRS Form W-8. Notwithstanding the foregoing, information reporting and backup withholding also may apply if the broker has actual knowledge, or reason to know, that the holder is a U.S. person that is not an exempt recipient.

Backup withholding is not an additional tax. Rather, the U.S. income tax liability of persons subject to backup withholding will be reduced by the amount of tax withheld. If withholding results in an overpayment of taxes, a refund may be obtained, provided that the required information is timely furnished to the IRS.

Foreign Account Tax Compliance Act

The Foreign Account Tax Compliance Act, or FATCA, imposes a 30% withholding tax on any “withholdable payment” to (i) a “foreign financial institution” (as specifically defined for this purpose), unless such institution enters into an agreement with the U.S. government to collect certain amounts and provide to the U.S. tax authorities substantial information regarding account holders or (ii) a foreign entity that is not a financial institution, unless such entity provides the withholding agent with a certification that the foreign entity does not have any substantial U.S. owners or provides the withholding agent with certain information relating to each of its substantial U.S. owners. Under certain limited circumstances, a non-U.S. holder might be eligible for refunds or credits of such taxes.

“Withholdable payments” include U.S.-source payments otherwise subject to nonresident withholding tax, and also include the entire gross proceeds from the sale of any equity of U.S. issuers. The withholding tax will apply regardless of whether the payment would otherwise be exempt from U.S. nonresident withholding tax (e.g., under the portfolio interest exemption or as capital gain).

This withholding will apply to U.S.-source payments otherwise subject to nonresident withholding tax made on or after July 1, 2014 and to the payment of gross proceeds from the sale of any equity of U.S. issuers made on or after January 1, 2017.

Estate Tax

Our common stock owned or treated as owned by an individual who is not a citizen or resident of the United States (as specifically defined for U.S. federal estate tax purposes) at the time of death will be includible in the individual’s gross estate for U.S. federal estate tax purposes and may be subject to U.S. federal estate tax unless an applicable estate tax treaty provides otherwise.

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SHARES ELIGIBLE FOR FUTURE SALE

Upon the closing of this offering, we will have outstanding an aggregate of approximately shares of common stock, or shares if the underwriters exercise their over-allotment option in full. Of these shares, shares to be sold in this offering, or shares if the underwriters exercise their over-allotment option in full, will be freely tradable without restriction or need for further registration under the Securities Act, unless the shares are held by any of our affiliates, as that term is defined in Rule 144 of the Securities Act. All remaining shares were issued and sold by us in private transactions and are eligible for public sale only if registered under the Securities Act or sold in accordance with Rule 144 which is discussed below.

As a result of the lock-up agreements described below and the provisions of Rule 144 under the Securities Act, the shares of common stock that are currently subject to lock-up agreement will be available for sale in the public market as follows:

none of these shares will be eligible for sale on the date of this prospectus; and

all of these shares will be eligible for sale upon the expiration of the lock-up agreements, as more particularly and except as described below, beginning after expiration of the lock-up period pursuant to Rule 144.

Rule 144

In general, under Rule 144, beginning immediately after the date of this prospectus, a person who is not our affiliate, has not been our affiliate for the previous three months, and who has beneficially owned shares of common stock for at least six months may sell all such shares. An affiliate or a person who has been our affiliate within the previous 90 days, and who has beneficially owned shares for at least six months, may sell within any three-month period a number of shares that does not exceed the greater of:

one percent of the number of shares then outstanding, which will equal approximately shares immediately after this offering; and

the average weekly trading volume of our common stock during the four calendar weeks preceding the filing of a notice on Form 144 with respect to the sale.

All sales under Rule 144 are subject to the availability of current public information about us. Sales under Rule 144 by affiliates or persons who have been affiliates within the previous 90 days are also subject to manner of sale provisions and notice requirements. Upon expiration of the 90-day lock-up period, subject to any extension of the lock-up period under circumstances described below, approximately 34,292,157 shares of our outstanding common stock that are subject to the lock-up agreements will be eligible for sale under Rule 144.

Registration Statement on Form S-8

On May 24, 2011, we filed a registration statement on Form S-8 under the Securities Act covering an aggregate of 7,500,000 shares of common stock subject to outstanding options or issuable pursuant to the Snap Interactive, Inc. 2011 Long-Term Incentive Plan. These shares are available for sale in the open market, unless such shares are subject to vesting restrictions with us or are otherwise subject to the lock-up agreements or manner of sale and notice requirements that apply to affiliates under Rule 144.

Lock-up Agreements

We, our President, Chief Executive Officer and sole director, Chief Financial Officer and Co-Founder, who beneficially own in the aggregate approximately 34,292,157 shares, or 68.4%, of our outstanding common stock as of September 23, 2013, have agreed, subject to certain exceptions, for a period of 90 days after the date of the final prospectus supplement, not to offer, sell, contract to sell, pledge, grant any option to purchase, make any short sale or otherwise dispose of, directly or indirectly any shares of common stock or any securities convertible into or exchangeable for our common stock without the prior written consent of the underwriter, subject to certain exceptions for previously existing 10b5-1 plans. This 90-day period may be extended if (1) during the last 17 days of the 90-day period, we issue an earnings release or material news or a material event regarding us occurs or (2) prior to the expiration of the 90-day period, we announce that we will release earnings results during the 16-day period beginning on the last day of the 90-day period, then the period of such extension will be 18 days, beginning on the issuance of the earnings release or the occurrence of the material news or material event, unless waived by the underwriter. The underwriter may, in its sole discretion and at any time or from time to time before the termination of the lock-up period, without notice, release all or any portion of the securities subject to lock-up agreements.

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UNDERWRITING

We have entered into an underwriting agreement with Roth Capital Partners, LLC with respect to the shares of common stock and warrants, subject to this offering. Subject to certain conditions, we have agreed to sell to the underwriter and the underwriter has agreed to purchase, the number of shares of common stock and corresponding warrants to purchase that number of shares of common stock provided below opposite its name.

Underwriters		Number of Shares of Common Stock				Number of Warrants
Roth Capital Partners, LLC

The underwriter is offering the shares of common stock and corresponding warrants, subject to their acceptance of the shares of common stock and corresponding warrants from us and subject to prior sale. No warrant will be issued in the offering, including in connection with the over-allotment option described below, without an accompanying share of common stock. The underwriting agreement provides that the obligation of the underwriter to pay for and accept delivery of the shares of common stock and corresponding warrants offered by this prospectus is subject to the approval of certain legal matters by their counsel and to certain other conditions. The underwriter is obligated to take and pay for all of the shares of common stock and warrants if any such shares and warrants are taken. However, the underwriter is not required to take or pay for the shares of common stock and/or warrants covered by the underwriter’s over-allotment option described below.

Over-Allotment Option

We have granted the underwriter an option, exercisable for 30 days from the date of this prospectus, to purchase up to an aggregate of additional shares of common stock and/or additional warrants to purchase up to shares of common stock to cover over-allotments, if any, at the public offering prices set forth on the cover page of this prospectus, less underwriting discounts and commissions. The underwriter may exercise this option solely for the purpose of covering over-allotments, if any, made in connection with the offering of the shares of common stock and the warrants offered by this prospectus. If the underwriter exercises the over-allotment option, the underwriter must deliver to each purchaser one share of common stock and the corresponding warrant to purchase shares of common stock. In order to satisfy its obligation, the underwriter may elect to purchase shares of common stock or warrants or both securities from us. The underwriter may elect to purchase shares of common stock in the open market instead of purchasing shares of common stock from us. In determining whether to purchase shares of common stock in the open market or from us, the underwriter will review overall market conditions, the depth of the liquidity of our common stock and the performance of the trading price for our common stock. Since the warrants will not be listed and are not expected to trade, the underwriter cannot purchase warrants in the open market and must have the ability to purchase the corresponding warrants from us so that the underwriter can deliver a share of common stock and the corresponding warrant to purchasers in the over-allotment option.

Commission and Expenses

The underwriter has advised us that it proposes to offer the shares of common stock and warrants to the public at the initial public offering prices set forth on the cover page of this prospectus and to certain dealers at that price less a concession not in excess of $ per share of common stock and corresponding warrant. After this offering, the initial public offering price and concession may be changed by the underwriter. No such change shall change the amount of proceeds to be received by us as set forth on the cover page of this prospectus. The per share of common stock and corresponding warrant are offered by the underwriters as stated herein, subject to receipt and acceptance by them and subject to their right to reject any order in whole or in part. The underwriter has informed us that it does not intend to confirm sales to any accounts over which it exercises discretionary authority.

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The following table shows the underwriting discounts and commissions payable to the underwriter by us in connection with this offering. Such amounts are shown assuming both no exercise and full exercise of the underwriter’s over-allotment option to purchase additional shares and/or warrants.

Per Share of

Common

Stock

and

Corresponding

Warrant

Total Without

Exercise of

Over-

Allotment

Option

Total With

Exercise of

Over-

Allotment

Option

Public offering price

Underwriting discounts and commissions payable by us

We estimate that expenses payable by us in connection with this offering, other than the underwriting discounts and commissions referred to above, will be approximately $ . We have agreed to reimburse the underwriter for certain out-of-pocket expenses not to exceed $ for all expenses, including legal fees and expenses.

Underwriter’s Warrants

We have also agreed to issue to the underwriter warrants to purchase a number of our shares of common stock equal to an aggregate of 5% of the shares of common stock sold in this offering. The warrants will have an exercise price equal to % of the public offering price of the shares of common stock sold in this offering and may be exercised on a cashless basis. The warrants are not redeemable by us. This prospectus also covers the sale of the underwriter’s warrants and shares of common stock issuable upon the exercise of the underwriter’s warrants. The warrants will provide for adjustment in the number and price of such warrants (and the shares of common stock underlying such warrants) in the event of recapitalization, merger or other fundamental transaction. The warrants and the underlying shares of common stock have been deemed compensation by FINRA and are therefore subject to FINRA Rule 5110(g)(1). In accordance with FINRA Rule 5110(g)(1), neither the underwriter warrants nor any shares of our common stock issued upon exercise of the underwriter warrants may be sold, transferred, assigned, pledged, or hypothecated, or be the subject of any hedging, short sale, derivative, put, or call transaction that would result in the effective economic disposition of such securities by any person for a period of 180 days immediately following the date of effectiveness of the registration statement for the offering pursuant to which the underwriter warrants are being issued, except for certain transfers of any security, including the following:

by operation of law or by reason of reorganization of us;

to any FINRA member firm participating in this offering and the officers or partners thereof, if all securities so transferred remain subject to the lock-up restriction described above for the remainder of the time period;

if the aggregate amount of our securities held by either an underwriter or a related person do not exceed 1% of the securities being offered;

that is beneficially owned on a pro-rata basis by all equity owners of an investment fund, provided that no participating member manages or otherwise directs investments by the fund, and participating members in the aggregate do not own more than 10% of the equity in the fund; or

the exercise or conversion of any security, if all securities received remain subject to the lock-up restriction set forth above for the remainder of the time period.

In addition, in accordance with FINRA Rule 5110(f)(2)(H), the underwriter warrants may not contain certain terms.

Indemnification

We have agreed to indemnify the underwriter against certain liabilities, including liabilities under the Securities Act, and liabilities arising from breaches of representations and warranties contained in the underwriting agreement, or to contribute to payments that the underwriter may be required to make in respect of those liabilities.

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Lock-up Agreements

We, our President, Chief Executive Officer and sole director, Chief Financial Officer and Co-Founder have agreed, subject to certain exceptions, for a period of 90 days after the date of the underwriting agreement, not to offer, sell, contract to sell, pledge, grant any option to purchase, make any short sale or otherwise dispose of, directly or indirectly any shares of common stock or any securities convertible into or exchangeable for our common stock either owned as of the date of the underwriting agreement or thereafter acquired without the prior written consent of the underwriter, subject to certain exceptions for previously existing 10b5-1 plans. This 90-day period may be extended if (1) during the last 17 days of the 90-day period, we issue an earnings release or material news or a material event regarding us occurs or (2) prior to the expiration of the 90-day period, we announce that we will release earnings results during the 16-day period beginning on the last day of the 90-day period, then the period of such extension will be 18 days, beginning on the issuance of the earnings release or the occurrence of the material news or material event, unless waived by the underwriter. The underwriter may, in its sole discretion and at any time or from time to time before the termination of the lock-up period, without notice, release all or any portion of the securities subject to lock-up agreements.

Electronic Distribution

This prospectus in electronic format may be made available on websites or through other online services maintained by the underwriter, or by its affiliates. Other than this prospectus in electronic format, the information on any underwriter’s website and any information contained in any other website maintained by any underwriter is not part of this prospectus, the related registration statement of which this prospectus forms a part, has not been approved and/or endorsed by us or any underwriter in its capacity as underwriter, and should not be relied upon by investors.

Price Stabilization, Short Positions and Penalty Bids

In connection with the offering the underwriter may engage in stabilizing transactions, over-allotment transactions, syndicate covering transactions and penalty bids in accordance with Regulation M under the Exchange Act:

Stabilizing transactions permit bids to purchase the underlying security so long as the stabilizing bids do not exceed a specified maximum.

Over-allotment involves sales by the underwriter of shares and warrants in excess of the number of shares and warrants the underwriter is obligated to purchase, which creates a syndicate short position. The short position may be either a covered short position or a naked short position. In a covered short position, the number of shares and warrants over-allotted by the underwriters is not greater than the number of shares and warrants that it may purchase in the over-allotment option. In a naked short position, the number of shares and warrants involved is greater than the number of shares and warrants in the over-allotment option. The underwriter may close out any covered short position by either exercising their over-allotment option and/or purchasing shares in the open market. Since the warrants will not be listed and are not expect to trade, the underwriter cannot purchase the warrants in the open market and, as a result, the underwriter cannot and will not enter into naked short positions.

Syndicate covering transactions generally involve purchases of shares of the common stock and warrants in the open market after the distribution has been completed in order to cover syndicate short positions. In determining the source of shares and warrants to close out the short position, the underwriter will consider, among other things, the price of shares and warrants available for purchase in the open market as compared to the price at which it may purchase shares and warrants through the over-allotment option. If the underwriter sells more shares and warrants than could be covered by the over-allotment option, a naked short position, the position can only be closed out by buying shares and warrants in the open market. A naked short position is more likely to be created if the underwriter is concerned that there could be downward pressure on the price of the shares and warrants in the open market after pricing that could adversely affect investors who purchase in the offering. Since the warrants will not be listed and are not expect to trade, the underwriter cannot purchase the warrants in the open market and, as a result, the underwriter cannot and will not enter into naked short positions.

Penalty bids permit the underwriter to reclaim a selling concession from a syndicate member when the security originally sold by the syndicate member is purchased in a stabilizing or syndicate covering transaction to cover syndicate short positions.

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These stabilizing transactions, syndicate covering transactions and penalty bids may have the effect of raising or maintaining the market price of our common stock or preventing or retarding a decline in the market price of the common stock. As a result, the price of our common stock may be higher than the price that might otherwise exist in the open market. Neither we nor the underwriter make any representation or prediction as to the direction or magnitude of any effect that the transactions described above may have on the price of the common stock. In addition, neither we nor the underwriter make any representations that the underwriters will engage in these stabilizing transactions or that any transaction, once commenced, will not be discontinued without notice.

Other

The underwriter and/or its affiliates have provided, and may in the future provide, various investment banking and other financial services for us for which services they have received and, may in the future receive, customary fees. Except for services provided in connection with this offering, the underwriters have not provided any investment banking or other financial services during the 180-day period preceding the date of this prospectus and we do not expect to retain the underwriters to perform any investment banking or other financial services for at least 90 days after the date of this prospectus.

Notice to Investors

Notice to Investors in the United Kingdom

In relation to each Member State of the European Economic Area which has implemented the Prospectus Directive (each, a “Relevant Member State”) an offer to the public of any securities which are the subject of the offering contemplated by this prospectus may not be made in that Relevant Member State except that an offer to the public in that Relevant Member State of any such securities may be made at any time under the following exemptions under the Prospectus Directive, if they have been implemented in that Relevant Member State:

(a) to legal entities which are authorized or regulated to operate in the financial markets or, if not so authorized or regulated, whose corporate purpose is solely to invest in securities;

(b) to any legal entity which has two or more of (1) an average of at least 250 employees during the last financial year; (2) a total balance sheet of more than €43,000,000 and (3) an annual net turnover of more than €50,000,000, as shown in its last annual or consolidated accounts;

(c) by the underwriters to fewer than 100 natural or legal persons (other than qualified investors as defined in the Prospectus Directive); or

(d) in any other circumstances falling within Article 3(2) of the Prospectus Directive, provided that no such offer of these securities shall result in a requirement for the publication by the issuer or the underwriters of a prospectus pursuant to Article 3 of the Prospectus Directive.

For the purposes of this provision, the expression an “offer to the public” in relation to any of the securities in any Relevant Member State means the communication in any form and by any means of sufficient information on the terms of the offer and any such securities to be offered so as to enable an investor to decide to purchase any such securities, as the same may be varied in that Member State by any measure implementing the Prospectus Directive in that Member State and the expression “Prospectus Directive” means Directive 2003/71/EC and includes any relevant implementing measure in each Relevant Member State.

The underwriter has represented, warranted and agreed that:

(a) it has only communicated or caused to be communicated and will only communicate or cause to be communicated any invitation or inducement to engage in investment activity (within the meaning of section 21 of the Financial Services and Markets Act 2000 (the FSMA)) received by it in connection with the issue or sale of any of the securities in circumstances in which section 21(1) of the FSMA does not apply to the issuer; and

(b) it has complied with and will comply with all applicable provisions of the FSMA with respect to anything done by it in relation to the securities in, from or otherwise involving the United Kingdom.

