UNITED STATES
SECURITIES AND EXCHANGE COMMISSION WASHINGTON, D.C. 20549 SCHEDULE
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0-11.
BDO
Convenience translation of the original German audit report. Solely
the original text in German is authoritative. Report on the audit
of the consolidated financial statements and the group management
report for the financial year from January 1, 2021 to December 31,
2021 of Spark Networks SE Munich
bdo TABLE OF
CONTENTS A. AUDIT ENGAGEMENT 1 B. REPLICATION OF THE INDEPENDENT
AUDITOR’S REPORT 2 C. GENERAL STATEMENTS 6 I. Evaluation of
management’s assessment of the group’s position 6 II. Findings on
the consolidated accounting 7 1. Group of entities consolidated and
the reporting date of the consolidated financial statements 7 2.
Audit of the financial information of the components included in
the consolidated financial statements 8 3. Consolidated financial
statements 8 4. Group management report 10 D. SUBJECT OF THE AUDIT
11 E. NATURE AND SCOPE OF THE ENGAGEMENT PERFORMED 12 F.
EXPLANATIONS ON THE CONSOLIDATED ACCOUNTING 15 I. Accounting
standards 15 II. Accounting policies and valuation methods 15 G.
CONCLUDING STATEMENT AND THE SIGNED AUDIT REPORT 18
bdo
APPENDICES Consolidated financial statements for the financial year
from January 1, 2021 to December 31, 2021 Appendix I Consolidated
statement of financial position Page 3 Consolidated statement of
comprehensive income Page 4 Consolidated statement of changes in
equity Page 5 Consolidated statement of cash flows Page 6 Notes to
the consolidated financial statements Page 7 - 50 Group management
report for the financial year from January 1, 2021 to December 31,
2021 Appendix II Page 1 - 23 Special Terms and Conditions of BDO AG
Wirtschaftsprüfungsgesellschaft and General Engagement Terms for
Wirtschaftsprüfer (German Public Auditors) and
Wirtschaftsprüfungsgesellschaften (Public Audit Firms) Appendix III
Page 1 - 4 Please note that small deviations may occur due to the
commercial rounding of figures and per- centages. In this audit
report we use the term „articles of association" in the sense of a
superordinate term and therefore do not differentiate between
articles of association and articles of incorporation (see § 2
AktG). References to provisions of the German Commercial Code (HGB)
as well as to other laws refer to the version applicable to the
audited financial year, unless otherwise indicated.
AUDIT
ENGAGEMENT Page 1 of 18 bdo A. AUDIT ENGAGEMENT By resolution of
the shareholders’ meeting of Spark Networks SE, Munich (hereinafter
also referred to as “Spark Networks ” or “parent company”) made on
August 11, 2021, we were appointed the group auditor for the
financial year from January 1, 2021 to December 31, 2021.
Thereupon, the Administrative Board of the parent company engaged
us to audit the consolidated financial statements and the group
management report for the financial year from January 1, 2021 to
December 31, 2021 in accordance with § 317 et seqq. HGB. The term
“group” comprises Spark Networks SE and all entities consolidated
in the consolidated financial statements. This report is solely
intended for Spark Networks SE. The performance of the audit
engagement and our responsibilities — also towards third parties —
are governed by the Special Terms and Conditions of BDO AG
Wirtschaftsprüfungsgesellschaft (STC) as well as the General
Engagement Terms for Wirtschaftsprüfer (German Public Auditors) and
Wirtschaftsprüfungsgesellschaften (Public Audit Firms) as amended
on 1 January 2017 (GET) accompanying this report as Appendix
III.
REPLICATION
OF THE INDEPENDENT AUDITOR’S REPORT bdo Page 2 of 18 B. REPLICATION
OF THE INDEPENDENT AUDITOR’S REPORT We have included the
consolidated financial statements and the group management report
of Spark Networks SE, Munich, for the financial year from January
1, 2021 to December 31, 2021 in this report as Appendix I
(consolidated financial statements) and Appendix II (group
management re- port) in the versions, for which the unqualified
audit opinion was signed and issued in Berlin on June 8, 2022 as
follows: Note: This is a convenience translation of the German
original. Solely the original text in German is authoritative.
“INDEPENDENT AUDITOR’S REPORT To Spark Networks SE, Munich AUDIT
OPINIONS We have audited the consolidated financial statements of
Spark Networks SE, Munich, and its subsidiaries (the group) — which
comprise the consolidated statement of financial position as at
December 31, 2021, the consolidated statement of comprehensive
income, consoli- dated statement of changes in equity, and con-
solidated statement of cash flows for the finan- cial year from
January 1, 2021 to December 31, 2021, and notes to the consolidated
financial statements, including a summary of significant accounting
policies. In addition, we have audited the group manage- ment
report of Spark Networks SE for the finan- cial year from January
1, 2021 to December 31, 2021. In accordance with the German legal
require- ments we have not audited the content of those parts of
the group management report listed under “OTHER INFORMATION”. In
our opinion, on the basis of the knowledge obtained in the audit, •
the accompanying consolidated finan- cial statements comply, in all
material respects, with the IFRSs as adopted by the EU, and the
additional require- ments of German commercial law pur- suant to §
315e (1) HGB [Han- delsgesetzbuch: German Commercial Code] and, in
compliance with these requirements, give a true and fair view of
the assets, liabilities and financial position of the group as at
December 31, 2021 and of its financial perfor- mance for the
financial year from Jan- uary 1, 2021 to December 31, 2021, and •
the accompanying group management report as a whole provides an
appropri- ate view of the group's position. In all material
respects, this group manage- ment report is consistent with the
con- solidated financial statements, com- plies with German legal
requirements and appropriately presents the oppor- tunities and
risks of future develop- ment. Our audit opinion on the group
management re- port does not cover the contents of the parts of the
group management report listed under “OTHER INFORMATION”. Pursuant
to § 322 (3) sentence 1 HGB, we de- clare that our audit has not
led to any reserva- tions relating to the legal compliance of the
consolidated financial statements and of the group management
report. BASIS FOR THE AUDIT OPINIONS We conducted our audit of the
consolidated fi- nancial statements and of the group manage- ment
report in accordance with § 317 HGB and in compliance with German
Generally Accepted Standards for Financial Statement Audits prom-
ulgated by the Institut der Wirtschaftsprüfer [Institute of Public
Auditors in Germany] (IDW).
REPLICATION
OF THE INDEPENDENT AUDITOR’S REPORT Page 3 of 18 bdo Our
responsibilities under those requirements and principles are
further described in the “AUDITOR’S RESPONSIBILITIES FOR THE AUDIT
OF THE CONSOLIDATED FINANCIAL STATEMENTS AND OF THE GROUP
MANAGEMENT REPORT” section of our auditor’s report. We are inde-
pendent of the group entities in accordance with the requirements
of German commercial and professional law, and we have fulfilled
our other German professional responsibilities in accordance with
these requirements. We be- lieve that the audit evidence we have
obtained is sufficient and appropriate to provide a basis for our
audit opinions on the consolidated finan- cial statements and on
the group management report. OTHER INFORMATION The executive
directors are responsible for the other information. The other
information com- prises the following unaudited parts of the group
management report: • the group statement of corporate governance
that is made reference to in the group management report. Our audit
opinions on the consolidated financial statements and on the group
management re- port do not cover the other information, and
consequently we do not express an audit opin- ion or nor any other
form of assurance conclu- sion thereon. In connection with our
audit, our responsibility is to read the other information and, in
so do- ing, to consider whether the other information • is
materially inconsistent with the con- solidated financial
statements, with the group management report or with our knowledge
obtained in the audit, or • otherwise appears to be materially
misstated. If, based on the work we have performed, we conclude
that there is a material misstatement of this other information, we
are required to report that fact. We have nothing to report in this
regard. RESPONSIBILITIES OF THE EXECUTIVE DIRECTORS AND THE
ADMINISTRATIVE BOARD FOR THE CONSOLIDATED FINANCIAL STATEMENTS AND
THE GROUP MANAGEMENT REPORT The executive directors are responsible
for the preparation of the consolidated financial state- ments that
comply, in all material respects, with IFRSs as adopted by the EU
and the addi- tional requirements of German commercial law pursuant
to § 315e (1) HGB and that the consol- idated financial statements
in compliance with those requirements give a true and fair view of
the assets, liabilities, financial position and fi- nancial
performance of the group. In addition, the executive directors are
responsible for such internal control as they have determined nec-
essary to enable the preparation of consoli- dated financial
statements that are free from material misstatement, whether due to
fraud or error. In preparing the consolidated financial state-
ments, the executive directors are responsible for assessing the
group’s ability to continue as a going concern. They also have the
responsibil- ity for disclosing, as applicable, matters related to
going concern. In addition, they are respon- sible for financial
reporting based on the going concern basis of accounting, unless
there is an intention to liquidate the group or to cease op-
erations, or there is no realistic alternative but to do so.
Furthermore, the executive directors are re- sponsible for the
preparation of the group man- agement report that, as a whole,
provides an appropriate view of the group’s position and is, in all
material respects, consistent with the consolidated financial
statements, complies with German legal requirements, and appropri-
ately presents the opportunities and risks of fu- ture development.
In addition, the executive directors are responsible for such
arrangements and measures (systems) as they have consid- ered
necessary to enable the preparation of a group management report
that is in accordance with the applicable German legal
requirements, and to be able to provide sufficient appropriate
evidence for the assertions in the group man- agement report. The
Administrative Board is responsible for overseeing the group’s
financial reporting pro-
REPLICATION
OF THE INDEPENDENT AUDITOR’S REPORT bdo Page 4 of 18 cess for the
preparation of the consolidated fi- nancial statements and of the
group manage- ment report. AUDITOR’S RESPONSIBILITIES FOR THE AUDIT
OF THE CONSOLIDATED FINANCIAL STATEMENTS AND OF THE GROUP
MANAGEMENT REPORT Our objectives are to obtain reasonable assur-
ance about whether the consolidated financial statements as a whole
are free from material misstatement, whether due to fraud or error,
and whether the group management report as a whole provides an
appropriate view of the group’s position and, in all material
respects, is consistent with the consolidated financial statements
and the knowledge obtained in the audit, complies with the German
legal require- ments and appropriately presents the opportu- nities
and risks of future development, as well as to issue an auditor’s
report that includes our audit opinions on the consolidated
financial statements and on the group management re- port.
Reasonable assurance is a high level of assur- ance, but is not a
guarantee that an audit con- ducted in accordance with § 317 HGB
and in compliance with German Generally Accepted Standards for
Financial Statement Audits prom- ulgated by the Institut der
Wirtschaftsprüfer (IDW) will always detect a material misstate-
ment. Misstatements can arise from fraud or er- ror and are
considered material if, individually or in the aggregate, they
could reasonably be expected to influence the economic decisions of
users taken on the basis of these consoli- dated financial
statements and this group man- agement report. We exercise
professional judgment and main- tain professional skepticism
throughout the au- dit. We also • identify and assess the risks of
material misstatement of the consolidated fi- nancial statements
and of the group management report, whether due to fraud or error,
design and perform au- dit procedures responsive to those risks,
and obtain audit evidence that is sufficient and appropriate to
provide a basis for our audit opinions. The risk of not detecting a
material misstatement resulting from fraud is higher than for one
resulting from error, as fraud may involve collusion, forgery,
intentional omissions, misrepresentations, or the override of
internal controls. • obtain an understanding of internal control
relevant to the audit of the consolidated financial statements and
of arrangements and measures (sys- tems) relevant to the audit of
the group management report in order to design audit procedures
that are ap- propriate in the circumstances, but not for the
purpose of expressing an audit opinion on the effectiveness of
these systems. • evaluate the appropriateness of ac- counting
policies used by the executive directors and the reasonableness of
es- timates made by the executive direc- tors and related
disclosures. • conclude on the appropriateness of the executive
directors’ use of the going concern basis of accounting and, based
on the audit evidence obtained, whether a material uncertainty
exists related to events or conditions that may cast significant
doubt on the group’s ability to continue as a going concern. If we
conclude that a material uncertainty exists, we are required to
draw attention in the auditor’s report to the related disclosures
in the consol- idated financial statements and in the group
management report, or if such disclosures are inadequate, to modify
our respective audit opinions. Our con- clusions are based on the
audit evi- dence obtained up to the date of our auditor’s report.
However, future events or conditions may cause the group to cease
to be able to continue as a going concern. • evaluate the overall
presentation, structure and content of the consoli- dated financial
statements, including the disclosures, and whether the con-
solidated financial statements present the underlying transactions
and events in a manner that the consolidated fi- nancial statements
give a true and fair view of the assets, liabilities, financial
position and financial performance of the group in compliance with
IFRSs as adopted by the EU and the additional requirements of
German commercial law pursuant to § 315e (1) HGB.
REPLICATION
OF THE INDEPENDENT AUDITOR’S REPORT Page 5 of 18 bdo • obtain
sufficient appropriate audit ev- idence regarding the financial
infor- mation of the entities or business ac- tivities with the
group to express audit opinions on the consolidated financial
statements and on the group manage- ment report. We are responsible
for the direction, supervision and perfor- mance of the group
audit. We remain solely responsible for our audit opin- ions. •
evaluate the consistency of the group management report with the
consoli- dated financial statements, its con- formity with German
law, and the view of the group’s position it provides. • perform
audit procedures on the pro- spective information presented by the
executive directors in the group man- agement report. On the basis
of suffi- cient appropriate audit evidence, we evaluate, in
particular, the significant assumptions used by the executive di-
rectors as a basis for the prospective information, and evaluate
the proper derivation of the prospective infor- mation from these
assumptions. We do not express a separate audit opinion on the
prospective information and on the assumptions used as a basis.
There is a substantial unavoidable risk that future events will
differ materially from the prospective information. We communicate
with those charged with gov- ernance regarding, among other
matters, the planned scope and timing of the audit and sig-
nificant audit findings, including any significant deficiencies in
internal control that we identify during our audit.”
GENERAL
STATEMENTS bdo Page 6 of 18 C. GENERAL STATEMENTS I. Evaluation of
management’s assessment of the group’s position From the group
management report prepared by the legal representatives of the
parent company, we highlight the following information which, in
our opinion, is of material importance for the assessment of the
economic situation of the Group and the future development of the
Group to- gether with its main opportunities and risks: — Revenue
in 2021 decreased by EUR 21.0 million, or 10.3 %, compared to 2020.
The decrease in revenue was attributable to the decrease in the
number of average paying subscribers of 5.7 % related to Zoosk
brand, partially offset by the increase in the core Spark brands. —
Net cash provided by operating activities was EUR 17.2 million for
the year ended Decem- ber 31, 2021, a decrease of EUR 0.7 million
compared to EUR 17.9 million during the year ended December 31,
2020. The decrease was primarily driven by the decrease in gross
profit. As of December 31, 2021 and 2020, the aggregated
outstanding principal balance of the Amended Term Loan Facility was
EUR 75.5 million and EUR 85.3 million, respectively, The Group is
in compliance with all its financial covenants with a net leverage
ratio of 2.12 as of December 31, 2021 and has met its payment
obligations at all times under the existing term and revolving
facility. — On March 11, 2022, the company completed the successful
refinancing of its existing revolving credit facility by way of
borrowings under a new term loan with MGG Investment Group LP. The
term loan agreement includes senior secured facilities in the
amount of USD 100 million. Borrowings under the loan agreement
mature on March 11, 2027 and are secured by all of the material
assets of the company, Spark Networks Inc. their respective
subsidiary guarantors. — The decrease in assets from 2020 to 2021
was primarily attributable to impairment of goodwill and internally
developed software. Impairment charge of EUR 34.6 million
attributable to the Zoosk operating segment was recognized and
included as part of Impairment of intangible assets and goodwill on
the Consolidated Statements of Operations and Comprehensive Loss.
The impairment charge was primarily attributed to declines in the
estimated undiscounted cash flows and an increase in the discount
rate due to increased risk factors, which resulted in the carrying
amount not being recoverable. — With four of the company's five key
brands already in growth mode and Zoosk showing signs of a positive
turnaround per management’s assessment, management is confident
that the Group will continue to see revenue growth throughout 2022.
With the new credit facility, and the ability to invest, management
expects a slight increase in sales of the Group's top products in
2022 the Group's top products, and adjusted EBITDA, which is
expected to be at the same level as in the 2021 fiscal
year.
GENERAL
STATEMENTS Page 7 of 18 bdo — An increasing number of
organizations, including large online and offline businesses,
internet companies, financial institutions, and government
institutions, have disclosed breaches of their information security
systems and other information security incidents, including
cyberat- tacks, ransomware, computer viruses, worms, hacking,
phishing, bot attacks or other destruc- tive or disruptive
software, distributed denial of service attacks, other attempts to
misappro- priate customer information, some of which have involved
sophisticated and highly targeted attacks. Spark has previously
experienced and expects to continue to experience these types of
breaches, attacks and other incidents. Although the Group and its
service providers have systems and processes that are designed to
protect, prevent data loss, and prevent other security breaches and
security incidents, these security measures have not fully
protected the Group's systems in the past and cannot guarantee
security in the future. — Management expects Spark to continue to
expand its presence in North America through sig- nificant
marketing investment in this region as Spark looks to drive both
organic growth of its existing brand portfolio through the launch
of new or acquired brands. The fact that Spark is one of the
largest publicly traded online dating companies in the United
States also enables the Group to issue public equity as
consideration for acquisitions as Spark pursues further
consolidation in the online dating industry. In our opinion based
on the knowledge we had obtained during the course of our audit,
the man- agement report as a whole provided an appropriate view of
the company’s position. In all material respects, the management
report appropriately presented the opportunities and risks of
future development. II. Findings on the consolidated accounting 1.
Group of entities consolidated and the reporting date of the
consolidated financial statements The subsidiaries included in the
consolidated financial statements are presented in the notes to the
consolidated financial statements (Appendix I). The scope of
consolidation was determined consistently with prior years. No
significant changes in the scope of consolidated entities took
place compared to prior year.
GENERAL
STATEMENTS bdo Page 8 of 18 2. Audit of the financial information
of the components included in the consolidated finan- cial
statements In the scope of auditing the consolidated financial
statements, deviations may occur between the components under
consideration and the subsidiaries consolidated as listed in the
notes to the consolidated financial statements. The identification
of components is decisively influenced by the structure of the
group. Components may be either legally independent entities or
legally de- pendent entities or entities defined by other criteria,
such as functions, processes, products or geographic locations. The
necessary adjustments to the annual financial statements regarding
recognition and measure- ment policies applicable in the group were
properly made. 3. Consolidated financial statements The
consolidated financial statements for the financial year from
January 1, 2021 to December 31, 2021 audited by us accompany this
report in Appendix I. In our opinion based on the findings of our
audit, they, in all material respects, comply with IFRSs as adopted
by the EU and the additional requirements of German commercial law
pursuant to § 315e (1) HGB and — if applicable — the supplementary
provisions of the articles of association of the parent company.
The consolidated statement of financial position and the
consolidated statement of comprehensive income were properly
derived from the financial information of the components included
in the consolidated financial statements. The opening figures of
the statement of financial position were properly carried over from
the prior year financial statements. The consolidation methods
applied, in all material respects, comply with IFRSs, as adopted by
the EU; the consolidation measures were properly applied, and the
foreign currency translations were properly performed.
Consolidation bookings were appropriately continued. Disclosures in
the notes to the consolidated financial statements are, in all
material respects, complete and appropriate. The consolidated
statement of changes in equity and the consolidated statement of
cash flows were, in all material respects, properly prepared.
According to our findings, the group-wide accounting-related
internal control system is, in princi- ple, appropriate for
ensuring the security of the accounting-related data processed in
the group with the exception of the material weaknesses described
below. During our audit, we identified the following significant
deficiencies in the Group's accounting- related internal control
system, which had not been remedied by the end of our audit: — The
Group has not designed certain key controls, including account
reconciliations and con- trols over the treasury business process,
with sufficient precision to address relevant financial reporting
risks, including inadequate design of procedures to ensure the
completeness and accuracy of the underlying reports and data used
in performing the controls.
GENERAL
STATEMENTS Page 9 of 18 bdo — The Corporation has not established
and maintained formal and effective controls over certain
information technology general controls ("ITGCs") over IT systems
relevant to the preparation of the consolidated financial
statements. In particular, the company has not established and
implemented the following controls: a) User access controls to
ensure appropriate segregation of duties and appropriate re-
striction of user and privileged access to financial applications,
-programs and data b) Program change controls to ensure that IT
program and data changes affecting financially significant IT
applications and underlying accounting records are appropriately
identified, tested, authorized, and implemented c) Computer
operational controls to ensure that data backups are authorized and
monitored d) Testing and approval controls for program development
to ensure that new software de- velopment is aligned with business
and IT requirements. As a result, it is possible that the company's
business process controls, which depend on the accuracy and
completeness of data or financial reports generated by the IT
system, could be impaired due to the lack of operating
effectiveness of the ITGCs. — The Group did not have an effective
risk assessment process that set clearly defined objectives and
risks for financial reporting, including risks arising from the
above material weakness re- lating to ITGC, and risks arising from
changes in business operations, including changes in peo- ple,
processes and systems, and assessed with a sufficient level of
detail to identify all relevant risks of material misstatement
across the Group. As a result, Spark has not implemented and
performed effective manual compensating controls to address risks
that data and automated controls over financial reporting are
reliable that are included in or generated by the systems affected
by the aforementioned ITGC, including controls to enforce
appropriate segregation of duties with respect to the preparation
and review of manual journal entries and controls to validate the
completeness and accuracy of revenue (including validation of price
changes and subscription customer data) and deferred revenue on a
timely basis. — Spark used external specialists in connection with
the valuation of the assets acquired and liabilities assumed in the
acquisition of Zoosk, the determination of the U.S. income tax pro-
vision and the annual impairment tests of goodwill and intangible
assets with indefinite useful lives. The Group did not have a
sufficient number of appropriately trained personnel within the
organization to adequately assess the appropriateness of the
specialists' work, to suffi- ciently understand the complexity of
the related estimates and to adequately verify certain assumptions
and calculations made by these specialists. — The Group has not
established appropriate controls over the analysis and settlement
of sales tax (VAT and sales tax) obligations to identify and
mitigate relevant risks to financial reporting related to timely
payment and proper accrual, which could adversely affect the
completeness and accuracy of the related financial statement
balance sheet items. — The audit procedures performed by the Group
to ensure the reliability of the data of the reports used to
perform controls were insufficient. Furthermore, there was
insufficient docu- mentation of the quality assurance
performed.
GENERAL
STATEMENTS bdo Page 10 of 18 Based on these findings, we selected a
substantive audit strategy and did not draw assurance from the
controls established on the part of the company. As a result, this
audit strategy has led to sufficient and appropriate audit evidence
for the correctness of the processed accounting-relevant data in
the Group. The consolidated financial statements contain the use of
material discretionary judgment as pre- sented in section F.II. Its
effect on the overall presentation of the consolidated financial
state- ments could not be clearly quantified due to a lack of
representative comparable values. Our audit has led to the
conclusion that the consolidated financial statements, as a whole,
give a true and fair view of the group’s assets, liabilities,
financial position and financial performance in accordance with
IFRSs, as adopted by the EU, and the additional requirements of
German com- mercial law pursuant to § 315e (1) HGB. 4. Group
management report The group management report for the financial
year from January 1, 2021 to December 31, 2021 audited by us
accompanies this report in Appendix II. In our opinion based on the
knowledge we had obtained during the course of our audit, the group
management report, as a whole, provides an appropriate view of the
group’s position. In all material respects, the group management
report is consistent with the consolidated financial statements,
complies with German legal requirements and appropriately presents
the opportunities and risks of future development. Our audit
opinion on the group management report does not cover the contents
of the parts of the group management report listed under “OTHER
INFORMATION” in the auditor’s report as replicated in section B. of
this report.
SUBJECT OF
THE AUDIT Page 11 of 18 bdo D. SUBJECT OF THE AUDIT The subject of
our audit included the process of the preparation of the
consolidated financial statements, including the evaluation of the
delineation of the group of entities consolidated, of the
consolidation measures performed, of the group-wide
accounting-related controls and the fi- nancial information of the
components included in the consolidated financial statements
including the reconciliation of the financial information of the
components by applying the applicable re- quirements for
consolidated financial statements. The subject of our audit was
also the consolidated financial statements, comprising the consoli-
dated statement of financial position as at December 31, 2021, the
consolidated statement of comprehensive income, the consolidated
statement of changes in equity as well as the consoli- dated
statement of cash flows for the financial year from January 1, 2021
to December 31, 2021 and the notes to the consolidated financial
statements, including a summary of significant ac- counting
policies. In addition, the group management report was the subject
of our audit. Pursuant to § 317 (2) Sentence 6 HGB, the audit of
the disclosures pursuant to § 315d HGB is limited to verify whether
the required disclosures have been made. In accordance with § 317
(4a) HGB, the audit did not cover whether the audited parent
company’s ability or another group entity’s ability to continue as
a going concern or whether the effectiveness and efficiency of
management can be ensured. With regard to the responsibilities of
the executive directors and the supervisory body for the
consolidated financial statements and the group management report,
we refer to our reporting under “RESPONSIBILITIES OF THE EXECUTIVE
DIRECTORS AND THE ADMINISTRATIVE BOARD FOR THE CONSOLIDATED
FINANCIAL STATEMENTS AND THE GROUP MANAGEMENT REPORT” in the
auditor’s report as replicated in section B. of this
report.
NATURE AND
SCOPE OF THE ENGAGEMENT PERFORMED bdo Page 12 of 18 E. NATURE AND
SCOPE OF THE ENGAGEMENT PERFORMED With regard to the nature and
scope of the engagement performed, we refer to the general de-
scription of the responsibilities of the financial statement
auditor for the audit of the consolidated financial statements and
the group management report in our reporting in the auditor’s
report in sections “BASIS FOR THE AUDIT OPINIONS” and “AUDITOR’S
RESPONSIBILITIES FOR THE AUDIT OF THE CONSOLIDATED FINANCIAL
STATEMENTS AND OF THE GROUP MANAGEMENT REPORT”. The au- ditor’s
report is replicated in section B. of this report. In this regard
we provide further explana- tions in the following. The starting
point of our audit was the consolidated financial statements as at
December 31, 2020 attested by the German public auditor, KPMG
Wirtschaftsprüfungsgesellschaft, Berlin and ap- proved by the
Administrative Board on August 11, 2021. The opening balances were
audited in compliance with the International Standard on Auditing
[DE] 510: "Initial Audit Engagements – Opening Balances" (ISA [DE]
510). Our risk and system-based audit approach complying with
international audit standards is to work out an audit strategy. The
required risk assessment is based on evaluating the group’s
position, business risks, environment and the group’s
accounting-related internal control system. For this assessment, we
furthermore consider our understanding of the process for preparing
the consoli- dated financial statements, and the arrangements and
measures (systems) the executive directors have considered
necessary for enabling the preparation of a group management report
to be in accordance with the applicable German legal requirements
and for providing sufficient appropri- ate evidence for the
assertions in the group management report. While assessing the risk
of material misstatement, we also identified and assessed risks at
both the financial statement level as well as at the assertion
level. Moreover, we categorized these risks into different types of
risks, highlighting two types of risk: significant risks requiring
special consideration during the audit and risks for which
substantive procedures alone do not provide sufficient audit
evidence. By definition in the auditing standards, significant
risks also include the risk of the executive directors overriding
implemented internal controls as well as how revenue is recognized.
In this regard the results of the group’s internal audit department
as well as findings from the financial statement audits of
individual entities or components consolidated were taken into con-
sideration. On the basis of our risk assessment, we determined the
materiality for the consolidated financial statements as a whole
and identified the significant components. In response to the risks
assessed, we determined the type of activities to be performed with
regard to the financial information of the components consolidated
as well as with regard to the consolidation process and the group-
wide accounting-related control system. Accordingly, we determined
the relevant audit areas,
NATURE AND
SCOPE OF THE ENGAGEMENT PERFORMED Page 13 of 18 bdo criteria
(financial statement assertions) as well as the key audit areas to
be focused on and devel- oped an audit plan. The nature and scope
of the respective audit procedures were detailed in the audit plan.
To the extent that audit procedures relating to components were
performed by component audi- tors, we acquired an understanding of
these component auditors, issued them relevant audit in- structions
on what activities they were to perform within the scope of the
audit of the consolidated financial statements and involved
ourselves in their activities in the scope required. The audit
procedures for obtaining audit evidence comprised tests of design
of controls, substan- tive analytical procedures and tests of
details (other substantive procedures) for the audit areas
selected. Materiality aspects were thereby taken into
consideration. We subcategorized our audit process into milestones,
which began with acquisition and engage- ment acceptance and
spanned through to concluding the engagement and archiving. In this
regard we refer to the graphic illustration of the milestones
below. The milestones depicted take the German Generally Accepted
Standards for Financial Statement Audits promulgated by the IDW
into consideration. Accordingly, we initially performed an audit of
the appropriateness of the accounting-related internal control
system of the group (design evalu- ation). On the basis of the
knowledge, we had obtained from examining the design and the imple-
mentation of the accounting-related internal controls in the group,
for assessing the risk of mate- rial misstatement, we defined and
specified the nature, scope, and timing of the tests of controls,
the analytical audit procedures, and the tests of details to be
performed for specific audit objec- tives. All audit procedures
were respectively conducted on a sample of specifically or
representatively selected elements. The selection of each sample
was based on the knowledge we had obtained from evaluating the
accounting-related internal control system as well as on the nature
and extent of the business transactions. M0 Acquisition Engagement
Acceptance M1 Scoping M2 Identify and Assess Risks M3 Design Audit
Response M4 Obtain Audit Evidence M5 Form Opinion M6 Report M7
Archiving ENGAGEMENT ACCEPTANCE AND PROCESSING OBTAINING
INFORMATION AND RISK ASSESSMENT ADRESSING ASSESSED RISKS FORMING
OPINION AND REPORTING ADRESSING ASSESSED RISKS CLOSING OF THE
ENGAGEMENT
NATURE AND
SCOPE OF THE ENGAGEMENT PERFORMED bdo Page 14 of 18 The key audit
areas we focused on were: – Impairment test of goodwill and
intangible assets – Existence of revenues – Accurate determination
of deferred taxes – Recoverability of deferred tax assets, in
particular on tax loss carryforwards – Completeness of the
disclosures in the notes to the consolidated financial statements –
Adequacy of the presentation in the management report –
Completeness of liabilities and provisions – Assessment of the
appropriateness of assumptions made by management with regard to
the going-concern assumption – Audit of opening balances As the
consolidated financial statements of Spark Networks SE, Munich,
prepared in accordance with U.S. GAAP were audited by another
auditor, we evaluated whether these financial statement audits
could be used for the purpose of the consolidated financial
statement audit and whether the work of such auditors as specified
in § 317 (3) sentence 2 HGB could, to the extent relevant, be used.
For evaluating whether the requirements are fulfilled by using the
results of other statu- tory auditors, we convinced ourselves
beforehand of their independence and judged their profes- sional
expertise and professional qualifications. In testing the
recoverability of goodwill in accordance with IAS 36 and the
measurement of loan liabilities, we used the results of the
valuation reports prepared by expert of the legal represent- atives
as part of our audit. We examined the group management report to
determine whether the group management report as a whole complies
with the legal requirements and is consistent with the consolidated
financial statements and the findings of our audit, and whether the
group management report as a whole provides an appropriate view of
the group’s position. We thereby performed audit procedures on the
prospective information presented by the executive directors in the
group management report. On the basis of sufficient appropriate
audit evidence, we especially examined the assertions of the
executive directors relating to the future, traced the underlying
significant assumptions, and assessed whether the assertions
relating to the future had accurately been derived. We performed
our audit from April to June 2022 (with interruptions) until June
8, 2022. At the conclusion of the audit, the executive directors of
the parent company provided us with a letter of representation
dated June 8, 2022, in which they confirmed the completeness of all
explanations and evidence made available to us as well as of the
consolidated financial statements and of the group management
report. The executive directors of the parent company provided us
with all explanations and evidence requested. The executive
directors of the subsidiaries consoli- dated or their financial
statement auditors also provided us with all explanations and
evidence requested without restriction.
EXPLANATIONS
ON THE CONSOLIDATED ACCOUNTING Page 15 of 18 bdo F. EXPLANATIONS ON
THE CONSOLIDATED ACCOUNTING I. Accounting standards The
consolidated financial statements were to be prepared in accordance
with IFRSs as adopted by the EU, and the and the additional
requirements of German commercial law pursuant to § 315e (1) HGB.
II. Accounting policies and valuation methods The preparation of
the consolidated financial statements requires that numerous
decisions be made by the executive directors of the parent company
on exercising legal options for particular accounting and valuation
policies. In the following we, in compliance with § 321 (2) sen-
tence 4 HGB, address the issue of – the significant valuation
policies, including a summary of significant accounting policies as
well as – how the use of discretionary judgment may overall
influence the presentation of the assets and liabilities, financial
position and financial performance. The accounting and valuation
policies are described in the notes to the consolidated financial
statements (Appendix I). In the following we have highlighted the
significant accounting and valuation policies as well as the use of
discretionary judgment in detail: Impairment tests in accordance
with IAS 36 Spark reports intangible assets of EUR 61.6 million
(previous year: EUR 66.5 million), of which EUR 57.6 million
(previous year: EUR 52.0 million) have indefinite useful lives, and
goodwill of EUR 91.7 million (previous year: EUR 118.0 million) in
its consolidated financial statements as of December 31, 2021. The
Group performed its annual impairment tests as of October 31, 2021.
In application of IAS 36 “Impairment of Assets”, intangible assets
and goodwill are allocated to cash-generating units (CGU's), which
represent the lowest level at which these assets are monitored for
internal man- agement management purposes. The Group has two CGU's:
“Spark” and “Zoosk”. In the impairment test, the recoverable amount
is compared with the carrying amount of the CGU. The recoverable
amount is based on the fair value less costs to sell, which was
estimated using an
EXPLANATIONS
ON THE CONSOLIDATED ACCOUNTING bdo Page 16 of 18 income approach
based on a discounted cash flow model. The cash flow projections
were calcu- lated by management on the basis of the financial
forecast for each CGU for the detailed planning period of the next
five years. A long-term growth rate is assumed for the period
thereafter. The valuation is based on the following key
assumptions: – long-term EBITDA margin of 17.0 % for Zoosk and 15.0
% for Spark – terminal growth rate of 3 % – WACC of 21.0% for Zoosk
and 11.7 % for Spark Based on the result of the impairment tests
performed, the recoverable amount of the of the CGU “Spark”
exceeded the carrying amount. Accordingly, no impairment was
identified and the good- will attributable to the Spark CGU amounts
to EUR 21.0 million as of December 31, 2021. The carrying amount of
the CGU “Zoosk” exceeded the recoverable amount of EUR 102.8
million, so that an impairment loss of EUR 34.6 million was
recognized in profit or loss. The remaining goodwill of the Zoosk
CGU amounts to EUR 70.7 million as of the balance sheet date. Stock
options In January 2020, the company's Administrative adopted the
Long-Term Incentive Plan (the “LTIP”) for selected officers and
employees of the company and its subsidiaries as part of their
compen- sation for future performance. The LTIP provides for the
granting of virtual stock options. Each option represents the right
to receive, upon exercise, a certain amount in cash upon exercise,
based on the respective share price less the exercise price of that
option. the exercise price of this option. However, the company
may, at its discretion to settle the claims in shares instead of
cash. In the past Spark has always settled the claims in shares and
intends to do so in the future. For this reason, Spark treats the
stock option plan as an equity-settled plan. Options granted under
the LTIP have a contractual term of 85 months and, subject to the
employ- ee's continued service with the company, vest as follows:
(i) 25 % of the total number of options granted to the participant
vest twelve months after the date of grant of such option, and (ii)
an additional 6.25 % of such options vest at the end of each
additional three-month period thereafter until the end of the 48th
month. In connection with the adoption of the LTIP, the
Administrative Board authorized the issuance of virtual options for
up to three million ADSs, including up to one million zero-price
options, for 2020. In 2021, the Administrative Board authorized
500,000 additional ADS’s that may be issued under the Plan, in each
case as zero-price options. At December 31, 2021, there were
197,772 (prior year: 450,000) virtual options and 915,932 (prior
year: 326,000) zero-price options available for future grants. For
the period up to the end of the financial year, the fair values of
the virtual stock options and free options are measured using the
capped Black-Scholes call option model. The
Black-Scholes
EXPLANATIONS
ON THE CONSOLIDATED ACCOUNTING Page 17 of 18 bdo call option model
meets the fair value measurement requirement, and there was no
material im- pact as a result of the change in valuation
techniques. The parameters used in the fair value measurement at
grant date are as follows meters are summarized below: Stock price
in USD Strike price in USD 3.13 - 5.34 31.3 - 53.4 0.00 50.00 Term
in years Volatility Dividend Risk-free rate Virtual Stock Options
Zero-Priced Options Long Call Option Short Call Option (Cap) Short
Call Option (Cap) Long Call Option 62.7% - 64.0% 0.00% 0.7% - 0.9%
3.21 - 5.42 4.65 - 4.67 For the financial year 2021, the total
expense for share-based payments for options granted under the
options granted under the virtual stock option plans amounted to
EUR 2.3 million (previous year: EUR 4.2 million). Capitalization of
deferred tax assets, in particular on loss carryforwards In the
consolidated financial statements, deferred taxes have been
calculated for temporary dif- ferences between the carrying amounts
of balance sheet items under IFRS and their tax bases. In addition
to the temporary differences, deferred tax assets were recognized
on tax loss carryfor- wards in the amount of were capitalized in
the amount of EUR 9.5 million. The calculation was based on the
individual tax rates of the subsidiaries. The Group recognizes
deferred tax assets on loss carryforwards to the extent that it is
probable that they can be used to reduce future income. Based on
current tax planning, the company expects to utilize the recognized
tax loss carryfor- wards. In Germany, the Group has corporate and
trade tax loss carryforwards of EUR 50.0 million and EUR 48.9
million as of December 31, 2021. No deferred tax assets were
recognized for EUR 29.5 million and EUR 29.4 million of these
corporate and trade tax loss carryforwards, respectively. In the
USA, the Group has trade tax loss carryforwards at federal and
state level of approximately EUR 51.5 million and EUR 68.2 million,
respectively. Of these available tax loss carryforwards, deferred
tax assets were recognized at the balance sheet date in the amount
of EUR 18.2 million. In addition, as of December 31, 2021, the
Group had tax loss carryforwards in Israel amounting to EUR 9.3
million for which no deferred tax assets were
recognized.
CONCLUDING
STATEMENT AND THE SIGNED AUDIT REPORT bdo Page 18 of 18 G.
CONCLUDING STATEMENT AND THE SIGNED AUDIT REPORT In accordance with
§ 321 (4a) HGB, we confirm that we have performed our financial
statement audit in compliance with the applicable regulations on
independence. We have compiled the report above on the audit of the
consolidated financial statements and the group management report
for the financial year from January 1, 2021 to December 31, 2021 of
Spark Networks SE, Munich, in compliance with legal regulations and
the German Generally Ac- cepted Standards for Reporting on Audits
of Financial Statements in the current version of Audit Standard
450 (revised) promulgated by the Institute of Public Auditors in
Germany, Incorporated Association (IDW). The auditor’s report
issued by us has been replicated in section B. of this audit
report. Berlin, June 8, 2022 BDO AG Wirtschaftsprüfungsgesellschaft
@@muz=@@ @@vwp=@@ Signed by Pfeiffer Signed by Wirth
Wirtschaftsprüfer Wirtschaftsprüfer (German Public Auditor) (German
Public Auditor)
APPENDICES
Appendix I
Page 1 Consolidated Financial Statements 31 December 2021 Spark
Networks SE
Appendix I
Page 2 INDEX TO CONSOLIDATED FINANCIAL STATEMENTS Consolidated
Balance Sheets as of December 31, 2021 and 2020 F-2 Consolidated
Statements of Operations and Comprehensive Loss for the Years Ended
December 31, 2021 and 2020 F-3 Consolidated Statements of
Shareholders' Equity for the Years Ended December 31, 2021 and 2020
F-4 Consolidated Statements of Cash Flows for the Years Ended
December 31, 2021 and 2020 F-5 Notes on the Consolidated Financial
Statements F-6
Appendix I
Page 3 Spark Networks SE Consolidated Balance Sheets (in €
thousands) Note December 31, 2021 December 31, 2020 ASSETS
Non-current assets 166,439 210,469 Goodwill 5.1 91,705 117,968
Intangible assets, net 5.1 61,597 66,537 Property and equipment,
net 5.2 2,183 1,463 Other non-current financial assets 5.4 4,310
5,679 Other non-current non-financial assets 5.5 249 247 Deferred
tax assets 5.6 6,395 18,575 Current assets 24,891 26,827 Current
trade and other receivables 9,738 10,004 Trade receivables 5.3
6,241 4,520 Other current financial assets 5.4 1,335 2,760 Other
assets 5.5 2,162 2,724 Current income tax assets 902 989 Cash and
cash equivalents 5.7 14,251 15,834 TOTAL ASSETS 191,330 237,296
SHAREHOLDERS' EQUITY AND LIABILITIES Shareholders' equity 5.8
28,659 74,109 Subscribed capital 2,662 2,662 Capital reserves
183,361 183,349 Share-based payment reserve 12,134 10,224
Accumulated deficit (166,632) (112,128) Accumulated other
comprehensive income (2,866) (9,998) Non-current liabilities 80,293
83,040 Non-current borrowings 5.9 56,851 67,368 Other non-current
provisions 5.10 7 17 Other non-current financial liabilities 5.11
14,568 13,148 Deferred tax liabilities 5.13 7,145 1,310 Non-current
income tax liabilities 1,722 1,195 Non-current contract liabilities
5.14 — 2 Current liabilities 82,378 80,147 Current borrowings 5.9
15,533 15,789 Other current provisions 5.10 3,802 3,486 Current
trade and other payables 27,246 28,080 Trade payables 7.1 19,435
20,964 Other current financial liabilities 5.11 2,670 2,137 Other
liabilities 5.12 5,141 4,979 Current income tax liabilities 3,153
1,578 Current contract liabilities 5.14 32,644 31,214 Total
liabilities 162,671 163,187 TOTAL SHAREHOLDERS' EQUITY AND
LIABILITIES 191,330 237,296 The accompanying notes are an integral
part of these consolidated financial statements. F-2
Appendix I
Page 4 Spark Networks SE Consolidated Statements of Operations and
Comprehensive Loss (in € thousands, except per share data) Years
Ended December 31, Note 2021 2020 Revenue 4.1 / 4.3 183,340 204,290
Cost of revenue 4.4 (111,441) (124,937) Gross profit 71,899 79,353
Other income 4.5 541 911 Other operating expenses 4.6 (55,386)
(63,651) Impairment of intangible assets and goodwill 5.1 (39,664)
(59,751) Operating loss (22,610) (43,138) Finance income 12,641
7,142 Finance costs (23,877) (19,131) Net finance expenses 4.7
(11,236) (11,989) Loss before taxes (33,846) (55,127) Income tax
expense 4.10 (20,658) (4,473) Net loss (54,504) (59,600) Other
comprehensive income/(loss) 7,132 (14,417) Total comprehensive loss
(47,372) (74,017) Loss per share Basic loss per share (€) 4.11
(20.88) (22.87) Diluted loss per share (€) 4.11 (20.88) (22.87) The
accompanying notes are an integral part of these consolidated
financial statements. F-3
Appendix I
Page 5 Spark Networks SE Consolidated Statements of Shareholders'
Equity (in € thousands) Capital reserves Note Subscribed capital
Treasury share reserves Other capital reserves Share- based payment
reserve Accumulated deficit Accumulated other comprehensive
income(1) Total shareholders' equity January 1, 2020 5.8 2,662 (56)
183,405 6,031 (52,528) 4,419 143,933 Net loss — — — — (59,600) —
(59,600) Other comprehensive loss — — — — — (14,417) (14,417) Total
comprehensive loss — — — — (59,600) (14,417) (74,017) Share-based
compensation 4.9 — — — 4,193 — — 4,193 December 31, 2020 5.8 2,662
(56) 183,405 10,224 (112,128) (9,998) 74,109 Net loss — — — —
(54,504) — (54,504) Other comprehensive income — — — — — 7,132
7,132 Total comprehensive loss — — — — (54,504) 7,132 (47,372)
Treasury stock issued pursuant to equity- based plans — 12 — (394)
— — (382) Share-based compensation 4.9 — — — 2,304 — — 2,304
December 31, 2021 5.8 2,662 (44) 183,405 12,134 (166,632) (2,866)
28,659 (1) Accumulated other comprehensive income primarily
consists of the net translation gain or loss. Refer to Note 5.8
Shareholders' Equity for more information. The accompanying notes
are an integral part of these consolidated financial statements.
F-4
Appendix I
Page 6 Spark Networks SE Consolidated Statements of Cash Flows (in
€ thousands) Years Ended December 31, Note 2021 2020 Net loss
(54,504) (59,600) Adjustments for: Depreciation of property and
equipment 5.2 928 1,033 Amortization of intangible assets 5.1 5,140
7,749 Impairment of intangible assets and goodwill 5.1 39,664
59,751 Net finance expenses 4.7 11,236 11,989 Loss on disposal of
tangible and intangible assets 5.1 / 5.2 12 311 Share-based
compensation expense 4.9 2,304 4,193 Change in operating assets and
liabilities: Change in contract liabilities 5.14 138 (128) Changes
in tax positions 4.10 20,330 4,303 Change in provisions 5.10 176
(394) Change in other operating assets and liabilities 216 (792)
Change in current trade and other receivables 5.3 803 1,588 Change
in current trade and other payables 7.1 (2,723) (3,552) Interest
paid (8,004) (9,513) Interest received 182 294 Taxes paid (95)
(679) Proceeds from lease receivables 1,429 1,303 Cash inflow from
operating activities 17,232 17,856 Expenditure for investments in
intangible assets 5.1 (641) (2,215) Expenditure for investments in
property and equipment 5.2 (271) (190) Cash paid for business
combination, net of cash acquired — (465) Cash outflow from
investing activities (912) (2,870) Proceeds from bank loans 5.9 —
5,023 Repayment of bank loans 5.9 (16,387) (13,532) Payments
directly related to loan facility 5.9 (442) (2,198) Payment of
lease liabilities 5.15 (1,662) (1,711) Cash outflow from financing
activities (18,491) (12,418) Net change in cash and cash
equivalents (2,171) 2,568 Cash and cash equivalents at January 1
15,834 15,450 Effects of exchange rate fluctuations on cash and
cash equivalents 588 (2,184) Cash and cash equivalents at December
31 5.7 14,251 15,834 The accompanying notes are an integral part of
these consolidated financial statements. F-5
Appendix I
Page 7 Spark Networks SE Notes to Consolidated Financial Statements
Note 1. Description of Business and Basis for Preparation 1.1
Reporting Entity Spark Networks SE (“Spark Networks” or "the
Group") is a leader in social dating platforms for meaningful
relationships focusing on the 40+ age demographic and faith-based
affiliations, including Zoosk, Inc. ("Zoosk"), EliteSingles,
SilverSingles, Christian Mingle, Jdate and JSwipe, among others.
The Group’s brands are tailored to quality dating with real users
looking for love and companionship in a safe and comfortable
environment. The Group consists of Spark Networks SE and its wholly
owned subsidiaries. Spark Networks SE is domiciled in Germany. The
Group’s office is at Kohlfurter Str. 41/43, 10999 Berlin,
registered with the commercial register (Handelsregister) of the
local court (Amtsgericht) of Munich, Germany, under HRB 232591.
Spark Networks SE is publicly listed on the Nasdaq Capital Market
("Nasdaq") under the ticker symbol “LOV”. The operations of Spark
Networks in its current form is the result of the merger between
Affinitas GmbH (“Affinitas”) and Spark Networks, Inc. (“Spark”) in
2017 and the addition of Zoosk, Inc. ("Zoosk") on July 1, 2019. 1.2
Basis of Accounting These consolidated financial statements have
been prepared in accordance with International Financial Reporting
Standards (“IFRS”) as adopted by the EU and the supplementary
regulations of Section 315e (1) HGB. They were authorized for
issuance by the Group’s management board on June 8, 2022. 1.3
Functional and presentation currency These consolidated financial
statements are presented in Euro, which is the Group’s presentation
currency. All amounts have been rounded to the nearest thousand,
unless otherwise indicated. The financial statements of the Group’s
foreign subsidiaries are prepared using the local currency as the
subsidiary’s functional currency. The Group translates the assets
and liabilities into Euro using period-end exchange rates at the
reporting date, and revenue and expenses using average exchange
rates for the year. The resulting translation gain or loss is
included in Accumulated other comprehensive loss and is excluded
from Net loss. 1.4 Use of judgments and estimates In preparing
these consolidated financial statements, management has made
judgments, estimates and assumptions that affect the application of
the Group’s accounting policies and the reported amounts of assets,
liabilities, income and expenses. Actual results may differ from
these estimates. Estimates and underlying assumptions are reviewed
on an ongoing basis. Revisions to estimates are recognized
prospectively. Assumptions and estimation uncertainties Information
about assumptions and estimation uncertainties may have a
significant risk of resulting in a material adjustment for the year
ending December 31, 2021 is included in the following notes: •
recognition and measurement of provisions and contingencies: key
assumptions about the likelihood and magnitude of an outflow of
resources; • impairment test of intangible assets and goodwill: key
assumptions regarding underlying recoverable amounts;
F-6
Appendix I
Page 8 • classification and measurement of virtual stock option
plans: key assumptions underlying the classification of the virtual
stock option plans as equity-settled, the capped-call Black-Scholes
option pricing model to calculate the fair value of granted
share-based awards; • recognition and measurement of internally
generated software: key assumptions about the future economic
benefits expected from those intangible assets; • recognition of
deferred tax assets: availability of future taxable profit against
which tax losses carried forward can be used; • uncertainty over
income tax treatments: key assumptions about the examination of tax
treatments by taxation authorities, determination of taxable profit
(tax loss), tax bases, unused tax losses, unused tax credits and
tax rates, and consideration of changes in facts and circumstances;
and • recognition of revenue: key assumptions about the amount of
consideration the Group is due in exchange for services, including
estimates about future refunds and chargebacks. Revenue is
recognized in an amount that reflects the consideration the Group
is contractually due in exchange for those services. Measurement of
fair values A number of the Group’s accounting policies and
disclosures require the measurement of fair values, for both
financial and non-financial assets and liabilities. The Group
regularly reviews significant inputs and valuation adjustments. If
third party information, such as broker quotes or pricing services,
is used to measure fair values, then the Group assesses the
evidence obtained from the third parties to support the conclusion
that these valuations meet the requirements of IFRS, including the
level in the fair value hierarchy in which the valuations should be
classified. When measuring the fair value of an asset or a
liability, the Group uses observable market data as far as
possible. Fair values are categorized into different levels in a
fair value hierarchy based on the inputs used in the valuation
techniques as follows: • Level 1: quoted prices (unadjusted) in
active markets for identical assets or liabilities. • Level 2:
inputs other than quoted prices included in Level 1 that are
observable for the asset or liability, either directly (i.e. as
prices) or indirectly (i.e. derived from prices). • Level 3: inputs
for the asset or liability that are not based on observable market
data (unobservable inputs). If the inputs used to measure the fair
value of an asset or a liability fall into different levels of the
fair value hierarchy, then the fair value measurement is
categorized in its entirety at the same level of the fair value
hierarchy as the lowest level input that is significant to the
entire measurement. The Group recognizes transfers between levels
of the fair value hierarchy at the end of the reporting period
during which the change has occurred. Further information about the
assumptions made in measuring fair values is included in the
following notes: • assets acquired and liabilities assumed in a
business combination; • share-based payment arrangements; •
intangible assets and goodwill; and • financial
instruments
Appendix I
Page 9 1.5 New standards, interpretations and amendments to
standards and interpretations A number of new standards and
amendments to standards are effective for annual periods beginning
after January 1, 2022, and earlier application is permitted;
however, the Group has not early adopted the following new or
amended standards in preparing these consolidated financial
statements. Standard / interpretation Amendments to IAS 37
Amendments to 'Onerous Contracts – Cost of Fulfilling a Contract'
Amendments to IFRS 1, IFRS 9, IFRS 16 and IAS 41 Amendments to
'Annual Improvements to IFRS Standards 2018-2020' Amendments to IAS
16 Amendments to 'Property, Plant and Equipment: Proceeds before
Intended Use' Amendments to IFRS 3 Amendments to 'Definition of a
Business' IFRS 17 Insurance Contracts Amendments to IFRS 17
Amendments to 'Insurance Contracts' Amendments to IAS 1 Amendments
to 'Classification of liabilities as current or non-current'
Amendments to IFRS 10 and IAS 28 Amendments to 'Sale or
Contribution of Assets between an Investor and its Associate or
Joint Venture' Amendments to IAS 1 and IFRS Practice Statement 2
Amendments to 'Disclosure of Accounting Policies' Amendments to IAS
8 Amendments to 'Definition of Accounting Estimates' Amendments to
IAS 12 Amendments to 'Deferred Tax related to Assets and
Liabilities arising from a Single Transaction' None of these
standards, amendments to standards, or new interpretations are
expected to have a significant effect on the consolidated financial
statements of the Group. The following standards was effective for
annual periods beginning on January 1, 2021, and was adopted by
Group for the first time in the consolidated financial statements:
Amendments to IFRS 16 - COVID-19-Related Rent Concessions In May
2020, the IASB issued Covid-19-Related Rent Concessions (Amendments
to IFRS 16). The amendments introduced an optional practical
expedient that simplifies how a lessee accounts for rent
concessions that are a direct consequence of COVID-19. Under that
practical expedient, a lessee is not required to assess whether
eligible rent concessions are lease modifications, instead
accounting for them in accordance with other applicable guidance.
The 2020 amendments only applied to rent concessions for which any
reduction in lease payments affects solely payments originally due
on or before June 30, 2021. The 2021 amendments extended the
practical expedient by 12 months effective for annual reporting
periods beginning on or after April 1, 2021. The adoption of the
amendments did not have any impact on the consolidated financial
statements. Amendments to IFRS 9, IAS 39, IFRS 7, IFRS 4 and IFRS
16 - Interest Rate Benchmark Reform - Phase 2 In September 2019,
the IASB issued 'Interest Rate Benchmark Reform (Amendments to IFRS
9, IAS 39 and IFRS 7)' as a first reaction to the potential effects
the LIBOR reform could have on financial reporting. The amendments
include a number of reliefs, which apply to all hedging
relationships that are directly affected by the interest rate
benchmark reform. In August 2020, the IASB issued 'Interest Rate
Benchmark Reform - Phase 2 (Amendments to IFRS 9, IAS 39, IFRS 7,
IFRS 4 and IFRS 16)'. The phase 2 amendments address issues that
arise from the implementation of the interest rate benchmark
reform, including the replacement of an interest rate benchmark
with an alternative benchmark rate. The adoption of the amendments
did not have any impact on the consolidated financial statements
for the periods presented. Refer to Note 7.2 for further discussion
managing the interest rate benchmark reform and associated risks.
Note 2. Basis of Consolidation The accompanying consolidated
financial statements include the accounts of Spark Networks as the
parent company and its subsidiaries. Intercompany transactions and
balances have been eliminated upon consolidation.
Appendix I
Page 10 Subsidiaries are entities controlled by the Group. The
Group controls an entity when it is exposed to, or has rights to,
variable returns from its involvement with the entity and has the
ability to affect those returns through its power over the entity.
The financial statements of subsidiaries are included in the
consolidated financial statements from the date on which control
commences until the date on which control ceases. There was no
business combination during 2021. 2.1 Group composition The
consolidated financial statements comprise the following fully
consolidated subsidiaries: Entity Domicile, Country Equity Share as
of December 31, 2021 Equity Share as of December 31, 2020 Spark
Networks Services GmbH (previously, Affinitas GmbH) Berlin, Germany
100 % 100 % Samadhi SAS (acquired on September 30, 2016)(1) Paris,
France — % 100 % EliteSingles LLC (formed on April 1, 2015)
Delaware, United States 100 % 100 % Spark Networks, Inc. (acquired
on November 2, 2017) Delaware, United States 100 % 100 % Spark
Networks Limited (acquired on November 2, 2017) London, United
Kingdom 100 % 100 % LOV USA, LLC (acquired on November 2, 2017)
Delaware, United States 100 % 100 % Spark Networks USA, LLC
(acquired on November 2, 2017) Delaware, United States 100 % 100 %
Spark Networks (Israel) Limited (acquired on November 2, 2017)
Petah Tikva, Israel 100 % 100 % JDate Limited (acquired on November
2, 2017) London, United Kingdom 100 % 100 % MingleMatch, Inc.
(acquired on November 2, 2017) Utah, United States 100 % 100 %
Reseaux Spark Canada Ltd. (acquired on November 2, 2017)(2) Quebec,
Canada — % 100 % SocialNet, Inc. (acquired on November 2, 2017) New
York, United States 100 % 100 % Smooch Labs, Inc. (acquired on
November 2, 2017) Delaware, United States 100 % 100 % SilverSingles
LLC (formed on December 22, 2018) Delaware, United States 100 % 100
% LDS Singles LLC (formed on May 17, 2019) Delaware, United States
100 % 100 % Adventist Singles LLC (formed on May 17, 2019)
Delaware, United States 100 % 100 % Charm Labs LLC (formed on May
17, 2019) Delaware, United States 100 % 100 % Zoosk, Inc. (acquired
on July 1, 2019) Delaware, United States 100 % 100 % Zoosk Limited
(acquired on July 1, 2019) London, United Kingdom 100 % 100 % Zoosk
Ireland Limited (acquired on July 1, 2019) Dublin, Ireland 100 %
100 % (1) Dissolved as of October 18, 2021. (2) Dissolved as of May
26, 2021. Exemption for disclosure and Parental Guarantee provided
by Spark Networks SE Spark Networks SE is the ultimate shareholder
of Spark Networks Services GmbH, a company incorporated in Germany,
and has decided to take the exemption from a German statutory audit
for Spark Networks Services GmbH for the year ended December 31,
2021 under § 264 Abs. 3 HGB. Spark Networks SE provides a guarantee
for all the liabilities of Spark Networks Services GmbH as of
December 31, 2021 as a condition of taking this exemption and
submitted the required documentation with the Federal Gazette. Note
3. Significant Accounting Policies 3.1 Foreign Currency
Transactions and Balances Foreign currency transactions, balances,
and cash flows Transactions in foreign currencies are translated
into the respective functional currencies of the Group's
subsidiaries at the exchange rates prevailing at the transaction
date. At each subsequent balance sheet date, monetary assets and
liabilities denominated in foreign currencies are translated into
the functional currency at the exchange rate at the reporting date.
Non-monetary assets and liabilities that are measured at fair value
in a foreign currency are translated into the functional currency
at the exchange rate when the fair value was determined.
Non-monetary items that are measured based on historical cost in a
foreign currency are translated into the functional currency at the
exchange rate at the date of the transaction. Exchange gains and
losses arising on the settlement of
Appendix I
Page 11 foreign currency transactions and the translation of
monetary assets and liabilities denominated in foreign currencies
into the functional currency are recognized in Net finance
expenses. Translation of foreign operations The translation of
foreign operations into the presentation currency is based on the
following criteria: • Assets and liabilities are translated using
period-end exchange rates at the reporting date; • Income and
expenses are translated using average exchange rates for the year.
This method does not differ significantly from using the exchange
rate at the date of the transaction Translation differences
resulting from the application of the above criteria are recognized
in other comprehensive loss and are excluded from Net loss. Upon
disposal of a foreign subsidiary and associate operation (which
results in loss of control or significant influence over that
operation) the total cumulative exchange differences recognized in
other comprehensive income are reclassified to profit or loss. 3.2
Revenue Recognition and Contract Balances Revenue Recognition The
Group recognizes revenue in accordance with IFRS 15 Revenue from
Contracts with Customers. The Group generates revenue primarily
from users in the form of recurring subscriptions. The Group
recognizes revenue through the following steps: (1) identification
of the contract, or contracts, with a customer; (2) identification
of the performance obligations in the contract; (3) determination
of the transaction price; (4) allocation of the transaction price
to the performance obligations in the contract; and (5) recognition
of revenue when, or as, the Company satisfies a performance
obligation. The Group enters into contracts with customers that
include promises to provide subscription services with enhanced
access to our dating platforms. Revenue is recognized when the
promised services are provided to our customers, in an amount that
reflects the consideration the Group expects to be entitled to in
exchange for those services. Subscription revenue is presented net
of refunds and credit card chargebacks. Sales and value-added-taxes
collected from customers and remitted to governmental authorities
are not included in revenue and are reflected as a liability on the
balance sheet. Subscribers pay in advance, primarily by credit card
or through mobile app stores. The Group records deferred revenue
when cash payments are received in advance of satisfying its
performance obligations. Enhanced access to dating platforms
represents a series of distinct services as the Group continually
provides enhanced access over the subscription term and represents
a single performance obligation that is satisfied over time.
Revenue is recognized using the straight-line method over the terms
of the applicable subscription period, which primarily range from
one to twelve months. The Group applies the practical expedient for
contracts with duration of one year or less and therefore does not
consider the effects of the time value of money. The Group
evaluates whether it is appropriate to recognize revenue on a gross
or net basis based upon its evaluation of whether the Group obtains
control of the specified services by considering if it is primarily
responsible for fulfillment of the promise, has latitude in
establishing pricing and selecting suppliers, among other factors.
Based on its evaluation of these factors, for revenue earned
through certain mobile applications, including iOS and Android, the
Group recognizes subscription revenue gross of the application
processing fees primarily because the Group is the principal and
has the contractual right to determine the price paid by the
subscriber. The Group records the related application processing
fees as cost of revenue, exclusive of depreciation and
amortization, in the period incurred.
Appendix I
Page 12 Revenue is also earned from virtual currency and
advertising. Virtual currency may be redeemed by members and
subscribers for certain premium features, delivery confirmation of
messages, and virtual gifts. Virtual currency is paid upfront and
is initially recorded as deferred revenue, and the Group records
virtual currency revenue as it is redeemed. Unredeemed virtual
currency is recognized into revenue if a user account is inactive
for more than two years. Advertising revenues are derived primarily
from sponsored links and display advertisements and is recognized
when the ad is displayed, based on the number of clicks. Contract
Balances The contract liabilities balance consists of advance
payments that are received or due in advance of the Company's
performance. The Company generally classifies contract liabilities
as current when the term of the applicable subscription period or
expected completion of the performance obligation is one year or
less. 3.3 Cost of Revenue Cost of revenue consists primarily of
direct marketing expenses, compensation and other employee-related
costs for personnel dedicated to maintaining Spark Networks’ data
centers, data center expenses, credit card fees and mobile
application processing fees. The Group incurs substantial
advertising expenses in order to generate traffic to its websites.
These advertising expenses consist of offline marketing,
particularly television and out-of-home advertising, as well as
online advertising and are directly attributable to the revenue the
Group receives from its subscribers. 3.4 Employee benefits
Short-term employee benefits are expensed as the related service is
provided. A liability is recognized for the amount expected to be
paid if the Group has a present legal or constructive obligation to
pay this amount as a result of past service provided by the
employee and the obligation can be estimated reliably. Share-based
payment arrangements Share-based compensation is measured at the
grant date based on the fair value of the award and is generally
expensed over the requisite service period (generally the vesting
period). The amount recognized as an expense is adjusted to reflect
the number of awards for which the related service and non-market
performance conditions are expected to be met, such that the amount
ultimately recognized is based on the number of awards that meet
the related service and non-market performance conditions at the
vesting date. The Group recognizes compensation expense on a
straight-line basis from the beginning of the service period. For
awards with graded-vesting features, each vesting tranche is
separately expensed over the related vesting period. The Company
estimates the fair value of each stock option grant using the
capped-call Black-Scholes option pricing model, which requires
management to make certain assumptions of future expectations based
on historical and current data. The assumptions include the
expected term of the stock option, expected volatility, dividend
yield, and risk-free interest rate. The expected term represents
the amount of time that options granted are expected to be
outstanding, using the simplified method, as the Company's
historical share option exercise experience does not provide a
reasonable basis upon which to estimate the expected term. The
simplified method deems the term to be the average of the
time-to-vesting and contractual life of the stock-based awards.
Expected volatility is estimated based on a combination of implied
market volatilities, historical volatility of our stock price and
other factors. The Company’s dividend yield is based on forecasted
expected payments, which are expected to be zero, and the risk-free
rate is derived from the U.S Treasury yield curve in effect at the
time of grant. In a net settlement of an award, the Company does
not receive payment of the exercise price from the employees but
reduces the number of ADRs issued. In addition, the Company net
settles for the purposes of payment of a grantee's minimum income
tax obligation. ADRs issued pursuant to the exercise of the awards
are issued from the Company's treasury shares.
Appendix I
Page 13 Defined contribution plans Obligations for contributions to
defined contribution plans are expensed as the related service is
provided. Prepaid contributions are recognized as an asset to the
extent that a cash refund or a reduction in future payments is
available. Termination benefits Termination benefits are recognized
as a liability and expense at the earlier of when the Group can no
longer withdraw the offer of those benefits and when the Group
recognizes costs for a restructuring under IAS 37 Provisions,
Contingent Liabilities and Contingent Assets and involves the
payment of termination benefits. If benefits are not expected to be
settled wholly within 12 months of the reporting date, then they
are discounted. 3.5 Leases The Group applies a single recognition
and measurement approach for all leases, except for short-term
leases and leases of low-value assets. The Group recognizes lease
liabilities to make lease payments and right-of-use assets
representing the right to use the underlying assets. Right-of-use
assets The Group recognizes right-of-use assets at the commencement
date of the lease (i.e., the date the underlying asset is available
for use). Right-of-use assets are measured at cost, less any
accumulated depreciation and impairment losses, and are adjusted
for any remeasurement of lease liabilities. The Group has included
the right-of-use assets arising from the lease contracts within
Property and equipment, net in the Consolidated Balance Sheets
(note 5.2 ). Lease liabilities At the commencement date of the
lease, the Group recognizes lease liabilities measured at the
present value of lease payments to be made over the lease term. The
lease payments include fixed payments (including in-substance fixed
payments) less any lease incentives receivable, variable lease
payments that depend on an index or a rate, and amounts expected to
be paid under residual value guarantees. The variable lease
payments that do not depend on an index or a rate are recognized as
expense in the period on which the event or condition that triggers
the payment occurs.
Appendix I
Page 14 In calculating the present value of lease payments, the
Group uses the incremental borrowing rate at the lease commencement
date if the interest rate implicit in the lease is not readily
determinable. After the commencement date, the amount of lease
liabilities is increased to reflect the accretion of interest and
reduced for the lease payments made. In addition, the carrying
amount of lease liabilities is remeasured if there is a
modification, a change in the lease term, a change in the
in-substance fixed lease payments or a change in the assessment to
purchase the underlying asset. The Group has included the lease
obligations arising from the lease contracts within other financial
liabilities in the Consolidated Balance Sheets (note 5.11). Lease
payments Lease payments are comprised of the following payments for
the right to use the underlying asset during the lease term: •
fixed payments (including in-substance fixed payments), less any
lease incentives received • variable lease payments that depend on
an index or a rate • amounts expected to be payable by the Group
under residual value guarantees • the exercise price of a purchase
option if the Group is reasonably certain to exercise that option,
and • payments of penalties for terminating the lease, if the lease
term reflects the Group exercising that option Lease receivables
When the Group enters into a sublease, it decognizes the
right-of-use asset and recognizes the net investment in the
sublease measured at the present value of future sublease payments
to be received over the sublease term. Any difference between the
right-of-use asset and the net investment in the sublease is
recognized in profit or loss. The Group retains the lease liability
related to the head lease. During the term of the sublease, the
Group recognizes both finance income on the sublease and interest
expense on the head lease. The Group has included the lease
receivable arising from a sublease contract within other financial
assets in the Consolidated Balance Sheets (note 5.2). Short-term
leases and leases of low-value assets The Group applies the
short-term lease recognition exemption to some of its short-term
leases (i.e., those leases that have a lease term of 12 months or
less from the commencement date and do not contain a purchase
option). It also applies the lease of low-value assets recognition
exemption to leases that are considered of low value based on a
defined threshold. Lease payments on short-term leases and leases
of low-value assets are recognized as an expense on a straight-line
basis over the lease term. 3.6 Finance income and finance costs The
Group’s finance income and finance costs include interest income
and expense, as well as translation gains and losses. Interest
income or expense is recognized using the effective interest
method. The effective interest rate is the rate used to discount
the estimated future cash payments or receipts through the expected
maturity of the financial instrument to: • the gross carrying
amount of the financial asset; or • the amortized cost of the
financial liability In calculating interest income and expense, the
effective interest rate is applied to the gross carrying amount of
the asset (when the asset is not credit-impaired) or to the
amortized cost of the liability. However, for the financial assets
that have become credit-impaired subsequent to initial recognition,
interest income is calculated by applying the effective interest
rate to the amortized cost of the financial asset. If the asset is
no longer credit-impaired, then the calculation of interest income
reverts to the gross basis.
Appendix I
Page 15 3.7 Income tax Income tax expense comprises current and
deferred tax and is recognized in profit or loss. Current tax
Current tax is based on the taxable income or loss for the year and
any adjustment to the tax payable or receivable in respect of
previous years. The amount of current tax is the best estimate of
the tax amount expected to be paid or received that reflects
uncertainty related to income taxes, if any. It is measured using
tax rates enacted or substantively enacted at the reporting date.
Deferred tax Deferred tax is recognized in respect of temporary
differences between the carrying amounts of assets and liabilities
for financial reporting purposes and the amounts used for taxation
purposes. Deferred tax is not recognized for: • temporary
differences on the initial recognition of assets or liabilities in
a transaction that is not a business combination and that affects
neither accounting nor taxable profit or loss; • temporary
differences related to investments in subsidiaries, associates and
joint arrangements to the extent that the Group is able to control
the timing of the reversal of the temporary differences and it is
probable that they will not reverse in the foreseeable future; and
• taxable temporary differences arising on the initial recognition
of goodwill. Deferred tax assets are recognized for unused tax
losses, unused tax credits and deductible temporary differences to
the extent that it is probable that future taxable profits will be
available against which they can be used. Future taxable profits
are determined based on business plans for individual subsidiaries
in the Group and the reversal of temporary differences. Deferred
tax assets are reviewed at each reporting date and are reduced to
the extent that it is no longer probable that the related tax
benefit will be realized; such reductions are reversed when the
probability of future taxable profits improves. Unrecognized
deferred tax assets are reassessed at each reporting date and
recognized to the extent that it has become probable that future
taxable profits will be available against which they can be used.
Deferred tax is measured at the tax rates that are expected to
apply to taxable income in the years in which those temporary
differences are expected to be recovered or settled. The
measurement of deferred tax reflects the tax consequences that
would follow from the manner in which the Group expects, at the
reporting date, to recover or settle the carrying amount of its
assets and liabilities. Deferred tax assets and liabilities are
offset only if certain criteria are met. Accordingly, deferred
income tax assets and liabilities are recognized for the future tax
consequences attributable to differences between financial
statement carrying amounts of existing assets and liabilities and
their respective tax basis. In assessing the potential realization
of deferred tax assets, management considers whether it is probable
that some portion or all of the deferred tax assets will be
realized. The ultimate realization of deferred tax assets is
dependent upon the generation of future taxable income during the
periods in which the Group’s tax loss carryforwards remain
deductible. 3.8 Prepaid Advertising Expenses The Group regularly
pays in advance for online and offline advertising, and expenses
the prepaid amounts as cost of revenue over the contract periods as
the vendor delivers on its commitment. The Group evaluates the
realization of prepaid amounts at each reporting period and
expenses prepaid amounts if the applicable vendor is unable to
deliver on its commitment and is not willing or able to repay the
undelivered prepaid amounts. Prepaid expenses are shown as
non-financial assets.
