1. In December 2005/June 2006, GHP purchased its 44% ownership stake at an average cost basis of $5.22.
2. From 2007 through 2008, Spark repurchased 34% of the Company for $45mn with an average cost of $4.20 per share.
3. In June 2008, Mr. Berger purchased 70,500 shares at $4.15 per share in the open market.
In conclusion, if a sufficient price for Spark cannot be achieved for all Spark shareholders, the Company should remain public and the Board should address the operating and compensation issues raised in this letter. Additionally, the Board should consider capital management actions such as paying out 100% of Free Cash Flow or conducting a Dutch Tender for 10-15% of the Company’s shares.We welcome a dialogue with the members of the Special Committee to discuss our concerns regarding the Company and the performance of its management team. However, for the avoidance of doubt, we intend to pursue all avenues available to us to ensure that shareholder value is maximized and minority shareholder rights are protected. Sincerely,
John H. LewisManaging PartnerOsmium Partners
DISCLAIMER Certain factual and statistical (both historical and projected) industry and market data and other information contained herein was obtained by Osmium Partners from independent, third-party sources that it deems to be reliable. However, Osmium Partners has not independently verified any of such data or other information, or the reasonableness of the assumptions upon which such data and other information was based, and there can be no assurance as to the accuracy of such data and other information. Further, many of the statements and assertions contained herein reflect the belief of Osmium Partners, which belief may be based in whole or in part on such data and other information. Osmium Partners recognizes that there may be confidential or otherwise non-public information in the possession of the companies discussed in this letter that could lead these companies or others to disagree with Osmium Partners’ conclusions. The analyses provided may include certain statements, assumptions, estimates and projections prepared with respect to, among other things, the historical and anticipated operating performance of the companies. Such statements, assumptions, estimates, and projections reflect various assumptions by Osmium Partners concerning anticipated results that are inherently subject to significant economic, competitive, and other uncertainties and contingencies and have been included solely for illustrative purposes. No representations, express or implied, are made as to the accuracy or completeness of such statements, assumptions, estimates or projections or with respect to any other materials herein. Actual results may vary materially from the estimates and projected results contained herein. Osmium Partners disclaims any obligation to update this letter. Funds and separately managed accounts managed by Osmium Partners own Spark Networks common stock. Osmium Partners manages funds that are in the business of actively trading - buying and selling - securities and other financial instruments. Osmium Partners in the future may change its investment position in Spark Networks and possibly increase, decrease, dispose of, or change the form of its investment for any or no reason. This letter should not be considered a recommendation to buy, sell, or hold any investment. In addition, this letter is neither an offer to purchase nor a solicitation of an offer to sell any securities of Spark Networks or any of the other companies mentioned in this letter. 1 US equities with under $100mn in market cap.