European Economic Area

In particular, this document does not constitute an approved prospectus in accordance with European Commission’s Regulation on Prospectuses no. 809/2004 and no such prospectus is to be prepared and approved in connection with this offering. Accordingly, in relation to each Member State of the European Economic Area which has implemented the Prospectus Directive (being the Directive of the European Parliament and of the Council 2003/71/EC and including any relevant implementing measure in each Relevant Member State) (each, a Relevant Member State), with effect from and including the date on which the Prospectus Directive is implemented in that Relevant Member State (the Relevant Implementation Date) an offer of securities to the public may not be made in that Relevant Member State prior to the publication of a prospectus in relation to such securities which has been approved by the competent authority in that Relevant Member State or, where appropriate, approved in another Relevant Member State and notified to the competent authority in that Relevant Member State, all in accordance with the Prospectus Directive, except that it may, with effect from and including the Relevant Implementation Date, make an offer of securities to the public in that Relevant Member State at any time:

to legal entities which are authorized or regulated to operate in the financial markets or, if not so authorized or regulated, whose corporate purpose is solely to invest in securities;

to any legal entity which has two or more of (1) an average of at least 250 employees during the last financial year; (2) a total balance sheet of more than €43,000,000; and (3) an annual net turnover of more than €50,000,000, as shown in the last annual or consolidated accounts; or

in any other circumstances which do not require the publication by the Issuer of a prospectus pursuant to Article 3 of the Prospectus Directive.

For the purposes of this provision, the expression an “offer of securities to the public” in relation to any of the securities in any Relevant Member State means the communication in any form and by any means of sufficient information on the terms of the offer and the securities to be offered so as to enable an investor to decide to purchase or subscribe for the securities, as the same may be varied in that Member State by any measure implementing the Prospectus Directive in that Member State. For these purposes the shares and warrants offered hereby are “securities.”

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LEGAL MATTERS

The validity of the common stock offered hereby will be passed upon for us by Haynes and Boone, LLP, New York, New York. Certain legal matters will be passed upon for the underwriter by Buchalter Nemer, a professional corporation, Los Angeles, California.

EXPERTS

The consolidated financial statements of Snap Interactive, Inc. at December 31, 2012, and for the year then ended, appearing in this prospectus have been audited by Ernst & Young LLP, independent registered public accounting firm, as set forth in its report thereon appearing elsewhere herein, and are included in reliance upon such report given on the authority of such firm as an expert in accounting and auditing.

The consolidated financial statements of Snap Interactive, Inc. at December 31, 2011, and for the year then ended, appearing in this prospectus have been audited by Liggett, Vogt & Webb, P.A., independent registered public accounting firm, as set forth in its report thereon appearing elsewhere herein, and are included in reliance upon such report given on the authority of such firm as an expert in accounting and auditing.

WHERE YOU CAN FIND MORE INFORMATION

We file annual, quarterly and current reports, proxy statements and other information with the SEC. You can read these SEC filings, and this prospectus, over the Internet at the SEC’s website at www.sec.gov. You may also read and copy any materials we file with the SEC at its public reference facilities at 100 F Street, N.E., Washington, D.C. 20549 on official business days during the hours of 10:00 a.m. to 3:00 p.m. You may also obtain copies of the documents at prescribed rates by writing to the Public Reference Section of the SEC at 100 F Street, N.E., Washington, D.C. 20549. Please call the SEC at 1-800-SEC-0330 for further information on the operation of the public reference facilities. You may also access our annual, quarterly and current reports, proxy statements and other information we file with the SEC on our website at investors.snap-interactive.com/sec-filings.

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INDEX TO FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA

Audited		Page Number

Report of Independent Registered Public Accounting Firms		F-2

Consolidated Balance Sheets as of December 31, 2012 and 2011		F-4

Consolidated Statements of Operations for the Years Ended December 31, 2012 and 2011		F-5

Consolidated Statement of Changes in Stockholders’ Equity for the Years Ended December 31, 2012 and 2011		F-6

Consolidated Statements of Cash Flows for the Years Ended December 31, 2012 and 2011		F-7

Notes to Consolidated Financial Statements		F-8 - F-21

Unaudited		Page Number

Report of Independent Registered Public Accounting Firms

Consolidated Balance Sheets as of June 30, 2013 and 2012		F-22

Consolidated Statements of Operations for the Six Months Ended June 30, 2013 and 2012		F-23

Consolidated Statement of Changes in Stockholders’ Equity for the Six Months Ended June 30, 2013 and 2012		F-24

Consolidated Statements of Cash Flows for the Six Months Ended June 30, 2013 and 2012		F-25

Notes to Consolidated Financial Statements		F-26 - F-34

F-1

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Report of Independent Registered Public Accounting Firms

To the Board of Directors and Stockholders of

Snap Interactive, Inc.

We have audited the accompanying consolidated balance sheet of Snap Interactive, Inc. (the “Company”) as of December 31, 2012 and the related consolidated statement of operations, stockholders' equity, and cash flows for the year ended December 31, 2012. These financial statements are the responsibility of the Company's management. Our responsibility is to express an opinion on these financial statements based on our audit.

We conducted our audit in accordance with the standards of the Public Company Accounting Oversight Board (United States). Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. We were not engaged to perform an audit of the Company’s internal control over financial reporting. Our audit included consideration of internal control over financial reporting as a basis for designing audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the Company’s internal control over financial reporting. Accordingly, we express no such opinion. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audit provides a reasonable basis for our opinion.

In our opinion, the financial statements referred to above present fairly, in all material respects, the consolidated financial position of Snap Interactive, Inc. as of December 31, 2012 and the consolidated results of its operations and its cash flows for the year ended December 31, 2012, in conformity with U.S. generally accepted accounting principles.

/S/ ERNST & YOUNG LLP

New York, New York

March 14, 2013

F-2

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To the Board of Directors of:

Snap Interactive, Inc. and Subsidiaries

We have audited the accompanying consolidated balance sheet of Snap Interactive, Inc. and Subsidiaries as of December 31, 2011 (restated), and the related statements of operations, changes in stockholders' equity and cash flows for the year then ended. These financial statements are the responsibility of the Company's management. Our responsibility is to express an opinion on these financial statements based on our audit.

In our opinion, the consolidated financial statements referred to above present fairly in all material respects, the consolidated financial position of Snap Interactive, Inc. and Subsidiaries as of December 31, 2011 (restated) and the results of its operations and its cash flows for the year then ended (restated), in conformity with accounting principles generally accepted in the United States of America.

As discussed in Note 16, the accompanying consolidated financial statements as of December 31, 2011, and for the year then ended have been restated.

LIGGETT, VOGT & WEBB, P.A.

Certified Public Accountants

Boynton Beach, Florida

March 30, 2012, except for Note 16 as to which the date is December 7, 2012.

F-3

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SNAP INTERACTIVE, INC.

CONSOLIDATED BALANCE SHEETS

	December 31,			December 31,
	2012			2011
ASSETS
Current assets:
Cash and cash equivalents	$	5,357,596		$	2,397,828
Restricted cash		105,000			-
Credit card holdback receivable		287,293			441,840
Accounts receivable, net of allowances and reserves of $36,129 and $184,964, respectively		320,019			480,190
Accrued interest receivable		-			5,907
Investments		-			6,481,205
Prepaid expense and other current assets		204,824			96,815
Total current assets		6,274,732			9,903,785
Fixed assets and intangible assets, net		548,549			578,463
Notes receivable		165,716			138,803
Security deposits		-			19,520
Total assets	$	6,988,997		$	10,640,571

LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Accounts payable	$	799,183		$	1,027,841
Accrued expenses and other current liabilities		240,049			864,983
Deferred revenue		2,524,229			3,138,406
Total current liabilities		3,563,461			5,031,230
Long term deferred rent		48,340			61,640
Warrant liability		1,616,325			937,000
Total liabilities		5,228,126			6,029,870

Stockholders' equity:
Preferred Stock, $0.001 par value, 10,000,000 shares authorized, none issued and outstanding		-			-
Common Stock, $0.001 par value, 100,000,000 shares authorized, 44,007,826 and 38,580,261 shares issued, respectively, and 38,832,826 and 38,580,261 shares outstanding, respectively		38,833			38,580
Additional paid-in capital		9,437,422			8,256,864
Accumulated deficit		(7,715,384	)		(3,684,743	)
Total stockholders' equity		1,760,871			4,610,701
Total liabilities and stockholders' equity	$	6,988,997		$	10,640,571

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

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SNAP INTERACTIVE, INC.

CONSOLIDATED STATEMENTS OF OPERATIONS

	For the Years Ended
	December 31,
	2012			2011
Revenues:
Subscription revenue	$	18,910,070		$	18,781,368
Advertising revenue		336,666			374,175
Total revenues		19,246,736			19,155,543
Costs and expenses:
Programming, hosting and technology		4,444,550			2,587,822
Compensation		3,625,117			1,976,384
Professional fees		703,125			558,136
Advertising and marketing		9,876,097			14,626,963
General and administrative		3,953,795			3,070,178
Total costs and expenses		22,602,684			22,819,483
Loss from operations		(3,355,948	)		(3,663,940	)
Interest income, net		21,517			28,858
Mark-to-market adjustment on warrant liability		(679,325	)		2,038,000
Other income (expense)		(16,885	)		3,909
Net loss before income taxes:		(4,030,641	)		(1,593,173	)
Provision for income taxes		-			-
Net loss	$	(4,030,641	)	$	(1,593,173	)

Net loss per common share:
Basic and diluted	$	(0.10	)	$	(0.04	)

Weighted average number of common shares used in calculating net loss per common share:
Basic and diluted		38,611,758			37,619,208

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

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SNAP INTERACTIVE, INC.

CONSOLIDATED STATEMENT OF CHANGES IN STOCKHOLDERS’ EQUITY

	Common Stock				Additional Paid-			Accumulated			Deferred			Stockholders’
	Shares		Amount		in Capital			Deficit			Compensation			Equity
Balance at December 31, 2010		33,210,756	$	33,211	$	2,730,659		$	(2,091,570	)	$	(7,603	)	$	664,697

Deferred compensation realized		-		-		-						7,603			7,603

Stock issued for services to employees		248,848		249		(249	)					-			-

Stock issued for services to third party		10,000		10		20,790						-			20,800

Stock issued in exchange for convertible note payable		823,157		823		71,136						-			71,959

Stock and warrants issued for cash ($2/sh, less stock offering costs)		4,250,000		4,250		7,911,450						-			7,915,700

Stock issued in exchange for warrants ($2.50/sh, less stock offering costs)		37,500		38		88,087						-			88,125

Stock-based compensation expense for stock options		-		-		321,281						-			321,281

Stock-based compensation expense for restricted stock awards		-		-		88,710						-			88,710

Warrant liability		-		-		(2,975,000	)					-			(2,975,000	)

Net loss		-		-		-			(1,593,173	)		-			(1,593,173	)

Balance at December 31, 2011		38,580,261	$	38,580	$	8,256,864		$	(3,684,743	)	$	-		$	4,610,701

Exercise of stock options for common stock		252,565		253		50,598			-			-			50,851

Stock-based compensation expense for stock options		-		-		814,996			-			-			814,996

Stock-based compensation expense for restricted stock awards		-		-		314,964			-			-			314,964

Net loss		-		-		-			(4,030,641	)		-			(4,030,641	)

Balance at December 31, 2012		38,832,826	$	38,833	$	9,437,422		$	(7,715,384	)	$	-		$	1,760,871

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

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SNAP INTERACTIVE, INC.

CONSOLIDATED STATEMENTS OF CASH FLOWS

	Year Ended
	December 31,
	2012			2011
Cash flows from operating activities:
Net loss	$	(4,030,641	)	$	(1,593,173	)
Adjustments to reconcile net loss to net cash used in operating activities:
Depreciation and amortization		151,007			51,180
Amortization of investment premium		6,205			8,734
Stock-based compensation expense		1,129,960			438,395
Mark-to-market adjustment on warrant liability		679,325			(2,038,000	)
Loss on disposal of fixed assets		16,885			453
Changes in operating assets and liabilities:
Restricted cash		(105,000	)		-
Credit card holdback receivable		154,547			(202,388	)
Accounts receivable		160,171			(356,177	)
Accrued interest paid		5,907			(5,907	)
Prepaid expense and other current assets		(108,009	)		(22,554	)
Security deposit		19,520			(1,335	)
Accounts payable and accrued expenses and other current liabilities		(843,470	)		960,266
Deferred rent		(23,421	)		102,115
Deferred revenue		(614,177	)		1,200,491
Accrued interest payable - related party		-			2,358
Net cash used in operating activities		(3,401,191	)		(1,455,542	)

Cash flows from investing activities:
Purchase of fixed assets		(137,978	)		(540,591	)
Redemption (purchase) of short-term investments		6,475,000			(6,489,937	)
Repayment of notes receivable issued to employees		11,320			-
Issuance of notes receivable issued to employees and accrued interest		(38,233	)		(138,803	)
Net cash provided by (used in) investing activities		6,310,109			(7,169,331	)

Cash flows from financing activities:
Proceeds from issuance of common stock and warrants		-			7,915,700
Proceeds from exercise of common stock warrants		-			88,125
Proceeds from exercise of stock options		50,850			-
Net cash provided by financing activities		50,850			8,003,825

Net increase (decrease) in cash and cash equivalents		2,959,768			(621,048	)

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

Cash and cash equivalents at end of period	$	5,357,596		$	2,397,828

Supplemental disclosure of cash flow information:

Cash paid for taxes and related interest	$	15,640		$	4,500

Supplemental disclosure of non-cash investing and financing activities:

Conversion of notes and accrued interest to common stock	$	-		$	71,959

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

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SNAP INTERACTIVE, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

1. Organization and Description of Business

Snap Interactive, Inc. (together with its wholly owned subsidiaries, eTwine, Inc. and Snap Mobile Limited, the “Company”) was incorporated under the laws of the State of Delaware on July 19, 2005. eTwine, Inc. was incorporated under the laws of the State of New York on May 7, 2004. Snap Mobile Limited is a United Kingdom corporation, and was incorporated on September 10, 2009.

The Company was organized to operate a social dating application and stand-alone website.

2. Summary of Significant Accounting Policies

Principles of Consolidation

The accompanying consolidated financial statements include the accounts of the Company and its wholly-owned subsidiaries, were prepared in conformity with generally accepted accounting principles in the United States of America ("GAAP"). All intercompany balances and transactions have been eliminated upon consolidation.

Significant Estimates and Judgments

The preparation of financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and at the date of the financial statements and the reported amounts of revenue and expenses during the reporting period. Significant estimates relied upon in preparing these financial statements include the provision for future credit card chargebacks and refunds on subscription revenue, estimates used to determine the fair value of our common stock, stock options, non-cash capital stock issuances, stock-based compensation and common stock warrants, collectability of our accounts receivable and the valuation allowance on deferred tax assets. Management evaluates these estimates on an ongoing basis. Changes in estimates are recorded in the period in which they become known. We base estimates on historical experience and various other assumptions that we believe to be reasonable under the circumstances. Actual results may differ from our estimates.

Comparative Data

Certain amounts from prior periods have been reclassified to conform to the current period presentation, including:

	●	The reclassification of a $61,572 reserve for future credit card chargebacks from accrued expenses and other current liabilities to accounts receivable;
	●	The reclassification of noncurrent deferred rent of $61,640 from accrued expenses and other current liabilities to long-term deferred rent; and
	●	The reclassification of stock-based compensation of $342,714 relating to non-developers from a programming, hosting and technology expense to compensation expense.

Revenue Recognition

The Company recognizes revenue on arrangements in accordance with Accounting Standards Codification (“ASC”) No. 605, Revenue Recognition. In all cases, revenue is recognized only when the price is fixed or determinable, persuasive evidence of an arrangement exists, the service is performed and collectability is reasonably assured.

The Company has revenue streams consisting of subscriptions and advertisements. The Company recognizes revenue from monthly premium subscription fees beginning in the month in which the services are provided. Revenues are presented net of refunds, credits, and known and estimated credit card chargebacks. During 2012, subscriptions were offered in durations of one-, three-, six- and twelve-month terms. Longer-term plans (those with durations longer than one month) are generally available at discounted monthly rates. All subscription fees, however, are collected at the time of purchase regardless of the length of the subscription term. Revenues from multi-month subscriptions are recognized over the length of the subscription term rather than when the subscription is purchased. The difference between the gross cash receipts collected and the revenue recognized from those sales during that reporting period will appear as deferred revenue.

The Company recognizes advertising revenue as earned on a click-through, impression, registration or subscription basis. When a user clicks an advertisement (CPC basis), views an advertisement impression (CPM basis), registers for an external website via an advertisement clicked on through the Company’s application (CPA basis), or clicks on an offer to subscribe to premium features on the Company’s applications, the contract amount is recognized as revenue.

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The Company’s payment processors have established routine reserve accounts to secure the performance of the Company’s obligations under its service agreements, which is standard practice within the payment processing industry. These reserve accounts withhold a small percentage of the Company’s sales in a segregated account in the form of a six-month rolling reserve. The funds that are withheld each month are returned to the Company on a monthly basis after six months of being held in the reserve account and any remaining funds will be returned to the Company 90 to 180 days following termination of such agreements. These funds are classified as credit card holdback receivable and totaled $287,293 and $441,840 at December 31, 2012 and December 31, 2011, respectively.

The Company has an additional reserve for potential credit card chargebacks based on historical experience and knowledge of the industry. As of December 31, 2012, the Company reserved $36,129 for potential future credit card chargebacks and the amount was included in accounts receivable, net on the Consolidated Balance Sheet.