Appendix I
Page 16 3.9 Business Combinations From time to time, the Group
acquires the stock or specific assets of companies in transactions
that may be considered to be business acquisitions under IFRS 3
Business Combinations. The Group accounts for business combinations
using the acquisition method when control is transferred to the
Group. The consideration transferred in the acquisition is
generally measured at fair value, as are the identifiable net
assets acquired. Under the acquisition method of accounting, Spark
Network allocates the fair value of purchase consideration to the
tangible assets acquired, liabilities assumed, and intangible
assets acquired based on their estimated fair values. The excess of
the purchase consideration over the fair values of these
identifiable assets and liabilities is recorded as goodwill. Such
valuations require Spark Networks’ management to make significant
estimates and assumptions, especially with respect to estimating
the fair value and expected useful life assigned to each class of
assets and liabilities acquired. Different classes of assets will
have varying useful lives. Spark Networks’ management’s estimates
of fair value are based upon assumptions believed to be reasonable,
but which are inherently uncertain and unpredictable and, as a
result, actual results may differ from estimates. During the
measurement period, which can be up to one year from the
acquisition date, Spark Networks may record adjustments to the
assets acquired and liabilities assumed, with the corresponding
offset to goodwill. Upon the conclusion of the measurement period,
any subsequent adjustments are recorded in the Group's financial
results within the Consolidated Statements of Operations and
Comprehensive Loss. Any goodwill or indefinite lived intangibles
that arise are tested annually for impairment. Transaction costs
are expensed as incurred. The consideration transferred does not
include amounts related to the settlement of pre-existing
relationships. Such amounts are generally recognized in profit or
loss. Any contingent consideration is measured at fair value at the
date of acquisition. If an obligation to pay contingent
consideration that meets the definition of a financial instrument
is classified as equity, then it is not remeasured and settlement
is accounted for within equity. Otherwise, other contingent
consideration is remeasured at fair value at each reporting date
and subsequent changes in the fair value of the contingent
consideration are recognized in profit or loss. There was no
business combination during 2021. 3.10 Goodwill and Intangible
Assets Recognition and measurement of goodwill and intangible
assets with indefinite lives Goodwill arising from the acquisition
of subsidiaries is measured at acquisition date fair value less
accumulated impairment losses. The Group’s goodwill represents the
excess of the purchase price over the fair value of the net assets
acquired resulting from business acquisitions. Intangible assets
resulting from the acquisitions of entities in a business
combination are recorded using the acquisition method of accounting
and estimated by management based on the fair value of assets
received. Management reviews the potential impairment of goodwill
and indefinite lived intangible assets at least annually, or more
frequently if events or changes in circumstances indicate that the
carrying value of goodwill may not be recoverable. Management also
routinely reviews whether events and circumstances continue to
support an indefinite useful life for intangible assets that are
not being amortized. Recognition and measurement of intangible
assets with finite lives Intangible assets with finite useful lives
are amortized using the straight-line method over their estimated
useful lives. In addition to the recoverability assessment,
management routinely reviews the remaining estimated useful lives
of its amortizable intangible assets. If the Group reduces its
estimate of the useful life assumption for any asset, the remaining
unamortized balance would be amortized over the revised estimated
useful life.
Appendix I
Page 17 Development expenditures such as internally generated
software are capitalized only if the expenditure can be measured
reliably, the product or process is technically and commercially
feasible, future economic benefits are probable and the Group
intends to and has sufficient resources to complete development and
to use or sell the asset. Otherwise, it is recognized in profit or
loss as incurred. Costs incurred in the planning and
post-implementation stages of a project are expensed as incurred
while direct and indirect costs associated with the development
phase are capitalized and amortized on a straight-line basis over
the estimated useful lives. Costs associated with minor
enhancements and maintenance are included in expenses in the
accompanying Consolidated Statements of Operations and
Comprehensive Loss. Subsequent to initial recognition, development
expenditure is measured at cost less accumulated amortization and
any accumulated impairment losses. The estimated useful lives of
intangible assets with finite lives for current and comparative
periods are as follows: • Brands and trademarks: 10 - 20 years •
Other intangible assets: 1 - 6 years Impairment of non-financial
assets Management assesses the potential impairment of assets,
which include intangible assets, whenever changes in circumstances
indicate that the carrying amount of an asset may not be
recoverable. Events and circumstances that may indicate that an
asset is impaired may include significant decreases in the market
value of an asset or the Group’s common stock, a significant
decline in actual or projected revenue, a change in the extent or
manner in which an asset is used, shifts in technology, loss of key
management or personnel, changes in the Group’s operating model or
strategy and competitive forces, as well as other factors.
Additionally, goodwill is tested annually for impairment. For
impairment testing, assets are grouped together into the smallest
group of assets that generate cash inflows from continuing use that
are largely independent of the cash inflows of other assets or
cash-generating units (“CGU”). Goodwill acquired in a business
combination is, from the acquisition date, allocated to CGUs based
on the lowest level within the entity which the goodwill is
monitored for internal management purposes, which is the operating
segment. The allocation is made to the CGUs that are expected to
benefit from the business combination in which the goodwill arose.
The Group has two operating segments for impairment testing
purposes: Zoosk and Spark. If events and circumstances indicate
that the carrying amount of an asset may not be recoverable and the
expected discounted future cash flows attributable to the asset or
CGU are less than the carrying amount of the asset, an impairment
loss equal to the excess of the asset’s carrying value over its
estimated recoverable amount is recorded. The recoverable amount is
determined based on the present value of estimated expected future
cash flows using a discount rate commensurate with the risk
involved, and quoted market prices or appraised values, depending
on the nature of the assets. Fair value measurements utilized for
assets under nonrecurring measurements were measured with Level 3
unobservable inputs. Subsequent expenditure Subsequent expenditure
is capitalized only when it increases the future economic benefits
embodied in the specific asset to which it relates. All other
expenditure, including expenditure on internally generated goodwill
and brands, is recognized in profit or loss as incurred. 3.11
Property and equipment Recognition and measurement Items of
property and equipment are measured at cost, less accumulated
depreciation and any accumulated impairment losses. If significant
parts of an item of property and equipment have different useful
lives, then they are accounted for as separate items (major
components) of property and equipment. The Group did not have such
item during the period presented.
Appendix I
Page 18 Any gain or loss on disposal of an item of property and
equipment is recognized in profit or loss. Depreciation Property
and equipment is stated at cost, net of accumulated depreciation,
which is recorded using the straight-line method over the estimated
useful life of the asset. The estimated useful lives of property
and equipment for current and comparative periods are as follows: •
Right-of-use asset: the shorter of the useful life of the
right-of-use asset or the term of the lease under IFRS 16 • Office
equipment and Other: 3 - 5 years Upon the sale or retirement of
property or equipment, the cost and related accumulated
depreciation and amortization are removed from the Group’s
Consolidated Balance Sheets with the resulting gain or loss, if
any, reflected in the Group’s Consolidated Statements of Operations
and Comprehensive Loss. Depreciation methods, useful lives and
residual values are reviewed at each reporting date and adjusted if
appropriate. 3.12 Financial instruments Classification and
measurement The Group applies IFRS 9 and classifies its financial
assets and financial liabilities in the following measurement
categories: • Fair value through profit or loss (FVTPL) • Fair
value through other comprehensive income (FVOCI); or • Amortized
cost (AC) Classification and subsequent measurement of financial
assets depends on: • The Group’s business model for managing the
asset; and • The cash flow characteristics of the asset Based on
these factors, the Group classifies its financial assets into one
of the following three measurement categories: • Amortized costs:
Assets that are held for collection of contractual cash flows where
cash flows represent solely payments of principal and interest
(SPPI), and that are not designated at FVTPL, are measured at
amortized cost. The carrying amount of these assets is adjusted by
any expected credit loss allowance recognized accordingly. Interest
income from these financial assets is included in Interest and
similar income using the effective interest rate method. • Fair
value through other comprehensive income (FVOCI): Financial assets
that are held for both the collection of contractual cash flows and
selling the assets, where the assets cash flows represent solely
payments of principal and interest, and that are not designated at
FVTPL, are measured at fair value through other comprehensive
income (FVOCI). Movements in the carrying amount are taken through
OCI, except for the recognition of impairment gains or losses,
interest income or expense, and foreign exchange gains and losses
on the instruments amortized cost which are recognized in profit or
loss. When the financial asset is derecognized, the cumulative gain
or loss previously recognized in OCI and accumulated in equity is
reclassified to profit or loss. Interest income from these
financial assets is included in interest and similar income using
the effective interest rate method.
Appendix I
Page 19 • Fair value through profit or loss (FVTPL): Assets that do
not meet the criteria for amortized cost or FVOCI are measured at
fair value through profit or loss. At initial recognition, an
entity may irrevocably designate a financial asset as measured at
FVTPL if doing so eliminates or significantly reduces a measurement
or recognition inconsistency that would otherwise arise. The
Group's financial liabilities satisfy the conditions for
classification at amortized cost. Other financial liabilities are
subsequently measured at amortized cost using the effective
interest method. Interest expense and foreign exchange gains and
losses are recognized in profit or loss. Any gain or loss on
derecognition is also recognized in profit or loss. Impairment of
financial assets The Group is exposed to credit risk if
counterparties fail to make payments as they fall due in respect of
payment of trade receivables specifically relating to receivables
from chargebacks or if a tenant fails to make rent payments as they
fall due in respect of payment of lease receivables specifically
relating to the Group's subleased property. The Group measures loss
allowances for trade receivables at an amount equal to lifetime
expected credit losses and for lease receivables at an amount equal
to the expected credit losses for the next twelve months. The Group
considers the probability of default upon initial recognition of
the asset and whether there has been a significant increase in
credit risk on an ongoing basis throughout each reporting period.
To assess whether there is a significant increase in credit risk,
the Company compares the risk of a default occurring on the asset
as at the reporting date with the risk of default as at the date of
initial recognition. It considers available reasonable and
supportive forwarding-looking information. Macroeconomic
information (such as market interest rates or growth rates) is
incorporated as part of the internal rating model. In determining
the credit risk related to the lease receivable, the specific
default risk of the tenant is considered. Credit risk relating to
other financial assets mainly relates to cash deposits to payment
processors. Management monitors the creditworthiness of payment
processors closely. In the past, there were no indications that the
payment processors would not meet their obligations. 3.13
Provisions The Group recognizes a provision if a present obligation
has arisen as a result of a past event, payment is probable (more
likely than not), and the amount can be estimated reliably.
Provisions are determined by discounting the expected future cash
flows at a pre-tax rate that reflects current market assessments of
the time value of money and the risks specific to the liability.
The unwinding of the discount is recognized as finance cost. Legal
Contingencies The Group is currently involved in certain legal
proceedings. To the extent that a loss related to a contingency is
reasonably estimable and probable, the Group accrues an estimate of
that loss. Because of the uncertainties related to both the amount
and range of loss on certain pending litigation, the Group may be
unable to make a reasonable estimate of the liability that could
result from an unfavorable outcome of such litigation. As
additional information becomes available, the Group will assess the
potential liability related to such pending litigation and make, or
if necessary, revise its estimates. Such revisions in the Group’s
estimates of the potential liability could materially impact its
consolidated results of operations and consolidated financial
position. Refunds A provision for refunds is recognized when the
underlying services are sold, based on historical refund data and a
weighting of possible outcomes against their associated
probabilities. Note 4. Notes on the Consolidated Statements of
Operations and Comprehensive Loss 4.1 Operating segments The Chief
Executive Officer of Spark Networks is the Group’s chief operating
decision maker ("CODM").
Appendix I
Page 20 In line with the management approach, the operating
segments were identified on the basis of the Group's internal
reporting. Internal reporting is the basis for the allocation of
resources and the evaluation of the performance of the operating
segments by the CODM. The Company has two operating segments, Spark
and Zoosk which are combined into a single reportable segment. The
Spark segment includes the legacy Affinitas and Spark Inc.
businesses, which were separate companies prior to the 2017 merger.
The determination of two operating segments is based on the level
of financial information regularly provided to the CODM to make
management decisions. When making operating decisions and assessing
performance, the CODM reviews contribution margin at operating
segments level. Segments with similar economic characteristics, is
defined by the Group as exhibiting similar long-term average
contribution margin (revenue less direct marketing costs). Both
operating segments exhibit similar long-term average contribution
margin. The Group provides platform for singles to find a
relationship through online dating sites and mobile applications.
The customers are single people looking for relationships. The
brands all utilize a “subscription” business model, where certain
basic functionalities are provided free of charge, while providing
premium features (such as interacting with other community members
via messages) only to paying subscribers. The Group promotes both
Spark and Zoosk worldwide and share customer demand and access to
customers across brands and markets, utilizing similar marketing
methods. The Group also shares resources, best practices, and
customers across Spark and Zoosk and collaborate for the benefits
of the customers. In addition, Spark and Zoosk are exposed to
similar competitive, operating and financial risks, including
intense competition, currency exchange rate fluctuations, the risks
related to growth and global expansion, reliance on performance and
brand marketing channels for traffic to the platforms, rapid
technological and other market changes, cybersecurity breaches,
system failures, those related to the consumer adoption of mobile
devices, tax liability and others. As Spark and Zoosk have similar
economic characteristics, the Company aggregates the operating
segments into one reportable segment. Geographic information The
Group operates across the world generating revenue from different
countries. It has allocated its total revenue to countries based on
where the revenue is generated and has deemed countries as material
and separately disclosed where they make up more than 10% of its
revenue or non-current assets. Rest of world includes various
countries, each of which makes up less than 10% of total revenue or
non-current assets for the Group. Years Ended December 31, Revenue
(in € thousands) 2021 2020 United States € 120,043 € 136,320
Germany 1,238 1,569 Rest of world 62,059 66,401 € 183,340 € 204,290
Non-current assets (in € thousands) 2021 2020 United States €
150,349 € 175,998 Germany 5,270 8,759 Rest of world 115 1,458 €
155,734 € 186,215 Non-current assets exclude financial instruments
and deferred tax assets. Major customers Given the nature of the
business, there is no one single customer that is significant to
the Group.
Appendix I
Page 21 4.2 Seasonality of operations The Group’s business
underlies a certain degree of seasonality. Higher operating profits
are usually expected in the second half of the year rather than in
the first six months as there are usually higher marketing expenses
in the first six months, while revenue is at a similar level in the
first and second half of the year. This information is provided to
allow for a better understanding of the results; however,
management has concluded that this is not "highly seasonal" in
accordance with IAS 34. 4.3 Revenue For the years ended December
31, 2021 and 2020, revenue was as follows: Years Ended December 31,
(in € thousands) 2021 2020 Subscription revenue € 176,487 € 198,838
Virtual currency revenue 4,424 3,107 Advertising revenue 2,429
2,345 Total Revenue € 183,340 € 204,290 The decrease in revenue
from 2020 to 2021 was mainly driven by reduced marketing spend. No
revenue was realized during the year ended December 31, 2021 from
performance obligations satisfied in prior periods. For information
regarding trade receivables and contract liabilities from contracts
with customers, refer to Notes 5.3 and 5.14, respectively. 4.4 Cost
of revenue For the years ended December 31, 2021 and 2020, cost of
revenue was as follows: (in € thousands) 2021 2020* Direct
marketing costs € 89,321 € 100,920 Data center expenses 5,928 6,434
Credit card fees 5,599 5,846 Mobile application processing fees
10,245 11,737 vPaas streaming fees 348 — Total cost of revenue €
111,441 € 124,937 * adjusted compared to the consolidated financial
statements 2020 due to changed account allocation Cost of revenue
consists primarily of direct marketing expenses, data center
expenses, credit card fees, mobile application processing fees, and
vPaas streaming fees. 4.5 Other income For the years ended December
31, 2021 and 2020, other income was as follows: (in € thousands)
2021 2020 Gain on sale of domain names 541 716 Other income — 195
Total other income € 541 € 911 During the years ended December 31,
2021 and 2020, the Group recognized gain on sale of domains of €0.5
million and €0.7 million, respectively.
Appendix I
Page 22 4.6 Other operating expenses Other operating expenses
consists primarily of costs for sales and marketing, customer
service, technical operations and development, and corporate
functions. These costs include personnel, technology platform and
system costs, third-party service and professional fees, occupancy
and other overhead costs. Certain reclassifications of prior period
amounts within the tables below have been made to conform to the
current period presentation. These reclassifications had no impact
on our results of operations. The following table shows sales and
marketing expenses by nature for the years ended December 31, 2021
and 2020: (in € thousands) 2021 2020* Personnel € 2,870 € 2,528
Software licenses 421 309 Depreciation and amortization 339 422
Third party services 400 533 Other 309 255 Total sales and
marketing expenses € 4,339 € 4,047 * adjusted compared to the
consolidated financial statements 2020 due to changed account
allocation The increase in sales and marketing expenses from 2020
to 2021 was primarily driven by an increase in personnel costs due
to higher headcount within sales and marketing organization. The
following table shows customer service expenses by nature for the
years ended December 31, 2021 and 2020: (in € thousands) 2021 2020*
Personnel € 1,834 € 2,023 Third party services 3,385 3,506 Software
licenses 836 786 Depreciation and amortization 65 106 Other 228 309
Total customer service expenses € 6,348 € 6,730 * adjusted compared
to the consolidated financial statements 2020 due to changed
account allocation The decrease in customer service expenses from
2020 to 2021 was primarily attributable to a reduction in personnel
costs due to consolidation of customer service employee headcount.
The following table shows technical operations and development
expenses by nature for the years ended December 31, 2021 and 2020:
(in € thousands) 2021 2020* Personnel € 9,750 € 9,508 Third party
services 2,862 2,793 Software licenses 3,488 3,501 Depreciation and
amortization 4,468 6,385 Other 483 531 Total technical operations
and development expenses € 21,051 € 22,718 * adjusted compared to
the consolidated financial statements 2020 due to changed account
allocation The decrease in technical operations and development
expenses from 2020 to 2021 was primarily driven by a decrease in
amortization expense, partially offset by an increase in personnel
costs due to higher headcount in 2021 compared to the prior year.
Total research and development costs for 2021 and 2020 were €11.5
million and €9.8 million(1), respectively, of which €0.5 million
and €2.2 million were capitalized in 2021 and 2020,
respectively.
Appendix I
Page 23 The following table shows general and administrative
expenses by nature for the years ended December 31, 2021 and 2020:
(in € thousands) 2021 2020* Personnel costs € 8,916 € 11,887 Legal,
consulting, bookkeeping and auditing costs 7,413 8,487 Insurance
2,891 2,100 Licenses 122 1,332 Depreciation and amortization 1,196
1,869 Value-added and sales tax expenses 657 1,821 Other expenses
2,453 2,660 Total general and administrative expenses € 23,648 €
30,156 * adjusted compared to the consolidated financial statements
2020 due to changed account allocation The decrease in general and
administrative expenses from 2020 to 2021 was primarily driven by a
decrease in share-based compensation expense due to higher grants
in 2020 and higher forfeitures in 2021. In addition, the Company
had higher accounting and audit fees in connection with the U.S.
GAAP conversion during 2020. The company also had higher business
and software license expenses, as well as higher value-added and
sales tax expenses during 2020. 4.7 Net finance expenses During the
years ended December 31, 2021 and 2020, net finance expenses were
as follows: (in € thousands) 2021 2020* Currency translation gains
€ 12,459 € 6,850 Interest income and similar income 182 292
Interest expense for non-current liabilities (8,914) (15,330)
Currency translation losses (14,963) (3,672) Other finance costs —
(129) Total net finance expenses € (11,236) € (11,989) * adjusted
compared to the consolidated financial statements 2020 due to
changed account allocation Net finance expenses consist primarily
of interest income and expenses, foreign exchange gains and losses,
and other finance costs. The decrease in total net finance expenses
was primarily driven by a €5.6 million increase in gains on foreign
currency transactions and a €6.4 million decrease in interest
expenses, partially offset by a €11.3 million increase in losses on
foreign currency transactions. The decrease in interest expense was
primarily driven by a decrease in interest expense related to
borrowings under the Senior Secured Facilities Agreement, which
includes a one-time gain of €2.4 million in 2021 related to the
Limited Waiver (as defined in Note 5.9) and a one-time loss of €3.7
million in 2020 related to the Second Amendment (as defined in Note
5.9). The decrease in interest expense related to the Senior
Secured Facilities Agreement was partially offset by a €0.6 million
increase in interest expense on the deferred payment to Zoosk's
shareholders due to an increase in the stated interest rate from 2%
to 12% per annum. 4.8 Employee benefits The following table shows
the different types of expenses recorded as employee benefits: (in
€ thousands) 2021 2020* Wages and salaries € 17,077 € 17,398 Social
security contribution 3,141 2,548 Equity-settled share-based
payments 2,304 4,193 Termination benefits 288 780 Other employee
benefits 560 1,027 Total employee benefits expenses € 23,370 €
25,946 * adjusted compared to the consolidated financial statements
2020 due to changed account allocation
Appendix I
Page 24 The decrease in employee benefits expense was primarily
driven by a decrease in share-based compensation expense due to
higher grants in 2020 and higher forfeitures in 2021. During the
years ended December 31, 2021 and 2020, termination benefits of
€0.3 million and €0.8 million, respectively, were expensed, of
which €0.3 million and €1.7 million were paid out in 2021 and 2020,
respectively. Contributions to the defined contribution retirement
funds presented as social security contributions amounted to €1.3
million for both years ended December 31, 2021 and 2020. Employee
benefits are allocated to costs and expenses as follows: (in €
thousands) 2021 2020* Sales and marketing expenses 2,870 2,528
Customer service expenses 1,834 2,023 Technical operations and
development expenses 9,750 9,508 General and administrative
expenses 8,916 11,887 Total employee benefits € 23,370 € 25,946 *
adjusted compared to the consolidated financial statements 2020 due
to changed account allocation 4.9 Share-based payment arrangements
Stock-based compensation expense reflects share awards issued under
the Spark Networks 2018 virtual stock option plan ("2018 VSOP") and
the Long Term Incentive Plan ("the LTIP") adopted 2020. 2018 VSOP
In 2017, Spark Networks established the 2017 VSOP for selected
executives and employees of the Company and its subsidiaries. In
March 2018, the Company replaced the 2017 VSOP by establishing the
2018 VSOP for selected executives and employees of the Company and
its subsidiaries if and to the extent that the plan participants
under the 2017 VSOP have agreed to such replacement. All plan
participants agreed to the replacement. Both plans, which were
established following the merger between Affinitas GmbH
("Affinitas") and Spark, Inc. in 2017, replaced plans in effect
under Affinitas prior to the merger. Under the 2018 VSOP, the
Company granted participants a certain number of virtual stock
options in exchange for options granted under the 2017 VSOP and/or
a certain number of new virtual stock options. Awards issued under
the 2018 VSOP have a contractual term of 85 months and vest over a
period of four years from the grant date, whereby one fourth of
each option award vests upon the first anniversary of the grant
with the remaining options vesting in six-month installments. The
2017 VSOP options which were exchanged for the 2018 VSOP vest over
a period of three years from the grant date, whereby one third of
each option award vest on the first-year anniversary of the grant
and the remaining options vesting in six month installments. The
Company will not grant any additional awards under the 2018 VSOP.
Vested awards under the 2018 VSOP may be settled for either equity
shares or a cash amount equal to the market price of the Company's
ADS minus the share price. The method of settlement is at the
discretion of the Company. As a result, awards issued under the
2018 VSOP are treated as equity settled.
Appendix I
Page 25 The following table summarizes the activity for the
Company's options under the 2018 VSOP: Number of Options Weighted
Average Exercise Price Weighted Average Remaining Contractual Term
(in years) Outstanding as of December 31, 2020 326,281 $ 11.56 4.15
Forfeited (16,250) $ 12.34 Outstanding as of December 31, 2021
310,031 $ 11.52 3.12 Options vested and exercisable as of December
31, 2021 307,221 $ 11.50 3.12 As the options are subject to a
graded vesting schedule, the grant date fair value of each tranche
is expensed ratably over the related vesting period. Estimated
forfeitures are revised if the number of options expected to vest
differ from previous estimate, and if any differences between the
actual and estimated forfeitures are accounted for in the period
they occur. The options outstanding at December 31, 2021 had an
exercise price in the range of $9.06 to 14.63 (2020: $9.06 to
$14.63). 2020 Long Term Incentive Plan In January 2020, the
Administrative Board of the Company (the "Administrative Board")
adopted the LTIP for applicable executives and employees of the
Company and its subsidiaries as part of their remuneration for
future services. The LTIP provides for the grant of virtual stock
options. Each option represents the right to receive, upon
exercise, a certain amount in cash determined based on the relevant
American Depository Shares ("ADS") Stock Price of the option minus
the strike price of such option; provided, however, that the
Company may elect to settle options in ADSs or ordinary shares of
Spark Networks instead of cash at its sole discretion. The LTIP
provides that the strike price can be set at any amount determined
by the Administrative Board, including zero. Under the LTIP, the
"ADS Stock Price" is, as of the grant date, the average closing
price of one ADS of Spark Networks trading on a US stock exchange
for the period of five trading days prior to such date. Spark
Networks classifies awards under the LTIP as equity-settled.
Options granted under the LTIP have a contractual term of 85 months
and vest, subject to the employee's continued service to the
Company, as follows: (i) 25% of the total number of options granted
to a participant vest 12 months after the grant date of such
option, and (ii) an additional 6.25% of such options shall vest at
the end of each additional three-month period thereafter until the
end of the 48th month after the relevant grant date. In connection
with the adoption of the LTIP, the Administrative Board authorized
for 2020 the issuance of virtual options for up to three million
ADSs, including up to one million zero-priced options.In 2021, the
Administrative Board authorized an additional 500,000 ADSs that may
be issued under the plan, all of which may be zero-priced options.
At December 31, 2021, 197,772 virtual options, and 915,932
zero-priced options were available for future grant.
Appendix I
Page 26 For the year ended December 31, 2020, the fair value of the
virtual stock options and zero-priced options were measured using a
binomial option-pricing model. The inputs used in the measurement
of fair values at the date of grant are summarized below: Virtual
Stock Zero-Priced Options Options Share price ($) $2.77 - $6.09
$2.91 - $6.42 Exercise price ($) $2.23 - $4.88 $— Option life
(months) 85 85 Volatility 40.0% - 49.0% 50.2% - 74.9% Dividend
yield —% —% Risk-free rate 0.52% - 1.51% 0.17% - 1.48% For the year
ended December 31, 2021, the fair value of the virtual stock
options and zero-priced options are measured using a capped-call
Black-Scholes option-pricing model. The Black-Scholes
option-pricing model meets the fair value measurement objective and
there was no material impact as a result of the change in valuation
techniques. The inputs used in the measurement of the fair values
at the date of grant are summarized below: Virtual Stock Options
Zero-Priced Options Long Call Short Call Long Call Short Call
Option Option (Cap) Option Option (Cap) Stock price $3.21 - $5.42
$3.21 - $5.42 $3.21 - $5.42 $3.21 - $5.42 Strike price $3.13 -
$5.34 $31.3 - $53.4 $0 $50 Term 4.65 - 4.67 4.65 - 4.67 4.65 - 4.67
4.65 - 4.67 Volatility 62.7% - 64.0% 62.7% - 64.0% 62.7% - 64.0%
62.7% - 64.0% Dividend —% —% —% —% Risk-free rate 0.7% - 0.9% 0.7%
- 0.9% 0.7% - 0.9% 0.7% - 0.9% The following table summarizes the
activity for the Company's options under the 2020 LTIP during the
year ended December 31, 2021: Number of Options Weighted Average
Exercise Price Weighted Average Remaining Contractual Term (in
years) Outstanding as of December 31, 2020 1,550,000 $ 4.74 6.22
Granted 523,400 $ 4.50 Exercised (7,250) $ 3.14 Forfeited (263,922)
$ 4.47 Outstanding as of December 31, 2021 1,802,228 $ 4.71 5.62
The weighted average fair value of options granted during the year
ended December 31, 2021 was $1.89 (2020: $3.00). The options
outstanding at December 31, 2021 had an exercise price in the range
of $3.13 to $5.34 (2020: $2.23 to $4.88).
Appendix I
Page 27 The following table summarizes the activity for the
Company's zero priced options under the 2020 LTIP: Number of
Options Outstanding as of December 31, 2020 674,000 Granted 200,900
Exercised (207,004) Forfeited (83,828) Outstanding as of December
31, 2021 584,068 The weighted average fair value of options granted
during the year ended December 31, 2021 was $3.85 (2020: $6.14).
Pre-merger Share Awards Prior to the 2017 merger with Affinitas,
Spark, Inc. granted share-based payment awards under the 2007
Omnibus Incentive Plan (the “Spark Inc. 2007 Plan”). As of the
merger date, outstanding awards under the Spark Inc. 2007 Plan
("Spark Inc. Options") consisted entirely of nonqualified stock
options. As the merger was considered a change in control under
Spark Inc. 2007 Plan, all outstanding unvested awards became fully
vested. In connection with the merger with Affinitas, Spark Inc.
established the Chardonnay Trust, with the purpose of holding such
number of shares of Spark Networks SE ADSs as necessary to settle
all unexercised Spark Inc. stock options awarded under the Spark
2007 Plan. For the years ended December 31, 2021 and 2020, no
stock-based compensation expense was recognized for the awards
granted under the Spark Inc. 2007 Plan. The Chardonnay Trust was
closed in 2021. For the years ended December 31, 2021 and 2020, the
Company recognized total share-based compensation expense for all
the plans of €2.3 million and €4.2 million, respectively, which is
included as a component of Selling, general and administrative
expenses in the Consolidated Statements of Operations and
Comprehensive Loss. 4.10 Income Taxes The major components of
income taxes are broken down as follows: Years Ended December 31,
(in € thousands) 2021 2020 Current income tax (expense) benefit
(2,560) (1,217) Current income tax expense (2,646) (1,251)
Adjustments for current income tax from prior periods 86 34
Deferred tax (expense) benefit (18,098) (3,256) Deferred taxes from
the origination and reversal of temporary differences, and
impairment of deferred tax assets on loss carryforwards (16,777)
(1,974) Deferred taxes from true-up (prior year effect) 28 —
Deferred taxes on tax loss and credit carryforwards (1,349) (1,282)
Total (20,658) (4,473)
Appendix I
Page 28 Based on the consolidated loss before taxes, the
reconciliation of income tax expense is the following: Years Ended
December 31, (in € thousands) 2021 2020 Loss before tax (33,846)
(55,127) Tax rate of the Group in % 30 % 30 % Expected tax benefit
10,213 16,635 Tax effect of: Differences in applicable tax rate
(8,123) (4,633) Impairment of deferred tax assets on loss
carryforwards (10,385) 179 Recognition of previously unrecognized
deferred assets (223) — Current year losses for which no deferred
tax is recognized (2,395) (867) Current year interest carry-forward
for which no deferred tax is recognized (1,196) (785) Current-year
deferreds for which no deferred tax asset is recognized 24 —
Impairment of goodwill (7,261) (13,699) Share-based compensation
arrangements (703) (663) Non-deductible expenses for tax purpose
(238) — Taxes from prior years 150 423 Deferred taxes from prior
years — (419) Tax credits (287) — Uncertain tax benefits (219)
(385) Other (15) (259) Income tax expense (20,658) (4,473) The
income tax rate of the Group is determined by the tax rate of Spark
Networks SE, consisting of a corporate income tax of 15.8%
including solidarity surcharge, as well as the trade tax of 14.4%.
As of December 31, 2021 and 2020, the following deferred tax assets
and liabilities were recognized: December 31, (in € thousands) 2021
2020 Deferred tax assets (DTA) 6,395 18,575 Deferred tax
liabilities (DTL) 7,145 1,310
Appendix I
Page 29 A breakdown of deferred tax assets and liabilities is
presented in the following table: 2021 2020 (in € thousands) DTA
DTL DTA DTL Intangible assets 81 13,854 381 15,912 Property and
equipment 43 10 69 109 Financial assets — — — 48 Receivables and
other assets 225 1,457 91 1,249 Compensation accruals 23 — 39 —
Cash 550 — 99 — Liabilities 1,291 — 1,353 980 Provisions — — 120 —
Contract liabilities 651 — 432 — Interest expense carryforward 950
— 269 — Other 723 433 1,151 129 Income tax credits 955 — 6,541 —
Tax losses carryforward 9,512 — 25,147 — Total, gross 15,004 15,754
35,692 18,427 Set off of deferred tax 8,609 8,609 17,117 17,117
Total, net 6,395 7,145 18,575 1,310 The deferred tax liabilities on
intangible assets as of December 31, 2021 and 2020 of €13.9 million
and €15.9 million, respectively, are mainly attributable to
intangible assets acquired as part of the Spark Networks / Zoosk
Merger in 2019. The deferred taxes recorded on cash and cash
equivalents relate to differences in the treatment of unrealized
foreign currency exchange effects that are not deductible for tax
purposes. The Group has unrecognized tax benefits of €4.6 million
and €4.0 million as of December 31, 2021 and 2020, respectively,
which are primarily related to R&D tax credits in the United
States. The Group does not expect any material changes in the
amount of unrecognized tax benefits in the next 12 months. The
Group applies IFRIC 23 Uncertainty over Income Tax Treatments in
its consolidated financial statements. IFRIC 23 clarifies the
application of recognition and measurement requirements of IAS 12
when there is uncertainty about the income tax treatment. Estimates
and assumptions must be made for recognition and measurement, e.g.
whether an assessment is made separately or together with other
uncertainties, a probable expected value is used for the
uncertainty and whether changes have occurred compared to the
previous period. Detection risk is irrelevant to the account for
uncertain balance sheet items. The accounting is based on the
assumption that the tax authorities will investigate the matter in
question and that they have all the relevant information. In
Germany, the Group has tax loss carryforwards for corporate taxes
amounting to €50.0 million as of December 31, 2021 (December 31,
2020: €55.8 million) and €48.9 million for trade taxes (December
31, 2020: €54.6 million). Of these available tax loss
carryforwards, deferred tax assets in the amount of €6.0 million
were recognized as of December 31, 2021 (December 31, 2020: €10.2
million). As of December 31, 2021, the Group had interest
carryforwards in the amount of €11.5 million (December 31, 2020:
€8.0 million) for which no deferred tax assets have been recorded.
As of December 31, 2021, there are corporate tax loss carryforwards
of €29.5 million (December 31, 2020: €21.8 million) and trade tax
loss carryforwards of €29.4 million (December 31, 2020: €21.4
million) for which no temporary differences were recognized. No
temporary differences for which no deferred tax assets were
recognized existed. In general, the net operating loss
carryforwards in Germany do not expire. They are subject to review
and possible adjustment by the German tax authorities. Furthermore,
under current German tax laws, certain substantial changes in the
Group’s ownership and business may further limit the amount of net
operating loss carryforwards, which could be utilized annually to
offset future taxable income.
Appendix I
Page 30 At December 31, 2021, the Group has gross net operating
loss carryforwards for United States income tax purposes of
approximately €51.5 million (December 31, 2020: €58.4 million) and
€68.2 million (December 31, 2020: €69.2 million) available to
reduce future federal and state taxable income, respectively, which
begin to expire beginning December 31, 2025 through December 31,
2037 for federal purposes and beginning in December 31, 2030
through December 31, 2039 for state purposes. Federal net operating
losses generated after December 31, 2017 are indefinite in nature
and do not expire. The decrease in net operating loss carryforwards
is due to the impairment of deferred tax assets for loss
carryforwards. Under Section 382 of the United States Internal
Revenue Code, the utilization of the net operating loss
carryforwards may be limited based on changes in the percentage
ownership of the Group. The Company conducted a study to account
for any limitation of attributes and noted it did not materially
impact its net operating loss carryforwards acquired as part of the
Zoosk acquisition. Of these available tax loss carryforwards,
deferred tax assets in the amount of €3.5 million were recognized
as of December 31, 2021. At December 31, 2021, the Group has United
States federal and state income tax credit carryforwards of
approximately €11.5 million (December 31, 2020: €11.7 million),
which primarily relate to research and development (“R&D”) tax
credits that expire beginning in the years December 31, 2027
through December 31, 2040 for federal purposes and December 31,
2021 through December 31, 2028 for U.S. state purposes. In
addition, as of December 31, 2021, the Group had net operating loss
carryforwards in Israel of €9.3 million (December 31, 2020: €9.0
million), which do not expire, and for which no deferred tax asset
was recognized. Management does not believe it is probable that
Israel’s deferred tax assets will be realized based on historical
and projected income. Spark Networks records deferred tax assets on
operating loss carryforwards to the extent that it is probable that
those can be used to reduce future taxable income. Following Spark
Networks’ evaluation, deferred tax assets of €9.5 million and €25.1
million were recorded as of December 31, 2021 and December 31,
2020, respectively. Such deferred tax assets primarily relate to
the Group's operations in the United States and Germany. The
company assessed whether any change in recognition was required
based on the continued changes in the economic environment. This
evaluation requires significant judgment and the company evaluates
all available positive and negative evidence, including historical
operating performance and expectations of future operating
performance. The Company recorded a reserve against United States
Federal and state operating loss carryforwards in the second
quarter of the year ended December 31, 2021. No deferred taxes on
the aggregate amount of temporary differences associated with
investments in subsidiaries of €(4.5) million as of December 31,
2021 (December 31, 2020: €0.8 million) were recognized. 4.11
Earnings per share Basic earnings per share The Group presents
earnings per share data for its common shares. Earnings per share
is calculated by dividing the net (loss) income of the period by
the weighted average number of common shares outstanding during the
period. Dilutive net (loss) earnings per share includes any
dilutive impact of stock options. For the years ended December 31,
2021, and 2020, all stock options outstanding during the period
were excluded from the calculation of diluted net (loss) earnings
per share because they would have been anti-dilutive. Years Ended
December 31, (in € thousands, except per share amounts) 2021 2020
Net loss € (54,504) € (59,600) Weighted average shares outstanding
- basic and diluted 2,611 2,606 Net loss per share - basic and
diluted € (20.88) € (22.87)
Appendix I
Page 31 Note 5. Notes on the Consolidated Balance Sheets 5.1
Goodwill and Intangible assets, net The following table shows the
reconciliation of goodwill and intangible assets, net for the years
ended December 31, 2021 and 2020: (in € thousands) Goodwill Brands
and trademarks Other intangible assets Total Net carrying amount
January 1, 2020 € 192,314 € 58,275 € 19,557 € 270,146 Additions — —
2,215 2,215 Disposals — — (311) (311) Amortization — (97) (7,652)
(7,749) Impairment (59,751) — — (59,751) Currency translation
(14,595) (4,799) (651) (20,045) December 31, 2020 117,968 53,379
13,158 184,505 Additions — — 641 641 Disposals — (9) — (9)
Amortization — (83) (5,057) (5,140) Impairment (34,577) — (5,087)
(39,664) Currency translation 8,314 4,338 317 12,969 December 31,
2021 € 91,705 € 57,625 € 3,972 € 153,302 During the year ended
December 31, 2021, the Group capitalized an additional €0.6 million
of Other intangible assets, including €0.5 million of intangible
assets under development related to the development of shared
billing technology for its platforms and €0.1 million of purchased
software. The Company performed its annual review of internally
developed software for the year ended December 31, 2021, and
determined to abandon various software development projects that
the Company concluded were no longer a current strategic fit based
on new product initiatives and focus areas for the organization.
The Company wrote-off internally generated software with a cost of
€5.5 million and accumulated amortization of €2.3 million and
intangible assets under development with a cost of €1.7 million,
both of which are reflected as Other intangible assets in the table
above. As a result, for the year ended December 31, 2021, the
Company recognized an impairment charge of €5.1 million. During the
year ended December 31, 2020, the Group capitalized an additional
€1.1 million of intangible assets under development related to the
development of shared billing technology for its platforms and new
features that add messaging and personality test functionality to
one of the Group's core platforms. The Group also capitalized an
additional €1.1 million of internally generated software related to
multiple projects for Zoosk which add functionality to the
platform. The Group disposed of €0.3 million of intangible assets
under development due to the write-off of certain products that
failed to perform to the Group's standards. As of December 31,
2021, the remaining useful life of intangible assets with finite
lives is as follows: • Brands and trademarks: 4 to 15 years • Other
intangible assets: 1 to 6 years Impairment Test of Goodwill and
Indefinite-lived Intangible Assets The Group performs its
impairment test for goodwill and indefinite-lived intangible assets
annually in the fourth quarter. Goodwill is allocated to groups of
cash-generating units (CGUs) that represent the lowest level at
which the goodwill is monitored for internal management purposes,
which is the operating segment. Goodwill is allocated to the
individual CGUs which make up the Group's two operating segments
Spark and Zoosk.
Appendix I
Page 32 For the years ended December 31, 2021 and 2020, the
impairment test was performed in accordance with IAS 36 Impairment
of Assets. The recoverable amount is based on fair value less cost
of disposal ("FVLCOD"), determined using an income approach based
on discounted cash flow ("DCF") model. The fair value results from
a complex series of judgements about future events and
uncertainties and rely heavily on estimates and assumptions at a
point in time. The DCF model incorporates a number of operating
segment specific market participant assumptions, including future
revenue growth and operating margins. The fair value measurement is
categorised as a Level 3 fair value based on the inputs in the
valuation technique used. The key assumptions used in the
estimation of the recoverable amount are long-term EBITDA margin,
terminal value growth rate and after-tax weighted average cost of
capital. The cash flow projections were derived based on the
financial forecast for each operating segment for the next five
years approved by management and a terminal growth rate thereafter.
Cash flows extrapolated beyond the five-year period are projected
to increase based on long-term growth rates to reach its long-term
sustainable level of growth in revenues and EBITDA by FY2029.
Terminal value growth rate is based on internal experience as well
as on expected impact of market trends anticipated in the future.
For discounting the future cash flows, an after-tax weighted
average cost of capital (WACC) was derived as of the impairment
testing date of October 31st and applied for each operating
segment. The discount rates represent the weighted average cost of
capital measuring the operating segment’s cost of debt and equity
financing, which are weighted by the percentage of debt and
percentage of equity in an operating segment's target capital
structure. The discount rates applied also include adjustments to
reflect management's assessment of a market participant's view
concerning other risks associated with the projected cash flows of
the individual operating segments. An impairment according to IAS
36 is required if the carrying amount exceeds the recoverable
amount. Goodwill As of December 31, 2021, goodwill of €91.7 million
is allocated to the following operating segments: (in € thousands)
As of December 31, 2021 Zoosk 70,674 Spark 21,031 Total Goodwill
91,705 For the impairment test performed as of October 31, 2021,
long-term EBITDA margin of 23.0%, terminal value growth rate of
3.0%, and WACC of 21.0% was applied for the Zoosk CGU. The Company
used the recoverable amount calculated in the prior year to perform
the impairment test of the Spark CGU in the current year, as the
recoverable amount exceeded the carrying amount by a substantial
margin and the likelihood that a current recoverable amount
determination would be less than the asset's carrying amount is
remote. Based on the result of the impairment tests performed, the
recoverable amount of the Spark operating segment exceeded the
carrying amount, and, accordingly, no impairment was necessary,
while the carrying amount exceeded the €102.8 million recoverable
amount of the Zoosk operating segment and an impairment charge of
€34.6 million was recognized and included as part of Impairment of
intangible assets and goodwill on the Consolidated Statements of
Operations and Comprehensive Loss. Accumulated impairment loss was
€94.3 million as of December 31, 2021 The impairment charge was
primarily attributed to declines in the estimated undiscounted cash
flows and an increase in the discount rate due to increased risk
factors which resulted in the carrying amount not being
recoverable. Adverse changes to key assumptions would lead to
further impairment for the Zoosk operating segment, while no
reasonable change in key assumptions considered possible by
management would cause the carrying amount to exceed the
recoverable amount for the Spark operating segment.
Appendix I
Page 33 As of December 31, 2020, goodwill of €118.0 million is
allocated to the following operating segments: (in € thousands) As
of December 31, 2020 Zoosk 98,558 Spark 19,410 Total Goodwill
117,968 For the impairment test performed as of October 31, 2020,
long-term EBITDA margin of 17.0% for Zoosk and 15.0% for Spark were
used, and a terminal value growth rate of 3.0% for both Zoosk and
Spark was applied. The WACC used for each operating segment was as
follows: 13.5% for Zoosk and 11.7% for Spark . Based on the result
of the impairment tests performed, the recoverable amount of the
Spark operating segment exceeded the carrying amount, and,
accordingly, no impairment was necessary, while the carrying amount
exceeded the €152.8 million recoverable amount of the Zoosk
operating segment and an impairment charge of €59.8 million was
recognized and included as part of Impairment of intangible assets
and goodwill on the Consolidated Statements of Operations and
Comprehensive Loss. Accumulated impairment loss was €59.8 million
as of December 31, 2020. The impairment charge was primarily
attributed to declines in the estimated undiscounted cash flows and
an increase in the discount rate due to increased risk factors,
which was offset by an increase in the terminal value growth rate,
the net of which resulted in the carrying amount not being
recoverable. Adverse changes to key assumptions would lead to
further impairment for the Zoosk operating segment, while no
reasonable change in key assumptions considered possible by
management would cause the carrying amount to exceed the
recoverable amount for the Spark operating segment.
Indefinite-lived intangible assets The intangible assets are
indefinite-lived, as there is no foreseeable limit on the period of
time over which it is expected to contribute to the cash flows, and
the Company anticipates that the intangible assets will contribute
cash flows beyond the foreseeable horizon. As of December 31, 2021,
indefinite-lived intangible assets consisting of brands and
trademarks, was €56.3 million is allocated to the following CGUs:
(in € thousands) As of December 31, 2021 Zoosk 53,735 Christian
Networks 1,651 Jdate 901 Other Networks 44 Total indefinite-lived
intangible assets 56,331 The recoverable amount of CGU determined
in the prior year was carried forward and used in the impairment
test for the CGUs in FY21. As of December 31, 2020,
indefinite-lived intangible assets of €52.0 million is allocated to
the following CGUs: (in € thousands) As of December 31, 2020 Zoosk
49,597 Christian Networks 1,524 Jdate 831 Other Networks 41 Total
indefinite-lived intangible assets 51,993 Based on the result of
the impairment tests performed, the recoverable amount of each CGU
exceeded the carrying amount, and, accordingly, no impairment of
the indefinite-lived intangible asset was necessary.
Appendix I
Page 34 5.2 Property and equipment, net The following table shows
the reconciliation of property and equipment, net for the year
ended December 31, 2021 and 2020: (in € thousands) Right-of-use
assets Office equipment and Other Total Net carrying amount January
1, 2020 € 803 € 1,514 € 2,317 Additions — 186 186 Disposals — — —
Depreciation (461) (572) (1,033) Impairment — — — Currency
translation (6) (1) (7) December 31, 2020 336 1,127 1,463 Additions
1,375 271 1,646 Disposals — (3) (3) Depreciation (419) (509) (928)
Reclassifications — — — Currency translation 1 4 5 December 31,
2021 € 1,293 € 890 € 2,183 During the year ended December 31, 2021,
the Group entered into an agreement to extend the office lease in
Berlin until January 21, 2024 and recognized additional
right-of-use assets of €1.4 million related to the extension. 5.3
Trade receivables The following table gives an overview of the
Group’s trade receivables as of December 31, 2021 and 2020:
December 31, (in € thousands) 2021 2020 Trade receivables (gross)
6,566 4,596 Allowance for credit losses (325) (76) - thereof
non-current — — - thereof current 6,241 4,520 Total trade
receivables 6,241 4,520 5.4 Other financial assets December 31, (in
€ thousands) 2021 2020 Lease receivables (gross) 4,610 5,627
Allowance for credit losses (166) (201) Total lease receivables
4,444 5,426 Deposits 1,179 1,221 Other receivables and assets 22
1,792 - thereof non-current 4,310 5,679 - thereof current 1,335
2,760 Other financial assets 5,645 8,439
Appendix I
Page 35 Deposits mainly include a security deposit for one of the
Group's leased office space properties and cash held with a payment
processor. Other receivables and assets as of December 31, 2020
mainly relate to restricted cash of €1.4 million that represents
the net cash proceeds of the loan commitment that were deposited
into the reserve account and used to pay the quarterly Term Loan
Facility principal and interest payment due on March 31, 2021. See
Note 5.9—Borrowings for additional information. 5.5 Other assets
December 31, (in € thousands) 2021 2020 Prepaid expenses 1,979
2,506 VAT receivables and deposits 210 392 Other receivables and
assets 222 73 - thereof non-current 249 247 - thereof current 2,162
2,724 Other assets 2,411 2,971 Prepaid expenses mainly relate to
prepaid software, licenses, and insurance expenses. 5.6 Deferred
tax assets See Note 4.10 Income taxes for the presentation of
deferred tax assets. 5.7 Cash and cash equivalents As of December
31, 2021 and 2020, the Group held cash with bank and financial
institution counterparties of €14.3 million and €15.8 million,
respectively. Movements in cash and cash equivalents during the
reporting periods are presented in the Consolidated Statements of
Cash Flows. 5.8 Shareholders' Equity At December 31, 2021, the
Company’s issued ordinary no-par value registered shares (auf den
Namen lautende Stückaktien) (“Ordinary Shares") totaled 2,661,386.
Outstanding Ordinary Shares totaled 2,617,397 after deducting
43,989 in treasury shares held by the Company. In accordance with
the Company’s American Depository Share (ADS) Program, each ADS
represents one-tenth of an ordinary share. Accordingly, issued and
outstanding ADSs as of December 31, 2021 totaled 26,173,970.
Treasury shares The Company accounts for treasury shares using the
nominal value method. Treasury shares are presented at nominal
value and classified as treasury share reserves within the
Consolidated Statements of Shareholders' Equity. Under local law,
treasury shares are not entitled to shareholder rights, in
particular, to dividends and voting rights. In 2021, the Company
closed the Chardonnay Trust, which held shares of Spark Networks SE
ADSs to satisfy, as necessary, the obligations under all
unexercised Spark stock options awarded under the Spark 2007 Plan.
Shares held in the Chardonnay Trust were transferred to an account
registered under Spark Networks SE. The shares underlying the ADSs
are classified as treasury shares at their nominal value per share
of €1.00. During 2021, 11,708 treasury shares were issued to
satisfy option exercises under the Company's LTIP
Plan.
Appendix I
Page 36 Accumulated deficit For the years ended December 31, 2021
and 2020, the increase in the Group's Accumulated deficit was
attributable to the net loss for the period. Accumulated other
comprehensive income Accumulated other comprehensive income
("AOCI") primarily consists of the net translation gain or loss
resulting from translation in the Group’s reporting currency (the
Euro) of the financial statements of subsidiaries with non-Euro
functional currencies. Also included in AOCI are the effects of
remeasuring intercompany transactions with the Spark Networks
(Israel) Limited subsidiary that are treated as net investments in
a foreign subsidiary. These are both items that will be
reclassified subsequently to profit or loss. 5.9 Borrowings On July
1, 2019, in connection with the Spark Networks / Zoosk Merger,
Spark Networks entered into a Loan Agreement with Zoosk, Spark
Networks, Inc., the subsidiary guarantors party thereto, the
lenders party thereto, and Blue Torch Finance LLC (“Blue Torch”),
as administrative agent and collateral agent (the "Senior Secured
Facilities Agreement") that provides for a four-year $125.0 million
(€110.1 million) Senior Secured Facility, maturing July 1, 2023
("Maturity Date"). The Senior Secured Facilities Agreement provides
for a term loan facility in an aggregate amount equal to $120.0
million (€105.7 million) (the “Term Loan Facility”) and a revolving
credit facility in an aggregate amount equal to $5.0 million (€4.4
million) (the “Revolving Credit Facility”) and, together with the
Term Loan Facility, the (“Facilities”). Substantially all of the
Company's assets are pledged as collateral. Borrowings under the
Facilities bear interest at a rate equal to LIBOR plus an
applicable margin of 8% per annum. Term Loan Facility The Term Loan
Facility was issued at a discount at the closing date equal to 3%
of the aggregate principal amount of the $120.0 million totaling
$3.6 million (€3.2 million). Upon closing, transaction costs and
commitment fees of $3.1 million (€2.7 million) and $0.6 million
(€0.5 million), respectively, were payable. The initial commitment
fee was equal to 0.50% of the aggregate principal amount of the
Term Loan Facility. Through the effective interest rate method, the
discount and commitment fees on the Term Loan Facility are
amortized to interest expense in the Consolidated Statements of
Operations and Comprehensive Loss through the maturity of the
Facilities on July 1, 2023. The effective interest rate was 10.7%.
On December 2, 2020, the Company entered into the Second Amendment
to Loan Agreement (the "Second Amendment") and together with the
Term Loan Facility, the ("Amended Term Loan Facility") which
established an additional $6.0 million (€4.9 million) of term loan
commitment to its existing Term Loan Facility. The additional
borrowing will be applied to pay the quarterly Term Loan Facility
principal and interest payments due on December 31, 2020 and March
31, 2021. Transaction costs of $2.6 million (€2.2 million) incurred
in connection with the Second Amendment were capitalized and will
be amortized using the effective interest method over the term of
the loan. The effective interest rate on the modified loan is 9.7%.
The Company recognized a modification loss of €3.7 million within
Finance Costs for the difference between the carrying amount before
the modification and net present value of the cash flows of the
modified liability discounted at the original effective interest
rate of 10.7%. The Second Amendment requires repayment of the
principal amount of $0.15 million quarterly, beginning on March 31,
2021, in addition to the $3.0 million quarterly principal repayment
of the original Term Loan Facility. The interest accrued during
each quarter is also payable at the end of each quarter along with
the principal amounts noted above. On March 5, 2021, the Company
entered into a Limited Waiver under Loan Agreement (the "Limited
Waiver") with the Administrative Agent and the lenders pursuant to
which certain defaults under the Senior Secured Facilities
Agreement were waived. In consideration of the Limited Waiver, the
Company agreed to pay the Administrative Agent, for the ratable
benefit of the lenders, a fee of $0.5 million (€0.4 million) upon
the execution of the Limited Waiver, plus $0.3 million (€0.2
million) paid in kind by capitalizing such amount into the
principal balance under the Senior Secured Facilities Agreement.
The aggregated fees were capitalized and will be amortized using
the effective interest rate of 11.8%. The Company recognized a
modification gain of €2.4 million within Finance Income for the
difference between the carrying amount before the
Appendix I
Page 37 modification and net present value of the cash flows of the
modified liability discounted at the previous effective interest
rate of 9.7%. As of December 31, 2021 and 2020, the aggregated
outstanding principal balance of the Amended Term Loan Facility is
€75.5 million and €85.3 million, respectively, and the amortized
cost basis is €72.4 million and €83.2 million, respectively. In
addition, pursuant to the terms of the Amended Term Loan Facility,
within 5 days after the annual financial statements are required to
be delivered to the lender, the Company is required to make a
prepayment of the loan principal in an amount equal to a percentage
of the excess cash flow of the most recently completed fiscal year.
For the years ended December 31, 2021 and 2020, the Company made a
prepayment of $6.8 million (€5.6 million) and $3.3 million (€3.1
million), respectively. Revolving Credit Facility The $5.0 million
Revolving Credit Facility has a commitment fee of 0.75% per annum
on the unutilized commitments thereunder and payable on the
maturity date. As the Revolving Credit Facility is not expected to
be drawn down, the transaction costs and upfront fees totaling $0.3
million (€0.3 million) related to the Revolving Credit Facility
were deferred and amortized over the term of the agreement. There
were no outstanding borrowings under the Revolving Credit Facility
as of December 31, 2021. Covenants The Facilities contain a number
of covenants that, among other things, restrict, subject to certain
exceptions, the Company's ability and the ability of its
subsidiaries to: incur additional indebtedness, create liens,
engage in mergers or consolidations, sell or transfer assets, pay
dividends and distributions and make share repurchases, make
certain acquisitions, engage in certain transactions with
affiliates, and change lines of business. In addition, the
Facilities, as revised by the Second Amendment, require the
following financial covenants to be maintained: (i) a fixed charge
coverage ratio of no less than 1.10 for the first four quarters of
the loan, 1.25 for the second two quarters of the loan, and between
1.20 and 0.70 for the remaining life of the loan, (ii) a net
leverage ratio of no greater than 3.00 for the first quarter of the
loan, declining steadily from 2.60 to 1.75 for the quarters ended
December 31, 2020 through the maturity date of the loan, and (iii)
a minimum liquidity threshold of $10 million at the end of each
month following the closing date of the loan, consisting of
available cash funds and availability under the Revolving Credit
Facility. The Facilities also contain certain customary affirmative
covenants and events of default, including a change of control. The
Company is in compliance with all of its financial covenants as of
December 31, 2021 and 2020. On March 11, 2022, the Company
completed the successful refinancing of its existing term and
revolving facility with borrowings under a new term loan facility
with MGG Investment Group LP. Refer to Note 8.6 for additional
information. 5.10 Provisions (in € thousands) Value-added and sales
tax provisions Other provisions Total December 31, 2020 3,057 446
3,503 - thereof non-current — 17 17 - thereof current 3,057 429
3,486 Acquired — — — Utilization — (446) (446) Release (404) —
(404) Addition 1,026 — 1,026 Reclassifications — — — Discounting
effects — — — Currency translation 123 7 130 December 31, 2021
3,802 7 3,809 - thereof non-current — 7 7 - thereof current 3,802 —
3,802
Appendix I
Page 38 The increase in provisions during 2021 primarily relates to
the addition of estimated United States sales tax liabilities and
value-added tax liabilities, offset by a decrease in Other
provisions related to two legal settlements in which final
judgements were reached in 2021. 5.11 Other financial liabilities
December 31, (in € thousands) 2021 2020 Payroll liabilities 171 399
Lease liabilities 5,549 5,471 Other liabilities 11,518 9,415 -
thereof non-current 14,568 13,148 - thereof current 2,670 2,137
Other financial liabilities 17,238 15,285 Other liabilities as of
December 31, 2021 and 2020 primarily relate to the amount owed
under the cash consideration holdback agreement associated with the
Spark Networks / Zoosk Merger (December 31, 2021: €10.2 million,
December 31, 2020: €8.4 million). Lease liabilities primarily
relates to one of the Group's leased office space properties
(December 31, 2021: €4.1 million, December 31, 2020: €5.0 million).
5.12 Other liabilities December 31, (in € thousands) 2021 2020
Value-added and sales tax payables 3,719 3,368 Social security
liabilities 93 66 Other payroll liabilities 1,047 1,235 Other tax
liabilities 282 310 - thereof non-current — — - thereof current
5,141 4,979 Total other liabilities 5,141 4,979 At December 31,
2021 and 2020, other payroll liabilities primarily relate to
vacation, bonus, and payroll tax obligations.
Appendix I
Page 39 5.13 Deferred tax liabilities See Note 4.10 for the
presentation of deferred tax liabilities. 5.14 Contract liabilities
The maturity structure of contract liabilities as of December 31,
2021 and 2020 is as follows: December 31, (in € thousands) 2021
2020 Non-current — 2 Current 32,644 31,214 Total contract
liabilities 32,644 31,216 The contract liabilities balance
primarily relates to the Group’s receipt of advance consideration
from customers for subscription services, for which revenue is
recognized over the subscription period. The contract liabilities
balance increased by €1.4 million, as subscription sales were
higher than subscription revenue recognized in the period due to
the multi-month nature of our subscription offerings. During the
year ended December 31, 2021, revenue of €31.2 million was
realized, which was included in the beginning contract liabilities
balance at January 1, 2021. 5.15 Leases Group as Lessee The Group
applies IFRS 16 Leases and recognizes lease liabilities as a lessee
in relation to three lease contracts for office space in Berlin,
Germany, and Utah and California, United States. In the current
year, the Company renewed the lease contract for the office space
in Berlin, Germany through 2024. For the year ended December 31,
2021, the Group recognized depreciation expense from right-of-use
assets of €0.4 million (2020: €0.5 million) and interest expense on
lease liabilities of €0.2 million (2020: €0.2 million). IFRS 16
Leases also affects the Group's Consolidated Statements of Cash
Flows: operating cash flow increased by €1.7 million and cash flow
from financing activities decreased by €1.7 million for the year
ended December 31, 2021 (2020: operating cash flow increased by
€1.7 million and cash flow from financing activities decreased by
€1.7 million). For the year ended December 31, 2021, the Group
recognized expense relating to short-term leases of €0.1 million
(2020: €0.3 million) and no expense relating to low-value assets
(2020: less than €0.1 million). The following table sets out a
maturity analysis of lease payments, showing the undiscounted lease
payments to be made after the reporting date: December 31, (in €
thousands) 2021 2020 Less than one year 2,228 1,782 One to three
years 3,546 2,911 Three to five years — 1,121 More than five years
— — Total undiscounted lease payables 5,774 5,814 Lease liabilities
included within the Consolidated Balance Sheets 5,549 € 5,471
Current 2,091 1,623 Non-current 3,458 3,848
Appendix I
Page 40 Group as Lessor The Group applies IFRS 16 Leases and
recognizes a lease receivable as lessee in relation to the sublease
of its leased office space in California. During 2021, the Group
recognized interest income on the lease receivable of €0.2 million
(2020: €0.2 million). The following table sets out a maturity
analysis of the lease receivable, showing the undiscounted sublease
payments to be received after the reporting date. December 31, (in
€ thousands) 2021 2020 Less than one year 1,597 1,421 One to two
years 1,784 1,599 Two to three years 1,460 1,647 Three to four
years — 1,348 Four to five years — — More than five years — — Total
undiscounted lease receivable 4,841 6,015 Unearned interest income
231 388 Net investment in the sublease 4,610 5,627 Note 6. Notes on
the Consolidated Statements of Cash Flows The Consolidated
Statements of Cash Flows were prepared in accordance with IAS 7
Statement of Cash Flows and show the cash inflows and cash outflows
during the reporting year. Cash flows are broken down into cash
flows from operating activities, cash flows from investing
activities and cash flows from financing activities. The cash flows
arising from operating activities are determined by using the
indirect method according to IAS 7.18(b). Note 7. Financial
Instruments and Risk Management 7.1 Financial instruments The
following tables show the carrying amounts and fair values of
financial assets and financial liabilities and classifies these
into measurement categories pursuant to IFRS 9 for the years ended
December 31, 2021 and 2020. Classification pursuant to IFRS 9
Carrying amount Measurement Categories Fair Value December 31, 2021
in € thousands At amortized cost At fair value Level 1 Level 2
Level 3 Total Deposits AC 1,160 1,160 — — — — — Other receivables
AC 3,150 3,150 — — — — — Other non-current financial assets 4,310
4,310 — — — — — Trade receivables AC 6,241 6,241 — — — — — Deposits
AC 19 19 — — — — — Other receivables AC 1,316 1,316 — — — — — Other
current financial assets 1,335 1,335 — — — — — Cash and cash
equivalents AC 14,251 14,251 — — — — — Total financial assets
26,137 26,137 — — — — — Borrowings AC 72,384 72,384 84,839 — 84,839
— 84,839 Deferred consideration payable AC 10,193 10,193 — — — — —
Other liabilities AC 4,375 4,375 — — — — — Other non-current
financial liabilities AC 14,568 14,568 — — — — — Trade payables AC
19,435 19,435 — — — — — Refund liabilities AC 110 110 — — — — —
Other liabilities AC 2,560 2,560 — — — — — Other current financial
liabilities 2,670 2,670 — — — — — Total financial liabilities
109,057 109,057 84,839 — 84,839 — 84,839
Appendix I
Page 41 Classification pursuant to IFRS 9 Carrying amount
Measurement Categories Fair Value December 31, 2020 in € thousands
At amortized cost At fair value Level 1 Level 2 Level 3 Total
Deposits AC 948 948 — — — — — Other receivables AC 4,731 4,731 — —
— — — Other non-current financial assets 5,679 5,679 — — — — —
Trade receivables AC 4,520 4,520 — — — — — Deposits AC 273 273 — —
— — — Other receivables AC 2,487 2,487 — — — — — Other current
financial assets 2,760 2,760 — — — — — Cash and cash equivalents AC
15,834 15,834 — — — — — Total financial assets 28,793 28,793 — — —
— — Borrowings AC 83,157 83,157 88,987 — 88,987 — 88,987 Deferred
consideration payable AC 8,453 8,453 — — — — — Other liabilities AC
4,695 4,695 — — — — — Other non-current financial AC 13,148 13,148
— — — — — Trade payables AC 20,964 20,964 — — — — — Refund
liabilities AC 110 110 — — — — — Other liabilities AC 2,027 2,027 —
— — — — Other current financial liabilities 2,137 2,137 — — — — —
Total financial liabilities 119,406 119,406 88,987 — 88,987 —
88,987
Appendix I
Page 42 Net gains/losses from financial assets amount to a net loss
of less than €0.1 million in 2021 and a net gain of €0.5 million in
2020. Net gains/losses from financial liabilities amount to a net
loss of €10.4 million and €13.7 million in 2021 and 2020,
respectively. The fair value of borrowings was determined using
observable inputs (Level 2). The valuation considers the present
value of expected future repayments, discounted using a market
interest rate equal to the interest margin on the borrowings plus a
three month Euro LIBOR interest rate. The following tables show the
movements of financial liabilities for the years ended December 31,
2021 and 2020: in € thousands January 1, 2021 Cash related changes
from financing activities Cash related changes from investing
activities Other changes December 31, 2021 Borrowings 83,157
(16,387) — 5,614 72,384 Deferred consideration payable from
business 8,453 — — 1,740 10,193 Other liabilities 4,695 (1,648) —
1,328 4,375 Other non-current financial liabilities 13,148 (1,648)
— 3,068 14,568 Refund liabilities 110 — — — 110 Other liabilities
2,027 (14) — 547 2,560 Other current financial liabilities 2,137
(14) — 547 2,670 Total financial liabilities 98,442 (18,049) —
9,229 89,622 in € thousands January 1, 2020 Cash related changes
from financing activities Cash related changes from investing
activities Other changes December 31, 2020 Borrowings 95,839
(10,707) — (1,975) 83,157 Deferred consideration payable from
business — — — 8,453 8,453 Other liabilities 7,167 (1,719) — (753)
4,695 Other non-current financial liabilities 7,167 (1,719) — 7,700
13,148 Refund liabilities 98 — — 12 110 Deferred consideration
payable from business 9,187 — (465) (8,722) — Other liabilities
5,144 8 — (3,125) 2,027 Other current financial liabilities 14,429
8 (465) (11,835) 2,137 Total financial liabilities 117,435 (12,418)
(465) (6,110) 98,442 Measurement of fair values The majority of the
Group’s financial instruments, including cash and cash equivalents,
restricted cash, deposits, trade receivable, and accounts payable
are carried at cost, which approximates their fair value due to the
short-term maturity of these instruments. Financial instruments not
measured at fair value Borrowings The fair value of borrowings has
been measured using discounted cash flows, i.e. the present value
of expected payments, discounted using a risk-adjusted discount
rate. For this, the current risk-adjusted market rate has been
used. 7.2 Financial risk management The Group has exposure to the
following risks arising from financial instruments: • credit risk;
• liquidity risk; and • market risk
Appendix I
Page 43 Risk management framework The Group’s management has
overall responsibility for the establishment and oversight of the
Group’s risk management. The Group’s risk management procedures are
established to identify and to analyze the risks faced by the
Group, to set appropriate risk limits and controls and to monitor
risks and adherence to limits. Risk management policies and systems
are reviewed regularly to reflect changes in market conditions and
the Group’s activities. The Group aims to maintain a disciplined
and constructive control environment in which all employees
understand their roles and obligations. Credit risk Credit risk is
the risk of financial loss to the Group if a customer or
counterparty to a financial instrument fails to meet its
contractual obligations, and arises principally from the Group’s
receivables from subscribers. The Credit risk exists for all
financial assets, in particular, for cash and cash equivalents,
trade receivables and other financial assets. The Group’s trade
receivables are unsecured. The Group's lease receivable is secured
by a cash deposit of $1.0 million (€0.9 million). The carrying
amount of financial assets represents the maximum credit exposure.
The credit risk relating to trade receivables is the risk that the
subscribers are unable to fulfill their payment obligations. The
Group does not regard itself as being exposed to a major default
risk from any single individual customer. The concentration of the
credit risk is limited due to the broad and heterogeneous customer
base. The credit risk relating to the lease receivable considers
the specific default risk of the tenant. Credit risk relating to
other financial assets mainly relates to cash deposits to payment
processors. If the payment processors incur financial difficulties,
then the Group may incur losses. Management monitors the
creditworthiness of payment processors closely. In the past, there
were no indications that the payment processors would not meet
their obligations. The movement in the allowance for impairment in
respect of trade receivables during the year was as follows. The
bad debt allowance includes all receivables that are not expected
to be recovered. (in € thousands) Impairment on Trade Receivables
Balance at December 31, 2020 76 Impairment loss recognized 249
Balance at December 31, 2021 325 The movement in the allowance for
impairment in respect of the Group's lease receivable during the
year was as follows: (in € thousands) Impairment on Lease
Receivables Balance at December 31, 2020 201 Impairment loss
recognized (35) Balance at December 31, 2021 166 As of December 31,
2021 and 2020, the Group held cash and cash equivalents of €14.3
million and €15.8 million, respectively. The cash and cash
equivalents are held with bank and financial institution
counterparties, which hold at least an A-level credit rating.
Liquidity risk Liquidity risk is the risk that the Group will
encounter difficulty in meeting the obligations associated with its
financial liabilities that are settled by delivering cash or
another financial asset. The Group’s approach to managing liquidity
is to ensure, as far as possible, that it will have sufficient
liquidity to meet its liabilities when they are due, under both
normal and stressed conditions, without incurring unacceptable
losses or risking damage to the Group’s reputation.
Appendix I
Page 44 Management monitors its cash inflows and outflows on a
daily basis and through proper budget planning, the Group’s
liquidity management makes sure that sufficient funds are available
to meet financial obligations. Additionally, many customers pay in
advance for subscription services at the commencement of the
subscription period. Therefore, the Group maintains high cash and
cash equivalents levels. Exposure to liquidity risk The following
are the remaining contractual maturities of financial liabilities
at the reporting date. The amounts are gross and undiscounted, and
include contractual interest payments and exclude the impact of
netting agreements. Contractual cash flows December 31, 2021 in €
thousands Carrying amount Total < 1 year 1-5 years More than 5
years Borrowings 72,384 85,434 22,405 63,029 — Deferred
consideration payable 10,193 11,829 — 11,829 — Other liabilities
4,375 4,462 — 4,462 — Other non-current financial liabilities
14,568 16,291 — 16,291 — Trade payables 19,435 19,435 19,435 — —
Refund liabilities 110 110 110 — — Other liabilities 2,560 2,697
2,697 — — Other current financial liabilities 2,670 2,807 2,807 — —
Total financial liabilities 109,057 123,967 44,647 79,320 —
Contractual cash flows December 31, 2020 in € thousands Carrying
amount Total < 1 year 1-5 years More than 5 years Borrowings
83,157 103,037 23,683 79,354 — Deferred consideration payable 8,453
10,918 — 10,918 — Other liabilities 4,695 4,878 — 4,878 — Other
non-current financial liabilities 13,148 15,796 — 15,796 — Trade
payables 20,964 20,964 20,964 — — Refund liabilities 110 110 110 —
— Other liabilities 2,027 2,186 2,186 — — Other current financial
liabilities 2,137 2,296 2,296 — — Total financial liabilities
119,406 142,093 46,943 95,150 — Market risk Market risk is the
potential loss from adverse changes in foreign exchange rates,
interest rates, and market prices. The Group's exposure to market
risk includes the Group’s cash, accounts receivable, other
financial assets, accounts payable, and other financial
liabilities.The Group manages its exposure to these risks through
established policies and procedures. The Group's objective is to
mitigate potential income statement, cash flow and market exposures
from changes in interest and foreign exchange rates. The Group has
exposures to IBORs on its financial instruments that will be
replaced or reformed as part of these market-wide initiatives. The
Group’s main IBOR exposure at 31 December 2021 was indexed to the
US dollar LIBOR. The UK regulator responsible for LIBOR, the
Financial Conduct Authority (FCA), announced on March 5, 2021 that
the publication of USD LIBOR will be discontinued as of June 30,
2023. The Group monitors contracts that have not yet been switched
to an alternative reference interest rate."
