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Osmium Partners Demands Action At Spark Networks To Maximize Shareholder Value

The following letter was sent to the board of Spark Networks Inc. (NYSE Amex: LOV) on August 2, 2010.

Dear Board Members,

Osmium Partners beneficially owns 6.7% of Spark Networks’ common stock. We are writing to express our concern in two areas that we believe are adversely affecting the Company’s public market valuation: a) substantial conflicts of interest that have and will likely continue to lead to a flawed strategic review process by the Special Committee of the Board of Directors and b) excessive management compensation that does not reflect Spark Networks’ reported financial results or stock performance over the last several years. We believe that these important issues mask the many positive attributes of Spark Networks’ business and act as impediments to shareholders realizing full value for their stock.

Given Great Hill Partners’ (“GHP”) influence on the Board’s actions and deliberations, the Board’s actions over time and the disturbing issues described below, we urge the Special Committee to 1) focus on selling the business for its full intrinsic value (which we believe is greater than $6 per share) or 2) announce its intention to remain public and enhance shareholder value through a comprehensive evaluation of management’s compensation relative to shareholder returns, revenue growth, and profitability. The Board should also renew its commitment to better capital management, including potential share repurchases and/or special dividends, and improved corporate governance.

The Special Committee is currently in the process of considering all strategic alternatives available to the Company, which was prompted by GHP’s unsolicited bid for the Company in March 2010. While we acknowledge that the Special Committee appropriately rejected GHP’s grossly inadequate and opportunistic bid, we remain convinced that independent directors will be unduly influenced by GHP to the detriment of the Company’s minority shareholders. We offer the following evidence to support this concern:

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