Business Segments

The Company operates in one reportable segment, and management assesses the Company’s financial performance and makes operating decisions based on one single operating unit.

Stock-Based Compensation

In accordance with ASC No. 718, Compensation – Stock Compensation (“ASC 718”), the Company measures the compensation costs of stock-based compensation arrangements based on the grant date fair value of granted instruments and recognizes the costs in the financial statements over the period during which employees are required to provide services. Stock-based compensation arrangements include stock options and restricted stock awards.

Equity instruments (“instruments”) issued to non-employees are recorded on the basis of the fair value of the instruments, as required by ASC 718. ASC No. 505, Equity Based Payments to Non-Employees (“ASC 505”), defines the measurement date and recognition period for such instruments. In general, the measurement date is (a) when a performance commitment, as defined, is reached or (b) when the earlier of (i) the non-employee performance is complete and (ii) the instruments are vested. The measured value related to the instruments is recognized over a period based on the facts and circumstances of each particular grant as defined in ASC 505.

The fair value of each option granted under the Company's Amended and Restated 2011 Long-Term Incentive Plan (the “Plan”) was estimated using the Black-Scholes option-pricing model (see Note 10 for further details). Using this model, fair value is calculated based on assumptions with respect to (i) expected volatility of the Company's common stock price, (ii) the expected life of the award, which for options is the period of time over which employees and non-employees are expected to hold their options prior to exercise, (iii) expected dividend yield on the Company's common stock, and (iv) a risk-free interest rate, which is based on quoted U.S. Treasury rates for securities with maturities approximating the expected term. Expected volatility is estimated based on the Company's historical volatilities. The expected life of options has been determined using the "simplified" method as prescribed by Staff Accounting Bulletin (“SAB”) No. 110, an amendment to SAB No. 107, which uses the midpoint between the vesting date and the end of the contractual term. The expected dividend yield is zero as the Company has never paid dividends and does not currently anticipate paying dividends in the foreseeable future.

Programming, Hosting and Technology Expense

Programming, hosting and technology expense includes the expenses associated with the operation of data centers, including labor, consulting, hosting, server, web design and programming expenses.

Advertising and Marketing

Advertising and marketing costs are expensed as incurred. Advertising and marketing expense was $9,876,097 and $14,626,963 for the years ended December 31, 2012 and 2011, respectively.

Research and Development

The Company has adopted the provisions of ASC No. 350, Intangibles – Goodwill & Other. Costs incurred in the planning stage of a website are expensed as research and development expenses while costs incurred in the development stage are capitalized and amortized over the life of the asset, estimated to be three years. The Company did not capitalize any research and development expenses during the years ended December 31, 2012 and 2011.

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Income Taxes

The Company accounts for income taxes using the asset and liability method prescribed by ASC No. 740, Income Taxes. Under this method, deferred tax assets and liabilities are recognized for the future tax consequences of differences between the financial statement carrying amounts of existing assets and liabilities and their respective tax bases, as well as net operating loss and tax credit carry forwards. Deferred taxes are measured using enacted tax rates expected to be applied to taxable income in the years in which those temporary differences are expected to be recovered or settled. The effect on deferred taxes of a change in tax rates is recognized in results of operations in the period that includes the enactment date.

Each reporting period, the Company assesses whether its deferred tax assets are more-likely-than-not realizable, in determining whether it is necessary to record a valuation allowance. This includes evaluating both positive (e.g., sources of taxable income) and negative (e.g., recent historical losses) evidence that could impact the realizability of the Company's deferred tax assets.

The Company recognizes the impact of an uncertain tax position in its financial statements if, in management's judgment, the position is more-likely-than-not sustainable upon audit based on the position's technical merits. This involves the identification of potential uncertain tax positions, the evaluation of applicable tax laws and an assessment of whether a liability for uncertain tax positions is necessary. Different conclusions reached in this assessment can have a material impact on our consolidated financial statements. Currently, we have no uncertain tax positions.

Net Income (Loss) Per Share

Basic net income (loss) per common share is determined using the two-class method and is computed by dividing net income (loss) attributable to Snap Interactive Inc. common stockholders by the weighted-average number of common shares outstanding during the period as defined by ASC No. 260, Earnings Per Share . The two-class method is an earnings allocation formula that determines income (loss) per share for each class of common stock and participating security according to dividends declared and participation rights in undistributed earnings. The two-class method treats a participating security as having rights to earnings that otherwise would have been available to common stockholders. According to the contractual terms of participating securities, such securities do not participate in losses.

Diluted net income (loss) per common share reflects the more dilutive earnings per share amount calculated using the treasury stock method or the two-class method, taking into account any potentially dilutive shares outstanding during the period. Potentially dilutive shares consist of shares issuable upon the exercise of stock options and unvested shares of restricted common stock (using the treasury stock method). To the extent stock options, stock equivalents and warrants are antidilutive, they are excluded from the calculation of diluted income per share.

Cash and Cash Equivalents

The Company considers all highly liquid investments with an original maturity of three months or less at the date of purchase to be cash equivalents. Cash and cash equivalents consist of cash on deposit with banks, money market funds and certain investments in commercial paper.

Investments

The Company's investment portfolio may at any time contain investments in U.S. Treasury obligations, securities guaranteed by the U.S. government, certificates of deposit, corporate notes and bonds, medium-term notes, commercial paper, and money market mutual funds, with original maturities less than one year.

The Company's investments with original maturity dates in excess of three months are classified as short-term investments on the Consolidated Balance Sheets. Short-term investments classified as held-to-maturity are recorded at amortized cost. Interest earned on short-term investments is recorded to "Interest income" which is presented net of Interest expense on the Consolidated Statements of Operations.

Fair Value of Financial Instruments

The carrying amounts of the Company's cash and cash equivalents, short-term investments classified as held-to-maturity, accounts receivable, credit card holdback receivable, prepaid expenses, accounts payable, accrued expenses and deferred revenue, approximate fair value due to the short-term nature of these instruments.

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Receivables

At December 31, 2012, we had accounts receivable from payment processors and advertising networks that place advertisements on our application in the amount of $328,680 and $27,469, respectively. The settlement of credit card sales by payment processors typically occurs several days after the date of the charge, and we generally receive payments from mobile payment processors and advertising networks on a monthly basis.

Concentration of Credit Risk

At times the Company has cash in bank accounts in excess of FDIC insurance limits. The Company had approximately $4,995,958 and $1,561,947 in excess of FDIC insurance limits as of December 31, 2012 and December 31, 2011, respectively. The Company also had credit card holdback receivables of $287,293 and $441,840, which were held by payment processors, and of which $139,389 and $248,534 were not FDIC insured as of December 31, 2012 and December 31, 2011, respectively.

Furniture, Fixtures and Equipment

Property and equipment are stated at cost, less accumulated depreciation. Depreciation is calculated using the straight-line method over the estimated useful lives of those assets, as follows:

Software and website costs	3 years
Computers and office equipment	5 years
Furniture and fixtures	7 years
Leasehold improvements	Shorter of estimated useful life or remaining lease term

Repairs and maintenance costs are expensed as incurred.

Other Intangible and Long-Lived Assets

The Company's long-lived assets primarily consist of computer and office equipment and software, furniture and fixtures and leasehold improvements, which are subject to depreciation over the useful life of the asset. Long-lived assets are evaluated for recoverability whenever events or changes in circumstances indicate that the carrying value of the asset may be impaired. In evaluating an asset for recoverability, the Company estimates the future cash flow expected to result from the use of the asset and eventual disposition. If the expected future undiscounted cash flow is less than the carrying amount of the asset, an impairment loss, equal to the excess of the carrying amount over the fair value of the asset, is recognized. No impairments were recorded on long-lived assets for the periods presented in these consolidated financial statements.

Intangible Assets, net

The Company’s intangible assets, net represents definite-lived intangible assets, which are being amortized on a straight-line basis over their estimated useful lives as follows:

Domain name

15 years

No impairments were recorded on intangible assets and no impairment indicators were noted for the periods presented in these consolidated financial statements.

Warrant Liability

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

Recently Adopted Accounting Pronouncement

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

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Restatement of Previously Issued Consolidated Financial Statements

We have restated our consolidated financial statements as of and for the year ended December 31, 2011 as described in "Note 16. Restatement of Consolidated Financial Statements."

3. Restricted Cash

During the year ended December 31, 2012, the Company established a line of credit with JPMorgan Chase Bank, National Association related to the Company’s corporate credit cards, which required the Company to place a cash collateral guarantee of 105% of the monthly credit line of $100,000 in a certificate of deposit for twelve months as collateral. Accordingly, the Company has reported $105,000 as restricted cash on the balance sheet as of December 31, 2012.

4. Accounts Receivable, Net

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

	December 31,			December 31,
	2012			2011
Accounts receivable	$	356,148		$	665,154
Less: Allowance for doubtful accounts		-			(123,392	)
Less: Reserve for future chargebacks		(36,129	)		(61,572	)
Total accounts receivable, net	$	320,019		$	480,190

Credit card payments for subscriptions and micro-transaction purchases typically settle several days after the date of purchase. As of December 31, 2012, the amount of unsettled transactions due from credit card payment processors amounted to $112,885, as compared to $220,272 at December 31, 2011. At December 31, 2012, the amount of receivable due from Apple Inc. amounted to $201,859, as compared to $176,118 at December 31, 2011. These amounts are included in our accounts receivable.

At December 31, 2012, we had accounts receivable from advertising networks that place advertisements on our application in the amount of $27,469, as compared to $64,330 at December 31, 2011, net of allowances. The allowance for doubtful accounts at December 31, 2011 related to one specific advertising network affiliate and was written off in 2012.

5. Investments and Fair Value Measurements

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

●

Level 1: Fair value measurement of the asset or liability using observable inputs such as quoted prices in active markets for identical assets or liabilities;

●

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

●

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

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The following table summarizes those assets and liabilities as of December 31, 2012 and December 31, 2011:

	December 31, 2012								December 31, 2011
	Level 1		Level 2		Level 3		Total		Level 1		Level 2		Level 3		Total
ASSETS:
Cash equivalents:
U.S. government securities	$	—	$	—	$	—	$	—	$	—	$	—	$	—	$	—
Certificates of deposit		—		—		—		—		—		—		—		—
Total cash equivalents	$	—	$	—	$	—	$	—	$	—	$	—	$	—	$	—
Short-term investments:
U.S. government securities (1)	$	—	$	—	$	—	$	—	$	3,506,205	$	—	$	—	$	3,506,205
Certificates of deposit		—		—		—		—		2,975,000		—		—		2,975,000
Total short-term investments	$	—	$	—	$	—	$	—	$	6,481,205	$	—	$	—	$	6,481,205
LIABILITIES:
Common Stock Warrants:
Common stock warrants	$	—	$	—	$	1,616,325	$	1,616,325	$	—	$	—	$	937,000	$	937,000
Total common stock warrants	$	—	$	—	$	1,616,325	$	1,616,325	$	—	$	—	$	937,000	$	937,000

(1) Includes amortization premium paid of $8,733 as of December 31, 2011.

Interest earned on debt securities is recorded to “Interest income, net” on the Consolidated Statement of Operations. The Company is classifying these short-term investments as held-to-maturity and has recorded them at amortized cost. The gross unrecognized holding gains and losses for the years ended December 31, 2012 and December 31, 2011 were not material.

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

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

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

	December 31,			December 31,
	2012			2011
Stock price	$	1.25		$	0.65
Strike price	$	2.50		$	2.50
Remaining contractual term (years)		3.1			4.1
Volatility		171.9	%		215.5	%
Adjusted volatility		121.1	%		125.5	%
Risk-free rate		0.4	%		0.6	%
Dividend yield		0.0	%		0.0	%

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For the purposes of determining fair value, the Company used “adjusted volatility” in favor of “historical volatility” in its Monte-Carlo simulations. Historical realized volatility of the Company was calculated using weekly stock prices over a look back period corresponding to the remaining contractual term of the warrants as of each valuation date. Topic 820 requires fair value to be estimated from the perspective of market participants. Management considered the lack of marketability of these instruments by incorporating a 10% incremental discount rate premium through a reduction of the volatility estimate (“volatility haircut”) to calculate the adjusted historical volatility as of each valuation date.

ASU 2011-04, Fair Value Measurement (Topic 820) - Amendments to Achieve Common Fair Value Measurement and Disclosure Requirements in U.S. GAAP and IFRSs indicates that “in the absence of a Level 1 input, a reporting entity should apply premiums or discounts when market participants would do so when pricing the asset or liability”.

6. Fixed Assets and Intangible Assets, Net

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

	December 31,			December 31,
	2012			2011
Computer equipment	$	211,896		$	143,461
Furniture and fixtures		142,856			159,051
Leasehold improvements		377,727			329,156
Software		8,047			7,342
Website domain name		24,938			24,938
Website costs		40,500			40,500
Total fixed assets		805,964			704,448
Less: Accumulated depreciation and amortization		(257,415	)		(125,985	)
Total fixed assets and intangible assets, net	$	548,549		$	578,463

The Company only holds fixed assets in the United States. Depreciation and amortization expense was $151,007 and $51,180 for the years ended December 31, 2012 and 2011, respectively.

The estimated future amortization and depreciation of intangible and tangible assets is as follows:

Year	Amount

2013	$	161,547
2014		156,498
2015		122,365
2016		52,886
2017 and thereafter		55,253
	$	548,549

7. Notes Receivable

At December 31, 2012, the Company had notes receivable in the aggregate amount of $165,716 due from one current and two former employees in the amounts of $92,152 and $73,564, respectively. The Company paid taxes on stock-based compensation on these employees’ behalf during 2011 and 2012 in exchange for these notes, and the outstanding amounts on the notes are secured by pledged stock certificates. The notes are due at various times during 2021-2023 and bear interest rates between 2.31% and 3.57% per annum.

8. Income Taxes

The Company has no income tax benefit or provision for the year ended December 31, 2012. As the Company has continued to incur a net tax loss, there is no income tax expense for the current period. Increases in deferred tax balances have been offset by a valuation allowance and therefore have no impact on our deferred income tax provision.

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Significant components of the Company's deferred tax assets and liabilities as of December 31, 2012 and December 31, 2011 are as follows:

	Years Ended December 31,
	2012			2011
Deferred Tax Liability:
Furniture, fixtures, equipment and intangibles	$	(64,437	)	$	(37,072	)
Other		(10,162	)		-
Warrants		(627,056	)		(842,260	)
Deferred Tax Assets
Stock options for services		1,049,578			562,163
Net operating loss carry-forward		3,237,128			1,924,412
Reserve for future charge backs		16,674			-
Valuation allowance		(3,601,725	)		(1,607,243	)
Net deferred tax assets (liabilities)	$	-		$	-

Due to uncertainties regarding benefits and utilization of the total deferred tax assets, a valuation allowance of $3,601,725 has been recorded. The valuation allowance was established to reduce the deferred tax asset to the amount that will more likely than not be realized. The valuation allowance on our total deferred asset increased by $1,994,482 from 2011 to 2012. At December 31, 2012, the Company had U.S. federal tax net operating loss (“NOL”) carry-forwards of $7,088,700, which will expire in 2032.

The deferred taxes do not account for NOL carry-forwards related to the windfall tax benefit of $26,128. This amount is being tracked separately and will be recorded in additional paid-in capital when realized.

The deferred tax liability results primarily from the use of accelerated methods of depreciation of equipment for tax purposes and the fluctuation of the fair market value of warrants.

A reconciliation from the federal income tax provision from continuing operations at the statutory rate to the effective rate for the years ended December 31, 2012 and 2011 is as follows:

	Years Ended December 31,
	2012			2011
Federal income tax benefit at statutory rate	$	(1,410,724	)	$	(557,891	)
Increase (decrease) in income taxes resulting from:
State and local income taxes		(598,095	)		(153,636	)
Change in deferred tax asset valuation allowance		1,994,482			702,147
Stock based compensation		-			-
Non-deductible expenses		14,337			9,380
Other		-			-
Income Tax Expense	$	-		$	-

The Company files U.S. federal income tax returns, as well as income tax returns for New York State, and New York City. The following years remain open for possible examination: 2008, 2009, 2010 and 2011.

9. Accrued Expenses and Other Current Liabilities

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

	December 31,		December 31,
	2012		2011
Compensation and benefits	$	39,344	$	817,656
Deferred rent		30,354		40,475
Professional fees		163,500		-
Other accrued expenses		6,851		6,852
Total accrued expenses and other current liabilities	$	240,049	$	864,983

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10. Stock-Based Compensation

The Plan was adopted effective May 24, 2011, and subsequently amended and restated in its entirety on October 21, 2011. The Plan permits the Company to award grants of stock options (both incentive stock options and non-qualified stock options), stock appreciation rights, restricted shares of common stock, restricted stock units, performance stock, dividend equivalent rights, and other stock-based awards and cash-based incentive awards to its employees (including an employee who is also a director or officer), non-employee directors and consultants. The maximum number of shares of common stock that may be delivered pursuant to awards granted under the Plan is 7,500,000 shares, of which 100% may be delivered pursuant to incentive stock options. As of December 31, 2012, there were 3,134,795 shares available for future issuance under the Plan.