Appendix I
Page 45 Currency risk The Group is exposed to currency risk to the
extent that there is a mismatch between the currencies in which
sales, purchases and borrowings are denominated and the functional
currency of the Group’s subsidiaries. The presentation currency of
all Group subsidiaries is the Euro. The Group transacts business
globally and is subject to risks associated with fluctuating
foreign exchange rates. The Group intends to naturally hedge
foreign exchange fluctuations by settling all transactions in their
respective transaction currencies. The Group’s policy is to ensure
that its net exposure is kept to an acceptable level by buying or
selling foreign currencies at spot rates when necessary to address
short-term obligations. When foreign currency reserves are more
than the short-term obligations, then the Group converts the amount
to functional currency. The currencies in which these transactions
are primarily denominated are Euro, United States dollar, Great
British pound, Australian dollar, Canadian dollar, and Israeli New
shekel (“ILS”). Future net transaction gains and losses are
inherently difficult to predict, as they are reliant on how the
multiple currencies in which the Group transacts fluctuate in
relation to the functional currency of the Group's subsidiaries,
the relative composition and denomination of current assets and
liabilities for each period, and the Group’s effectiveness at
forecasting and managing such exposures. Exposure to currency risk
The summary quantitative data about the Group’s exposure to
currency risk as reported to the management of the Group is as
follows: December 31, 2021 in thousands in local currency EUR USD
GBP AUD CAD ILS Financial assets Trade receivables 1,012 4,852 244
254 398 9 Other financial assets 400 5,940 — — — — Cash and cash
equivalents 2,029 13,171 181 471 14 463 Financial liabilities
Borrowings — (81,982) — — — — Trade payables (5,547) (15,493) (140)
— — (56) Other financial liabilities (1,604) (17,707) — — — — Net
statement of financial position exposure (3,710) (91,219) 285 725
412 416 December 31, 2020 in thousands in local currency EUR USD
GBP AUD CAD ILS Financial assets Trade receivables 1,091 3,711 147
131 182 10 Other financial assets 239 9,508 — 160 — — Cash and cash
equivalents 2,755 14,271 894 206 265 617 Financial liabilities
Borrowings — (102,041) — — — — Trade payables (8,779) (14,879)
(105) — (138) (71) Other financial liabilities (593) (18,029) — — —
— Net statement of financial position exposure (5,287) (107,459)
936 497 309 556 Sensitivity analysis A reasonably possible
strengthening (weakening) of the Euro, United States dollar, Great
British pound, Australian dollar, Canadian dollar, and Israeli New
shekel, determined by the gross currency fluctuation of the
previous year, against all other currencies at December 31, 2021
and 2020 would have affected the measurement of financial
instruments denominated in a foreign currency profit or loss by the
amounts shown below. The effect of intercompany transactions with
the Spark Networks (Israel) Limited subsidiary that are treated as
net investments are remeasured through other comprehensive loss.
This analysis
Appendix I
Page 46 assumes that all other variables, in particular interest
rates, remain constant and ignores any impact of forecast sales and
purchases. Profit or loss Effect in € Strengthening Weakening
December 31, 2021 EUR (0% movement) — — USD (8% movement) 5,940
(5,940) GBP (7% movement) (22) 22 AUD (2% movement) (8) 8 CAD (8%
movement) (22) 22 ILS (11% movement) (12) 12 December 31, 2020(1)
EUR (0% movement) — — USD (9% movement) 8,684 (8,684) GBP (6%
movement) (60) 60 AUD (1% movement) (2) 2 CAD (7% movement) (14) 14
ILS (2% movement) (2) 2 (1) Prior period amounts have been restated
to present the effect in Euro. Interest rate risk Borrowings under
the Facilities bear interest at a rate equal to LIBOR plus a
specified margin. Refer to Note 5.9. As of December 31, 2021, the
amortized cost basis of the Term Loan Facility is €72.4 million.
These borrowings expose us to interest rate risk due to the
potential variability in market interest rates. Assuming our
outstanding aggregate borrowings under the Term Loan Facility at
December 31, 2021 as described above, a one-percentage point
increase in applicable interest rates would have increased our
interest expense for 2021 by €0.8 million. This amount is
determined by calculating the effect of a hypothetical interest
rate change on the Group’s floating rate debt. This estimate does
not include the effects of other potential actions to mitigate this
risk or changes in the Group’s financial structure. Fair value
sensitivity analysis for fixed-rate instruments As of December 31,
2021 and 2020, the Group does not account for any fixed-rate
financial assets or financial liabilities at fair value through
profit or loss. Therefore, a change in interest rates at the
reporting date would not affect profit or loss. Other market price
risk The Group does not hold any equity securities or financial
assets or liabilities that are dependent on the price of equity
instruments. The Group is therefore not exposed to market price
risks.
Appendix I
Page 47 Note 8. Other Information 8.1 Balances and transactions
with related parties Parent and ultimate controlling party The
ultimate controlling party of the group is Spark Networks SE. The
ADSs of the Group are publicly traded on the Nasdaq Capital Market.
Prior to February 2021, the ADSs of the Group were publicly traded
on the New York Stock Exchange. Transactions with shareholders An
employee of the Company's wholly owned subsidiary, Smooch Labs, is
a co-founder and employee of a marketing agency for which the
Company incurs expenses in the ordinary course of business. For the
year ended December 31, 2021 and 2020, the Company has expensed
€0.1 million and €0.3 million, respectively, for services performed
by the marketing agency. Managing director compensation We refer to
the remuneration report in accordance with Section 289a(2), 315 (a)
HGB for further information in relation to the compensation of the
Managing Directors and Administrative Board. The core elements of
managing director compensation comprise base salary, a target cash
incentive based on annual performance, and equity awards tied to
the Company's stock price performance. Managing directors do not
necessarily receive equity on an annual basis. During the years
ended December 31, 2021 and 2020, managing director compensation
was comprised of the following: Years Ended December 31, (in €
thousands) 2021 2020 Short-term benefits 1,256 1,405 Other
employment benefits — — Post-employment benefits 194 282
Share-based compensation 1,498 3,137 Total compensation 2,948 4,824
The expenses for short-term employee benefits including base salary
and annual target cash incentive totaled €1.3 million in 2021 and
€1.4 million in 2020. Total short-term compensation in 2021 of €1.3
million (2020: €1.4 million) in accordance with German Accounting
Standard 17 includes additional fringe benefits amounting to less
than €0.1 million in 2021 and less than €0.1 million in 2020.
Former members of the Managing Board received total compensation of
€0.2 million in 2021 and €0.3 million in 2020. Compensation
received in 2021 was related to a termination agreement entered
into between the Company and the former Managing Director and Chief
Financial Officer in March 2021. In 2020, no compensation was paid
due to termination of employment. Share-based compensation of €1.5
million in 2021 and €3.1 million in 2020 was comprised of €1.5
million share-based payments expensed in 2021 and €3.1 million
share-based payments expensed in 2020, respectively.
Appendix I
Page 48 In 2021, the Administrative Board granted the following
equity awards to managing directors under the LTIP: Type of Award
Exercise Price Number of Options Virtual stock options $ 3.77
200,000 Zero-priced options $ — 100,000 300,000 The awards were
granted in connection with the appointment by the Administrative
Board of a new Managing Director and Chief Financial Officer of the
Company in August 2021. In 2020, the Administrative Board granted
the following equity awards to managing directors under the LTIP:
Type of Award Exercise Price Number of Options Virtual stock
options $ 4.88 1,058,000 Virtual stock options $ 4.33 42,000
Zero-priced options $ — 534,000 1,634,000 The awards were granted
in connection with the adoption of the LTIP in January 2020, as
well as in connection with the Company's Chief Legal Officer's
appointment by the Administrative Board to also serve as the
Company’s Chief Operating Officer in November 2020. Administrative
Board compensation The members of the Administrative Board receive
a fixed remuneration for each full fiscal year of Administrative
Board membership. The fixed remuneration increases for serving on
specific positions, e.g. membership of Presiding and Nominating
Committee or of the Audit Committee. For their activities in 2021,
the members of the Administrative Board received compensation
amounting to €0.7 million and €0.4 million in 2020, respectively.
8.2 Off-balance sheet contractual obligations As of the reporting
date, the Group's future payments related to off-balance sheet
contractual obligations are as follows: December 31, (in €
thousands) 2021 2020 Less than one year 4,005 5,446 Between one and
five years 231 3,495 Total 4,236 8,941 The Company has
non-cancellable contractual obligations consisting of contracts
with cloud-based web service providers and marketing service
providers. The Group does not have significant renewal or purchase
options. The Group's indebtedness is secured by collateral,
including substantially all of the Group and the Group's subsidiary
guarantors' assets.
Appendix I
Page 49 8.3 Average number of employees The average headcount for
the year was as follows: Years Ended December 31, 2021 2020 Female
125 112 Male 141 133 Total 266 245 8.4 Fees paid to the Auditors
The following table presents fees for professional audit services
rendered by (i) KPMG AG Wirtschaftsprüfungsgesellschaft, our
independent auditors for the fiscal year December 31, 2020, and
(ii) BDO AG Wirtschaftsprüfungsgesellschaft, Berlin, our
independent auditors for the IFRS consolidated financial statements
and the HGB standalone financial statements, for the fiscal year
ended December 31, 2021. Years Ended December 31, (in € thousands)
2021 2020 Audit fees(1) 57 2,051 Tax fees(2) — 18 Total 57 2,069
(1) Audit fees for 2021 and 2020 include costs associated with the
interim procedures and annual audits, including costs associated
with the US GAAP conversion in 2020, and statutory audits required
internationally. Total audit fees in 2021 includes only fees
related to the statutory audits according to IFRS and HGB as
required in Germany and performed by BDO AG
Wirtschaftsprüfungsgesellschaft, Berlin, Germany. Total Audit fees
in 2020 have been restated from the prior year to include an
overrun fee for additional audit-related services, which were
billed in June and July of 2021. (2) Tax fees for 2020 represent
tax and VAT compliance. 8.5 German Corporate Governance Code The
Administrative Board of Spark Networks SE has issued a declaration
pursuant to Section 161 of the German Stock Corporation Act (AktG)
and has made it permanently available to their shareholders on
Sparks' website at
https://www.spark.net/investor-relations/corporate-governance/highlights.
8.6 Events after the reporting date On March 2, 2022, Gitte
Bendzulla, the Chief Operating Officer, Chief Legal Officer and
Managing Director of Spark Networks SE (the “Company”), notified
the Company that she would be leaving the Company to pursue other
opportunities. Ms. Bendzulla’s departure date was April 30, 2022.
On March 11, 2022, Spark Networks SE (the “Company”) entered into a
Financing Agreement (the “Loan Agreement”) with Zoosk, Inc.
(“Zoosk”) and Spark Networks, Inc., the subsidiary guarantors party
thereto, the lenders party thereto, and MGG Investment Group LP, as
administrative agent and collateral agent. The Loan Agreement
provides for senior secured term loans of $100 million. Borrowings
under the Loan Agreement accrue interest at a rate per annum equal
to the LIBOR Rate (as defined in the Loan Agreement) plus 7.50% or
the Reference Rate (as defined in the Loan Agreement), plus 6.50%,
as the case may be. Borrowings under the Loan Agreement mature on
March 11, 2027 and are secured by substantially all of the assets
of the Company, Spark Networks Inc., Zoosk and their respective
subsidiary guarantors.
Appendix I
Page 50 The Loan Agreement contains customary representations,
warranties, events of default and covenants, including limitations
on incurrences of debt and liens, restricted payments and
investments, mergers and financial covenants including (1)
quarterly testing of a maximum Leverage Ratio and a minimum
Marketing Efficiency Ratio (each as defined in the Loan Agreement)
and (2) an all-times test of a minimum liquidity covenant. Date:
June 8, 2022 Eric Eichmann Chief Executive Officer David Clark
Chief Financial Officer Frederic Beckley General Counsel and Chief
Administrative Officer Responsibility Statement by the Managing
Board To the best of our knowledge, and in accordance with the
applicable reporting principles, the consolidated financial
statements give a true and fair view of the assets, liabilities,
financial position, and profit or loss of the Group, and the
management report, which is combined with the management report of
Spark Networks SE, includes a fair review of the development and
performance of the business and the position of the Spark Networks
Group, together with a description of the principal opportunities
and risks associated with the expected development of the
Group.
Appendix II
Page 1 Group Management Report Content 1. Principles of the Group 2
1.1 Our Business 2 1.2 Our Strategy and our Goals 3 1.3 Group
Structure and Management System 5 1.4 Research and development 6 2.
Economic Report: 7 2.1 Macroeconomic and industry-specific
conditions 7 2.2 Course of the business 8 2.3 Earnings performance,
Financial and Asset position 9 2.3.1 Earnings performance 9 2.3.2.
Financial position 13 2.3.3 Asset position 15 2.3.4 Overall
statement of the economic situation 15 3. Forecast, opportunity and
risk report 16 3.1 Forecast report 16 3.2 Risk report 18 3.3
Opportunities report 21 4. Other information 22 4.1 Group statement
of Corporate Governance 22 4.2 Treasury Shares 22
Appendix II
Page 2 1. Principles of the Group 1.1 Our Business Spark Networks
SE considers itself a leader in social dating platforms for
meaningful relationships focusing on the 40+ demographic and
faith-based affiliations. Our primary businesses are in the online
personals industry, which we believe fulfills the need for single
adults looking to meet a companion. With features such as detailed
personal profiles, email, mobile chat and instant messaging, this
medium allows users to communicate with other singles at their
convenience and affords them the ability to meet multiple people in
an anonymous, convenient and secure setting. We currently operate a
portfolio of brands accessible to customers across the globe.
However, our focus is in five key geographies – USA, Canada,
Australia, UK and France, where we generate the majority of our
revenues. Further information regarding the geographical source of
our revenue can be found in Note 4.1 to our Consolidated Financial
Statements included in this annual report. Our vision is to be the
world’s leader in premium and community-based dating. It
encompasses the following three pillars: • We build world's best
dating communities focused on the 40+ age demographic and religious
communities: our users are active, committed and sophisticated. •
We excel in customer safety, privacy and social dating features. •
We create engaging brands and innovative products to help our
customers find true love seamlessly. Our key brands include Zoosk,
EliteSingles, SilverSingles, Christian Mingle, Jdate and JSwipe.
Our brands are primarily tailored to quality dating with real users
looking for love and companionship in a safe, comfortable
environment. With shared values being one of the most important
factors in successful, long-term relationships, our portfolio holds
value-based dating brands worldwide. Additionally, the Zoosk brand
provides the potential to be turned into a high-quality product
providing an additional option for a younger demographic looking
for high- quality profiles. We offer services both via websites and
mobile applications mostly through a “subscription” business model,
where certain basic functionalities are provided free of charge,
while providing premium features (such as interacting with other
community members via messages) only to paying subscribers.
Subscription revenue is our primary source of income, with
membership subscriptions accounting for the vast majority of our
revenue for the years ended December 31, 2021 and 2020.
Subscription length ranges from 1-month to 12-months, with most
subscriptions renewing automatically unless the member opts to
terminate the subscription. We also offer users "pay as you go"
features and have a small but growing advertising revenue stream.
Cost of revenue consists primarily of direct marketing expenses,
data center expenses, credit card fees and mobile application
processing fees. The Group incurs substantial advertising expenses
in order to generate traffic to its websites. These advertising
expenses consist of offline marketing, particularly television and
out-of-home
Appendix II
Page 3 advertising, as well as online advertising and are directly
attributable to the revenue the Group receives from its
subscribers. The majority of our users' activity is on mobile
devices. As more users connect to the internet via their mobile
devices, demand for such applications rises. We have created
innovative and tailored mobile applications and will continue to
improve the features, functionality and engagement of our mobile
websites and applications. We operate in a highly competitive
environment with minimal barriers to entry. We believe the primary
competitive factors in creating a community on the internet are
functionality, brand recognition, reputation, critical mass of
members, member affinity and loyalty, ease-of-use, quality of
service and reliability. We compete with a number of large and
small companies, including vertically integrated internet portals
and specialty-focused media companies that provide online and
offline products and services to the markets we serve. Our
principal online personals services competitors include Match Group
(which operates the Match.com, OkCupid, Plenty of Fish, Tinder and
Hinge brands), Bumble (which operates Bumble and Badoo brands) and
ParshipMeet Group (which operates the eHarmony, Parship,
ElitePartner and Meet brands). In addition, we face competition in
free and freemium mobile applications such as Tinder, Hinge and
Bumble, as well as social networking sites such as
Facebook.
Appendix II
Page 4 1.2 Our Strategy and our Goals We will continue to focus on
premium online dating services catering to singles with a high
socio-economic status. This strategy will include a focus on
developing new and maintaining existing products. We currently
operate a portfolio of brands accessible to customers across the
globe. While we might enter new geographies in the future, our
primary focus will be to expand our presence in North America,
which we consider the most attractive market for further growth
based on the relative size of the United States and Canadian
markets and the high potential for us to garner additional market
share. We will also consider launching existing brands in markets
where we already have a geographic presence to complement our
service offerings and create a broader offering in these markets.
Grow in North America. We will continue to focus on expanding our
presence in North America. In recent years, we have grown our North
American market share through the (i) introduction of established
European brands such as EliteSingles, (ii) launch of new brands
such as SilverSingles, and (iii) acquisition of established North
American brands such as Zoosk, Jdate, Christian Mingle and JSwipe.
Going forward, we expect to continue to allocate significant
marketing capital towards North America as we look to drive both
the organic growth of our existing brand portfolio and expansion
through the launch of new or acquired brands. Cement and grow our
leadership position in 40+ age demographic and religious segments.
We will continue to invest in product innovation, brand building,
customer acquisition and partnerships to provide the best products
and strongest brands in the premium and community-based dating
areas. We intend to develop solutions and strengthen our brands
that speak to the specific needs of our target audiences. In 2021,
we launched Zoosk Great Dates, a first-to-market virtual dating
feature for singles. Zoosk Great Dates aims to reinvigorate the
video dating trend by enabling singles and their dates to access
fun virtual date experiences in exciting global destinations, with
the first batch of interactive dates set in Greece, Italy and
Japan. Create global technology services to enable flexible and
powerful dating platforms. Spark Networks is developing new,
scalable technology services that will support future growth. Our
new services will be architected and built with a particular
emphasis on supporting all platforms and applications that many of
our members utilize to access our products. With shared services to
power our platforms, we expect to reduce the time and resources
required to launch new brands or to integrate potential
acquisitions, and to quickly adopt new features, trends and
consumer preferences.
Appendix II
Page 5 1.3 Group Structure and Management System Spark Networks SE
was incorporated as a European stock corporation (Societas
Europaea, SE) with the legal name Blitz 17-655 SE under the laws of
Germany and the European Union, with entry into the German
commercial register on April 5, 2017, by its ADS holders. It was
acquired by Affinitas GmbH on April 12, 2017, for the purpose of
becoming the ultimate holding company of Spark Networks, Inc., a
Delaware corporation (“Spark”), and Spark Networks Services GmbH
(f/k/a Affinitas GmbH), a German limited company (“Affinitas”)
following the completion of the merger between Spark and Affinitas
(the “Affinitas / Spark Merger”). On August 29, 2017, Spark
Networks SE changed its name from Blitz 17-655 SE to Spark Networks
SE. Spark Networks SE is registered with the commercial register
(Handelsregister) of the local court (Amtsgericht) of Munich,
Germany, under the registration number HRB 232591 under the legal
name Spark Networks SE. Spark Networks SE currently does not use a
commercial name different from its legal name. Spark Networks SE
has been formed for an unlimited duration. On November 2, 2017,
Spark Networks completed the Affinitas / Spark Merger pursuant to
the Agreement and Plan of Merger dated May 2, 2017. On July 1,
2019, Spark Networks completed the acquisition of Zoosk whereby it
acquired 100% of Zoosk's shares for a combination of cash and Spark
Networks ADS. Prior to the acquisition, Zoosk was an unrelated
third party and owner of the Zoosk platform, which we consider a
leading global online dating platform. The acquisition made Spark
Networks the second-largest online dating company in North America
in revenue. The consolidated financial statements of Spark Networks
SE (hereinafter also referred to as the "Company") and its
subsidiaries (hereinafter also referred to collectively as the
"Group") are prepared in accordance with International Financial
Reporting Standards ("IFRS") as applicable in the European Union
("EU"). Information regarding the subsidiaries can be found in Note
2.1 to our Consolidated Financial Statements included in this
annual report. Our principal administrative activities are located
in Berlin, Germany. We also have offices in New York, Utah, and
California in the United States. We have two operating segments,
Zoosk and Spark, which are aggregated together as one reportable
segment, consistent with the prior year. Information regarding
operating segments can be found in Note 4.1 to our Consolidated
Financial Statements included in this annual report. Consistent
with prior year, the following financial and non-financial key
performance indicators are used for analyzing the activities of the
Group. Two key business metrics that we utilize are revenue and
adjusted earnings before interest, taxes, depreciation and
amortization ("adjusted EBITDA"). Other business metrics we utilize
include number of registrations, number of the average paying
subscribers, the monthly average revenue per user (“Monthly ARPU”),
contribution (revenue net of credits and less direct marketing),
and direct marketing expenses.
Appendix II
Page 6 1.4 Research and development Investing in product and
development initiatives is a key part of our strategy. We are
developing new, scalable technology services in order to support
future growth. Our new services will be architected and built with
a particular emphasis on supporting all platforms and applications
that many of our members utilize to access our products. With
shared services to power our platforms, we expect to reduce the
time and resources required to launch new brands or to integrate
potential acquisitions, and to quickly adopt new features, trends
and consumer preferences. As of December 31, 2021, we held several
United States and EU patents. Research and development costs are
mainly comprised of personnel and freelancer costs. Total research
and development costs for 2021 and 2020 were €11.5 million and €9.8
million(1), respectively, of which €0.5 million and €2.2 million
were capitalized in 2021 and 2020, respectively. Total amortization
on capitalized development costs during 2021 and 2020 was €1.5
million and €1.8 million, respectively. (1) Adjusted from the
previous year to conform to the current period
presentation.
Appendix II
Page 7 2. Economic Report 2.1 Macroeconomic and industry-specific
conditions According to an International Monetary Fund and Economic
Outlook Update Study, during 2021, the global recovery continues
but the momentum has weakened, fueled by the highly transmissible
Delta variant. Pandemic outbreaks in critical links of global
supply chains have resulted in longer-than-expected supply1
disruptions, further feeding inflation in many countries. Overall,
risks to economic prospects have increased, and policy trade- offs
have become more complex. Inflation has increased in the United
States and some emerging market economies. The global online
personals industry has experienced significant growth in recent
years due to the rising number of broadband internet connections
and the declining social stigma surrounding online dating. Industry
research estimates that the dating services industry revenue is
expected to increase an annualized 7.8% to approximately $8 billion
by 2026. North America is currently the largest geographic market
in the online personals industry, according to industry research.
In recent years, we have increased our market share in the United
States through the launch of EliteSingles and SilverSingles in
conjunction with the 2017 and 2019 acquisitions of the largely
North American brands Jdate, Christian Mingle, JSwipe, and Zoosk. 1
see
https.//www.imf.org/en/Publications/WEO/Issues/2022/04/19/world-economic-outlook-april-2022
Appendix II
Page 8 2.2 Course of the business Revenue during 2021 decreased by
10.3% to €183.3 million from €204.3 million in 2020. Adjusted
EBITDA during 2021 decreased by 13.6% to €28.9 million from €33.5
million in 2020. Initially, we forecasted 2021 revenue in the range
of €198.0 million and €203.0 million and 2021 adjusted EBITDA in
the range of €27.0 million and €30.0 million. Subsequently, we
lowered our full year 2021 guidance in the second quarter of 2021
due to certain delays in product improvement primarily on the Zoosk
platform. Our 2021 revenue in euro met our revised forecast range
of €182.0 million to €185.0 million due to the favorable impact of
exchange rates. Our 2021 adjusted EBITDA exceeded our revised
forecast range of €22.0 million to €25.0 million. We focused on
several core goals in 2021, which we believe provided a strong
foundation for sustainable long- term growth. While revenue for
Zoosk, our largest brand, declined year over year in 2021, we have
been making the necessary product improvements to return Zoosk to
revenue growth in 2022. In 2021, we launched Zoosk Great Dates, a
first-to-market virtual dating feature for singles. Zoosk Great
Dates aims to reinvigorate the video dating trend by enabling
singles and their dates to access fun virtual date experiences in
exciting global destinations, with the first batch of interactive
dates set in Greece, Italy and Japan. With this innovation, as well
as several other product and user experience upgrades delivered
during the year, we have reduced Zoosk’s revenue decline and we are
confident that the improvements we made to Zoosk in 2021, and will
continue to make in 2022, are enhancing our competitive
differentiation and will drive increased engagement, resulting in a
return to revenue growth for Zoosk in 2022. Our other top four
brands — EliteSingles, SilverSingles, Christian Mingle and Jdate,
made up close to half of our total revenue in 2021 and collectively
grew their revenue 5% and subscribers 3% year over year in 2021.
With these strong brands and limited competition in these growing
market segments, we forecast that we will continue to grow revenue
in 2022. We continue to invest in product, technology, marketing
and talent to capture the large market opportunity for Spark. We
are working to further improve our properties' features and
functionality with a focus on revenue generating enhancements, like
improved first time user experience and new matching technology, as
well as revamping our apps, and simplifying our technology
platform's complexity to increase platform stability, reduce costs,
and allow for new features and functionality to be launched more
seamlessly across brands. Additionally, with our new debt agreement
in place, and its less restrictive covenants which requires lower
minimum cash balance and more favorable covenant ratios, we expect
to increase our marketing spend with a renewed focus on
brand-building capabilities, ensuring our portfolio of brands
clearly communicate our brand propositions, which we believe will
ensure ensures our community of singles find their ideal matches on
our platforms.
Appendix II
Page 9 2.3 Earnings performance, Financial and Asset position 2.3.1
Earnings performance Key Business Metrics We regularly review
certain operating metrics in order to evaluate the effectiveness of
our operating strategies and monitor the financial performance of
the business. The two key business metrics that we utilize include
the following: Revenue Revenue is primarily generated from users in
the form of recurring subscriptions, and is presented net of
refunds and credit card chargebacks. Adjusted EBITDA Adjusted
EBITDA is defined as net earnings (loss) excluding net finance
expenses, income tax (benefit) expense, depreciation and
amortization, asset impairments, share-based compensation expense,
acquisition related costs and other costs. Other business metrics
that we utilize include the following: Total Registrations Total
registrations are defined as the total number of new members
registering to the platforms with their email address. Those
include members who enter into premium subscriptions and free
memberships. Average Paying Subscribers Paying subscribers are
defined as individuals who have paid a monthly fee for access to
premium services, which include, among others, unlimited
communication with other registered users, access to user profile
pictures and enhanced search functionality. Average paying
subscribers for each month are calculated as the sum of the paying
subscribers at the beginning and the end of the month, divided by
two. Average paying subscribers for periods longer than one month
are calculated as the sum of the average paying subscribers for
each month, divided by the number of months in such
period.
Appendix II
Page 10 Monthly Average Revenue Per User ("ARPU") Monthly ARPU
represents the Revenue for the period divided by the number of
average paying subscribers for the period, divided by the number of
months in the period. Contribution Contribution is defined as
revenue, net of refunds and credit card chargebacks, less direct
marketing. Direct Marketing Expenses Direct marketing expenses is
defined as online and offline advertising spend and is included
within Cost of revenue within our Consolidated Statements of
Operations and Comprehensive Loss. Selected statistical information
regarding business metrics described above is shown in the table
below: Years Ended December 31, 2021 2020 Registrations 13,146,834
14,809,382 Average Paying Subscribers 874,922 927,951 Total Monthly
ARPU € 17.46 € 18.35 (in thousands): Net Revenue € 183,340 €
204,290 Direct Marketing 89,321 100,920 Contribution € 94,019 €
103,370 New members registered to our platforms in 2021 decreased
by 1.7 million, or 11.2%, compared to 2020. Average paying
subscribers in 2021 decreased by 53 thousand, or 5.7%, compared to
2020. The decrease was primarily driven by a decline in
registrations of the Zoosk brand. Monthly ARPU for 2021 decreased
by 4.9% compared to 2020. The decline in ARPU was a result of us
emphasizing longer duration subscriptions through price incentives.
Direct marketing in 2021 decreased by €11.6 million, or 11.5%,
compared to 2020. The decrease was driven by lower marketing spend
due to debt covenant restrictions. Contribution in 2021 decreased
by 9.4 million, or 9.0%, compared to 2020. The decrease was driven
by a decline in revenue for Zoosk. Adjusted EBITDA Adjusted EBITDA
is one of the primary metrics by which we evaluate the performance
of our business, budget, forecast and compensate management. We
believe this measure provides management and investors with a
consistent view, period to period, of the core earnings generated
from the ongoing operations and allows for greater transparency
with respect to key metrics used by senior leadership in its
financial and operational decision- making.
Appendix II
Page 11 We define adjusted EBITDA as net income (loss) excluding
net finance costs, income taxes, depreciation and amortization,
impairment of intangible assets and goodwill, stock-based
compensation expense, acquisition- related and other costs.
Adjusted EBITDA should not be construed as a substitute for net
(loss) / profit (as determined in accordance with IFRS) for the
purpose of analyzing our operating performance or financial
position, as Adjusted EBITDA is not defined by IFRS. The following
table presents certain selected information and Adjusted EBITDA for
the periods presented: Years Ended December 31, (in € thousands)
2021 2020(3) Variance Variance in % Net loss (54,504) (59,600)
5,096 (8.6) % Net finance expenses 11,236 11,989 (753) (6.3) %
Income tax expense (benefit) 20,658 4,473 16,185 361.8 %
Depreciation and amortization 6,068 8,782 (2,714) (30.9) %
Impairment of intangible assets and goodwill 39,664 59,751 (20,087)
(33.6) % Share-based compensation expense 2,304 4,193 (1,889)
(45.1) % Acquisition related costs(1) — 1,418 (1,418) (100.0) %
Other costs(2) 3,486 2,466 1,020 41.4 % Adjusted EBITDA 28,912
33,472 (4,560) (13.6)% (1) Acquisition related costs primarily
consist of transaction costs, including legal, consulting, advisory
fees, and severance and retention costs. (2) Includes primarily
consulting and advisory fees related to special projects, as well
as non-cash acquisition related expenses, post-merger integration
activities and long-term debt transaction and advisory fees. (3)
Comparative Adjusted EBITDA for the year ended December 31, 2020 is
restated. The Group modified its calculation of Adjusted EBITDA to
include a fair value adjustment of €1.1 million which reduced the
value of contract liabilities acquired from Zoosk in connection
with the Zoosk acquisition in 2019. Adjusted EBITDA in 2021 was
€28.9 million, a decrease from €33.5 million in 2020 primarily due
to the decline in Zoosk revenue, and our increased product
investment during the year. The following table shows our results
of operations for the periods presented. The period-over-period
comparison of our historical results are not necessarily indicative
of the results that may be expected in the future.
Appendix II
Page 12 Results of Operations Years Ended December 31, (in €
thousands) 2021 2020 Variance Variance in Revenue 183,340 204,290
(20,950) (10.3) % Cost of revenue (111,441) (124,937) 13,496 (10.8)
% Gross profit 71,899 79,353 (7,454) (9.4)% Other income 541 911
(370) (40.6) % Other operating expenses (55,386) (63,651) 8,265
(13.0) % Impairment of intangible assets and goodwill (39,664)
(59,751) 20,087 (33.6) % Operating loss (22,610) (43,138) 20,528
(47.6)% Finance income 12,641 7,142 5,499 77.0 % Finance costs
(23,877) (19,131) (4,746) 24.8 % Net finance expenses (11,236)
(11,989) 753 (6.3)% Loss before taxes (33,846) (55,127) 21,281
(38.6)% Income tax expense (20,658) (4,473) (16,185) 361.8 % Net
loss (54,504) (59,600) 5,096 (8.6)% Comparison of Years Ended
December 31, 2021 and December 31, 2020 Revenue Revenue in 2021
decreased by €21.0 million, or 10.3%, compared to 2020. The
decrease in revenue was attributable to the decrease in the number
of average paying subscribers of 5.7% related to Zoosk brand,
partially offset by the increase in the core Spark brands. Cost of
revenue Cost of revenue consists primarily of direct marketing
expenses, data center expenses, credit card fees and mobile
application processing fees. Cost of revenue in 2021 decreased by
€13.5 million, or 10.8%, compared to 2020. The decrease was
primarily due to a reduction in marketing spend for Zoosk and
commission expense for mobile application due to a decrease in
revenue. Other operating expenses Other operating expenses consists
primarily of costs for sales and marketing, customer service,
technical operations and development, and corporate functions.
These costs include personnel, technology platform and system
costs, third-party service and professional fees, occupancy and
other overhead costs. Other operating expenses in 2021 decreased by
€8.3 million, or 13.0%, compared to 2020. The decrease was
primarily driven by higher legal fees incurred during 2020 related
to cybersecurity matters and a decrease in stock-based compensation
expense from higher grants in 2020 and higher forfeitures in 2021.
In addition, we had higher accounting and audit fees in connection
with the U.S. GAAP conversion during the third quarter of 2020. The
company also had higher business and software license expenses, as
well as higher value-added and sales tax expenses during
2020.
Appendix II
Page 13 Net finance expenses Net finance expenses consist primarily
of interest income and expenses, foreign exchange gains and losses,
and other related finance costs. Net finance expenses decreased to
€11.2 million in 2021, compared to €12.0 million in 2020. The
decrease in total net finance expenses was primarily driven by a
€5.6 million increase in gains on foreign currency transactions and
a €6.4 million decrease in interest expenses, partially offset by a
€11.3 million increase in losses on foreign currency transactions.
The decrease in interest expense was primarily driven by a decrease
in interest expense related to borrowings under the Senior Secured
Facilities Agreement, which includes a one-time gain of €2.4
million in 2021 related to the Limited Waiver (as defined in Note
5.9 to our Consolidated Financial Statements included in this
annual report) and a one-time loss of €3.7 million in 2020 related
to the Second Amendment (as defined in Note 5.9 to our Consolidated
Financial Statements included in this annual report). The decrease
in interest expense related to the Senior Secured Facilities
Agreement was partially offset by a €0.6 million increase in
interest expense on the deferred payment to Zoosk's shareholders
due to an increase in the stated interest rate from 2% to 12% per
annum. Impairment For the year ended December 31, 2021, we
recognized impairment expense of €39.7 million, due to the Company
lowering its financial expectations for the remainder of 2021. This
was due to the introduction of enhanced security measures to
address increased risk of cybersecurity attacks, delays in product
initiatives and a more uncertain COVID-19 outlook. In addition, the
Company revised financial projections beyond 2021 and a used a
higher discount rate to reflect the higher risk factors. Income tax
expense For the year ended December 31, 2021, we recognized income
tax expense of €20.7 million, compared to €4.5 million for the year
ended December 31, 2020. The increase in income tax expense was
primarily driven by the change valuation allowance on U.S. Federal
and state taxes and German net operating losses and interest
carryfowards, deferred tax assets and the impairment of goodwill
and intangible assets. 2.3.2 Financial position Spark Networks’
ongoing liquidity requirements arise primarily from working capital
needs, research and development requirements and the debt service.
In addition, Spark Networks may use liquidity to fund acquisitions
or make other investments. Sources of liquidity are cash balances
and cash flows from operations and borrowings under the Senior
Secured Facilities Agreement (as defined in Note 5.9 to our
Consolidated Financial Statements included in this annual report).
From time to time, Spark Networks may obtain additional liquidity
through the issuance of equity or debt. As of December 31, 2021 and
2020, the Group held cash with bank and financial institution
counterparties of €14.3 million and €15.8 million, respectively.
Movements in cash and cash equivalents during the reporting periods
are presented in the Consolidated Statements of Cash Flows. Based
on our budgeted cash flow, our current cash and cash flow from
operations will be sufficient to meet our anticipated cash needs
for financial liabilities, capital expenditures and contractual
obligations, for at least the next 12 months. We do not anticipate
requiring additional capital; however, if required or desirable, we
may utilize
Appendix II
Page 14 our Revolving Credit Facility (as defined in Note 5.9 to
our Consolidated Financial Statements included in this annual
report) or issue additional equity in the private or public
markets. Under the Senior Secured Facilities Agreement, we are
subject to various financial covenants including a monthly
liquidity requirement and quarterly tests including guarantor
coverage test, maximum leverage ratio and minimum asset coverage
ratio. Additionally, it includes covenant that, among other things,
restricts the Company's ability and the ability of its subsidiaries
to: incur additional indebtedness, create liens, engage in mergers
or consolidations, sell or transfer assets, pay dividends and
distributions and make share repurchases, make certain
acquisitions, engage in certain transactions with affiliates, and
change lines of business. Cash Flows The following table summarizes
Spark Networks´ cash flows for the periods presented: December 31,
(in € thousands) 2021 2020 Variance Variance in % Cash inflow from
operating activities 17,232 17,856 (624) (3.5) % Cash outflow from
investing activities (912) (2,870) 1,958 (68.2) % Cash outflow from
financing activities (18,491) (12,418) (6,073) 48.9 % Net change in
cash and cash equivalents (2,171) 2,568 (4,739) (184.5) % Operating
Activities Our cash flows from operating activities primarily
include net loss adjusted for (i) non-cash items included in net
loss, such as depreciation and amortization, impairment of goodwill
and intangible assets, shared-based compensation and (ii) changes
in the balances of operating assets and liabilities. Net cash
provided by operating activities was €17.2 million for the year
ended December 31, 2021, a decrease of €0.7 million compared to
€17.9 million during the year ended December 31, 2020. The decrease
was primarily driven by the decrease in gross profit. Investing
Activities Our cash flows from investing activities primarily
include development of internal-use software, purchase of property
and equipment and business acquisition. Net cash used in investing
activities was €0.9 million for the year ended December 31, 2021, a
decrease of €2.0 million compared to €2.9 million during the year
ended December 31, 2020. The decrease was primarily due to the cash
paid for the Zoosk acquisition, net of cash acquired, of €0.5
million during the year ended December 31, 2020, and the additional
capital expenditures of €1.5 million during 2020 as well as
payments for fees in connection with the temporary waiver related
to the covenant breach under the loan agreement in March
2021.
Appendix II
Page 15 Financing Activities Our cash flows from financing
activities primarily include changes in long-term debt. Net cash
used in financing activities was €18.5 million for the year ended
December 31, 2021, an increase of €6.1 million compared to €12.4
million during the year ended December 31, 2020. The increase was
primarily attributable to the additional €5.0 million in proceeds
from bank loans in 2020 as well as payments for fees in connection
with the temporary waiver related to the covenant breach under the
loan agreement in March 2021. Borrowings As of December 31, 2021
and 2020, the aggregated outstanding principal balance of the
Amended Term Loan Facility was €75.5 million and €85.3 million,
respectively, and the amortized cost basis was €72.4 million and
€83.2 million, respectively. The decrease in borrowings year over
year is attributable to the repayment of debt under the Senior
Secured Facilities Agreement. Unused credit line was $5.0 million
under the Revolving Credit Facility as of December 31, 2021. We are
in compliance with all of our financial covenants with a net
leverage ratio of 2.12 as of December 31, 2021 and have met our
payment obligations at all times under the existing term and
revolving facility. For further discussion of our debt, refer to
Note 5.9 to our Consolidated Financial Statements included in this
annual report. On March 11, 2022, the Company completed the
successful refinancing of its existing term and revolving facility
with borrowings under a new term loan facility with MGG Investment
Group LP. Refer to Note 8.6 to our Consolidated Financial
Statements included in this annual report for additional
information. 2.3.3 Asset position Years Ended December 31, (in €
thousands) 2021 2020 Variance Variance in Cash and cash equivalents
14,251 15,834 (1,583) (10.0)% Current trade and other receivables
9,738 10,004 (266) (2.7)% Goodwill 91,705 117,968 (26,263) (22.3)%
Intangible assets, net 61,597 66,537 (4,940) (7.4)% Total Assets
191,330 237,296 (45,966) (19.4)% Total Liabilities 162,671 163,187
(516) (0.3)% Total Shareholders' Equity 28,659 74,109 (45,450)
(61.3)% Assets The decrease in assets from 2020 to 2021 was
primarily attributable to impairment of goodwill and internally
developed software. The Company performed its annual review of
internally developed software for the year ended December 31, 2021,
and determined to abandon various software development projects
that the Company concluded were no longer a current strategic fit
based on new product initiatives and focus areas for the
organization. The Company wrote-off internally generated software
with a cost of €5.5 million and accumulated amortization of €2.3
million and intangible assets under development with a cost of €1.9
million, both of which are reflected as Intangible
Appendix II
Page 16 assets, net in the Consolidated Balance Sheets included in
this annual report. As a result, for the year ended December 31,
2021, the Company recognized an impairment charge of €5.1 million.
Impairment charge of €34.6 million attributable to the Zoosk
operating segment was recognized and included as part of Impairment
of intangible assets and goodwill on the Consolidated Statements of
Operations and Comprehensive Loss. The impairment charge was
primarily attributed to declines in the estimated undiscounted cash
flows and an increase in the discount rate due to increased risk
factors, which resulted in the carrying amount not being
recoverable. Liabilities The decrease in liabilities from 2020 to
2021 was primarily attributable to the repayment of borrowing under
the Senior Secured Facilities Agreement, as well as a decrease in
trade payables due to timing of payments. 2.3.4 Overall statement
of the economic situation In 2021, we established a roadmap of
strategic investments, which should further our ability to scale.
Four of our top five brands, representing close to half of total
revenue, collectively grew revenue year over year in 2021. While
Zoosk revenues declined year over year in 2021, we have been making
the necessary product improvements to return Zoosk to revenue
growth in 2022. With this innovation, as well as several other
product and user experience upgrades delivered during the year, we
have reduced Zoosk’s revenue decline and for the second consecutive
quarter we saw new Zoosk organic registrations grow. With the
growth in our core non-Zoosk brands, and the turnaround efforts
achieved at Zoosk, we are satisfied with the performance of the
Company in 2021. - "We believe that this investment in talent,
products, technology and marketing, as well as our position will
enable us to realize the significant market potential and return
the company to growth in 2022."
Appendix II
Page 17 3. Forecast, opportunity and risk report 3.1 Forecast
report According to an International Monetary Fund and Economic
Outlook Update Study2, the economic damage from the war in Ukraine
will contribute to a significant slowdown in global growth in 2022
from an estimated 6.1% in 2021 to 3.6% in 2022. Beyond 2022, global
growth is projected to decline to about 3.3% over the medium term.
Inflation is expected to remain elevated at 5.7% in 2022, driven by
war-induced commodity price increases and broadening price
pressures. IBISWorld Indstury Report for Dating Services3 forecasts
that industry revenue is expected to increase an annualized 7.8%
over the five years to 2026 due to fading social stigmas associated
with online dating and busy work schedules that limit alternative
ways of meeting potential partners. In addition, the mobile dating
market is expected to continue increasing its share of industry
revenue. Spark Networks’ performance each year is affected by the
ability to attract and retain paying subscribers, particularly
within the North American market. In 2022, we will continue to
focus on our five key brands — Zoosk, EliteSingles, SilverSingles,
Christian Mingle, and Jdate and invest in product, technology,
marketing and talent to capture the large market opportunity for
Spark. We are working to further improve our properties' features
and functionality with a focus on revenue generating enhancements,
like improved first time user experience and new matching
technology, as well as revamping our apps, and simplifying our
technology platform's complexity to increase platform stability,
reduce costs, and allow for new features and functionality to be
launched more seamlessly across brands. Additionally, with our new
debt agreement in place, and its less restrictive covenants, we
expect to increase our marketing spend with a renewed focus on
brand-building capabilities, ensuring our portfolio of brands
clearly communicate our unique and differentiated brand
propositions, which ultimately ensures our community of singles
find their ideal matches on our platforms. Further, one of our most
important strategies for growth is investing in talent to capture
Spark's significant future potential. Adding to our recently hired
Chief Financial Officer and Head of Brand Marketing, we have also
hired a new Chief Product Officer to start in Q2 2022 and a Head of
Corporate and Business Development who started in Q1 2022. With
four of our five key brands already in growth mode and Zoosk
showing signs of a positive turnaround, we are confident in our
ability return to total revenue growth for the full year 2022. We
have put in place a well- developed roadmap of strategies and
investments to drive revenue growth and ultimately shareholder
value in 2022 and beyond. With our new debt facility in place, we
now have the financial flexibility to execute on this plan.
Accordingly, for full year 2022, we expect to return to mid to high
single digit total revenue growth year over year, while investing
in marketing to drive stronger growth in 2023. Despite this
additional marketing spend 2 See
https://www.imf.org/en/Publications/WEO/Issues/2022/04/19/world-economic-outlook-april-2022
3 See
https://www.ibisworld.com/united-states/market-research-reports/dating-service-industry/
- version June 2021
Appendix II
Page 18 we expect to deliver low double-digit Adjusted EBITDA
margins, calculated as Revenue divided by Adjusted EBITDA, for the
year. The business development of Spark is in line with the outlook
for the financial year 2022. Foreseeable effects of the COVID-19
crisis have been considered in the outlook. However, there is
substantial uncertainty in many dimensions of the business which
limits forecasting to the current state of knowledge – in both a
positive and negative sense. In addition to the adverse impact on
customer behavior already described, additional risks arise from
possible wider government restrictions on operational work in
offices or at service providers as well as the effect of a possible
severe global recession on customer demand. There is therefore a
risk that these factors could lead to an unfavorable development of
the business. In such a case, results in terms of both revenue and
adjusted EBITDA would differ from the outlook
presented.
Appendix II
Page 19 3.2 Risk report Our business is regulated by diverse and
evolving laws and governmental authorities in North America and
other countries in which we operate. We are subject to laws and
regulations related to internet communications, privacy, consumer
protection, security and data protection, intellectual property
rights, commerce, taxation, entertainment, recruiting and
advertising. Plus, legal uncertainties surrounding domestic and
foreign government regulations could increase our costs of doing
business, require us to revise our services, prevent us from
delivering our services over the internet or slow the growth of the
internet, any of which could materially adversely affect our
business, financial condition and results of operations. The key
objectives of the Group's risk management system are to manage and
streamline the Group-wide risk management process, to control all
risk management related activities, and to ensure a comprehensive
view on all significant risks of the Group. The identification,
assessment and regular monitoring of risks are key drivers in
enabling us to achieve our objectives. In our risk strategy, we
take into account significant risks as well as risks that represent
a threat when aggregated at the Group level. The risks identified
below could materially harm our business, operating results and/or
financial condition, impair our future prospects and/or cause the
price of our ADS to decline. The risk assessment reporting period
is 12 months from the assessment date. The risks have remained
unchanged from the prior year. Credit risk, is not classified as
significant and are not presented separately in the report on risks
and opportunities but in the Note 7.2 to the Consolidated Financial
Statements. Regardless of the processes implemented to enable the
identification of risks and any countermeasures taken to manage the
identified risks, residual risks that cannot completely be
eliminated, even by a comprehensive risk management system, are
present in all commercial activities. It, therefore, cannot be
ruled out that currently unknown potential risks or those currently
deemed to be immaterial could have a negative impact on business
performance. Foreign currency exchange rate fluctuations We operate
in various international markets, primarily in various
jurisdictions within the EU, United States and other international
locations, and as a result, are exposed to foreign exchange risk
for the Euro, United States dollar ("USD"), Great British pound,
Australian dollar and Canadian dollar, among others. We translate
international revenue into USD-denominated operating results, so
during periods of a strengthening USD, our non-USD revenue will be
reduced when translated into USD. In addition, as foreign currency
exchange rates fluctuate, the translation of international revenue
into USD-denominated operating results affects the period-over-
period comparability of such results. We face similar risks as a
result of revenue earned in other currencies. Fluctuating foreign
exchange rates can also result in foreign currency exchange gains
and losses. We do not intend to hedge any foreign currency
exposures. Significant foreign exchange rate fluctuations, in the
case of one currency or collectively with other currencies, could
adversely affect future results of operations.
Appendix II
Page 20 Adverse capital and credit market conditions The capital
and credit markets have been experiencing extreme volatility over
the last few years, most recently in light of the ongoing COVID-19
pandemic and the response by U.S. and international governments
thereto, including the lowering of short-term interest rates by the
U.S. Federal Reserve in the first quarter of 2020, and the
potential global recession resulting therefrom. In some cases, the
markets have exerted downward pressure on availability of liquidity
and credit capacity for certain issuers. We may not be able to
access cash or to incur indebtedness if the ongoing macroeconomic
effects, including the COVID-19 pandemic, the closure of banks for
an extended period of time or a sudden increase in requests for
indebtedness at one time by many potential borrowers, either or
both of which could overwhelm the banking industry. Legal
requirements relating to the protection of personal information
There are numerous laws in the countries in which the we operate
regarding privacy and the storage, sharing, use, processing,
disclosure and protection of this kind of information, the scope of
which are constantly changing, and in some cases, inconsistent and
conflicting and subject to differing interpretations, as new laws
of this nature are proposed and adopted. For example, in 2016, the
European Commission adopted the General Data Protection Regulation
("GDPR"), a comprehensive European Union privacy and data
protection reform that became effective in May 2018. Additionally,
we are subject to laws, rules, and regulations regarding
cross-border transfers of personal data. The Group implemented and
rolled out relevant data protection processes. Such processes and
internal documents were improved and internal promotion of the
issue increased. In addition, enhanced close cooperation between
the Legal and IT departments ensured the implementation of
additional technical and organizational measures to reduce the risk
of non-compliance with data protection requirements. While we
believe that we comply with industry standards and applicable laws
and industry codes of conduct relating to privacy and data
protection in all material respects, there is no assurance that we
will not be subject to claims that we have violated applicable laws
or codes of conduct, that we will be able to successfully defend
against such claims or that we will not be subject to significant
fines and penalties in the event of non-compliance. Cyber security
Our business involves the collection, storage, processing, and
transmission of personal data, including credit card information.
Additionally, we maintain sensitive and proprietary information
relating to our business, such as our own proprietary information
and personal data relating to our employees. An increasing number
of organizations, including large online and offline businesses,
internet companies, financial institutions, and government
institutions, have disclosed breaches of their information security
systems and other information security incidents, including
cyberattacks, ransomware, computer viruses, worms, hacking,
phishing, bot attacks or other destructive or disruptive software,
distributed denial of service attacks, other attempts to
misappropriate customer information, some of which have involved
sophisticated and highly targeted attacks. We have previously
experienced and expect to continue to experience these types of
breaches, attacks and other incidents. Although we and our service
providers have systems and processes that are designed to protect,
prevent data loss, and prevent other security breaches and security
incidents, these security measures have not fully protected our
systems in the past and cannot guarantee security in the future.
The IT and infrastructure used in our business and in the products
of third parties we use may be vulnerable to cyberattacks or
security breaches, and unauthorized third parties may be able to
access data, including personal data and other sensitive and
proprietary data of users, our employees’ personal data, or our
other sensitive and proprietary data, accessible through those
systems. Those responsible for IT security at Spark constantly
monitor relevant risk areas and maintain processes and controls
aiming to ensure the security of data and operations.
Appendix II
Page 21 COVID-19 pandemic The outbreak of the novel coronavirus and
the COVID-19 disease that it causes has evolved into a global
pandemic. In light of the continued uncertainty relating to
COVID-19, we have taken certain precautionary measures intended to
minimize the risk of the virus to our employees and the communities
in which we operate, including temporarily closing certain of our
offices and virtualizing, postponing, or canceling certain events
and travel, which may negatively impact our business. It is
possible that continued, widespread remote work arrangements may
have a negative impact on our operations, the execution of our
business plans, the productivity and availability of key personnel
and other employees necessary to conduct our business, and on
third-party service providers who perform critical services for us,
or otherwise cause operational failures due to changes in our
normal business practices necessitated by the outbreak and related
governmental actions. In addition, governments at all levels
continue to impose and advise restrictions on social gatherings in
both public and private spaces. The continuation of these
restrictions, along with an increased hesitancy by individuals to
frequent public spaces, could reduce the demand for our services in
the future. Accordingly, it is not possible at this time to
estimate the extent of the impact that COVID-19 will have on our
business, as the pandemic continues to evolve and be highly
uncertain.
Appendix II
Page 22 3.3 Opportunities report We operate a diverse global
platform of premium online dating sites and mobile applications.
This diversified suite of dating sites and mobile applications
allows us to implement different features from each of the brands
across our geographic footprint and will also enable the roll-out
of new brands and products. We intend to incorporate ore social
features in our products with content, community and social
discovery functionality to allow our users to meet in more informal
ways and to provide new ways to date online. We are one of the
largest public dating companies in the United States based on
revenue. This allows for the operational and financial scale
required for significant investments into new technologies and
products, while also providing a better platform to attract and
retain customers. We believe that we have a deep understanding of
how to use online and offline marketing to drive traffic to our
websites and mobile applications, and leverage proprietary
technology to analyze the efficiency of all our marketing
campaigns. This ensures an efficient and effective marketing budget
allocation that ultimately translates into superior margins. We
believe that we have the potential to build shared user pools for
all of our brands in each market and use matchmaking algorithms to
provide best possible matches to our users upon further platform
consolidation of our dating technology. Combining the user pools of
our combined portfolio of brands would add value to users of all of
our platforms and allow us to quickly and efficiently launch new
products and services. We will continue to expand our presence in
North America through significant marketing investment in this
region as we look to drive both organic growth of our existing
brand portfolio through the launch of new or acquired brands. The
fact that we are one of the largest publicly traded online dating
companies in the United States also enables us to issue public
equity as consideration for acquisitions as we pursue further
consolidation in the online dating industry.
Appendix II
Page 23 4. Other information 4.1 Group statement of Corporate
Governance The statement of Corporate Governance in accordance with
Sections 289f and 315d HGB includes the declaration of conformity
with the German Corporate Governance Code pursuant to Section 161
AktG (issued by the Board of Directors) and has been made available
to shareholders on the Spark Networks SE website
(https://www.spark.net/investor-relations/corporate-governance/highlights).
4.2 Treasury Shares With regard to the treasury shares held on the
balance sheet date in accordance with Section 160 (1) No. 2 AktG,
we refer to Section 5. Notes on the Consolidated Balance Sheet –
Shareholders’ Equity of the Notes to the Consolidated Financial
Statements of Spark Networks SE for 2021.
© BDO AG
Wirtschaftsprüfungsgesellschaft, March 1, 2021 BDO AG
Wirtschaftsprüfungsgesellschaft - Special Terms and Conditions - 1.
General Provisions (a) We render our services based on (i) the
engagement letter and any possi- ble attachments to the engagement
letter (in particular any service descrip- tions, revocation
notices for consumers and portal terms of use), (ii) these Special
Terms and Conditions (hereinafter the "STC"), and (iii) the General
Engagement Terms for Wirtschaftsprüfer and
Wirtschaftsprüfungsgesellschaf- ten of the Institute of German
Certified Accountants (hereinafter the "GET") (hereinafter
collectively referred to as the "Client Agreement"). The same also
applies to any part of our services that may be rendered by us
before the Client Agreement is signed with legal effect. Different
or conflicting terms and conditions will apply only if they have
been expressly accepted by us in writing. The provisions of our
engagement letter, the STC and GET will apply even if we do not
expressly object to an order placed on the basis of different terms
and conditions (e.g., terms and conditions of written orders). (b)
Unless otherwise agreed, these STC and GET also apply if we render
services in addition to those agreed upon in the engagement letter
or any attachments thereto. 2. Fees, Payment Due Date (a) Our
invoices, including any invoices for installment payments or
prepay- ments, will be issued in Euro and will be due for payment
immediately. We will invoice you at cost for any subcontractor
services. (b) Any demands for advance payments are subject to
section 13 (1) sentence 2 of the GET. We have the right to invoice
the client for reasonable install- ment payments on fees, charges
and expenses, including incidental costs, at any time. (c) All
information we provide regarding the expected amount of fees gener-
ally is only a cost estimate, unless the Client Agreement expressly
provides for a flat fee. A quoted flat fee may be exceeded, if
unforeseeable events beyond our control will result in a
considerable amount of additional work. (d) If we should
discontinue our services early, we shall have the right to invoice
the client for the number of hours worked up to that point in time,
unless termination of the contract is due to wrongful conduct on
our part. However, in the latter case we may invoice you for the
number of hours worked, if and to the extent that the services
rendered are utilizable despite early termination. (e) The German
Regulations on Fees of Tax Advisors (Steuerberater-
vergütungsverordnung - StBVV) shall apply only to the extent
expressly agreed in writing. If after the Client Agreement is
signed you request from our firm services that are not included in
the engagement letter, we will invoice you for those services
either based on a separate agreement or, ab- sent a separate
agreement, based on our standard hourly rates applicable to those
services, which are available upon request. (f) If we are requested
or required (whether before or after services are ren- dered) to
make available information about our services to a competent court,
a trustee or insolvency administrator, a public, regulatory or
supervi- sory authority (WPK, PCAOB, DPR) or to any other third
party (including the hearing of our personnel as witnesses), we
shall have the right to invoice you for the time expended in this
context based on hourly rates as agreed in the Client Agreement. 3.
Limitations of our Liability (a) Unless otherwise specified in this
section 3 of the STC our liability is gov- erned by section 9 of
the GET. In derogation of section 9 (2) and (5) of the GET, each of
the liability limits stated therein shall however be replaced
throughout by the amount of € 5 million. Section 9 (1) of the GET
shall in each case remain unaffected. (b) If in your opinion the
risk associated with our services substantially ex- ceeds the
amount of € 5 million, we are prepared to discuss the possibility
and costs of increasing our liability limit with you and our
liability carrier. You are responsible for any additional premiums
incurred in connection therewith. (c) Contrary to section 9 (2) of
the GET and section 3 (a) of the STC our liability is unlimited
only if (i) expressly agreed in writing, or (ii) as far as we have
to perform our work without any limitations of liability to meet
the requirements of the laws of the United States of America
concerning the in- dependence of auditors. 4. Our Work Results Work
results that must be delivered in writing and signed by us shall be
bind- ing only if the original is signed by two employees or, in
case of e-mails, if two employees are named as signatories. Unless
otherwise agreed or in vio- lation of any applicable laws or
professional standards, we may also deliver our work results to you
exclusively (i) as a PDF file and/or (ii) by e-mail and/or (iii)
with a qualified electronic signature. 5. Disclosure of Our Work
Results, Rights to Work Results (a) Our work results are intended
solely for the agreed purpose, and they are therefore addressed
exclusively to you and may not be used for any other purpose. Any
disclosure of our work results to third parties or any use of our
work results for advertising purposes is subject to section 6 of
the GET. (b) Unless otherwise agreed in writing, we generally will
consent to a disclo- sure of our work results to third parties only
under the condition that a stand- ard disclosure agreement (hold
harmless release letter) has been signed by the third
party/parties. Any disclosure of our work results must be made in
full text and include all appendices. § 334 of the German Civil
Code (Bürgerliches Gesetzbuch - BGB) shall remain unaffected by any
such disclo- sure. (c) You agree to hold harmless and indemnify us
from and against any and all losses and damages that may result
from any non-compliance with the fore- going provisions in section
5 (a) and/or (b). (d) We will grant you rights to use our work
results only to the extent neces- sary given the purpose of the
applicable Client Agreement. 6. Principles of Our Cooperation (a)
The amount of time needed to render our services and used to
calculate our fees depends in substantial part on satisfaction of
the requirements set forth in section 3 (1) of the GET. (b) Unless
otherwise provided by the engagement letter, binding laws to which
we are subject or any other provisions or applicable standards, we
shall have no obligation to review any information made available
to us for accu- racy or completeness. 7. Special Clause for Tax
Advice (a) You hereby instruct and authorize us to electronically
submit in your name all statements prepared for you that are
intended and have been approved for electronic transmission to the
responsible office of the German tax au- thority directly through
DATEV eG. The foregoing instruction and authoriza- tion shall be
effective immediately and may be revoked at any time. Any notice of
revocation must be at least in text form. (b) If documents
requiring action by a certain deadline are submitted to us, we
shall have no obligation to take any steps to meet the deadline
unless the documents are transmitted to us by regular mail or fax.
8. Electronic Communication and Antivirus Protection Electronic
communication is subject to section 12 of the GET. You hereby
further acknowledge that data sent via the Internet cannot be
reliably pro- tected against access by third parties, might be
subject to loss, delay or vi- ruses. To the extent permitted by
law, we therefore disclaim any responsi- bility and liability for
the integrity of e-mails after they leave our control, and for any
damages you or any third parties may suffer as a result. This also
applies if despite antivirus programs used by us, viruses enter
your system as a result of receiving e-mails from us. 9. BDO
Network, Sole Recourse (a) We are a member of BDO International
Limited, a British company with limited capital contributions, and
we are part of the international BDO net- work of legally
independent member firms. BDO is the brand of the BDO net- work and
the BDO member firms (hereinafter "BDO Firms”). To render ser-
vices, we may involve other BDO Firms as subcontractors. For this
purpose, you hereby release us from our duty of confidentiality in
relation to such BDO Firms. (b) You hereby acknowledge and agree
that in such cases we will bear full responsibility for both our
acts and/or omissions and also all acts and/or omissions of any BDO
Firms assisting us as subcontractors. Accordingly, you agree that
you shall bring no claims or proceedings of any kind whatsoever
against any BDO subcontractors (including BDO International Limited
or Brus- sels Worldwide Services BVBA). This shall not apply to any
claim or proceed- ing founded on an allegation of fraud or willful
misconduct or any other claims that cannot be excluded under the
laws of the Federal Republic of Germany. (c) The liability
provisions of this Client Agreement, including, without limi-
tation, the limitations of liability, shall also apply for the
benefit of any BDO Appendix III Page 1
© BDO AG
Wirtschaftsprüfungsgesellschaft, March 1, 2021 Firms assisting us
as subcontractors. Such BDO subcontractors have the right to
directly invoke the provisions of the foregoing section 9 (b) of
these STC. 10. BDO Legal Rechtsanwaltsgesellschaft mbH (BDO Legal)
and BDO Group (a) If in connection with our services you are also
engaging BDO Legal or other companies of the BDO group, you hereby
release us from our duty of confi- dentiality with respect to all
engagement-related information in relation to BDO Legal and/or
other companies of the BDO group, so that services can be rendered
as smoothly and efficiently as possible. (b) We are legally
independent from BDO Legal and from other companies of the BDO
group, we neither assume responsibility for their actions or omis-
sions, nor do we form partnership under civil law (Gesellschaft
bürgerlichen Rechts - GbR) with BDO Legal or any company of the BDO
group, nor are we subject to joint and several liability with BDO
Legal or any company of the BDO group. 11. Money-Laundering Act,
Sanctions Under the provisions of the German Money-Laundering Act
(Geldwäschege- setz - GwG) we are required to follow certain
identification procedures with respect to our contract partners.
You are obligated to provide us, fully and truthfully, with all
information and documentation that must be provided under the
German Money-Laundering Act, and you are obligated to update such
information and documentation without demand in the further course
of the business relationship. We hereby expressly advise you of our
obliga- tions to terminate business relationships in accordance
with applicable pro- visions of the German Money-Laundering Act. We
further note that we also review our business relationships, inter
alia, for relevant national or interna- tional sanctions. We
reserve the right to terminate a business relationship without
notice if we determine in the course of any sanction reviews that
you and/or any of your controlling shareholders/partners are
subject to relevant sanctions. 12. Marketing Unless we are
instructed otherwise by you in writing or highly personal mat- ters
or mandates of consumers within the meaning of § 13 of the German
Civil Code are involved, you hereby allow us to use the type and
nature of our contract with you for marketing purposes. This
authorization exclusively co- vers a factual description of the
basic nature of the contract and the client (e.g., reference lists
with firm and logo, as well as scorecards). 13. Statute of
Limitations (a) The limitation of warranty claims is subject to
section 7 (2) of the GET. The limitation of all other claims is as
provided in the following subsections. (b) In cases of simple
negligence not involving harm to life, body, freedom or health, all
claims against us shall be subject to a general limitation period
of one year. (c) The limitation period shall begin to run at the
end of the calendar year in which the claim occurred and in which
you discovered or absent gross negli- gence would have discovered
the circumstances giving rise to the claim as well as the identity
of the liable party ("knowledge or grossly negligent lack of
knowledge"). Irrespective of the above, claims shall be time-barred
after a period of five years after they occurred, or, without
regard to their occur- rence and to your knowledge or grossly
negligent lack of knowledge, ten years after the act, breach of
duty or any other event triggering the damage. Whichever deadline
expires first shall be relevant. (d) Except as provided herein, the
limitation of claims shall be governed by applicable law. 14.
Jurisdiction, Form, Severability (a) If you are a merchant
(Kaufmann), a legal entity under public law or a special fund under
public law, or if you do not have a general place of juris- diction
in Germany, the place of jurisdiction for any and all disputes
arising from or in connection with the Client Agreement shall, at
our option, be (i) Hamburg/Germany, (ii) the place at which the
work in dispute was per- formed, or (iii) the place of your
registered office or residence. (b) Any amendment, supplement or
cancellation of the Client Agreement shall be made at least in text
form (§ 126b German Civil Code). This shall also apply to any
amendment, supplement or cancellation of this clause 14 (b) STC.
(c) If any provision of this agreement - in whole or in part - is
held to be invalid or otherwise impracticable, the other provisions
shall remain in full force and effect. Any invalid or impracticable
provision shall be deemed to be replaced by such valid and
enforceable provision as comes as close as possible to the economic
intent of the invalid or unenforceable provision. The foregoing
shall apply, mutatis mutandis, if any provision has been inad-
vertently omitted from this agreement. Appendix III Page
2
[Translator's
notes are in square brackets] General Engagement Terms for
Wirtschaftsprüfer and Wirtschaftsprüfungsgesellschaften [German
Public Auditors and Public Audit Firms] as of January 1, 2017 1.
Scope of application (1) These engagement terms apply to contracts
between German Public Auditors (Wirtschaftsprüfer) or German Public
Audit Firms (Wirtschaftsprüfungsgesellschaften) – hereinafter
collectively referred to as ”German Public Auditors” – and their
engaging parties for assurance services, tax advisory services,
advice on business matters and other engagements except as
otherwise agreed in writing or prescribed by a mandatory rule. (2)
Third parties may derive claims from contracts between German
Public Auditors and engaging parties only when this is expressly
agreed or results from mandatory rules prescribed by law. In
relation to such claims, these engagement terms also apply to these
third parties. 2. Scope and execution of the engagement (1) Object
of the engagement is the agreed service – not a particular economic
result. The engagement will be performed in accordance with the
German Principles of Proper Professional Conduct (Grundsätze
ordnungsmäßiger Berufsausübung). The German Public Auditor does not
assume any management functions in connection with his services.
The German Public Auditor is not responsible for the use or
implementation of the results of his services. The German Public
Auditor is entitled to make use of competent persons to conduct the
engagement. (2) Except for assurance engagements
(betriebswirtschaftliche Prüfungen), the consideration of foreign
law requires an express written agreement. (3) If circumstances or
the legal situation change subsequent to the release of the final
professional statement, the German Public Auditor is not obligated
to refer the engaging party to changes or any consequences
resulting therefrom. 3. The obligations of the engaging party to
cooperate (1) The engaging party shall ensure that all documents
and further information necessary for the performance of the
engagement are provided to the German Public Auditor on a timely
basis, and that he is informed of all events and circumstances that
may be of significance to the performance of the engagement. This
also applies to those documents and further information, events and
circumstances that first become known during the German Public
Auditor’s work. The engaging party will also designate suitable
persons to provide information. (2) Upon the request of the German
Public Auditor, the engaging party shall confirm the completeness
of the documents and further information provided as well as the
explanations and statements, in a written statement drafted by the
German Public Auditor. 4. Ensuring independence (1) The engaging
party shall refrain from anything that endangers the independence
of the German Public Auditor’s staff. This applies throughout the
term of the engagement, and in particular to offers of employment
or to assume an executive or non-executive role, and to offers to
accept engagements on their own behalf. (2) Were the performance of
the engagement to impair the independence of the German Public
Auditor, of related firms, firms within his network, or such firms
associated with him, to which the independence requirements apply
in the same way as to the German Public Auditor in other engagement
relationships, the German Public Auditor is entitled to terminate
the engagement for good cause. 5. Reporting and oral information To
the extent that the German Public Auditor is required to present
results in writing as part of the work in executing the engagement,
only that written work is authoritative. Drafts are non-binding.
Except as otherwise agreed, oral statements and explanations by the
German Public Auditor are binding only when they are confirmed in
writing. Statements and information of the German Public Auditor
outside of the engagement are always non-binding. 6. Distribution
of a German Public Auditor‘s professional statement (1) The
distribution to a third party of professional statements of the
German Public Auditor (results of work or extracts of the results
of work whether in draft or in a final version) or information
about the German Public Auditor acting for the engaging party
requires the German Public Auditor’s written consent, unless the
engaging party is obligated to distribute or inform due to law or a
regulatory requirement. (2) The use by the engaging party for
promotional purposes of the German Public Auditor’s professional
statements and of information about the German Public Auditor
acting for the engaging party is prohibited. 7. Deficiency
rectification (1) In case there are any deficiencies, the engaging
party is entitled to specific subsequent performance by the German
Public Auditor. The engaging party may reduce the fees or cancel
the contract for failure of such subsequent performance, for
subsequent non-performance or unjustified refusal to perform
subsequently, or for unconscionability or impossibility of
subsequent performance. If the engagement was not commissioned by a
consumer, the engaging party may only cancel the contract due to a
deficiency if the service rendered is not relevant to him due to
failure of subsequent performance, to subsequent non-performance,
to unconscion- ability or impossibility of subsequent performance.
No. 9 applies to the extent that further claims for damages exist.
(2) The engaging party must assert a claim for the rectification of
deficiencies in writing (Textform) [Translators Note: The German
term “Textform” means in written form, but without requiring a
signature] without delay. Claims pursuant to paragraph 1 not
arising from an intentional act expire after one year subsequent to
the commencement of the time limit under the statute of
limitations. (3) Apparent deficiencies, such as clerical errors,
arithmetical errors and deficiencies associated with technicalities
contained in a German Public Auditor’s professional statement
(long-form reports, expert opinions etc.) may be corrected – also
versus third parties – by the German Public Auditor at any time.
Misstatements which may call into question the results contained in
a German Public Auditor’s professional statement entitle the German
Public Auditor to withdraw such statement – also versus third
parties. In such cases the German Public Auditor should first hear
the engaging party, if practicable. 8. Confidentiality towards
third parties, and data protection (1) Pursuant to the law (§
[Article] 323 Abs 1 [paragraph 1] HGB [German Commercial Code:
Handelsgesetzbuch], § 43 WPO [German Law regulating the Profession
of Wirtschaftsprüfer: Wirtschaftsprüferordnung], § 203 StGB [German
Criminal Code: Strafgesetzbuch]) the German Public Auditor is
obligated to maintain confidentiality regarding facts and
circumstances confided to him or of which he becomes aware in the
course of his professional work, unless the engaging party releases
him from this confidentiality obligation. (2) When processing
personal data, the German Public Auditor will observe national and
European legal provisions on data protection. 9. Liability (1) For
legally required services by German Public Auditors, in particular
audits, the respective legal limitations of liability, in
particular the limitation of liability pursuant to § 323 Abs. 2
HGB, apply. (2) Insofar neither a statutory limitation of liability
is applicable, nor an individual contractual limitation of
liability exists, the liability of the German Public Auditor for
claims for damages of any other kind, except for damages resulting
from injury to life, body or health as well as for damages that
constitute a duty of replacement by a producer pursuant to § 1
ProdHaftG [German Product Liability Act: Produkthaftungsgesetz],
for an individual case of damages caused by negligence is limited
to € 4 million pursuant to § 54 a Abs. 1 Nr. 2 WPO. (3) The German
Public Auditor is entitled to invoke demurs and defenses based on
the contractual relationship with the engaging party also towards
third parties. Al l r ig ht s re se rv ed . T hi s fo rm m ay n ot
b e re pr in te d, e ith er in w ho le o r i n pa rt, o r c op ie d
in a ny m an ne r, w ith ou t t he e xp re ss w rit te n co ns en t
o f t he p ub lis he r. © ID W V er la g G m bH · Te rs te eg en st
ra ße 1 4 · 4 04 74 D üs se ld or f D o kI D : 3 5 0 2 1 O JS H 1 O
0 Lizenziert für/Licensed to: BDO AG
Wirtschaftsprüfungsgesellschaft ǀ 4298982 Appendix III Page
3
(4) When
multiple claimants assert a claim for damages arising from an
existing contractual relationship with the German Public Auditor
due to the German Public Auditor’s negligent breach of duty, the
maximum amount stipulated in paragraph 2 applies to the respective
claims of all claimants collectively. (5) An individual case of
damages within the meaning of paragraph 2 also exists in relation
to a uniform damage arising from a number of breaches of duty. The
individual case of damages encompasses all consequences from a
breach of duty regardless of whether the damages occurred in one
year or in a number of successive years. In this case, multiple
acts or omissions based on the same source of error or on a source
of error of an equivalent nature are deemed to be a single breach
of duty if the matters in question are legally or economically
connected to one another. In this event the claim against the
German Public Auditor is limited to € 5 million. The limitation to
the fivefold of the minimum amount insured does not apply to
compulsory audits required by law. (6) A claim for damages expires
if a suit is not filed within six months subsequent to the written
refusal of acceptance of the indemnity and the engaging party has
been informed of this consequence. This does not apply to claims
for damages resulting from scienter, a culpable injury to life,
body or health as well as for damages that constitute a liability
for replace- ment by a producer pursuant to § 1 ProdHaftG. The
right to invoke a plea of the statute of limitations remains
unaffected. 10. Supplementary provisions for audit engagements (1)
If the engaging party subsequently amends the financial statements
or management report audited by a German Public Auditor and
accompanied by an auditor's report, he may no longer use this
auditor’s report. If the German Public Auditor has not issued an
auditor's report, a reference to the audit conducted by the German
Public Auditor in the management report or any other public
reference is permitted only with the German Public Auditor’s
written consent and with a wording authorized by him. (2) lf the
German Public Auditor revokes the auditor's report, it may no
longer be used. lf the engaging party has already made use of the
auditor's report, then upon the request of the German Public
Auditor he must give notification of the revocation. (3) The
engaging party has a right to five official copies of the report.
