UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
____________________________________________________
 
FORM 10-K
                                   
(Mark One)
   x ANNUAL REPORT PURSUANT TO SECTION 13 or 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
 
For The Fiscal Year Ended December 31, 2010
 
  o TRANSITION REPORT PURSUANT TO SECTION 13 or 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
  
Commission File No.  000-52176

SNAP INTERACTIVE, INC.
(Exact name of registrant as specified in its charter)
   
Delaware
20-3191847
(State or other jurisdiction of incorporation or organization)
(I.R.S.  Employer Identification No.)
   
363 7th Avenue, 13th Floor,
New York, NY
 
10001
(Address of principal executive offices)
(Zip Code)
   
Registrant’s telephone number, including area code : (516) 942-2030
 
   
Securities registered pursuant to Section 12(b) of the Exchange Act: None.
   
Securities registered pursuant to Section 12(g) of the Exchange Act:
 
Common stock, par value $0.001 per share.
(Title of class)

Indicate by check mark if the registrant is a well-known seasoned issuer, as defined in Rule 405 of the Securities Act.        Yes  o     No  x

Indicate by check mark if the registrant is not required to file reports pursuant to Section 13 or Section 15(d) of the Act.    Yes  o      No  x

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes  x No  o

Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files).
Yes ¨ No ¨

 
 

 
 
Indicate by check mark if disclosure of delinquent filers pursuant to Item 405 of Regulation S-K (§229.405 of this chapter) is not contained herein, and will not be contained, to the best of registrant’s knowledge, in definitive proxy or information statements incorporated by reference in Part III of this Form 10-K or any amendment to this Form 10-K.   x

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller reporting company. See the definitions of “large accelerated filer,” “accelerated filer” and “smaller reporting company” in Rule 12b-2 of the Exchange Act.
 
 
Large accelerated filer
o
 
Accelerated filer
o
         
Non-accelerated filer
(Do not check if a smaller reporting company)
o
 
Smaller reporting company
x

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes  o    No x

The aggregate market value of the registrant’s voting common stock held by non-affiliates computed by reference to the closing price as of the last business day of the quarterly period ended June 30, 2010 was approximately $2,028,000. 


As of March 24, 2011, the registrant had 37,585,756 shares of common stock issued and outstanding.

DOCUMENTS INCORPORATED BY REFERENCE :
None.
 

 
 

 
 
TABLE OF CONTENTS
 
 
  PART I
Page
 ITEM 1.
  1
 ITEM 1A.
  4
 ITEM 1B.
  11
 ITEM 2.
  12
 ITEM 3.
  12
 ITEM 4.
  12
 
PART II
 
 ITEM 5.
  13
 ITEM 6.
  14
 ITEM 7.
  14
 ITEM 7A.
  19
 ITEM 8.
  F-1
 ITEM 9.
  20
 ITEM 9A.
  20
 ITEM 9B.
  20
 
PART III
 
 ITEM 10.
  21
 ITEM 11.
  22
 ITEM 12.
  23
 ITEM 13.
  24
 ITEM 14.
  25
 
PART IV
 
 ITEM 15.
  26
     
 
 
 
i

 
 
Forward-Looking Statements
 
Certain statements in this Annual Report on Form 10-K constitute “forward-looking statements” made under the “safe harbor” provisions of the Private Securities Litigation Reform Act of 1995 that are based on current expectations, estimates, forecasts and assumptions and are subject to risks and uncertainties. Words such as “anticipate,” “assume,” “believe,” “estimate,” “expect,” “goal,” “intend,” “plan,” “project,” “seek,” “target,” and variations of such words and similar expressions are intended to identify such forward-looking statements. All forward-looking statements speak only as of the date on which they are made. Such forward-looking statements are subject to certain risks, uncertainties and assumptions relating to certain factors that could cause actual results to differ materially from those anticipated in such statements, including, without limitation, the following:
 
  
our ability to successfully transition to a subscription-based online dating model;

  
our ability to obtain additional financing to implement our long-term growth strategy;

  
our ability to anticipate and respond to changing consumer trends and preferences;

  
reliance on our sole officer and director and our ability to attract and hire key personnel;

  
the intense competition in the online dating marketplace;

  
our ability to establish and maintain brand recognition;

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

  
our reliance on a very limited number of third party platforms to run our applications and the ability of third party platforms to take action against these applications, including the sole ability to remove an application from the platform;
 
  
our protection of intellectual property;

  
the potential impact of a finding that we have infringed on intellectual property rights of others;

  
our ability to create and maintain secure websites and protect our technology from hackers;

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

  
other circumstances that could disrupt the functioning of our applications and websites.
 