Stock Options

The following table summarizes the weighted average values of the assumptions used in the Black-Scholes pricing model to estimate the fair value of the options granted during the year ended December 31, 2012:

		Year Ended December 31, 2012
Expected volatility		292.52%
Expected life of option		5.96 Years
Risk free interest rate		0.98%
Expected dividend yield		0.00%

The expected life of the option awards is the period of time over which employees and non-employees are expected to hold their options prior to exercise. The expected life of options has been determined using the "simplified" method as prescribed by SAB 110, an amendment to SAB 107, which uses the midpoint between the vesting date and the end of the contractual term. The volatility of the Company’s common stock is calculated using the company’s historical volatilities beginning at the grant date and going back for a period of time equal to the expected life of the award.

The following table summarizes stock option activity for the year ended December 31, 2012:

	Number of Options			Weighted Average Exercise Price
Stock Options:
Outstanding at December 31, 2011		8,118,955		$	0.41
Granted		1,502,000			1.41
Exercised		(470,000	)		0.64
Expired or canceled, during the period		(4,515,000	)		0.13
Forfeited, during the period		(110,750	)		0.97
Outstanding at December 31, 2012		4,525,205			0.97
Exercisable at December 31, 2012		2,171,614		$	0.73

At December 31, 2012, the aggregate intrinsic value of stock options that were outstanding and exercisable was $1,807,362 and $1,179,516, respectively. At December 31, 2011, the aggregate intrinsic value of stock options that were outstanding and exercisable was $2,561,209 and $2,469,865, respectively. The intrinsic value for stock options is calculated based on the exercise price of the underlying awards and the fair value of such awards as of the period-end date.

Stock-based compensation expense was $814,996 and $321,281 during the years ended December 31, 2012 and 2011, respectively.

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Non-employee stock option activity is broken out for disclosure purposes below, but is included in total stock option activity on the previous page. The following table summarizes non-employee stock option activity for the year ended December 31, 2012:

	Number of Options			Weighted Average Exercise Price
Non-employee Stock Options:
Outstanding at December 31, 2011		530,000		$	0.94
Granted		400,000			1.21
Exercised		(30,000	)		0.33
Expired or canceled, during the period		-
Forfeited, during the period		-
Outstanding at December 31, 2012		900,000			1.08
Exercisable at December 31, 2012		525,000		$	0.99

At December 31, 2012, the aggregate intrinsic value of non-employee stock options that were outstanding and exercisable was $152,500 and $137,500, respectively. At December 31, 2011, the aggregate intrinsic value of non-employee stock options that were outstanding and exercisable was $9,510.

Stock-based compensation expense relating to non-employee stock options was $115,178 and $11,692 during the years ended December 31, 2012 and 2011, respectively.

The following table summarizes unvested stock option activity for the year ended December 31, 2012:

	Number of Options			Weighted Average Grant Date Fair Value
Unvested Stock Options:
Unvested stock options outstanding at December 31, 2011		1,885,955		$	0.54
Granted		1,502,000			1.26
Vested		(923,614	)		0.55
Forfeited, during the period		(110,750	)		0.68
Unvested stock options outstanding at December 31, 2012		2,353,591		$	0.99

There was $1,846,201 and $858,457 of total unrecognized compensation expense related to unvested stock options at December 31, 2012 and 2011, respectively, which is expected to be recognized over a weighted average remaining vesting period of 2.58 and 2.67 years, respectively.

At December 31, 2012, there was $419,206 of total unrecognized compensation expense related to unvested non-employee stock options, which is expected to be recognized over a weighted average period of 1.57 years. At December 31, 2011, there was $26,023 of total unrecognized compensation expense related to unvested non-employee stock options, which is expected to be recognized over a weighted average period of 0.69 years.

Restricted Stock Awards

The following table summarizes restricted stock award activity for the year ended December 31, 2012:

	Number of RSAs			Weighted Average Grant Date Fair Value
Restricted Stock Awards:
Outstanding at December 31, 2011		5,150,000		$	0.65
Granted		325,000			1.12
Vested		-
Expired or canceled, during the period		(300,000	)		0.45
Forfeited, during the period		-
Outstanding at December 31, 2012		5,175,000		$	0.68

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At December 31, 2012, there was $3,169,203 of total unrecognized compensation expense related to unvested restricted stock awards, which is expected to be recognized over a weighted average period of 9.00 years. At December 31, 2011, there was $3,120,167 of total unrecognized compensation expense related to unvested restricted stock awards, which is expected to be recognized over a weighted average period of 9.94 years.

Stock-based compensation expense relating to restricted stock awards was $314,964 and $88,710 for the years ended December 31, 2012 and 2011, respectively.

11. Common Stock Purchase Warrants

In January 2011, we completed an equity financing that raised gross proceeds of $8,500,000 from the issuance of 4,250,000 shares of common stock at a price of $2.00 per share and warrants to purchase an aggregate of 2,125,000 shares of common stock that are exercisable for five years from the date of issuance. The warrants are exercisable any time on or before January 19, 2016 and have an exercise price of $2.50 per share. We received $7,915,700 in net proceeds from the equity financing after deducting offering expenses of $584,300. The exercise price of the warrants and number of shares of common stock to be received upon the exercise of the warrants are subject to adjustment for reverse and forward stock splits, stock dividends, stock combinations and other similar transactions.

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

Warrant Liability

In connection with the issuance of these warrants, the Company recorded a warrant liability on its Consolidated Balance Sheet based on the estimated fair value of the common stock warrants at the issuance date. The warrants are valued at the end of each reporting period with changes recorded as mark-to-market adjustment on warrant liability on the Company’s Consolidated Statement of Operations. The fair value of these warrants was $1,616,325 and $937,000 at December 31, 2012 and December 31, 2011, respectively, based on a model developed with the assistance of an independent third-party valuation expert.

The mark-to-market income (expense) on these warrants was ($679,325) and $2,038,000 for the years ended December 31, 2012 and December 31, 2011, respectively, and was not presented within loss from operations.

Common Stock Issued for Warrants Exercised

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

The following table summarizes warrant activity for the year ended December 31, 2012:

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

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12. Net Loss Per Common Share

Basic net loss per common share is computed based upon the weighted average common shares outstanding as defined by ASC No. 260, Earnings Per Share . Diluted net loss per common share includes the dilutive effects of stock options, warrants and stock equivalents. To the extent stock options, stock equivalents and warrants are antidilutive, they are excluded from the calculation of diluted net loss per share. For the year ended December 31, 2012, 6,867,705 shares issuable upon the exercise of stock options and warrants were not included in the computation of diluted net loss per share because their inclusion would be antidilutive. For the year ended December 31, 2011, 10,461,455 shares issuable upon the exercise of stock options and warrants and 823,157 shares issuable upon the conversion of convertible debt, were not included in the computation of net loss per share because their inclusion would be antidilutive.

The following table provides a reconciliation of the numerator and denominator used in computing basic and diluted net loss per common share for the years ended December 31, 2012 and 2011:

	Year Ended
	December 31,
	2012			2011
Numerator:
Net loss	$	(4,030,641	)	$	(1,593,173	)
Denominator:
Basic shares:
Weighted-average common shares outstanding		38,611,758			37,619,208
Diluted shares:
Weighted-average shares used to compute basic net loss per share		38,611,758			37,619,208
Add: Weighted average shares assumed to be issued upon conversion of convertible notes as of the date of issuance		-			-
Warrants and options as of beginning of period		-			-
Weighted-average shares used to compute diluted net loss per share		38,611,758			37,619,208

Net loss per share:
Basic	$	(0.10	)	$	(0.04	)
Diluted	$	(0.10	)	$	(0.04	)

13. Commitments

On May 23, 2011, the Company executed a 46-month non-cancelable operating lease for its new corporate office space. The lease began on June 1, 2011 and expires on March 30, 2015. Total base rent due during the term of the lease is $973,595. Monthly rent escalates during the term, but is recorded on a straight-line basis over the term of the lease. The Company can terminate the final five months of the lease with eight months prior notice and the payment of unamortized costs. Rent expense under this lease for the years ended December 31, 2012 and 2011 was $253,982 and $84,661, respectively.

During 2012, the Company entered into three separate two-year lease agreements with the Hewlett Packard Financial Services Company (“HP”) for equipment and certain financed items. Monthly rent expense is $8,649 until January 2014, and then $6,584 per month until September 2014. Rent expense under the HP leases totaled $42,468 for the year ended December 31, 2012.

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

Year	Amount

2013	$	388,128
2014		352,769
2015		74,373
2016		-
2017 and thereafter		-
Total	$	815,270

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14. Related Party Transactions

At December 31, 2012, the Company had notes receivable in the aggregate amount of $165,716 due from current and former employees (see Note 7).

During the fourth quarter of 2011, an aggregate of 5,150,000 shares of restricted stock, having a fair value of $2,762,500, were granted to the Company’s chief executive officer and Darrell Lerner that vest upon the earlier of the tenth anniversary of the date of grant or a change in control. These shares have voting rights, but are not transferable and are not considered outstanding as of December 31, 2012 as they had not vested. On December 28, 2012, the 300,000 shares of restricted stock previously granted to Darrell Lerner were cancelled in exchange for a new award of 325,000 restricted shares, having a fair value of $364,000, which will vest upon the earlier of (i) the tenth anniversary of the grant date; (ii) a change in control; or (iii) on his termination of service without “cause”. Accordingly, 5,175,000 shares were recorded as issued on the Company’s Consolidated Balance Sheet at December 31, 2012.

On June 1, 2012, the Company entered into a two-year consulting agreement with Byron Lerner. Pursuant to the consulting agreement, Mr. Byron Lerner has agreed to provide consulting services related to (i) monitoring revenue and various traffic and engagement statistics for the purpose of proactively uncovering inconsistencies or bugs, as well as (ii) providing strategic advice along with business and financial introductions as requested. During the consulting period, the Company will pay Mr. Byron Lerner a monthly consulting fee of $8,000 as well as reimbursement for certain expenses incurred during the performance of the consulting services.

On January 31, 2013, the Company entered into a severance and general release agreement with Darrell Lerner pursuant to which his employment with the Company was terminated. Pursuant to this agreement, the Company granted 150,000 restricted shares of common stock to Mr. Darrell Lerner that will vest upon the earlier of (i) the tenth anniversary of the grant date; (ii) a change in control; (iii) on Mr. Darrell Lerner’s termination of service without “cause”; or (iv) the date of Mr. Darrell Lerner’s termination of service due to the Company’s nonrenewal of the consulting agreement without “cause” (See Note 15).

On January 31, 2013, the Company entered into a three-year consulting agreement with Darrell Lerner (See Note 15).

On January 31, 2013, the Company entered into a subscription agreement with DCL Ventures, Inc. and Darrell Lerner (See Note 15).

15. Subsequent Events

The Company entered into a two-year service agreement with Equinix Operating Co., Inc. (“Equinix”) whereby Equinix will provide certain products and services to the Company from January 2013 to January 31, 2015. Pursuant to the service agreement, the Company has agreed to pay monthly recurring fees in the amount of $8,450 as well as nonrecurring fees totaling $9,700. The agreement will automatically renew for additional service terms of twelve months unless terminated earlier by either party.

On January 11, 2013, the Company obtained a Letter of Credit from JP Morgan Chase Bank, N.A. in the amount of $200,000, in favor of HP. This letter will expire on January 31, 2014.

On January 31, 2013, the Company entered into a severance and general release agreement with Darrell Lerner. Pursuant to this agreement, the Company granted 150,000 restricted shares of common stock to Mr. Darrell Lerner, having a fair value of $124,500, that will vest upon the earlier of (i) the tenth anniversary of the grant date; (ii) a change in control; (iii) on Mr. Darrell Lerner’s termination of service without “cause”; or (iv) the date of Mr. Darrell Lerner’s termination of service due to the Company’s nonrenewal of the consulting agreement without “cause”.

On January 31, 2013, the Company entered into a three-year consulting agreement with Darrell Lerner. Pursuant to the consulting agreement, Mr. Darrell Lerner has agreed to provide consulting services relating to assisting and advising the Company on legal, financial and other matters for which Mr. Darrell Lerner has knowledge that pertains to the Company. During the consulting period, the Company will pay Mr. Darrell Lerner a monthly consulting fee of $25,000 during the first two years of the agreement and $30,000 per month from February 1, 2015 until the termination of the consulting agreement. As additional compensation for his consulting services, Mr. Darrell Lerner’s previous restricted stock awards will continue to vest as provided in the underlying award agreements as long as Mr. Darrell Lerner continues to provide services under the consulting agreement; provided, however that the awards shall immediately become fully vested upon the date the Company terminates the consulting agreement without “cause” or the date of Mr. Darrell Lerner’s termination of service due to the Company’s nonrenewal of the consulting agreement without “cause”.

On January 31, 2013, the Company entered into a subscription agreement with DCL Ventures, Inc. and Darrell Lerner. Pursuant to the terms and subject to the conditions set forth in the agreement, the Company agreed to purchase shares of DCL Ventures, Inc. common stock, $0.0001 par value, at a purchase price per share equal to the lowest price per share paid by investors in the initial third party sale for an aggregate purchase price of $50,000, subject to the occurrence of certain conditions at closing. The consummation of the initial investment shall take place simultaneously with, or promptly after, the closing of the initial third party sale; provided, that if the initial third party sale occurs on or before March 31, 2013, the initial closing shall take place no later than March 31, 2013; and (ii) the Company agrees to purchase additional shares of common stock for an aggregate purchase price of $150,000. The Company can require DCL Ventures, Inc. or Mr. Darrell Lerner to repurchase the secondary shares from the Company if, at any time prior to the thirty month anniversary of the date of the secondary closing, Mr. Darrell Lerner is not a stockholder, employee, or member of the Board of Directors of the Company.

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16. Restatement of Certain Consolidated Financial Statements

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

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

Consolidated Balance Sheet as of December 31, 2011:

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

Consolidated Statements of Operations for the Year Ended December 31, 2011:

	As Originally Reported			Effect of Restatement		As Restated
Mark-to-market adjustment on warrant liability	$	-		$	2,038,000	$	2,038,000
Total Other Income (Expense)		32,767			2,038,000		2,070,767
Loss Before Provision For Income Taxes		(3,631,173	)		2,038,000		(1,593,173	)
Net Loss		(3,631,173	)		2,038,000		(1,593,173	)
Net Loss Per Share - Basic and diluted		(0.10	)		0.06		(0.04)

Consolidated Statement of Changes in Stockholders' Equity for the Year Ended December 31, 2011:

	As Originally Reported			Effect of Restatement			As Restated
Additional paid-in capital	$	11,231,864		$	(2,975,000	)	$	8,256,864
Accumulated deficit		(5,722,743	)		2,038,000			(3,684,743	)
Total Stockholders' Equity		5,547,701			(937,000	)		4,610,701

Consolidated Statements of Cash Flows for the Year Ended December 31, 2011:

	As Originally Reported			Effect of Restatement			As Restated
Net Loss	$	(3,631,173	)	$	2,038,000		$	(1,593,173	)
Mark-to-market adjustment on warrant liability		-			(2,038,000	)		(2,038,000	)

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SNAP INTERACTIVE, INC.

CONDENSED CONSOLIDATED BALANCE SHEETS

	June 30,			December 31,
	2013			2012
ASSETS	(Unaudited)
Current assets:
Cash and cash equivalents	$	2,617,733		$	5,357,596
Restricted cash		375,211			105,000
Credit card holdback receivable		256,924			287,293
Accounts receivable, net of allowances and reserves of $41,929 and $36,129, respectively		333,182			320,019
Prepaid expense and other current assets		170,136			204,824
Total current assets		3,753,186			6,274,732
Fixed assets and intangible assets, net		598,536			548,549
Notes receivable		168,098			165,716
Investments		50,000			-
Total assets	$	4,569,820		$	6,988,997

LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Accounts payable	$	989,893		$	799,183
Accrued expenses and other current liabilities		394,479			240,049
Deferred revenue		2,031,702			2,524,229
Total current liabilities		3,416,074			3,563,461
Long-term deferred rent		30,214			48,340
Warrant liability		445,075			1,616,325
Total liabilities		3,891,363			5,228,126
Stockholders' equity:
Preferred Stock, $0.001 par value, 10,000,000 shares authorized, none issued and outstanding		-			-
Common Stock, $0.001 par value, 100,000,000 shares authorized, 49,737,826 and 44,007,826 shares issued, respectively, and 38,932,826 and 38,832,826 shares outstanding, respectively		38,933			38,833
Additional paid-in capital		9,982,391			9,437,422
Accumulated deficit		(9,342,867	)		(7,715,384	)
Total stockholders' equity		678,457			1,760,871
Total liabilities and stockholders' equity	$	4,569,820		$	6,988,997

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

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SNAP INTERACTIVE, INC.

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS

(Unaudited)

	Three Months Ended						Six Months Ended
	June 30,						June 30,
	2013			2012			2013			2012
Revenues:
Subscription revenue	$	3,150,319		$	5,110,907		$	6,578,210		$	10,696,945
Advertising revenue		1,670			101,730			43,339			261,143
Total revenues		3,151,989			5,212,637			6,621,549			10,958,088
Costs and expenses:
Programming, hosting and technology		1,339,930			995,765			2,701,321			1,897,885
Compensation		1,078,536			1,063,503			1,899,606			1,969,852
Professional fees		206,703			183,909			473,807			332,226
Advertising and marketing		952,248			3,023,656			2,083,929			7,543,897
General and administrative		1,118,700			1,090,334			2,264,725			2,074,553
Total costs and expenses		4,696,117			6,357,167			9,423,388			13,818,413
Loss from operations		(1,544,128	)		(1,144,530	)		(2,801,839	)		(2,860,325	)
Interest income, net		1,440			10,067			3,106			18,600
Mark-to-market adjustment on warrant liability		70,275			117,125			1,171,250			(1,171,250	)
Other expense		-			16,885			-			16,885
Net loss before income taxes		(1,472,413	)		(1,034,223	)		(1,627,483	)		(4,029,860	)
Provision for income taxes		-			-			-			-
Net loss	$	(1,472,413	)	$	(1,034,223	)	$	(1,627,483	)	$	(4,029,860	)

Net loss per common share:
Basic and diluted	$	(0.04	)	$	(0.03	)	$	(0.04	)	$	(0.10	)

Weighted average number of common shares used in calculating net loss per common share:
Basic and diluted		38,932,826			38,580,261			38,920,671			38,580,261

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

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SNAP INTERACTIVE, INC.