Additional official copies will be charged separately. 11.
Supplementary provisions for assistance in tax matters (1) When
advising on an individual tax issue as well as when providing
ongoing tax advice, the German Public Auditor is entitled to use as
a correct and complete basis the facts provided by the engaging
party – especially numerical disclosures; this also applies to
bookkeeping en- gagements. Nevertheless, he is obligated to
indicate to the engaging party any errors he has identified. (2)
The tax advisory engagement does not encompass procedures required
to observe deadlines, unless the German Public Auditor has
explicitly accepted a corresponding engagement. In this case the
engaging party must provide the German Public Auditor with all
documents required to observe deadlines – in particular tax
assessments – on such a timely basis that the German Public Auditor
has an appropriate lead time. (3) Except as agreed otherwise in
writing, ongoing tax advice encompasses the following work during
the contract period: a) preparation of annual tax returns for
income tax, corporate tax and business tax, as well as wealth tax
returns, namely on the basis of the annual financial statements,
and on other schedules and evidence documents required for the
taxation, to be provided by the engaging party b) examination of
tax assessments in relation to the taxes referred to in (a) c)
negotiations with tax authorities in connection with the returns
and assessments mentioned in (a) and (b) d) support in tax audits
and evaluation of the results of tax audits with respect to the
taxes referred to in (a) e) participation in petition or protest
and appeal procedures with respect to the taxes mentioned in (a).
In the aforementioned tasks the German Public Auditor takes into
account material published legal decisions and administrative
interpretations. (4) If the German Public auditor receives a fixed
fee for ongoing tax advice, the work mentioned under paragraph 3
(d) and (e) is to be remunerated separately, except as agreed
otherwise in writing. (5) Insofar the German Public Auditor is also
a German Tax Advisor and the German Tax Advice Remuneration
Regulation (Steuerberatungsvergü- tungsverordnung) is to be applied
to calculate the remuneration, a greater or lesser remuneration
than the legal default remuneration can be agreed in writing
(Textform). (6) Work relating to special individual issues for
income tax, corporate tax, business tax, valuation assessments for
property units, wealth tax, as well as all issues in relation to
sales tax, payroll tax, other taxes and dues requires a separate
engagement. This also applies to: a) work on non-recurring tax
matters, e.g. in the field of estate tax, capital transactions tax,
and real estate sales tax; b) support and representation in
proceedings before tax and administra- tive courts and in criminal
tax matters; c) advisory work and work related to expert opinions
in connection with changes in legal form and other
re-organizations, capital increases and reductions, insolvency
related business reorganizations, admis- sion and retirement of
owners, sale of a business, liquidations and the like, and d)
support in complying with disclosure and documentation obligations.
(7) To the extent that the preparation of the annual sales tax
return is undertaken as additional work, this includes neither the
review of any special accounting prerequisites nor the issue as to
whether all potential sales tax allowances have been identified. No
guarantee is given for the complete compilation of documents to
claim the input tax credit. 12. Electronic communication
Communication between the German Public Auditor and the engaging
party may be via e-mail. In the event that the engaging party does
not wish to communicate via e-mail or sets special security
requirements, such as the encryption of e-mails, the engaging party
will inform the German Public Auditor in writing (Textform)
accordingly. 13. Remuneration (1) In addition to his claims for
fees, the German Public Auditor is entitled to claim reimbursement
of his expenses; sales tax will be billed additionally. He may
claim appropriate advances on remuneration and reimbursement of
expenses and may make the delivery of his services dependent upon
the complete satisfaction of his claims. Multiple engaging parties
are jointly and severally liable. (2) If the engaging party is not
a consumer, then a set-off against the German Public Auditor’s
claims for remuneration and reimbursement of expenses is admissible
only for undisputed claims or claims determined to be legally
binding. 14. Dispute Settlement The German Public Auditor is not
prepared to participate in dispute settle- ment procedures before a
consumer arbitration board (Verbraucherschlich- tungsstelle) within
the meaning of § 2 of the German Act on Consumer Dispute
Settlements (Verbraucherstreitbeilegungsgesetz). 15. Applicable law
The contract, the performance of the services and all claims
resulting therefrom are exclusively governed by German law. D o kI
D : 3 5 0 2 1 O JS H 1 O 0 Lizenziert für/Licensed to: BDO AG
Wirtschaftsprüfungsgesellschaft ǀ 4298982 Appendix III Page
4
BDO
Convenience translation of the original German audit report. Solely
the original text in German is authoritative. Report on the audit
of the financial statements for the financial year from January 1,
2021 to December 31, 2021 of Spark Networks SE Munich
bdo TABLE OF
CONTENTS A. AUDIT ENGAGEMENT 1 B. REPLICATION OF THE INDEPENDENT
AUDITOR’S REPORT 2 C. GENERAL STATEMENTS 5 I. Accounting and other
documents audited 5 II. Annual financial statements 6 III. Findings
on areas not directly related to financial reporting 7 D. SUBJECT
OF THE AUDIT 8 E. NATURE AND SCOPE OF THE ENGAGEMENT PERFORMED 9 F.
EXPLANATIONS ON THE ACCOUNTING 12 I. Accounting standards 12 II.
Accounting policies and valuation methods 12 G. CONCLUDING
STATEMENT AND THE SIGNED AUDIT REPORT 15
bdo
APPENDICES Annual financial statements for the financial year from
January 1, 2021 to December 31, 2021 Appendix I Balance sheet Page
1 Disclosures under the balance sheet Page 2 - 3 Income statement
Page 4 Special Terms and Conditions of BDO AG
Wirtschaftsprüfungsgesellschaft and General Engagement Terms for
Wirtschaftsprüfer (German Public Auditors) and
Wirtschaftsprüfungsgesellschaften (Public Audit Firms) Appendix II
Page 1 - 4 Please note that small deviations may occur due to the
commercial rounding of figures and per- centages. In this audit
report, we use the term "articles of association" in the sense of a
superordinate term and therefore do not differentiate between
articles of association and articles of partnership (cf. § 2 AktG).
References to provisions of the German Commercial Code (HGB) and to
other laws refer to the version applicable to the audited financial
year, unless otherwise indicated.
AUDIT
ENGAGEMENT Page 1 of 15 bdo A. AUDIT ENGAGEMENT By resolution of
the supervisory board of Spark Networks SE, Munich (hereinafter
also referred to as “Spark Networks” or “company”) made on August
11, 2021, we were appointed the auditor for the financial year from
January 1, 2021 to December 31, 2021. Thereupon, the management of
the company engaged us to audit the annual financial statements
including the accounting for the financial year from January 1,
2021 to December 31, 2021 in accordance with §§ 317 et seqq. HGB.
The audit, which is not required by law, was carried out on the
basis of a contractual agreement to have an audit of the financial
statements carried out in accordance with §§ 317 et seq. HGB. This
report is solely intended for Spark Networks SE. The company is a
micro-corporation within the meaning of the provisions of German
commercial law. The performance of the engagement and our
responsibilities — also towards third parties — are governed by the
Special Terms and Conditions of BDO AG
Wirtschaftsprüfungsgesellschaft (STC) as well as the General
Engagement Terms for Wirtschaftsprüfer (German Public Auditors) and
Wirtschaftsprüfungsgesellschaften (Public Audit Firms) as amended
on 1 January 2017 (GET) ac- companying this report as Appendix
II.
REPLICATION
OF THE INDEPENDENT AUDITOR’S REPORT bdo Page 2 of 15 B. REPLICATION
OF THE INDEPENDENT AUDITOR’S REPORT We have included the annual
financial statements of Spark Networks SE, Munich, for the
financial year from January 1, 2021 to December 31, 2021 in this
report as Appendix I in the version for which the unqualified audit
opinion was signed and issued in Berlin on June, 8 2022 as follows:
Note: This is a free translation of the German original. Solely the
original text in German is authoritative. “INDEPENDENT AUDITOR’S
REPORT To Spark Networks SE, Munich AUDIT OPINIONS We have audited
the annual financial state- ments, of Spark Networks SE, Munich,
which comprise the balance sheet as at December 31, 2020, the
disclosures under the balance sheet and the statement of profit and
loss for the fi- nancial year from January 1, 2021 to December 31,
2021. In our opinion, on the basis of the knowledge obtained in the
audit, the accompanying annual financial statements comply, in all
material re- spects, with the requirements of German com- mercial
law applicable to business corporations and give a true and fair
view of the assets, lia- bilities and financial position of the
company as at December 31, 2021 and of its financial per- formance
for the financial year from January 1, 2021 to December 31, 2021 in
compliance with German Legally Required Accounting Principles, as
well as with the use of the relief for micro- corporations in
accordance with § 264 (1) sen- tence 5 of the HGB. Pursuant to §
322 (3) sentence 1 HGB, we de- clare that our audit has not led to
any reserva- tions relating to the legal compliance of the an- nual
financial statements. BASIS FOR THE AUDIT OPINIONS We conducted our
audit of the annual financial statements in accordance with § 317
HGB and in compliance with German Generally Accepted Standards for
Financial Statement Audits prom- ulgated by the Institut der
Wirtschaftsprüfer [Institute of Public Auditors in Germany] (IDW).
Our responsibilities under those requirements and principles are
further described in the “AUDITOR’S RESPONSIBILITIES FOR THE AUDIT
OF THE ANNUAL FINANCIAL STATEMENTS” sec- tion of our auditor’s
report. We are independ- ent of the company in accordance with the
re- quirements of German commercial and profes- sional law, and we
have fulfilled our other Ger- man professional responsibilities in
accordance with these requirements. We believe that the audit
evidence we have ob- tained is sufficient and appropriate to
provide a basis for our audit opinions on the annual fi- nancial
statements. RESPONSIBILITIES OF THE EXECUTIVE DIRECTORS AND THE
SUPERVISORY BOARD FOR THE ANNUAL FINANCIAL STATEMENTS The executive
directors are responsible for the preparation of the annual
financial statements that comply, in all material respects, with
the requirements of German commercial law appli- cable to business
corporations, and that the an- nual financial statements give a
true and fair view of the assets, liabilities, financial position
and financial performance of the company in compliance with German
Legally Required Ac- counting Principles, as well as with the use
of the relief for micro-corporations in accordance with § 264 (1)
sentence 5 of the HGB. In addi- tion, the executive directors are
responsible for such internal control as they, in accordance with
German Legally Required Accounting Prin- ciples, have determined
necessary to enable the preparation of annual financial statements
that are free from material misstatement, whether due to fraud or
error.
REPLICATION
OF THE INDEPENDENT AUDITOR’S REPORT Page 3 of 15 bdo In preparing
the annual financial statements, the executive directors are
responsible for as- sessing the company’s ability to continue as a
going concern. They also have the responsibility for disclosing, as
applicable, matters related to going concern. In addition, they are
responsible for financial reporting based on the going con- cern
basis of accounting, provided no actual or legal circumstances
conflict therewith. The supervisory board is responsible for over-
seeing the company’s financial reporting pro- cess for the
preparation of the annual financial statements. AUDITOR’S
RESPONSIBILITIES FOR THE AUDIT OF THE ANNUAL FINANCIAL STATEMENTS
Our objectives are to obtain reasonable assur- ance about whether
the annual financial state- ments as a whole are free from material
mis- statement, whether due to fraud or error, and to issue an
auditor’s report that includes our audit opinions on the annual
financial state- ments. Reasonable assurance is a high level of
assur- ance, but is not a guarantee that an audit con- ducted in
accordance with § 317 HGB and in compliance with German Generally
Accepted Standards for Financial Statement Audits prom- ulgated by
the Institut der Wirtschaftsprüfer (IDW) will always detect a
material misstate- ment. Misstatements can arise from fraud or er-
ror and are considered material if, individually or in the
aggregate, they could reasonably be expected to influence the
economic decisions of users taken on the basis of these annual fi-
nancial statements. We exercise professional judgment and main-
tain professional skepticism throughout the au- dit. We also: •
Identify and assess the risks of material misstatement of the
annual financial statements, whether due to fraud or error, design
and perform audit proce- dures responsive to those risks, and ob-
tain audit evidence that is sufficient and appropriate to provide a
basis for our audit opinions. The risk of not de- tecting a
material misstatement result- ing from fraud is higher than for one
resulting from error, as fraud may in- volve collusion, forgery,
and inten- tional omissions, misrepresentations, or the override of
internal controls. • Obtain an understanding of internal control
relevant to the audit of the an- nual financial statements in order
to design audit procedures that are ap- propriate in the
circumstances, but not for the purpose of expressing an audit
opinion on the effectiveness of these systems of the company. •
Evaluate the appropriateness of ac- counting policies used by the
executive directors and the reasonableness of es- timates made by
the executive direc- tors and related disclosures. • Conclude on
the appropriateness of the executive directors’ use of the going
concern basis of accounting and, based on the audit evidence
obtained, whether a material uncertainty exists related to events
or conditions that may cast significant doubt on the com- pany’s
ability to continue as a going concern. If we conclude that a
material uncertainty exists, we are required to draw attention in
the auditor’s report to the related disclosures in the annual
financial statements, or if such disclo- sures are inadequate, to
modify our re- spective audit opinions. Our conclu- sions are based
on the audit evidence obtained up to the date of our audi- tor’s
report. However, future events or conditions may cause the company
to cease to be able to continue as a going concern. • Evaluate the
overall presentation, structure and content of the annual fi-
nancial statements, including the dis- closures, and whether the
annual fi- nancial statements present the under- lying transactions
and events in a man- ner that the annual financial state- ments
give a true and fair view of the assets, liabilities, financial
position and financial performance of the com- pany in compliance
with German Le- gally Required Accounting Principles as well as
with the use of the relief for micro-corporations in accordance
with § 264 (1) sentence 5 of the HGB.
REPLICATION
OF THE INDEPENDENT AUDITOR’S REPORT bdo Page 4 of 15 We communicate
with those charged with gov- ernance regarding, among other
matters, the planned scope and timing of the audit and sig-
nificant audit findings, including any significant deficiencies in
internal control that we identify during our audit.”
GENERAL
STATEMENTS Page 5 of 15 bdo C. GENERAL STATEMENTS I. Accounting and
other documents audited We found that in all material respects the
accounting complied with legal regulations including the German
Legally Required Accounting Principles and, if applicable, with the
supplementary provisions of the articles of incorporation. In all
material respects, the information taken from the other documents
audited was properly shown in the accounting and in the annual
financial state- ments. During our audit, we identified the
following deficiencies in the accounting-related internal control
system: — The company has not designed certain key controls,
including account reconciliations and con- trols over the treasury
business process, with sufficient precision to address relevant
financial reporting risks, including inadequate design of
procedures to ensure the completeness and accuracy of the
underlying reports and data used in performing the controls. — The
company has not established and implemented formal and effective
controls over certain information technology general controls
("ITGCs") over IT systems relevant to the preparation of the
consolidated financial statements. Specifically, the company has
not established and implemented the following controls: a) User
access controls to ensure adequate segregation of duties and
appropriate limitation of user and privileged access to financial
applications, programs, and data. b) Program change controls to
ensure that IT program and data changes affecting financially
significant IT applications and underlying accounting records are
appropriately identified, tested, authorized, and implemented. c)
Computer operational controls to ensure that data backups are
authorized and monitored. d) Program development testing and
approval controls to ensure that new software develop- ment is
consistent with business and IT requirements. As a result, it is
possible that the organization's business process controls, which
depend on the accuracy and completeness of data or financial
reports generated by the IT system, could be impaired due to the
lack of operational effectiveness of ITGCs. — The company did not
have an effective risk assessment process that established clearly
defined objectives and risks for financial reporting, including
risks arising from the material weakness related to ITGC identified
above, as well as risks arising from changes in business
operations, including changes in people, processes, and systems,
and assessed with a sufficient level of detail to identify all
relevant risks of material misstatement throughout the Corporation.
As a result, Spark has not implemented and performed effective
manual compensating controls to
GENERAL
STATEMENTS bdo Page 6 of 15 address risks to the reliability of
data and automated controls over financial reporting con- tained in
or generated by the systems affected by the above ITGC, including
controls to enforce appropriate segregation of duties with respect
to the preparation and review of manual journal entries. — Spark
used external specialists in connection with the valuation of the
shares in affiliated companies. The Group did not have a sufficient
number of appropriately trained personnel within the organization
to adequately assess the appropriateness of the specialists' work,
to adequately understand the complexity of the related estimates,
and to adequately review certain assumptions and calculations
performed by these specialists. — The company has not established
and performed appropriate controls over the analysis and accounting
for sales tax obligations (VAT and sales tax) to address relevant
financial reporting risks related to timely payment and proper
accrual, which could adversely affect the com- pleteness and
accuracy of the related balance sheet line items. — The audit
procedures performed by the company to ensure the reliability of
the data in the reports used to perform controls were inadequate.
In addition, there was insufficient docu- mentation of the quality
assurance performed. Based on these findings, we selected a
substantive audit strategy and did not draw assurance from the
controls established by the company. As a result, this audit
strategy has led to sufficient and appropriate audit evidence for
the correctness of the processed accounting-relevant data in the
annual financial statements. With the exception of these matters,
we have determined that the accounting-related internal control
system is generally suitable for ensuring the security of the
accounting-relevant data pro- cessed. II. Annual financial
statements The annual financial statements for the financial year
from January 1, 2021 to December 31, 2021 audited by us accompany
this report in Appendix I. In our opinion based on the findings of
our audit, they, in all material respects, comply with the legal
requirements including the German Legally Required Accounting
Principles and, if applicable, with the supplementary provisions of
the articles of incorporation. The balance sheet and statement of
profit and loss were properly derived from the accounting and the
other underlying documents audited. The opening balance sheet
figures were properly carried over from the prior year’s annual
financial statements. The recognition, presentation and measurement
requirements applicable to corporations have been complied with in
all material respects. The annual financial statements have been
prepared using the exemptions for micro-corporations pursuant to §
264 (1) Sentence 5 HGB, § 266 (1) Sen- tence 4 and § 275 (5) HGB.
With reference to the simplification provisions for
micro-corporations
GENERAL
STATEMENTS Page 7 of 15 bdo pursuant to § 264 (1) Sentence 5 HGB,
the company has dispensed with the preparation of notes to the
financial statements. All necessary disclosures have been made
under the balance sheet in order to satisfy the legal presumption
of § 264 (2) sentence 5 HGB with regard to compliance with the
general standard. III. Findings on areas not directly related to
financial reporting The company has not yet filed the annual
financial statements for the financial year from Janu- ary 1, 2020
to December 31, 2020 with the operator of the Federal Gazette.
Contrary to §§ 325 et seq. HGB, the company has thus not submitted
the annual financial statements and the combined management report
for the previous year, as well as the other documents, to the
operator of the Federal Gazette within the statutory period. In
this regard, we also refer to Section 335 HGB. The annual financial
statements contain the use of material discretionary judgment as
presented in section F.II. Its effect on the overall presentation
of the annual financial statements could not be clearly quantified
due to a lack of representative comparable values. Our audit has
led to the conclusion that the annual financial statements, as a
whole, give a true and fair view of the company’s assets,
liabilities, financial position and financial performance in
accordance with the German Legally Required Accounting Principles
and the use of the simplified procedure for micro-corporations
pursuant to § 264 (1) sentence 5 HGB.
SUBJECT OF
THE AUDIT bdo Page 8 of 15 D. SUBJECT OF THE AUDIT The subject of
our financial statement audit was the accounting and the annual
financial state- ments prepared in accordance with the requirements
of German commercial law — comprising the balance sheet as at
December 31, 2021, the disclosures under the balance sheet and the
statement of profit and loss for the financial year from January 1,
2021 to December 31, 2021. The annual financial statements had to
be prepared by making (partial) use of the relief for micro-
corporations pursuant to § 264 (1) sentence 5 HGB. In accordance
with § 317 (4a) HGB, the audit did not cover whether the audited
company’s ability to continue as a going concern or the
effectiveness and efficiency of management can be ensured. With
regard to the responsibilities of the executive directors and the
supervisory body for the annual financial statements, we refer to
our reporting in “RESPONSIBILITIES OF THE EXECUTIVE DIRECTORS AND
THE SUPERVISORY BOARD FOR THE ANNUAL FINANCIAL STATEMENTS” in the
audi- tor’s report as replicated in section B. of this
report.
NATURE AND
SCOPE OF THE ENGAGEMENT PERFORMED Page 9 of 15 bdo E. NATURE AND
SCOPE OF THE ENGAGEMENT PERFORMED With regard to the nature and
scope of the engagement performed, we refer to the general de-
scription of the responsibilities of the financial statement
auditor for the audit of the annual fi- nancial statements in our
reporting in the auditor’s report in sections “BASIS FOR THE AUDIT
OPINIONS” and “AUDITOR’S RESPONSIBILITIES FOR THE AUDIT OF THE
ANNUAL FINANCIAL STATE- MENTS”. The auditor’s report is replicated
in section B. of this report. In this regard we provide further
explanations in the following. The starting point of our audit was
the annual financial statements as at December 31, 2020 at- tested
by the German public auditor KPMG Wirtschaftsprüfungsgesellschaft,
Berlin and approved by the shareholders on June 2, 2021. The
opening balances were audited in compliance with the International
Standard on Auditing [DE] 510: “Opening balances of initial audit
engagements” (ISA [DE] 510). Risk and system-based audit approach
Our risk and system-based audit approach complying with
international audit standards is to work out an audit strategy. The
required risk assessment is based on evaluating the company’s
position, business risks, environment and the company’s
accounting-related internal control system. For this assessment we
furthermore consider our understanding of the process for preparing
the annual financial statements. While assessing the risk of
material misstatement, we also identified and assessed risks at
both the financial statement level as well as at the assertion
level. Moreover, we categorised these risks into different types of
risks, highlighting two types of risk: significant risks requiring
special consideration during the audit and risks for which
substantive procedures alone do not provide sufficient audit
evidence. By definition in the auditing standards, significant
risks also include the risk of the executive directors overriding
internal controls implemented as well as how revenue is recognised.
On the basis of our risk assessment, we determined the relevant
audit areas and criteria (financial statement assertions) as well
as the key audit areas to be focused on and developed an audit
plan. The nature and scope of the respective audit procedures were
detailed in the audit plan. The audit procedures for obtaining
audit evidence comprised tests of design and controls, substan-
tive analytical procedures and tests of details (other substantive
procedures) for the audit areas selected. Materiality aspects were
thereby taken into consideration.
NATURE AND
SCOPE OF THE ENGAGEMENT PERFORMED bdo Page 10 of 15 Description of
the audit process We subcategorised our audit process into
milestones, which began with acquisition and engage- ment
acceptance and spanned through to concluding the engagement and
archiving. In this regard we refer to the graphic illustration of
the milestones below. The milestones depicted take the German
Generally Accepted Standards for Financial Statement Audits
promulgated by the IDW into consideration. Accordingly, we
initially performed an audit of the appropriateness of the
accounting-related internal control system of the company (design
evaluation). On the basis of the knowledge, we had obtained from
examining the design and the implementation of the
accounting-related internal controls for assessing the risk of
material mis- statement, we defined and specified the nature,
scope, and timing of the tests of controls, the analytical audit
procedures, and the tests of details to be performed for specific
audit objectives. All audit procedures were respectively conducted
on a sample of specifically or representatively selected elements.
The selection of each sample was based on the knowledge we had
obtained from evaluating the accounting-related internal control
system as well as on the nature and extent of the business
transactions. The key audit areas we focused on were: — Valuation
of financial assets — Completeness of accounts payables and accrued
accounts payables — Measurement of share-based payment expense —
Evaluation of management’s going concern assessment — Audit of
opening balances M0 Acquisition Engagement Acceptance M1 Scoping M2
Identify and Assess Risks M3 Design Audit Response M4 Obtain Audit
Evidence M5 Form Opinion M6 Report M7 Archiving ENGAGEMENT
ACCEPTANCE AND PROCESSING OBTAINING INFORMATION AND RISK ASSESSMENT
ADRESSING ASSESSED RISKS FORMING OPINION AND REPORTING ADRESSING
ASSESSED RISKS CLOSING OF THE ENGAGEMENT
NATURE AND
SCOPE OF THE ENGAGEMENT PERFORMED Page 11 of 15 bdo In the scope of
the tests of details, we obtained confirmations or notifications
and information from the following third parties: — banks — lawyers
In testing the recoverability of the financial assets and the
valuation of the stock options, we used the results of the
valuation report prepared by an expert of the legal representatives
as part of our audit. We performed our audit in the period April to
June 2022 (with interruptions) until June 8, 2022. At the
conclusion of the audit, the executive directors provided us with a
letter of representation dated June 8, 2022, in which they
confirmed the completeness of all explanations and evidence made
available to us as well as of the accounting and the annual
financial statements. The com- pany’s executive directors provided
us with all explanations and evidence requested.
EXPLANATIONS
ON THE ACCOUNTING bdo Page 12 of 15 F. EXPLANATIONS ON THE
ACCOUNTING I. Accounting standards The annual financial statements
were to be prepared as specified in the applicable commercial law
regulations for micro-corporations. II. Accounting policies and
valuation methods The preparation of the annual financial
statements requires that numerous decisions be made by the
company’s management on exercising legal options for particular
accounting policies and val- uation methods. In the following, we
discuss the main accounting policies in accordance with § 321 (2)
sentence 4 HGB, including accounting and measurement options
exercised, as well as how the use of discretionary judgment may
overall influence the presentation of the assets, liabilities,
financial position and financial performance. In the following we
have highlighted the, in our opinion, material accounting policies
and valuation methods applied by the company in further detail
including the assumptions management made on components determining
value, which, in our opinion, materially influence the presentation
of the assets, liabilities, financial position and financial
performance: Financial assets The company reports financial assets
of EUR 126.7 million (previous year: EUR 120 million) in the
balance sheet, of which EUR 120 million relates to the shares in
Spark Networks Inc., Dela- ware/USA ("Spark Inc.") and EUR 6.7
million to Spark Services GmbH, Berlin ("Spark GmbH"). The
impairment of the shares in Spark Inc. was assessed using an income
approach based on a discounted cash flow model. The cash flow
projections were determined by management based on the financial
forecast for each CGU for the detailed planning period of the next
five years, for the period thereafter a long-term growth rate is
assumed. The valuation is based on the following key assumptions: —
long-term EBITDA margin of 26.6 % — terminal growth rate of 3 % —
WACC of 17.0 % Based on the result of the valuation, no need for
impairment was identified.
EXPLANATIONS
ON THE ACCOUNTING Page 13 of 15 bdo The assessment of the
recoverability of the shares in Spark GmbH was based on the results
of the impairment test in accordance with IAS 36 for the
cash-generating unit "Spark" for the purposes of the consolidated
financial statements. As the estimated proportionate recoverable
amount at- tributable to Spark GmbH is significantly higher than
the carrying amount in the HGB financial statements of Spark
Networks SE, the company did not consider further impairment
considerations to be necessary. No impairment requirement was
identified. The increase of EUR 6.7 million in the shares compared
with the previous year's figure relates to the correction of the
impairment loss recognized in excess in the previous year on Spark
Inc. The amount was corrected in the current account and is shown
under other operating income. A cor- responding explanation has
been provided in the disclosures under the balance sheet. Stock
option programs In January 2020, the Board of Directors of the
company adopted the Long-Term Incentive Plan (the “LTIP”) for
selected officers and employees of the company and its subsidiaries
as part of their compensation for future services. The LTIP
provides for the grant of virtual stock options. Each option
represents the right to receive, upon exercise, a specified amount
in cash determined based on the respective share price less the
exercise price of that option. However, the company may, at its
discretion, elect to settle the awards in shares rather than cash.
In the past, Spark has always settled the claims in shares and
intends to do so in the future. For this reason, Spark treats the
stock option plan as an equity-settled plan. Spark has adopted the
accounting treatment permitted by the literature and does not
recognize any personal expense during the vesting period. The
company retains the portion of shares equal to the amount of
payroll taxes withheld on behalf of the employee ("net settlement")
at the time the option is exercised. A corresponding expense is
recognized in the income statement for this amount. In fiscal year
2021, an expense of kEUR 395 was recognized in connection with the
exercise of stock options, which corresponds to the payroll tax
paid on the option value. The options were valued using the capped
Black-Scholes call option model. The company engaged an external
expert for the valuation. Loans As of the balance sheet date, the
company had liabilities to banks of EUR 9.0 million (previous year:
EUR 10.3 million). These relate to the agreement concluded on July
1, 2019 between Spark Networks SE (as “Administrative Borrower”),
Spark Networks Inc. and Zoosk Inc. (each as “Bor- rower”) and Blue
Torch Finance LLC (“Blue Torch”) as administrative agent and
collateral man- ager. The Agreement provides for a four-year senior
secured credit facility in the initial amount of USD 125.0 million
(EUR 110.1 million) maturing on July 1, 2023 (the “Maturity Date”).
The agreement includes a term loan in the amount of USD 120.0
million (EUR 105.7 million) and a revolving credit facility in the
total amount of USD 5.0 million (EUR 4.4 million).
EXPLANATIONS
ON THE ACCOUNTING bdo Page 14 of 15 The term loan was issued at a
discount of 3 % of the total principal amount at closing, totaling
USD 3.6 million (EUR 3.2 million). The loan was split 12.5 % to
Spark SE and 87.5 % to Spark Inc. at the date of issue. The
discount is recognized under prepaid expenses and amortized over
the term of the loan. On December 2, 2020, the company entered into
the second amendment to the Loan Agreement (the “Second
Amendment”), which provided for an additional loan commitment of
USD 6.0 million (EUR 4.9 million) to the existing credit facility.
Virtually all of the company's assets are pledged as collateral.
Borrowings under the credit facilities bear interest at a rate
equal to LIBOR plus a margin of 8 % (per annum), with a minimum
interest rate of 1.5 % (“floor”). On March 5, 2021, the company
entered into a covenant break related temporary waiver (so-called
covenant waiver) under the loan agreement with the administrative
agent and the lenders. The total fees of EUR 0.1 million are
included in interest expenses. In the fiscal year, Spark Networks
SE made loan repayments totaling EUR 2.1 million and interest
payments totaling EUR 1.0 million.
CONCLUDING
STATEMENT AND THE SIGNED AUDIT REPORT Page 15 of 15 bdo G.
CONCLUDING STATEMENT AND THE SIGNED AUDIT REPORT In accordance with
§ 321 (4a) HGB, we confirm that we have performed our financial
statement audit in compliance with the applicable regulations on
independence. We have compiled the report above on the audit of the
annual financial statements for the finan- cial year from January
1, 2021 to December 31, 2021 of Spark Networks SE, Munich, in
compliance with legal regulations and the German Generally Accepted
Standards for Reporting on Audits of Financial Statements in the
current version of Audit Standard 450 promulgated by the Institute
of Public Auditors in Germany, Incorporated Association (IDW). The
auditor’s report issued by us is replicated in section B of this
audit report. Berlin, June 8, 2022 BDO AG
Wirtschaftsprüfungsgesellschaft @@muz=@@ @@vwp=@@ Signed by
Pfeiffer Signed by Wirth Wirtschaftsprüfer Wirtschaftsprüfer
(German Public Auditor) (German Public Auditor)
APPENDICES
Spark
Networks SE, Munich Financial statements for the financial year
from January 1, 2021 to December 31, 2021 Balance Sheet Total
Assets Equity and Liabilities 12/31/2021 12/31/2020 EUR EUR EUR EUR
EUR EUR A. Capital assets A. Equity I. Intangible assets I.
Subscribed capital 2,661,385 2,661,385 Purchased concessions,
industrial property rights and similar rights and values as well
as licenses to such rights and values 31,266 35,395 - Treasury
Stock -43,989 2,617,396 -55,697 2,605,688 II. Financial assets II.
Additional paid-in capital 108,126,422 108,126,423 Shares in
affiliated companies 126,677,755 120,000,000 III. Accumulated
deficit -40,831,569 -33,805,283 126,709,021 120,035,395 69,912,250
76,926,828 B. Current assets B. Provisions Other provisions
1,660,386 2,647,023 I. Receivables and other Assets C. Liabilities
1. Receivables from affiliated companies 6,554,929 9,705,666 1.
Liabilities to Credit Institutions 9,018,293 10,270,688 2. Other
assets 194,234 398,066 – of which less than 1 year EUR 1.390.606
(PY EUR 1.283.514) – – of which between 1 and 5 years EUR 7.627.687
(PY EUR 8.987.174) – II. Cash in hand, credit with Credit
institutions 196,760 213,361 – of which more than 5 years EUR 0 (PY
EUR 0) – 2. Liabilities from goods and services 210,816 1,180,831
6,945,923 10,317,093 – of which with a remaining term of up to 1
year EUR 210.816 (PY EUR 1.180.831) – 3. Liabilities to affiliated
companies 42,778,882 31,261,332 C. Prepaid expenses 299,200 470,329
– of which with a remaining term of up to 1 year EUR 42.778.882 (PY
EUR 31.261.332) – 4. Other liabilities 10,373,516 8,536,116 – of
which with a remaining term of up to 1 year EUR 219.161 (PY EUR
141.672) – – of which with a remaining term between 1 and 5 years
EUR 10.154.355 (PY EUR 8.394.444) – – of which with a remaining
term of more than 5 years EUR 0 (PY EUR 0) – – of which from taxes
EUR 23.328 (PY EUR 19.396) 62,381,508 51,248,967 133,954,144
130,822,818 133,954,144 130,822,818 12/31/2021 12/31/2020 Appendix
I Page 1
Appendix I
Page 2 Disclosures under the balance sheet GENERAL INFORMATION The
Company meets the size criteria of a micro-corporation pursuant to
Section 267 a (1) HGB. Spark Networks SE, with its registered
office in Munich, is registered with the Munich Local Court under
the registration number HRB 232591. ADDITIONAL INFORMATION ON
EXCEPTIONAL ITEMS Other operating income in the financial year
includes amounts of an exceptional nature amounting to EUR
6,677,755.18, which relate to a correction of the impairment of the
shares in Spark Networks Inc. Delaware/USA recognized in the
previous year. CONTINGENCY DISCLOSURES: The Company has issued a
letter of comfort to its subsidiary Spark Networks Services GmbH in
which it will guarantee all obligations incurred by the subsidiary
up to the reporting date (December 31, 2021) and entered into by
the subsidiary in the following financial year. Furthermore, the
Company will guarantee the current financial resources of the
subsidiary and equip it to meet its financial obligations
punctually and in full. In connection with the agreement entered
into on July 1, 2019 between Spark Networks SE (as "Administrative
Borrower"), and Spark Networks Inc. and Zoosk Inc. (each as
"Borrower") and Blue Torch Finance LLC ("Blue Torch") as
administrative agent and collateral agent, the Company is jointly
and severally liable with respect to the obligations under the loan
agreement. The loan liability recognized at the subsidiary as of
December 31, 2021 amounts to EUR 63,799,163. There are no other
contingent liabilities or other material contingencies within the
meaning of Section 251 HGB that are not apparent from the balance
sheet. DISCLOSURES ON ADVANCES AND LOANS GRANTED TO MEMBERS OF
GOVERNING BODIES: No advances or loans within the meaning of
Section 285 No. 9 c) HGB were granted to members of governing
bodies. DISCLOSURES ON CAPITAL The Company's share capital as of
December 31, 2021 amounts to EUR 2,661,385.00 (previous year: EUR
2,661,385.00) and is divided into registered no-par value shares.
The Annual General Meeting on October 25, 2017 resolved to create
authorized capital. The Board of Directors is authorized to
increase the share capital of the Company on one or more occasions
until October 31, 2022 by a total of up to EUR 640,000.00 by
issuing new no-par value registered shares in exchange for cash
contributions and/or contributions in kind. By resolution of the
Board of Directors of June 26, 2019, the Authorized Capital of
October 25, 2017, after partial utilization, still amounts to EUR
593,481.00.
Appendix I
Page 3 The Annual General Meeting on June 03, 2019 resolved to
increase the share capital by EUR 1,298,000.00. The Annual General
Meeting on July 29, 2020 resolved to create authorized capital and
conditional capital. The Board of Directors is authorized to
increase the Company's share capital on one or more occasions on or
before July 28, 2025, by a total of up to EUR 266,138.00 by issuing
new registered no-par value shares in return for cash contributions
and/or contributions in kind. The share capital of the Company is
increased by EUR 1,330,692.00 by issuing new no-par value
registered shares. SHARES HELD IN TRUST FOR THE SETTLEMENT OF STOCK
OPTIONS: In connection with the acquisition of Spark Networks Inc.
by Spark Networks SE, an escrow agreement was entered into with The
Bank of New York Mellon Corporation ("BNY Mellon"), as escrow
agent, pursuant to which BNY Mellon holds common shares in Spark
Networks SE in escrow to satisfy obligations under unexercised
stock options originally issued by Spark Networks Inc. On July 19,
2019, Spark Networks SE acquired 41,867 no-par value registered
shares of the Company created through the exercise of stock
options. As of the reporting date, BNY Mellon held 43,989 shares
(previous year: 55,697 shares) of Spark Networks SE in trust with a
notional amount of share capital totaling EUR 43,988.60 (previous
year: EUR 55,696.60), corresponding to 1.7% of the share capital.
In the financial year, treasury shares amounting to EUR 11,708 with
a notional value of EUR 11,708 of the share capital and
representing 0.4% of the share capital were used to settle stock
options. Berlin, June 8, 2022 ..................................
Eric Eichmann CEO .................................. David Clark
CFO
Spark
Networks SE, Munich Financial statements for the financial year
from January 1, 2021 to December 31, 2021 Income statement EUR EUR
EUR EUR 1. Sales 0 4,985 2. Other company income 9,044,065
8,036,240 – of which from currency conversion EUR 153.060 (PY EUR
3.103.239) – 3. Personnel expenses a) Wages and salaries 894,146
1,050,118 b) Social security contributions and expenses for
Retirement benefits 43,786 937,932 18,865 1,068,983 – of which
expenses for Retirement benefits EUR 0 (PY EUR 0) – 4. Depreciation
a) on intangible and tangible assets 4,129 0 5. Other operating
expenses 11,083,794 8,396,875 – of which from currency conversion
EUR 3.345.930 (PY EUR 88.631) – 6. Other interest and similar
income 90,306 136,747 – of which from affiliated companies EUR
90.306 (PY EUR 135.722) – 7. Depreciation on financial assets and
on securities held as current assets 0 28,555,970 8. Interest and
similar expenses 4,134,801 3,961,427 9. Result after taxes
-7,026,286 -33,805,283 10. Annual deficit -7,026,286 -33,805,283
11. Loss brought forward from the previous year -33,805,283 0 12.
Balance sheet loss -40,831,569 -33,805,283 2021 2020 Appendix I
Page 4
© BDO AG
Wirtschaftsprüfungsgesellschaft, March 1, 2021 BDO AG
Wirtschaftsprüfungsgesellschaft - Special Terms and Conditions - 1.
General Provisions (a) We render our services based on (i) the
engagement letter and any possi- ble attachments to the engagement
letter (in particular any service descrip- tions, revocation
notices for consumers and portal terms of use), (ii) these Special
Terms and Conditions (hereinafter the "STC"), and (iii) the General
Engagement Terms for Wirtschaftsprüfer and
Wirtschaftsprüfungsgesellschaf- ten of the Institute of German
Certified Accountants (hereinafter the "GET") (hereinafter
collectively referred to as the "Client Agreement"). The same also
applies to any part of our services that may be rendered by us
before the Client Agreement is signed with legal effect. Different
or conflicting terms and conditions will apply only if they have
been expressly accepted by us in writing. The provisions of our
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discontinue our services early, we shall have the right to invoice
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unless termination of the contract is due to wrongful conduct on
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number of hours worked, if and to the extent that the services
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the GET. In derogation of section 9 (2) and (5) of the GET, each of
the liability limits stated therein shall however be replaced
throughout by the amount of € 5 million. Section 9 (1) of the GET
shall in each case remain unaffected. (b) If in your opinion the
risk associated with our services substantially ex- ceeds the
amount of € 5 million, we are prepared to discuss the possibility
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the GET and section 3 (a) of the STC our liability is unlimited
only if (i) expressly agreed in writing, or (ii) as far as we have
to perform our work without any limitations of liability to meet
the requirements of the laws of the United States of America
concerning the in- dependence of auditors. 4. Our Work Results Work
results that must be delivered in writing and signed by us shall be
bind- ing only if the original is signed by two employees or, in
case of e-mails, if two employees are named as signatories. Unless
otherwise agreed or in vio- lation of any applicable laws or
professional standards, we may also deliver our work results to you
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disclosure of our work results to third parties or any use of our
work results for advertising purposes is subject to section 6 of
the GET. (b) Unless otherwise agreed in writing, we generally will
consent to a disclo- sure of our work results to third parties only
under the condition that a stand- ard disclosure agreement (hold
harmless release letter) has been signed by the third
party/parties. Any disclosure of our work results must be made in
full text and include all appendices. § 334 of the German Civil
Code (Bürgerliches Gesetzbuch - BGB) shall remain unaffected by any
such disclo- sure. (c) You agree to hold harmless and indemnify us
from and against any and all losses and damages that may result
from any non-compliance with the fore- going provisions in section
5 (a) and/or (b). (d) We will grant you rights to use our work
results only to the extent neces- sary given the purpose of the
applicable Client Agreement. 6. Principles of Our Cooperation (a)
The amount of time needed to render our services and used to
calculate our fees depends in substantial part on satisfaction of
the requirements set forth in section 3 (1) of the GET. (b) Unless
otherwise provided by the engagement letter, binding laws to which
we are subject or any other provisions or applicable standards, we
shall have no obligation to review any information made available
to us for accu- racy or completeness. 7. Special Clause for Tax
Advice (a) You hereby instruct and authorize us to electronically
submit in your name all statements prepared for you that are
intended and have been approved for electronic transmission to the
responsible office of the German tax au- thority directly through
DATEV eG. The foregoing instruction and authoriza- tion shall be
effective immediately and may be revoked at any time. Any notice of
revocation must be at least in text form. (b) If documents
requiring action by a certain deadline are submitted to us, we
shall have no obligation to take any steps to meet the deadline
unless the documents are transmitted to us by regular mail or fax.
8. Electronic Communication and Antivirus Protection Electronic
communication is subject to section 12 of the GET. You hereby
further acknowledge that data sent via the Internet cannot be
reliably pro- tected against access by third parties, might be
subject to loss, delay or vi- ruses. To the extent permitted by
law, we therefore disclaim any responsi- bility and liability for
the integrity of e-mails after they leave our control, and for any
damages you or any third parties may suffer as a result. This also
applies if despite antivirus programs used by us, viruses enter
your system as a result of receiving e-mails from us. 9. BDO
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Limited, a British company with limited capital contributions, and
we are part of the international BDO net- work of legally
independent member firms. BDO is the brand of the BDO net- work and
the BDO member firms (hereinafter "BDO Firms”). To render ser-
vices, we may involve other BDO Firms as subcontractors. For this
purpose, you hereby release us from our duty of confidentiality in
relation to such BDO Firms. (b) You hereby acknowledge and agree
that in such cases we will bear full responsibility for both our
acts and/or omissions and also all acts and/or omissions of any BDO
Firms assisting us as subcontractors. Accordingly, you agree that
you shall bring no claims or proceedings of any kind whatsoever
against any BDO subcontractors (including BDO International Limited
or Brus- sels Worldwide Services BVBA). This shall not apply to any
claim or proceed- ing founded on an allegation of fraud or willful
misconduct or any other claims that cannot be excluded under the
laws of the Federal Republic of Germany. (c) The liability
provisions of this Client Agreement, including, without limi-
tation, the limitations of liability, shall also apply for the
benefit of any BDO Appendix II Page 1
© BDO AG
Wirtschaftsprüfungsgesellschaft, March 1, 2021 Firms assisting us
as subcontractors. Such BDO subcontractors have the right to
directly invoke the provisions of the foregoing section 9 (b) of
these STC. 10. BDO Legal Rechtsanwaltsgesellschaft mbH (BDO Legal)
and BDO Group (a) If in connection with our services you are also
engaging BDO Legal or other companies of the BDO group, you hereby
release us from our duty of confi- dentiality with respect to all
engagement-related information in relation to BDO Legal and/or
other companies of the BDO group, so that services can be rendered
as smoothly and efficiently as possible. (b) We are legally
independent from BDO Legal and from other companies of the BDO
group, we neither assume responsibility for their actions or omis-
sions, nor do we form partnership under civil law (Gesellschaft
bürgerlichen Rechts - GbR) with BDO Legal or any company of the BDO
group, nor are we subject to joint and several liability with BDO
Legal or any company of the BDO group. 11. Money-Laundering Act,
Sanctions Under the provisions of the German Money-Laundering Act
(Geldwäschege- setz - GwG) we are required to follow certain
identification procedures with respect to our contract partners.
You are obligated to provide us, fully and truthfully, with all
information and documentation that must be provided under the
German Money-Laundering Act, and you are obligated to update such
information and documentation without demand in the further course
of the business relationship. We hereby expressly advise you of our
obliga- tions to terminate business relationships in accordance
with applicable pro- visions of the German Money-Laundering Act. We
further note that we also review our business relationships, inter
alia, for relevant national or interna- tional sanctions. We
reserve the right to terminate a business relationship without
notice if we determine in the course of any sanction reviews that
you and/or any of your controlling shareholders/partners are
subject to relevant sanctions. 12. Marketing Unless we are
instructed otherwise by you in writing or highly personal mat- ters
or mandates of consumers within the meaning of § 13 of the German
Civil Code are involved, you hereby allow us to use the type and
nature of our contract with you for marketing purposes. This
authorization exclusively co- vers a factual description of the
basic nature of the contract and the client (e.g., reference lists
with firm and logo, as well as scorecards). 13. Statute of
Limitations (a) The limitation of warranty claims is subject to
section 7 (2) of the GET. The limitation of all other claims is as
provided in the following subsections. (b) In cases of simple
negligence not involving harm to life, body, freedom or health, all
claims against us shall be subject to a general limitation period
of one year. (c) The limitation period shall begin to run at the
end of the calendar year in which the claim occurred and in which
you discovered or absent gross negli- gence would have discovered
the circumstances giving rise to the claim as well as the identity
of the liable party ("knowledge or grossly negligent lack of
knowledge"). Irrespective of the above, claims shall be time-barred
after a period of five years after they occurred, or, without
regard to their occur- rence and to your knowledge or grossly
negligent lack of knowledge, ten years after the act, breach of
duty or any other event triggering the damage. Whichever deadline
expires first shall be relevant. (d) Except as provided herein, the
limitation of claims shall be governed by applicable law. 14.
Jurisdiction, Form, Severability (a) If you are a merchant
(Kaufmann), a legal entity under public law or a special fund under
public law, or if you do not have a general place of juris- diction
in Germany, the place of jurisdiction for any and all disputes
arising from or in connection with the Client Agreement shall, at
our option, be (i) Hamburg/Germany, (ii) the place at which the
work in dispute was per- formed, or (iii) the place of your
registered office or residence. (b) Any amendment, supplement or
cancellation of the Client Agreement shall be made at least in text
form (§ 126b German Civil Code). This shall also apply to any
amendment, supplement or cancellation of this clause 14 (b) STC.
(c) If any provision of this agreement - in whole or in part - is
held to be invalid or otherwise impracticable, the other provisions
shall remain in full force and effect. Any invalid or impracticable
provision shall be deemed to be replaced by such valid and
enforceable provision as comes as close as possible to the economic
intent of the invalid or unenforceable provision. The foregoing
shall apply, mutatis mutandis, if any provision has been inad-
vertently omitted from this agreement. Appendix II Page
2
[Translator's
notes are in square brackets] General Engagement Terms for
Wirtschaftsprüfer and Wirtschaftsprüfungsgesellschaften [German
Public Auditors and Public Audit Firms] as of January 1, 2017 1.
Scope of application (1) These engagement terms apply to contracts
between German Public Auditors (Wirtschaftsprüfer) or German Public
Audit Firms (Wirtschaftsprüfungsgesellschaften) – hereinafter
collectively referred to as ”German Public Auditors” – and their
engaging parties for assurance services, tax advisory services,
advice on business matters and other engagements except as
otherwise agreed in writing or prescribed by a mandatory rule. (2)
Third parties may derive claims from contracts between German
Public Auditors and engaging parties only when this is expressly
agreed or results from mandatory rules prescribed by law. In
relation to such claims, these engagement terms also apply to these
third parties. 2. Scope and execution of the engagement (1) Object
of the engagement is the agreed service – not a particular economic
result. The engagement will be performed in accordance with the
German Principles of Proper Professional Conduct (Grundsätze
ordnungsmäßiger Berufsausübung). The German Public Auditor does not
assume any management functions in connection with his services.
The German Public Auditor is not responsible for the use or
implementation of the results of his services. The German Public
Auditor is entitled to make use of competent persons to conduct the
engagement. (2) Except for assurance engagements
(betriebswirtschaftliche Prüfungen), the consideration of foreign
law requires an express written agreement. (3) If circumstances or
the legal situation change subsequent to the release of the final
professional statement, the German Public Auditor is not obligated
to refer the engaging party to changes or any consequences
resulting therefrom. 3. The obligations of the engaging party to
cooperate (1) The engaging party shall ensure that all documents
and further information necessary for the performance of the
engagement are provided to the German Public Auditor on a timely
basis, and that he is informed of all events and circumstances that
may be of significance to the performance of the engagement. This
also applies to those documents and further information, events and
circumstances that first become known during the German Public
Auditor’s work. The engaging party will also designate suitable
persons to provide information. (2) Upon the request of the German
Public Auditor, the engaging party shall confirm the completeness
of the documents and further information provided as well as the
explanations and statements, in a written statement drafted by the
German Public Auditor. 4. Ensuring independence (1) The engaging
party shall refrain from anything that endangers the independence
of the German Public Auditor’s staff. This applies throughout the
term of the engagement, and in particular to offers of employment
or to assume an executive or non-executive role, and to offers to
accept engagements on their own behalf. (2) Were the performance of
the engagement to impair the independence of the German Public
Auditor, of related firms, firms within his network, or such firms
associated with him, to which the independence requirements apply
in the same way as to the German Public Auditor in other engagement
relationships, the German Public Auditor is entitled to terminate
the engagement for good cause. 5. Reporting and oral information To
the extent that the German Public Auditor is required to present
results in writing as part of the work in executing the engagement,
only that written work is authoritative. Drafts are non-binding.
Except as otherwise agreed, oral statements and explanations by the
German Public Auditor are binding only when they are confirmed in
writing. Statements and information of the German Public Auditor
outside of the engagement are always non-binding. 6. Distribution
of a German Public Auditor‘s professional statement (1) The
distribution to a third party of professional statements of the
German Public Auditor (results of work or extracts of the results
of work whether in draft or in a final version) or information
about the German Public Auditor acting for the engaging party
requires the German Public Auditor’s written consent, unless the
engaging party is obligated to distribute or inform due to law or a
regulatory requirement. (2) The use by the engaging party for
promotional purposes of the German Public Auditor’s professional
statements and of information about the German Public Auditor
acting for the engaging party is prohibited. 7. Deficiency
rectification (1) In case there are any deficiencies, the engaging
party is entitled to specific subsequent performance by the German
Public Auditor. The engaging party may reduce the fees or cancel
the contract for failure of such subsequent performance, for
subsequent non-performance or unjustified refusal to perform
subsequently, or for unconscionability or impossibility of
subsequent performance. If the engagement was not commissioned by a
consumer, the engaging party may only cancel the contract due to a
deficiency if the service rendered is not relevant to him due to
failure of subsequent performance, to subsequent non-performance,
to unconscion- ability or impossibility of subsequent performance.
No. 9 applies to the extent that further claims for damages exist.
(2) The engaging party must assert a claim for the rectification of
deficiencies in writing (Textform) [Translators Note: The German
term “Textform” means in written form, but without requiring a
signature] without delay. Claims pursuant to paragraph 1 not
arising from an intentional act expire after one year subsequent to
the commencement of the time limit under the statute of
limitations. (3) Apparent deficiencies, such as clerical errors,
arithmetical errors and deficiencies associated with technicalities
contained in a German Public Auditor’s professional statement
(long-form reports, expert opinions etc.) may be corrected – also
versus third parties – by the German Public Auditor at any time.
Misstatements which may call into question the results contained in
a German Public Auditor’s professional statement entitle the German
Public Auditor to withdraw such statement – also versus third
parties. In such cases the German Public Auditor should first hear
the engaging party, if practicable. 8. Confidentiality towards
third parties, and data protection (1) Pursuant to the law (§
[Article] 323 Abs 1 [paragraph 1] HGB [German Commercial Code:
Handelsgesetzbuch], § 43 WPO [German Law regulating the Profession
of Wirtschaftsprüfer: Wirtschaftsprüferordnung], § 203 StGB [German
Criminal Code: Strafgesetzbuch]) the German Public Auditor is
obligated to maintain confidentiality regarding facts and
circumstances confided to him or of which he becomes aware in the
course of his professional work, unless the engaging party releases
him from this confidentiality obligation. (2) When processing
personal data, the German Public Auditor will observe national and
European legal provisions on data protection. 9. Liability (1) For
legally required services by German Public Auditors, in particular
audits, the respective legal limitations of liability, in
particular the limitation of liability pursuant to § 323 Abs. 2
HGB, apply. (2) Insofar neither a statutory limitation of liability
is applicable, nor an individual contractual limitation of
liability exists, the liability of the German Public Auditor for
claims for damages of any other kind, except for damages resulting
from injury to life, body or health as well as for damages that
constitute a duty of replacement by a producer pursuant to § 1
ProdHaftG [German Product Liability Act: Produkthaftungsgesetz],
for an individual case of damages caused by negligence is limited
to € 4 million pursuant to § 54 a Abs. 1 Nr. 2 WPO. (3) The German
Public Auditor is entitled to invoke demurs and defenses based on
the contractual relationship with the engaging party also towards
third parties. Al l r ig ht s re se rv ed . T hi s fo rm m ay n ot
b e re pr in te d, e ith er in w ho le o r i n pa rt, o r c op ie d
in a ny m an ne r, w ith ou t t he e xp re ss w rit te n co ns en t
o f t he p ub lis he r. © ID W V er la g G m bH · Te rs te eg en st
ra ße 1 4 · 4 04 74 D üs se ld or f D o kI D : 3 5 0 2 1 O JS H 1 O
0 Lizenziert für/Licensed to: BDO AG
Wirtschaftsprüfungsgesellschaft ǀ 4298982 Appendix II Page
3
(4) When
multiple claimants assert a claim for damages arising from an
existing contractual relationship with the German Public Auditor
due to the German Public Auditor’s negligent breach of duty, the
maximum amount stipulated in paragraph 2 applies to the respective
claims of all claimants collectively. (5) An individual case of
damages within the meaning of paragraph 2 also exists in relation
to a uniform damage arising from a number of breaches of duty. The
individual case of damages encompasses all consequences from a
breach of duty regardless of whether the damages occurred in one
year or in a number of successive years. In this case, multiple
acts or omissions based on the same source of error or on a source
of error of an equivalent nature are deemed to be a single breach
of duty if the matters in question are legally or economically
connected to one another. In this event the claim against the
German Public Auditor is limited to € 5 million. The limitation to
the fivefold of the minimum amount insured does not apply to
compulsory audits required by law. (6) A claim for damages expires
if a suit is not filed within six months subsequent to the written
refusal of acceptance of the indemnity and the engaging party has
been informed of this consequence. This does not apply to claims
for damages resulting from scienter, a culpable injury to life,
body or health as well as for damages that constitute a liability
for replace- ment by a producer pursuant to § 1 ProdHaftG. The
right to invoke a plea of the statute of limitations remains
unaffected. 10. Supplementary provisions for audit engagements (1)
If the engaging party subsequently amends the financial statements
or management report audited by a German Public Auditor and
accompanied by an auditor's report, he may no longer use this
auditor’s report. If the German Public Auditor has not issued an
auditor's report, a reference to the audit conducted by the German
Public Auditor in the management report or any other public
reference is permitted only with the German Public Auditor’s
written consent and with a wording authorized by him. (2) lf the
German Public Auditor revokes the auditor's report, it may no
longer be used. lf the engaging party has already made use of the
auditor's report, then upon the request of the German Public
Auditor he must give notification of the revocation. (3) The
engaging party has a right to five official copies of the report.
Additional official copies will be charged separately. 11.
Supplementary provisions for assistance in tax matters (1) When
advising on an individual tax issue as well as when providing
ongoing tax advice, the German Public Auditor is entitled to use as
a correct and complete basis the facts provided by the engaging
party – especially numerical disclosures; this also applies to
bookkeeping en- gagements. Nevertheless, he is obligated to
indicate to the engaging party any errors he has identified. (2)
The tax advisory engagement does not encompass procedures required
to observe deadlines, unless the German Public Auditor has
explicitly accepted a corresponding engagement. In this case the
engaging party must provide the German Public Auditor with all
documents required to observe deadlines – in particular tax
assessments – on such a timely basis that the German Public Auditor
has an appropriate lead time. (3) Except as agreed otherwise in
writing, ongoing tax advice encompasses the following work during
the contract period: a) preparation of annual tax returns for
income tax, corporate tax and business tax, as well as wealth tax
returns, namely on the basis of the annual financial statements,
and on other schedules and evidence documents required for the
taxation, to be provided by the engaging party b) examination of
tax assessments in relation to the taxes referred to in (a) c)
negotiations with tax authorities in connection with the returns
and assessments mentioned in (a) and (b) d) support in tax audits
and evaluation of the results of tax audits with respect to the
taxes referred to in (a) e) participation in petition or protest
and appeal procedures with respect to the taxes mentioned in (a).
In the aforementioned tasks the German Public Auditor takes into
account material published legal decisions and administrative
interpretations. (4) If the German Public auditor receives a fixed
fee for ongoing tax advice, the work mentioned under paragraph 3
(d) and (e) is to be remunerated separately, except as agreed
otherwise in writing. (5) Insofar the German Public Auditor is also
a German Tax Advisor and the German Tax Advice Remuneration
Regulation (Steuerberatungsvergü- tungsverordnung) is to be applied
to calculate the remuneration, a greater or lesser remuneration
than the legal default remuneration can be agreed in writing
(Textform). (6) Work relating to special individual issues for
income tax, corporate tax, business tax, valuation assessments for
property units, wealth tax, as well as all issues in relation to
sales tax, payroll tax, other taxes and dues requires a separate
engagement. This also applies to: a) work on non-recurring tax
matters, e.g. in the field of estate tax, capital transactions tax,
and real estate sales tax; b) support and representation in
proceedings before tax and administra- tive courts and in criminal
tax matters; c) advisory work and work related to expert opinions
in connection with changes in legal form and other
re-organizations, capital increases and reductions, insolvency
related business reorganizations, admis- sion and retirement of
owners, sale of a business, liquidations and the like, and d)
support in complying with disclosure and documentation obligations.
(7) To the extent that the preparation of the annual sales tax
return is undertaken as additional work, this includes neither the
review of any special accounting prerequisites nor the issue as to
whether all potential sales tax allowances have been identified. No
guarantee is given for the complete compilation of documents to
claim the input tax credit. 12. Electronic communication
Communication between the German Public Auditor and the engaging
party may be via e-mail. In the event that the engaging party does
not wish to communicate via e-mail or sets special security
requirements, such as the encryption of e-mails, the engaging party
will inform the German Public Auditor in writing (Textform)
accordingly. 13. Remuneration (1) In addition to his claims for
fees, the German Public Auditor is entitled to claim reimbursement
of his expenses; sales tax will be billed additionally. He may
claim appropriate advances on remuneration and reimbursement of
expenses and may make the delivery of his services dependent upon
the complete satisfaction of his claims. Multiple engaging parties
are jointly and severally liable. (2) If the engaging party is not
a consumer, then a set-off against the German Public Auditor’s
claims for remuneration and reimbursement of expenses is admissible
only for undisputed claims or claims determined to be legally
binding. 14. Dispute Settlement The German Public Auditor is not
prepared to participate in dispute settle- ment procedures before a
consumer arbitration board (Verbraucherschlich- tungsstelle) within
the meaning of § 2 of the German Act on Consumer Dispute
Settlements (Verbraucherstreitbeilegungsgesetz). 15. Applicable law
The contract, the performance of the services and all claims
resulting therefrom are exclusively governed by German law. D o kI
D : 3 5 0 2 1 O JS H 1 O 0 Lizenziert für/Licensed to: BDO AG
Wirtschaftsprüfungsgesellschaft ǀ 4298982 Appendix II Page
4
EU-317590
REPORT OF THE ADMINISTRATIVE BOARD OF SPARK NETWORKS SE Dear
shareholders, The 2021 financial year was one of progress for Spark
Networks SE (the "Company"). In 2021, the Company continued to
integrate the "Zoosk" brand into its portfolio of dating brands and
generate corresponding operational synergies. The Company also
enhanced the Zoosk product offering with exciting new features -
Zoosk Live and Zoosk Great Dates – to drive social interaction and
made investments into the Tech, Brand and Finance organizations to
build a strong framework for its future growth. Under the
leadership of Eric Eichmann as CEO, the Company continued to
strengthen its core functions, growing its legacy platforms
EliteSingles, Silver Singles and Christian Mingle and worked to
stabilize the commercial performance of the Zoosk platform.
Currently, our family of brands serve roughly four million page
views per day of singles searching for serious relationships and
millions of paid subscribers per year, making Spark the fourth
largest online subscription-based dating company across North
American and Europe. With this scaled platform, Spark has a large
growth opportunity ahead of it and with a new credit facility in
place, it now has the financial flexibility to begin executing on a
strong and well-developed roadmap of strategies and investments
that it believes will drive growth in 2022 and beyond. With the
right talent in place, the right product strategy, scalable
technology and financial flexibility Spark is well positioned to
return to growing its revenue. Spark Networks SE was formed on
March 29, 2017, under the company name "Blitz- 17-655 SE" as a
shelf company and was acquired on April 12, 2017 by Affinitas GmbH
with the purpose of becoming the ultimate parent company upon
completion of the cross-border merger between Spark Networks Inc.
in the United States and Affinitas GmbH in Germany. As part of the
merger transaction on August 24, 2017, Blitz-17-655 SE was renamed
Spark Networks SE. Spark Networks SE had not performed any
activities prior to the merger, except those concerning the
creation and implementation of the merger. The management of the
Spark Networks SE is the responsibility of a single company organ,
the Administrative Board according to the single-tier system
pursuant to Art. 43 - 45 SE Regulation in conjunction with Sections
20 et seq. of the German SE Implementation Act (SE-
Ausführungsgesetz, “SEAG”). The Administrative Board determines the
Company’s basic
EU-317590
business strategies and monitors the implementation of said
strategies carried out by the managing directors. The managing
directors manage the Company’s business, represent the Company in
and out of court and are bound by instructions from the
Administrative Board. On August 11, 2021, the Company's Annual
General Meeting increased the number of members of the
Administrative Board from seven to eight, effective as of the end
of such Annual General Meeting. In 2021, the members of the
Administrative Board were in constant contact with the managing
directors of Spark Networks SE in order to regularly analyze and
assess the situation of the Company and to discuss significant
aspects relating to the stabilization of the performance of its
core assets, the realignment of the Company’s strategy, the changes
with regard to senior management, relevant improvements to address
the company’s material weaknesses as shown under the 2020 audit and
the Company’s obligations under its then current debt facility.
Another focus was the management of risks arising from the global
pandemic in connection with "mobile work" and any cyber security
risks. Management supervision and advice In 2021, the
Administrative Board performed its tasks provided by law, the
Articles of Association, the Rules of Procedure of the
Administrative Board, the Charters of the Committees of the
Administrative Board, Corporate Governance Guidelines of the
Administrative Board and Code of Ethics of the Company with utmost
diligence. The Administrative Board regularly advised and monitored
the managing directors of Spark Networks SE with regard to the
Company's business operations, including but not limited to the
planning and implementation of the Company’s short-term and
long-term financial and strategic planning. The Administrative
Board also reviewed in detail the management of compliance and
other risks. In 2021, the Administrative Board and the managing
directors exchanged views and regularly discussed - the status of
the implementation of the business strategy with regard to the
synergies resulting from the acquisition of Zoosk Inc.; - the
strategic alignment of the Company with regard to market trends and
industry dynamics; - the impact of a global pandemic and the
changed processes; - the hiring of a new CFO and stabilization of
processes about SOX and further financial compliance and - the
engagement of the company with its investors and the market to
generate shareholder value. The Administrative Board was directly
involved in all important decisions for Spark Networks SE at an
early stage in accordance with the law and company’s Articles of
Association as well as the rules of procedure for the
Administrative Board. The managing directors informed
the
EU-317590
Administrative Board, in a timely manner and in detail, both in
writing and verbally, about its progress to strengthen its Brand
position, to generate increased awareness of the Company’s Brands
and Products, to drive operational and organizational efficiencies,
assess its approach on investor relations, managing Cyber Security
and other operational and compliance risks, as well as about the
current situation of the Company. The managing directors also
addressed and dealt with all deviations from the initial planning,
which occurred in the course of business in due time and explained
to the Administrative Board any deviations and the necessary
corrective measures. The subject and scope of the reports of the
managing directors thus met the requirements defined by law and by
the Administrative Board. In addition to the reports, the
Administrative Board has frequently requested additional
information from the managing directors. The managing directors
attended the meetings of the Administrative Board to report
directly and provide in person support by discussing and answering
questions from its members, however, the Administrative Board has
regularly held meetings without the presence of the managing
directors as well. Strategic or financial transactions of
significance in 2021 that required approval by the Administrative
Board were discussed with the managing directors and reviewed in
detail. The focus was on the advantages and disadvantages as well
as the further consequences of the relevant transaction, engagement
with key investors, management of the Company’s current debt
facility, strengthening of the financial organization and impact of
the pandemic of the company’s performance. The entire
Administrative Board was kept well informed in the periods between
its meetings and those of its committees. This way, the strategy,
the current business development, the situation of the Company, as
well as key aspects and decisions were regularly discussed by the
managing directors and the Administrative Board. The Chairman and
upon August 2021 the chairwoman of the Administrative Board were
also immediately informed by the managing directors of all material
events relevant for the situation of the Company and its
management. The Audit Committee and the Administrative Board
reviewed and discussed the monthly performance as well as the
quarterly figures and financial statements of the Company and
reports of the Company during the 2021 financial year. All members
of the Administrative Board attended all meetings of the
Administrative Board virtually or in person but for the meeting on
August 25, 2021 where Axel Hefer and Bangaly Kaba did not attend.
Topics of Administrative Board Meetings The Administrative Board
held 11 meetings in 2021: Due to the global pandemic, the
Administrative Board meetings were held mostly via video conference
with two in person meetings in Q2 and Q3 2021. In addition, the
Administrative Board has passed several resolutions by way of
circular voting. The individual meetings had the following content:
On January 20, 2021, the Administrative Board discussed results for
2020 and approved the budget for 2021.
EU-317590 On
February 18, 2021, the Administrative Board approved the terms of
the separation agreement with the Company’s then current CFO by
circular motion. On March 1 and 2, 2021, the Administrative Board
discussed market and industry dynamics the current performance of
the business and based on these insight the strategic initiatives
for 2021 and beyond. The Administrative Board further resolved on
the revocation of the company’s then current CFO as managing
director of the Company. On March 4, 2021, the Administrative Board
discussed a Letter of Default by the Company’s then current lenders
and consecutive waiver terms. The waiver was approved by circular
motion on March 5, 2021. On March 24, 2021, discussions around the
Company’s business strategy continued. On March 30, 2021 the
Administrative Board approved the Company’s 10k for the fiscal year
2020 and based on the recommendation by the Nominating, Governance
and Compensation Committee the target goals for the Managing
Directors 2021 and the bonus payments in accordance with the target
achievements for 2020 by circular motion. On May 11, 2021 the
Administrative Board and management discussed the Company’s
Corporate Strategy. The Board resolved on the appointment of Yoon
Um as Principal Financial Officer. On May 15, 2021, the 10Q for the
fiscal quarter ending on March 31, 2021 was approved by circular
resolution. On May 28, 2021, the Administrative Board discussed the
status of the audit of the Company’s 2020 stand-alone and
consolidated financial statements and prepared for the Company’s
2021 Annual General Meeting; the compliance declaration and the
report of the Administrative Board for the year 2020 were approved.
On June 2, 2021, the Company’s consolidated Financials according to
IFRS and the Company’s stand-alone Financials according to German
GAAP were approved by the Administrative Board by circular
resolution. On June 9, 2021 the Administrative Board approved the
Date and Agenda of the Company’s AGM, the filing of respective
Proxy and the signature of the Managing Director Service Agreement
with David Clark as the Company’s new CFO by circular
motion.
EU-317590 In
its in-person meeting on July 21, 2021 the Administrative Board
discussed in detail the current performance of the Company and the
then current risk assessment. The Administrative Board resolved on
the appointment of David Clark as CFO of the Spark Group. The
Administrative Board further passed several resolutions affecting
representation authority for the company’s affiliates. On August
11, 2021, the Administrative Board set up its Committees by
circular motion and elected its Chairwoman, its Vice-Chairman and
the Chairs of its Committees in a call on August 15, 2021. On
August 23, 2021, the 10Q for the fiscal quarter ending on June 30,
2021 was approved by circular resolution. On August 25, 2021, the
Administrative Board discussed the company’s engagement with its
stakeholders and its approach on Investor Relations. On November 9,
2021, the Administrative Board met in person and discussed and
reviewed in addition to the current business development, the
direction and strategy for 2022 and beyond. The Administrative
Board further dealt with the topic of governance and was briefed on
current legal developments as well as the current risk assessment.
On November 12, 2021, the Administrative Board approved the 10Q for
the fiscal quarter ending on September 30, 2021 by circular
resolution. On December 16, 2021, the Administrative Board focused
on the status of the operating business and the budget for 2022.
Between Sep 14 and Dec 31, 2021 the Administrative Board held 6
ad-hoc meetings with the Company’s CEO and CFO to discuss
performance and strategy. These meetings were attended by the
Chairwoman, the Chair of the Audit Committee and Nominating
Governance and Compensation Committee, other members of the
Administrative Board were invited optionally. Corporate Governance
In 2021, the Administrative Board discussed and monitored the
process and implementation of compliance with the recommendations
of the German Corporate Governance Code (“DCGK”), taking into
account the Company's single-tier system. The Administrative Board
addressed and reviewed exceptions to be disclosed in the
declaration of conformity according to Section 161
EU-317590 of
the German Stock Corporation Act (AktG). As a general rule, due to
the single-tier system of the Company, Spark Networks SE (i)
applies those provisions of the DCGK to its Administrative Board
which, in the two-tier system of a German stock corporation
(Aktiengesellschaft), would apply to the Supervisory Board
(Aufsichtsrat) and (ii) applies those provisions of the DCGK to its
managing directors which, in the two-tier system of a German stock
corporation (Aktiengesellschaft), would apply to the Management
Board (Vorstand), in each case of (i) and (ii) if and to the extent
such provisions are applicable against the background of the
statutory provisions applicable to Spark Networks SE as an SE with
a single-tier governance system pursuant to Art. 43 - 45 SE-VO, in
conjunction with Sections 20 et seq. SEAG. As the shares of the
Company have been listed on NYSE American LLC in 2021, the Company
has adopted the corporate governance policies implementing the
corporate governance standards set by the New York Stock Exchange
Rules. These regulations do not completely correspond with the
recommendations of the DCGK. On July 18, 2022, the managing
directors and the members of the Administrative Board approved the
declaration of conformity regarding the recommendations of the
Government Commission on the German Corporate Governance Code
pursuant to Section 161 of the German Stock Corporation Act (AktG)
and will make it permanently available to its shareholders on the
Company's website at www.spark.net together the publication of the
2021 financial statements and the invitation to the 2022 annual
general meeting. Conflict of interest Members of the Administrative
Board are required to disclose potential conflicts of interest
immediately in accordance with E.1 DCGK 2019 and United States
securities laws. In 2021 no such disclosures were made. Committees
The Administrative Board has established two committees in
accordance with the Company's Articles of Association: the Audit
Committee and the Nominating, Governance and Compensation
Committee. Both committees shall consist of at least three members
in accordance with the Articles of Association of the Company and
the Rules of procedure of the Administrative Board, taking into
account the NYSE American LLC rules regarding the independence of
board members. Mr. Joe Whitters chairs the Audit Committee and Mr.
Bradley J. Goldberg chairs the Nominating, Governance and
Compensation Committee. Audit Committee The Audit Committee is
responsible for the accounting issues and for monitoring the
accounting
EU-317590
process, internal control system, risk management, compliance, and
the statutory audit procedure for the annual financial statements,
as well as issuing the audit mandate to the statutory auditors. In
2021, the Audit Committee focused on reviewing and discussing with
management quarterly and annual financial results, earnings
guidance and earnings press releases prior to distribution to the
public, discussing the scope and results of the audit with the
independent registered public accounting firm, overseeing the
performance of the internal audit function and the effectiveness of
internal controls which included addressing the deficiencies
disclosed in the Company's 2021 annual financial statements, and
reviewing the 2021 annual statutory financial statements in
accordance with the German Commercial Code (HGB) and IFRS, and
preparing the Administrative Board resolutions on these topics. The
Audit Committee was also responsible for selecting, appointing,
compensating and overseeing the work of the independent registered
public accounting firm, and well as reviewing their qualification,
performance and continuing independence. In 2021, 12 meetings of
the Audit Committee were held on March 25, March 29, April 8, May
10, May 26, May 28, May 31, June 3, July 20, August 12, November 5,
and December 14, 2021. All committee members attended all meetings
of the Audit Committee. Nominating, Governance and Compensation
Committee The Nominating, Governance and Compensation Committee is
responsible for proposing suitable candidates for the position of
managing directors and board members, overseeing the evaluation of
members of the Administrative Board and management, in particular
the appointment and dismissal as well as the compensation of the
managing directors, the execution of the Company's long-term
incentive plans and it reviews the overall corporate governance of
the Company and the Administrative Board. In 2021, the Nominating,
Governance and Compensation Committee met a total of 7 times on
January 27, March 1, May 10, May 21, July 20, October 19 and
November 23, 2021. All members of the Nominating, Governance and
Compensation Committee attended all meetings of the committee.
Annual financial statements and consolidated annual financial
statements BDO USA, LLP, was appointed as independent registered
public accounting firm for the Company for the year ended December
31, 2021, and BDO AG Wirtschaftsprüfungsgesellschaft, Katharina-
Heinroth-Ufer 1, 10787 Berlin, Germany was appointed as local
statutory auditor for the financial statements and group auditor
for the consolidated financial statements for the fiscal year 2021
and as auditor for any review of interim financial reports for the
fiscal year 2021 and for any review of interim financial reports
for the fiscal year 2022 issued before the 2022 Annual General
Meeting. The auditor has audited the Company's statutory annual
consolidated financial statements which were prepared in accordance
with International Financial Reporting Standards („IFRS“), as
issued by the
EU-317590
International Accounting Standards Board (“IASB”), including
bookkeeping. The auditor's report is unrestricted. The Audit
Committee was closely involved in the review process and informed
on the current status of the review process and its results. By
circular resolution, the Audit Committee approved the annual
financial statements in accordance with the German Commercial Code
(“HGB”) and the consolidated annual financial statements (in
accordance with IFRS) as prepared by the managing directors, as
well as the reports by BDO AG regarding the audit of the German
annual financial statements (“HGB”) and the consolidated annual
financial statements in accordance with IFRS IASB. The
Administrative Board was regularly informed by phone and by e-mail
about the audit, the preparation of the annual financial statements
including the status report for the financial year 2021 in
accordance with German Commercial Code (“HGB”), and the
consolidated annual financial statements including the consolidated
status report for the financial year 2021 in accordance with IFRS
for the 2021 financial year. The Administrative Board examined the
annual financial statements for the financial year 2021 in
accordance with the German Commercial Code, the consolidated annual
financial statements for the financial year 2021 in accordance with
IFRS, as well as the audit reports in detail and no objections were
raised. The Administrative Board approved the consolidated
financial statements in accordance with IFRS on June 23, 2022 and
the annual financial statements of the Company in accordance with
the German Commercial Code on June 23, 2022 in accordance with
Section 47 (5) SEAG. Personnel changes on the Administrative Board
At the annual general meeting on August 11, 2021, Ms. Colleen
Birdnow Brown, Mr. Bradley J. Goldberg, Ms. Chelsea Grayson, Mr.
David Khalil, Mr. Axel Hefer, and Mr. Eric Eichmann were reelected
as members of the Administrative Board until the annual general
meeting deciding on the discharge for the 2021 financial year, but
no longer than for six years after the effective appointment of the
respective member to the Administrative Board. Mr. Bangaly Kaba and
Mr. Joe Whitters were elected as new members of the Administrative
Board until the end of the General Meeting resolving on the
discharge for the 2021 financial year, but for no longer than six
years after the appointment of the respective Administrative Board
member.
EU-317590 All
new members of the Administrative Board are supported by the
Company with an individualized introduction to their role and
responsibilities as a member of the Company’s Administrative Board.
As part of recurring governance, the whole Administrative Board is
provided with a “refresher training” and an update on latest
relevant regulatory requirements. Trainings are provided by the
Company’s SEC Counsel and the Board Counsel who acts as an
independent advisor to the Administrative Board. Updates on changed
Capital Market Rules, filing obligations and best governance
practices are provided by the Board Counsel on a regular base. The
Administrative Board would like to thank the managing directors and
all of the Spark group’s staff worldwide for their dedication and
success in 2021. Berlin, July 18, 2022 For the Administrative Board
Colleen Birdnow Brown Chairwoman of the Administrative
Board
Page 1 of 8
EU-362303 Statement of Corporate Governance of Spark Networks SE
The Statement of Corporate Governance is to be published separately
on the Internet pursuant to Section 289f German Commercial Code
(Handelsgesetzbuch – HGB). It comprises the Compliance Statement
pursuant to Section 161 German Stock Corporation Act (Aktiengesetz
– AktG) (A.), relevant information on corporate governance
practices (C.), a description of the working methods of the
Management Board and the Supervisory Board, as well as of the
composition and working methods of their committees (D.),
specifications for promoting the participation of women in
management positions pursuant to Section 76 para. 4 and Section 111
para. 5 AktG, together with a report on whether the targets set
were achieved (E.), as well as a description of the diversity
concept (F.). A. Compliance Statement pursuant to Section 161 AktG
The Management Board and the Supervisory Board of a listed German
stock corporation or – in the case of a listed German SE with a
one-tier system of corporate governance – the Administrative Board
are, pursuant to Section 161 AktG, obliged to declare that the
recommendations of the "Government Commission German Corporate
Governance Code" published by the Federal Ministry of Justice and
Consumer Protection in the official section of the Federal Gazette
have been, and are being, complied with or which recommendations
have not been, or are not being applied and why not. The
Administrative Board of Spark Networks SE issued the following
statement in June 2022, which was published on the Company's
website
https://www.spark.net/investor-relations/corporate-governance/highlights:
Compliance Statement regarding the recommendations of the
Government Commission German Corporate Governance Code pursuant to
Section 161 AktG Pursuant to Art. 9 p. 1 c) (ii) of the SE
Regulation (SE-VO) and Section 22 p. 6 of the German SE
Implementation Act (SEAG) in conjunction with Section 161 AktG, the
Administrative Board of Spark Networks SE (the "Company") hereby
declares as follows: Taking into account the particularities of the
one-tier system of corporate governance described under item 1 and
subject to the exceptions listed and explained under item 2, the
Company (a) since the last Compliance Statement published in June
2021, has complied with the recommendations of the German Corporate
Governance Code in the version dated 16 December 2019, published by
the German Ministry of Justice and Consumer Protection in the
official section of the Federal Gazette on 20 March 2020 (the “Code
2019”) since its entry into force; and (b) will comply with the
recommendations of the Code 2019.
Page 2 of 8
EU-362303 1. Particularities of the One-Tier Corporate Governance
System According to Art. 43 - 45 SE-VO, in conjunction with
Sections 20 et seq. SEAG, under the one-tier system of corporate
governance, the management of the SE is the responsibility of a
single management body, namely the Administrative Board. The
Administrative Board manages the Company, determines the Company’s
basic business strategies and monitors the implementation of said
strategies by the Managing Directors. The Managing Directors manage
the Company’s day-to-day business, represent the Company in and out
of court and are bound by the instructions of the Administrative
Board. Spark Networks SE applies those recommendations of the Code
that address the Supervisory Board to the Administrative Board, and
applies those recommendations of the Code that address the
Management Board to its Managing Directors to the extent
applicable. 2. Exceptions to the recommendations of the Code 2019
G.3 and G.4 as well as G.10 and G.11 Code 2019 (Remuneration) As a
result of the Act Implementing the Second Shareholders' Rights
Directive (ARUG II), the requirements for determining the
remuneration of Management Boards of listed companies have
undergone far-reaching changes. In the future, the remuneration of
the Management Board may mandatorily only be determined on the
basis of an abstract remuneration system to be adopted by the
Supervisory Board of the respective company by no later than the
end of the first annual general meeting after 31 December 2020. The
Company's Administrative Board has presented a remuneration system
to the Company’s annual general meeting 2021 that complies with the
statutory requirements of ARUG II and follows the recommendations
of the Code 2019 unless exceptions are declared herein. Pursuant to
recommendation G.3 of the Code 2019, in order to assess whether the
specific total remuneration of members of the Management Board is
in line with usual levels compared to other enterprises, the
Supervisory Board shall determine an appropriate peer group of
other third-party entities, and shall disclose the composition of
that group. In the opinion of the Administrative Board, it is not
advisable to disclose the composition of the peer group since
competitors could draw conclusions about the strategic
considerations of the Administrative Board. Therefore, the Company
does not comply with recommendation G.3 of the Code 2019. Given the
Company's listing on the U.S. stock exchange NASDAQ in New York
respectively the previous listing on the New York Stock Exchange
(NYSE) and the US characteristics of the Company Group, the
determination of the remuneration follows the remuneration of
comparable US-based companies. Thus, the Company does not comply
with the recommendation G.4 of the Code 2019, pursuant to which –
when assessing whether the remuneration is in line with usual
levels within such company – the Administrative Board shall take
into account the ratio between the remuneration of the Managing
Directors and the remuneration of the senior management and the
workforce as a whole, as well as how remuneration has developed
over time. For the aforementioned reasons, the Company also does
not comply with recommendation G.11 of the Code 2019. Additionally,
and as a precautionary measure it shall be declared that the
Company does not comply with recommendation G.10 of the Code 2019,
since the variable share-based remuneration granted by the Company
is a virtual stock option plan pursuant to which a beneficiary’s
claims can – at the discretion of the Company – be settled either
in shares/ADS or in cash.
Page 3 of 8
EU-362303 B.2 and B.5 Code 2019 (Succession planning, age limit for
Managing Directors) Pursuant to recommendation B.2 of the Code
2019, the procedure for long-term succession planning shall be
described in the Statement of Corporate Governance. The Company,
however, is of the opinion that the search for and selection of
suitable persons for management positions in the Company belongs to
the category of sensitive information that the Company – unless
required by securities law – does not share with the public.
According to recommendation B.5 of the Code 2019, an age limit
shall be specified for members of the Management Board and
disclosed in the Statement of Corporate Governance. Irrespective of
the standards that exist in the Company with regard to the
qualifications and responsibilities of board members, the Company
does not consider the abstract criterion of the age of Managing
Directors to be an appropriate attribute for generally denying a
candidate's suitability for the respective position. Consequently,
no age limit has been established nor is it disclosed in the
Statement of Corporate Governance. B.3 Code 2019 (Initial
Appointment of Members of the Management Board) According to
recommendation B.3 Code 2019, the first-time appointment of
Management Board members shall be for a period of not more than
three years. In deviation from this, the Company respectively the
Administrative Board has appointed the Managing Director Ms. Gitte
Bendzulla for a period of five years. Prior to her appointment as
Managing Director, Ms. Bendzulla had already worked for the Company
as General Counsel since 2018. In this context, she has already
proven herself as a person with leadership qualities and
demonstrated that she is intimately familiar with Spark Networks
SE, its corporate structures, values and objectives. An initial
appointment for a period of more than three years is therefore, in
the view of the Administrative Board, in the interest of the
Company. Furthermore, the Managing Director Mr. Eric Eichmann was
also appointed as Managing Director for a period of five years. In
this respect, the Company declares a deviation from recommendation
B.3 Code 2019. Mr. Eichmann was appointed as Managing Director for
the maximum term in particular due to his special knowledge and
experience in global listed companies, in technology and product
development as well as in consumer and marketing-oriented
companies. C.1 and C.2 Code 2019 (Composition of the Administrative
Board, age limit for Administrative Board members) Pursuant to
recommendation C.1 of the Code 2019, the Administrative Board shall
determine specific objectives regarding its composition and shall
prepare a profile of skills and expertise for the entire board. The
Administrative Board has defined certain requirements and
objectives for its composition as well as a skills matrix by which
all members of and candidates for the Administrative Board are
judged in order to ensure a balanced composition of the
Administrative Board. Further, the Company is subject to special
requirements and standards under US securities law due to the
listing of its shares on the U.S. stock exchange NASDAQ
respectively the previous listing on the New York Stock Exchange
(NYSE). Those standards regarding the qualifications and
responsibilities of Administrative Board members are taken into
account in each election. However, as it remains unclear as to
whether the defined requirements and objectives for its composition
as well as the skills matrix meet the standards of recommendation
C.1 of the Code 2019, as a precautionary measure it shall be
declared that the Company does not comply with recommendation C.1
of the Code 2019.
Page 4 of 8
EU-362303 According to recommendation C.2 of the Code 2019, an age
limit for members of the Supervisory Board shall be specified and
appropriately taken into account and disclosed in the Statement of
Corporate Governance. As for Managing Directors, the Company does
not consider an abstract age criterion to be appropriate for
generally denying a candidate's suitability for the respective
position. Moreover, against the backdrop of the Company’s listing
on the U.S. stock exchange NASDAQ respectively the previous listing
on the New York Stock Exchange (NYSE), the Administrative Board
follows a recommendation by Institutional Shareholder Services not
to set an age limit. Accordingly, no age limit has been
established, nor is it disclosed in the Statement of Corporate
Governance. C.5 Code 2019 (Board Mandates) Pursuant to
recommendation C.5 of the Code 2019, members of the Management
Board of a listed company shall not hold, in aggregate, more than
two Supervisory Board mandates in non-group listed companies or
comparable functions, and shall not accept Chairmanship of a
Supervisory Board in a non- group listed company. According to sec.
11 of the Company's Corporate Governance Guidelines reflecting the
corresponding rules of the New York Stock Exchange (NYSE) or the
U.S. stock exchange NASDAQ, respectively and following a
recommendation by Institutional Shareholder Services, executive
members of the Administrative Board may hold up to four (4) board
positions in addition their respective position as member of the
Company's Administrative Board. F.2 Code 2019 (Financial
Statements) Pursuant to recommendation F.2 of the Code 2019, the
consolidated financial statements and the group management report
shall be made publicly accessible within 90 days from the end of
the financial year and the mandatory interim financial information
shall be made publicly accessible within 45 days from the end of
the reporting period. The Company makes its Financial Statements
and the interim financial information publicly accessible within
the timeframe provided by German and US securities law in order to
avoid additional administrative efforts that would otherwise be
required due to its international group structure. Berlin, June
2022 Spark Networks SE For the Administrative Board Colleen Birdnow
Brown
Page 5 of 8
EU-362303 B. Remuneration details The remuneration report for the
last financial year and the auditor’s report pursuant to Section
162 of the German Stock Corporation Act, the remuneration system
submitted to the annual general meeting for approval pursuant to
Section 87a (1) and (2) Sentence 1 of the German Stock Corporation
Act, and the last remuneration resolution pursuant to Section 113
(3) of the German Stock Corporation Act have been made publicly
available on the Company’s website at
https://www.spark.net/investor-relations. C. Information on
corporate governance practices The corporate governance of Spark
Networks SE is primarily determined by statutory provisions, the
recommendations of the German Corporate Governance Code as amended,
as well as the internal corporate guidelines. Pursuant to Art. 43 -
45 SE-VO in conjunction with Sections 20 et seq. SEAG, in the
one-tier corporate governance system, the management of the SE is
the responsibility of a single management body, namely the
Administrative Board. The Administrative Board manages the Company,
determines the Company's basic business strategies and monitors the
implementation of said strategies by the Managing Directors. The
Managing Directors manage Company’s day-to-day business, represent
the Company in and out of court and are bound by the instructions
of the Administrative Board. Spark Networks SE applies those
recommendations of the German Corporate Governance Code that
address the Supervisory Board to the Administrative Board, and
applies those recommendations of the Code that address the
Management Board to its Managing Directors to the extent
applicable. Efficient cooperation between the Administrative Board
and the Managing Directors, respect for shareholders’ interests,
openness and transparency are key aspects of good corporate
governance. Another corporate body is the General Meeting. The
powers of the governing bodies are stipulated in the SE-VO
(Regulation on the Statute for a European Company (SE)), the SEAG
(SE Implementation Act), the AktG (German Stock Corporation Act),
the Articles of Association and the Company's internal guidelines.
Lawful conduct and responsibility of employees and executives form
the basis for the success of Spark Networks SE. In accordance with
the Code of Conduct, all employees of Spark Networks SE are
required to act in a risk-conscious manner and to avoid risks that
could threaten the Company’s existence. The Code of Conduct
summarizes key policies and guidelines and includes moral standards
and legal requirements that each employee must adhere. To enhance
good corporate governance, the Administrative Board and the
Managing Directors shall ensure that appropriate measures are taken
in line with the risk situation of the Company (Compliance
Management System). The Managing Directors deal with the relevant
risks on an ongoing and responsible basis, as business risk
management is considered a fundamental part of professional
corporate governance. Spark Networks SE has already adopted several
internal corporate policies: Whistleblower Policy, Code of Conduct,
Corporate Governance Policy, Code of Ethics and Insider Trading
Policy. So far, the Company has not yet implemented a complete
Compliance Management System covering all consolidated companies.
The Company intends to examine and implement further compliance
management measures in the near future. For further information on
key corporate governance practices is available on Spark Networks
SE's homepage at
https://www.spark.net/investor-relations/corporate-governance/highlights.
Page 6 of 8
EU-362303 D. Functioning and composition of the Administrative
Board, committees of the Administrative Board and functioning of
the Managing Directors The Managing Directors manage the business
of Spark Networks SE, represent Spark Networks SE in and out of
court, and are bound by the instructions of the Administrative
Board. The Managing Directors manage the business of Spark Networks
SE in accordance with the law, the Articles of Association of Spark
Networks SE and the instructions of the Administrative Board. In
doing so, they are bound by the best interests of the Company and
committed to increasing the sustainable value of the Company. The
two Managing Directors, Eric Eichmann and Gitte Bendzulla, manage
the business of Spark Networks SE by implementing the principles
and guidelines set by the Administrative Board. The Administrative
Board appointed Eric Eichmann as CEO and Gitte Bendzulla as Chief
Operating Officer and Chief Legal Officer of Spark Networks SE. The
Managing Directors conduct the business of the Company with the
care and diligence of a prudent and conscientious manager. The
Managing Directors cooperate with the other bodies of the Company
in a collegial and trustful manner for the benefit of the Company.
The Administrative Board manages Spark Networks SE, determines the
principles of the Company's activities and monitors their
implementation. It cooperates closely and in a spirit of trust with
the Managing Directors and other bodies of Spark Networks SE for
the benefit of the Company. The Administrative Board currently
consists of the following members: Colleen Birdnow Brown (Chair),
David Khalil, Bradley J. Goldberg, Axel Hefer (all since 2017),
Chelsea Grayson and Eric Eichmann (both since 2020), Bangaly Kaba
and Joseph E. Whiters (both since 2021). In the opinion of the
Administrative Board, all of its members are independent within the
meaning of the German Corporate Governance Code. In accordance with
the Articles of Association of Spark Networks SE, the
Administrative Board has established two committees, namely an
Audit Committee and a Nominating, Governance and Compensation
Committee. The Audit Committee consists of three members and is
responsible for the following topics: Preparation of the
Administrative Board's resolution on the annual financial
statements of Spark Networks SE, the application of accounting
standards, monitoring the accounting process, monitoring the
effectiveness of the internal audit system, the internal risk
management system, the internal control system and compliance
issues, passing resolutions on the audit mandate, the definition of
audit priorities, monitoring the audit process and the independence
of the auditor. The Audit Committee shall prepare the resolution of
the Administrative Board regarding the annual financial statements
(including the consolidated financial statements) and the proposal
of the Supervisory Board regarding the appointment of the auditor
for the General Meeting and the assignment of the auditor. The
Chairperson of the Audit Committee shall have expertise and
experience in the application of accounting policies and internal
control systems. In addition, the Chairperson of the Audit
Committee must not be the Chairperson of the Administrative Board
or a former Managing Director of Spark Networks SE within the
previous two years. The Audit Committee of Spark Networks SE must
include at least one member with expertise in the field of
accounting and one member with expertise in the field of auditing
within the meaning of Section 100 para. 5 AktG and one member who
is considered an audit committee expert within the meaning of the
provisions of the U.S. Securities and Exchange Commission with
experience in accounting practice or finance. The members of the
Audit Committee must be fully acquainted with the sector in which
the
Page 7 of 8
EU-362303 Company operates. The members of the Audit Committee are
to be considered independent if the Administrative Board determines
that they are independent within the meaning of the rules of the
NYSE American LLC or the U.S. stock exchange NASDAQ, respectively
and the U.S. Securities and Exchange Commission. The Audit
Committee currently consists of the following members: Joseph E.
Whitters (Chair), Axel Hefer and Chelsea Grayson. The Nominating,
Governance and Compensation Committee consists of three members and
shall make candidate proposals to the Administrative Board to
submit to the General Meeting for the election as members of the
Administrative Board. The Nominating, Governance and Compensation
Committee shall also prepare the decisions of the Administrative
Board regarding the appointment, dismissal, remuneration and
employment contracts of the Managing Directors. The members of the
Nominating, Governance and Compensation Committee are to be
considered independent if the Administrative Board determines that
they are independent within the meaning of the rules of the NYSE
American LLC or the U.S. stock exchange NASDAQ, respectively. The
Nominating, Governance and Compensation Committee currently
consists of the following members: Bradley J. Goldberg (Chair),
Cheryl Law and David Khalil. In the financial year 2021, the
Administrative Board conducted a self-assessment as to how
effectively the Administrative Board performs its tasks. As part of
the self-assessment, the Administrative Board discussed the work
performed in the past year by the Administrative Board, the
cooperation, the flow of information, the organization and conduct
of meetings, as well as risk management and accounting, and
strategy development in the Administrative Board and with the
Managing Directors. E. Specifications for promoting the
participation of women in management positions pursuant to Section
76 para. 4 and Section 111 para. 5 AktG and achievement report
Pursuant to Section 9 para. 1c) (ii) SE-VO and Section 22 para. 6
SEAG in conjunction with Section 76 para. 4 and Section 111 para. 5
AktG, the Administrative Board shall set targets for the proportion
of women on the Administrative Board, at the level of the Managing
Directors, and at the two management levels below Managing
Directors. Since Spark Networks SE has no management level below
the Managing Directors, targets are only set for the Administrative
Board and the Managing Directors. Spark Networks SE currently has
two women on its Administrative Board. On 28 March 2018, the
Administrative Board set a target of having one woman on the
eight-member Administrative Board until 30 June 2022. A target of
0% by 30 June 2022 was set at the level of the Managing Directors.
Until 30 April 2022, one of the three Managing Directors has been a
woman. Currently, none of the three Managing Directors is a
woman.
Page 8 of 8
EU-362303 F. Diversity concept Pursuant to Section 289f para. 2 no.
6 HGB, stock corporations must include in their Statement of
Corporate Governance a description of the diversity concept pursued
in terms of the composition of the body authorized to represent the
Company and the Supervisory Board regarding aspects such as age,
gender, educational or professional background, as well as the
objectives of this diversity concept, the way how it is implemented
and the results achieved in the financial year. Pursuant to Section
289f para. 5 HGB, if a company does not pursue a diversity concept,
it must explain this fact in the Statement of Corporate Governance.
On 28 March 2018, the members of the Administrative Board of Spark
Networks SE passed a resolution that – with the exception of the
target of one woman in the eight-member Administrative Board – no
diversity concept within the meaning of Section 289f para. 2 no. 6
HGB regarding the composition of the Administrative Board and the
Managing Directors in terms of age, gender, educational or
professional background will be established. The Administrative
Board is of the opinion that – in addition to the target for the
composition of the Administrative Board and other measures
previously introduced to promote diversity within the Company – a
further diversity concept would not be expedient. Nevertheless, the
Administrative Board will examine in the financial year 2022
whether establishing an own diversity concept would be advisable.
Berlin, June 2022
EU-384792
Convenience Translation. The German language version shall prevail
in the event of any dispute or ambiguity. SPARK NETWORKS SE Munich
ISIN DE000A2E4RU2 ISIN US8465171002 (ADR) INVITATION TO THE ANNUAL
GENERAL MEETING On Wednesday, August 31, 2022, at 4.00 p.m. (CEST),
the Annual General Meeting of the Spark Networks SE with registered
seat in Mu- nich (the “Company”) takes place at the offices of
Morrison & Foerster LLP, Pots- damer Platz 1, 10785 Berlin. We
hereby cordially invite our shareholders to attend.
EU-384792 I.
AGENDA 1. Presentation of the adopted annual financial statements,
the approved con- solidated financial statements and the combined
management report of Spark Networks SE and the group for the year
ended December 31, 2021 as well as the report of the administrative
board for the financial year 2021 The adopted annual financial
statements, the approved consolidated financial state- ments and
the combined management report of Spark Networks SE and the group
for the year ended December 31, 2021 as well as the report of the
Administrative Board for the financial year 2021 are available on
the Company’s website at:
https://www.spark.net/investor-relations/annual-meeting and will be
explained in more detail during the Annual Meeting. In accordance
with statutory provisions under applicable German law, no
resolution by the Annual Meeting is proposed for this proposal no.
1 because the Administrative Board has already approved the adopted
annual financial statements as well as the consolidated financial
statements for the financial year 2021. Thus, the annual finan-
cial statements for the financial year 2021 have been established
in accordance with Art. 9 (1) lit. c) ii), Art. 10 SE-Regulation in
conjunction with Sec. 172 German Stock Corporation Act*. Therefore,
approval of the annual financial statements for the finan- cial
year 2021 by the Annual General Meeting is not required, Art. 9 (1)
lit. c) ii), Art. 10 SE Regulation in conjunction with Sec. 173
German Stock Corporation Act. For other documents referred to in
this proposal no. 1, German statutory law only provides for a
general information to the shareholders but no resolution by the
Annual Meeting. For information purposes, an Annual Report on Form
10-K for the year ended Decem- ber 31, 2021, which contains the
consolidated financial statements made in accord- ance with IFRS is
also made available on the Company’s website. * The relevant
provisions for stock corporations domiciled in Germany, in
particular the provisions of the HGB and the German Stock
Corporation Act (Aktiengesetz – AktG), apply to the Company due to
the conflict-of-law rules set out in Art. 5, Art. 9 (1) lit. c)
ii), Art. 53 as well as Art. 61 of Council Regulation (EC) No
2157/2001 of October 8, 2001 on the Statute for a European company
(SE) (SER) unless otherwise provided for by any more specific rules
of the SER.
EU-384792 2.
Resolution on the discharge of the Managing Directors for the
financial year 2021 The Administrative Board proposes that the
Managing Directors who were in office in the financial year 2021
shall be granted discharge for this period. 3. Resolution on the
discharge of the members of the Administrative Board for the
financial year 2021 The Administrative Board proposes that the
members of the Administrative Board who were in office in the
financial year 2021 shall be granted discharge for this period. 4.
Appointment of the auditor for the financial statements and for the
consol- idated financial statements as well as for the review of
interim financial re- ports and ratification of independent
registered public accounting firm Our Audit Committee has selected
BDO USA, LLP as our independent registered pub- lic accounting firm
for the year ended December 31, 2022, and BDO AG
Wirtschaftsprüfungsgesellschaft, Katharina-Heinroth-Ufer 1, 10787
Berlin, Germany as our local statutory auditor for the fiscal year
ending December 31, 2022 (collec- tively, “BDO”). At the Annual
Meeting, the shareholders are being asked to ratify the appointment
of BDO as our auditor for the financial statements and for the
consolidated financial state- ments as well as for review of
interim financial reports for the fiscal year ending De- cember 31,
2022. Under mandatory German corporate law the Annual Meeting must
elect the auditor of the company for the current fiscal year. If
this proposal does not receive the affirmative approval of a
majority of the votes cast on the proposal and if an auditor has
not been elected by the end of the ongoing financial year, the
Local Court of Munich, Germany shall appoint the auditor at the
request of the legal repre- sentatives, the Administrative Board or
a shareholder of Spark Networks SE. Principal Policy on Audit
Committee Pre-Approval of Audit and Permissible Non-Audit Services
of the Independent Registered Public Accounting Firm Our Audit
Committee generally pre-approves all audit and permissible
non-audit ser- vices provided by the independent registered public
accounting firm. These services may include audit services,
audit-related services, tax services and other
services.
EU-384792
Pre-approval is detailed as to the particular service or category
of services and is gen- erally subject to a specific budget. The
independent registered public accounting firm and management are
required to periodically report to the Audit Committee regarding
the extent of services provided by the independent registered
public accounting firm in accordance with this pre-approval, and
the fees for the services performed to date. Our Audit Committee
may also pre-approve particular services on a case-by-case ba- sis.
All of the services relating to the fees described in the table
below were approved by our Audit Committee. The following table
presents fees for professional audit services rendered by (i) KPMG
AG Wirtschaftsprüfungsgesellschaft, our independent auditors for
the fiscal year De- cember 31, 2020, and (ii) BDO USA, LLP, our
independent auditors for the fiscal year ended December 31, 2021
(in thousands). Fee Category 2021 2020 Audit fees(1) $ 985 $ 2,343
Tax fees(2) 12 21 Total Fees $ 997 $ 2,364 (1) Audit fees for 2021
and 2020 include costs associated with the interim procedures and
annual audits, including costs associated with the US GAAP
conversion in 2020, and statutory audits required internationally.
Total Audit fees in 2020 have been restated from the prior year to
in- clude an overrun fee for additional audit-related services,
which were billed in June and July of 2021. (2) Tax fees for 2021
and 2020 represent tax and VAT compliance. Shareholders are being
asked at the Annual Meeting to approve, and the Administra- tive
Board, based on the recommendation of the Audit Committee, proposes
to adopt the following resolution: BDO USA, LLP, is appointed as
independent registered public accounting firm for the Company for
the year ended December 31, 2022, and BDO AG
Wirtschaftsprüfungsgesellschaft, Katharina-Heinroth-Ufer 1, 10787
Berlin, Germany is appointed as local statutory auditor for the
financial statements and group auditor for the consolidated
financial statements for the fiscal year 2022 and as auditor for
any review of interim financial reports for the fiscal year 2022
and for any review of interim financial reports for the fiscal year
2023 issued before the 2023 Annual General Meet- ing.
EU-384792
Annex to agenda item 4 – Report of the audit committee The Audit
Committee is appointed by the Board of Directors to assist the
Board of Directors in fulfilling its oversight responsibilities
with respect to (1) the integrity of Spark’s financial statements
and financial reporting process and systems of internal controls
regarding finance, accounting, and compliance with legal and
regulatory re- quirements, (2) the qualifications, independence,
and performance of Spark’s inde- pendent registered public
accounting firm, (3) the performance of Spark’s internal au- dit
function, if any, and (4) other matters as set forth in the charter
of the Audit Com- mittee approved by the Board of Directors.
Management is responsible for the preparation of Spark’s financial
statements and the financial reporting process, including its
system of internal control over financial re- porting and its
disclosure controls and procedures. The independent registered
public accounting firm is responsible for performing an audit of
Spark’s financial statements in accordance with the standards of
the Public Company Accounting Oversight Board (PCAOB) and issuing a
report thereon. The Audit Committee’s responsibility is to mon-
itor and oversee these processes. In connection with these
responsibilities, the Audit Committee reviewed and discussed with
management and the independent registered public accounting firm
the audited consolidated financial statements of Spark Networks SE
for the fiscal year ended De- cember 31, 2021. The Audit Committee
also discussed with the independent regis- tered public accounting
firm the matters required to be discussed by the applicable
standards of the PCAOB. In addition, the Audit Committee received
written communi- cations from the independent registered public
accounting firm confirming their inde- pendence as required by the
applicable requirements of the PCAOB and has dis- cussed with the
independent registered public accounting firm their independence.
Based on the reviews and discussions referred to above, the Audit
Committee recom- mended to the Board of Directors that the audited
consolidated financial statements of Spark Networks SE be included
in Spark’s Annual Report on Form 10-K for the fiscal year ended
December 31, 2021, that was filed with the SEC. The information
contained in this report shall not be deemed to be (1) “soliciting
material,” (2) “filed” with the SEC, (3) subject to Regulations 14A
or 14C of the Exchange Act, or (4) subject to the liabilities of
Section 18 of the Exchange Act. This report shall not be deemed
incorporated by reference into any of our other filings under the
Exchange Act or the
EU-384792
Securities Act, except to the extent that we specifically
incorporate it by reference into such filing. The Audit Committee
further recommended to the Board of Directors the approval of the
audited IFRS and stand-alone Financials of Spark Networks SE for
the fiscal year ended December 31, 2021, which will be made
available on the Company’s website, accessible at
https://www.spark.net/investor-relations/annual-meeting, following
Board approval, on or about July 20, 2022. 5. Election of the
members of the Administrative Board In accordance with Article 43
para. (2), (3) SE Regulation and Sec. 23 of the SE Reg- ulation
Implementation Act (“SEAG”) in conjunction with Section 10 (1)
sent. 2 of the Company’s Articles of Association (“AoA”) and the
resolution of the Annual Meeting of August 11, 2021 (agenda item
6), the Administrative Board consists of eight members elected by
the Annual General Meeting. All current members of the
Administrative Board have been elected to the Administra- tive
Board of Spark Networks SE by the Annual Meeting of August 11, 2021
for a period until the end of the Annual General Meeting that
resolves on granting the Ad- ministrative Board members discharge
for the fiscal year 2021. Thus, pursuant to Article 43 para. (2),
(3) SE-Regulation, Sec. 23 SEAG in conjunction with Section 10
para. (1) sent. 2 AoA eight new members shall be elected to the Ad-
ministrative Board. Shareholders are being asked at the Annual
Meeting to approve, and the Administra- tive Board, based on the
recommendation of its Presiding and Nominating Committee, proposes
to adopt, the following resolutions: The following individuals
shall be elected to the Administrative Board of Spark Net- works
SE, each for a term beginning with the end of this Annual Meeting
until the end of the Annual Meeting which resolves on granting the
Administrative Board members discharge for the fiscal year 2022,
but not longer than for a maximum term of six years from the
beginning of their respective term of office: a) Eric Eichmann,
Managing Director of Spark Networks SE, Munich, Ger- many; resident
in Montclair (New Jersey), USA;
EU-384792 b)
Ulrike Handel, member of the management board of Axel Springer SE,
Ber- lin, Germany, Investor (Proptech, Krypto, Adtech), Supervisory
and Advisory Board Member (Healthcare, Media Intelligence, Data
Mastery, Commerce Tech); resident in Hamburg, Germany; c) Bradley
J. Goldberg, former executive at Microsoft and PEAK6, Chicago
(Illinois), USA; limited partner advisor at NYCA Partners, New
York, (New York) USA; resident in Seattle (Washington), USA; d)
Colleen Birdnow Brown, former CEO of Fisher Communications, Seattle
(Washington) USA; member of the board of directors at True Blue
Inc., Ta- coma (Washington), USA and Big5 Sporting Goods, El
Segundo (California) USA; resident in Parker (Colorado), USA; e)
Michael J. McConnell, former Interim Executive Chairman and Chief
Exec- utive Officer of Spark Networks SE, private Investor;
resident in La Canada Flintridge (California), USA; f) Chelsea
Grayson, Executive-in-Residence at Wunderkind (formerly BounceX)
New York (New York) USA; member of the boards of directors at
Xponential Fitness, Inc., Califronia, USA, Goodness Growth Holdings
(for- merly Vireo Health International, Inc., Minneapolis
(Minnesota), USA) and Loudpack, Greenfield (California), USA;
resident in Los Angeles (California), USA; g) Bangaly Kaba, Head of
Platform Growth at Popshop Live; New York (New York), USA, resident
in Belmont (California), USA; and h) Joseph E. Whitters,
Advisor/Consultant and partner at Frazier Healthcare Partners,
Seattle (Washington) USA; resident in Granite Bay (California), USA
With regard to the Administrative Board members proposed for
election, the following information is disclosed pursuant to Sec.
125 para. (1) sent. 5 German Stock Corpo- ration Act: The following
person of the proposed Administrative Board members is a member in
another domestic supervisory board the establishment of which is
required by law.
EU-384792
Ulrike Handel Supervisory Board Member at CompuGroup Medical SE
& Co KGaA, Ko- blenz, Germany The candidates are members in the
following comparable domestic or foreign control- ling bodies of
commercial enterprises:
EU-384792
Candidate Membership in comparable domestic or foreign controlling
bodies of commercial enterprises: Michael J. McConnell Member of
the Board of Directors (Audit Committee) of Vonage Holdings Corp.,
New Jersey, USA; Member of the Board of Direc- tors of Adacel
Technologies Limited, Mel- bourne, Australia; Member of the Board
of Directors of and OneSpan Inc., Chicago (Illi- nois), USA;
Non-executive director at Quick- Fee, Australia; Board of directors
of Jacob Stern & Sons, Inc, Santa Barbara, USA Ulrike Handel
Member of the management board of Axel Springer SE, Berlin,
Germany; Member of the management board of Unicepta GmbH Bradley J.
Goldberg Member of the Board of Directors of Cellar Tracker,
Seattle (Washington), USA Colleen Birdnow Brown Member of the Board
of Directors of TrueBlue, Inc. ,Tacoma (Washington), USA and Big 5
Sporting Goods Corpora- tion, El Segundo (California),
USA
EU-384792
Chelsea Grayson Member of the Board of Directors, Chair of the
Nominating & Corporate Governance Committee and Member of the
Audit Com- mittee of Goodness Growth Holdings (for- merly Vireo
Health) Minneapolis (Minne- sota), USA; Member of the Board of
Direc- tors and Member of the Audit Committee of Xponential
Fitness, Inc., California, USA; Member of the Board of Directors
and Member of the Audit Committee of LoudPack Greenfield
(California), USA; Member of the Board of Directors, Inde- pendent
Lead Director and Member of the Audit Committee of iHerb; Member of
the Board of Directors and Chair of the Board of Lapmaster Group
Holdings, Illinois, USA Bangaly Kaba Member of the Board of
Directors of Polar, New York (New York), USA Joseph E. Whitters
Member of the Board of Directors of Or- thotic Holdings, Inc Meza
(Arizona) USA, and Parata Systems, Durham (North Caro- lina) USA,
Chairman of the Board and member of the Audit Committee at Accu-
ray Incorporated, Sunnyvale (California), USA; Chair of the Audit
Committee at Cutera, Inc. Brisbane (California), USA In the opinion
of the Administrative Board, there are no personal or professional
rela- tionships between the proposed candidates and Spark Networks
SE, its group com- panies or the corporate bodies of Spark Networks
SE or any shareholder directly or indirectly holding more than 10%
of the voting shares in the Company, which an ob- jectively judging
shareholder would consider decisive for his election decision. The
proposals of the Administrative Board observe statutory
requirements as well as the objectives determined by the
Administrative Board of Spark Networks SE regard- ing its
composition. Furthermore, in the opinion of the Administrative
Board, all can- didates proposed for election are independent
within the meaning of the German Cor- porate Governance Code
(Deutscher Corporate Governance Kodex).
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Short CVs and further information on the candidates for the
Administrative Board can be found at the Company’s website at
https://www.spark.net/investor-relations/annual-meeting It is
intended to let the Annual General Meeting vote on the election of
the candi- dates to the Administrative Board by way of individual
ballot. 6. Advisory vote on executive compensation At the Annual
Meeting, the shareholders are being asked to approve our executive
compensation on an advisory basis in accordance with Section 14A of
the Securities Exchange Act of 1934 (the “Exchange Act”) (the
“say-on-pay” vote). The say-on-pay vote is an advisory vote on the
compensation of our Named Executive Officers (the “NEOs”), as such
compensation is disclosed pursuant to Item 402 of Regulation S-K in
the section titled “Executive Officer and Director Compensation” in
the Company’s Proxy Statement. The relevant section, Executive
Officer and Director Compensation, of the Proxy Statement of Spark
Networks SE is as follows:
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2021 COMPENSATION DECISIONS AND OUTCOMES Base Salary Base salaries
for our named executive officers are established based on the scope
of their responsibilities. Base salaries are reviewed on an annual
basis and increases, if any are similar in scope to our overall
corporate salary increase. The base salary is paid in twelve equal
monthly installments. Named executive officer salaries did not
increase in 2021. Name 2021 Base Salary 2020 Base Salary Increase
Eric Eichmann (1) $625,000 $625,000 0 % David Clark (2) $400,000
n/a n/a Gitte Bendzulla (3) €240,000 €240,000 0 % (1) Mr.
Eichmann’s salary comprises $525,000 under his employment agreement
with Spark Networks, Inc., also referred to as the “Eichmann
Employment Agreement” and $100,000 under his employment agreement
with Spark Networks, SE, also referred to as the “Eichmann
Executive Director Service Agreement”. For the purpose of this
CD&A the combined value is referred to as base salary. (2) Mr.
Clark was appointed effective August 10, 2021 and this represents
his annual salary. Mr. Clark’s salary comprises $340,000 under the
employment agreement with Social Net, Inc., and $60,000 with Spark
Networks SE. For the purpose of this CD&A the combined value is
referred to as base salary. (3) 2020 salary reflects Ms.
Bendzulla’s salary on appointment to her role as COO on December 1,
2020. Annual Cash Incentives The annual cash incentive plan is
designed to drive near-term business objectives and strategic
priorities, and reward for progress and performance delivered
during the year. Awards consist of an annual target with
performance measures based on a combination of quantitative
financial performance goals and a combination of quantitative and
qualitative individual objectives. The maximum payout is capped at
150% of target. (1) For Mr. Clark, who was appointed during 2021,
the NGCC resolved to assess his actual annual cash incentive based
solely on his individual performance. Financial Performance The
metrics approved for 2021 were revenue and adjusted EBITDA,
reflecting our priorities of driving shareholder value while
ensuring we continue to meet our debt covenants. The NGC Committee
seeks to establish goals that are rigorous, and appropri- ately
align pay with performance, while not incentivizing excessive risk
taking. Each metric has a threshold, target and maximum performance
goal associated with it, and a corresponding level of payout.
Metric Weight Threshold (50% Payout) Target (100% Payout Maximum
(150% payout) Actual Achieved Payout (% of target) Revenue (M) 50 %
$240 $250 $260 $217 0 % Adjusted EBITDA (M)(1) 50 % $34 $37 $40 $33
0 % Total 0 % (1) We make adjustments to U.S. GAAP financial
measures for purposes of this performance metric to ensure that
results properly reflect management contributions. See Part II—Item
7. Management’s Discussion and Analysis of Financial Condition and
Results of Operations for an explanation of how this metric is
calculated from our audited financial statements. As a result of
financial performance failing to reach the threshold performance
goals, no payment was earned by our named executive officers in
respect of this component for 2021.
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Individual Performance The NGC Committee believes that it is also
important to incentivize and reward for performance in areas of
strategic importance specific to each executive’s role. Objectives
are established and approved by the NGC Committee in the first
quarter and are intended to reflect drivers of future financial
performance. Performance goals are both quantitative and
qualitative and reflect areas such as product development, customer
satisfaction and human capital management. Spark continued to
navigate a challenging macro environment during 2021 with the
prolonged effects of COVID-19 disrupting factors such as customer
behavior and increased levels of employee turnover as companies
battled ‘The Great Resignation’. However, the Company still hit a
number of notable achievements and onboarded new senior leaders,
including Mr. Clark as Chief Financial Officer. These achievements
as they relate to each named executive officer’s goals are
summarized below, along with the overall achieved percentage as
determined by the NGCC.
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Name Overview of Goal Areas Key Achievements Achieved Payout (% of
Target) Eric Eichmann 1. Develop and clarify corporate strategy 2.
Progress product portfolio 3. Define and execute on senior talent
development plans • Developed a board-approved strategy with
targeted customer segments fo- cused on growth and prioritizing
share- holder value creation • Launched two new and differentiated
so- cial features on Zoosk in 2021 • Closed gaps on Zoosk and Elite
that drove performance improvements, a heightened user experience
leading to revenue improvements • Drove half of the full-year
revenue through focused product-revenue initia- tives •
Successfully onboarded key senior lead- ers during the year •
Restructured commercial organization to 83 % David Clark 1. Build
FP&A group 2. Reconsider Spark’s tax, IR and internal audit/SOX
to in- crease effectiveness and re- duce costs 3. Initiate new
re-finance pro- cess • Refreshed Investor Relations function and
strategy, resulting in improved qual- ity of service and lower
associated cost • Completed activities that resulted in re- duced
tax costs and improved our tax strategy capabilities • Initiated an
assessment of operational capacities, key processes and financial
policies to identify future opportunities for improvement •
Initiated refinance process on time in an effective manner 100 %
Gitte Ben- dzulla 1. Develop the COO organiza- tion 2. Improve
business-driven value 3. Drive improved accountability and
governance processes • Build Cyber Security Organization, stabi-
lized technical capabilities and driving company wide awareness of
Cyber Se- curity Threats • Established company-wide performance
management and rolled our comprehen- sive Learning- and Development
Pro- gram • Initiated company wide diversity program • Grew inhouse
legal capabilities and im- plemented company – wide Contract
Management, IP Management system • Drove further efficiencies and
enhanced responsibilities at Customer Care result- ing in CSat
score across all brands. • Stabilized Board Governance and Com-
pliance catering for German and US le- gal specifics • Mitigated
company’s risk profile by imple- 84 %
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summary, based on the performance and accomplishments summarized
above, the NGC Committee approved the following annual incentive
payouts for 2021. Name Target Cash Incentive Actual Cash Incentive
Actual (% of Target) Eric Eichmann $300,000 $75,000 25 % David
Clark (1) $78,904 $78,904 100 % Gitte Bendzulla €72,000 €18,144 25
% (1) Mr. Clark’s target incentive opportunity of $200,000 was
pro-rated to reflect his service during the year, with his actual
annual cash incentive based solely on his individual performance.
Equity Incentives Long-term incentive awards represent the largest
percentage of a named executive officer’s compensation package and
are awarded periodically. Awards are designed to incentivize and
reward long-term value creation and stock price appreciation, rec-
ognize performance, align interests with those of our shareholders
and retain top talent. The design of our equity-based compensation
program is influenced by our German incorporation, although it
operates in a manner consistent with other German and U.S.
companies of a similar size to Spark. Awards take the form of
virtual options which are structured to operate in a manner
consistent with either stock options or restricted stock. Vehicle
Operates like Purpose Exercise price definition Market-priced vir-
tual stock options Stock option Align with shareholder in- terests
by reward long-term sustainable stock price ap- preciation Granted
with an exercise price equal to the average closing price of the
underlying shares over the five trading days pre- ceding the date
of grant Zero-priced virtual stock options Restricted stock unit
Align with shareholder in- terests and support execu- tive
retention In order to operate like a restricted stock unit, awards
are granted to operate like whole-value shares and so have no
associated exercise price (hence the term ‘zero-priced’) Virtual
options are subject to a seven-year term with vesting phased over a
four-year period: • 25% of the award vests after 12 months • 6.25%
of the award subsequently vests at the end of each quarter On
vesting, awards are settled in Spark stock, and while the company
can settle awards in cash under the Plan Rules, this feature is not
currently used, nor is planned to be use for named executive
officers. As noted above, the NGC Committee makes awards
periodically to named executive officers with consideration to a
range of factors including the market competitiveness of that award
at the time of grant, and the potential value and retention power
of unvested awards. Given awards made in 2020, Mr. Eichmann, Ms.
Bendzulla and Mr. Althaus did not receive any equity grants during
2021. Following his appointment, in August 2021 Mr. Clark received
an award of 200,000 virtual stock options with an exercise price of
$3.77 per ADS, and an award of 100,000 zero-priced virtual stock
options. Both of Mr. Clark’s awards vest in accordance with the
schedule summarized above consistent with the other executive
officers. Market-priced virtual stock options Operating like stock
options Zero-priced virtual stock options Operating like RSUs Total
value of awards in 2021 (1) Name Number Value (1) Number Value (1)
Eric Eichmann 0 $0 0 $0 $0 David Clark 200,000 $267,500 100,000
$308,000 $575,500 Gitte Bendzulla 0 $0 0 $0 $0 (1) This value
represents the grant date fair value of the stock options granted
as computed in accordance with ASC 718 and captured in the Summary
Compensation Table.
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the interest of enhanced understanding, the table below summarizes
the awards made in 2020 to Mr. Eichmann and Ms. Ben- dzulla who
were serving named executive officers on December 31, 2021.
Market-priced virtual stock options Operating like stock options
Zero-priced virtual stock options Operating like RSUs Total value
of awards in 2020 (1) Name Number Value (1) Number Value (1) Eric
Eichmann 833,000 $2,607,290 449,000 $2,837,680 $5,444,970 Gitte
Bendzulla (2) 132,000 $378,300 42,000 $242,690 $620,990 (1) This
value represents the grant date fair value of the stock options
granted as computed in accordance with ASC 718 and captured in the
Summary Compensation Table. (2) Reflects the aggregate value of
grants made to Ms. Bendzulla during 2020. The average equity mix
for the three executive officers as of December 31, 2021, was 52%
in the form of market-priced virtual stock options, which the NGC
Committee considers performance-based given the inherent need for
stock price appreciation for any value to be realized, with the
remaining 48% in the form of zero-priced virtual stock options,
which operate like RSUs. Our executive compensation program
reflects our principle of aligning incentives with shareholder
value creation. The table above, and our Summary Compensation Table
(SCT) below include the fair value of long-term incentive awards at
the date of grant, calculated in accordance with the applicable
accounting standards. Given the inherent relationship between our
stock price per- formance and the value of our incentive awards, on
December 31, 2021, the CEO’s 2020 equity award was worth 26% of
this fair value at the date of grant. This aligns with a reduction
in our stock price between the date of grant and our fiscal
year-end, and provides a forward-looking incentive to build
value.
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Benefits and Perquisites Named executive officers are eligible to
participate in all of our employee benefit plans on terms
consistent with employees in the applicable geography. Benefit
Eligibility Key Features Health & Welfare In- surance Benefits
All full-time US-based em- ployees, including Mr. Eichmann and Mr.
Clark Medical, dental, vision, group life, disability and
accidental death and dismemberment insurance, voluntary life and
accidental death and dis- memberment All German-based employ- ees,
including Ms. Ben- dzulla State or private health and care
insurance, state unemployment insur- ance, state accident insurance
Retirement Benefits All regular US-based em- ployees, including Mr.
Eichmann and Mr. Clark Employer sponsored 401(k) traditional and
Roth retirement Safe Har- bor plan Company match is 100% up to 4%
of employee contribution with maxi- mum employee contributions and
employer match subject to annual federal limits All German-based
employ- ees, including Ms. Ben- dzulla State pension insurance
Mr. Eichmann’s employment agreement provides that Spark Networks,
Inc. will reimburse Mr. Eichmann for income tax liabilities to the
extent that such liabilities exceed by $25,000 the amount he would
have otherwise been obligated to paid had he been subject only to
income taxes in the United States. NOMINATING, GOVERNANCE AND
COMPENSATION COMMITTEE REPORT The NGC Committee has reviewed this
Compensation Discussion & Analysis and discussed it with
Company management. In reliance on its review and the discussions
referred to above, the Committee recommended to the Administrative
Board that the Compensation Discussion & Analysis be included
in the Company’s Proxy Statement. Bradley J. Goldberg (Chair)
Bangaly Kaba David Khalil
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COMPENSATION OF NAMED EXECUTIVE OFFICERS Summary Compensation Table
The following table presents summary information regarding the
total compensation for services rendered in all capacities that was
earned by our named executive officers during the years ended
December 31, 2021 and 2020, all amounts are in US dollars: Name
Fiscal Year Salary Bonus Option Awards(1) Non-equity In- centive
Plan Compensation All Other Com- pensation(2) Total Eric Eichmann
2021 625,000 — — 75,000 49,398 749,398 Chief Executive Officer 2020
625,000 — 5,444,970 300,000 43,471 6,413,441 Gitte Bendzulla(3)
2021 283,848 — — 21,459 19,191 324,498 Chief Operating Officer and
Chief Legal Officer 2020 232,247 — 620,990 68,532 17,586 939,355
David Clark(4) 2021 157,052 — 575,500 78,904 16,363 827,819 Chief
Financial Officer 2020 — — — — — — Bert Althaus(3)(5) 2021 155,229
— — 88,703 239,471 483,403 Former Chief Financial Officer 2020
256,995 — 694,310 85,665 16,337 1,053,307 Yoon Um(6) 2021 235,000 —
108,140 23,500 25,909 392,549 Global Controller (Interim Principal
Financial Of- ficer and Principal Accounting Officer) 2020 — — — —
— — (1) The amounts reported in the Option Awards column represent
the grant date fair value of the stock options granted to the named
executive officers during the years ended December 31, 2021 and
2020 as computed in accordance with ASC 718. The assump- tions used
in calculating the grant date fair value of the stock options
reported in the Option Awards column are set forth in Note 12. to
the audited consolidated financial statements included in our Form
10-K. Note that the amounts reported in this column reflect the
accounting cost for these stock options, and do not correspond to
the actual economic value that may be received by the named
executive officers from the options. (2) The amounts reported in
the All Other Compensation column include health and welfare
insurance benefits, retirement benefits, and severance. (3) The
amounts reported for Ms. Bendzulla and Mr. Althaus have been
converted into US Dollars based on the average exchange rate of
1.1827 and 1.1422 for 2021 and 2020, respectively. (4) Mr. Clark
was appointed as Chief Financial Officer in August 2021. (5) Mr.
Althaus departed as Chief Financial Officer in July 2021. Severance
of $229,148 earned by Mr. Althaus in 2021, including his remaining
contractual gross fixed salary through September 31, 2021, is
reflected in the All Other Compensation column. (6) Ms. Um was
appointed as Principal Financial Officer and Principal Accounting
Officer from May 2021 until August 2021. Outstanding Equity Awards
at 2021 Fiscal Year-End Table The table below sets forth certain
information regarding the outstanding equity awards held by our
named executive officers as of December 31, 2021.
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Option Awards Option Awards Zero Option Awards Name Grant Date
Vesting Com- mencement Date Number of Securities Underlying
Unexercised Options Ex- ercisable (#) Number of Securities Un-
derlying Un- exercised Op- tions Unexer- cisable (#) Option
Exercise Price ($) Number of Securities Underlying Unexercised
Options Exer- cisable (#) Number of Securities Un- derlying Un-
exercised Op- tions Unexer- cisable (#) Option Expiration Date Eric
Eichmann 1/21/20 1/31/20 364,439 468,561 4.88 28,063 252,561
2/28/27 Chief Executive Officer Gitte Bendzulla 1/21/20 1/31/20
39,375 50,625 4.88 1,813 16,311 2/28/27 Chief Operating Of- and
Chief Legal Of- 11/30/20 11/30/20 10,500 31,500 4.33 3,250 9,750
12/31/27 David Clark 8/31/21 8/31/21 — 200,000 3.77 — 100,000
9/30/28 Chief Financial Officer Bert Althaus 1/21/20 1/31/20 50,626
— 4.88 — — 2/28/27 Former Chief Financial Officer Yoon Um 11/30/20
11/30/20 7,500 22,500 4.54 2,000 6,000 12/30/27 Global Controller
(Interim Principal Fi- nancial Officer and Principal Accounting
Officer) 6/15/21 6/15/21 — 20,000 5.34 — 12,000 7/15/28 Options
Exercises and Stock Vested Option Awards Stock Awards Name Number
of Shares Acquired on Exer- cise (#)(1) Value Realized on Exercise
($)(2) Number of Shares Acquired on Vest- ing (#) Value Realized on
Vesting ($) Eric Eichmann 91,850 366,347 — — Gitte Bendzulla 6,215
29,542 — — David Clark — — — — Bert Althaus 9,016 42,687 — — Yoon
Um — — — — (1) Represents the net shares acquired (2) Value
realized on exercise is based on the difference between the closing
price of Spark Networks SE common shares on the date of share
transfer and the exercise price. Employment and Other Compensation
Arrangements Eric Eichmann. On November 19, 2019, our wholly-owned
subsidiary Spark Networks, Inc. entered into an employment
agreement with Mr. Eichmann (the “Eichmann Employment Agreement”)
with respect to his employment as Chief Executive Officer of Spark
Networks, Inc. The Eichmann Employment Agreement provides for an
annual base salary of $525,000 and an annual target bonus amount of
not less than $300,000. Pursuant to the Eichmann Employment
Agreement, if Mr. Eichmann’s employment is terminated by Spark
Networks, Inc. without cause or by Mr. Eichmann with good reason,
then (i) if such termination occurs within 18 months of his
employment agreement, Mr. Eichmann will be eligible to receive
severance in an amount equal to 18 months of his annual base salary
and his annual bonus amount for such period (plus an amount equal
to the then current annual base salary and annual bonus payable to
Mr. Eichmann pursuant to the executive director service agreement
with Spark Networks SE, as described further below), paid in the
form of salary continuation, as well as reimbursement of COBRA
continuation coverage premium payments for 18 months; and (ii) if
such termination occurs more than 18 months following the date of
his employment agreement, Mr. Eichmann will be eligible to receive
severance in an amount equal to 12 months of his annual base salary
and his annual bonus amount for such period (plus an amount equal
to the then current annual base salary and annual bonus payable to
Mr. Eichmann pursuant to the executive director service agreement
with the Company), as well as reimbursement of COBRA continuation
coverage premium payments for 12 months. Mr. Eichmann’s eligibility
for the foregoing severance is conditioned on Mr. Eichmann having
first signed
EU-384792 a
release agreement in a form reasonably acceptable to the
Administrative Board. Spark Networks, Inc. will reimburse Mr. Eich-
mann for ordinary course expenses incurred in connection with
travel between the Berlin, Germany and New York, New York, and for
income tax liabilities to the extent that such liabilities exceed
by $25,000 the amount he would have otherwise been obligated to
paid had he been subject only to income taxes in the United States.
Also on November 19, 2019, Spark Networks SE entered into an
executive director service agreement with Mr. Eichmann (the
“Eichmann Executive Director Service Agreement”) pursuant to which
Mr. Eichmann has an annual base salary of $100,000 (in addition to
his salary under his employment agreement with Spark Networks,
Inc.). The term of the Eichmann Executive Director Service
Agreement is four years and six months. Gitte Bendzulla. Ms.
Bendzulla has entered into an employment agreement with Spark
Networks which provides for an annual fixed compensation (base
salary) and an annual performance award (annual bonus) with a
target amount of 30% of her then current fixed gross annual salary.
The relevant goals shall be established annually by the
Administrative Board after consultation with Ms. Bendzulla. The
final amount of the bonus shall be determined annually by the
Administrative Board based on achievement of the established goals
at the same time as the annual financial statements of Spark
Networks are approved by Spark Networks’ auditors. The annual
bonus, if any, shall be due and payable at the end of the month
following such approval of the annual financial statements. Upon
termination of employment, the agreement provides that Ms.
Bendzulla may not compete with Spark Networks for one year provided
that Spark Network pays Ms. Bendzulla during such period an amount
equal to 50% of her total remuneration most recently received by
her. Spark Networks shall be entitled to waive this non-compete
covenant by written declaration at any time, including after the
service relationship, with the effect that Ms. Bendzulla is
released of the obligations immediately, and Spark Networks shall
be free of the obligation to pay compensation with immediate effect
starting from the date of declaration. Ms. Bendzulla is further
entitled to receive a severance payment in the amount equal to six
months of her base salary, plus the pro rata portion of her annual
bonus for such year assuming achievement at the 100% level. The
severance payment shall be due and payable together with the last
regular salary payment. Any vesting of VSOP or stock option granted
to Ms. Bendzulla due to occur within the next 3 months after the
effective date of the termination shall continue to vest. In
addition to the fixed and variable remuneration components, under
the terms of the agreement, Ms. Bendzulla is entitled to additional
benefits and reimbursement of necessary and reasonable expenses.
Ms. Bendzulla’s current base salary is €240,000 and her annual
bonus target amount is €72,000. David Clark. Mr. Clark’s employment
agreement with Spark Networks provides for a base salary at an
annual rate of $340,000 and an annual bonus with a target amount of
not less than 50% of his annual base salary based on the
achievement of individual and Company performance goals to be
determined by the Board. In the event that Spark Networks
terminates Mr. Clark’s employ- ment (other than for cause, by death
or by disability), Mr. Clark will be eligible to receive an amount
equal to one year of his then- current annual base salary, payable
in the form of salary continuation, and his unvested options shall
vest in the number of options that would have vested on the next
Vesting Date (as defined in the LTIP) following the effective date
of termination had Mr. Clark remained employed by the Company at
that Vesting Date. Such severance shall be reduced by any
remuneration paid to Mr. Clark because of his employment or
self-employment during the severance period, and Mr. Clark shall
promptly report all such remu- neration to the Company in writing.
Mr. Clark’s eligibility for severance is conditioned on him having
first signed a release agreement in the form reasonably acceptable
to the Board. Also in connection with Mr. Clark’s hiring, Spark
Networks SE entered into an executive director service agreement
with Mr. Clark pursuant to which Mr. Clark has an annual base
salary of $60,000 (in addition to his salary under his employment
agreement with Spark Networks, Inc.). The term of such agreement is
in accordance with the German Corporate Governance Codex limited to
3 years. Bert Althaus. In connection with Mr. Althaus’ departure
from the Company, the Company and Mr. Althaus entered into a
termination agreement (the “Termination Agreement”) pursuant to
which Mr. Althaus resigned from his position as a Managing
Director, effec- tive as of March 31, 2021, but would remain
employed by the Company as Chief Financial Officer until September
30, 2021 (the “Termination Date”) in order to facilitate a
transition of his duties and job responsibilities. In addition,
pursuant to the Termination Agreement, Mr. Althaus received (i) his
contractual gross fixed salary until the Termination Date, (ii) a
bonus in the amount of EUR 75,000 for the year 2020 and (iii) a
severance payment of EUR 156,250. The Termination Agreement also
provided that virtual share options granted to Mr. Althaus under
the Company’s 2020 Long Term Incentive Plan shall continue to vest
until July 31, 2021, and Mr. Althaus shall be entitled to retain
all virtual share options vested but not yet exercised as of July
31, 2021. Mr. Althaus departed as Chief Financial Officer in July
2021. Potential Payments Upon Termination or Change in
Control
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Eric Eichmann. As described above, the Eichmann Employment
Agreement provides if Mr. Eichmann’s employment is terminated by
Spark Networks, Inc. without cause or by Mr. Eichmann with good
reason, then (i) if such termination occurs within 18 months of his
employment agreement, Mr. Eichmann will be eligible to receive
severance in an amount equal to 18 months of his annual base salary
and his annual bonus amount for such period (plus an amount equal
to the then current annual base salary and annual bonus payable to
Mr. Eichmann pursuant to the executive director service agreement
with Spark Networks SE, as described further below), paid in the
form of salary continuation, as well as reimbursement of COBRA
continuation coverage premium payments for 18 months; and (ii) if
such termination occurs more than 18 months following the date of
his employment agreement, Mr. Eichmann will be eligible to receive
severance in an amount equal to 12 months of his annual base salary
and his annual bonus amount for such period (plus an amount equal
to the then current annual base salary and annual bonus payable to
Mr. Eichmann pursuant to the executive director service agreement
with the Company), as well as reimbursement of COBRA continuation
coverage premium payments for 12 months. Mr. Eichmann’s eligibility
for the foregoing severance is conditioned on Mr. Eichmann having
first signed a release agreement in a form reasonably acceptable to
the Administrative Board. Gitte Bendzulla. In case of a termination
of her employment by Spark Networks, Ms. Bendzulla is further
entitled to receive a severance payment equal to the amount of her
remuneration entitlement for six equal installments of her base
salary plus the pro rata variable annual bonus assuming a target
achievement of 100%. The severance payment shall be due and payable
together with the last regular salary payment. Any vesting of VSOP
or stock option granted to Ms. Bendzulla due to occur within the
next 3 months after the effective date of the termination shall
continue to vest. In the event of enforcement of the
non-competition clause contained in Ms. Bendzulla employment
contract, Ms. Bendzulla will receive compensation amounting to 50%
of the basic remu- neration received by her for a period of six
months. David Clark. As described above, in the event that Spark
Networks terminates Mr. Clark’s employment (other than for cause,
by death or by disability), Mr. Clark will be eligible to receive
an amount equal to one year of his then-current annual base salary,
payable in the form of salary continuation and his unvested options
shall vest in the number of options that would have vested on the
next Vesting Date (as defined in the LTIP) following the effective
date of termination had Mr. Clark remained employed by the Company
at that Vesting Date. Such severance shall be reduced by any
remuneration paid to Mr. Clark because of his employment or
self-employment during the severance period, and Mr. Clark shall
promptly report all such remuneration to the Company in writing.
Mr. Clark’s eligibility for severance is conditioned on him having
first signed a release agreement in the form reasonably acceptable
to the Board.
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DIRECTOR COMPENSATION The full Board determines compensation of our
non-executive directors based on recommendations made by the
Nominating, Governance and Compensation Committee (NGC Committee).
The NGC Committee evaluates the form and amount of compensation for
non-executive directors periodically and recommends changes to our
Board when appropriate. Director compensation was established to
comply with the German Corporate Governance Code and consequently,
director compensation is currently paid solely in the form of cash.
During our 2021 shareholder engagement, ques- tions were
specifically asked about why Directors do not receive any of their
compensation in the form of equity, as is customary in the United
States. This reflects limitations we are subject to under German
law, rather than an active choice to deviate from market norms in a
relevant geography for our business, talent and shareholders.
Regardless, we believe that the compensation system in place
provides a reasonable balance between US and German compensation
practices on the Board and its Committees, and enables us to
attract and retain high caliber talent. Non-executive directors are
paid a quarterly retainer for their service on the Board and
additional fees to reflect any incremental roles or duties they
hold. Directors are not compensated for attending individual
meetings of the Board on a per-meeting basis. Role Non-Employee
Director An- nual Compensation Board Retainer €80,000 Additional
Compensation: Chair of Board €40,000 Vice-Chair of Board €20,000
Audit Committee Chair €20,000 Audit Committee Member(1) €12,500 NGC
Committee Chair €18,000 NGC Committee Member(1) €10,000 (1)
Committee chairs are not eligible to receive the member
compensation; this time commitment is contemplated in their
compensation as chair. We reimburse all our non-executive directors
for all expenses reasonably incurred in connection with their
service as a director, including attendance at Board or Committee
meetings. The following table sets forth the compensation earned by
or paid to our non-employee directors for services pro- vided
during the year ended December 31, 2021. Other than as described
below, none of our non-employee direc- tors received any fees or
reimbursement of any expenses (other than customary expenses in
connection with the attendance of meetings of our Board of
Directors) or any equity or non-equity awards in the year ended
Decem- ber 31, 2021. Amounts are converted from the policy values
set out above into US Dollars based on the average 2021 exchange
rate of 1.1827. Name Fees Earned or Paid in Cash ($) Option Awards
($)(1) Total ($) Axel Hefer 109,400 — 109,400 Bangaly Kaba(2)
41,490 41,490 Bradley J. Goldberg 139,559 — 139,559 Colleen Birdnow
Brown 127,490 — 127,490 Chelsea A. Grayson 109,400 — 109,400 Cheryl
Michel Law(3) 64,953 64,953 David Khalil 135,312 — 135,312 Joseph
E. Whitters(4) 46,099 — 46,099
EU-384792 (1)
The amounts reported in the Option Awards column represent the
grant date fair value of the stock options granted to the director
during the year ended December 31, 2021 as computed in accordance
with ASC 718. The assumptions used in calculating the grant date
fair value of the stock options reported in the Option Awards
column are set forth in Note 12. to the audited consolidated
financial statements included in our Form 10-K for the year ended
December 31, 2021. Note that the amounts reported in this column
reflect the accounting cost for these stock options, and do not
correspond to the actual economic value that may be received by the
named executive officers from the options. (2) Bangaly Kaba was
appointed to the Board of Directors on August 11, 2021. (3) Cheryl
Michel Law was a Director of the Board until August 10, 2021. (4)
Joseph E. Whitters was appointed to the Board of Directors on
August 11, 2021. Compensation Committee Interlocks and Insider
Participation None of our executive officers currently serves, and
in the past year has not served, as a member of the compen- sation
committee of any entity that has one or more executive officers
serving on our Administrative Board.
EU-384792 7.
Resolution on the approval of the compensation report for the
financial year 2021 Under the Act Implementing the Second
Shareholders’ Rights Directive (“ARUG II”), which came into force
on January 1, 2020, the Administrative Board has to prepare an
annual compensation report on the compensation granted and owed in
the last financial year to each individual current or former member
of the Executive Board and Administrative Board by the company and
by companies in the same group. Such compensation report must
comply with certain requirements of Section 162 Ger- man Stock
Corporation Act. Under the applicable transitional law, the new
provisions of the German Stock Corporation Act on the compensation
report must be applied for the first time for the first financial
year beginning after December 31, 2020. Therefore, the company had
to prepare a compensation report for the first time for the
financial year 2021 ended on December 31, 2021. The auditor must
check whether the compensation report pursuant to Section 162
German Stock Corporation Act contains all the information required
by law and has to issue an audit opinion on such audit. Pursuant to
Section 120a para. 4 German Stock Corporation Act, the audited com-
pensation report together with the audit opinion must be submitted
to the Annual Gen- eral Meeting for a decision on its approval. The
decision of the Annual General Meet- ing on the approval of the
compensation report is of an advisory nature. The Administrative
Board has adopted, and hereby submits to the Annual Meeting, a
compensation report as described in the Annex to this proposal no.
7. The Administrative Board proposes that the General Meeting
approve the compensa- tion report for the fiscal year
2021.
25 EU-384792
Annex to agenda item 7 COMPENSATION REPORT FOR THE FINANCIAL YEAR
2021 PURSUANT TO SECTION 162 GERMAN STOCK COR- PORATION ACT
Convenience translation of the original German audit report. Solely
the original text in German is authoritative. Report on the audit
of the remuneration report for the financial year from 1 January
2021 to 31 December 2021 of Spark Networks SE Munich
26 EU-384792
APPENDICES Compensation Report 2021 Appendix I Page 1 - 13 Special
Terms and Conditions of BDO AG Wirtschaftsprüfungsgesellschaft and
General Engagement Terms for Wirtschaftsprüfer (German Public
Auditors) and Wirtschaftsprüfungsgesellschaften (Public Audit
Firms) Appendix I Page 1 - 4
27 EU-384792
REPORT ON THE AUDIT OF THE RUMUNERATION REPORT To Spark Networks
SE, Munich REPORT OF THE INDEPENDENT AUDITOR ON THE AUDIT OF THE
REMUNERATION REPORT PURSUANT TO § 162 (3) AKTG Audit Opinion We
have formally audited the remuneration report of Spark Networks SE,
Munich, for the financial year from January 1, 2021 to December 31,
2021, to determine whether the disclosures pursuant to § 162 (1)
and (2) AktG (Aktiengesetz: German Stock Corporation Act) have been
made in the remuneration report. In accordance with § 162 (3) AktG,
we have not audited the content of the remuneration report. In our
opinion, the accompanying remuneration report complies, in all
material respects, with the disclosure re- quirements pursuant to §
162 (1) and (2) AktG. Our audit opinion does not cover the content
of the remuneration report. Basis for the Audit Opinion We
conducted our audit of the remuneration report in accordance with §
162 (3) AktG and in compliance with the IDW Auditing Standard: The
Audit of the Remuneration Report pursuant to § 162 (3) AktG (IDW PS
870 (08.2021)). Our responsibilities under this regulation and this
standard are further described in the “Auditor's Responsibilities”
section of our auditor’s report. Our audit firm has applied the
requirements of the IDW Quality Assurance Standard: Quality
Assurance Requirements in Audit Practices (IDW QS 1). We have
complied with our professional duties pursuant to the German Public
Auditors Act (WPO) and the Professional Charter for
Auditors/Chartered Account- ants (BS WP/vBP), including the
independence requirements. Responsibilities of the Executive
Directors and the Administrative Board The Executive Directors and
the Administrative Board of Spark Networks SE are responsible for
the preparation of the remuneration report, including the related
disclosures, in compliance with the requirements of § 162 AktG.