CONDENSED CONSOLIDATED STATEMENT OF CHANGES IN STOCKHOLDERS’ EQUITY

(Unaudited)

	Common Stock				Additional Paid-		Accumulated			Stockholders’
	Shares		Amount		in Capital		Deficit			Equity
Balance at December 31, 2012		38,832,826	$	38,833	$	9,437,422	$	(7,715,384	)	$	1,760,871

Stock issued in exchange for domain name		100,000		100		99,900		-			100,000

Stock-based compensation expense for stock options		-		-		106,496		-			106,496

Stock-based compensation expense for restricted stock awards		-		-		338,573		-			338,573

Net loss		-		-		-		(1,627,483	)		(1,627,483	)

Balance at June 30, 2013		38,932,826	$	38,933	$	9,982,391	$	(9,342,867	)	$	678,457

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

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SNAP INTERACTIVE, INC.

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

(Unaudited)

	Six Months Ended
	June 30,
	2013			2012
Cash flows from operating activities:
Net loss	$	(1,627,483	)	$	(4,029,860	)
Adjustments to reconcile net loss to net cash used in operating activities:
Depreciation and amortization		85,563			72,476
Amortization of investment premium		-			5,348
Stock-based compensation expense		445,069			609,793
Mark-to-market adjustment on warrant liability		(1,171,250	)		1,171,250
Loss on disposal of fixed assets		-			16,885
Changes in operating assets and liabilities:
Restricted cash		(270,211	)		(105,000	)
Credit card holdback receivable		30,369			(31,954	)
Accounts receivable, net		(13,163	)		(69,992	)
Prepaid expense and other current assets		34,688			(96,833	)
Security deposit		-			19,520
Accounts payable and accrued expenses and other current liabilities		341,601			235,007
Deferred rent		(14,587	)		(11,135	)
Deferred revenue		(492,527	)		516,537
Net cash used in operating activities		(2,651,931	)		(1,697,958	)

Cash flows from investing activities:
Purchase of fixed assets		(35,550	)		(88,241	)
Purchase of non-marketable equity securities		(50,000	)		-
Redemption of short-term investments		-			4,975,000
Repayment (issuance) of notes receivable and accrued interest		(2,382	)		7,672
Net cash (used in) provided by investing activities		(87,932	)		4,894,431

Cash flows from financing activities:
Net cash provided by financing activities		-			-

Net (decrease) increase in cash and cash equivalents		(2,739,863	)		3,196,473

Cash and cash equivalents at beginning of year		5,357,596			2,397,828

Cash and cash equivalents at end of period	$	2,617,733		$	5,594,301

Supplemental disclosure of noncash activity:

AYI.com domain purchase in exchange for 100,000 shares of common stock	$	100,000			-

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SNAP INTERACTIVE, INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(Unaudited)

1. Basis of Presentation

The accompanying unaudited condensed consolidated financial statements include the accounts of Snap Interactive, Inc. and its wholly owned subsidiaries, eTwine, Inc. and Snap Mobile Limited. The condensed consolidated financial statements included in this report have been prepared in accordance with generally accepted accounting principles in the United States of America (“GAAP”) and the rules and regulations of the Securities and Exchange Commission (the “SEC”) for interim financial information. We have not included certain information normally included in annual financial statements pursuant to those rules and regulations, although we believe that the disclosure included herein is adequate to make the information presented not misleading.

The financial statements contained herein should be read in conjunction with the Company’s audited consolidated financial statements and the related notes to the audited consolidated financial statements included in the Company’s Annual Report on Form 10-K for the year ended December 31, 2012, filed with the SEC on March 14, 2013.

In the opinion of management, the accompanying unaudited condensed consolidated financial information contains all normal and recurring adjustments necessary to fairly present the consolidated financial condition, results of operations, and changes in cash flows of the Company for the interim periods presented. The Company’s historical results are not necessarily indicative of future operating results and the results for the six months ended June 30, 2013 are not necessarily indicative of results for the year ending December 31, 2013, or for any other period.

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

2. Summary of Significant Accounting Policies

During the six months ended June 30, 2013, there were no material changes to the Company’s significant accounting policies from those disclosed in the Company’s Annual Report on Form 10-K for the year ended December 31, 2012, except for the following:

The Company follows Accounting Standards Codification (“ASC”) 325-20, Cost Method Investments (“ASC 325-20”) to account for its ownership interest in noncontrolled entities. Under ASC 325-20, equity securities that do not have readily determinable fair values (i.e., non-marketable equity securities) and are not required to be accounted for under the equity method are typically carried at cost (i.e., cost method investments). Investments of this nature are initially recorded at cost. Income is recorded for dividends received that are distributed from net accumulated earnings of the noncontrolled entity subsequent to the date of investment. Dividends received in excess of earnings subsequent to the date of investment are considered a return of investment and are recorded as reductions in the cost of the investment. Investments are written down only when there is clear evidence that a decline in value that is other than temporary has occurred.

3. Restricted Cash

During 2012, the Company established a line of credit with JP Morgan Chase Bank, N. A. (“JP Morgan”) related to the Company’s corporate credit cards and placed a cash collateral guarantee of 105% of the monthly credit line of $100,000 in a certificate of deposit for twelve months as collateral. Accordingly, the Company has recorded $105,211 as restricted cash on the balance sheet as of June 30, 2013.

On January 11, 2013, the Company obtained a letter of credit from JP Morgan in the amount of $200,000, in favor of Hewlett Packard Financial Services Company (“HP”). This letter of credit expires on January 31, 2014 and has been increased to $270,000.

4. Accounts Receivable, Net

Accounts receivable, net consisted of the following at June 30, 2013 and December 31, 2012:

	June 30,			December 31,
	2013			2012
	(Unaudited)
Accounts receivable	$	375,111		$	356,148
Less: Reserve for future chargebacks		(41,929	)		(36,129	)
Total accounts receivable, net	$	333,182		$	320,019

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Credit card payments for subscriptions and micro-transaction purchases typically settle several days after the date of purchase. As of June 30, 2013, the amount of unsettled transactions due from credit card payment processors amounted to $157,826, as compared to $112,885 at December 31, 2012. At June 30, 2013, the amount of accounts receivable due from Apple Inc. amounted to $201,096, as compared to $201,859 at December 31, 2012. These amounts are included in our accounts receivable.

5. Fair Value Measurements

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

●

Level 1: Fair value measurement of the asset or liability using observable inputs such as quoted prices in active markets for identical assets or liabilities;

●

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

The following table summarizes those liabilities as of June 30, 2013 and December 31, 2012:

	June 30, 2013 (Unaudited)								December 31, 2012
	Level 1		Level 2		Level 3		Total		Level 1		Level 2		Level 3		Total
LIABILITIES:
Warrant liability	$	—	$	—	$	445,075	$	445,075	$	—	$	—	$	1,616,325	$	1,616,325
Total warrant liability	$	—	$	—	$	445,075	$	445,075	$	—	$	—	$	1,616,325	$	1,616,325

Interest earned on debt securities is recorded to “Interest income, net” on the Consolidated Statements of Operations.

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

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

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The following table summarizes the values of certain assumptions used in our custom model to estimate the fair value of the warrant liability at June 30, 2013 and December 31, 2012:

	June 30,			December 31,
	2013			2012
	(Unaudited)
Stock price	$	0.51		$	1.25
Strike price	$	2.50		$	2.50
Remaining contractual term (years)		2.6			3.1
Volatility		141.8	%		171.9	%
Adjusted volatility		123.0	%		121.1	%
Risk-free rate		0.5	%		0.4	%
Dividend yield		0.0	%		0.0	%

For the purposes of determining fair value, the Company used “adjusted volatility” in favor of “historical volatility” in its Monte-Carlo style simulation. Historical volatility of the Company was calculated using weekly stock prices over a look back period corresponding to the remaining contractual term of the warrants as of each valuation date. Management considered the lack of marketability of these instruments by incorporating a 10% incremental discount rate premium through a reduction of the volatility estimate (“volatility haircut”) to calculate the adjusted historical volatility as of each valuation date.

Accounting Standards Update 2011-04, Fair Value Measurement (Topic 820) - Amendments to Achieve Common Fair Value Measurement and Disclosure Requirements in U.S. GAAP and IFRS (“ASU 2011-04”) indicates that “in the absence of a Level 1 input, a reporting entity should apply premiums or discounts when market participants would do so when pricing the asset or liability.” In accordance with ASU 2011-04, management estimated fair value from the perspective of market participants.

6. Cost-Method Investment

On January 31, 2013, the Company entered into a subscription agreement with Darrell Lerner and DCL Ventures, Inc. (“DCL”) in connection with Mr. Lerner’s separation from the Company. Pursuant to this agreement, the Company made an initial investment in DCL by purchasing 50,000 shares of DCL’s common stock, $0.001 par value per share, for an aggregate purchase price of $50,000 in April 2013. These nonmarketable securities have been included in the Company’s Consolidated Balance Sheet measured on a cost basis (See Note 16).

As of June 30, 2013, the aggregate carrying amount of the Company’s cost-method investment in a noncontrolled entity was $50,000, and was recorded in Investments on the Company’s Consolidated Balance Sheets. The Company assesses all cost-method investments for impairment quarterly. No impairment loss was recorded during the three and six months ended June 30, 2013. The Company does not reassess the fair value of cost-method investments if there are no identified events or changes in circumstances that may have a significant adverse effect on the fair value of the investments (See Note 16).

7. Fixed Assets and Intangible Assets, Net

Fixed assets and intangible assets, net consisted of the following at June 30, 2013 and December 31, 2012:

	June 30,			December 31,
	2013			2012
	(Unaudited)
Computer equipment	$	239,875		$	211,896
Furniture and fixtures		142,856			142,856
Leasehold improvements		382,376			377,727
Software		10,968			8,047
Website domain name		124,938			24,938
Website costs		40,500			40,500
Total fixed assets		941,513			805,964
Less: Accumulated depreciation and amortization		(342,977	)		(257,415	)
Total fixed assets and intangible assets, net	$	598,536		$	548,549

The Company only holds fixed assets in the United States. Depreciation and amortization expense for the six months ended June 30, 2013 was $85,563, as compared to $72,476 for the six months ended June 30, 2012.

On January 23, 2013, the Company issued 100,000 shares of common stock with a fair value of $100,000 to an unrelated third party in exchange for the AYI.com domain name (See Note 13).

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8. Notes Receivable

At June 30, 2013, the Company had notes receivable in the aggregate amount of $168,098 due from one current and two former employees. The employees issued the notes to the Company since the Company paid taxes for stock-based compensation on these employees’ behalf during 2011 and 2012. The outstanding amounts under the notes are secured by pledged stock certificates and are due at various times during 2021-2023. Interest accrues on these notes at rates from 2.31% and 3.57% per annum.

9. Income Taxes

We had no income tax benefit or provision for the three and six months ended June 30, 2013. Since the Company incurred a net loss for the three and six months ended June 30, 2013, there was no income tax expense for the period. Increases in deferred tax balances have been offset by a valuation allowance and have no impact on our deferred income tax provision.

In calculating the provision for income taxes on an interim basis, the Company estimates the annual effective income tax rate based upon the facts and circumstances known for the period and applies that rate to the earnings or losses for the most recent interim period. The Company’s effective income tax rate is based on expected income and statutory tax rates and takes into consideration permanent differences between financial statement income and tax return income applicable to the Company in the various jurisdictions in which the Company operates. The effect of a discrete item, such as changes in estimates, changes in enacted tax laws or rates or tax status, and unusual or infrequently occurring events, is recognized in the interim period in which the discrete item occurs. The accounting estimates used to compute the provision for income taxes may change as new events occur, additional information is obtained or as the result of new judicial interpretations or regulatory or tax law changes.

10. Accrued Expenses and Other Current Liabilities

Accrued expenses and other current liabilities consisted of the following at June 30, 2013 and December 31, 2012:

	June 30,		December 31,
	2013		2012
	(Unaudited)
Compensation and benefits	$	293,333	$	39,344
Deferred rent		33,894		30,354
Professional fees		60,401		163,500
Other accrued expenses		6,851		6,851
Total accrued expenses and other current liabilities	$	394,479	$	240,049

11. Stock-Based Compensation

The Snap Interactive, Inc. Amended and Restated 2011 Long-Term Incentive Plan (the “Plan”) permits the Company to award stock options (both incentive stock options and non-qualified stock options), stock appreciation rights, restricted shares of common stock, restricted stock units, performance stock, dividend equivalent rights, and other stock-based awards and cash-based incentive awards to its employees (including an employee who is also a director or officer under certain circumstances), non-employee directors and consultants. The maximum number of shares of common stock that may be delivered pursuant to awards under the Plan is 7,500,000 shares, 100% of which may be pursuant to incentive stock options. As of June 30, 2013, there were 2,943,335 shares available for future issuance under the Plan.

Stock Options

The following table summarizes the assumptions used in the Black-Scholes pricing model to estimate the fair value of the options granted during the six months ended June 30, 2013:

	Six Months Ended June 30, 2013
Expected volatility	259.31		%
Expected life of option	6.20 Years
Risk free interest rate		1.11	%
Expected dividend yield		0	%

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The expected life of the options is the period of time over which employees and non-employees are expected to hold their options prior to exercise. The expected life of options has been determined using the "simplified" method as prescribed by Staff Accounting Bulletin (“SAB”) 110, which uses the midpoint between the vesting date and the end of the contractual term. The volatility of the Company’s common stock is calculated using the Company’s historical volatilities beginning at the grant date and going back for a period of time equal to the expected life of the award.

The following table summarizes stock option activity for the six months ended June 30, 2013:

	Number of Options			Weighted Average Exercise Price
Stock Options:
Outstanding at December 31, 2012		4,525,205		$	0.97
Granted		1,316,960			0.57
Exercised		-			-
Expired or canceled, during the period		(750,000	)		1.08
Forfeited, during the period		(295,500	)		1.04
Outstanding at June 30, 2013		4,796,665			0.84
Exercisable at June 30, 2013		1,967,478		$	0.78

At June 30, 2013, the aggregate intrinsic value of stock options that were outstanding and exercisable was $82,730 and $82,635, respectively. At June 30, 2012, the aggregate intrinsic value of stock options that were outstanding and exercisable was $2,813,293 and $1,571,783, respectively. The intrinsic value for stock options is calculated based on the exercise price of the underlying awards and the fair value of such awards as of the period-end date.

Stock-based compensation expense was $445,069 and $609,793 during the six months ended June 30, 2013 and 2012, respectively. Stock-based compensation expense was $370,122 and $324,510 during the three months ended June 30, 2013 and 2012, respectively. We estimate potential forfeitures of stock awards and adjust recorded stock-based compensation expense accordingly. The estimate of forfeitures is adjusted over the requisite service period to the extent that actual forfeitures differ, or are expected to differ, from such estimates. Changes in estimated forfeitures are recognized through a cumulative catch-up adjustment in the period of change and will also impact the amount of stock-based compensation expense that is recognized in future periods.

Non-employee stock option activity is included in the table below, but is also included in the table for stock option activity above. The following table summarizes non-employee stock option activity for the six months ended June 30, 2013:

	Number of Options			Weighted Average Exercise Price
Non-employee Stock Options:
Outstanding at December 31, 2012		900,000		$	1.08
Granted		50,000			0.54
Exercised		-
Expired or canceled, during the period		(750,000	)		1.08
Forfeited, during the period		-
Outstanding at June 30, 2013		200,000			0.93
Exercisable at June 30, 2013		150,000		$	1.06

At June 30, 2013, the aggregate intrinsic value of non-employee stock options that were outstanding and exercisable was $0. At June 30, 2012, the aggregate intrinsic value of non-employee stock options that were outstanding and exercisable was $270,010 and $261,510, respectively.

Stock-based compensation expense relating to non-employee stock options was $23,210 and $18,600 during the six months ended June 30, 2013 and 2012, respectively. The Company revalues non-employee stock options for each reporting period. For the six months ended June 30, 2013, the Company recorded an adjustment of $1,269 to reduce stock-based compensation expense related to one non-employee’s stock options.

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The following table summarizes unvested stock option activity for the six months ended June 30, 2013:

	Number of Options			Weighted Average Grant Date Fair Value
Unvested Stock Options:
Unvested stock options outstanding at December 31, 2012		2,353,591		$	0.99
Granted		1,316,960			0.56
Vested		(265,864	)		1.00
Expired or canceled, during the period		(300,000	)		1.21
Forfeited, during the period		(275,500	)		0.70
Unvested stock options outstanding at June 30, 2013		2,829,187		$	0.77

There was $1,481,725 and $1,498,460 of total unrecognized compensation expense related to unvested stock options at June 30, 2013 and 2012, respectively, which is expected to be recognized over a weighted average remaining vesting period of 2.88 and 2.81 years, respectively.

At June 30, 2013, there was $106,200 of total unrecognized compensation expense related to unvested non-employee stock options, which is expected to be recognized over a weighted average period of 0.16 years. At June 30, 2012, there was $7,303 of total unrecognized compensation expense related to unvested non-employee stock options, which is expected to be recognized over a weighted average period of 0.19 years.