They are also responsible for internal controls they consider to be
necessary to enable the preparation of a remu- neration report,
including the related disclosures, that is free from material
misstatement, whether due to fraud or error. Auditor’s
Responsibilities Our responsibility is to obtain reasonable
assurance about whether the remuneration report complies, in all
ma- terial respects, with the disclosure requirements pursuant to §
162 (1) and (2) AktG, and to issue an auditor’s report that
includes our opinion. We planned and performed our audit to obtain
evidence about the formal completeness of the remuneration report
by comparing the disclosures made in the remuneration report with
the disclosures required by § 162 (1) and (2) AktG. In accordance
with § 162 (3) AktG, we have not audited whether the disclosures
are correct or individual disclosures are complete or whether the
remuneration report is fairly presented. Consideration of
Misleading Representations
28 EU-384792
In connection with our audit, our responsibility is to read the
remuneration report considering the knowledge ob- tained in the
audit of the financial statements and to remain alert for
indications as to whether the remuneration report contains
misleading representations in relation to the correctness of the
content of the disclosures, the completeness of the individual
disclosures or the fair presentation of the remuneration report.
If, based on the work we have performed, we conclude that such a
misleading representation exists, we are required to report that
fact. We have nothing to report in this regard. Berlin, June 8,
2022 BDO AG Wirtschaftsprüfungsgesellschaft signed Pfeiffer signed
Wirth Wirtschaftsprüfer Wirtschaftsprüfer (German Public Auditor)
(German Public Auditor)
29 EU-384792
APPENDICES
30 EU-384792
I. COMPENSATION REPORT FOR THE FISCAL YEAR 2021 This compensation
report describes the remuneration to the acting and former Managing
Directors and the members of the Administrative Board of Spark
Networks SE (“Spark”, “Company”) during the fiscal year in the
period from January 1, 2021 to December 31, 2021. The report
explains in detail and individualized the structure and amount of
the individual compensation components of the Managing Directors
and the remuneration of the Administrative Board members. This
compensation report was prepared by the Administrative Board and is
based on the requirements of the German Stock Corporation Act and
com- plies with the applicable recommendations of the German
Corporate Governance Code (DCGK 2020), unless a deviation has been
declared. Clear, comprehensible and transparent reporting is
important to both the Executive Board and the Administra- tive
Board. This compensation report will be submitted to the 2022
Annual General Meeting of Spark Networks SE for approval (advisory
vote). II. COMPENSATION OF MANAGING DIRECTORS 1. New compensation
system approved by the Annual General Meeting Pursuant to the newly
introduced Section 120a (1) of the German Stock Corporation Act
(AktG), the Annual General Meeting of a listed company shall
resolve on the approval of the compensation system for the Managing
Directors presented by the Administrative Board whenever there is a
significant change to the system, but at least every four years.
The first resolution had to be passed by the end of the first
Annual General Meeting following December 31, 2020. Against this
background, the Administrative Board has adopted a compensation
system for the Managing Directors which complies with the
requirements of German Stock Corporation Law and which - to the
extent that no deviation has been de- clared pursuant to Section
161 German Stock Corporation Act - is based on the recommendations
of the German Corporate Governance Code 2020. The compensation
system for the members of the Management Board was approved by the
Annual General Meeting August 11, 2021. In accordance with
statutory requirements, the Administrative Board will apply this
compensation system to service contracts with members of the
Company's Executive Board which are newly concluded, amended or
extended only after the first-time approval of the compensation
system by the Annual General Meeting on August 11, 2021 (section
87a (2) of the AktG). Detailed information on this agm approved new
compensation system is available on the Company's website at
https://www.spark.net/ investor-relations/annual-meeting. 2.
Managing Directors in office during fiscal year 2021 During fiscal
year 2021 the Managing Directors in office consisted of: • Erich
Eichmann (CEO) • Gitte Bendzulla (CLO and COO) • David Clark (CFO
since August 2021) • Bert Althaus (CFO until March 2021). David
Clark joined Spark Networks SE in August 2021 as Chief Financial
Officer. Bert Althaus resigned from his position as Managing
Director effective March 31, 2021 and subsequently continued as CFO
until July 31, 2021. 3. Compensation system for the members of the
Executive Board in office in fiscal year 2021; reference to
corporate strategy The service contracts with the members of the
Executive Board in office in fiscal year 2021 were amended and
extended or, in the case of Mr. David Clark, newly concluded before
the first-time approval of the compensation system by the Annual
General Meeting on August 11, 2021. The new compensation system for
Managing Directors submitted for approval to the Annual General
Meeting on August 11, 2021 is therefore not yet applicable to the
Management Board service agreements in place in fiscal year 2021.
Where the compensation report refers to the applicable and relevant
compensation system for Managing Directors in accord- ance with
section 162 of the German Stock Corporation Act (AktG), this refers
to the compensation system in place when the Management Board
Service agreements with the Managing Directors Mr. Eric Eichmann,
Ms. Gitte Bendzulla and Mr. David Clark were concluded (hereinafter
referred to as the "Applicable Compensation System"). The following
is a brief description of the Applicable Compensation System in
fiscal year 2021
31 EU-384792
3.1 Base Salary The base salary is contractually agreed with each
Managing Director and is paid in twelve equal monthly installments
at the end of each month. Together with the other compensation
components, the fixed compensation forms the basis for attracting
and retaining the highly qualified members of the Executive Board
required for the development and implementation of the corporate
strategy. The Executive Board's compensation system is an important
element of Spark Group's orientation and makes a significant
contribution to promoting the business strategy and enhancing the
operating performance, and thus to the long-term success of the
Spark Group, by ensuring that fixed compensation supports
sustainable corporate governance. In this context, the fixed
compensation is to be commensurate with the skills, experience and
tasks of the individual member of the Executive Board. 3.2 Annual
Cash Incentives (Short Term Incentive) The annual cash incentive
plan is designed to drive near-term business objectives and
strategic priorities, and reward for progress and performance
delivered during the current year. The goal with bonuses to the
Managing Directors is to reward executives in a manner that is
commensurate with the level of achievement of certain financial and
operational goals that, if attained, result in greater long-term
stockholder value. Awards consist of an annual target with
performance measures based on a combination of quantitative
financial performance goals and a combination of quantitative and
qualitative individual objectives. The maximum payout is capped at
150% of target. (1) For Mr. Clark, who was appointed during 2021
the actual annual cash incentive was assessed based solely on his
individual performance. 3.3 Equity Incentives (Long Term Incentive
Program, LTIP) Long-term incentive awards represent the largest
percentage of a Managing Director’s compensation package and they
are awarded periodically. Awards are designed to incentivize and
reward long-term value creation and stock price appreciation,
recognize performance, align interests with those of our
shareholders and retain top talent. The Managing Directors of Spark
Networks SE shall be encouraged to make a long-term commitment to
the Company and to promote sustainable growth and value creation.
For this reason, a significant part of their total compensation is
linked to the long-term development of the Company’s share price.
The design of the equity-based compensation program is influenced
by Spark Networks SE being a German incorporation, although it
operates in a manner consistent with other German and U.S.
companies of a similar size to Spark Networks SE. Awards take the
form of virtual options which are structured to operate in a manner
consistent with either stock options or restricted stock. Vehicle
Operates like Purpose Exercise price definition Market-priced vir-
tual stock options Stock option Align with shareholder in- terests
by reward long-term sustainable stock price ap- preciation Granted
with an exercise price equal to the average closing price of the
underlying shares over the five trading days pre- ceding the date
of grant Zero-priced virtual stock options Restricted stock unit
Align with shareholder in- terests and support execu- tive
retention In order to operate like a restricted stock unit, awards
are granted to operate like whole-value shares and so have no
associated exercise price (hence the term ‘zero-priced’) The LTIP
provides for the grant of (virtual) stock options. Each option
represents the right to receive, upon exercise, a certain amount in
cash determined on the relevant ADS Stock Price of the option minus
the strike price of such option; provided, however, that the
Company may elect to settle options in ADSs or ordinary shares of
Spark Networks SE instead of cash at its sole discretion. As the
(virtual) stock options are not necessarily settled in cash only,
the grant of such options qualifies as
32 EU-384792
an inflow of assets and compensation granted. However, even though
the company can settle awards in cash under the LTIP rules, this
feature is not currently used, nor is planned to be used Managing
Directors. The LTIP provides that the strike price can be set at
any amount determined by the Administrative Board, including zero.
Under the LTIP, the “ADS Stock Price” is, as of the grant date, the
average closing price of one ADS of Spark trading on a US stock
exchange for the period of five trading days prior to such date.
Options granted under the LTIP vest, subject to the Managing
Director´s continued service to Spark, as follows: (i) 25% of the
total number of options granted to a participant vest 12 months
after the grant date of such option, and (ii) an additional 6.25%
of such options shall vest at the end of each additional
three-month period thereafter until the end of the 48th month after
the relevant grant date. 3.4 Benefits and Perquisites;
D&O-Insurance Managing Directors are eligible to participate in
all of the employee benefit plans on terms consistent with the
employees in the applicable geography. Benefit Eligibility Key
Features Health & Welfare In- surance Benefits All full-time
US-based em- ployees, including Mr. Eichmann and Mr. Clark
Medical, dental, vision, group life, disability and accidental
death and dismemberment insurance, voluntary life and accidental
death and dis- memberment All German-based employ- ees, including
Ms. Ben- dzulla State or private health and care insurance, state
unemployment insur- ance, state accident insurance Retirement
Benefits All regular US-based em- ployees, including Mr. Eichmann
and Mr. Clark Employer sponsored 401(k) traditional and Roth
retirement Safe Har- bor plan Company match is 100% up to 4% of
employee contribution with maxi- mum employee contributions and
employer match subject to annual federal limits All German-based
employ- ees, including Ms. Ben- dzulla State pension insurance
The Company includes the Managing Directors in its financial loss
liability insurance (D&O insurance) so that the Managing
Director is insured in the event of a claim by a third party or by
the Company for breaches of duty committed during the performance
of his duties to the Company, and any other Associated Companies.
The goal is to create an attractive working environment for the
members of the Executive Board so that a success-oriented corporate
management can be ensured. 4. Implementation of the Applicable
Compensation System The Applicable Compensation System was fully
implemented and applied in the context of the compensation of the
Managing Directors during fiscal year 2021. 5. Individual
compensation of the Managing Directors in the fiscal year 2021 in
accordance with Section 162 AktG and application of performance
criteria 5.1 Individual Compensation The following table shows the
total compensation (including fringe benefits) for services
rendered in all capacities to current and former members of the
Executive Board in the past fiscal year 2021 as well as variable
compensation components, including the respective relative share in
accordance with section 162 of the German Stock Corporation Act
(AktG).
33 EU-384792
In the interest of enhanced understanding and a voluntary
disclosure, the following table also shows the total compensation
that was earned by the Managing Directors during the fiscal year
2020 ended December 31, 2020; all amounts are reported in EUR (and
in US dollars). Name Position Fiscal Year Salary (fixed) Bonus
(variable) Option Awards(1) (variable) Non-equity In- centive Plan
Compensation (variable) All Other Com- pensation(2) (fixed) Total
Ratio of var- iable com- ponents Eric Eichmann Chief Executive
Officer 2021 €528,452 ($625,000) — — €63,414 ($75,000) €41,767
($49,398) €633,633 ($749,398) 10.008% 2020 €547,190 ($625,000) —
€4,767,090 ($5,444,970 ) €262,651 ($300,000) €38,059 ($43,471)
€5,614,989 ($6,413,441) 89.58% Gitte Bendzulla(3) Chief Operating
Officer and Chief Legal Officer 2021 €240,000 ($283,848) — —
€18,144 ($21,459) €16,226 ($19,191) €274,371 ($324,498) 6.61% 2020
€203,333 ($232,247) — €543,679 ($620,990) €60,000 ($68,532) €15,397
($17,586) €822,409 ($939,355) 73.40% David Clark(4) Chief Financial
Officer 2021 €132,791 ($157,052) — €486,598 ($575,500) €66,715
($78,904) €13,835 ($16,363) €699,940 ($827,819) 79.05% 2020 — — — —
— — —% Bert Althaus(3)(5) (Former) Chief Financial Officer 2021
€131,250 ($155,229) — — €75,000 ($88,703) €202,478 ($239,471)
€408,728 ($483,403) 18.35% 2020 €225,000 ($256,995) — €607,871
($694,310) €75,000 ($85,665) €14,303 ($16,337) €922,174
($1,053,307) 74.05% (1) The amounts reported in the Option Awards
column represent the grant date fair value of the stock options
granted to the named executive officers during the years ended
December 31, 2021 and 2020. Note that the amounts reported in this
column reflect the accounting cost for these stock options, and do
not correspond to the actual economic value that may be received by
the Managing Directors from the options. (2) The amounts reported
in the All Other Compensation column include health and welfare
insurance benefits, retirement benefits, and severance. (3) The
amounts reported have been converted into US Dollars based on the
average exchange rate of 1.1827 and 1.1422 for 2021 and 2020,
respectively. (4) Mr. Clark was appointed as Chief Financial
Officer in August 2021. (5) Mr. Althaus departed as Chief Financial
Officer in July 2021. Severance of $229,148 earned by Mr. Althaus
in 2021, including his remaining contractual gross fixed salary
through September 31, 2021, is reflected in the All Other
Compensation column. 5.2 Base Salaries and other compensation
arrangements Base salaries for the Managing Directors are
established based on the scope of their responsibilities and are
reviewed on an annual basis and increase, if any are similar in
scope to the overall corporate salary increase. The base salary was
paid in twelve equal monthly installments and salaries did not
increase in 2021. Name 2021 Base Salary 2020 Base Salary Increase
Eric Eichmann (1) €528,452 ($625,000) €547,190 ($625,000) 0 % David
Clark (2) €338,209 ($400,000) n/a n/a Gitte Bendzulla (3) €240,000
€240,000 0 % Bert Althaus(4) €225,000 €225,000 0 % (1) Mr.
Eichmann’s salary comprises $525,000 under his employment agreement
with Spark Networks, Inc., also referred to as the “Eichmann
Employment Agreement” and $100,000 under his employment agreement
with Spark Networks, SE, also re- ferred to as the “Eichmann
Executive Director Service Agreement”. For the purpose of this
Compensation Report the combined value is referred to as base
salary. (2) Mr. Clark was appointed effective August 10, 2021 and
this represents his annual salary. Mr. Clark’s salary comprises
$340,000 under the employment agreement with Social Net, Inc., and
$60,000 with Spark Networks SE. For the purpose of this
Compensation Report the combined value is referred to as base
salary.
34 EU-384792
(3) 2020 salary reflects Ms. Bendzulla’s salary on appointment to
her role as COO on December 1, 2020. (4) Mr. Althaus departed as
Chief Financial Officer in July 2021. 5.2.1 Eric Eichmann On
November 19, 2019, Spark Networks SE’s wholly-owned subsidiary
Spark Networks, Inc. entered into an employment agreement with Mr.
Eichmann (the “Eichmann Employment Agreement”) with respect to his
employment as Chief Executive Officer of Spark Networks, Inc. The
Eichmann Employment Agreement provides for an annual base salary of
$525,000 and an annual target bonus amount of not less than
$300,000. Pursuant to the Eichmann Employment Agreement, if Mr.
Eich- mann’s employment is terminated by Spark Networks, Inc.
without cause or by Mr. Eichmann with good reason, then (i) if such
termination occurs within 18 months of his employment agreement,
Mr. Eichmann will be eligible to receive severance in an amount
equal to 18 months of his annual base salary and his annual bonus
amount for such period (plus an amount equal to the then current
annual base salary and annual bonus payable to Mr. Eichmann
pursuant to the executive director service agreement with Spark
Networks SE, as described further below), paid in the form of
salary continuation, as well as reimburse- ment of Consolidated
Omnibus Budget Reconciliation Act (“COBRA”) continuation coverage
premium payments for 18 months; and (ii) if such termination occurs
more than 18 months following the date of his employment agreement,
Mr. Eichmann will be eligible to receive severance in an amount
equal to 12 months of his annual base salary and his annual bonus
amount for such period (plus an amount equal to the then current
annual base salary and annual bonus payable to Mr. Eichmann
pursuant to the executive director service agreement with the
Company), as well as reimbursement of COBRA continuation coverage
premium payments for 12 months. Mr. Eichmann’s eligibility for the
foregoing severance is conditioned on Mr. Eichmann having first
signed a release agreement in a form reasonably acceptable to the
Administrative Board. Spark Networks, Inc. will reim- burse Mr.
Eichmann for ordinary course expenses incurred in connection with
travel between the Berlin, Germany and New York, New York, and for
income tax liabilities to the extent that such liabilities exceed
by $25,000 the amount he would have otherwise been obligated to
paid had he been subject only to income taxes in the United States.
Also on November 19, 2019, Spark Networks SE entered into an
executive director service agreement with Mr. Eichmann (the
“Eichmann Executive Director Service Agreement”) pursuant to which
Mr. Eichmann has an annual base salary of $100,000 (in addition to
his salary under his employment agreement with Spark Networks,
Inc.). The term of the Eichmann Executive Director Service
Agreement is four years and six months. 5.2.2 Gitte Bendzulla Ms.
Bendzulla has entered into an employment agreement with Spark
Networks which provides for an annual fixed compen- sation (base
salary) and an annual performance award (annual bonus) with a
target amount of 30% of her then current fixed gross annual salary.
The relevant goals shall be established annually by the
Administrative Board after consultation with Ms. Bendzulla. The
final amount of the bonus shall be determined annually by the
Administrative Board based on achievement of the established goals
at the same time as the annual financial statements of Spark
Networks are approved by Spark Networks’ auditors. The annual
bonus, if any, shall be due and payable at the end of the month
following such approval of the annual financial statements. Upon
termination of employment, the agreement provides that Ms.
Bendzulla may not compete with Spark Networks for one year provided
that Spark Network pays Ms. Bendzulla during such period an amount
equal to 50% of her total remuneration most recently received by
her. Spark Networks shall be entitled to waive this non-compete
covenant by written declaration at any time, including after the
service relationship, with the effect that Ms. Bendzulla is
released of the obligations immediately, and Spark Networks shall
be free of the obligation to pay compensation with immediate effect
starting from the date of declaration. Ms. Bendzulla is further
entitled to receive a severance payment in the amount equal to six
months of her base salary, plus the pro rata portion of her annual
bonus for such year assuming achievement at the 100% level. The
severance payment shall be due and payable together with the last
regular salary payment. Any vesting of VSOP or stock option granted
to Ms. Bendzulla due to occur within the next 3 months after the
effective date of the termination shall continue to vest. In
addition to the fixed and variable remuneration components, under
the terms of the agreement, Ms. Ben- dzulla is entitled to
additional benefits and reimbursement of necessary and reasonable
expenses. Ms. Bendzulla’s current base salary is €240,000 and her
annual bonus target amount is €72,000. 5.2.3 David Clark Mr.
Clark’s employment agreement with Spark Networks provides for a
base salary at an annual rate of $340,000 and an annual bonus with
a target amount of not less than 50% of his annual base salary
based on the achievement of individual and Company performance
goals to be determined by the Board. In the event that Spark
Networks terminates Mr. Clark’s employ- ment (other than for cause,
by death or by disability), Mr. Clark will be eligible to receive
an amount equal to one year of his
35 EU-384792
then-current annual base salary, payable in the form of salary
continuation, and his unvested options shall vest in the number of
options that would have vested on the next Vesting Date (as defined
in the LTIP) following the effective date of termination had Mr.
Clark remained employed by the Company at that Vesting Date. Such
severance shall be reduced by any remuneration paid to Mr. Clark
because of his employment or self-employment during the severance
period, and Mr. Clark shall promptly report all such remuneration
to the Company in writing. Mr. Clark’s eligibility for severance is
conditioned on him having first signed a release agreement in the
form reasonably acceptable to the Board. Also in connection with
Mr. Clark’s hiring, Spark Networks SE entered into an executive
director service agreement with Mr. Clark pursuant to which Mr.
Clark has an annual base salary of $60,000 (in addition to his
salary under his employment agreement with Spark Networks, Inc.).
The term of such agreement is in accordance with the German
Corporate Governance Codex limited to 3 years. 5.2.4 Bert Althaus
In connection with Mr. Althaus’ departure from the Company, the
Company and Mr. Althaus entered into a termination agree- ment (the
“Termination Agreement”) pursuant to which Mr. Althaus resigned
from his position as a Managing Director, effective as of March 31,
2021, but would remain employed by the Company as Chief Financial
Officer until September 30, 2021 (the “Termination Date”) in order
to facilitate a transition of his duties and job responsibilities.
In addition, pursuant to the Termination Agreement, Mr. Althaus
received (i) his contractual gross fixed salary until the
Termination Date, (ii) a bonus in the amount of EUR 75,000 for the
year 2020 and (iii) a severance payment of EUR 156,250. The
Termination Agreement also provided that (virtual) share options
granted to Mr. Althaus under the Company’s 2020 Long Term Incentive
Plan shall continue to vest until July 31, 2021, and Mr. Althaus
shall be entitled to retain all virtual share options vested but
not yet exercised as of July 31, 2021. Mr. Althaus departed as
Chief Financial Officer in July 2021. 5.3 Variable compensation,
target achievement and application of performance criteria 5.3.1
Annual Cash Incentives (Short Term Incentive) Awards consist of an
annual target with performance measures based on a combination of
quantitative financial performance goals and a combination of
quantitative and qualitative individual objectives. The maximum
payout is capped at 150% of target. (1) For Mr. Clark, who was
appointed during 2021 the actual annual cash incentive was assessed
based solely on his individual performance. (a) Financial
Performance The metrics approved for 2021 were revenue and adjusted
EBITDA, reflecting the Company’s priorities of driving shareholder
value while ensuring continuing to meet the Company’s debt
covenants. Spark Networks SE seeks to establish goals that are
rigorous, and appropriately align pay with performance, while not
incentivizing excessive risk taking. Each metric has a thresh- old,
target and maximum performance goal associated with it, and a
corresponding level of payout. Metric Weight Threshold (50% Payout)
Target (100% Payout Maximum (150% payout) Actual Achieved Payout (%
of target) Revenue (M) 50 % €203 ($240) €211 ($250) €220 ($260)
€183 ($217) 0 % Adjusted EBITDA (M)(1) 50 % €29 ($34) €31 ($37) €34
($40) €28 ($33) 0 % Total 0 % (1) Spark makes adjustments to U.S.
GAAP financial measures for purposes of this performance metric to
ensure that results properly reflect management
contributions.
36 EU-384792
As a result of financial performance failing to reach the threshold
performance goals, no payment was earned by the Managing Directors
in respect of this component for fiscal year 2021. (b) Individual
Performance Spark Networks SE believes that it is also important to
incentivize and reward for performance in areas of strategic
importance specific to each executive’s role. Objectives are
established and approved by the Nomination, Governance and
Compensation Committee (NGCC) in the first quarter and are intended
to reflect drivers of future financial performance. Performance
goals are both quantitative and qualitative and reflect areas such
as product development, customer satisfaction and human capital
management. Spark continued to navigate a challenging macro
environment during 2021 with the prolonged effects of COVID-19
disrupting factors such as customer behavior and increased levels
of employee turnover as companies battled ‘The Great Resignation’.
However, the Company still hit a number of notable achievements and
onboarded new senior leaders, including Mr. Clark as Chief
Financial Officer. These achievements as they relate to each
Managing Director’s goals are summarized below, along with the
overall achieved percentage as determined by the NGCC.
37 EU-384792
Name Overview of Goal Areas Key Achievements Achieved Payout (% of
Target) Eric Eichmann 1. Develop and clarify cor- porate strategy
2. Progress product portfo- lio 3. Define and execute on senior
talent develop- ment plans • Developed a board-approved strategy
with targeted customer segments fo- cused on growth and
prioritizing share- holder value creation • Launched two new and
differentiated so- cial features on Zoosk in 2021 • Closed gaps on
Zoosk and Elite that drove performance improvements, a heightened
user experience leading to revenue improvements • Drove half of the
full-year revenue through focused product-revenue initia- tives •
Successfully onboarded key senior lead- ers during the year •
Restructured commercial organization to 83 % David Clark 1. Build
FP&A group 2. Reconsider Spark’s tax, IR and internal au-
dit/SOX to increase ef- fectiveness and reduce costs 3. Initiate
new re-finance process • Refreshed Investor Relations function and
strategy, resulting in improved qual- ity of service and lower
associated cost • Completed activities that resulted in re- duced
tax costs and improved our tax strategy capabilities • Initiated an
assessment of operational capacities, key processes and financial
policies to identify future opportunities for improvement •
Initiated refinance process on time in an effective manner 100 %
Gitte Ben- dzulla 1. Develop the COO or- ganization 2. Improve
business- driven value 3. Drive improved ac- countability and
govern- ance processes • Build Cyber Security Organization, stabi-
lized technical capabilities and driving company wide awareness of
Cyber Se- curity Threats • Established company-wide performance
management and rolled our comprehen- sive Learning- and Development
Pro- gram • Initiated company wide diversity program • Grew inhouse
legal capabilities and im- plemented company – wide Contract
Management, IP Management system • Drove further efficiencies and
enhanced responsibilities at Customer Care result- ing in CSat
score across all brands. • Stabilized Board Governance and Com-
pliance catering for German and US le- gal specifics • Mitigated
company’s risk profile by im- 84 % In summary, based on the
performance and accomplishments summarized above, the NGC Committee
approved the following annual incentive payouts for
2021.
38 EU-384792
Name Target Cash Incentive Actual Cash Incentive Actual (% of
Target) Eric Eichmann €253,657 ($300,000) €63,414 ($75,000) 25%
David Clark (1) €66,715 ($78,904) €66,715 ($78,904) 100% Gitte
Bendzulla €72,000 €18,144 25% Bert Althaus €0 €0 0% (1) Mr. Clark’s
target incentive opportunity of $200,000 was pro-rated to reflect
his service during the year, with his actual annual cash incentive
based solely on his individual performance. 5.3.2 Equity Incentives
(Long Term Incentive Program, LTIP) The LTIP provides for the grant
of (virtual) stock options which operate like stock options (or
restricted stock units). Each option represents the right to
receive, upon exercise, a certain amount in cash determined on the
relevant ADS Stock Price of the option minus the strike price of
such option; provided, however, that the Company may elect to
settle options in ADSs or ordinary shares of Spark instead of cash
at its sole discretion. The LTIP provides that the strike price can
be set at any amount determined by the Administrative Board,
including zero. Under the LTIP, the “ADS Stock Price” is, as of the
grant date, the average closing price of one ADS of Spark trading
on the stock exchange for the period of five trading days prior to
such date. Mr. Eichmann, Ms. Bendzulla and Mr. Althaus did not
receive any equity grants during 2021. Following his appointment,
in August 2021 Mr. Clark received an award of 200,000 virtual stock
options with an exercise price of $3.77 per ADS, and an award of
100,000 zero-priced virtual stock options. Both of Mr. Clark’s
awards vest in accordance with the schedule summa- rized above
consistent with the other Managing Directors. Market-priced virtual
stock options Operating like stock options Zero-priced virtual
stock options Operating like RSUs Total value of awards in 2021 (1)
Number Value (1) Number Value (1) Eric Eichmann 0 $0 0 $0 $0 David
Clark 200,000 €226,177 ($267,500) 100,000 €260,421 ($308,000)
€486,598 ($575,500) Gitte Bendzulla 0 $0 0 $0 $0 Bert Althaus 0 $0
0 $0 $0 (1) This value represents the grant date fair value of the
stock options granted as computed in accordance with ASC 718 and
captured in the Summary Compensation Table. In the interest of
enhanced understanding and a voluntary disclosure, the table below
summarizes the awards made in 2020 to Mr. Eichmann and Ms.
Bendzulla who were serving named executive officers on December 31,
2021. Market-priced virtual stock options Operating like stock
options Zero-priced virtual stock options Operating like RSUs Total
value of awards in 2020 (1) Number Value (1) Number Value (1) Eric
Eichmann 833,000 €2,282,691 ($2,607,290) 449,000 €2,484,399
($2,837,680) €4,767,090 ($5,444,970) Gitte Bendzulla (2) 132,000
€331,203 ($378,300) 42,000 €212,476 ($242,690) €543,679 ($620,990)
(1) This value represents the grant date fair value of the stock
options granted as computed in accordance with ASC 718 and captured
in the Summary Compensation Table. (2) Reflects the aggregate value
of grants made to Ms. Bendzulla during 2020. The average equity mix
for the three Managing Directors as of December 31, 2021, was 52%
in the form of market-priced virtual stock options, with the
remaining 48% in the form of zero-priced virtual stock options,
which operate like RSUs.
39 EU-384792
5.3.3 Outstanding Equity Awards at 2021 Fiscal Year-End Table The
table below sets forth certain information regarding the
outstanding equity awards held by the Managing Directors of
December 31, 2021. Option Awards Option Awards Zero Option Awards
Name Grant Date Vesting Com- mencement Date Number of Securities
Underlying Unexercised Options Exer- cisable (#) Number of Se-
curities Un- derlying Unex- ercised Op- tions Unexer- cisable (#)
Option Exercise Price ($) Number of Securities Un- derlying Un-
exercised Op- tions Exercis- able (#) Number of Se- curities Under-
lying Unexer- cised Options Unexercisable (#) Option Expiration
Date Eric Eichmann 1/21/20 1/31/20 364,439 468,561 4.88 28,063
252,561 2/28/27 Chief Executive Officer Gitte Bendzulla 1/21/20
1/31/20 39,375 50,625 4.88 1,813 16,311 2/28/27 Chief Operating
Officer and Chief Legal Officer 11/30/20 11/30/20 10,500 31,500
4.33 3,250 9,750 12/31/27 David Clark 8/31/21 8/31/21 — 200,000
3.77 — 100,000 9/30/28 Chief Financial Of- ficer Bert Althaus
1/21/20 1/31/20 50,626 — 4.88 — — 2/28/27 Former Chief Fi- nancial
Officer Options Exercises and Stock Vested In the interest of
enhanced understanding and a voluntary disclosure, the table below
summarizes the number of shares acquired by the Managing Directors
as a result of the (virtual) stock option exercise in fiscal year
2021. Option Awards Stock Awards Name Number of Shares Acquired on
Exer- cise (#)(1) Value Realized on Ex- ercise(2) Number of Shares
Acquired on Vest- ing (#) Value Realized on Vesting ($) Eric
Eichmann 91,850 €309,755 ($366,347) — — Gitte Bendzulla 6,215
€24,978 ($29,542) — — David Clark — — — — Bert Althaus 9,016
€36,093 ($42,687) — — (1) Represents the net shares acquired (2)
Value realized on exercise is based on the difference between the
closing price of Spark Networks SE common shares on the date of
share transfer and the exercise price. 6. Disclosures pursuant to
Section 162 (2) AktG: Benefits in the event of premature
termination activity 6.1 Erich Eichmann The Eichmann Employment
Agreement provides if Mr. Eichmann’s employment is terminated by
Spark Networks, Inc. without cause or by Mr. Eichmann with good
reason, then (i) if such termination occurs within 18 months of his
employment agreement, Mr. Eichmann will be eligible to receive
severance in an amount equal to 18 months of his annual base salary
and his annual bonus amount for such period (plus an amount equal
to the then current annual base salary and annual bonus payable to
Mr. Eichmann pursuant to the executive director service agreement
with Spark Networks SE, as described further below), paid in the
form of salary continuation, as well as reimbursement of COBRA
continuation coverage premium payments for 18 months;
40 EU-384792
and (ii) if such termination occurs more than 18 months following
the date of his employment agreement, Mr. Eichmann will be eligible
to receive severance in an amount equal to 12 months of his annual
base salary and his annual bonus amount for such period (plus an
amount equal to the then current annual base salary and annual
bonus payable to Mr. Eichmann pursuant to the executive director
service agreement with the Company), as well as reimbursement of
COBRA continuation coverage premium payments for 12 months. Mr.
Eichmann’s eligibility for the foregoing severance is conditioned
on Mr. Eichmann having first signed a release agreement in a form
reasonably acceptable to the Administrative Board. 6.2 Gitte
Bendzulla In case of a termination of her employment by Spark
Networks, Ms. Bendzulla is further entitled to receive a severance
pay- ment equal to the amount of her remuneration entitlement for
six equal installments of her base salary plus the pro rata
variable annual bonus assuming a target achievement of 100%. The
severance payment shall be due and payable together with the last
regular salary payment. Any vesting of VSOP or stock option granted
to Ms. Bendzulla due to occur within the next 3 months after the
effective date of the termination shall continue to vest. In the
event of enforcement of the non-competition clause contained in Ms.
Bendzulla employment contract, Ms. Bendzulla will receive
compensation amounting to 50% of the basic remuneration received by
her for a period of six months. 6.3 David Clark In the event that
Spark Networks SE terminates Mr. Clark’s employment (other than for
cause, by death or by disability), Mr. Clark will be eligible to
receive an amount equal to one year of his then-current annual base
salary, payable in the form of salary continuation and his unvested
options shall vest in the number of options that would have vested
on the next Vesting Date (as defined in the LTIP) following the
effective date of termination had Mr. Clark remained employed by
the Company at that Vesting Date. Such severance shall be reduced
by any remuneration paid to Mr. Clark because of his employment or
self- employment during the severance period, and Mr. Clark shall
promptly report all such remuneration to the Company in writing.
Mr. Clark’s eligibility for severance is conditioned on him having
first signed a release agreement in the form reasonably acceptable
to the Board. 7. Other mandatory disclosures pursuant to Section
162 (1) and (2) AktG None of the service agreements of the Managing
Directors who were in office during the fiscal year 2021 provide
for malus- and clawback provisions that would allow to reclaim or
reduce variable components of the Executive Board compensation.
None of the Executive Board members were promised any benefits by a
third party in respect of their activities as Executive Board
members or granted any such benefits in fiscal year 2021. There
were no deviations from the authoritative compensation system -
beyond the differences between the respective Exec- utive Board
service contracts described. As a precaution, it is pointed out
that the Executive Board service contracts in place in fiscal year
2021 do not yet correspond or have not yet corresponded to the
compensation system for Managing Directors submitted to the Annual
General Meeting for approval last year. The relevant compensation
system does not contain any provisions on maximum compensation,
compliance with which would have to be reported. III.
ADMINISTRATIVE BOARD COMPENSATION 1. Compensation System for the
Administrative Board The compensation system and the specific
compensation for the members of the Administrative Board are
defined by the Annual Meeting which, in accordance with Section 38
para. (1) SEAG in conjunction with Section 113 para. (3) German
Stock Corporation Act, adopts a resolution on the compensation of
the members of the Administrative Board at least every four years.
The compensation system for the members of the Administrative Board
of Spark Networks SE as determined in Section 16 of the Articles of
Association of Spark Networks SE. “(1) The members of the
Administrative Board shall receive a fixed remuneration for each
full fiscal year of Administrative Board membership. This
remuneration amounts to EUR 80,000 for each Administrative Board
member. The fixed remunera- tion shall be increased by the amounts
set out below for serving on the following positions:
41 EU-384792
(i) EUR 40,000 for the Chairman of the Administrative Board, (ii)
EUR 20,000 for the Vice Chairman, (iii) EUR 18,000 for the Chairman
of the Presiding and Nominating Committee, (iv) EUR 10,000 for
other members of the Presiding and Nominating Committee, (v) EUR
20,000 for the Chairman of the Audit Committee and (vi) EUR 12,500
for other members of the Audit Committee. If a member of the
Administrative Board serves on several of the above positions, the
respective increase amounts shall apply cumulatively. Members of
the Administrative Board who are also Managing Directors of the
Company shall be compensated exclusively under their respective
service agreements for their duties carried out in their capacity
as Managing Director.” Detailed information on the new compensation
system is available on the Company's website at
https://www.spark.net/ inves- tor-relations/annual-meeting. 2.
Contribution of compensation to the promotion of the business
strategy and long-term development The compensation system for the
members of the Administrative Board is based on the legal
requirements and takes into account the recommendations and
suggestions of the German Corporate Governance Code (as amended
last on 16 Decem- ber 2019). Spark Networks SE pursues a long-term
perspective in its entrepreneurial activities. In the course of
continuous development, added value shall be created – for
shareholders, employees, customers and for the company itself. 3.
Compensation components Under the compensation system, the fixed
compensation of Administrative Board members is increased depending
on the office held on the Administrative Board and/or its
committees. The compensation system of the Administrative Board
members can be summarized as follows: Compensation Component
Description Fixed compensation • Chairman: EUR 120,000 • Vice
Chairman: EUR 100,000 • Ordinary member: EUR 80 000 Committee
Compensation Nominating, Governance and Compensation Committee •
Chairman: EUR 18,000 • Ordinary member: EUR 10,000 Audit Committee
• Chairman: EUR 20,000 • Ordinary member: EUR 12,500 Other •
Reimbursement for all out-of-pocket expenses and for the sales tax
payable on out-of-pocket expenses and compensation • Financial loss
liability insurance (D&O insurance) coverage 3.1 Fixed
compensation The yearly fixed compensation amounts to EUR 80,000
for every ordinary member of the Administrative Board, increased by
EUR 40,000 for the Chairman of the Administrative Board and by EUR
20,000 for the Vice Chairman. As of now, the yearly basic
compensation amounts to EUR 80,000 for ordinary members, EUR
120,000 for the Chairman and EUR 100,000 for the Vice Chairman. 3.2
Function surcharges (chairing and committee compensation)
Additional committee compensation for chairing and vice chairing
the Administrative Board as well as chairing committees and
membership in committees serve to reflect the work intensity and
the time required for the respective activity. The Administrative
Board has currently established two committees, the Nominating,
Governance and Compensation Com- mittee (NGCC) and the Audit
Committee. Experience has shown that next to chairing or vice
chairing the Administrative Board also membership in the NGCC as
well as in the Audit Committee involves a significantly higher
amount of preparation and work, both in terms of quality and
quantity which leads to a higher work intensity. This is even more
so if a person assumes the position of Chairman in a committee. For
this reason, the Administrative Board considers correspondingly
staggered function surcharges as set out above to be appropriate.
3.3 No double compensation for Managing Directors being members of
the Administrative Board Members of the Administrative Board who
are also Managing Directors of the Company shall be compensated
exclusively under their respective service agreements for their
duties carried out in their capacity as Managing Director. This
applies to Mr. Eric Eichmann who is also a member of the
Administrative Board. 3.4 Due date, pro rata payment
42 EU-384792
The compensation of the members of the Administrative Board is due
for payment in four equal installments, each due after the
expiration of a quarter. Administrative Board members who are part
of the body or a committee of the Administrative Board for only
part of a fiscal year, or who hold the office of Chairman or Vice
Chairman of the Administrative Board or Chairman of a committee for
only part of a fiscal year, shall receive corresponding pro rata
compensation. 3.5 Reimbursement of expenses In addition to their
fixed compensation, the Company reimburses the members of the
Administrated Board for any reasonable expenses incurred in
exercising their Administrative Board mandate as well as any sales
tax payable on their compensation and expenses. 3.6 D&O
insurance The members of the Administrative Board are appropriately
included in a financial loss liability insurance for board members
in the interest and at the expense of the Company. 4.
Administrative Board Compensation in fiscal year 2021 The following
table sets forth the compensation earned by or paid to the
non-executive members of the Administrative Board for services
provided during the year ended December 31, 2021. Other than as
described below, none of those members of the Administrative Board
received any fees or reimbursement of any expenses (other than
customary expenses in connection with the attendance of meetings of
the Administrative Board) or any equity or non-equity awards in the
year ended Decem- ber 31, 2021. Amounts are converted from the
policy values set out above into US Dollars based on the average
2021 ex- change rate of 1.1827. Name Fees Earned or Paid in Cash
Option Awards Total Axel Hefer €92,500 ($109,400) — €92,500
($109,400) Bangaly Kaba(2) €35,081 ($41,490) €35,081 ($41,490)
Bradley J. Goldberg €118,000 ($139,559) — €118,000 ($139,559)
Colleen Birdnow Brown €107,796 ($127,490) — €107,796 ($127,490)
Chelsea A. Grayson €92,500 ($109,400) — €92,500 ($109,400) Cheryl
Michel Law(3) €54,919 ($64,953) €54,919 ($64,953) David Khalil
€114,409 ($135,312) — €114,409 ($135,312) Joseph E. Whitters(4)
€38,978 ($46,099) — €38,978 ($46,099) (2) Bangaly Kaba was
appointed to the Board of Directors on August 11, 2021. (3) Cheryl
Michel Law was a Director of the Board until August 10, 2021. (4)
Joseph E. Whitters was appointed to the Board of Directors on
August 11, 2021. IV. COMPARATIVE PRESENTATION OF THE ANNUAL CHANGE
IN THE COMPENSATION OF THE MEMBERS OF THE EXECUTIVE BOARD AND THE
ADMINISTRATIVE BOARD WITH THE DEVELOPMENT OF EARNINGS AND THE
AVERAGE COMPENSATION OF EMPLOYEES PURSUANT TO SECTION 162 (1) NO. 2
AKTG The following table shows the annual change in the
compensation of the Managing Directors and members of the
Administra- tive Board in comparison to the Company's earnings
performance and the compensation of employees on a full-time
equivalent basis pursuant to Section 162 AktG.
43 EU-384792
Annual change 2021 vs. 2020 Compensation for fiscal year 2021 in €
(and $) in € (and $) in % Managing Directors Erich Eichmann
€633,633 ($749,398) -€4,981,356 (-$5,664,043) -89% David Clark
€699,940 ($827,819) n/a n/a Gitte Bendzulla €274,371 ($324,498)
-€548,038 (-$614,857) -67% Bert Althaus €408,728 ($483,403)
-€513,446 (-$569,904) -56% Members of the Administrative Board Axel
Hefer €92,500 ($109,400) €+36,058 ($+44,932) +64% Bangaly Kaba
€35,081 ($41,490) n/a n/a Bradley J. Goldberg €118,000 ($139,559)
€+47,884 ($+59,473) +68% Colleen Birdnow Brown €107,796 ($127,490)
€+44,870 ($+55,616) +71% Chelsea A. Grayson €92,500 ($109,400)
€+53,537 ($+64,897) +137% Cheryl Michel Law(1) €54,919 ($64,953)
€+689 ($+3,011) +1% David Khalil €114,409 ($135,312) €+36,297
($+46,093) +46% Joseph E. Whitters(2) €38,978 ($46,099) n/a n/a
Employees Average employee compensation of the Group €78,247
€-7,454 -9% Earning Performance Spark Networks SE (in thousands €
($)) Net profits of the Group €-54,514 ($-64,474) €-9,808
($-13,411) -26% Net profits of the Company €-14,725 €-3,671 -33%
(1) Cheryl Michel Law was a Director of the Board until August 10,
2021. (2) Joseph E. Whitters was appointed to the Board of
Directors on August 11, 2021. The compensation of the Managing
Directors and members of the Administrative Board as set forth in
the table above shows the compensation earned for fiscal year 2021.
Where members of the Executive or Administrative Board were
remunerated on a pro rata basis in individual fiscal years, for
example because they joined the Company during the year, the
compensation for this fiscal year was extrapolated to a full year
in order to ensure comparability. The comparison with the
development of average employee compensation is based on the
average compensation of the Spark-Group workforce. The remuneration
of all employees excluding executive employees within the meaning
of Section 5 (3) of the German Works Council Constitution Act
(BetrVG) was taken into account for such comparisons. To ensure
compa- rability, the compensation of part-time employees was
extrapolated to full-time equivalents. ***
EU-384792 8.
Resolution on the cancellation of the Authorized Capital 2017
pursuant to section 4 para. 3 of the Articles of Association and on
the creation of a new Authorized Capital 2022 with the possibility
of excluding shareholders’ subscription rights and the
corresponding amendment of section 4 of the Articles of Association
The Company’s Annual Meeting of October 25, 2017 created an
authorized capital in the original amount of EUR 640,000.00 that
can be utilized by the Administrative Board until October 31, 2022
on one or several occasions to increase the Company’s share capital
against contributions in cash and/or in kind (Authorized Capital
2017). Having been utilized partially, the Authorized Capital 2017
still amounts to EUR 593,481.00. However, the Authorized Capital
2017 will expire on October 31, 2022. Further, the Company’s Annual
Meeting of July 29, 2020 created an authorized capital in the
original amount of EUR 266,138.00 that can be utilized by the
Administrative Board until July 28, 2025 on one or several
occasions to increase the Company’s share capital against
contributions in cash and/or in kind (Authorized Capital 2020). The
Authorized Capital 2020 has not been utilized, yet. The Company
relies significantly on being able to cover its financial
requirements quickly and flexibly in the future, to react quickly
to market conditions and to increase its equity as well as to be
able to provide shares in the context of a capital increase for
contributions in kind. In this context, the availability of
financing instruments is of par- ticular importance, irrespective
of the interval of the Annual General Meetings, as the point in
time at which corresponding funds need to be raised cannot always
be deter- mined in advance. Accordingly, decisions to cover such
capital requirements generally have to be made at short notice. In
addition, any transactions can often only be carried out
successfully in competition with other companies if secured
financing instruments are already available at the time
negotiations begin. The legislator has taken account of the
resulting need of companies and grants stock corporations and SEs
the possi- bility of authorizing the board, for a limited period
and limited in amount, to increase the share capital without a
further resolution by the General Meeting. Against this background,
common reasons for using authorized capital are to strengthen the
equity base and to finance acquisitions of shareholdings. In order
to ensure that the Company remains in a position to cover its
financial needs flexibly, react quickly to market conditions and
increase its equity or to provide shares
EU-384792 in
the context of a capital increase against contributions in kind or
in connection with granting shares to executives or employees under
the Company’s Long Term Incen- tive Plan, Authorized Capital 2017
shall be cancelled and, instead, a new authorized capital shall be
created in Section 4 para. (3) of the Articles of Association in
the amount of EUR 1,064,554.00. Shareholders are being asked at the
Annual Meeting to approve, and the Administra- tive Board proposes
to adopt, the following resolution pursuant to this proposal: a)
Cancellation of the Authorized Capital 2017 pursuant to Section 4
para. 3 of the Articles of Association The Authorized Capital 2017
pursuant to Section 4 para. 3 of the Articles of Associa- tion
shall be cancelled with effect from the registration of the
Authorized Capital 2022, insofar as Authorized Capital 2017 has not
been used at the time this cancellation takes effect. b) Creation
of a new Authorized Capital 2022 The Administrative Board shall be
authorized to increase the Company’s share capital on or before
August 29, 2027 by not more than in total EUR 1,064,554.00 (in
words: one million sixty-four thousand five-hundred fifty four
Euro) by issuing up to 1,064,554 new registered no-par value shares
on one or several occasions against contributions in cash and/or in
kind (Authorized Capital 2022). The Administrative Board shall be
authorized to define the further content of the share- holder
rights and the terms and conditions for the new stock issuance.
Thereby, the profit participation rights of the new shares may be
determined in deviation from Sec. 60 (2) German Stock Corporation
Act; in particular, the new shares may carry profit participation
rights from the beginning of the fiscal year preceding their
issuance pro- vided that the Annual General Meeting has not yet
resolved on the profit participation for such fiscal year when the
new shares are issued. As a rule, the shareholders shall be granted
the statutory subscription rights to the new shares. The
subscription rights may also be fully or partially granted by way
of indirect subscription rights within the meaning of Sec. 186 (5)
sentence 1 German Stock Corporation Act. However, the shareholders’
subscription rights are subject to the following restrictions when
utilizing the Authorized Capital 2022:
EU-384792 aa)
The Administrative Board shall be authorized to exclude
shareholders’ subscrip- tion rights with respect to capital
increases against cash contributions provided that the shares are
issued, with reference to this provision, at an issue price which
is not substantially below the stock exchange price of the existing
shares of the Company and that the shares issued under this
authorization for the ex- clusion of subscription rights in total
do not exceed 10% of the registered share capital, neither at the
time this authorization becomes effective nor at the time of the
utilization of this authorization. The term “stock exchange price”
may also refer to the price of an ADS listed on the Nasdaq (or NYSE
American LLC and any other similar stock exchange), multiplied by
the number of ADSs represent- ing one share. The 10 % share capital
limit shall include the proportionate share capital amount
attributable to (i) shares sold during the term of the Authorized
Capital 2022 on the basis of an authorization to sell treasury
shares pursuant to Secs. 71 (1) No. 8 sentence 5, 186 (3) sentence
4 German Stock Corporation Act under exclusion of subscription
rights; (ii) shares that are issued to fulfill subscription rights
or conversion or option rights or obligations arising from con-
vertible bonds and/or bonds with warrants, profit participation
rights and/or par- ticipating bonds or bonds with warrants or a
combination of these instruments (collectively “bonds”), provided
that the corresponding bonds are issued during the term of the
Authorized Capital 2022 in analogous application of Sec. 186 (3)
sentence 4 German Stock Corporation Act under exclusion of
shareholders’ subscription rights; as well as (iii) shares issued
during the term of the Author- ized Capital 2022 on the basis of
other capital measures excluding sharehold- ers’ subscription
rights in direct or analogous application of Sec. 186 (3) sen-
tence 4 German Stock Corporation Act. bb) The Administrative Board
shall further be authorized to exclude shareholders’ subscription
rights with respect to capital increases against contributions in
cash and/or in kind, if the new shares, with reference to this
provision, shall be issued in the context of employee participation
and/or remuneration programs or in- struments to employees of the
Company or companies controlled by the Com- pany or companies in
which the Company holds an (indirect) majority interest, or to
Managing Directors of the Company and/or to members of the manage-
ment of companies controlled by the Company or companies in which
the Com- pany holds an (indirect) majority interest or to third
parties which transfer the
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economic property (wirtschaftliches Eigentum) and/or the economic
benefits from the shares to the mentioned persons (including, in
particular, by delivering ADSs). The new shares may, in particular,
also be issued to the mentioned persons at a reduced issue price
(including, in particular, at the lowest issue price permissible
pursuant to Sec. 9 (1) German Stock Corporation Act) and/or against
contribution of remuneration claims or similar claims. Furthermore,
the new shares may also be issued through a credit institution or a
company oper- ating in accordance with Sec. 53 (1) sentence 1 or
Sec. 53b (1) sentence 1 or (7) German Banking Act (KWG) which
assumes these shares subject to an ob- ligation to deliver or offer
them or ADSs representing the shares to the persons mentioned
above. The shares issued under this authorization for the exclusion
of subscription rights may in total not exceed 10% of the
registered share capi- tal, namely neither at the time this
authorization becomes effective nor at the time of the utilization
of this authorization. cc) Furthermore, the Administrative Board
shall be authorized to exclude the share- holders’ subscription
rights regarding fractional amounts and also to exclude the
shareholders’ subscription rights to the extent required in order
to grant to holders or creditors, respectively, of conversion or
option rights attached to con- vertible and/or option bonds, that
are or were issued by the Company or a na- tional or foreign
subsidiary in which the Company either directly or indirectly holds
a majority in terms of voting rights and capital, or, in case of an
own con- version right of the Company, to holders or creditors,
respectively, being obli- gated thereby, subscription rights to the
extent they would be entitled to after exercising the conversion or
option rights or after fulfilling a conversion or option
obligation, respectively. dd) Additionally, the Administrative
Board shall be authorized to exclude the share- holders’
subscription rights when increasing the share capital in exchange
for contributions in kind, in particular to acquire companies,
parts of companies or shareholdings, in the context of joint
ventures and mergers and/or for the pur- pose of acquiring other
assets including rights and claims, also against the Company or its
subsidiaries. The Administrative Board shall be authorized to amend
the wording of the Articles of Association accordingly after
utilization of Authorized Capital 2022 or expiry of
the
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period for utilization of Authorized Capital 2022 and to resolve
amendments to the Articles of Association if such amendments only
relate to the wording. c) Amendment of Section 4 para. 3 of the
Articles of Association Section 4 para. 3 of the Articles of
Association is revised and restated as follows: „(3) The
Administrative Board is authorized to increase the Company’s share
capital on or before 29 August 2027 by not more than in total EUR
1,064,554.00 (in words: one million sixty-four thousand
five-hundred fifty four Euro) by issuing up to 1,064,554 new
registered no-par value shares on one or several occasions against
contributions in cash and/or in kind (Authorized Capital 2022). The
Ad- ministrative Board is authorized to define the further content
of the shareholder rights and the terms and conditions for the new
stock issuance. Thereby, the profit participation rights of the new
shares may be determined in deviation from Sec. 60 (2) German Stock
Corporation Act; in particular, the new shares may carry profit
participation rights from the beginning of the fiscal year
preceding their issuance provided that the General Meeting of
Shareholders has not yet resolved on the profit participation for
such fiscal year when the new shares are issued. As a rule, the
shareholders shall be granted the statutory subscription rights to
the new shares. The subscription rights may also be fully or
partially granted by way of indirect subscription rights within the
meaning of Sec. 186 (5) sentence 1 German Stock Corporation Act.
However, the shareholders’ subscription rights are subject to the
following re- strictions when utilizing the Authorized Capital
2022: a) The Administrative Board is authorized to exclude
shareholders’ subscrip- tion rights with respect to capital
increases against cash contributions pro- vided that the shares are
issued, with reference to this provision, at an issue price which
is not substantially below the stock exchange price of the existing
shares of the Company and that the shares issued under this
authorization for the exclusion of subscription rights in total do
not exceed 10% of the registered share capital, neither at the time
this authorization becomes ef- fective nor at the time of the
utilization of this authorization. The term “stock exchange price”
may also refer to the price of an American Depository
Share
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(“ADS”) listed on the Nasdaq (or NYSE American LLC and any other
similar stock exchange), multiplied by the number of ADSs
representing one share. The 10 % share capital limit shall include
the proportionate share capital amount attributable to (i) shares
sold during the term of the Authorized Cap- ital 2022 on the basis
of an authorization to sell treasury shares pursuant to Secs. 71
(1) No. 8 sentence 5, 186 (3) sentence 4 German Stock Corpora- tion
Act under exclusion of subscription rights; (ii) shares that are
issued to fulfill subscription rights or conversion or option
rights or obligations arising from convertible bonds and/or bonds
with warrants, profit participation rights and/or participating
bonds or bonds with warrants or a combination of these instruments
(collectively “bonds”), provided that the corresponding bonds are
issued during the term of the Authorized Capital 2021 in analogous
ap- plication of Sec. 186 (3) sentence 4 German Stock Corporation
Act under exclusion of shareholders’ subscription rights; as well
as (iii) shares issued during the term of the Authorized Capital
2022 on the basis of other capital measures excluding shareholders’
subscription rights in direct or analogous application of Sec. 186
(3) sentence 4 German Stock Corporation Act. b) The Administrative
Board is further authorized to exclude shareholders’ sub- scription
rights with respect to capital increases against contributions in
cash and/or in kind, if the new shares, with reference to this
provision, shall be issued in the context of employee participation
and/or remuneration pro- grams or instruments to employees of the
Company or companies controlled by the Company or companies in
which the Company holds an (indirect) majority interest, or to
Managing Directors of the Company and/or to mem- bers of the
management of companies controlled by the Company or com- panies in
which the Company holds an (indirect) majority interest or to third
parties which transfer the economic property (wirtschaftliches
Eigentum) and/or the economic benefits from the shares to the
mentioned persons (in- cluding, in particular, by delivering ADSs).
The new shares may, in particular, also be issued to the mentioned
persons at a reduced issue price (including, in particular, at the
lowest issue price permissible pursuant to Sec. 9 (1) Ger- man
Stock Corporation Act) and/or against contribution of remuneration
claims or similar claims. Furthermore, the new shares may also be
issued through a credit institution or a company operating in
accordance with Sec.
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(1) sentence 1 or Sec. 53b (1) sentence 1 or (7) German Banking Act
(KWG) which assumes these shares subject to an obligation to
deliver or offer them or ADSs representing the shares to the
persons mentioned above. The shares issued under this authorization
for the exclusion of sub- scription rights may in total not exceed
10% of the registered share capital, namely neither at the time
this authorization becomes effective nor at the time of the
utilization of this authorization. c) Furthermore, the
Administrative Board is authorized to exclude the share- holders’
subscription rights regarding fractional amounts and also to
exclude the shareholders’ subscription rights to the extent
required in order to grant to holders or creditors, respectively,
of conversion or option rights attached to convertible and/or
option bonds, that are or were issued by the Company or a national
or foreign subsidiary in which the Company either directly or
indirectly holds a majority in terms of voting rights and capital,
or, in case of an own conversion right of the Company, to holders
or creditors, respec- tively, being obligated thereby, subscription
rights to the extent they would be entitled to after exercising the
conversion or option rights or after fulfilling a conversion or
option obligation, respectively. d) Additionally, the
Administrative Board is authorized to exclude the share- holders’
subscription rights when increasing the share capital in exchange
for contributions in kind, in particular to acquire companies,
parts of compa- nies or shareholdings, in the context of joint
ventures and mergers and/or for the purpose of acquiring other
assets including rights and claims, also against the Company or its
subsidiaries.” The Administrative Board is authorized to amend the
wording of the Articles of Asso- ciation accordingly after
utilization of Authorized Capital 2022 or expiry of the period for
utilization of Authorized Capital 2022 and to resolve amendments to
the Articles of Association if such amendments only relate to the
wording.
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Annex to agenda item 8 Report of the Administrative Board on the
authorizations of the Administrative Board mentioned in agenda item
8 to exclude subscription rights pursuant to Sec. 203 (2) sentence
2 in conjunction with Sec. 186 (4) sentence 2 German Stock
Corporation Act In agenda item 8, the Administrative Board proposes
the creation of a new Authorized Capital 2022 with the possibility
to exclude subscription rights. Hereby, the Adminis- trative Board
submits the following report pursuant to Sec. 203 (2) sentence 2 in
con- junction with Sec. 186 (4) sentence 2 German Stock Corporation
Act: The Administrative Board is of the opinion that it is
reasonable to continue enabling the Company to increase the share
capital on short notice, also under exclusion of subscription
rights, in order to give the Company flexibility for further growth
and po- tential opportunities for acquisitions, which may arise, as
well as for continuously in- centivizing executives and employees
via the Company’s Long Term Incentive plan. Therefore, it is
intended to cancel the Authorized Capital 2017 and to adopt a new
Authorized Capital 2022. The Company relies significantly on being
able to cover its financial requirements quickly and flexibly in
the future, to react quickly to market conditions and to increase
its equity as well as to be able to provide shares in the context
of a capital increase for contributions in kind. In this context,
the availability of financing instruments is of par- ticular
importance, irrespective of the interval of the Annual General
Meetings, as the point in time at which corresponding funds need to
be raised cannot always be deter- mined in advance. Accordingly,
decisions to cover such capital requirements generally have to be
made at short notice. In addition, any transactions can often only
be carried out successfully in competition with other companies if
secured financing instruments are already available at the time
negotiations begin. The legislator has taken account of the
resulting need of companies and grants stock corporations and SEs
the possi- bility of authorizing the board, for a limited period
and limited in amount, to increase the share capital without a
further resolution by the General Meeting. Against this background,
common reasons for using authorized capital are to strengthen the
equity base and to finance acquisitions of shareholdings. With the
proposed Authorized Capital 2022, the Administrative Board of Spark
Net- works SE will – at any time – be able to adapt the equity base
of Spark Networks SE
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required by business within the aforementioned limits and to act
swiftly and flexibly in the interest of the Company. To be able to
do so, the Company must always have the necessary financing
instruments available, regardless of specific utilization plans. By
creating the Authorized Capital 2022, the Administrative Board is
authorized to increase the Company’s share capital once or several
times until August 29, 2027 by up to in total EUR 1,064,554.00 (in
words: one million sixty-four thousand five-hundred fifty four
Euro) against cash and/or contributions in kind by issuing up to
1,064,554 new registered shares (Authorized Capital 2022). When
utilizing the Authorized Capital 2022, shareholders are generally
entitled to a subscription right. Pursuant to Sec. 203 (1) sentence
1 in conjunction with Sec. 186 (5) German Stock Corporation Act,
the new shares can also be taken over by one or several credit
institutions that must undertake to offer them to the shareholders
for subscription (“indirect subscription right”). In this context,
the Administrative Board shall be allowed to design the
subscription right partly as an immediate subscription right and
otherwise as an indirect subscription right. The proposed
authorization pro- vides that the Administrative Board – in
accordance with statutory provisions – may exclude the
shareholders’ subscription right, in whole or in part, in the cases
described below. Exclusion of subscription rights for fractional
amounts The Administrative Board shall be authorized to exclude the
shareholders’ subscrip- tion right for fractional amounts. Such
exclusion of the subscription right shall enable a practicable
subscription process and, thus, facilitate the technical
implementation of a capital increase. The value of the fractional
amounts is generally low, but the ex- penses for issuing shares
without excluding the subscription right for fractional amounts is
usually much higher. With respect to fractional amounts, the costs
associ- ated with trading in subscription rights would be out of
proportion to the shareholders’ actual benefits. The new shares,
which – as so-called “free fractions” – are excluded from the
shareholders’ subscription right, will be used in the Company’s
best interest. The exclusion of the subscription right in these
cases, thus, serves the practicability of, and facilitates, the
execution of an issuance of new shares.
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Exclusion of subscription rights in case of capital increases by
way of contribu- tion in kind The Administrative Board shall also
be authorized to exclude the shareholders’ sub- scription right in
case of a capital increase against contributions in kind, in
particular in connection with mergers of companies or the (also
indirect) acquisition of compa- nies, operations, parts of
companies, participations or other assets or claims for the
acquisition of assets including claims against the company or its
group companies. This is to enable Spark Networks SE to quickly and
flexibly offer shares in the Com- pany in appropriate cases in
order to fulfill claims arising from the preparation, execu- tion,
implementation or settlement of contractual or statutory
acquisitions as well as mergers. Spark Networks SE needs to be able
to act quickly and flexibly in the interest of its shareholders at
any time. This includes acquiring companies, operations, parts of
companies, participations or other assets in connection with an
acquisition in order to improve its market position. It may be
reasonable or even necessary to grant shares as transaction
consideration in order to preserve liquidity or to meet the
sellers’ ex- pectations. Granting shares as consideration instead
of cash may also make sense from the perspective of an optimal
financing structure. Since the emission of shares against a
contribution in kind requires that the value of such contribution
in kind be in due proportion to the value of the shares, no
disadvantages arise for the Company. When determining the valuation
ratio, the Administrative Board has to make sure to protect the
interests of the Company and of its shareholders appropriately and
to achieve an adequate issue price for the new shares. In general,
the Company’s stock exchange listing gives every shareholder the
opportunity to maintain or increase their participation quota by
acquiring additional shares or ADSs on the stock exchange, which
can also be exchanged for shares. Exclusion of subscription rights
in case of capital increases for cash pursuant to Sec. 186 (3)
sentence 4 German Stock Corporation Act In case of cash capital
increases, the Administrative Board shall be authorized to ex-
clude the subscription right pursuant to Sec. 203 (1) sentences 1
and 2, 186 (3) sen- tence 4 German Stock Corporation Act, if the
par value of the new shares does not substantially fall short of
the stock exchange price of the already listed shares. It may be
reasonable to use this option of excluding the subscription right
if the Company
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wishes to take advantage of favorable market conditions quickly and
flexibly and to cover, on very short notice, any capital needs that
may arise. The mandatory two- week subscription period when a
subscription right is granted to shareholders (Sec. 203 (1)
sentence 1 in conjunction with Sec. 186 (1) sentence 2 German Stock
Corpo- ration Act) does not allow for a comparable quick reaction
to current market conditions. Moreover, due to the volatility of
equity markets, conditions close to market-conditions can generally
only be achieved if they do not bind the Company over a longer
period. When granting a subscription right, Sec. 203 (1) sentence 1
in conjunction with Sec. 186 (2) German Stock Corporation Act
requires for the final subscription price to be published no later
than three days before the expiry of the subscription period. This
means that granting a subscription right is associated with a
greater market risk – in particular the price change risk existing
for several days – than an allocation without subscription rights.
Therefore, for a successful placement, regularly appropriate safety
discounts to the current stock exchange price are required when
granting subscription rights. This will usually result in less
favorable conditions for the Company than a cap- ital increase
under exclusion of the subscription right. The exclusion of the
subscription right allows for a placement close to the stock
exchange price. Also, if subscription rights are granted, a
complete placement is not guaranteed due to the uncertainty
regarding the exercise of the subscription rights by the
beneficiaries and a subsequent placement with third parties is
usually associated with extra costs. The proportion of the share
capital attributable to the shares issued under such an exclusion
of sub- scription rights, must not exceed, in total, 10 % of the
share capital, neither at the time of said authorization taking
effect nor at the time of said authorization being exercised. In
this context, the legislator assumes it possible and reasonable to
expect the share- holders to maintain their participation quota by
purchases on the market. When calcu- lating this limit of 10 % of
the share capital, the pro rata amount of the share capital
attributable to shares sold during the term of the Authorized
Capital 2022 on the basis of an authorization to sell own shares
pursuant to or in accordance with Secs. 71 (1) no. 8 sentence 5,
186 (3) sentence 4 German Stock Corporation Act under the exclu-
sion of subscription rights shall be included. Moreover, the pro
rata amount of the share capital attributable to the shares issued
during the term of the Authorized Capital 2022 on the basis of
other authorizations to issue shares of the Company under ex-
clusion of shareholders’ subscription rights in direct or analogous
application of Sec. 186 (3) sentence 4 German Stock Corporation
shall also be included. Furthermore,
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pro rata amount of the share capital attributable to shares that
can, or are to, be issued to fulfill bonds with conversion and/or
option rights or with conversion and/or option obligations shall be
included in the calculation if the bonds are issued during the term
of the Authorized Capital 2022 under exclusion of shareholders’
subscription rights in analogous application of Sec. 186 (3)
sentence 4 German Stock Corporation Act. Including the all of the
above in the respective calculation serves to protect the
shareholders and to keep the dilution of their participation as low
as possible. The above calculation model makes it possible that
even if capital measures are combined with the issue of bonds
and/or the sale of treasury shares, the participation quota of the
shareholders is not diluted by more than 10 %. Furthermore, due to
the issue price of the new shares being close to the stock exchange
price and due to the limitation of the size of the capital increase
without subscription rights, shareholders generally have the
opportunity to maintain their participation quota by acquiring
respective shares on approximately the same terms via the stock
exchange. This ensures that, in line with the statutory assessment
of Sec. 186 (3) sentence 4 German Stock Cor- poration Act, the
financial and participating interests are adequately safeguarded
when utilizing the Authorized Capital 2022 under exclusion of
subscription rights, while the Company is given further scope of
action in the interest of all shareholders. . Exclusion of
subscription rights for bonds and warrants The Administrative Board
shall also be authorized to exclude the shareholders’ sub-
scription right, if and to the extent necessary, to grant bearers
or creditors of conver- sion and/or option rights, and/or bearers
or creditors of bonds carrying conversion and/or option
obligations, issued by the Company or its affiliated companies, a
sub- scription right to the extent they would be entitled to after
exercise of the conversion or option rights or after the fulfilment
of a conversion or option obligation. This has the following
background: In addition to the conversion or option price, the
economic value of the aforementioned conversion and/or option
rights or the bonds with conversion and/or option obligations also
depends in particular on the value of the shares of the Company to
which the conversion and/or option rights or conversion and/or
option obligations relate. In order to ensure a successful
placement of the relevant bonds or to avoid a corresponding price
discount in the placement, it is therefore customary to include
dilution protection provisions in the terms and conditions of the
bonds which
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protect the beneficiaries against a loss in value of their
conversion or option rights due to a dilution in the value of the
shares to be subscribed. Accordingly, inclusion of such
anti-dilution provisions in the bond or option terms is also
covered by the current au- thorization to issue convertible bonds
and/or bonds with warrants and/or profit-sharing rights with option
and/or conversion rights (or a combination of these instruments).
Without anti-dilution protection, a subsequent share issue granting
the shareholders’ subscription rights would typically lead to such
dilution in value. In that case, the afore- mentioned anti-dilution
provisions in the terms and conditions of the bond regularly
provide for a reduction of the conversion and/or option price with
the consequence that the funds received by the Company in case of a
later conversion or exercise of the option or later fulfilment of a
conversion or option obligation are reduced or that the number of
shares to be issued by the Company is increased. Alternatively, to
avoid a reduction of the conversion and/or option price,
anti-dilution provisions usually allow holders of bonds carrying
conversion and/or option rights or conversion and/or option
obligations to be granted a subscription right for new shares in
the amount they would be entitled to after exercise of their
conversion and/or option rights or after fulfilment of their
conversion and/or option obligations. Thus, they are treated as if
they had already become shareholders by exercising their conversion
or option rights or by ful- filling any conversion or option
obligations prior to the subscription offer and to this extent have
already become shareholders; they are thus compensated for the
dilution in value – like all shareholders already invested – by the
value of the subscription right. For the Company, this second
alternative – namely granting of dilution protection – has the
advantage that the conversion and/or option price does not have to
be re- duced; it therefore serves to guarantee the greatest
possible inflow of funds in the event of a subsequent conversion or
exercise of an option or the subsequent fulfilment of any
conversion or option obligation or reduces the number of shares to
be issued in this case. This also benefits the shareholders
involved, so that it also compensates for the restriction of their
subscription rights. Their subscription right, as such, remains
intact and is reduced only proportionately to the extent to which a
subscription right is granted not only to the participating
shareholders, but also to the bearers of the con- version and/or
option rights or of the bonds carrying conversion and/or option
obliga- tions. This authorization gives the Company the
opportunity, in the event of a sub-
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scription rights issue, to choose between the two alternatives of
granting dilution pro- tection described above, taking into account
the interests of the shareholders and the Company. Utilization of
the authorization Currently, there are no specific plans to utilize
the Authorized Capital 2022. Respective anticipatory resolutions
including the possibility to exclude the shareholders’ subscrip-
tion rights are common at both, national and international level.
The Administrative Board will carefully examine in each case
whether the utilization of the Authorized Capital 2022 is in the
interest of the Company; in particular, the Administrative Board
will also examine whether any exclusion of subscription rights is
objectively justified in individual cases. The Administrative Board
will report to the next Annual Meeting on each utilization of the
authorization. The written report of the Administrative Board
pursuant to Art. 5 SE Regulation in con- junction with Sec. 203 (2)
sentence 2 in conjunction with Sec. 186 (4) sentence 2 German Stock
Corporation Act on the authorization of the Administrative Board to
ex- clude shareholders’ subscription rights in connection with the
resolution on agenda item 9 will be accessible to the shareholders
from the date of the convocation of the Annual General Meeting at
http://investor.spark.net/shareholder-services/annual-meeting II.
FURTHER INFORMATION ON THE CONVOCATION OF THE MEETING Total number
of shares and voting rights At the time of convocation of this
Annual General Meeting, the Company’s share cap- ital amounts to
EUR 2,661,385.00. The share capital is divided into 2,661,385
regis- tered ordinary shares with no par value. Each share grants
one vote. The total amount of voting rights thus amounts to
2,661,385 voting rights. At the time of the convocation of the
Annual General Meeting, the Company indirectly holds 41,800
treasury shares, from which the Company has no voting rights.
Participation in the General Meeting and exercise of voting
rights
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Shareholders, who are entered in the share register and timely
register for the Annual General Meeting, are entitled to
participate in the Annual General Meeting and exer- cise their
voting rights. Registration must be received by the Company by no
later than August 24, 2022, 24.00 hrs (CEST) (midnight) in writing
or in text form (Sec. 126b German Civil Code) or by telefax or by
e-mail to the following address: Spark Networks SE c/o LINK Market
Services GmbH Landshuter Allee 10 80637 Munich Germany or by e-mail
to: namensaktien@linkmarketservices.de Upon receipt of
registration, the registration office will send admission tickets
for the Annual General Meeting to the shareholders or their
nominated proxy. Unlike registra- tion for the Annual General
Meeting, admission tickets are merely organizational aids and are
not a prerequisite for attending the Annual General Meeting or the
exercise of voting rights. Pursuant to Sec. 67 (2) sentence 1
German Stock Corporation Act, only those who are entered in the
share register are considered shareholders of the Company. Ac-
cordingly, the status of the entries in the share register on the
day of the General Meeting is decisive for determining the right to
participate as well as the number of votes the authorized
participant is entitled to exercise. For technical processing rea-
sons, however, no changes to the share register will be carried out
between the end of August 24, 2022 (“technical record date”), and
the conclusion of the Annual Gen- eral Meeting (“transfer stop”).