Restricted Stock Awards (“RSAs”)

The following table summarizes restricted stock award activity for the six months ended June 30, 2013:

	Number of RSAs		Weighted Average Grant Date Fair Value
Restricted Stock Awards:
Outstanding at December 31, 2012		5,175,000	$	0.68
Granted		5,630,000		0.53
Vested		-
Forfeited, during the period		-
Outstanding at June 30, 2013		10,805,000	$	0.60

These restricted stock awards have voting rights, but are not transferable and are not considered outstanding as of June 30, 2013 since the awards had not vested. Accordingly, 10,805,000 shares were recorded as issued but not outstanding on the Company’s Consolidated Balance Sheet at June 30, 2013.

At June 30, 2013, there was $5,804,730 of total unrecognized compensation expense related to unvested restricted stock awards, which is expected to be recognized over a weighted average period of 6.12 years. At June 30, 2012, there was $2,963,744 of total unrecognized compensation expense related to unvested restricted stock awards, which is expected to be recognized over a weighted average period of 9.44 years.

Stock-based compensation expense relating to restricted stock awards was $338,573 and $154,874 for the six months ended June 30, 2013 and 2012, respectively. Stock-based compensation expense relating to restricted stock awards was $250,208 and $77,437 for the three months ended June 30, 2013 and 2012, respectively.

12. Common Stock Purchase Warrants

In January 2011, we completed an equity financing that raised gross proceeds of $8,500,000 from the issuance of 4,250,000 shares of common stock at a price of $2.00 per share and warrants to purchase an aggregate of 2,125,000 shares of common stock. The warrants are exercisable any time on or before January 19, 2016 and have an exercise price of $2.50 per share. We received $7,915,700 in net proceeds from the equity financing after deducting offering expenses of $584,300. The exercise price of the warrants and number of shares of common stock to be received upon the exercise of the warrants are subject to adjustment for reverse and forward stock splits, stock dividends, stock combinations and other similar transactions.

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

Warrant Liability

In connection with the issuance of these warrants, the Company recorded a warrant liability on its Consolidated Balance Sheet based on the estimated fair value of the warrants at the issuance date. The warrants are valued at the end of each reporting period with changes recorded as mark-to-market adjustment on warrant liability on the Company’s Consolidated Statement of Operations. The fair value of these warrants was $445,075 and $1,616,325 at June 30, 2013 and December 31, 2012, respectively, based on a model developed with the assistance of an independent third-party valuation expert.

The mark-to-market income on these warrants was $70,275 and $117,125 for the three months ended June 30, 2013 and June 30, 2012, respectively, and $1,171,250 and ($1,171,250) for the six months ended June 30, 2013 and June 30, 2012, respectively, and was not presented within loss from operations.

Common Stock Issued for Warrants Exercised

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

The following table summarizes warrant activity for the six months ended June 30, 2013:

	Number of Warrants		Weighted Average Exercise Price
Stock Warrants:
Outstanding at December 31, 2012		2,342,500	$	2.50
Granted		-		-
Exercised		-		-
Forfeited		-		-
Outstanding at June 30, 2013		2,342,500		2.50
Warrants exercisable at June 30, 2013		2,342,500	$	2.50

13. Common Stock Issued for Domain Name

On January 23, 2013, the Company issued 100,000 shares of its common stock with a fair value of $100,000 to an unrelated third party in exchange for the AYI.com domain name. For the six months ended June 30, 2013, $100,000 was recorded to fixed assets and intangible assets for the new domain name, and $100 and $99,900 were recorded to common stock and additional paid-in capital, respectively, on the Company’s Consolidated Balance Sheets.

14. Net Loss Per Common Share

Basic net loss per common share is computed based upon the weighted average number of common shares outstanding as defined by ASC No. 260, Earnings Per Share . Diluted net loss per common share includes the dilutive effects of stock options, stock equivalents and warrants. To the extent stock options, stock equivalents and warrants are antidilutive, they are excluded from the calculation of diluted net loss per share. For the six months ended June 30, 2013, 7,139,165 shares issuable upon the exercise of stock options and warrants were not included in the computation of diluted net loss per share because their inclusion would have been antidilutive. For the six months ended June 30, 2012, 8,991,955 shares issuable upon the exercise of stock options and warrants were not included in the computation of net loss per share because their inclusion would have been antidilutive.

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The following table provides a reconciliation of the numerator and denominator used in computing basic and diluted net loss per common share for the three and six months ended June 30, 2013 and 2012:

	Three Months Ended						Six Months Ended
	June 30,						June 30,
	2013			2012			2013			2012

Numerator:
Net loss	$	(1,472,413	)	$	(1,034,223	)	$	(1,627,483	)	$	(4,029,860	)
Denominator:
Basic shares:
Weighted-average common shares outstanding		38,932,826			38,580,261			38,920,671			38,580,261
Diluted shares:
Weighted-average common shares used to compute basic net loss per common share		38,932,826			38,580,261			38,920,671			38,580,261
Weighted-average common shares used to compute diluted net loss per common share		38,932,826			38,580,261			38,920,671			38,580,261

Net loss per common share:
Basic	$	(0.04	)	$	(0.03	)	$	(0.04	)	$	(0.10	)
Diluted	$	(0.04	)	$	(0.03	)	$	(0.04	)	$	(0.10	)

15. Commitments

Operating Lease Agreements

On May 23, 2011, the Company executed a non-cancelable operating lease for corporate office space which began on June 1, 2011 and expires on March 30, 2015. Total base rent due during the term of the lease is $973,595. Monthly rent escalates during the term, but is recorded on a straight-line basis over the term of the lease. The Company can terminate the final five months of the lease with eight months prior notice and the payment of unamortized costs. Rent expense under this lease for the six months ended June 30, 2013 and 2012 was $126,991.

During 2012, the Company entered into multiple two-year lease agreements with HP for equipment and certain other assets. Monthly rent expense for the leases is $8,649 until January 2014, and $6,584 per month from January 2014 until September 2014. Rent expense under the HP leases totaled $25,948 and $4,130 for the three months ended June 30, 2013 and 2012, respectively. On January 11, 2013, the Company obtained a letter of credit from JP Morgan in the amount of $200,000 in favor of HP. This letter of credit expires on January 31, 2014 and has been increased to $270,000 (See Note 3).

The Company entered into a two-year service agreement with Equinix Operating Co., Inc. (“Equinix”) whereby Equinix will provide certain products and services to the Company from January 2013 to January 2015. Pursuant to the service agreement, the Company agreed to pay monthly recurring fees in the amount of $8,450 and certain nonrecurring fees in the amount of $9,700. The agreement automatically renews for additional twelve month terms unless earlier terminated by either party. Hosting expense under this lease for the six months ended June 30, 2013 totaled $63,907.

16. Related Party Transactions

During the six months ended June 30, 2013, there were no material changes to the Company’s transactions with related parties from those disclosed in “Note 14. Related Party Transactions” in the notes to the consolidated financial statements included in the Company’s Annual Report on Form 10-K for the year ended December 31, 2012, filed with the SEC on March 14, 2013 which disclosure is hereby incorporated by reference herein, except for the following:

On January 31, 2013, the Company entered into a subscription agreement with Darrell Lerner and DCL in connection with Mr. Lerner’s separation from the Company. Pursuant to this agreement, the Company purchased 50,000 shares of DCL’s common stock, $0.001 par value per share, for an aggregate purchase price of $50,000 in April 2013. As a secondary investment, the Company agreed to purchase 150,000 additional shares of common stock for an aggregate purchase price of $150,000. The second investment is being paid in six quarterly installments of $25,000 with the first payment made in July 2013.

On April 10, 2013, the Company awarded Mr. Lerner 5,000,000 restricted shares of common stock. Pursuant to the terms of the restricted stock award agreement, (i) fifty percent (50%) of the restricted shares will vest on the third anniversary of grant date, and (ii) the remaining fifty percent (50%) shares will vest on the fourth anniversary of grant date; provided, that any unvested shares will immediately vest on the effective date of a change in control.

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On April 10, 2013, the Company awarded Mr. Pedersen 480,000 restricted shares of common stock. Pursuant to the terms of the restricted stock award agreement, (i) fifty percent (50%) of the restricted shares will vest on the third anniversary of grant date, and (ii) the remaining fifty percent (50%) of the restricted shares will vest on the fourth anniversary of grant date; provided, that any unvested shares will immediately vest on the effective date of a change in control.

On April 10, 2013, the Company also awarded Mr. Pedersen a stock option to purchase 700,000 shares of the Company’s common stock at an exercise price of $0.52 per share. The shares of common stock underlying Mr. Pedersen’s stock option will vest one-fourth on each of the first, second, third and fourth anniversaries of the date of grant; provided, that (i) upon the effective date of a “change in control,” 50% of all then unvested shares of common stock underlying the option will vest immediately and the remaining unvested shares of common stock underlying the option will vest on the earlier of (a) the original vesting date or (b) equally on the first and second anniversary of the effective date of the change in control (subject to early termination or forfeiture in accordance with the terms of the stock option agreement), (ii) any vested options will be forfeited immediately upon violation of any non-competition or non-solicitation agreement between the Company and Mr. Pedersen and (iii) upon termination of Mr. Pedersen’s employment without cause, the option will remain exercisable until the tenth anniversary of the date of grant to the extent the shares underlying the option are vested.

At June 30, 2013, the Company had notes receivable in the aggregate amount of $168,098 due from one current and two former employees (see Note 8).

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Shares of Common Stock

Warrants to Purchase Shares of Common Stock

, 2013

Roth Capital Partners

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PART II

INFORMATION NOT REQUIRED IN THE PROSPECTUS

Item 13. Other Expenses of Issuance and Distribution

The expenses, other than underwriting commissions, we expect to incur in connection with the issuance and distribution of the securities being registered hereby are estimated as follows:

Expenses	Amount
SEC registration fee	$	515.20
Printing and engraving expenses		15,000	*
Legal fees and expenses		225,000	*
Accounting fees and expenses		125,000	*
Miscellaneous			†
Total	$	365,515.20	*

*Each of the amounts set forth above is an estimate.

†To be completed by an amendment.

Item 14. Indemnification of Directors and Officers

Section 102(b)(7) of the DGCL allows a corporation to provide in its certificate of incorporation that a director of the corporation will not be personally liable to the corporation or its stockholders for monetary damages for breach of fiduciary duty as a director, except where the director breached the duty of loyalty, failed to act in good faith, engaged in intentional misconduct or knowingly violated a law, authorized the payment of a dividend or approved a stock repurchase in violation of Delaware corporate law or obtained an improper personal benefit. Our Certificate of Incorporation provides for this limitation of liability.

Section 145 of the DGCL (“Section 145”) provides that a Delaware corporation may indemnify any person who was, is or is threatened to be made, party to any threatened, pending or completed action, suit or proceeding, whether civil, criminal, administrative or investigative (other than an action by or in the right of such corporation), by reason of the fact that such person is or was an officer, director, employee or agent of such corporation or is or was serving at the request of such corporation as a director, officer, employee or agent of another corporation or enterprise. The indemnity may include expenses (including attorneys’ fees), judgments, fines and amounts paid in settlement actually and reasonably incurred by such person in connection with such action, suit or proceeding, provided such person acted in good faith and in a manner he reasonably believed to be in or not opposed to the corporation’s best interests and, with respect to any criminal action or proceeding, had no reasonable cause to believe that his conduct was illegal. A Delaware corporation may indemnify any persons who are, or were, a party to any threatened, pending or completed action or suit by or in the right of the corporation by reason of the fact that such person is or was a director, officer, employee or agent of another corporation or enterprise. The indemnity may include expenses (including attorneys’ fees) actually and reasonably incurred by such person in connection with the defense or settlement of such action or suit, provided such person acted in good faith and in a manner he reasonably believed to be in or not opposed to the corporation’s best interests, provided that no indemnification is permitted without judicial approval if the officer, director, employee or agent is adjudged to be liable to the corporation. Where an officer or director is successful on the merits or otherwise in the defense of any action referred to above, the corporation must indemnify him against the expenses which such officer or director has actually and reasonably incurred.

Section 145 further authorizes a corporation to purchase and maintain insurance on behalf of any person who is or was a director, officer, employee or agent of the corporation or is or was serving at the request of the corporation as a director, officer, employee or agent of another corporation or enterprise, against any liability asserted against him and incurred by him in any such capacity, or arising out of his status as such, whether or not the corporation would otherwise have the power to indemnify him under Section 145.

Our Certificate of Incorporation provides that no director shall be liable to us or our stockholders for monetary damages for breach of fiduciary duty as a director, except for liability (i) for any breach of the director’s duty of loyalty to us or our stockholders, (ii) for acts or omission not in good faith or which involve intentional misconduct or a knowing violation of law, (iii) under Section 174 of the DGCL, or (iv) for any transaction from which the director derived an improper personal benefit. Our Certificate of Incorporation also provides that if the DGCL is amended to authorize corporate action further eliminating or limiting the personal liability of directors, then the liability of a director of shall be eliminated or limited to the fullest extent permitted by the DGCL, as so amended.

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Our Certificate of Incorporation provides that we shall, to the fullest extent permitted by Section 145 of the DGCL, as the same may be amended and supplemented, indemnify and advance expenses to any person who is or was a director or officer, or who is or was serving at our request as a director, officer, employee or agent of another corporation, partnership, joint venture, trust or other enterprise from and against any and all of the expenses, liabilities or other matters referred to in or covered by such section. In addition, the proposed amendment would also provide clarification that we may provide indemnification to any such person and any other person who is or was an employee or agent, by agreement or otherwise, on such terms and conditions as our Board of Directors may approve and that any agreement for indemnification of any director, officer, employee or other person may provide indemnification rights that are broader or otherwise different from the rights set forth in the amendment.

Our By-Laws require us to indemnify and advance expenses to our current and former directors and officers, as well as certain persons serving, at our request, at another entity as a director, officer, employee or agent. These indemnification provisions are not effective until our stockholders approve the amendment to our Certificate of Incorporation to provide for indemnification rights to our directors and officers.

The indemnification rights set forth above shall not be exclusive of any other right which an indemnified person may have or hereafter acquire under any statute, provision of our Certificate of Incorporation or By-Laws, agreement, vote of stockholders or disinterested directors or otherwise.

We maintain a general liability insurance policy that covers certain liabilities of our director and officers arising out of claims based on acts or omissions in the person’s capacity as a director or officer.

We have entered into employment agreements with our Chief Executive Officer and our Chief Financial Officer, pursuant to which we have agreed to indemnify such persons against any liability, damage, cost or expense incurred in connection with the defense of any action, suit or proceeding to which such persons are a party to the extent permitted by applicable law, subject to certain exceptions.

Item 15. Recent Sales of Unregistered Securities

Private Placement Offering

On January 19, 2011, for gross subscription proceeds of $8,500,000 we issued: (i) 4,250,000 shares of our common stock and (ii) Investor Warrants exercisable into 2,125,000 shares of common stock at an exercise price of $2.50 per share to certain accredited investors. In connection with the offering, we paid a cash placement agency fee to the placement agent equal to 6% of the aggregate purchase price paid by the investors. We further agreed to pay a cash fee equal to 6% of the aggregate cash exercise price received by us upon the exercise of the Investor Warrants. In addition, the placement agent was issued 255,000 warrants with an exercise price of $2.50 per share.

Issuance of securities to the investors and the placement agent were not registered under the Securities Act. Such issuance of securities was exempt from registration under the safe harbor provided by Rule 506 of Regulation D and Section 4(a)(2) of the Securities Act. We made this determination in part based on the representations of investors, which included, in pertinent part, that such Investors were an “accredited investor” as defined in Rule 501(a) under the Securities Act, and upon such further representations from the investors that (a) the investor is acquiring the securities for his, her or its own account for investment and not for the account of any other person and not with a view to or for distribution, assignment or resale in connection with any distribution within the meaning of the Securities Act, (b) the investor agrees not to sell or otherwise transfer the purchased securities unless they are registered under the Securities Act and any applicable state securities laws, or an exemption or exemptions from such registration are available, (c) the investor either alone or together with its representatives has knowledge and experience in financial and business matters such that he, she or it is capable of evaluating the merits and risks of an investment in us, and (d) the investor has no need for the liquidity in its investment in us and could afford the complete loss of such investment. Our determination is made based further upon our action of (a) making written disclosure to each investor prior to the closing of sale that the securities have not been registered under the Securities Act and therefore cannot be resold unless they are registered or unless an exemption from registration is available, (b) making written descriptions of the securities being offered, the use of the proceeds from the offering and any material changes in our affairs that are not disclosed in the documents furnished, and (c) placement of a legend on the certificate that evidences the securities stating that the securities have not been registered under the Securities Act and setting forth the restrictions on transferability and sale of the securities, and any upon the absence of any general solicitation or advertising for securities herein issued in reliance upon Rule 506 of Regulation D and Section 4(a)(2) of the Securities Act.

Issuance for Services

Legal Services

On January 14, 2011, we issued 10,000 shares to an unrelated third party to provide legal services. Such shares were issued pursuant to an exemption from registration under Section 4(a)(2) of the Securities Act.

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Employee Service

On December 14, 2011, we issued 4,250,000 shares of common stock to our Founder and Chief Executive Officer as compensation for serving as our President and Chief Executive Officer. Such shares were issued pursuant to an exemption from registration under Section 4(a)(2) of the Securities Act.

On August 20, 2012, we issued 75,000 shares of common stock to a current employee pursuant to the exercise of a stock option with an exercise price of $0.33 per share in exchange for proceeds of $24,750. The issuance of these shares was exempt from the registration requirements of the Securities Act, pursuant to Section 4(a)(2) thereof as a transaction by an issuer not involving a public offering.

On December 17, 2012, we issued 50,000 shares of common stock to a former employee pursuant to the exercise of a stock option with an exercise price of $0.22 per share in exchange for proceeds of $11,000. The issuance of these shares was exempt from the registration requirements of the Securities Act pursuant to Section 4(a)(2) thereof as a transaction by an issuer not involving a public offering.

On December 26, 2012, we issued an aggregate of 45,000 shares of common stock to a current employee and a former employee pursuant to the exercise of stock options with an exercise price of $0.33 per share in exchange for proceeds of $14,850. The issuance of these shares was exempt from the registration requirements of the Securities Act pursuant to Section 4(a)(2) thereof as a transaction by an issuer not involving a public offering.

On December 27, 2012, we issued an aggregate of 82,565 shares of common stock to a current employee pursuant to the cashless exercise of stock options to purchase an aggregate of 300,000 shares of common stock. The issuance of these shares was exempt from the registration requirements of the Securities Act pursuant to Section 4(a)(2) thereof as a transaction by an issuer not involving a public offering.

On April 10, 2013, we issued 5,000,000 restricted shares of common stock to our President and Chief Executive Officer in connection with entering into an employment agreement with the President and Chief Executive Officer. The issuance of these shares was exempt from the registration requirements of the Securities Act pursuant to Section 4(a)(2) thereof as a transaction by an issuer not involving a public offering.

On April 10, 2013, we issued 480,000 restricted shares of common stock and a stock option to purchase 700,000 shares of common stock to our Chief Financial Officer in connection with entering into an employment agreement with the Chief Financial Officer. The issuance of these securities was exempt from the registration requirements of the Securities Act pursuant to Section 4(a)(2) thereof as a transaction by an issuer not involving a public offering.

Other Issuances

On January 23, 2013, we issued 100,000 shares of common stock to an unrelated third party in exchange for the AYI.com domain name. The issuance of these shares of common stock were exempt from the registration requirements of the Securities Act pursuant to Rule 506 of Regulation D and Section 4(a)(2) thereof as a transaction by an issuer not involving a public offering.

Exchanges of Securities

During the fourth quarter of 2011, we issued an aggregate of 348,955 options to purchase shares of our common stock in exchange for the cancellation of unvested restricted shares of common stock and unvested restricted stock units. Such options were issued pursuant to an exemption from registration under Section 3(a)(9) of the Securities Act.

On December 12, 2011, we issued an aggregate of 823,157 shares to our Co-Founder pursuant to the conversion of unsecured convertible notes. Such shares were issued pursuant to an exemption from registration under Section 3(a)(9) of the Securities Act.

Item 16. Exhibits and Financial Statement Schedules

(a) Exhibits

A list of exhibits filed herewith is contained in the Exhibit Index that immediately precedes such exhibits and is incorporated by reference herein.

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(b) Financial Statement Schedules

No financial statement schedules are provided because the information called for is not applicable or is shown in the financial statements or notes incorporated herein by reference.

Item 17. Undertakings

Insofar as indemnification for liabilities arising under the Securities Act may be permitted to directors, officers and controlling persons of the registrant pursuant to the foregoing provisions, or otherwise, the registrant has been advised that in the opinion of the SEC such indemnification is against public policy as expressed in the Securities Act and is, therefore, unenforceable. In the event that a claim for indemnification against such liabilities (other than the payment by the registrant of expenses incurred or paid by a director, officer or controlling person of the registrant in the successful defense of any action, suit or proceeding) is asserted by such director, officer or controlling person in connection with the securities being registered, the registrant will, unless in the opinion of its counsel the matter has been settled by controlling precedent, submit to a court of appropriate jurisdiction the question whether such indemnification by it is against public policy as expressed in the Securities Act and will be governed by the final adjudication of such issue.

The undersigned registrant hereby undertakes that:

(a) To file, during any period in which offers or sales are being made, a post-effective amendment to this registration statement:

(i) To include any prospectus required by section 10(a)(3) of the Securities Act;

(ii) To reflect in the prospectus any facts or events arising after the effective date of the registration statement (or the most recent post-effective amendment thereof) which, individually or in the aggregate, represent a fundamental change in the information set forth in the registration statement. Notwithstanding the foregoing, any increase or decrease in volume of securities offered (if the total dollar value of securities offered would not exceed that which was registered) and any deviation from the low or high end of the estimated maximum offering range may be reflected in the form of prospectus filed with the SEC pursuant to Rule 424(b) under the Securities Act if, in the aggregate, the changes in volume and price represent no more than a 20% change in the maximum aggregate offering price set forth in the “Calculation of Registration Fee” table in the effective registration statement; and

(iii) To include any material information with respect to the plan of distribution not previously disclosed in the registration statement or any material change to such information in the registration statement.

(b) For the purpose of determining any liability under the Securities Act, each such post-effective amendment that contains a form of prospectus shall be deemed to be a new registration statement relating to the securities offered therein, and the offering of such securities at that time shall be deemed to be the initial bona fide offering thereof.

(c) For the purpose of determining any liability under the Securities Act, each such post-effective amendment shall be deemed to be a new registration statement relating to the securities offered therein, and the offering of such securities at that time shall be deemed to be the initial bona fide offering thereof.

(d) The registrant will remove from registration by means of a post-effective amendment any of the securities being registered which remain unsold at the termination of the offering.

(e) For the purpose of determining liability of the registrant under the Securities Act to any purchaser in the initial distribution of the securities:

The undersigned registrant undertakes that in a primary offering of securities of the undersigned registrant pursuant to this registration statement, regardless of the underwriting method used to sell the securities to the purchaser, if the securities are offered or sold to such purchaser by means of any of the following communications, the undersigned registrant will be a seller to the purchaser and will be considered to offer or sell such securities to such purchaser:

(i) Any preliminary prospectus or prospectus of the undersigned registrant relating to the offering required to be filed pursuant to Rule 424;

(ii) Any free writing prospectus relating to the offering prepared by or on behalf of the undersigned registrant or used or referred to by the undersigned registrant;

(iii) The portion of any other free writing prospectus relating to the offering containing material information about the undersigned registrant or its securities provided by or on behalf of the undersigned registrant; and

(iv) Any other communication that is an offer in the offering made by the undersigned registrant to the purchaser.

(f) the undersigned registrant hereby undertakes that:

(i) For purposes of determining any liability under the Securities Act, the information omitted from the form of prospectus filed as part of this registration statement in reliance upon Rule 430A and contained in a form of prospectus filed by the registrant pursuant to Rule 424(b)(1) or (4) or 497(h) under the Securities Act shall be deemed to be part of this registration statement as of the time it was declared effective; and

(ii) For the purpose of determining any liability under the Securities Act, each post-effective amendment that contains a form of prospectus shall be deemed to be a new registration statement relating to the securities offered therein, and the offering of such securities at that time shall be deemed to be the initial bona fide offering thereof.

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SIGNATURES

Pursuant to the requirements of the Securities Act, the registrant has duly caused this Registration Statement on Form S-1 to be signed on its behalf by the undersigned, thereunto duly authorized in the City of New York, State of New York, on October 1, 2013.

	SNAP INTERACTIVE, INC.

	By:	/s/ Clifford Lerner
		Clifford Lerner Director, President and Chief Executive Officer

Each person whose signature appears below hereby appoints Clifford Lerner as his true and lawful attorney-in-fact, with full power of substitution, and with the authority to execute in the name of each such person, any and all amendments (including without limitation, post-effective amendments) to this registration statement on Form S-1, to sign any and all additional registration statements relating to the same offering of securities as this registration statement that are filed pursuant to Rule 462(b) of the Securities Act, and to file such registration statements with the SEC, together with any exhibits thereto and other documents therewith, necessary or advisable to enable the registrant to comply with the Securities Act, and any rules, regulations and requirements of the SEC in respect thereof, which amendments may make such other changes in the registration statement as the aforesaid attorney-in-fact executing the same deems appropriate.

Pursuant to the requirements of the Securities Act, this Registration Statement on Form S-1 has been signed by the following persons in the capacities and on the dates indicated.

Signature	Title	Date

/s/ Clifford Lerner	Director, President and Chief Executive Officer	October 1, 2013
Clifford Lerner	(Principal Executive Officer)

/s/ Jon D. Pedersen, Sr.	Chief Financial Officer	October 1, 2013
Jon D. Pedersen, Sr.	(Principal Financial Officer)

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EXHIBIT INDEX

1.1**		Form of Underwriting Agreement

3.1		Certificate of Incorporation, dated July 19, 2005 (incorporated by reference to Exhibit 3.1 to the Registration Statement on Form S-1 of the Company filed February 11, 2011 by the Company with the SEC).

3.2		Certificate of Amendment to Certificate of Incorporation, dated November 20, 2007 (incorporated by reference to Exhibit 3.2 to the Registration Statement on Form S-1 of the Company filed February 11, 2011 by the Company with the SEC).

3.3		Amended and Restated By-Laws of Snap Interactive, Inc. as amended April 19, 2012 (incorporated by reference to Exhibit 3.1 to the Current Report on Form 8-K of the Company filed April 25, 2012 by the Company with the SEC).

4.1		Form of Common Stock Certificate (incorporated by reference to Exhibit 4.1 to the Post-Effective Amendment No. 1 to the Registration Statement on Form S-1 filed May 2, 2012 by the Company with the SEC).

4.2**		Form of Warrant

4.3**		Form of Underwriter’s Warrant

5.1**		Opinion of Haynes and Boone, LLP

10.1		Statement of Rights and Responsibilities, by and between Snap Interactive, Inc. and Facebook (incorporated by reference to Exhibit 10.1 to the Annual Report on Form 10-K of the Company filed March 31, 2011 by the Company with the SEC).

10.2		Registered Apple Developer Agreement, by and between Snap Interactive, Inc. and Apple Inc. (incorporated by reference to Exhibit 10.2 to the Annual Report on Form 10-K of the Company filed March 31, 2011 by the Company with the SEC).

10.3		iOS Developer Program License Agreement, by and between Snap Interactive, Inc. and Apple Inc. (incorporated by reference to Exhibit 10.3 to the Annual Report on Form 10-K of the Company filed March 31, 2011 by the Company with the SEC).

10.4		Securities Purchase Agreement (incorporated by reference to Exhibit 10.1 to the Current Report on Form 8-K of the Company filed January 21, 2011 by the Company with the SEC).

10.5		Form of Warrant (incorporated by reference to Exhibit 10.2 to the Current Report on Form 8-K of the Company filed January 21, 2011 by the Company with the SEC).

10.6		Registration Rights Agreement (incorporated by reference to Exhibit 10.3 to the Current Report on Form 8-K of the Company filed January 21, 2011 by the Company with the SEC).

10.7†		Form of Restricted Stock Unit Award Agreement (incorporated by reference to Exhibit 99.2 to the Registration Statement on Form S-8 of the Company filed on May 24, 2011 by the Company with the SEC).

10.8†		Form of Restricted Stock Award Agreement (incorporated by reference to Exhibit 99.3 to the Registration Statement on Form S-8 of the Company filed on May 24, 2011 by the Company with the SEC).

10.9†		Form of Nonqualified Stock Option Agreement (incorporated by reference to Exhibit 99.4 to the Registration Statement on Form S-8 of the Company filed on May 24, 2011 by the Company with the SEC).

10.10†

Amended and Restated Snap Interactive, Inc. 2011 Long-Term Incentive Plan (incorporated by reference to Exhibit 10.1 to the Quarterly Report on Form 10-Q of the Company filed on November 14, 2011 by the Company with the SEC).

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10.11†		Form of Incentive Stock Option Agreement (incorporated by reference to Exhibit 10.2 to the Quarterly Report on Form 10-Q of the Company filed on November 14, 2011 by the Company with the SEC).

10.12		Restricted Stock Award Agreement, dated as of December 28, 2012, by and between Darrell Lerner and Snap Interactive, Inc. (incorporated by reference to Exhibit 99.3 to the Amendment No. 1 to Schedule 13D filed on January 2, 2013 by the Reporting Person with the SEC).

10.13		Award Cancellation and Release Agreement, effective as of December 28, 2012, by and between Darrell Lerner and Snap Interactive, Inc. (incorporated by reference to Exhibit 99.4 to the Amendment No. 1 to Schedule 13D filed on January 2, 2013 by the Reporting Person with the SEC).

10.14		First Amendment to Restricted Stock Award Agreement, dated as of December 28, 2012, by and between Darrell Lerner and Snap Interactive, Inc. (incorporated by reference to Exhibit 99.6 to the Amendment No. 1 to Schedule 13D filed on January 2, 2013 by the Reporting Person with the SEC).

10.15		Severance and General Release Agreement, dated as of January 31, 2013, by and between Darrell Lerner and Snap Interactive, Inc. (incorporated by reference to Exhibit 10.1 to the Current Report on Form 8-K of the Company filed on February 5, 2013 by the Company with the SEC).

10.16		Restricted Stock Award Agreement, dated as of January 31, 2013, by and between Darrell Lerner and Snap Interactive, Inc. (incorporated by reference to Exhibit 10.2 to the Current Report on Form 8-K of the Company filed on February 5, 2013 by the Company with the SEC).

10.17		Consulting Agreement, dated as of January 31, 2013, by and between Darrell Lerner and Snap Interactive, Inc. (incorporated by reference to Exhibit 10.3 to the Current Report on Form 8-K of the Company filed on February 5, 2013 by the Company with the SEC).

10.18		Subscription Agreement, dated as of January 31, 2013, by and among Darrell Lerner, DCL Ventures, Inc., and Snap Interactive, Inc. (incorporated by reference to Exhibit 10.4 to the Current Report on Form 8-K of the Company filed on February 5, 2013 by the Company with the SEC).

10.19†		Executive Employment Agreement, dated as of April 10, 2013, by and between Clifford Lerner and Snap Interactive, Inc. (incorporated by reference to Exhibit 10.4 to the Post-Effective Amendment No. 3 to the Registration Statement on Form S-1 of the Company filed April 11, 2013 by the Company with the SEC).

10.20†		Amended and Restated Executive Employment Agreement, dated as of April 10, 2013, by and between Jon D. Pedersen, Sr. and Snap Interactive, Inc. (incorporated by reference to Exhibit 10.5 to the Post-Effective Amendment No. 3 to the Registration Statement on Form S-1 of the Company filed April 11, 2013 by the Company with the SEC).

21.1		Subsidiaries of the Company (incorporated by reference to Exhibit 21.1 to the Annual Report on Form 10-K of the Company filed March 14, 2013 by the Company with the SEC).

23.1*		Consent of Ernst & Young LLP.

23.2*		Consent of Liggett, Vogt & Webb, P.A.

23.3**		Consent of Haynes and Boone, LLP (included in Exhibit 5.1)

24.1*		Power of attorney (included on the signature page)

101***		The following materials from the Company's Registration Statement on Form S-1 formatted in XBRL (eXtensible Business Reporting Language), (i) Consolidated Balance Sheets, (ii) Consolidated Statements of Operations, (iii) Consolidated Statement of Changes in Stockholders' Equity, (iv) Consolidated Statements of Cash Flows and (v) Notes to the Consolidated Financial Statements.

†	Management contract or compensatory plan arrangement.
*	Filed herewith.
**	To be filed with an amendment to this registration statement.
***	Pursuant to Rule 406T of Regulation S-T, the Interactive Data Files on Exhibit 101 hereto are deemed not filed or part of a registration statement or prospectus for purposes of Section 11 or Section 12 of the Securities Act of 1933, as amended, are deemed not filed for purposes of Section 18 of the Securities Exchange Act of 1934, as amended, and otherwise are not subject to liability under those sections.

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Delaware		7370		20-3191847
(State or other jurisdiction of incorporation or organization)		(Primary Standard Industrial Classification Code Number)		(I.R.S. Employer Identification Number)

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

Title of Each Class of Securities to be Registered	Proposed Maximum Aggregate Offering Price(1)		Amount of Registration Fee(2)
Common stock, par value $0.001 per share (3)	$		$
Warrants to purchase common stock (4)	$		$	—
Common stock, par value $0.001 per share, issuable upon the exercise of warrants (3)	$		$
Warrants to purchase common stock to be issued to the underwriter (4)	$		$	—
Common stock, par value $0.001 per share, issuable upon the exercise of underwriter warrants (3)	$		$
	$	4,000,000	$	515.20

Common stock offered by us	shares.

Common stock to be outstanding after this offering	shares, or shares if the underwriter exercises its over-allotment option in full.
Warrants we are offering	Each share of common stock is being sold together with a warrant to purchase of a share of common stock, which will be exercisable during the period commencing on the date of the original issuance and ending five years from that date at an exercise price of $ per share of common stock. This prospectus also relates to the offering of the shares of common stock issuable upon the exercise of the warrants. There is no established public trading market for the warrants, and we do not expect a market to develop. In addition, we do not intend to apply for listing of the warrants on any securities exchange or other trading system.

Over-allotment option	We have granted the underwriter an option to purchase an additional shares of common stock and warrants to purchase up to shares of common stock within 30 days from the date of this prospectus to cover any over-allotments. See “Underwriting” for additional information regarding the over-allotment option.

Use of proceeds	We estimate that the net proceeds from this offering will be approximately $ , or approximately if the underwriter exercises its over-allotment option in full, based on an assumed public offering price of $ per share of common stock, which was the closing bid price of our common stock on , 2013, and after deducting estimated underwriting discounts and commissions and estimated offering expenses payable by us. We anticipate that we will use the net proceeds of this offering to invest in user acquisition campaigns and for general corporate purposes, including working capital. See “Use of Proceeds” for additional information.