Therefore, the entry status in the share register on the day of the
Annual General Meeting corresponds to the status after the last
change of registration on August 24, 2022. The registration stop
does not prevent a shareholder disposing of shares. However,
purchasers of shares whose transfer applications are received by
the Company after August 24, 2022 cannot exercise participation
rights
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voting rights from these shares, unless they have obtained a power
of attorney to do so or an authorization to exercise such rights.
In such cases, participation and vot- ing rights remain with the
shareholder entered in the share register until the change of
registration. All purchasers of shares in the Company who are not
yet registered in the share register are therefore requested to
submit requests for change of registration in due time. Exercise of
voting rights by authorized representatives Shareholders registered
in the share register may also be represented at the Annual General
Meeting and have their voting rights exercised by an authorized
representa- tive (proxy) – for example, an intermediary (e.g. a
credit institution or a (foreign) finan- cial services institution)
or a shareholders’ association. Granting the power of attorney, its
revocation and proof of the proxy authorization vis-à-vis the
Company require, in principle, text form if neither an intermediary
(e.g. a credit institution or a (foreign) fi- nancial services
institution) nor a shareholders’ association, or another person
with an equivalent status pursuant to Sec. 135 (8) German Stock
Corporation Act is granted power of attorney to exercise the voting
right. Registration in due time for the Annual General Meeting is
necessary also for granting power of attorney. If power of attorney
to exercise voting rights is granted to an intermediary (e.g. a
credit institution or a (foreign) financial services institution)
or to a shareholders’ association or other persons with an
equivalent status pursuant to Sec. 135 (8) German Stock Corporation
Act, these recipients may stipulate their own formal requirements.
If you appoint another person to act as your authorized proxy, such
proxy must be in text form and made known to Spark by end of August
30, 2022, 24.00 hrs (CEST) (midnight) by mail or by e-mail at the
following address: Spark Networks SE c/o LINK Market Services GmbH
Landshuter Allee 10 80637 Munich Germany
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by e-mail to: namensaktien@linkmarketservices.de On the day of the
Annual General Meeting, proxies and instructions to the authorized
proxies may also be issued, changed or withdrawn in writing at the
entrances and exits. The Company also offers its shareholders the
possibility of being represented by prox- ies nominated by the
Company to exercise shareholders’ voting rights at the Annual
General Meeting. The Company proxies will only vote in accordance
with the instruc- tions given to them. The power of attorney and
the instructions must be sent to the registration address using the
options described above. Details on how to issue a power of
attorney and instructions are given in the docu- ments sent to the
shareholders. Documents for the Annual General Meeting Documents
for and additional information concerning the Annual General
Meeting are available on the Internet at
https://www.spark.net/investor-relations/annual-meeting
Furthermore, these documents will be available at the Annual
General Meeting and – to the extent necessary – will be explained
in more detail. III. SHAREHOLDER RIGHTS pursuant to Art. 53, Art.
56 sentence 2, sentence 3 SE Regulation, Sec. 50 (2) SEAG, Sec. 122
(2), Sec. 126 (1), Sec. 127, Sec. 131 (1) German Stock Corpora-
tion Act Additions to the Agenda at the request of a minority
according to Art. 56 sen- tence 2, sentence 3 SE Regulation, Sec.
50 (2) SEAG, Sec. 122 (2) German Stock Corporation Act Shareholders
whose aggregate shareholdings represent 5 % of the share capital or
the proportionate amount of EUR 500,000.00 (this corresponds to
500,000 non-par value shares) may request that items be added to
the Agenda and published. The
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request must be made in writing to the Administrative Board of the
Company and must be received by the Company on July 31, 2022 at the
latest. Please send such requests to the following address: Spark
Networks SE – Administrative Board – c/o LINK Market Services GmbH
Landshuter Allee 10 80637 Munich Germany Each new item of the
Agenda must also include a statement of reasons or a resolution
proposal. The publication and forwarding of requests for additions
are effected in the same way as for the convocation of the Annual
General Meeting. Shareholders’ counterproposals and election
proposals pursuant to Art. 53 SE Regulation, Sec. 126 (1), Sec. 127
German Stock Corporation Act The Company’s shareholders may submit
counterproposals to the proposals of the Administrative Board on
specific agenda items and election proposals for the election of
Administrative Board members or auditors. Such proposals (and
statements of rea- sons, if any) and election proposals are to be
sent solely to: Spark Networks SE c/o LINK Market Services GmbH
Landshuter Allee 10 80637 Munich Germany or by e-mail to:
antraege@linkmarketservices.de
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Counterproposals should be provided with a statement of reasons.
This does not apply to election proposals. Shareholders’
counterproposals and election proposals that fulfill the
requirements and are received by the Company at the address
specified above by August 16, 2022 at the latest, will be made
accessible without undue delay on the website
https://www.spark.net/investor-relations/annual-meeting along with
the name of the shareholder and, specifically in the case of
counterpro- posals, any statement of reasons and, in the case of
election proposals, the additional information to be provided by
the Administrative Board pursuant to Sec. 127 sentence 4 German
Stock Corporation Act, as well as any comments by the
Administrative Board. The Company is not required to make a
counterproposal and a statement of reasons, if any, or an election
proposal available if one of the reasons for exclusion pursuant to
Sec. 126 (2) German Stock Corporation Act apply, for example,
because the election proposal or counterproposal would lead to a
resolution by the Annual General Meeting that breaches the law or
the Articles of Association or its reason apparently contains false
or misleading information with regard to material points.
Furthermore, an election proposal does not have to be made
available if the proposal does not contain the name, the current
occupation and the place of residence of the proposed candidate as
well as information on his / her membership in other statutory
supervisory boards. The reason for a counterproposal does not have
to be made available if its total length is more than 5,000
characters. This also applies to counterproposals which have been
made concerning agenda items that have been included at the request
of a minority in accordance with Sec. 122 (2) German Stock
Corporation Act. Note that counterproposals and election proposals,
even if they have been submitted to the Company in advance in due
time, will only be considered at the Annual General Meeting if they
are submitted/put forward verbally there. The right of every
shareholder to submit counterproposals on the various agenda items
or election proposals during the Annual General Meeting even
without a previous submission to the Company re- mains
unaffected.
EU-384792
Right to request information pursuant to Sec. 131 (1) German Stock
Corporation Act At the Annual General Meeting, every shareholder
may request information from the Administrative Board about Company
matters insofar as the information is required for a proper
evaluation of the relevant matter on the agenda (cf. Sec. 131 (1)
German Stock Corporation Act). The duty to provide information
covers the Company’s legal and business relations with affiliated
companies as well as the position of Spark Net- works Group and of
the companies included in the Consolidated Financial Statements of
Spark Networks SE. In principle, requests for information are to be
put forward at the Annual General Meeting verbally. The
Administrative Board may refrain from an- swering individual
questions for the reasons specified in Sec. 131 (3) German Stock
Corporation Act, for example, if providing such information,
according to sound busi- ness judgement, is likely to cause
material damage to the Company or an affiliated company. Pursuant
to the Articles of Association, the Chair of the General Meeting,
over the course of the General Meeting, may determine appropriate
speaking time limits, the time for asking questions and/or the
total time available in general for speak- ing and asking questions
or for individual speakers (cf. § 19 (3) sentence 2 of the Articles
of Association). IV. FURTHER INFORMATION Further information on
shareholders’ rights is available on the Company’s website at
https://www.spark.net/investor-relations/annual-meeting. Holders of
American Depositary Shares relating to common stock of the Company
will receive information regarding the Annual General Meeting via
the Bank of New York Mellon, New York, USA (Depositary).
Information on the Company’s website Information pursuant to Sec.
124 a German Stock Corporation Act on this year’s An- nual General
Meeting is available on the Company’s website at
https://www.spark.net/investor-relations/annual-meeting After the
Annual General Meeting, the voting results will be announced at the
same Internet address Documents concerning the Annual General
Meeting
EU-384792
Documents and further information concerning the Annual General
Meeting are available on the Company’s website at
https://www.spark.net/investor-relations/annual-meeting The
documents will also be explained in more detail where necessary. V.
DATA PROTECTION NOTICE On 25 May 2018, new regulations on data
protection came into force in the EU. The protection and compliant
processing of your personal data are a high priority for us. In our
data protection notice you can find detailed information about
processing per- sonal data of our shareholders. You can find the
data protection notice here:
https://www.spark.net/investor-relations/annual-meeting Munich,
July 2022 Spark Networks SE The Administrative Board
Satzung
Artlclea ofAssocladon der of Spark Networt® SE Sparte NetworksSE 1.
Abschnitt. Allaemalna Bßstfmmui Söcäon 1. Qendml Provlriofls 51 §1
Rechtsfonn; Ptnna, SHz und Geschäftsjahr Legal Fonn: Corporata
Nam®, Reglstered Office and Flnanctol Year (1) Die Gaellschaft hat
die Rechtsform einer (1) The Company has the legal form of a
Europäischen Gesellschaft (Sotfefes European Company (Sodetas
Euivpaea. SE) und führt dte Rrma Eumpaea. SE) and has the corporate
name Spark Networks SE.' Spark Networkc SE. (2) Sitz der
Gesellschaft Ist Mönchen, (2) Thereglsferedofflceofthe Company fe
Deutschland, (n Munlch. Gennany. (3) Das Geschöftejahr der
Gesellschaft tet das (3) Theflnandalyearofthe Company Is
Kalenderjahr, thecalendaryear. §2 Bekanntmachungen;
Informaäonsöbermlttlung $2 Noäcett; Conveyance of-bifönnatlon (1)
Die Bekanntmachungen der Geseltechaft (1) The notioes of the
Company shall only werden ausschließlich Im Bundessnzelgsr be
publtshed In the Fetferal Gazette veröffentUcht, sofern das Gesetz
nicht etwas (Bundosamelgei). unless spedfied anderes bestimmt
othenrtse by (aw. Mt)2.3032.S33()vl
uuiiinidii»«ni>iiMiiii*.niiBteiwu«Bt«aui bh»»i.№.k»»ti
lUMrtlCTUU
§3 Gegenstand
des Unternehmens (1) Gegenstand des Unternehmens Ist die
Beteiligung an und die Gründung sowie die Leitung von Unternehmen
oder die Verwaltung von Be- telligungen an Unternehmen sowie die
Bereitstellung von Verwaltungs- und Holdingsfunktfonen für diese
Beteiligungsunternehmen, die in folgenden Geschäftsfeldern oder
Teilbereichen davon tätig sind: der Betrieb und die Erbringung von
Onllnediensten in den Bereichen Partnervermittlung, Datlng und
Kontaktanbahnung; §3 Object and purpose ofthe Company (1) The
object and purpose of the Company is the Investment in äs weil äs
the establishment and managing of companies or the administration
of equity interests in companies äs weil äs the Provision of
administrative and holding functions for |ts affiliated companfes
(hat operate [n the following business areas or parts thereof: the
Operation and the Provision of sen/ices in particular in the areas
of matchmaking, dating and contad initiation; W12-S33Qvl riiUrtut.
A. roeu. l»4un<Miht«wurtwu. N t.
uinit—ruiiitmruiuaai
die
Enhvicklung, der Betrieb und das Vermarkten von Software, die
Wartung von Kontakt- netzwerken, das Design und die Herstellung von
Computer- Programmen zur Datenver- arbeitung und -Verfolgung; the
development. operaüon and markettng of Software, main. tenance of
networks of contacts, deslgn and creiation of Computer programs Tor
data processing and tracking; das Oesign und die Errichtung von
Homepages und Internet- serten, Kommunikatfonsdiensten und
Unterhaltungsdiensten; the design and creaüon of homepages and
interne» web sites, communicatfon Services and entertalnment
servtces; das Veranstalten und Durchführen von gesellschafr lichen
Events, Werbungs- und Vermarktungsdiensten und E- Commerce
Tätigkeit. the arranging and conductlng of social events,
advertlsing and marketing Services and e-commeroe actlvfty.
Ausgenommen sind Tätigkeiten, die einer Erlaubnlspflicht nac^i dem
Kapltalanlagegesetzbuch (KAGB) oder dem Kredltwesengesetz (KWG)
unterliegen. (2) Die Gesellschaft kann in den genannten
Geschäftsfeldem auch selbst tätig werden. Die Geseüschaft Ist
berechtigt, alle Geschäfte und Ma&nahmen vorzunehmen, die mit
den vorstehenden Tätigkeitsgebieten in Zusammenhang stehen oder
sonst geeignet sind, dem Gesellschafts- zweck unmittelbar oder
mittelbar zu dienen Activiäes wh(ch requlre approval under the
Capital Investment Code (KAGB) or the Banklng Act (KWG) are
excluded. (2) The Company is entitted to carry out itself
activitles and operations In the aforementtoned IInes of buslness.
The Company is entitted to carry out all transactions and actions
which are related to the aforementioned lines of business or
otherwise appropriate to serve directly or fndlrectty the objects
of the Company. Za
(3) W (3)
unä^BetriebsstStten (m in- und Ausfand errichten, andere
Unteroehmen im ln."uni A"sland. 8rün<ten- «weAen oder sich "an
Ihnen beteiligen eowfe wtohe Unternehmen' Idten. Der
Untemehmw8gegen8tend"von Tochter- und BeteiKgungsüntemehmen darf
auch Gegewtfindti außeriialb der Grenzen desAt»safeE (l)umfeB sen.
Die Geselfechaft kann ihre Tätigkeit auf einen oder_ ein2e"» der
<n Absatz (1) genannten Geigenstände beschränken. Dte
Geseflschaft (st ferner berechtigt. Ihre Ta keit anz oder telhwise
mittelbar durch. ^Company may ̂ establteh branch s In ' and abroad,
may. estabtfeh or P^cha^other Cortpanies in Gennan'y S^ad^or hoM
-Partidä"8 Inand manage such'othw corn.panfes- the bu8(nws
Purposo"rf subsld»aries and compwtw in whteMhe Company holds a
parttdpaBng interest mey also Indude (bies o/buslnesa other .than
those nefierenced to In para. (1). Th9 Company may limft Ks
busln&s acttvfty to one or sewrel ofthe llnesof business
refepenoed to in para. (l). The Company further is enätteä to cany
out te busfness act Inwholfeorfn' »«12-3032.030VI
.A.ns^n^n<uw^artAff»,>hi»««, tiw^uui
Tochter-,
BeteUjgungs- und Gemeinschateunteinetmen . aualuüben. sfe tenn
Insbesondere (hren Betrieb ganz oder tettwelse an von Ihr abhängige
Untertiehmen Obertassen unä/oöw ganz oder telhweise auf von Ihr
abhä^ige Unternehmen ausgliedern. Sie kann sieh audi auf dte
TSägkeit einer gwchfifteteitenden Hotellng und/oder dte sonstige
Verwaltung eigenen Vermögens beschränken. Indlrecüy. flwough
subsldlaries, through ooftipaniäs in whfch the Company holds a
patidpding (ntwBst ahd throughjoW ventures. In partcular, tt may
transfer and/orspfn offlts operaBons In whote or in part to
companles controlled by ttie Company, The Company may also Ibnlt
tts buslness to acäng es a manaölng holding Company and/or restrict
Itseif to adminjstering te own assets. ?i A«??tf»nWT Grundka^^. 1,
^^fc^ SWWWf, ?h?ra Canlta», ̂ p^ §4. 84 Höheund EInteUvng de.
Grundkapltats Amountsnd SubdMaton oTthe Share Capttal (l) Das
Grundkapital der Gesellschaft beträgt EUR 2.661.385,00 (in Worten;
zwei Millionen sechshundertelnundsechzig- tausend
dreihundertfünfundachtzig Euro). (l) The share capital ofthe
Company amounts to EUR 2,661,385.00 (in words; Euro two million slx
hundred sixty one thousand three hundred eightyflve). {2} Das
Grundkapital ist eingeteilt in 2. 661. 385 auf den Namen lautende
Stückaktien. (2) The share capital of the Company is subdivided
into 2,661,385 reglstered no-par value shares
(3) Der
Verwaltungsrat ist ermächtigt, das Grundkapital der Gesellschaft
bis zum 31. Oktober 2022 (einschließlich) gegen Bar- und/oder
Sacheinlagen eirtmaltg oder mehrmals um insgesamt bis 2U EUR
593.481,00 durch Ausgabe neuer auf den Namen lautender Stückaktien
zu erhöhen (Genehmigtes Kapital 2017). Der Verwaltungsrat ist
ermächtigt, den weiteren In- halt der Aktienreehte und die
Bedingungen der Aktienaus- gaöe festzulegen. Dabei karm die
Gewhmberecktigung der neuen AWen auch abwei- chend von § 60 Abs. 2
AktG ctusgestoStet werden; die neuen Aktien können insbe- simdere
auch mit Gewtnnbe- rechtigung ab Beginn des ih- rer Ausgabe
vorangehenden Gesch^ftsfahres ausgestattet werden, wefm im
Zeitpunkt der Ausgabe der neuen Aktien ein Oewiiwverwendungsbe-
schluss der Hmytwrsamm- limg über den Gewinn dieses Geschäftsjahres
noch nicht gffasst worden ist. (3) The Administrative Board is au-
thorized, to tncrease the Compan/s share capital on one' or more
ocüisions on or before October 31, 2022, by not more than in total
EUR 593,481.00 in return for contributfons in cash and/or in kind,
by issuing new registered no-par value shares (Authorized Capltal
2017). The Administrative Board is authorized to define the further
content ofthe shareholder rigfüs and the terms and condttians for
the new steck issuartce. Thereby, the profil participation rfghts
ofrhe new shares mqy be determined in dewiation from section 60 (2)
of the Germeaz Stock Corporation Act: inpartiwlar, the new shares
may carry proßt participation rightsß-om the beglmiitig ofthe ßsccd
yecar preceäing thetr issu- wwe pravided thctt the share- holders'
meeting hos not cäready resohedon the proflt partictpa- tionfor
suehßsccüyear when the new shares ccre issued Den Aktionären ist
grundsätz- lich das gesetzliche Bezugs- recht emfdie neuen Aktien
zu gewähren. Das Bezugsrecht ftann detbei auch gam oder teilweise
als nüttelbares Be- zugsrecht im Sinne von § 186 Abs. 5 Satz l AktG
ousgestal- tet werden. As a rule, the shareholders shall be
granteäthe statutory preemp- ttve rights to the new shares. The
preempttve rights can also be granted by -wey of indirect
preempttve rights -within the mecsrüng qfsection 186 (5) sen- tence
l ofthe Germern Stock Cor- porcitionAct. #№12. 3032<33ad A.wnna
i»<BU(»n<u<ianh*iimi l
Das
Sezugsrecht der. Aktlo- näre bei Äuwtüzwig des Oe- nehmtgten
KtyUaJs 2017 wr Erliegt Jedoch folgenden Se- achrSnhmgen: a)
DasSezugsrechtderAk- tionäre isf bei Kcyitaler- höhmgen gegen
Barein- lagen ausgeschlossen, wen» äe Aktien vnter Bezvgnahme auf
diese Bestimmung zu eüiem Preis ausgegeben wer' der bestehenden
Aktien der Gesellsehtft nicht wesentV.ch wsterschrei- tet und die
in Ausmü- sung dieser &Tnäc}ai- S"ng zum Bezugsrechts-
cwschJuss awgegsbe- nen Aktien insgesamt 10 % des Gnmdktpitals
nicht Sberschreften. und -war werfer ö» &(ipunfe des
WWsamwerdens noch im Zeitpunkt der AusübuMg dieser £r- mächtigung.
AhBörsen- preis gilt auch der Preis eines an <kr NTSEAme- rtcan
LLC notierten Americccn Deposltory Shares (»ADS"), muW. pliziert
mit der Änzaü der ADSs, die eine Ahie repräsentieren. ffwever, the
shareholders' preenyfive rights are subject to the foüawlng
restrictions -when utiliziiig the Avfhorized. W17; a) The
shareholders 'preemp- tfve rfghts are excluäed wlth respecf to
capltal in- creases against cash con- tributionspyoviekd, tfuü the
shtves ca'e issued. with ref. erence to ffüs Provision, at an
issueprice which is not substantiaüy below the stock exchmge price
ofthe existfngshares ofthe Com- pwy andthat the skares is- sued
wider this aiü/wHm- ft'on for the exclvsion of preenyttve rtghts in
total do not exceed 10% qfthe registered share ciyital, ncsmety
neither at the time Ms cwthorizatton becomes ^ective nor ai the
time of the vtllization of this au- thorization. 7%e term "stock
exchange price" 'my oüo refer to the price o fern Americtin
Deposttory Shares ("A1SS") iisted on the NVSE ̂ nerfcan LLC.
m^rtpUedby the mmber of ^DSSs representing one share.
<W2-3CSM330vl t*<»«BCMIU^8ahh
b)
DasßessugsrechtderAh- tionäre isst ferner bei Ka- pita!erhöhungen
gegen Bar- wid/oder-Sfwhefn-, kigen ausgeschlossen, wenn &e
neuen Aktien wtfer Bezugnafaw ai<f ^sse Besttmmiftg im Rahnen wn
Beteili- gwngs- oder Vergüfmy- progrcanmen bsw, Setei- Ugungs- oder
Yergü- tungsifstrumenten an Personen. <ße in einem Arbeits- oder
Anstel' Itingsverhältfüs zur Ge- sellschqft oder zu einem von ifv
abhängigen oder in ihrem (mittelbaren) Mehrheitsbesitx stehen- den
Unternehmen ste- hen, oder an gesch^fts- ftlhrende Direktoren der
(Sesellsehqft vnd/oder Mitglieder von Ge- schäft^fithnmgen von
abhängigen oder im (mittelbaren) Mefvheits- besitz stehenden Unter-
nehmen ochr. an Dritte, die diesen Persomn das wirtschaftliche
Eigen- turn und/oder die •wfrt- schcfftlichenFrQchte aus den Aktien
Sberlassen (insbesondere oucA durch Lieferung von ADSs), wsgegeben
wer- den sollen. Die neuen AKtfen können an die ge- normten
Personen dabei insbesondere auch zu ei- nern vergünstigten Aus-
ga&ebetrag ftnsbesem- b) TTie sharekolders'preewp- tiw rights
are fio^her ex- chide<lwith respeot to cap- ital tncreevses
against can' tributions in cash muVor in än4 ifthe. new shves, with
rvference to üiü provislon. shall be isswd in.the con- text
ofemployeepartlcipa- lion cmä/or remwwation programs or instrwnents
to employees ofthe Company or conyxmies controlled by the Conywy ar
coifywnies in whlch the Cojnpcmy holds an ffndirect) nu^orüy
interest, or to Memaging Directors ofthe Cowywny and/or to members
ofthe maw^ement ofconycmies corürolled by the Cimywny ar companies
in which the Company Iwlds an ftndi- rect) mcfforlty interest or to
fhlrdparties -which trfmsfer the economic property
/wirtschaftliches Eigen- tua^ andfor the eeonomic benefltsjrovi ffw
shcwes to . the mentioned persow fln- cluäing, tn partieulw, ty
delivertng ADSs). 7%c new shares mcy, in pctrtleidar, also be
issued to the men- tlonedpersons cffi a redwxd fssue price
ffndzuüng, tn parücular, at the lawest is- suepricepermiss&le
under section 9 parcL l of the Öerman Stock Corporation Act) cmd/or
agcünst contri- toft'on o/" remuneratiofi elaims w stmllar Claims.
ftUlM032>S3iQ«1 A.roua»4»iati
<fere
ciuch zum gertngs- ten Äusgabebeirag un Sinne des $9 Abs. l ^tG)
unä/oSer gegen Einbringung von Vergü-. ivngs-. oder eßwdichen
^wprüchen ausgegeben werfien. Die neuen Ak- tien können ferner auch
unter Zwlschenwhal- tung eines Kredütnsti- tuts oder eines nach §
53 Abs. I Satz l oder § 53b ^bs. l Sats l oder Abs. 7 KtfV tätigen
Untemeh- mens ausgegeben wer- den, das diese Aktien mit der
Vefj^llchtung über- nimmt, sie bzw. ADSs, die Affien repräsentie-
ren, an die vorstehend genannten Personen su li^ßrn bzw. ihnen
anzu- bieten. Die in Avsfwt- zung dieser Bnnächti- gifftg zum
Bemgsrechts- awscMiiss ausgegebe- mn Aktien dürfen insge-
samilOKdesOrundka- pltals nicht üb'erscfrel- • ten, wvä swar -wedw
im . Zei^unfo des Wlrksam- werdfew nych im Zeit- punkt derAvsübuns
die- ser Ermächtigung. Fwthemwre, the new shares mey also be issued
ffircwgh a aredü institutfon W a ewiywy öperattng in accordawe
wühsection 53 (l) sentence l or section 53b (l) sentence l ar(7)of
the Oerman Bcmtdng Act <K1VG} whlch asswnes these shgres subfect
to an Obligation to Oliver or of- fer them or ADSs repre- senting
the shwes to the persons mentiofwd above. Tke shca-es issueet'
vnäer <%te authoriscttion far the exclvsion of preempttve rtghts
mcy in total mt ex- wedJOy» ofthe registered share capital, namely
nei- ther tu the time this avthör' ization becomes effective nor at
the time ofihe utlli- zation ofthfs auüwrization. Der
Verwaltimgsrat ist darüber hiiwus ermäch- tigt. ctosSesussrechtder
Aktionäre (auch in Kom- bination mit einem Be- zugsrechtsausschluss
nach vorstehend Ut. e) und/oder Ut. b)) nach näherer Maßgabe der
folgenden Besftmmun- .gen auch in folgenden f'äilen
•auszuse/Seßen,' c) Furthermore, the Ädmüiis- trattve Board is
(wthorized, subject fo the foWcwtng provisions. to excbtde the
shea-eholders' preemptive rights Calso by combinivg svch exdlisions
with an ex- clusion of' preenyitfve rights accorälng to Zu. a)
tmä/or lit, b) above) also in thefoHawiry cases:
^- i. Der
Yerwaltungsrat ist ermächligt, Spit- zenbeträge wm Be- zugarecht
der 'Aktio- märe auszwiehmen vnd das ßesvgsrecht der Ahion^-e auch
Insoweit ccuszuschlie- ßen, -wie dies erfor- derlfchist. vmdenln-
habem bzw. Gläubi- ^em von Wondhmgs- oder Optionsreehten aus
Wandel- oder Qptiofuschuldver- sehreibungen, die von der
OeseHschaft oder einem in- oder aus- ländlichen Vntemeh- mw, an dem
die Ge' Seilschaft wimiitelbar oder mittelbar mit der Meh-heü der
Stirn- menwi3räes Kcpifals beteiligt ist, ausgege- ben vhwiw oder
wer- den, bzw, den hieraus im Falle eines eige- nen Wcmdlungsrechts
der Oesellschsft Ver- pflichteten ein Be- zugsrecht in dem Um- fcms
m gewähren, •wie es ihnen nach Ausübung der Wand' lungs- oder
Options- rechte bsw. nach &- fiülung einer Wand- Jwtgs- oder
Optiow- pflieht zustünde. /. The Athünistratfve Board is auüwrized
to exclude. the sherehold' ers' preenyttve rights regardfng
jractional • ammoüs cmd also to ex- clude the shareholders'
preempttve righfs to tke extent it is reqvired in or<fer ta
gränt to holders or credttors, respec- tfvely, ofwnversim ar Option
rtghts ccttcshed to convertible and/or ap- tion bands. ihat are ar
were issued by the Com- pcsiy or a ncctiondl or foreign svbsidlary
in which the Compccry ei- ther directfy m indi' rectty holds a
majority in tenns ofvoting rights fmd capüal, or, in ease of an wwn
conversion rtght ofthe Conyany, to holders or creditors, re-
specttvely, belng obll- gated thereby, preemp- Ifve rights to tfie
extenl they would be entiüed to t^ier exercisin^ the con- Version
or optton rights or öfter ßäfilUng a con- Version or Option obli-
gation, respecttvety. M8l2-3032-S330vI lA.nnmunäiu»
il. Ser
Vffiwed!Ko^sr<ü. ist ferner ermäeh- tigt, bei Stpftoler-
SacheMctgen-^tns- befonäere mfn ^vessk <ks £rww6s 'von
Ui^ersehmen, URtef»ehme«steflen oder BetSWgungen m'Vntem^meh, im
Kahmen von Ünter- nelsne'Rszvscanmen- schlössen' und/oder zum
Z-wecke des Er- •werbs sonstiger Vermögensgegen- stände einscfüieß-
lich Sechten unä Fordenmgen - das Sesugsreüht der Ak- tionäre
ouszftschlie- ßen. . ft Ädäittow^fy, the M- mtnistrceSw Soca-d is
aütlwHswI to exdude the shorefioldaf-f' yewyÜM rfg^tf yft^»
inereeat^ Ihe share cepital *i exchmge for contrüwtiow in Ünä, in
poytiwlto- № acgutre cospwües, parts of consievües or sfuyp-
AoAäivgT, ̂ ffie contoct af jtitnt ventwes and mergers and/or for
the ptapose of acgutring orker assets tmluding rights omd elaims,
»WitWsa^amvi. >t. *. reti!iBi»<»adBW 10
(4) Der
Verwaltungsrat ist ermächtigt, das Grundkapital der Gesellschaft
bis zum 28. Juli 2025 gegen Bar- und/oder Sacheinlagen einmalig
oder mehrmals um bis zu insgesamt EUR 266. 138,00 (in Worten:
zweihundertsechsundsechzig- tausendeinhundert-achtunddreißig Eure)
durch Ausgabe von bis zu 266. 138 neuen, auf den Namen lautenden
Stückaktien zu erhöhen (Genehmigtes Kapital 2020/1). Der
Verwaltungsrat ist ermächtigt, den weiteren Inhalt der Aktienrechte
und die Be- dingungen der Aktienausgabe festzulegen. Dabei kann die
Gewinnberechtigung der neuen Aktien auch abweichend von § 60 Abs. 2
AktG ausgestaltet werden; die neuen Aktien können insbesondere auch
mit Ge- winnberechtigung ab Beginn des ihrer Ausgabe vorangehenden
Geschäftsjahres ausgestattet werden, wenn im Zeitpunkt der Ausgabe
der neuen Aktien ein Gewinnver- wendungsbeschluss der Hauptversam-
mlung Ober den Gewinn dieses Geschäfts- Jahres noch nicht gefasst
worden ist. Den Aktionären ist grundsätzlich das gesetzliche
Bezugsrecht auf die neuen Aktien zu gewähren. Das Bezugsrecht kann
dabei auch ganz oder teilweise als mittelbares Bezugsrecht im Sinne
von § 186 Abs. 5 S. 1 AktG ausgestaltet werden. Das Bezugsrecht der
Aktionäre bei Ausnutzung des Genehmigten Kapitals 2020/1 unterliegt
jedoch folgenden Beschränkungen: a) Der Verwaltungsrat ist
ermächtigt, das Bezugsrecht der Aktionäre bei Kapital- erhöhungen
gegen Bareinlagen aus- zuschließen, wenn die Aktien unter
Bezugnahme auf diese Bestimmung zu einem Preis ausgegeben werden,
der den Börsenpreis der bestehenden Aktien der Gesellschaft nicht
wesentlich unterschreitet und die in (4) The Administrative Board
is authorized to increase the Company's share capital on or before
28 July 2025 by not more than in total EUR 266,138.00 (in words:
two hundred sixty-six thousand one hundred thirty-eight Euro) by
issuing up to 266, 138 new registered no-par value shares on one or
several occasions against contributions in cash and/or in kind
(Authorized Capital 2020/1). The Administrative Board is authorized
to define the further content of the shareholder rights and the
terms and conditions for the new stock issuance. Thereby, the
profit participation rights of the new shares may be determined in
deviation from See. 60 (2) German Stock Corporation Act; in
particular, the new shares may carry profit participation rights
from the beginning of the fiscal year preceding their issuance
provided that the General Meeting of Shareholders has not yet
resolved on the profit participation for such fiscal year when the
new shares are issued. As a rule, the shareholders shall be granted
the statutory subscription rights to the new shares. The
subscription rights may also be fully or partially granted by way
of indirect subscription rights within the meaning of See. 186 (5)
sentence 1 German Stock Corporation Act. However, the shareholders'
subscription rights are subject to the following restrictions when
utilizing the Authorized Capital 2020/1; a) The Administrative
Board is authorized to exclude shareholders' subscription rights
with respect to capital increases against cash contributions
provided that the shares are issued, with reference to this
Provision, at an issue price which is not substantially below the
stock exchange price of the existing shares of the Com an and that
the shares
Ausnutzung
dieser Ermächtigung zum Bezugsrechtsausschluss ausgege- benen
Aktien insgesamt 10% des Grundkapitals nicht überschreiten, und
zwar weder im Zeitpunkt des Wirksam- Werdens noch im Zeitpunkt der
Ausübung dieser Ermächtigung. Als Börsenpreis gilt auch der Preis
eines an der NYSE American LLC notierten American Depository Shares
(„ ADS "), multipliziert mit der Anzahl der ADSs, die eine Aktie
repräsentieren. Auf die Begrenzung von 10% des Grund- kapitals ist
der anteilige Betrag des Grundkapitals anzurechnen, (i) der auf
Aktien entfällt, die während der Lauf- zeit des Genehmigten
Kapitals 2020/1 aufgrund einer Ermächtigung zur Veräußerung eigener
Aktien gemäß §§ 71 Abs. 1 Nr. 8 S. 5, 186 Abs. 3 S. 4 AktG unter
Ausschluss eines Bezugsrechts veräußert werden; (ii) der auf Aktien
entfällt, die zur Be- dienung von Bezugsrechten oder in Erfüllung
von Wandlungs- bzw. Optionsrechten oder -pflichten aus Wandel-
und/oder Optionsschuldver- Schreibungen, Genussrechten und/ oder
Gewinnschuldverschreibungen (bzw. Kombinationen dieser Instru-
mente) (zusammen „Schuldverschrei- bungen") ausgegeben werden,
sofern die entsprechenden Schuldverschrei- bungen wahrend der
Laufzeit des Genehmigten Kapitals 2020/1 in entsprechender
Anwendung von § 186 Abs. 3 S. 4 AktG unter Ausschluss des
Bezugsrechts der Aktionäre ausge- geben werden; sowie (iii) der auf
Aktien entfällt, die während der Laufzeit des Genehmigten Ka-
pitals 2020/1 auf der Grundlage anderer Kapitalmaßnahmen unter
Ausschluss des Bezugsrechts der AKtlonare in ents rechender An-
issued under this authorization for the exclusion of subscription
rights in total do not exceed 10% of the registered share capital,
neither at the time this authorization becomes effective nor at the
time of the utilization of this authorization. The term "stock
exchange price" may also refer to the price of an American
Depository Share ("ADS") liste'd on the NYSE American LLC,
multiplied by the number ofADSs representing one share. The 10 %
share capital limit shall include the proportionate share capital
amount attributable to (i) shares sold during the term ofthe
Authorized Capital 2020/1 on the basis of an authorization to seil
treasury shares pursuant to Sees. 71 (1) No. 8 sentence 5, 186 (3)
sentence 4 German Stock Corporation Act under exclusion of
subscription rights; (ii) shares that are issued to fulfill
subscription rights or conversion or Option rights or obligations
arising from convertible bonds and/or bonds with warrants, profit
participation rights and/or participating bonds or bonds with
warrants or a combination ofthese Instruments (collectively
"bonds"), provided that the corresponding bonds are issued during
the term of the Authorized Capital 2020/1 in analogous application
of See. 186 (3) sentence 4 German Stock Corporation Act under
exclusion of shareholders' subscription rights; äs weil äs (iii)
shares issued during the term of the Authorized Capital 2020/1 on
the basis of other capital measures excluding shareholders'
subscription rights in analogous application of See. 186 (3)
sentence 4 German Stock Corporation Act.
Wendung von §
186 Abs. 3 S. 4 AktG ausgegeben werden. b) Der Verwaltungsrat ist
ferner ermächtigt, das Bezugsrecht der Aktionäre bei
Kapitalerhöhungen gegen Bar- und/oder Sachein lagen auszuschließen,
wenn die neuen Ak- tien unter Bezugnahme auf diese Bestimmung im
Rahmen von Beteiligungs- oder Vergütungspro- grammen bzw.
Beteiligungs- oder Vergütungsinstrumenten an Perso- nen, die in
einem Arbeits- oder Anstellungsverhältnis zur Gesellschaft oder zu
einem von ihr abhängigen oder in ihrem (mittelbaren)
Mehrheitsbesitz stehenden Unternehmen stehen, oder an
geschäftsführende Direktoren der Gesellschaft und/oder Mitglieder
von Geschäftsführungen von abhängigen oder im (mittelbaren)
Mehrheits-besitz stehenden Unternehmen oder an Dritte, die diesen
Personen das wirtschaftliche Eigentum und/oder die wirtschaftlichen
Früchte aus den Aktien überlassen (ins-besondere auch durch
Lieferung von ADSs), ausgegeben werden sollen. Die neuen Aktien
können an die genannten Personen dabei insbesondere auch zu einem
vergünstigten Ausgabebetrag (insbesondere auch zum geringsten
Ausgabebetrag im Sinne des § 9 Abs. 1 AktG) und/oder gegen
Einbringung von Vergütungs- oder ähnlichen Ansprüchen ausgegeben
werden. Die neuen Aktien können ferner auch unter Zwischenschaltung
eines Kreditin- stituts oder eines nach § 53 Abs. 1 S. 1 oder § 53b
Abs. 1 S. 1 oder Abs. 7 KWG tätigen Unternehmens ausge- geben
werden, das diese Aktien mit der Verpflichtung übernimmt, sie bzw.
ADSs, die Aktien repräsentieren, an die vorstehend enannten
Personen b) The Administrative Board is further authorized to
exclude shareholders' subscription rights with respect to capital
increases against contributions in cash and/or in kind, ifthe new
shares. with reference to this Provision, shall be issued in the
context of employee participation and/or remuneration programs or
Instruments to employees of the Company or companies controlled by
the Company or companies in which the Company holds an (indirect)
majority interest, or to Managing Directors of the Company and/or
to members of the management of companies controlled by the Company
or companies in which the Company holds an (indirect) majority
interest or to third parties which transfer the economic property
(wirtschaftliches Eigentum) and/or the economic benefits from the
shares to the mentioned persons (including, in particular, by
delivering ADSs). The new shares may, in particular, also be issued
to the mentioned persons at a reduced issue price (including, in
particular, at the lowest issue price permissible pursuant to See.
9 (1) German Stock Corporation Act) and/or against contribution of
remuneration Claims or similar Claims. Furthermore, the new shares
may also be issued through a credit institution or a Company
operating in accordance with See. 53 (1) sentence l or See. 53b (1)
sentence 1 or (7) German Banking Act (KWG) which assumes these
shares subject to an Obligation to deliver or offer them or ADSs
representing the shares to the persons mentioned above. The shares
issued under this authorization for the exclusion of
zu liefern
bzw. Ihnen anzubieten. Die in Ausnutzung dieser Ermächtigung zum
Bezugsrechtsausschluss ausge- gebenen Aktien dürfen insgesamt 10 %
des Grundkapitals nicht über- schreiten, und zwar weder im Zeit-
punkt des Wirksamwerdens noch im Zeitpunkt der Ausübung dieser Er-
mächtigung. c) Der Verwaltungsrat ist darüber hinaus ermächtigt,
Spitzen betrage vom Be- zugsrecht der Aktionäre auszunehmen und das
Bezugsrecht der Aktionäre auch insoweit aus-zuschließen, wie dies
erforderlich ist, um den Inhabern bzw. Gläubigem von Wandlungs-
oder Optionsrechten aus Wandel- oder Optionsschuldverschreibungen,
die von der Gesellschaft oder einem in- oder ausländischen
Unternehmen, an dem die Gesellschaft unmittelbar oder mittelbar mit
der Mehrheit der Stimmen und des Kapitals beteiligt ist, aus-
gegeben wurden oder werden, bzw. den hieraus im Falle eines eigenen
Wandlungsrechts der Gesellschaft Verpflichteten ein Bezugsrecht in
dem Umfang zu gewähren, wie es ihnen nach Ausübung der Wandlungs-
oder Optionsrechte bzw. nach Erfüllung einer Wandlungs- oder
Optionspflicht zustünde. d) Der Verwaltungsrat ist ferner er-
mächtigt, bei Kapitalerhöhungen gegen Sacheinlagen - insbesondere
zum Zweck des Erwerbs von Unter- nehmen, Untemehmensteilen oder
Beteiligungen an Unternehmen, im Rahmen von Unternehmenszusam-
menschlüssen und/oder zum Zwecke des Erwerbs sonstiger Vermögens-
gegenstände einschließlich Rechten und Forderungen - das
Bezugsrecht der Aktionäre auszuschließen. subscription rights may
in total not exceed 10% of the registered share capital, namely
neither at the time this authorization becomes effective nor at the
time of the utilization of this authorization. c) Furthermore, the
Administrative Board is authon'zed to exclude the shareholders'
subscription rights regarding fractional amounts and also to
exclude the shareholders' subscription rights to the extent
required in order to grant to holders or creditors, respectively,
of conversion or Option rights attached to convertible and/or
Option bonds, that are or were issued by the Company or a national
or foreign subsidiary in which the Company either directly or
indlrectly holds a majority in terms ofvotlng rights and capital,
or, in case of an own conversion right of the Company, to holders
or creditors, respectively, being obligated thereby, subscription
rights to the extent they would be entitled to after exercising the
conversion or Option rights or after fulfilling a conversion or
Option Obligation, respectively. d) Additionally, the
Administrative Board is authorized to exciude the shareholders'
subscription rights when increasing the share capital in exchange
for contributions in kind, in particular to acquire companies,
parts ofcompanies or shareholdings, in the context ofjoint ventures
and mergers and/or for the purpose of acquiring other assets
including rights and Claims.
(5) Das
Grundkapital ist um bis zu EUR 1.330.692,00 (in Worten: eine
Million dreihundertdreißigtausendsechshundert- zweiundneunzig Euro)
durch Ausgabe von bis zu 1, 330.692 neuen, auf den Namen lautende
Stückaktien bedingt ertiöht (Be- dingtes Kapital 2020/1). Die
bedingte Kapitalerhöhung dient der Gewährung von auf den Namen
lautenden Stück-aktien bei Ausübung von Wandlungs- oder Options-
rechten (oder bei Erfüllung entsprechender Wandlungspflichten) oder
bei Ausübung eines Wahlrechts der Gesellschaft, ganz oder teilweise
anstelle der Zahlung des fälligen Geldbetrags Stückaktien der Ge-
Seilschaft zu gewähren, an die Inhaber von Wandel- oder
Optionsschuldver- Schreibungen, Genussrechten und/oderGe-
winnschuldverschreibungen oder Kombina- tionen dieser Instrumente
("Schuldver- Schreibungen"), die aufgrund des
Ermächtigungsbeschlusses der Hauptver- Sammlung vom 29. Juli 2020
bis zum 28. Juli 2025 von der Gesellschaft oder einem
nachgeordneten Konzernunter- nehmen gegen Bareinlage ausgegeben
werden. Die Ausgabe der neuen Aktien erfolgt zu dem nach Maßgabe
des vorstehend bezeichneten Ermächtigungs- beschlusses jeweils zu
bestimmenden Options- oder Wandlungspreis. Die bedingte
Kapitalerhöhung ist nur im Fall der Begebung von
Schuldverschreibungen, die mit Optionsrechten oder Wandlungsrechten
oder -pflichten ausgestattet sind, gemäß dem Ermächtigungsbeschluss
der Haupt- Versammlung vom 29. Juli 2020 und nur insoweit
durchzuführen, wie von Options- oderWandlungsrechten Gebrauch
gemacht wird oder zur Wandlung verpflichtete Inhaber oder Gläubiger
von Schuld- verschreibungen ihre Verpflichtung zur Wandlung
erfüllen oder soweit die Gesellschaft ein Wahlrecht ausübt, ganz
oder teilweise anstelle der Zahlun des (5) The share capital of the
Company is conditionally increased by up to to EUR 1,330,692.00 (in
words: one million three hundred thirty thousand six hundred
ninety-two Euro) by issuing up to 1, 330,692 new no-par value
registered shares (Conditional Capital 2020/1). The conditional
capital increase serves the issuance of registered no-par value
shares upon the exercise ofconversion orwarrant rights (or upon
fulfilment of corresponding conversion obligations) or, when
exercising the Company's right to choose to partialty or in total
deliver no-par value shares of the Company instead of paying the
due amount of money to the holders of convertible bonds or warrant
bonds, profit participation rights and/or income bonds or a
combination of these Instruments (collectively the "Bonds") issued
by the Company or by a subsidiary of the Company against cash
contribution until 28 July 2025 on the basis of the authorization
of the general meeting of 29 July 2020. The new shares are issued
at the respective warrant or conversion price to be established in
accordance with the aforementioned authorization resolution. The
conditional capital increase shall only be implemented if bonds
carrying warrant rights or conversion rights or obligations in
accordance with the authorization resolution adopted by the Annual
General Meeting on 29 July 2020 are issued and only to the extent
that warrant or conversion rights are exercised or the holders or
creditors of bonds obliged to exercise the warrant or conversion
right fulfill their obligations or to the extent that the Company
exercises its right to choose to partially or in total deliver
no-par value shares ofthe Company instead of payment of the due
amount of money and insofar äs in each case no cash compensation is
ranted or treasu shares or shares of 15
fälligen
Geldbetrags, Stückaktien der Gesellschaft zu gewahren und soweit
jeweils nicht ein Barausgleich gewahrt oder eigene Aktien oder
Aktien einer anderen börsennotierten Gesellschaft zur Bedienung
eingesetzt werden. Die neuen Aktien nehmen von dem Beginn des
Geschäftsjahrs an, in dem sie entstehen, und für alle nachfolgenden
Geschäftsjahre am Gewinn teil; abweichend hiervon kann der
Verwaltungsrat -- soweit rechtlich zulässig - festlegen, dass die
neuen Aktien vom Beginn des Geschäftsjahrs an, für das im Zeitpunkt
der Ausübung von Wandlungs- oder Optionsrechten, der Erfüllung von
Wandlungs- oder Optionspflichten oder der Gewährung anstelle des
fälligen Geldbetrags noch kein Beschluss der Hauptversammlung über
die Verwendung des Bilanzgewinns gefasst worden ist, am Gewinn
teilnehmen. Der Verwaltungsrat ist ermächtigt, die weiteren
Einzelheiten der Durchführung der bedingten Kapital- erhöhung sowie
die technischen Voraus- Setzungen und Ablaufe für eine eventuelle
Umwandlung der Bezugsaktien in ADSs festzulegen. another listed
Company are used for serving these rights. The new shares
participate in profits from the beginning of the fiscal year in
which they are created and for all subsequent fiscal years; in
deviation hereof, the Administrative Board may, to the extent
legally permissible, determine that the new shares participate in
profits from the beginning of the fiscal year for which at the time
of the exercise of the conversion or Option rights, the fulfilment
of the conversion or Option obligations or the granting (of shares)
instead of the amount due, a resolution by the General Meeting äs
to the appropn-ation of the balance sheet profit has not yet been
passed. The Administrative Board is authorized to stipulate the
further details of the implementation of the conditional capital
increase äs well äs the technical requirements and procedures for
an eventual conversion of the subscription shares into ADSs.
16
§5 Aktien (1)
Die Aktien lauten auf den Namen. Die Gesellschaft führt ein
elektronisches Aktienregister. Die Aktionäre haben der Gesellschaft
die gemäß § 67 Abs. 1 S. 1 AktG in der jeweils anwendbaren Fassung
erforderlichen Angaben zur Ein- tragung in das Aktienregister
mitzuteilen. Ferner ist mitzuteilen, inwieweit die Aktien
demjenigen, der als Inhaber im Aktien- register eingetragen werden
soll, auch gehören. Sofern Aktionäre eine elektronische Adresse zum
Aktienregister übermitteln, wird die Gesellschaft die Mitteilungen
gemäß § 125 AktG auf elektronischem Weg an diese Adresse
übermitteln, sofern der Aktionär diesem Vorgehen nicht ausdrücklich
widerspricht. Der Ver- waltungsrat ist - ohne dass hierauf ein
Anspruch besteht - berechtigt, diese Mitteilungen auch auf anderem
Weg zu versenden. §5 Shares (1) The shares of the Company are
registered shares. The Company maintains an electronic share
register. The shareholders must provide the Company with the
Information required for entry in the share register pursuant to
See. 67 (1) sentence 1 German Stock Corporation Act (AktG) äs
amended. Furthermore, it must be communicated to which extent the
shares belang to the person who is to be entered äs the holder in
the share register. If shareholders submit an electronic address
for entry in the share register, the Company will send
notifications pursuant to See. 125 Gtrman Stock Corporation Act
(AktG) by electronic communication to this address, unless such
shareholder expressly objects to this procedure. The Administrative
Board is entitled to send - but no shareholder entitled to request
receiving - these notifications by other means. (2) Die
Geseltechaft Ist berechtigt, Aktien in (2) Einzel, oder
SamroNurkunden zu vwbriefen. Form und InhaH der Akäerturkyhden
sowie von GewinnanteUs-, und Erneuerungsscheinen bestimmt der
Verwaltungsrat, Der Ansprudi der Aktionäre airf Vertiriefuns Ihrer
Anteile Ist ausgeschlossen. Ttie Company may ceräfy ähares by
IhdMäual or global pertiflcafes. Form and content of Vhs share
certficates äs well äs of proffl ehare and rehewal cerfiSc^tes at^B
detennlned by the Admlnlstrafive Board. The shareholdere' right fo
have thelr shares evfdenced by oertificates Is exduded. (S) Bei
einer Brh&hung des Grundkapltate kann die Ge^innbetelfljgung
neuer AkUen abweichend von § 60 Abs. 1 und 2 AktG bestimmt werden.
Junge AKtlen aus eln6r KQnfBgen Kapltalerhflhung können mit
Vorzogen bei der Gewtnnvenellung versehen werden. (3) In the event
of an Increase In share capifa), the profit share öf new shares
tnay be determined In derogatlDn from Secüon 60 p^ragraphs 1 and 2
of the Gennan Stedt OorporaUon Act. New shares from a Ware (ncfeaw
In share j capltäl may b6 öranted prefeFenüal rights In the
dfstribufloh <sf proflts.
S. Absdinltt.
Verfassung Secäon ä.GonsiHuffcm ofthe Cömuuffi i6 MontetlschBs
System; Oräan® $6 Olifrfler System; ©ovamlnö Bodlte (l) Dfo
GeseHschaft hat eine mänlsäsche (1) The Company has a one-tler
Untemebdnensldtungs-und Kontrollstruktur, mangganent and
adminlatrative altern. QZ) Die Organe der Gesellsdiafl sind; a) der
Verwaltungsrat, und b) die Haupti/erwmimluns. (2) The öoverrdng
bodtes öfthe Company are: a) the Administrative Board; and b) (he
General Meeäng of Shareholders. (3) Die
gesäififtsrQhrendwplrektoren fQhren die Oesdiäfie der
SeBell&Chaft. Indem äe die Grundlinien und Vorgaben umsetzen,
die der Verwaltungsrat aufetellt (3) The Company's Maftaging
Dfrectors ere managlng the Company öy Implemenfing the prtnclples
and güldelines estabUshed by fte Admlnlstrsth/e Board. A Ahachnltt
Ole n»«r*illfhtführend»n Dtroktoren; SectlQB 4. "nia Mnnacftna
DIrütStors §7 _ §7 Bestellung, ZußtfindlQkelt, Aüberufurtg
Appolntment, Responslbnittes. Removal (1) Der Verwaltunösrat
be^Btlt ernen oder mehrere fl^sohäfteführende Direktoren.
Mttglieder des VerwaKungsrats können zu esehäftemhrtnden Dlrddoren
besteRt (1) The AdmtnlKtratfve Board shall äppplHt pne pr more
Msnaglng Directors. Membere of the AdmlniStraflve Board ma be s
olnted äs ana )»4»12.3032^330vl t.OfdlNht«*»!*"*' iA. nnuiitOUli
BlNthp-t. luUBIII. II.—lTONJUA.t 18
Werden,
sofern dte Mehrheit des Venwaltongsrate weiterhin aus nicht
geschäftsföhrehdöft Ml^fledem besteht. Nrectore provtded that the
oiembere not »rvins ss MensSti^ Diresctors shad ät all finnes
consßtute the majority of the Admlrilstraäve toanj membere. (2) Der
Verwaftungsrat . tenn einen ^) TheAdmMstratfveBoafdinaynomin^rte
g6S№8ft^Bh)iBnden Direktor zum Verelenden der Gesdiäftsmhmng (Chtef
Executive Offloer, CEO) ernennen und einen odw zwd weltera
geschffftefllhrende Direktoren zu seinen Stellvertretern ernennen.
one of these Managing Directors äs chtef ececuäve offteer (CEO) and
one or two further Managlrtg Dlrectore äs hi? depuHes. (3) Sind
mehrere geschSftsfOhrende Direktoren b^teflt, können sta sich eine
Gesdiäftsordilüng geben, sofern nicht der VerwaKungsrat eine
<?e$chäftsordnung für die geschäftsführenden Direktoren eilässt.
W If at leest two Menaging Dlrectors are appolnfed, thsy may adppt
thelr ipwn rul^ of procedüre, unless äie AdmirristraUve Board
adppts rules of prooedure forthe Managlng Dlreettns. (4) Die
geschäfteführenden • Direktoren (Uhren die Geschäfte der
Gesellschaft nach Maßgabe der Gesetze, dt«B8r Sateung, der
Geschäftsordnung für die sesch&fteRlhrenden Direktoren und den
Weisungen des VewaKungsrats. (4) The Managlng DIrectors shall
conduct the buslness of tfip Company in accordance wlth ptatutöry
prövtsions, ftese artldes of assoyatton, fiie rules of procedure
for-the Managlng Dlrectore and tiw Instrucäons ofthe Administrative
Board. (5) <3e6ch<lftef(lhr»nd9 Direktoren können Jederzeit
durch Beschluss des Verwaltungsrates abberufön werden. fß) Managlng
Otractor» niay be removed from Office ?t any Urne by resolutlon of
theAdmlnte&atIve Board.. 58 Vertretung der Gesellschaft §8
Representlng the Conipany (1) Ist nur ein gescäiäftsfflhrender
Direktor bestellt, so verrttt er die GeseUsdiaft allein. Sind
ehrere eschaftsftlhrende DireMören (1) If only one Manäglng
Direc*or Is appolnted, be shall have sole and indMdual authori to
re resent the 1^^^..r^^^ 19
beeteltt, so
wird die Oesdlschaft durch zwei geschäftsfühnBnde Direktoren oder
durch iatnen getehäfeftthrenderi Direktor fr» Qemejnschaft mft
einem Protturiäen gesetzlich vertreten. Company. If at least two
Managlng Dlrectore are appdnted, the Gonipany shafl etthw be legaHy
represented t»y two Managing Dlrectore or by one Managlng Dlrector
and one execuUvs offlcer vested wtth power of commerctel
representatlon under German law (P/otorfsQ. (2) Der Verwattur^israt
kann bestimmen. dass (2) eIitoBtoe oder alte gesohfitetohrenden
Dlrtktoren ehizeh/ertretungAefugt sind. The AdmlrfstraUve Board may
determlne (hat (ndivldual or all Managlng Dlrectots have sote and
Indfvldual authortty to represent the Company, (^) Der
Verwaltungsrat kann ferner einzelne oder alte flesdiäftsfOhrenden
Direktoren alfgemeln oder für den Eln3Eelfall von dem Verbot der
Mehrfachvertretung des § 181 Altemaäve2 BG8 betreten; §41 Abs. 5
SEAG bleibt unberührt. (3) The Ädmlnisfretive Boaitt may furthw
release IndMdual or al( Managlng DIrectors from the proWbtUon on
multiple representeiüon pursuant to SecUon 181 alternative 2 of the
German Clvll Code (BQB) In general or In spedflc caseis; 8ecäon41
para. 5 offrie SEAG remalns unaffected. §9 Zusttnimungsbedörftlge
Geschäfte Transactlons Requlring Approval (2) Öle
aeschäftsführenden Direktoren dürfen die folgenden Maßnahmän und
Gesdiäfte nur rrttt vorheriger Zysdmmung des Verwattungsrats
äusföhrBn; a) VerabscWedüng c|0r Jähriichen Budgetjstanüng ®r die
GeseUäch8ft und Ihren TochteruntwnehmcitfOrdas folgende
Geschäftsjahr (Prouktlon, Umsatz, Personal, Investments,
FInaririeru und Gesrfnn- und <1) Ttie Managfng DIret^ore shatl
wacute the foflowlng meiasures and (rensadions only wtfh the prior
approval of the Adrahilstrattve Board; a) Adof^Ihs the ennuat
budget planntng fprthe Company and te subsldlaries for the cpmlng
business year (producüon, turriover, pereonnd, Investment, toantto
aswell äs rodt. arKl toss Si5J2ä^2!l».~^i^"<"»-» rtoN. »»*
20
Vertustplanun^ "Büdgetplanung"); (die
plannlng) (the • "Budget Plannlng*); b) Erwert? und Veräußeiung von
Unternehmen, UntemehmensbetdUgungen und Untemehmenstelleiri, wenn
der Gegenwert vom Verwaltungsrat festgelegte Wertgnsozen Oberetelgt
Ausgenortimen sind, sowen vom Verwaltunfisrat nicht andere
bestimmt, Erweit» und Veräußerung von und an vertoundene
Unternehmen i.S.d. §§ 15 ff. Afrtlengeseiz. b) Acqulitläon and
dfeposgl of enterprijBös, tnterests In comparttes . and parts of
compfinles, In case the value exceeds üie ihresholds sttpulated by
the Adminletraäve Board. Thls does not appty. to the extern not
sflpulated to ttie contrary by the Admlntstraäve Board, 1o the
acqulslUon äftd dteposal from or to efflllated companies (wlthln
ttie meaning of §§ 15 et sfeq. German Stod< Gorpörations Ad). c)
Investitionen In das Anlagevermögen Ober einen vom Verwattungsrat
für den Einzelfall oder das betreffend Gasdiäftsjahr festgelegten
Betrag hinaus; und c) Spendfng för addläons to flxed assets
{Inve^Wonen in des Anlagevefmögen) In excess of thresholds äs
determlned by the Administrative, Board per IndMdual ca$e ör for
äie respedlve budness year; and d) Aufnahme von
Flnanzvertalndllchkelten, wann deren Umfeng vom . Verwaltunflsret
festgelegt® Wertgrtnzen O&eretelgt. d) Incurrence of finandal
obllgatlons [ In case the vatue eitoeeds . thelr i threshQlds
säpuiated by the' Admlnistretlw Board. (2) Maßnahmen oder
Transakflonen, die ausdrücklich In der wm Verwaltungsrat
genehmigten Budgetplanung ̂ nthattw sfnd, b&dOfen keiner
zusätelldTBn Zustimmunfl durch den Verwajtungsrat gemäß
vorstehendem Absattl, es sei den die üetreffentje Maßnahme oüw
Transaktion Obereclireftet Wert- taw. betra. Bmfißl den (2)
Measures or tränsacäons specfficaTly addressed In the Budget
Planning äs approved by the Administrative Board dö not requlre a
separate approval oflhe Administrative Board under para. 1) above,
urfesa the relevant measure or trensactton exceeds tn terme of
wfue/attöunt üie amount ör llinlt ».jl»12.3P^S3tol
»WB8ttl»<BUfli da*tiw<^*«» 21
Betrag odw
die Qvtwtts, die für die JewelUge Maßnahme oder Traosaktlen In der
genehmtgten Büdßetpteniung voigetehen ist. provkled for such
measure br bansa^on In fte approved Budget Pfanribig. (S) Das Recht
des Veiwaftungsrats. wettere Maßnahmen und Gesdiäfte zu bestimmen,
die nur mit seiner ZUBHWmung vorgenommen wefdön dürfen, blettit
unberührt. (3) The Administrative Board's right io determlne
further. measures and transacäons requfrtng its approvsl shall
remaln unaffocted. 5. Abschnitt. Der Vc'iwsltunflsrat Sectton 5.
The AdmlnlstnaäveBoanl. §10 Zusammenseücunfl und Amtsdauer $10
GpmposlBon and Term of Office (1) Der Verwattungsrät ' der
Gesellschaft besteht aus mlndtetene drei Mltgttedern. Im Übrigen
beetlmmt die Hauptversammlung die Zahl der Mitglieder des
Verwattungsrafe unter Beachtung der Regelung In § S3 Abs. 1 SEAG.
SäiTrfllohe Mitglieder des Verwaltungsrats werden von der
Hauptveraatnmlung bestellt (1) The Compan/s Administrative Board '
oomprises at laast thrae membere. j Apa»f fröm that, the General
Meeting of Shareholdere shall detennlne the number of the
Adminlstreäve Board members In aocordance wjth the prortslons of
seeäon ?3 para. 1 of the 8EAG. All • membere of the Administrative
Board are elected by the Genera] Meeäng ofShareholdere. (2) Die
Wahl der MHgBeder des Verwaltungsrats erfölflt, sofern die
Hauptversammlung bei der Wart keine kärzere Amtszeit besümiflt, fOr
den Zei&9um bte wir Boendlgung der Hauptveresimmtung, die Über
ihre Entlastung filr das vierte Geschäftsjahr aü Beginn Ihrer
Amtszeit beschließt, wobei das Geschäfte ahr In dem die ÄmlszeKbe
(nnt (2) Unless the General Meeting of Sharehotdere detennines a
shortertBmi, the tnembers of fhe Administrative Board are elected
tora teim endlng wlth the dose öf the General Meetlr® of
Shareholdere which rssölves on the formal approval of thefr aets
for the fourth flscal ear followta the »l№IS. iO»-»3Pyl
^.ressisn'wsvav MavtvHJWw 22
nicht
mitzurechnen ist, höchstens Jedoch fOr sechs Jahre.
Wietteifeestetlungen sind zulässig, cömmencemeht of thelr term. not
countlng Uw year in whteh äielr temi of Office comhiencw, however,
för a tenn of slx yeare at the Ipngest. Röappointmente are
penplsslble. (3) Ergänzurgswahlen erfolgen för die restliche
Amtszeit des Busg^scWedenen Mitglieds, sofern die Hauptvereammlung
bei der Wahl keine abweldiende Arotszdt bsstJmint, die jedoch dte
nach Absatz (2) zulässige Höchstdauer riicht Qberschretert darf.
(3) substtute eIecUons shatl be held (or the remalnlng pelod of
offlce of any member wlthdrawlng from the Adminlstraüve Board
urdess the General Meeting of SharenoRlera detemilnes a dlfferent
term on the occaslon of the election whlch, however, must not
exceed the pennltted maximum tonn äccorcilng to para. (2). (4) FOr
Ml^lleder des Värwattungsrats können gleichzeitig mft deren Wahl
EreatBnttglleder gewählt werden. Ist bei der Wahl Xdne anderweitige
Bestimmung getroffen worden, treten sie in dör Reihenfolge Ihrer
Wahl an die Stelle voizeltlg ausscheidender, gleichzelUg von der
Hauptvereammlung gewählter Verwaltungsratsmttglleder. Tritt ein
ErsatzmitgBed an dte Stdie dnes vorzeitig ausgeschfedenen
Verwaltungsratsmltglfeds, so erilscht sein Amt, falls nach Eintritt
des Ersatzfaltes fm Wege der Ereianzungswahl elnNachfolgBr für das
ausgescKiedene VowaltungsratsmKglled gewähft wTrd, mit der
Beendigung der Hguptvereammlung, In der dfe Ergflnzungswahl
erfolgt, anderenfalls mit Ablauf der restlfdiön Amtszeit des
Ausgeschiedenen. ßrilscht das Amt des Erastemttglieds durch
Ergänzungswaht für den Ausgeschtedenen, erlangt das Er^itemitglied
seine VöThörige Stellung als (4) Subsätute merinberft may be
elect^d for members of the Adminlstraäve Board slmultaneously wlth
the relevant member's etecäon. If not sUpulated oth^narise In Ihe
eiecäön. the subsütyts members replace, In the order of thelr
elactlon, prematurely wtthdrawlng members of the AdmlntstraBve
Board whidi wen elected by the same General Meeting of
Shareholders. In esse a subsUtute member replaces a preinafairely
wlthdrawing member ofthe Administrative Board, hls offlro-ends, ir
after Ihe eubstKutlon Situation has occurred a sucoessor for th®
wlthdrswing Admlnistraäve Board merttber Is elected by way öf a by-
ötecüon, wfüi the dose of the öeneral Meeting of Shareholders In
which the by- eledlon Is resotved on, othervrise wiüi tbe end ofthe
remalnlng temi of offlGe af the wlthdrawlng Admlnlsüslitfe Board
member. If Ihe term of Office of the t4812. 3<B2.5330vI
.TOU<an<Un<MW»l»aUiiun№d»a>^i,««U<^uBiBn|<<^^
23
ETsatemBgtled
für VerwaUunssratsmi&UetierzurOck, anders subsBtute »nember
ends by by^etectton forttovrithdravrir^ AdmMstnaCv^ Board tnember,
the subsätute member r^filns Its prevfous Office äs substtota
mwrtl?^ for othw membws ofthe Admfnlstraüve Boaret. (5) J^des
VerwaltungaFBftsmitglted kann sein Amt unter Etnhaftung einer Frist
von dnem Wotwft. dyreh ̂ ne ah den Vorelteencten des V^wsltungsrete
- ocTer im FaUe einer Aintsnlederiegung durch den Vwsffctentlen des
Verwaltungsrats an seinen Stdhfertreter zu richtende schriftliche
ErWSrung niederlegen. Der Vorsttzende des VerwBfturigsrats - oder
Im Falte »iner Amtsniederf^ung durch den Vorsitzenden des
Vawattungsrats sah S?e)h/6rtreter - kann einer Verküizunfl der
Frist oder einem Verzicht auf dte Wahrung der Frist zustinunen. Das
Recht zur Amtsntedertegung aus wlchügem Grund bleibt hiervon
unbälthrt. (5) Each member of the Admlntetrathm Board may reslgn
from üffiee t>y gtving one morräi's noäce In writlng to be
dlrected to the Chalrman of ä» Admlnlstraäve Boanl or In case of
reslgnaUon of the Chatmian cf the Adminlstraüve Board to his Vfce-
Chalrmsn. The Chalrmsn of the AdmlnlstreUvA goard - or In case of
reslgnatlon of the Ghalrman of the Adinlnlsfraäve Board hte
Vlce-Chalrmön - may approve a shoiter noäce period or a wah/er of
the noUce period. Thte shall not affect the right to reslgn from
offlee for good cause. $11 Vorsitzender und Stellvertretsr §11
Chalrman and Vlce-Chalrmen (1) Der VewaKunssrät wählt aus seiner
Mitte einen Vorehzendgra und mtndestens ernen etellvertnstenden
Voreltzenden. Dto Amtszeiten des Vordtzenden und eines
stefh/ertretend^n Voraltzenden entsprechen, soweit be] der Wahl
rtcht korzere Amtszeiten bestimmt werden, Ihren jeweiligen
AnfteeBen als Verwaltungsratsmttglled. (1) The Admlnlsfraäve Board
shall elect from among Its mwnbers a Chalnman and at least one
Vloe-Chatrman. The terms of offi№ äs Chainnan and Vice- Chalrman
shall correspond tö their terms of offtae äs AtfmWstrafive Board!
membefs, untess the terms are! shortened on the occaslon of the
eleeäon. W»1?-3032-ä330Yl i».fBBiBlwan<M «lTC»»^ajkn
24
(2) Wenn der
Vordtzende oder ein stellvertre'tereler VoFpftzender vo»ze1flg aus
fiesem Amt auss&helden, hat der Verwaltyngsrat unverzüglich
e(ne NeiriwaW durchzufohren. (2) tf the Chalrman or a
Vice-Cheilnnan wlthdräws from äijs Office prematureJy; the
Administraöve Board shall Immedtatdy eonducrt a oewelecäon. (3) Die
dem VorstüsBnden durch Gesetz oder Sat2ung elngei'äurrrten
besonderen Beftigntepe sliehsn -soweit sich aus Gesetz oder Satzung
nicht ein anderes ergibt - Im Falle sdner Vertiinderung seinem
Stellverti^er. Sind Vorsttzender und Stellvertreter an der
Wahrnehmung ihrer Aufgaben verhindert, so hat diese Aufgaben für
die Dauer der Verhinderung das an Lebensiiahren älteste der
verbleibenden Verwaltungsratsmitfllleder zu übernehmen; dies gilt
entspreöhend, solange weder ein Vorsitzender noch ein
Stellvertreter bestellt Ist (3) In caw the Ghalrman te pre(äuded
from hls Office, äieV(c9-Chalr»nan shaB have the same spedal poweis
conferwd to the Chaihnan by statutory tew or the artldes of
assodaäon to the extwt statutory law or the arücfes of assoctatlon
do not provlde othe»wise. In esse the Chätrman and ttie Vioe-
Chafmien are not able to futfill thelr tasks, the oldest In age
offhe remalntng ftOTibere of th® Administrative Board shall ftjlfiU
these tasks forthe duratton of Uie htndrance; thls also appltes äs
lang äs nefther a Chainrtan nor a Vlce- Chsfrmah is appolnted. S 12
Aufgaben des Vewattungsrats §12 Responslbllläes ofthe
Administrative Board (l) Der Verwattungsrat feitet die
Gesellschaft, bestimmt die Grundlinien Ihrer Tättflkett und
Überwacht deren Umsettung. Der VerwaItungsTOt hat <»e ihm nacl)
Gesetz und dlesör Satzung zugewiesenen Aufgaben. (1) The
AdnitnlBtrBUve Board shal) dlnct the Conipany, e$tabllsh the
general prindptes of fts üuslness and supen/Ise thelr
Implemerrtatlon. The Admirtsfratlve Board has the responsIbllHies
äs stipulated by stafutory law and these artides of association.
<f481^i03!i^30vl^ .. rvuiti'wsa« 25
(2) Der
Vemaltungsrat Ist befugt. Änderung«! (2) TheAdmlnlBUaKTOBoönljsempi
owewt der Sateut^, dte nur dsren Fassung betreflen, zu b»chtleßOT.
to adopt rBsoluäons ön amendlr^ Ihe Brtldes of assodatton- whioh
affwt (Me wording orriy but not the. sense or meanlngthereof. (3)
Der Verwältungsrat gibt GeschiEjftsordnung. sich eine (3) The
Administrative Board shalladoptlts own ndes of procedure. §13
Staungen §13 Meetings (1) Die Sitzungen des Verwaltyngsrate werden
durch den Vorsftzenden des Verwaltungsrats in Textform (§ 126b BGB)
einbentfen. Die Elnberufiung muss s^Stestens am 10. Tag vor der
Sitzung erfolgen. FOr die Wahrung der Frist genogt die Absendung.
In dringenden Fänep kann der Vorstteende diese Frist angemessen
verkOtzen und die Sitzung auch mQndllch, femmündlteh oder durch
Nuteung sQn^flger TetetoinmunlkaflonBmlttßl einberufen. Dte
Gesctiäftsordnung des Vetwaltungsrate kann aflgetndn oder für
bestimmte Ffltle die in Säte 2 bestimmte Rrist verkürasn. (1)
Admlnlstrattve Board meeflngs shall be convoked fc!iy the Chalnnan
of the Admfnlstraäve Board In text form {SecUon 126b of fhe German
CtvU. Code). Such convocaäon shaD oecur no teter than on the 10öi
day before the Admlnlstraäve Board meetlng. Dtspatch of the
convocatlon sufflces to meet Üi® | notfce perfod. In the event of
urgency, ; the Chalrman may shorten thls noäce j period In a
reasonable msnner end mey also convoke a meeäng orally. by
telephone or by other means of telecommunlcatlon. The ryles of
procedure af the Admlnistraäve. Board may shorten the notice perfod
In sentenoe2 generally or for specffic. eltuatlons. (2) MU der
E(nberufang sind Ort und Zeft der Sftzung sovrie dte Tagesordnung
inteut&llen. Ergänzungen der Tagesordnung sind, soweit nicht
ein dringender Fslt etne spätere Mtttellyng rwhtfertlgt. spätestens
fünf Tage vor der Slteung mitzuteilen; die Regelungen Von Absatz 1
Satz 3 bis'5 dten (2) The Ipcaäon and tlme of the meeUng äs weil äs
the agenda of the ineetfng are to be notltted togather wlth the
oonvocatlön. Amendments to the agenda may be sybmttted up to five
days prior to Ihe AdmlnfsttBäve Board meetl unless a later
submlsdon le (14tia-302. 03pvl .W-HSUfft ftWW 26
enti^rechend.
In StoaiiRgen, (Be nfcäit ordnungsgemäß elnt^nrfen sowie über
Gegenstände der Tagesol-dnung. die nicht ordnupgsgemöß angökündigt
worden sind, darf nur bescNossen weKten, wenn kein
VerwaltungsratemItoUed widerspricht. Abwesenden
VOrwaltungsratsmMglledem Ist In einem solchen Fall GelegenheH m
geben, binnen einer vom VorsltEenden zu bestimmenden angemessenen
Frist der Beschlusstessung zu widersprechen oder ihre Stimme
nachträglich ateufieben. Der Bgschluss whxl erei vrirk?am, wenn die
abwesenden Verwaltunflerstsmf^glleder d@r Bescfttussfassung
]werhalb der Frist nicht vridersprochen (oder Jhr züflestimrtit)
oder Ihre Summe nachträölich abgegeben haben, Justffled by an wgent
matter? the provlsfons öf para. (1) aentenoe 3 to S appty
accordtngly. In meeflngs which v№re not duly convpked and on agenda
item? whlch wäre not düiy noäffed votlng niay only be he(d tf rw
membw of th® Admlnls&aUve Board ralses an objeeUon. In such a
case abservt membörs of the Admlnlsfraüve Board must be glven äle
opportuntty to object to the resoluflon withln an appropriate
period to be stlpulateel by th6 Cftairman or to cast h(s or her
vpte sübsequently. The resolutton shatt become effecöve onty if
thls period of tlme has etepsed wiftout any sbsent Adminteträttve
Board member raislnfl an objection regardfng (he resolutton ortf,
wtthin thls peiiod of time, tha absönt Administrative Board member
consented to the resoluüon w öast his or her vote subsequentiy. (3)
Im Anschluss an die Neuwahl des (3) Verwaftungsrats In einer
Hauptversammlung findet eine Verwattungsratssftzung statt, zu der
es einer besonderen Einladung nicht bedarf. In dieser Slteung v^hlt
der Verwaltungsrat aus seiner. MHte einen Vörßttzenden und einen
oder mehrwe Stellvertreter. Subseqüent to the election of the
Administrative Board at a shareholders' meeäng, the Administrative
Board shglt meet wlthout the requlrement of a separate convocation.
At thls meetlng, the Administrative Board shall elect one Chatnnan
and one or more VIce- Chalrmen ffom pfflong rte mämbers. §14
Beschlussfassung §14 Adopäng Resolutlons (1) Beschlösse des
Veroattungsrats virerdön in der ftegel in Sitzungen gefasst Auf
Anorelnung des Vorsitzenden kann eine Besch1ussfas$un des Verwanurt
srats (1) Administrative 0oard resolufions shgtl generally be
adopted In meetlngs. By orter of the Chalmtan. fhe Administrative
Boartfs resoluflons »na <4812-3032.»30rl UO-nAtodM»«W*>* t.
i.dtiiw^tiunm'w-'-u" 27
auch
außertialb VOR Sitzungen (öder Im Wage der kombinierten
Besehlussfassung) (iün^i telefonlstAe Stbnmabflabe, Sdnimabgabe In
Twtfonn <§ 126b BGB) ünd/oder unter Nytzyng soiwüger M%el der
Tetekommurikaäon oder elektronischer Medten erfolgen. Por Form und
Frist der Anordnung gelten die BesSmmungen des § 13 Absate (1) und
Absata (2) entsprechend. ateo be adopted out^de of mefiittngs (or
by vtey of cembined voflng procedui'e) by voäng vfe tdephorw. text
form (S^ctlon 12öb oftheQennan ClvU Code) and/or by uslng olhör
m^hods of teleoommunlcaäon or electronlc media. Regardlng fontial
requtrements and ttne period of the order, the provislons of § 13
para. (1) and para. (2) shall äppty accorälngly. (2) Auch ohne
(redifcE eiUge) Anordnung Im (2) Sinne von Absatz (1) ist eine
Beschlusstessung in der In Absatz (1) Satt 2 genannten Weise
zulässtg. wenn kein VeimattungwBtet-atemftönK l vriderepricht.
Nähere Regelungen hletzu kann die Geschäftsordnung des
Verwaltungsrats enthaKen. Even wlthout a ^mely (ssuad) Order
vrithln tfte meaning of para. (1), edopttpg resotu^ons ts
permisslbte by usfng ih<B methods set out In para. (1) sentence
2' provided teat no Adminlstrafive Board member objöets. Furttier
dötails in thls regard may be sät out In the Administrative Board's
rotes of procedure. (3) Der Verwaltunßsrat Ist beschlusstöhtg, (3)
sofern mindestens die Hälfte seiner MHglledör, aus denen er
jn^esamt §eitiä& SatEung und Besehlüss der Hauptvertammlung xü
bestehen hat, ah der Bäschlussfawung tellnehmeo. Beschlösse des
Verwaltungsrsts werden, soweit nicht zwtnflende oesetdldie
Rt^elunoefi oder dtese Satzung etwas antferes bestlmmeri. mit
einfacher Mehrheit der abgegebenen Sämnrten getasst. Dabei gilt
Stimmenüialtung als MltwlrHurtfl an der Besohlussfassung. aber
nicht als Sämmabgabe. Bei Sümmensle?chhett gibt die SUmme des
VoreHzendert des Verwattüngsrats den Ausschlag (Stlcshentöcheld);
das gltt auch bei Wahteh. Nimmt der Votöttzerwle des Veawaitun
srBts Tbe Admlnisfrative Board hae a quoirum If at teast half of
Its members of whom tt has to conslst aftogetfter accordlng to the
aräcles of assoclation and the resöluäons of tiw GeneFal Meettng of
Shareholdört pärtfdpato ln-№e deciston- taklng. Unless ötherwise
sHpulated by mahdatory statutory provislone or thls articles
öfassodaäon. resölulfons ofthe Administrative Board shall be
adopted by simple ittqloFtty of ttie vötes cast. in thls connecüon
abstenfions shall be deemed to consätuteparääpatlng.ln the
declslon-taklng but not casting a vote. in the event of a tie. the
Chalnman of the Administrative Board shall have e casäng vote; Ws
shalt also apply at; etecUons. If the Ghaiiman öf ihe!
S22ä2ää£2*..reBa>l»-ten«»*<»i iTOPüKm 28
an der
Abstimmung nicht teil, so steht seinem Stellvertreter • das
StichentsGheldungsrBcht nicht zu, Admtnistrafive Board does not
partldpate In the ttecfeJw^klr^. the Vlce^halrman shall. not have .
the castlng vote, (4) Der Vorsitzende fet befugt, Eiklärungen des
Verwattungsrate. die 2ur Duröhführung der Beschjüsse erforderiläi
sind, tn dessen Namen abzugeben. <4) TheChabmui Is Buthorteedon
behalt ot the AdmlntetraHve Board to dellver ctedarations
oftheAdmlntstraüve Board whtch are recjüfired to ftnplemBnt the
resolutlons. §15 AusschOsse <(es Verwaltungsrats §16 Gommlttees
of the Administrative Board (1) Der Verodtungsrat kann aus seiner
Mitte Ausschüsse blklen und ihnen, soweit gesetzlich zulässig, auch
Angefegenhelten zur BeschTussfassung anstellä des Qesaitrt-
Verwaftungsrats zuweisen, Näheres regelt die Geschäftsordnung des
Verwaltungsräts. (1) The Administrative Board may establish
commfttees from among Its members and, to the extent permfttod by
law, assign • to fhe" commlttees the responstblltty. to take
dedslons In place öf thö Admlnlstraflve Board es a whole. Further
deteils are set out In the Administraüye Board's rutes of
protiedure. (2) Für die Beschrussfählgkelt und Beschlyssfassurg
eines Ausschusses gelten dla Regelungen des § 14 mit der Maßgabe
entspf®Ghend, dass fQr dte Beschiussrähiökett fite» auf dte Anzahl
der Ml^lleder des Venwattungsrats gemäß Satajng und Beschluss der
Hsuptvereammtung auf dte Anzahl der Mitglieder des JewelUgen
Ausschusses ataustellen Ist, an der BeschluBsfässung In einem
Ausschüss Jedoch mindestens drei MlilgUecter teilnehmen müssen. Das
Sficheatectietdun w&dit des Vorsttzenden (2) The provl^ons of §
14 shall appty accordingly to a commlttee's quorum ahd Its
dedslon-taldng provlded that wfth respwt to the quorum - Instead of
the number <rf . Admlntetraflve Board membere aocordtag to the
artldes öf asSödatlon and the resotüüons of the General Meeting of
Sharehoklws - thc number of memfaere of the respecüve committee
shall be dedsh/e, whfereby at teäst three membere must partldpate
In a committee's deeIsion-taMng. The <48IM03W33(h?l
iA.mntalKi>»a»N rt..Auin»rt»«»»nK^"— 29
besteht bei
der BescMussfassung in einem Aysschiws nicht casfing vote of thfr
Chatrman doee not apply to resoluttonjB öf a cömmtttee. § l®
Vcigdtung S16 Remunwaüon (1) Die Mitglieder des Verwaltungsrats
erhalten für "(1) The members of the Administrative Board shall
jedes volle Geschäftsjahr ihrer Zugehörigkeit zum Verwaltungsrat
eine feste Vergütung. Sie beträgt für jedes Verwaltungsratsmitglied
EUR 80.000. receive a fixed remuneration for each füll fiscal year
of Administrative Board membership. This remuneration amounts to
EUR 80,000 for each Administrative Board member. Die feste
Vergütung erhöht sich für die Wahrnehmung der nachfolgend genannten
Positionen jeweils um den folgenden Betrag: (i) EUR 40.000 für den
Vorsitzenden des Verwaltungsrats, (ii) EUR 20.000 für den
stellvertretenden Vorsitzenden, (iii) EUR 18.000 für den
Vorsitzenden des Präsidial-'und Nominierungsausschusses, (iv) EUR
10.000 für sonstige Mitglieder des Präsidial- und
Nominierungsausschusses, (v) EUR 20.000 für den Vorsitzenden des
Prüfungsausschusses und (vi) EUR 12. 500 für sonstige Mitglieder
des Prüfungsausschusses. Bei Wahrnehmung mehrerer der vorstehenden
Positionen durch ein Verwaltungsratsmitglied finden die
betreffenden Erhöhungen kumulativ Anwendung.
Verwaltungsratsmitglieder, die zugleich geschäfts- führende
Direktoren der Gesellschaft sind, erhalten ausschließlich eine
Vergütung für ihre Tätigkeit als geschäftsführender Direktor
entsprechend ihrem jeweiligen Dienstvertrag. The fixed remuneration
shall be increased by the amounts set out below for sen/ing on the
following positions: (i) EUR 40,000 for the Chairman of the
Administrative Board, (ii) EUR 20,000 for the Vice Chairman, (iii)
EUR 18,000 forthe Chairman ofthe Presiding and Nominating
Committee, (iv) EUR 10,000 for other members of the Presiding and
Nominating Committee, (v) EUR 20,000 for the Chairman of the Audit
Committee and (vi) EUR 12. 500 for other members of the Audit
Committee. If a member of the Administrative Board serves on
severat of the above positions, the respective increase amounts
shall apply cumulatively. Members ofthe Administrative Board who
are also Managing Directors of the Company shall be compensated
exclusively under their respective Service agreements for their
duties carried out in their capacity äs Managing
Director.
(2) Die
Vergütungen gemäß vorstehendem Absatz 1 sind zahlbar in vier
gleichen Raten, jeweils fällig nach Ablauf eines Quartals.
Verwaltungsrats- mitglieder, die nicht während eines vollen
Geschäftsjahres dem Verwaltungsrat angehört haben oder die in
Absatz 1 genannten Positionen innehatten, erhalten die jeweilige
Vergütung zeitanteilig. (2) The remunerations pursuant to the
foregoing para. (1) are payable in fourequal installments, each due
after the expiration of a quarter. Administrative Board members who
served on the Administrative Board or in the positions mentioned in
para. 1 for only part of the financial year shall receive pro rata
remuneration in accordance with the duration of their sen/ice. (3)
Die Mitglieder des Verwaltungsrats erhalten ferner Ersatz aller
Auslagen sowie Ersatz der auf ihre Vergütung und Auslagen zu
entrichtenden Umsatzsteuer. (3) Furthermore, members ofthe
Administrative Board shall be reimbursed for all out-of-pocket
expenses and for the sales tax payable on their out-of-pocket
expenses and remuneration. (4) Die Gesellschaft kann zugunsten der
Verwaltungs- ratsmitglieder eine Vermögensschaden-
Haftpflichtversicherung (D&O-Versicherung) zu marktüblichen und
angemessenen Konditionen abschließen, welche die gesetzliche
Haftpflicht aus der Verwaltungsratstätigkeit abdeckt. (4) The
Company may take out financial loss liability insurance (D&O
insurance) for the benefit of the members of the Administrative
Board, under market-standard and appropriate terms and conditions,
to cover legal liability arising from their activities on the
Administrative Board.
6. Absehnftt.
Dia HauDtVsrBammIuna Sectlon ft Qfineral Meeäna of Shareholdera §17
Ort und Einberufung S 17 Venue anä Convoeatlon (1) Die
Hauptvereammlung -flndat arti Sltt der Gesellschaft, am Ste einer
deu^hen Wer^aplwfaöFse oder 'an einem Ort In Deutechland Im Umkreis
von 50 km vonrt Sttc der Gesellschaft oder vom Ste einer deutschen
Wertpapierbörse statt (1) The General Meeüng of Shareholddrs stall
be held at ths Cotnpan/s d^istered Office, at the locaäon of a
Gennan stod( exchange or at a place In Germany tocated wtthin a.50
tan radlus of (he Company's reglstered ofRce or of the locaäon of a
Gennan stock exchange. (2) Die Hauptversammlung wird durch den
Vewaltungsrat oder die sonst htetzu gesebdlch befugten Perisonen
einberufen, (2) The General Meeting of Shareholdere shall be
convened by the Administrative Board or by any ftjrther persons
authorized by law. <3) Für die Form und Frhst der Elnberufting
gelten die gesetzlichen Vorschriften. (3) Form and nottee period
requirements for catllng the shareholdere' me$ting shall be govemed
by the stetütory provlslons. §18 §18 Teilnahme und Ausübung das
Stlmmrechte Attendance and Exerctee of Votlng Rlght (1) zur
Teilnahme an der Hauptvereammlung ynd zur Ausübung des Sämmrechts
sind nur diejenigen AMIonäre berecMtet, ^ steh nach näherer Maßgabe
der nachfelgaiden Besämmungen rechteeitfg vor der Hauptversammlung
angemeldet ̂aben. (1) Shareholdprs shall onty be enätted to attend
the Oeneral Meeting of ; Sharehplders and exerdse the voüng <
right at such meeBng ff they have №gfsterBd In dü& flme bBfore
the General MeeBng of Sharehotdere In accordance wrfth the
fottowlnig more detalled provislons. K4812.W2.W30VI lA. nanin
ii4ai8cinii»i»«(**i>»i »l ii.M'ar»iimmni|TflK^a*u
32
(2) Die
Anmeldung muss' In deutsäher öder engHscher Sprach® In Textform
oder, sofern dies In der Bnberu&ing v<?rgweheri Ist, hi
einer dort naher bestiironten eleldrontsohen Form erfolgen. (2) The
reglstraäon shall be In text fonn tn Gennan or (n Eng(lsli,. or }f
provlded fQr b? tee ccwocaäon, In aneüier de<*orirc fönn äs
fürthef detennfned fcereln. (3) Die Afimetdüng muss der
Gesellschaft Innerhalb der geBetcllch voigösehenen Frist unter der
In der Einberufung htertOr mttgetelfteh Adresse zugehen. In der
EirdaenAing zur ^aupfi/ersanfimtung kann stettdessen audi eine
künsere, In Tagen zu bemessende Frist vorgesehen werden. (3) The
r^lsfratlon must be recöived by the Company wlthln the statutory
ame period at the address äs communlcated tn th? convocaUon. In the
convocaüon förifte Gsneral Msötfng af Shareholdere also a shorter
period of time to be calculated (n days csm Instead be säpulated.
(4) Der Vawattungsrat ist ermächtigt vorzusehen« dass Aktionäre
Ihre Sänfimen auch ohne an der VeTsammlung teUainehn»en, schrtfUldl
oder Im Wege elekfrontecher Kominurilkaäon abgeben können
(Briefwaht). Der Verwsltyngsrat kann Umfang und Verfahren der
Briefwah» Im Einzelnen r^eln. (4) The AdmMstrath/e Board Is
authorized to allow thö shareholders to cast thelr vote tn wrffing
or by means of eleotronlc communlcattons ^postal vote) without
havlng to attehd the Gerterat Meeting of Shareholdere (hemselves.
The AdmlnlstraCve Board can determlne the extent and the procedure
of the postal votlng In further details. (5) Der Verwartungsrat tet
ferner emnflditigt vorzusehen, dass AKUonäre auch ohne selbst vor
Ort ahwesewt oder vertreten zu sein, en der Hauptvenammtung
teilnehmen und sämtfidw oder einzelne Ihrer Rechte ganz oder
teilweise 'Im Wege elektronischer Kommunikation ausüben können
(Online- Täl^^htne). Der Värwaltungsret kann Umfang und Verfahren
der Ontine- Teilnahme Im Einzelnen regeln. (5) The Admlnfstratfve
Board ts fürther euthorized to allow^ that shareholders attend the
Oeneral Meeting of Shareholdere wlthout bdng phystcally present at
the focatlon of the General Meeting of Shareholdws themsehres or by
a representaßve and exerctse all or parts of their righte In whote
or In part by way of electronte communlcatlons (online attendance).
Tbe Administrative Board csn detennlne the extent and the
£Sää2äS2^..̂ ^»<. ^w, •lA»»**. •Wili1nl«>n>«in»<^U«a
33
prooedure of
(he orflne attwdanee In (ürtherdetalte. (6) Das Sämmrecht kann auch
durdi Bevollmächtigte ausgeüüt werden. Für die Form der Erteilung
der Vollmacht, Ihr^n Wefruf und/oder <ten Nadiwefs d^- Vollmacht
können In der Snberufimg Eriychterungen gegenöBer der gesetcllch
vorgeschriebenen Form besUmnrt werdan; im Obrigen gelten hierfür
die gesetztldien Biestfmmungen. Die Regelungen von § 135 ÄktG
bleiben unberührt. . (6) The voUng right can be exwcfsed through
representatlves. WMh i'agaid to the form for the flrantlng of an
authorlzation, tts revoGafion änd/or the proof of authorteätion,
allevfaäws flrom the statutory fonn can be detenmlned; apart from
(hat, the provlsions äfSeäion 135 of the Gemnan Stock Corporafion
Act remaln unaffected. §18 Voreitz S 19 Chalr (1) Den Vorsitz der
Hauptversammlung TOhrt der Vorsitzende des VerwaRungsrats oder ein
anderes, vom Vorsttzenden des Verwaltungsrats dazu bestimmtes
Mltgfled des Vewaltüngsrate oder eine sonsüge, vom Voreftzenden des
Verwaltungsrats dazu bestimmte Person (Vereammlunigsleltei). Sofern
der Vorsitzende des Verwattungsrats nicht an der Hauptwreammlung
teilnimmt und eine BesUmmyng nach. Satt 1 nicht getroffen hat oder
der Bestimmte verhindert (st, erfolgt die Besßfnmung des
VersammtungslelteRB durch mit elnfiacher Mehrheit der abgegäbe(i6n
Summen der anwesenden VenwaBungsratsmltglieder zu fassenden
Beschluss. Ist In der tiauptvereammlung kein
Verwaltungsratsmltglled anwesend und Ist auch keine ßesltmmung
durüti den Vorsitzenden getroffen worden bzw. Ist der Bestimmte
wrtilndert, so wird der (1) The General Meeting of Shareholders
shall be preslded aver by the Chatrman of the Adminlstraäve Board
or by another member of the Administrative Board ae detwmined by
the Chairman of Sie Admlnlstrefive Board or any other person äs
determtned by the Chalrman of the Adrtitnfstrsäve Board (Ohatnnan
öf the Meeting). If the Chairman of the j Administrative Board döee
not attend 1he General Meräng of Sharähotders end häs not made ahy
such rullng acoordlng to eentence 1 or the person determlned (s
prevented from attendlng, the Chalrman of the Meeting ehall be
determlned by a resoluöon adopted vrfth simple majority of the
votes cast by the Administrative Board • membere aäendfng the
General Meeting of Shareholders. IfnoAdmlnlstraüve Board
meraäefattendsüw General Meetin ofi <WiS.?<>32-533ÖvI
A.»iattitel70»IE(UI <ai(»«aTU>Ul*« 34
Veraanimlungsfelter unter tfem Vorete
des AKöonära mft dem höchsten In der HWptvereammking erschienenen
Antellsbesttz oder seines Vertretere dureh die Haupferersammlung
giswshlt. Sharehofdere and also ho determlnafion by the Chalrman of
the Admlnlstrethw Board has been made or the peison dötwnlned
te'preventedfrom äftendlng, the Chalonan o/ the Meeäng shall be
deftermined by etwUon of the General Me^Irig of Shareholdws chäred
by the sharehotder wtth the hlghest degreö of shäre ownerehtp
represent«! in the mseting or by tts proxy. (2) Der
Vereammlungslefer bsstimmt Irt» Rahmen der gesetzHchen BesUminungen
die Relhenfds® der Oftgenstände der Tagesordnung sowie An und Form
der Abstimmuftgen. (2j Wtthln the franfiework of statytory
provlslons, the Chalnpan ofthe Meeting shall determtne the örder In
whlch the Items on the agenda are to be deatt w№i and the type and
fonn of voüng. (3) Der VeFsammIungsletter . kann das Frag®. (3) und
Rederecht der Aktlonä»^ zeiüich angemessen besehränken. Er ist
(n6be$oridwe berechtigt, zu Beginn der Hayptversammlung öder
während Ihreä Voriaufe den aseftflöhen Rahmen des gesamten
Vereammtungsveriaufe, der Aussprache zu ' den einzelnen
Tagesordnungspunkten oder der einzelnen Frage- und Redebetträge
angemessen festzusetzen. The Chalnnan of the Meeting may establish
reäsonable temporal llmtts for the sharehpfders' right to put
quesflons and sddress the General Meethg of Shafeholders, In
paräcylar, the chalrperson shall be enäüed to flx, 8t the beglnnlng
of the General Meeting of Shareholder or during Its couree,
reasonable time frfimes for the entlre General Me^ing
of'Shareholdere, for dellberatlons on №e Individual Kerns of the
agenda or for the Indivldual contributlons made by askers &nd
Speakers. Der Versammlungsleiter kann rine (4) Obertragung der
Hauptveraammlung tn Tcn und Bfld In einer von jhm näher zu
besämmenden W^se zulassen. (5) Mitglieder des Verwaltungsrates
können in Abstimmung mit dem Versammlungsleiter an der
Hauptversammlung der Gesellschaft auch im Wege der Ton- und Bitd-
Übertragung teilnehmen, wenn sie dienstlich bedingt verhindert sind
oder die Anreise zum Ort der Hauptversammlung mit erheblichem Zeit-
oder Kostenaufwand verbunden wäre. (5) The Chafrrnan of the Meeting
may pannlt audto and video transmleslon of the General Meetfng
ofShareholdere In a manner whlch h6 shall deflne In further In
consultation with the Chairman of the Meeting, Members of the
Administrative Board may also artend the Company's General Meeting
of Shareholders by means of audlo and video transmission, if such
Members of the Administrative Board are tied up with business or
their attendance would require time-consuming or expensive travel
to the venue of the General Meeting of Shareholders.
35
§20
Hauptversammlungstoeschiasse §20 l-t^solutjon» öfäw Seneral Mwttng
of SHapßholder» (1) Dte I-lauptWBBsirifldung biMßhnBBl nur tn 'W
The Öeneral Meaäi^ tf Shanihotdere den Im öesete oder fn der
Sateung $hfill oftly pass rtttcrfua<m6 on such üesflmmten
Falten, ma^^as^tipulatedbystatutorylawor (n the ertietes of
wsodatton. (2) SoweK ach aus den BA»Rg<»iden VorsGhrlSw nlc(rt8
Abweleliendes ergibt, fet dte Hauptversammlung nur bwchlusstöhlg,
wenn mindestens ein Üritfel des Grundkapitals der Gesellschaft In
der Hauptversammlung vertreten Ist <Qüorum). Wird das Quorutn
ntöit erreicht. so Ist unväzügHd'i eine wöltere Hauptvereamintung
mit derselben Tagesordnung elnzubenrfen, wet<rfie ohne ROckstcht
auf das vwvetßne Grunäkapltal der Öesellsdiaft btechlusstöhtg ist,
wann hierauf In der Bnberufung hingewiesen worden Ist. (2) To the
extent maMtätoiy istatutory law does not proviäe «herwise, ttie
General Meeüng of Shafgholdere sheU ortly be valfdty consütuted ff
at least one tWrd of the share capltal of Uie. GCTnpany is
represented at the Gwieral Meeünfl of Shsfehclders (quorum). In
case the General Meefing of Shareholdens does not have the quorum,
a ftirth®!" General Meeting of Shjareholdete with ttie same agend$
№all be oonvcned wfthout undue delay. whlch shalt be valldly
conäituted regardless of the share captel of the Company
representfed tf the convocaäon expllctüy pointe out to suchfact,
(3) Die Beschlüsse der Hauptversammlung werden, soweit nicht
zwingende gesetzliche Vorschriften oder die Satzung etwas anderes
vorschreiben, mit der einfachen Mehrheit der abgegebenen Stimmen
und, sofern das Gesetz außer der Stimmenmehrheit eine Kapital-
mehrheit vorschreibt, mit der einfachen Mehrheit des bei der
Beschlussfassung vertretenen Grundkapitals gefasst. (3) Resolutions
of the General Meeting of Shareholders shall be passed with a
simple majority of the valid votes cast, unless a higher majority
is required by mandatory law or by these Articles of Association
and, if the law prescribes a capital majority in addition to the
voting majority, by a simple majority of the share capital
represented when the resolution is adopted. »48>2^0»-S30Yl *.
PBiaift|1<U«8(UB 36
Soweit nicht
zwingende gesetzliche Vorschriften entgegenstehen, bedarf es für
Satzungsänderungen einer Mehrheit von zwei Dritteln der abgegebenen
gültigen Stimmen bzw., sofern mindestens die Hälfte des
Grundkapitals vertreten ist, der einfachen Mehrheit der gültigen
abgegebenen Stimmen. Sofern das Gesetz für Beschlüsse der
Hauptversammlung außer der Stimmenmehr- heit eine Kapitalmehrheit
vorschreibt, genügt, soweit gesetzlich zulässig, die einfache
Mehrheit des bei der Beschlussfassung vertretenen Grundkapitals.
Das in § 103 Abs. 1 Satz 2 AktG vorgesehene Mehrheitser- fordernis
bleibt unberührt. Unless this conflicts with mandatory legal
provisions, amendments to the Articles of Association require a
majority of two-thirds of the valid votes cast or, if at least
one-half of the share capital is represented, the simple majority
ofthe valid votes cast. As far äs the law requires a capital
majority in addition to a majority of votes for resolutions of the
General Meeting, a simple majority ofthe share capital represented
at the time the resolution is passed shall be sufficient to the
extent that this is legally permissible. The majority requirement
set out in §103 para. (1) sentence 2 German Stock Corporation Act
(AktG) remains unaffected. Beschlüsse, die gemäß § 20 Abs. 3 mit
einfacher Stimmen- oder Kapitalmehrheit gefasst werden können sind
insbesondere, aber nicht ausschließlich, alle Beschlüsse der
Hauptversammlung über Resolutions that can be passed with a simple
majority vote or capital majority vote pursuant to Section 20 para.
(3) are, in particular but not exclusively, all relevant
resotutions of the General Meeting regarding Kapitalerhöhungen mit
Bezugsrecht der Aktionäre gegen Einlagen (§ 182 Abs. 1 AktG),
jedoch nicht für die Ausgabe von Vorzugsaktien ohne Stimmrecht (§
182 Abs. 2 Satz 1 AktG), capital increases with shareholders' pre-
emptive rights against contributions (Section 182 para. (1) AktG),
but not for the issuance of non-voting preferred shares (Section
182 para(1)sent. 2AktG), Kapitalerhöhungen aus Gesellschaftsmitteln
(§ 207 Abs. 2 AktG i. V. m. § 182 Abs. 1 AktG), und capital
increases from Company funds (Section 207 para. (2) in conjunction
with Section 182 para. (1) AktG), and Ausgabe von
Wandelschuldverschreibungen, Gewinnschuldverschreibungen und
sonstigen Instrumenten, auf die die Aktionäre ein Bezugsrecht haben
(§ 221 AktG). the issuance of convertible bonds, profit
participation bonds and other instruments for which the
shareholders have a pre-emptive right (Section 221
AktG).
(4) Jede
$tOckaRUe gewährt eine $8>nme. (4) One vote shall be efforded to
eadh ftö- psrvalueshare. 7. JUti»chti(U. R«ichhühciSl6äünaund
Geartnnserwttnduna Sectlön 7, Renderlna of Accounts and
Aüpro'DrIatlwh 6f Profits §21 Jahresabschtuss S 21 Ann<ttl
Rnaindal Stetements Stritt der VenMaltungsrat den Jahresabschluss
fest, so kann er den'JahtesQberechuss ganz oder teilweise In andwe
Qewinnroddagen etnstenen. Dl» Elnstsllünsi eines größeren T«(ls als
der Hfiffie des jahttesßberschüsses Ist Jedoch nicht zulässig, wenn
die anderen Gewtnnrößkl^gen die Hälfte des Grundkapltels
flberetdgen oder soweit sie nadi der Einstellung die Hälfte
Obereteigen wOnien. Vom Jattfesßbersdiuss sind Jeweils die Befrage,
die In die gesetdlchö Rttcklage einzustellen sind, und ßln
Veriustvortreg vorab abzuziehen. If the Admlnistreäve Boarä
approvas the annual finandat statemente. then tt may apptopriate
the apnual profit för the year to öfter revende restfn/es In w^iofe
or In pari The ̂ »proprlaflon öf more tf>an half of the annual
pröflt for the year Is not ddmisslble, however, If fte other
revenue reserves exceed half of the share capttal or Insofar äs ;
they would exceed half of the share oapltal föltowlng such
appropriatlon. Any amounts alloßated to the etatytory reserve and
any accaurtUfated xleficjt brought iomarü from the prtor year have
to bs deäücted from' Vhs annual pro» for the year in advanoe. §22
©ewlnnvi&rwendung §22 Dlsposal of Corporato Protfta (1) Ob®-
die Verwendung des Ktenzsiewtnns beschließt dte Hauptversanimlunfl.
Dte Hau mtu" känn B"sfe<te o(;ler (1) The General Meeäng of
Shareholdere shefl dedde upon fhä dlsposal of co rate rdtte. TTie
General Meetin ^ffi^2iA.̂ P<". dlN»i|»OK^a*» 37
neben einer
BarausschOttung auch SachausschQttur® beschUeßön. efne may resdva
to make äistributtons (n Mnd, In place of or In addlüon tö ca^
dfsfrIbuUons, (ä) Soweit die Gesellschaft Genussschelne ausgegeben
hat oder ausgrtien vrfrd und sich aus den jeweiligen
Qenussrechtebe<<lngyngen ffir die tnhator der Genus»che|ne
efp Aropruch auf AusschQttund aus dem Bilanzgewinn 'esrflibt, tet
dor Aispruch der Aktionäre auf diesen Teil des BBanzgewInns
aysgeschfossen. C2) Insofar äs the Company has Issued' partclpaäon
certfflcates or does so In j future and If the rospecäve condltions
of i üie partldpatlon certfflcates sUpylato (hat the Iwarers of fh6
parttdpaäon certfflcates are entWJed to <nsWt>u(ion of j
dh/Idends from Sie net Irtcome, the ehareholders' entltlement to
fhis part o/ the nef income shäll be exdude.d. (3) Nach Ablauf
ehies Geschäftsjahres kann der (3) After explraäon tif a finandal
year, the Verwattungscat unter BeacWiins der Vorgataen des §58 AktG
auf den voraussichtlichen Bilanzgewinn eirten Abschlag an die
Aktionäre zahlen. Admintstnaäve Board may, in accordanpe wläl the
requlrements of Secäon69 6f the German Stoek CorporaäonAct. pay to
the shareholders an histalment of üie expected balance sheet
profits. S. Abtchnltt. SchlussbeBtrmmunoBö §23 Gründyngsaufwand
Sectlon 8; Plnal Provlslons S 23 Exponaes for Formation t3ie Kosten
der Gründung tragen die Grönder- Th$ founders shall bear the costs
of fte fermatlon. l»48t2.3032-3!?30vl iA.»waanr)<tf»8«
ig«^t>«K»l*n 38
§34
Sdvatorische Klausel §24 Swerabllity Clause SoUten eine oder
mehrere Besflipmuagen cBesw If öne Ar several proylslons öf these
aräcles of Satzuftg, ganz oder In Telten nlchüg oder
assodatlohareorwlffbeconielnvalkllnwhole unwirksam sehi <x(w
werden, so <Mrd dlei Gültigkeit Qf In part, the validtty of the
remalolng pari» of; <ter8at2ung im Obffgen hiervon nicht
berfflirt (hs artfdes of assodaäon remalns unaffeiäed.i §2S
Sonstiges §26 Mtecellaneous BeJAbwelohung der englischen von
derdeytechan Fassung dlesw Satzung ist elleln dfe deutsche Fassung
ausschlaggebend. In the event of devlaäons of the Englfeh veftlon
froni the Gennan verelon of fhese artldes of assoclatfon, the
Gennan vereton shan prevall. WWSSS^Mrt^ ^
,WBaiBn<B«»«in*a>aiw«»t. Ndw «ti<iiii»iiiimriTnn_-'T '—
39
Bescheinigung
gemäß §181Abs. 1AktG Certificate pursuant to Section 181 para 1
Stock Corporation Act (AktG) Ich bescheinige hiermit, dass die
geän- derten Bestimmungen der Satzung der Spark Networks SE mit
Sitz in München mit dem Protokoll der Hauptversammlung über die
Satzungsänderung vom 1 1. Au- gust 2021 und die unveränderten Best-
immungen mit dem zuletzt dem Handels- register eingereichten
vollständigen Wort- laut der Satzung übereinstimmen. l hereby
certify that the wording of the Articles of Association of Spark
Networks SE with its registered Office in Munich contains the
provisions of the articles of association äs amended by the
resolution of the general meeting dated 11 August 2021 and the
unchanged pro- visions of the articles of association cor- respond
to the complete wording of the articles of association which have
been filed with the commercial registry most recently. Berlin, 17
August 2021 / 17 August 2021 L.S gez./sign. Dr. Friedemann
Eberspächer Notar / Notary
Hiermit
beglaubige ich die Übereinsmmung der in dieser Datei enthaltenen
Bilddaten (Abschri) mit dem mir vorliegenden Papierdokument
(Urschri). Berlin, 19.08.2021 Dr. Friedemann Eberspächer,
Notar
SPARK
NETWORKS SE Election of Administrative Board members This document
presents the candidates up for election as members of the
Administrative Board:
Eric Eichmann
Managing Director of Spark Networks SE; resident in Montclair (New
Jersey), USA. Eric Eichmann joined Spark Networks in November 2019
as Chief Executive Officer. Until 2018 Mr. Eichmann was with Criteo
S.A. since April 2013 where he hold the position of CEO since 2015.
Prior to joining Criteo, Eric was COO at Living Social and at
Rosetta Stone, SVP of Advertising Operations and Technology at AOL,
and Eric was also a senior engagement manager at McKinsey &
Company. Eric holds a master’s degree in computer engineering from
EPFL (École Polytechnique Fédérale de Lausanne), and an MBA from
the Kellogg School of Management, Northwestern University. Mr.
Eichmann was already selected to our Board of Directors in the past
because of his particular knowledge and experience in global public
companies, technology and product development, and consumer and
marketing driven businesses.
Ulrike Handel
I/II Ulrike Handel is an accomplished CEO with more than 25 years
of experience in the media and digital industry. Among other
things, she held various management positions at Axel Springer SE
and, as CEO, was responsible for the turnaround of the listed ad
pepper media group. Her strong leadership qualities and ability to
rapidly create international high performing teams with a winning
culture allow her to succeed with both startups and large
corporations. In her latest position, Dr. Handel was CEO of Dentsu
(Germany & DACH), responsible for the transformation of the
more than 3000 employees into an international marketing services
group for digital consulting and transformation. Moreover she has
been a member of Dentsu’s EMEA Exec team and Dentsu’s Global
Operating Committee. Dr. Handel primarily focuses on the
development of sustainable business models based on technology
innovation, the digital transformation of companies and cultural
change management. She uses a strong entrepreneurial and
collaborative approach to create and execute a vision, delivering
strong results, focused on sustainable outcomes and structures. She
has a long lasting-standing career as a board member for a
multitude of well known and high performing companies, including ad
pepper media International N.V., Stepstone ASA, Namics AG, and is
currently serving as Supervisory Board Member at Compugroup Medical
SE & Co.KGaA and as a Supervisory Board Member for various also
Private Equity-backed companies.
Ulrike Handel
II/II She has received several awards for her work - including the
“Helga-Stödter-Award für Mixed Leadership“ in 2019, the Emotion
Award "Women in Leadership" and "Ad Age: Women to Watch Europe " in
2018. In 2015, she received the "Manager of the Year” Award from
the female leadership organization “Generation CEO”. She is a
member of transatlantic organization Atlantik Brücke, Hamburg
Chamber of Commerce (Member of the Innovation Committee), European
Center for Digital Competitiveness (at ESCP Berlin), Club of
European Female Entrepreneurs, 2hearts community (supporting great
talents with immigration background in Europe's tech industry),
Leaders for Climate Action and Generation CEO (Exclusive Club for
female CEOs and Supervisory Board Members). Ulrike Handel studied
media management and economics in Hanover and Madison, Wisconsin.
In addition, she holds a PhD in media studies from the University
of Amsterdam, the Netherlands.
Brad Goldberg
Former executive at Microsoft Corporation and PEAK6 Investments
LLC; limited partner advisor at NYCA Partners; resident in Seattle
(Washington), USA. Bradley J. Goldberg is a builder of fintech,
consumer, and tech platform businesses. He is a Limited Partner
Advisor at NYCA Partners and a Board Member at CellarTracker. Mr.
Goldberg is an active advisor for CEOs and Founders using
technology to disrupt the status quo. Mr. Goldberg served as an
executive at PEAK6 Investments L.P. from 2009-2019, first as CEO,
Online from 2009-2011, and then as President of PEAK6 from
2011-2019. Prior to PEAK6, Mr. Goldberg served at Microsoft from
1997- 2009, first leading product management teams in Visual C++
and SQL Server, and then as an executive leading multi-billion
P&Ls in Server Platforms and Search. Before graduate school,
Mr. Goldberg was an Associate in strategy consulting at A.T.
Kearney. Mr. Goldberg is also the founder and Chief Executive
Officer of Quartz Strategic, LLC. Mr. Goldberg graduated with a
Bachelor’s degree in Economics from Amherst College and completed
post graduate work in Japan, at the Inter- University Center for
Japanese Language Studies. Mr. Goldberg earned an MBA from Harvard
Business School, where he was awarded second year honors. Mr.
Goldberg was already selected to our Board of Directors in the past
because he possesses particular knowledge and experience in scaling
global technology companies, people operations including global
compensation systems, and strategic planning.
Colleen
Birdnow Brown Former CEO of Fisher Communications; member of the
Boards of Directors at TrueBlue, Inc. and Big 5 Sporting Goods;
resident in Parker (Colorado), USA. Colleen Birdnow Brown serves as
a director of publicly traded TrueBlue, Inc. and Big 5 Sporting
Goods. She also serves as a director for privately held Port
Blakely. Ms. Brown served as President and CEO at Fisher
Communications from 2005 to 2013, and in the C-Suite as Senior Vice
President of A.H. Belo from 2000 to 2004. Prior to 2000, she held a
number of positions in the media and broadcasting industries,
including President of Broadcast at Lee Enterprises from 1998 to
2000, President at 12 News (KPNX-TV, NBC) from 1995 to 1998,
President of WFMY News 2 from 1991 to 1995, and station manager and
CFO at KUSA-TV from 1980 to 1991. She also served in various
corporate positions at TEGNA (formerly Gannett) from 1980 to 1998.
Ms. Brown also served as chairman of the board of directors of
American Apparel, and as a director of CareerBuilder and Classified
Ventures. Ms. Brown currently serves as a director of a nonprofit,
Delta Dental of Washington and SpringRock Ventures. Ms. Brown is a
member of NACD, WCD, IWF, and C200. She is a NACD Leadership
Fellow. She holds an MBA from the University of Colorado Boulder
(1981) and a BS in Business Administration from the University of
Dubuque (1979). Ms. Brown was already selected to our Board of
Directors in the past because she possesses particular knowledge
and experience in accounting, finance and risk management,
governance and she has public company operating experience as a
CEO.
Mike
McConnell Mr. McConnell currently serves as a private investor. Mr.
McConnell has previously served as Interim Executive Chairman and
Chief Executive Officer of Spark Networks SE. Mr. McConnell also
serves on the board of privately held Jacob Stern & Sons, Inc.,
an importer, exporter, processor and distributor of specialty
agricultural products, since July 2019. Mr. McConnell received a
B.A. in Economics from Harvard University and an M.B.A from the
Darden School (Shermet Scholar) of the University of Virginia. Mr.
McConnell brings to the Board extensive experience serving on
numerous public and private company boards, both domestically and
internationally, experience as chief executive officer in public
companies and investment experience in private equity and hedge
funds, both domestically and internationally .
Chelsea
Grayson Executive in Residence at Wunderkind (formerly BounceX);
member of the Boards of Directors at Vireo Health International,
Inc. and LP-KP IP Holdings, LLC; resident in Los Angeles
(California), USA. Chelsea A. Grayson is an Executive in Residence
at Wunderkind (formerly BounceX), a leading marketing technologies
provider, a member of the Board of Directors of Vireo Health
International, Inc. (CSE: VREO) (where she Chairs the Nominating
& Corporate Governance Committee and sits on the Audit
Committee), a member of the Board of Directors of Loudpack, and a
member of the Board of Directors of Lapmaster Group Holdings. She
is also a member of the UCLA Board of Visitors for the English
Department and a Board Leadership Fellow and Corporate Governance
Fellow with the National Association of Corporate Directors (NACD).
Previously, she was the Chief Executive Officer and a board member
of True Religion, Inc. (where she chaired the audit committee) and
the Chief Executive Officer and a board member of American Apparel
Inc. Before joining American Apparel, Ms. Grayson was a partner in
the Mergers & Acquisitions practice group of law firm Jones
Day. Ms. Grayson received a J.D. from Loyola Law School and a BA
from the University of California, Los Angeles. Ms. Grayson was
already selected to our Board of Directors because she possesses
particular knowledge and experience in corporate development and
M&A, consumer marketing and business operations.
Bangaly Kaba
Head of Platform Growth at Popshop Technologies Inc.; resident in
Belmont (California), USA; Member of the Administrative Board of
Spark Networks SE. Mr. Bangaly Gaba is currently the Head of
Platform Growth at Popshop Technologies Inc., a live streaming
mobile marketplace that combines commerce, entertainment, and
social, which he joined in June 2020. Popshop is reimagining
ecommerce as a people-centric, engaging experience for both sellers
and buyers across the US. From January 2020 to March 2021, Mr. Gaba
was an Executive in Residence at Reforge, the leading career
development company for tech professionals. Mr. Gaba served as VP
of Product Management at Instacart, a grocery delivery marketplace
startup with a valuation of over $39B, from November 2018 to
November 2019. At Instacart, Mr. Gaba led the Growth and Consumer
organizations that built the core functionality for user
onboarding, shopping, and product discovery. From February 2014 to
November 2018, Mr. Gaba worked at Facebook, Inc. where his last
role was the Head of Growth at Instagram. Mr. Gaba joined Instagram
when it had 450M monthly actives and helped it to grow to over 1B
monthly actives in just 2.5 years, making Instagram one of the
world’s fastest growing apps. Mr. Gaba’s career prior to Facebook
spanned multiple industries, including working in education as a
Dean of a boarding school in Switzerland, working in finance as an
Asset Manager at Lehman Brothers and Barclays Capital, and founding
an e- commerce startup. Mr. Gaba holds a BA in History and Spanish
from Washington University in St. Louis and an MBA in
Entrepreneurship and Finance from the University of Southern
California. Mr. Gaba has been selected as a nominee to our Board of
Directors because he possesses particular knowledge and experience
in consumer technology, building mobile digital products, and
accelerating growth through social media.
Joe Whitters
Management consultant and partner at Frazier Healthcare Partners;
resident in Granite Bay (California), USA; Member of the
Administrative Board of Spark Networks SE. Mr. Joseph E. Whitters
is currently a partner at Frazier Healthcare Partners, a private
equity firm, which he joined in 2005. Mr. Whitters represents
Frazier on the boards of Orthotic Holdings, Inc, and Parata
Systems, LLC. Furthermore, Mr. Whitters currently is a member of
the Board of Directors of Accuray Incorporated and Cutera, Inc. Mr.
Whitters has previously served on the board of directors of other
publicly traded public companies, including PRGX Global, Inc.,
InfuSystem Holdings, Inc., Analogic Corporation, Air Methods
Corporation, Mentor Corp, Omnicell, Inc.. Mr. Whitters was a member
of the Audit Committee of all of these respective organizations and
in many cases, he chaired the Audit Committee. He also served on
the board at various privately held companies, including
Rural/Metro Corp., Northfield Medical and Revionics LLC. Mr.
Whitters held various finance positions of increasing
responsibility at First Health Group Corporation (“FHCC”), a public
managed care organization where he served as Chief Financial
Officer for many years. Prior to FHCC, Mr. Whitters held various
financial positions with United Healthcare and Overland Express.
Mr. Whitters is a certified public accountant (inactive) and began
his career in public accounting with Peat Marwick. Mr. Whitters
holds a B.A. in Accounting from Luther College. Mr. Whitters has
been selected as a nominee to our Board of Directors because he
possesses particular knowledge and experience in accounting,
finance and risk management, governance, and has public company
operating experience as a CFO and experience as a chair and member
of numerous audit committees of public and private
companies.
EU-385937
Annual General Meeting Spark Networks SE on 31 August 2022
EXPLANATION OF THE RIGHTS OF SHAREHOLDERS (pursuant to Art. 56
sentences 2 and 3 of the SE Regulation (SER) in conjunction with §
50 (2) of the German SE Implementation Act (SE-Ausführungsgesetz –
SEAG), § 122 (2), § 126 (1), § 127, § 131 (1) of the German Stock
Corporation Act (Aktiengesetz – AktG)) The convocation notice
already contains information on shareholders' rights pursuant to
Art. 53 and Art. 56 sentences 2 and 3 SER, in conjunction with Sec.
50 (2) SEAG, Sec. 122 (2) AktG and Sec. 126 (1), Sec. 127, Sec. 131
(1) AktG. The following information serves the purpose to further
explain these provisions pursuant to § 121 (3) no. 3 AktG. 1.
Requests to amend the agenda pursuant to Art. 56 sentence 2 and
sentence 3 SER, Sec. 50 (2) SEAG, Sec. 122 (2) AktG Shareholders
whose aggregate shareholdings represent five percent of the share
capital or the pro- portionate amount of € 500,000.00 (this
corresponds to 500,000 non-par value shares) may request that items
be placed on the Agenda and published. The request must be
addressed in writing to the Administrative Board of the company and
be received by the company at the latest on 30 July 2022. Please
send such requests to the following address: Spark Networks SE -
Administrative Board - c/o Link Market Services GmbH Landshuter
Allee 10 80637 Munich Germany Each new item of the Agenda must also
include a reason or a resolution proposal. Shareholders of the
company are not subject to the requirement applicable to a German
stock corporation accord- ing to which shareholders must have held
their shares for at least 90 days (Art. 56 SER in conjunc- tion
with § 50 (2) SEAG). The provisions of Sec. 70 and Sec. 121 (7)
AktG must be observed in deter- mining this period. The publication
and forwarding of requests for additions are carried out in the
same way as in the convocation. This shareholder right is based
upon the following statutory regulations:
EU-385937
Article 56 SER One or more shareholders who together hold at least
10 % of an SE's subscribed capital may re- quest that one or more
additional items be put on the agenda of any general meeting. The
proce- dures and time limits applicable to such requests shall be
laid down by the national law of the Member State in which the SE's
registered office is situated or, failing that, by the SE's
statutes. The above proportion may be reduced by the statutes or by
the law of the Member State in which the SE's registered office is
situated under the same conditions as are applicable to public
limited- liability companies. Section 50 SEAG Convocation of and
amendment to the agenda at the request of a minority (excerpt) (2)
The amendment to the agenda of a general meeting by one or more
items may be requested by one or more shareholders whose shares
amount in aggregate to not less than 5 percent of the subscribed
capital or represent an amount of the subscribed capital
corresponding to EUR 500,000. Section 122 AktG Convocation of a
meeting at the request of a minority (excerpt) (1) The General
Meeting shall be called if shareholders, whose holding in aggregate
equals or ex- ceeds one-twentieth of the share capital, demand such
meeting in writing, stating the purpose and the reasons of such
meeting; such demand shall be addressed to the management board.
The articles may provide that the right to demand a General Meeting
shall require another form or the holding of a lower proportion of
the share capital. The petitioners must evidence that they have
held their shares for a period of at least 90 days prior to the
date the request is received by the company and that they hold the
shares until the decision upon their request is passed by the man-
agement board. Section 121 (7) shall apply accordingly. (2) In the
same manner, shareholders whose shares amount in aggregate to not
less than one- twentieth of the share capital or represent an
amount of the share capital corresponding to EUR 500,000, may
demand that items are put on the agenda and published. 2Each new
item shall be accompanied by an explanation or a draft proposal.
The demand in the sense of sentence 1 shall be provided to the
company at least 24 days, in case of listed companies at least 30
days, prior to the meeting; the day of receipt shall not be
included in this calculation.
EU-385937
Section 121 AktG General provisions (excerpt) (7) In case of
deadlines and dates which are calculated back from the date of the
meeting, the day of the meeting itself shall not be included in the
calculation. Adjourning the meeting from a Sun- day, Saturday or a
holiday to a preceding or following working day shall not be an
option. Sections 187 to 193 of the German Civil Code shall not be
applied analogously. In case of unlisted compa- nies, the articles
may provide for a different calculation of the deadline. 2.
Shareholders’ counterproposals and election proposals pursuant to
Art. 53 SER, Sec. 126 (1), Sec. 127 AktG The company’s shareholders
may submit counterproposals to the proposals of the Administrative
Board on specific Agenda Items and election proposals for the
election of Administrative Board mem- bers or auditors. Such
proposals (including their statement of reasons, if any) and
election proposals are to be sent solely to: Spark Networks SE c/o
Link Market Services GmbH Landshuter Allee 10 80637 Munich Germany
or by telefax: +49 (0) 89 210 27 298 or by e-mail to:
antraege@linkmarketservices.de Counterproposals as well as election
proposals do not require a statement of reasons. Shareholders’
counterproposals and election proposals that fulfill the
requirements and are received by the company at the address
specified above by 17 August 2022, at the latest, will be made
acces- sible through the website
https://www.spark.net/investor-relations/annual-meeting
http://inves- tor.spark.net/shareholder-services/annual-meeting
along with the name of the shareholder and, specifically in the
case of counterproposals, the reason and, in the case of election
proposals, the additional information to be provided by the
Administrative Board pursuant to Sec. 127 sentence 4 AktG, as well
as any comments by the Administrative Board. The company is not
required to make a counterproposal and a statement of reason, if
any, or an election proposal accessible if one of the reasons for
exclusion pursuant to Sec. 126 (2) AktG apply, for example, because
the election proposal or counterproposal would lead to a resolution
by the General Meeting that breaches the law or the Articles of
Association or its reason apparently contains false or misleading
information with regard to material points. Furthermore, an
election proposal does not have to be made accessible if the
proposal does not contain the name, the current occupa- tion and
the place of residence of the proposed person as well as his / her
membership in other statutory supervisory boards. The reason for a
counterproposal need not be made accessible if its total length is
more than 5,000 characters.
EU-385937
Note that counterproposals and election proposals, even if they
have been submitted to the com- pany in advance in due time, will
only be considered at the General Meeting if they are submitted /
put forward verbally there. The right of every shareholder to put
forward counterproposals on the various Agenda Items or election
proposals even without a previous submission to the company re-
mains unaffected. This shareholder right is based upon the
following statutory regulations: Section 126 AktG Motions by
Shareholders (1) Motions by shareholders together with the
shareholder’s name, the grounds and any positions taken by the
management board shall be made available to the persons entitled
pursuant to Sec- tion 125 (1) to (3) under the conditions stated
therein if at least 14 days before the meeting the shareholder
sends to the address indicated in the notice convening the meeting
a motion counter to a proposal of the management board and
supervisory board as to an item on the agenda. The date of receipt
shall not be taken into account. In the case of listed companies,
access shall be provided via the company’s Internet page. Section
125 (3) shall apply analogously. (2) A counterproposal and the
grounds for this need not be made available if 1. the management
board would by reason of such communication become criminally
liable; 2. the counterproposal would result in a resolution by the
General Meeting which would be illegal or would violate the
articles; 3. the grounds contain statements which are manifestly
false or misleading in material respects or which are libelous; 4.
a counterproposal of such shareholder based on the same facts has
already been communi- cated with respect to a General Meeting of
the company pursuant to Section 125; 5. the same counterproposal of
such shareholder on essentially identical grounds has already been
communicated pursuant to Section 125 to at least two General
Meetings of the company within the past five years and at such
General Meeting less than one-twentieth of the share capital rep-
resented has voted in favour of such counterproposal; 6. the
shareholder indicates that he will neither attend nor be
represented at the General Meeting; or 7. within the past two years
at two General Meetings the shareholder has failed to make or cause
to be made on his behalf a counterproposal communicated by him. The
statement of the grounds need not be communicated if it exceeds
5,000 characters. (3) If several shareholders make counterproposals
for resolution in respect to the same subject matter, the
management board may combine such counterproposals and the
respective state- ments of the grounds.
EU-385937
Section 127 AktG (excerpt) Nominations by shareholders Section 126
shall apply analogously to a nomination by a shareholder for the
election of a member of the supervisory board or independent
auditors. Such nomination need not be supported by a statement of
the reasons therefore. The management board need not communicate
such nomina- tion if the nomination fails to contain information
pursuant to Section 124 (3) sentence 4 and Sec- tion 125 (1)
sentence 5. (...) Section 124 AktG Publications of requests for
supplements; proposals for resolutions (excerpt) (3) (…) The
proposal for the election of members of the supervisory board or
auditors shall state their names, actual profession and place of
residence. (…) Section 125 AktG Communications to shareholders and
members of the supervisory board (excerpt) (1) (…) In case of
listed companies, details on the membership in other supervisory
boards to be established pursuant to statutory provisions must be
added to any nomination for the election of supervisory board
members; details on their membership in comparable domestic and
foreign con- trolling bodies of enterprises should be added. (3)
Each member of the supervisory board may request that the
management board send him the same notifications. 3. Right to
obtain information pursuant to Art. 53 SER, Sec. 131 (1) AktG At
the General Meeting, every shareholder may request information from
the Administrative Board about company matters insofar as the
information is required for a proper evaluation of the relevant
matter on the Agenda (cf. Sec. 131 (1) AktG). The duty to provide
information covers the company’s legal and business relations with
affiliated companies as well as the position of Spark Networks
Group and of the companies included in the Consolidated Financial
Statements of Spark Networks SE. In principle, requests for
information are to be put forward at the General Meeting verbally.
The Administrative Board may refrain from answering individual
questions for the reasons specified in Sec. 131 (3) AktG, for
example, if providing such information, according to sound business
judge- ment, is likely to cause material damage to the company or
an affiliated company. Pursuant to the
EU-385937
Articles of Association, the Chair of the General Meeting, over the
course of the General Meeting, may determine appropriate
restrictions on the speaking time, the time for putting questions
and / or the total time available in general for speaking and
putting questions or for individual speakers (cf. Sec. 19 (3)
sentence 2 of the Articles of Association). This shareholder right
is based upon the following statutory regulations and provision of
the Articles of Association of the company: Section 131 AktG Right
of shareholders to information (1) 1Each shareholder shall upon
request be provided with information at the General Meeting by the
management board regarding the company’s affairs, to the extent
that such information is necessary to permit a proper evaluation of
the relevant item on the agenda. The duty to provide information
shall also extend to the company’s legal and business relations
with any affiliated enterprise. If a company makes use of the
simplified procedure pursuant to Section 266 (1) sen- tence 3,
Section 276 or Section 288 of the German Commercial Code, each
shareholder may re- quest that the annual financial statements be
presented to him at the General Meeting on such annual financial
statements in the form which would have been used if such
provisions on the simplified procedure were not applied. A parent
enterprise’s (Section 290 (1) and (2) of the German Commercial
Code) management board’s duty to inform the General Meeting that
considers the consolidated financial statements and the
consolidated annual report shall extend to the outlook of the group
and the enterprises included in the consolidated financial
statement. (2) The information provided shall comply with the
principles of conscientious and accurate ac- counting. The articles
or rules of procedure pursuant to Section 129 may authorise the
chairperson of the meeting to limit the number of questions and
speaking time of the shareholders as appro- priate and to lay down
general rules in this regard. (3) The management board may refuse
to provide information 1. to the extent that providing such
information is, according to sound business judgement, likely to
cause material damage to the company or an affiliated enterprise;
2. to the extent that such information relates to tax valuations or
the amount of certain taxes; 3. with regard to the difference
between the value at which items are shown in the annual balance
sheet and the higher market value of such items, unless the General
Meeting is to approve the annual financial statements; 4. with
regard to the methods of classification and valuation, if
disclosure of such methods in the notes suffices to provide a clear
view of the actual condition of the company’s assets, financial
position and profitability within the meaning of Section 264 (2) of
the German Commercial Code; the foregoing shall not apply if the
General Meeting is to approve the annual financial statements; 5.
if provision thereof would render the management board criminally
liable;
EU-385937 6.
if in the case of a credit institution, financial services
institution or securities institution infor- mation about the
applied balance sheet and valuation methods or calculations made in
the annual financial statements, the annual report, the
consolidated financial statements or the group’s an- nual report
need not be given; 7. if the information is continuously available
on the company’s Internet page seven or more days prior to the
General Meeting as well as during the meeting. The provision of
information may not be refused for other reasons. (4) If
information has been provided outside a general meeting to a
shareholder by reason of his status as a shareholder, such
information shall upon request be provided to any other shareholder
at the general meeting, even if such information is not necessary
to permit a proper evaluation of an item on the agenda. The
management board may not refuse to provide such information on the
grounds of Section 131 (3) sentence 1 nos. 1 to 4. Sentences 1 and
2 shall not apply if a subsid- iary (Section 290 (1) and (2) of the
German Commercial Code (HGB)), a joint venture (Section 310 (1) of
the German Commercial Code (HGB)) or an associated company (Section
311 (1) of the Ger- man Commercial Code (HGB)) provides the
information to a parent company (Section 290 (1) and (2) of the
German Commercial Code) for the purpose of inclusion in the
consolidated financial statements of the parent company and such
information is required for such purpose. (5) A shareholder who has
been denied information may request that his question and the
reason for which the information was denied be recorded in the
minutes of the meeting. In addition, the Articles of Association of
Spark Networks SE contain the following provision re- garding the
limitation of the shareholders’ right to ask questions and speak:
Section 19 (3) Articles of Association The Chairman of the Meeting
may establish reasonable temporal limits for the shareholders’
right to put questions and address the General Meeting of
Shareholders. In particular, the chairperson shall be entitled to
fix, at the beginning of the General Meeting of Shareholder or
during its course, reasonable time frames for the entire Generals
Meeting of Shareholders, for deliberations on the individual items
of the agenda or for the individual contributions made by askers
and speakers.
EU-385941
Data protection information for shareholders of Spark Networks SE
We are writing to inform you about the collecting and processing of
your personal data by Spark Networks SE, Munich (the "Company"),
and the rights granted to you according to data protection law,
especially the General Data Protection Regulation
(Datenschutz-Grundverordnung). Who is responsible for personal data
processing? Spark Networks SE Kohlfurter Straße 41/43 10999 Berlin
legal@spark.net Purposes and legal bases of the processing of your
personal data and the sources of this data: The protection of your
personal data is important to us. We process your personal data
exclusively in compli- ance with the applicable legal regulations,
in particular, the EU General Data Protection Regulation (GDPR),
the German Federal Data Protection Act (Bundesdatenschutzgesetz –
BDSG), the German Stock Corporation Act (Aktiengesetz – AktG) and
all other relevant legal provisions. Spark Networks SE shares are
registered shares. In the case of registered shares, section 67
AktG requires that information be entered in the share register of
the Company, stating the name, date of birth and the address of the
shareholder, as well as the number of shares or the share number;
and in the case of par-value shares, the amount. Each shareholder
is generally obligated to provide the Company with this
information. Furthermore, we process personal data that you provide
to us when you register for a shareholders’ meeting, or vote via
postal vote, or order entrance tickets and/or grant power of
attorney. We use your personal data for the purposes set out in the
German Stock Corporation Act. These purposes are, in particular,
the management of the share register, communicating with you as a
shareholder, and various processes when conducting the
shareholders’ meetings (registration for the shareholders' meeting,
documen- tation of the right to participate and compiling the
attendance list). The legal basis for processing your personal data
is the German Stock Corporation Act in conjunction with article 6
(1) (c) GDPR. In addition, we may also process your personal data
to fulfil other legal obligations; for example, regulatory
requirements, as well as stock, commercial and tax legislation
retention requirements. In order to comply with the regulations of
the German Stock Corporation Act, for example, when authorising the
proxies nominated by the Company for the shareholders’ meetings, we
must keep a verifiable record of such data, which serves as proof
of proxy. We must also keep such data access-protected for three
years (section 134 (3) sentence 5 AktG). The legal basis for the
processing in this case is the respective statutory regulations in
conjunction with article 6 (1) (c) GDPR. Furthermore, we only use
your data where you have given consent, which can be withdrawn at
any time (for example, to use electronic means of communication),
or if processing is necessary for the purposes of the legitimate
interests pursued by the Company (in particular, to create
statistics, for example, to portray share- holder development, the
number of transactions, and an overview of the largest
shareholders). The legal basis for processing your personal data
is, in these cases, article 6 (1) (a) and (f) GDPR. If we intend to
process your personal data for a purpose not mentioned above, we
will inform you in advance within the scope of the legal
provisions. Categories of recipients of your personal
data:
EU-276713 v1
We make use of professional services of so-called contract
processors. These are natural or legal persons, authorities,
institutions or other bodies that process personal data on our
behalf as responsible parties. Since the selection of our
processors may change on a regular basis, we have provided the
following overview of the categories of potential recipients. If
you would like to receive a complete list of our processors at the
time of processing your personal data, please reach out to our Data
Protection Officer via the below contact infor- mation. • External
service providers: We use a number of external service providers
for the administration and technical management of the share
register as well as the handling of shareholders’ meetings (for
example, a share register service company, IT service providers,
and AGM service providers). Our external service providers process
your personal data exclusively on our behalf and according to our
instructions and are contractually bound by applicable data
protection law in accordance with article 28 (3) GDPR. • Other
recipients: In addition, we may transfer your personal information
to other recipients, such as public authorities, to comply with our
legal reporting obligations (for example, if you exceed statutory
voting thresholds). Retention periods: We will delete your personal
data as soon as it is no longer necessary for the above purposes.
We may retain personal data for sufficient time to enable us to
defend us against claims made against our Company (legal limitation
period of three to thirty years). In addition, we store your
personal data as far as we are legally obligated to do so.
Corresponding proof obligations and retention obligations arise,
among other things, from the German Commercial Code
(“Handelsgesetzbuch,”), tax code (“Abgabenordnung”) and Money
Laundering Act (“Geldwäschegesetz”)..” These regulations require
storage periods of up to ten years. Transfer of personal data to
non-European countries: Should we transfer personal data to service
providers outside the European Economic Area (EEA), the trans- fer
will only take place if the location has been confirmed by the EU
Commission to have an adequate level of data protection or other
appropriate data protection safeguards (e.g. binding internal data
protection regula- tions or agreement to standard (data protection)
contractual clauses of the European Commission). Currently, we
transfer personal data to a processor in the USA. You can request
detailed information on the level of data protection at our service
provider and the appropriate data protection safeguards implemented
from the contact information detailed above. Your rights as a data
subject: You have the right to request information about the data
stored about you. Additionally, under certain circum- stances, you
may request a correction or the deletion of your data, as well as
the restriction of the processing of your data. You also have the
right (under certain circumstances) to object to the processing of
your data, or to require that certain of your personal data be
transferred to you or a third party. You may revoke your consent to
the processing of your data at any time. To exercise these rights,
please contact us at the above-mentioned address. Data protection
officer of Spark Networks SE: Frank Trautwein Fresh Compliance GmbH
Fürbringerstraße 15 10961 Berlin
info@freshcompliance.de
EU-385941 You
have the right to contact a supervisory authority about the
processing of your data by our Company. The responsible data
protection supervisory authority is: Berliner Beauftragte für
Datenschutz und Informationsfreiheit Friedrichstrasse 219 10969
Berlin E-Mail: mailbox@datenschutz-berlin.de
POWER OF
ATTORNEY Shareholder’s number: Number of shares: I/We Authorising
person’s first name Authorising person’s surname Authorising
person’s postcode Authorising person’s town/city of residence
hereby authorise Mr./Ms./Mrs. Proxy’s first name Proxy’s surname
Proxy’s postcode Proxy’s town/city of residence to represent me/us
at the virtual Annual General Meeting of Spark Networks SE on
August 31, 2022 and to exercise my/our shareholder rights,
especially my/our voting rights. The proxy includes the right to
issue sub-proxies. Place/date Authorising person’s signature(s) or
other closing of the declaration in accordance with Section 126b of
the German Civil Code (BGB) Notes: - Please note that the
representation of voting rights by a proxy is only possible if the
respective shares are registered for the Annual General Meeting of
Spark Networks SE no later than by August 30, 2022, 24:00 hours
(CEST). - The issuance of a power of attorney must generally be
made in text form (§ 126b of the German Civil Code – BGB).
Exceptions may apply for the authorisation of credit institutions,
shareholders’ associations or other persons or associations of
individuals which, pursuant to section 135 (8) of the German Stock
Corporation Act, are treated like a credit institution. We kindly
ask the shareholders to coordinate with the respective proxy
recipients the details, in particular with respect to the form of
the authorization.
INFORMATION
ON AUTHORIZING THE COMPANY PROXIES OF SPARK NETWORKS SE
Shareholders can authorize the Company proxies of Spark Networks
SE, Jörg Engmann, employee of Link Market Services GmbH, business
address Munich, who can vote on your behalf on their own and are
bound by your instructions. The Company proxy is entitled to vote
on your behalf only if you have given specific instructions
regarding the individual motions proposed for the items on the
agenda. The Company proxy must follow your instructions when voting
on the motions proposed as announced in the agenda. The
possibilities for authorizing and instructing the above-mentioned
Company proxy using the form "Proxy and voting instructions to the
Company proxies” are outlined below. Sending your authorization and
instruction by post or e-mail Please use the form "Proxy and voting
instructions to the Company proxies". With this form you authorize
the above-mentioned proxy provided by Spark Networks SE and
instruct the proxy how your voting right(s) on the motions proposed
is/are to be exercised. Send the filled in form "Proxy and voting
instructions to the Company proxies" by post or e-mail by
specifying your shareholder’s number directly to the following
address: By post: Spark Networks SE c/o Link Market Services GmbH
Landshuter Allee 10 80637 Munich Germany or by e-mail:
namensaktien@linkmarketservices.de Important Notes: Please note
that only shareholders who have registered in time and who are
entitled to participate and vote are entitled to cast their votes
by granting authorization and issuing instructions for exercising
their voting right(s) to the Company proxy provided by Spark
Networks SE. Please fill in the form and send it to the Company by
specifying your shareholder’s number by August 30, 2022, 24:00
hours (CEST) - time of receipt. If the Company receives
authorizations and instructions for Company proxies by several
means of transmission that differ from one another, they will be
regarded binding in the following order: (1) via e-mail, (2) via
post. Company proxies are bound by instructions and cannot be
instructed to raise an objection, file a motion or ask questions.
Proxy to the Company proxies must be revoked until August 30, 2022,
24:00 hours (CEST) if submitted in text form by post or email (see
contact details above). If you have any questions about the
proxies, please call our General Meeting hotline between 9:00 and
17:00 hours CEST, Mondays to Fridays (except public holidays) at
+49 (0)89 210 27 333
PROXY AND
VOTING INSTRUCTIONS TO THE COMPANY PROXIES Ordinary Annual General
Meeting on August 31, 2022 We would ask you to fill in this form
and send it together by specifying your shareholder’s number
directly to the following ad- dress by August 30, 2022, 24:00 hours
(CEST) - time of receipt: Spark Networks SE E-Mail: c/o Link Market
Services GmbH namensaktien@linkmarketservices.de Landshuter Allee
10 80637 Munich Germany Proxy Authorizing person’s first name /
surname Admission ticket number Number of shares I/We authorize the
Company proxies provided by Spark Networks SE, Jörg Engmann,
employee of Link Market Services GmbH, business address Munich,
with the right to delegate authorization, to represent me/us at the
Annual General Meeting of Spark Networks SE on August 31, 2022 by
disclosure of my/our name in the list of participants and to
exercise my/our voting right(s) or have such voting right(s)
exercised with the following instructions: Voting instructions to
the Company proxies Only one instruction may be issued to each item
on the Agenda. Item on the agenda Yes No Abst. 2. Resolution on the
discharge of the Managing Directors for the financial year 2021
3. Resolution on the discharge of the members of the
Administrative Board for the finan- cial year 2021 4.
Appointment of the auditor for the financial statements and for the
consolidated finan- cial statements as well as for the review of
interim financial reports and ratification of independent
registered public accounting firm 5. Election of the members
of the Administrative Board a) Eric Eichmann b) Ulrike Handel
c) Bradley J. Goldberg d) Colleen Birdnow Brown
e) Michael J. McConnell f) Chelsea Grayson g) Bangaly
Kaba h) Jospeh E. Whitters 6. Advisory vote on
executive compensation 7. Resolution on the approval of the
compensation report for the financial year 2021 8. Resolution
on the cancellation of the Authorized Capital 2017 pursuant to
section 4 pa- ra. 3 of the Articles of Association and on the
creation of a new Authorized Capital 2022 with the possibility of
excluding shareholders’ subscription rights and the corresponding
amendment of section 4 of the Articles of Association I/We
hereby confirm that I/we have read the „Information on authorizing
the company proxies” and that I/we accept the specified terms for
the proxy voting. Place, Date Signature(s) or other closing of the
declaration in accordance with Section 126b of the German Civil
Code (BGB)
REVOCATION OF
PROXY for shareholder’s number ___________________ for
_____________ ordinary shares in Spark Networks SE I/We
______________________________________________ hereby revoke
Authorising person’s name the proxy I/we issued to the Company
proxy of Spark Networks SE, Mr Jörg Engmann, employee of Link
Market Services GmbH, business address Munich, the proxy I/we
issued to Mr./Ms. _____________________________________ Authorised
representative’s name resident in ________________________________
Town/City of residence to represent me/us at the Annual General
Meeting of Spark Networks SE convened for August 31, 2022 and to
exercise my/our voting rights. _______________________
_______________________________________________________ Place, Date
Authorising person’s signature or other completion of the
declaration in accordance with Section 126b of the German Civil
Code (BGB) Notes: - Should you wish to revoke a proxy issued to the
Company proxies, please send your revocation no later than August
30, 2022, 24:00 hours (CEST) - time of receipt - to the following
address: Spark Networks SE, c/o Link Market Services GmbH,
Landshuter Allee 10, 80637 Munich, Germany or by e-mail to:
namensaktien@linkmarketservices.de. - Revocations of proxy must be
made in text form (§ 126b BGB) unless the proxy is given to banks
or other persons or institutions with equivalent status pursuant to
§ 135 AktG as well as to shareholders' associations or other
persons with equivalent status pursuant to § 135 AktG. Should you
wish to revoke a proxy issued to an authorised representative you
may notify the authorised representative thereby authorised of such
revocation or alternatively notify the company as well. Should you
wish to notify the company of such revocation, please forward your
revocation up to August 30, 2022, 24:00 hours (CEST) - time of
receipt - to the following address: Spark Networks SE, c/o Link
Market Services GmbH, Landshuter Allee 10, 80637 Munich, Germany or
by e-mail to: namensaktien@linkmarketservices.de.