Risk factors	See “Risk Factors” beginning on page 5 for a discussion of factors you should consider carefully before deciding whether to invest in this offering.

OTCBB symbol	STVI
The number of shares of common stock to be outstanding after this offering is based on 38,932,826 shares outstanding as of September 23, 2013 and, unless otherwise indicated, excludes:

	·	our ability to generate and sustain increased revenue levels and achieve profitability in the future;

	·	our heavy reliance on the Facebook platform to run our application and Facebook’s ability to discontinue, limit or restrict access to its platform by us or our application, change its terms and conditions or other policies or features, including restricting methods of collecting payments and establish more favorable relationships with one or more of our competitors or develop an application or feature that competes with our application;

	·	our ability to maintain good relationships with Apple and Google;

	·	our reliance on our President, Chief Executive Officer and sole director;

	·	the intense competition in the online dating industry;

	·	our reliance on a small percentage of our total users for substantially all of our revenue;

	·	our ability to develop, establish and maintain a strong brand;

	·	our ability to develop and market new technologies to respond to rapid technological changes;

	·	our ability to effectively manage our growth, including attracting and retaining qualified employees;

	·	our ability to generate subscribers through advertising and marketing agreements with third party advertising and marketing providers;

	·	our reliance on email campaigns to convert users to subscribers and to retain subscribers;

	·	the effect of any interruption or failure of our data center;

	·	the effect of an interruption or failure of our programming code, servers or technological infrastructure;

	·	the effect of security breaches, computer viruses and computer hacking attacks;

	·	our ability to comply with laws and regulations regarding privacy and protection of user data;

	·	our reliance upon credit card processors and related merchant account approvals;

	·	governmental regulation or taxation of the online dating, social dating or Internet industries;

	·	the impact of any claim that we have infringed on intellectual property rights of others;

	·	our ability to protect our intellectual property rights;

	·	the risk that we might be deemed a “dating service” or an “Internet dating service” under various state regulations;

	·	the possibility that our users or third parties may be physically or emotionally harmed following interaction with other users;

	·	our ability to obtain additional capital or financing to execute our business plan; and

	·	our ability to maintain effective internal control over financial reporting.

(1)	Estimated solely for the purpose of calculating the amount of the registration fee pursuant to Rule 457(o) under the Securities Act of 1933, as amended (the “Securities Act”).

(2)	Calculated pursuant to Rule 457(o) under the Securities Act based on an estimate of the proposed maximum aggregate offering price, including the offering price of common stock and warrants that the underwriter has the option to purchase.

(3)	Pursuant to Rule 416 under the Securities Act, we are also registering an indeterminate number of shares of common stock that may be issuable with respect to the shares being registered hereunder as a result of stock splits, stock dividends or similar transactions.

(4)	No fee is required pursuant to Rule 457(g) under the Securities Act.

ABOUT THIS PROSPECTUS	i
PROSPECTUS SUMMARY	1
SUMMARY CONSOLIDATED FINANCIAL DATA	4
RISK FACTORS	5
SPECIAL NOTE REGARDING FORWARD-LOOKING STATEMENTS	14
USE OF PROCEEDS	15
MARKET PRICE OF COMMON STOCK AND RELATED STOCKHOLDER MATTERS	16
CAPITALIZATION	17
DILUTION	19
SELECTED CONSOLIDATED FINANCIAL DATA	20
DIVIDEND POLICY	22
MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS	23
DESCRIPTION OF BUSINESS	34
DIRECTORS, EXECUTIVE OFFICERS, PROMOTERS AND CONTROL PERSONS	38
EXECUTIVE COMPENSATION	39
SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT	44
CERTAIN RELATIONSHIPS AND RELATED PARTY TRANSACTIONS	45
DESCRIPTION OF SECURITIES	47
MATERIAL U.S. FEDERAL INCOME AND ESTATE TAX CONSIDERATIONS FOR NON-U.S. HOLDERS	51
SHARES ELIGIBLE FOR FUTURE SALE	54
UNDERWRITING	55
LEGAL MATTERS	59
EXPERTS	59
WHERE YOU CAN FIND MORE INFORMATION	59
INDEX TO FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA	F-1

	For the Years Ended						For the Six Months Ended
	December 31,						June 30,
	2011			2012			2013
Statements of Operations Data:							(unaudited)
Revenues:
Subscription revenue	$	18,781,368		$	18,910,070		$	6,578,210
Advertising revenue		374,175			336,666			43,339
Total revenues		19,155,543			19,246,736			6,621,549
Costs and expenses:
Programming, hosting and technology		2,587,822			4,444,550			2,701,321
Compensation		1,976,384			3,625,117			1,899,606
Professional fees		558,136			703,125			473,807
Advertising and marketing		14,626,963			9,876,097			2,083,929
General and administrative		3,070,178			3,953,795			2,264,725
Total costs and expenses		22,819,483			22,602,684			9,423,388
Loss from operations		(3,663,940	)		(3,355,948	)		(2,801,839	)
Interest income, net		28,858			21,517			3,106
Mark-to-market adjustment on warrant liability		2,038,000			(679,325	)		1,171,250
Other income (expense)		3,909			(16,885	)		-
Net loss before income taxes:		(1,593,173	)		(4,030,641	)		(1,627,483	)
Provision for income taxes		-			-			-
Net loss	$	(1,593,173	)	$	(4,030,641	)	$	(1,627,483	)

Net loss per common share:
Basic and diluted	$	(0.04	)	$	(0.10	)	$	(0.04	)

Weighted average number of common shares used in calculating net loss per common share:
Basic and diluted		37,619,208			38,611,758			38,920,671

	As of December 31, 2012		As of June 30, 2013 (unaudited)
	Actual		Actual		As Adjusted (1)
Balance Sheet Data:				(unaudited)
Cash and cash equivalents	$	5,357,596	$	2,617,733	$
Working capital (deficit)		2,711,271		337,112
Total assets		6,988,997		4,569,820
Deferred revenue		2,524,229		2,031,702
Long-term deferred rent		48,340		30,214
Total liabilities		5,228,126		3,891,363
Total stockholders’ equity		1,760,871		678,457

	High Bid* ($)		Low Bid* ($)
2013
Third Quarter	$	1.14	$	0.52
Second Quarter		0.84		0.40
First Quarter		1.31		0.55

2012
Fourth Quarter	$	1.30	$	0.51
Third Quarter		1.51		0.96
Second Quarter		1.95		1.02
First Quarter		2.37		0.62

2011
Fourth Quarter	$	0.79	$	0.48
Third Quarter		1.44		0.65
Second Quarter		3.20		1.02
First Quarter		4.50		1.60

	As of June 30, 2013
	Actual		As Adjusted(1)
Cash and cash equivalents	$	2,617,733	$
Restricted cash(2)		375,211

Stockholders’ equity:
Preferred Stock, $0.001 par value, 10,000,000 shares authorized, none issued and outstanding		—
Common Stock, $0.001 par value, 100,000,000 shares authorized, 49,737,826 shares issued and 38,932,826 shares outstanding, actual(3); 100,000,000 shares authorized, shares issued and shares outstanding, as adjusted		38,933
Additional paid-in capital		9,982,391
Accumulated deficit		(9,342,867)
Total stockholders’ equity		678,457
Total capitalization	$	678,457	$

(1)	Each $1.00 increase or decrease in the assumed public offering price of $ per share, which was the closing bid price of our common stock on, 2013, in this offering would increase or decrease, as applicable, each of cash, additional paid-in capital, total stockholders’ equity and total capitalization by $ , assuming the number of shares of common stock offered by us, as set forth on the cover page of this prospectus, remains the same, and after deducting estimated underwriting discounts and commissions and estimated offering expenses payable by us.
(2)	We have a line of credit with JP Morgan Chase Bank, N.A. (“JP Morgan”) related to our corporate credit cards and have placed a cash collateral guarantee of 105% of the monthly credit line of $100,000 in a certificate of deposit. We had recorded $105,211 as restricted cash on the balance sheet for this credit line as of June 30, 2013. We also have a letter of credit from JP Morgan in the amount of $270,000 in favor of Hewlett Packard Financial Services Company that is recorded as restricted cash on the balance sheet as of June 30, 2013.
(3)	As of June 30, 2013, we have included 10,805,000 shares of restricted common stock in the number of shares that are issued, but have excluded these shares of restricted common stock in the number of shares outstanding since the shares have been issued but have not vested.

	●	10,805,000 shares of restricted common stock that have been issued but remain subject to forfeiture;

	●	4,511,815 shares of common stock issuable upon the exercise of outstanding options to purchase our common stock at a weighted average exercise price of $0.76 per share;

	●	2,342,500 shares of common stock issuable upon the exercise of outstanding warrants at a weighted average exercise price of $2.50 per share;

	●	3,228,185 shares of common stock reserved for future issuance under the Incentive Plan;

	●	shares of common stock issuable upon the exercise of warrants included in this offering; and

	●	shares of common stock issuable upon the exercise of the underwriter’s warrants.

Assumed public offering price per share		$
Net tangible book value per share as of June 30, 2013
Increase in net tangible book value per share attributable to new investors		$
Pro forma net tangible book value per share after this offering		$
Dilution per share to investors in this offering		$

	For the Years Ended						For the Six Months Ended
	December 31,						June 30,
	2011			2012			2013
Statements of Operations Data:							(unaudited)
Revenues:
Subscription revenue	$	18,781,368		$	18,910,070		$	6,578,210
Advertising revenue		374,175			336,666			43,339
Total revenues		19,155,543			19,246,736			6,621,549
Costs and expenses:
Programming, hosting and technology		2,587,822			4,444,550			2,701,321
Compensation		1,976,384			3,625,117			1,899,606
Professional fees		558,136			703,125			473,807
Advertising and marketing		14,626,963			9,876,097			2,083,929
General and administrative		3,070,178			3,953,795			2,264,725
Total costs and expenses		22,819,483			22,602,684			9,423,388
Loss from operations		(3,663,940	)		(3,355,948	)		(2,801,839	)
Interest income, net		28,858			21,517			3,106
Mark-to-market adjustment on warrant liability		2,038,000			(679,325	)		1,171,250
Other income (expense)		3,909			(16,885	)		-
Net loss before income taxes:		(1,593,173	)		(4,030,641	)		(1,627,483	)
Provision for income taxes		-			-			-
Net loss	$	(1,593,173	)	$	(4,030,641	)	$	(1,627,483	)

Net loss per common share:
Basic and diluted	$	(0.04	)	$	(0.10	)	$	(0.04	)

Weighted average number of common shares used in calculating net loss per common share:
Basic and diluted		37,619,208			38,611,758			38,920,671

	Year Ended December 31,							Six Months Ended June 30,
	2011			2012				2012			2013
Consolidated Statements of Operations Data:
Total revenues	$	19,155,543			$	19,246,736		$	10,958,088		$	6,621,549

Consolidated Balance Sheets Data:
Deferred revenue (at period end)	$	3,138,406			$	2,524,229		$	3,654,943		$	2,031,702

Consolidated Statements of Cash Flows Data:
Net cash used in operating activities	$	(1,455,542	)		$	(3,401,191	)	$	(1,697,958	)	$	(2,651,931	)

	Year Ended December 31,						Six Months Ended June 30,
	2011			2012			2012			2013
Revenues		100.0	%		100.0	%		100.0	%		100.0	%
Costs and expenses:
Programming, hosting and technology		13.5	%		23.1	%		17.3	%		40.8	%
Compensation		10.3	%		18.8	%		18.0	%		28.7	%
Professional fees		2.9	%		3.7	%		3.0	%		7.2	%
Advertising and marketing		76.4	%		51.3	%		68.8	%		31.5	%
General and administrative		16.0	%		20.5	%		18.9	%		34.2	%
Total costs and expenses		119.1	%		117.4	%		126.1	%		142.3	%
Loss from operations		(19.1	)%		(17.4	)%		(26.1	)%		(42.3	)%
Interest income, net		0.2	%		0.1	%		0.2	%		0.0	%
Mark-to-market adjustment on warrant liability		10.6	%		(3.5	%		(10.7)	%		17.7	%
Other income (expense)		0.0	%		(0.1	)%		(0.2)	%		0.0	%
Net loss before income taxes		(8.3	)%		(20.9	)%		(36.8	)%		(24.6	)%
Provision for income taxes		0.0	%		0.0	%		0.0	%		0.0	%
Net loss		(8.3	)%		(20.9	)%		(36.8	)%		(24.6	)%

	Six Months Ended June 30,										% Revenue Six Months Ended June 30,
	2012		2013		Decrease			% Decrease			2012			2013
Subscription revenue	$	10,696,945	$	6,578,210	$	(4,118,735	)		(38.5	)%		97.6	%		99.3	%
Advertising revenue		261,143		43,339		(217,804	)		(83.4	)%		2.4	%		0.7	%
Total revenues	$	10,958,088	$	6,621,549	$	(4,336,539	)		(39.6	)%		100.0	%		100.0	%

	Six Months Ended							%
	June 30,				Increase			Increase
	2012		2013		(Decrease)			(Decrease)
Programming, hosting and technology	$	1,897,885	$	2,701,321	$	803,436			42.3	%
Compensation		1,969,852		1,899,606		(70,246	)		(3.6	)%
Professional fees		332,226		473,807		141,581			42.6	%
Advertising and marketing		7,543,897		2,083,929		(5,459,968	)		(72.4	)%
General and administrative		2,074,553		2,264,725		190,172			9.2	%
Total costs and expenses	$	13,818,413	$	9,423,388	$	(4,395,025	)		(31.8	)%

	Six Months Ended June 30,					Increase			% Increase
	2012		2013			(Decrease)			(Decrease)
Interest income, net	$	18,600	$	3,106		$	(15,494	)		(83.3	)%
Mark-to-market adjustment on warrant liability		(1,171,250)		1,171,250	)		2,342,500			(200.0	)%
Other expense		(16,885)		-			16,885			(100.0	)%
Total non-operating income (expense)	$	(1,169,535)	$	1,174,356		$	2,343,891			(200.4	)%

											% Revenue
	Year Ended										Year Ended
	December 31,				Increase			% Increase			December 31,
	2011		2012		(Decrease)			(Decrease)			2012			2011
Subscription revenue	$	18,781,368	$	18,910,070	$	128,702			0.7	%		98.3	%		98.0	%
Advertising revenue		374,175		336,666		(37,509	)		(10.0	)%		1.7	%		2.0	%
Total revenues	$	19,155,543	$	19,246,736	$	91,193			0.5	%		100.0	%		100.0	%

Name	Age	Position

Clifford Lerner	35	President, Chief Executive Officer and Chairman of the Board of Directors

Jon D. Pedersen, Sr.	42	Chief Financial Officer

Name and Principal Position	Year	Salary ($) (1)		Bonus ($)			Stock Awards ($) (2)		Option Awards ($) (3)		Non-Equity Incentive Plan Compensation ($)		Change in Pension Value and Nonqualified Deferred Compensation Earnings ($)		All Other Compensation ($)		Total ($)
Clifford Lerner	2012	$	282,333	$	50,000			-		-		-		-		-	$	332,333
President and Chief Executive Officer	2011	$	246,667	$	200,000	(4)		2,762,500		-		-		-		-	$	3,209,167

Jon D. Pedersen, Sr.	2012	$	250,000	$	100,000			-		-		-		-		-	$	350,000
Chief Financial Officer	2011	$	44,508	$	25,000	(4)		-	$	389,390		-		-		-	$	458,898

(2)	Represents the grant date fair value of restricted stock awards calculated in accordance with Accounting Standards Codification (“ASC”) 718, Compensation—Stock Compensation (“ASC 718”).
(3)	Represents the amount recognized for financial statement reporting purposes in accordance with ASC 718.
(4)	For each named executive officer in 2011, represents a bonus earned during 2011 but paid in February 2012.

			Option Awards						Stock Awards
Name	Grant Date		Number of Securities Underlying Unexercised Options (#) Exercisable	Number of Securities Underlying Unexercised Options (#) Unexercisable	Equity Incentive Plan Awards: Number of Securities Underlying Unexercised Unearned Options (#)	Option Exercise Price ($)		Option Expiration Date	Number of Shares or Units of Stock That Have Not Vested (#)	Market Value of Shares or Units of Stock That Have Not Vested ($) (5)		Equity Incentive Plan Awards: Number of Unearned Shares, Units or Other Rights That Have Not Vested (#)	Equity Incentive Plan Awards: Market or Payout Value of Unearned Shares, Units or Other Rights That Have Not Vested ($)
Clifford Lerner	12/14/2011	(1)	--	--	--		--	--	4,250,000	$	5,312,500	--	--

Jon D. Pedersen, Sr.	10/27/2011	(2)	100,000	--	--	$	0.651	10/27/2021	--		--	--	--
	10/27/2011	(3)	103,609	375,000	--	$	0.651	10/27/2021	--		--	--	--
	10/27/2011	(4)	21,391	--	--	$	0.651	10/27/2021	--		--	--	--

	Beneficial Ownership Prior to the Offering (1)						Beneficial Ownership After the Offering (1) (2)
Name of Beneficial Owner	Number			Percentage			Number	Percentage
Directors and Officers
Clifford Lerner		30,250,000	(3)		62.8	%
Jon D. Pedersen, Sr.		830,000	(4)		2.1	%
Officers and Directors as a Group (2 persons)		31,080,000	(5)		63.4	%

Certain 5% Beneficial Owners
Darrell Lerner		3,212,157	(6)		8.3	%
Manulife Financial Corporation		2,000,000	(7)		5.1	%