For a more detailed discussion of these and other factors that may affect our business, see Item 1A, “Risk Factors,” and Item 7, “Management’s Discussion and Analysis of Financial Condition and Results of Operations.” We caution that the foregoing list of factors is not exclusive, and new factors may emerge, or changes to the foregoing factors may occur, that could impact our business. We do not undertake any obligation to update any forward-looking statement, whether written or oral, relating to the matters discussed in this Annual Report on Form 10-K, except to the extent required by federal securities laws.
 
 
ii

 
 
PART I
 
Item 1.     Business .
 
In this Annual Report on Form 10-K, references to “we,” “our,” “us,” “the Company,” or “Snap Interactive” refer to Snap Interactive, Inc. and its subsidiaries on a consolidated basis.

General

We develop, own and operate dating and social networking software applications that can be accessed by users on various social networking websites and platforms, such as Facebook, and iPhone users, as well as an online dating website and a location-based social networking application and website. Applications that we have created include AreYouInterested, WhoIsNear, Meet New People and Flirt With Me . Our portfolio of applications is designed to appeal to a broad base of Internet and iPhone users. We switched our leading application AreYouInterested from an advertising-based to a subscription-based revenue model in late 2009, and in 2010, we primarily generated revenue from subscription fees and premium sales on our AreYouInterested Facebook application and our AreYouInterested.com Internet website.

As of March 24, 2011, we had approximately 84,000 active subscribers on AreYouInterested and in excess of 40 million total installations across all of our applications. We do not consider a subscription as “active” if the user has elected to void the subscription’s automatic renewal terms. We only count a subscription as active when that subscription has not reached its expiration date and is still eligible to automatically renew.

We were incorporated under the laws of the State of Delaware on July 19, 2005. Our principal executive office is located at 363 Seventh Ave, 13th Floor, New York, New York 10001.  Our telephone number is (516) 942-2030.

Our Products

We have developed and published a portfolio of dating applications and a social networking application that are designed to appeal to a broad section of Internet and iPhone users. We have created the following applications based on our own original brands and intellectual property:
 
AreYouInterested.   Since August 2007, AreYouInterested has consistently been one of the leading dating-only applications on Facebook based on: (i) number of daily active users, (ii) number of monthly active users, as well as (iii) number of total users.   AreYouInterested members create a personal profile, enter search criteria concerning potential matches, are able to view pictures of other members meeting that criteria and indicate if they are “interested” in a member by clicking “yes” on a button above the picture.  We notify members when there is a mutual match. In addition, once members become paid subscribers they are able to communicate on an unlimited basis with potential matches and exchange virtual gifts on the application. We also earn revenue from AreYouInterested through the direct sale of “points.”  Members can either purchase or earn points by performing various activities on the product, such as by browsing profiles, that can be used in exchange for accessing certain premium features on our applications. AreYouInterested has approximately 84,000 active subscribers and in excess of 35 million total installations on Facebook as of March 24, 2011.

We have expanded upon the AreYouInterested brand to provide multiple gateways to access the product. AreYouInterested is also available as an iPhone application, our first mobile dating application. Users can download AreYouInterested through iTunes and the iPhone App Store. AreYouInterested is also available on the MySpace and Bebo social networking websites.  
 
We have also created AreYouInterested.com, a stand-alone online dating website.  AreYouInterested.com represents an expanded and fully integrated version of the AreYouInterested Facebook application and incorporates a Facebook Connect integration, which allows users to “connect” their Facebook identity, friends and privacy settings to any website.
 
 
1

 
 
WhoIsNear .   WhoIsNear was launched in public beta in February 2011.   WhoIsNear is a location-based service with a fully integrated web, mobile, iPhone and social networking application that enables users to easily access their online social graph, the network of friends and contacts that they have created on Facebook. WhoIsNear provides information on the current geographic location of users to their friends and allows users to seamlessly find and interact with their existing friends without the need to re-create their social graph by sending messages, chatting through the iPhone application or adding new friends.

Meet New People .   Meet New People is a dating application for the Facebook platform that was launched in June 2007 and was substantially revamped in December 2007.   Meet New People allows users to flirt with each other by messaging online and posting when they are free to meet in person. Meet New People has in excess of 4 million total installations on Facebook.

Flirt With Me.    Flirt With Me is a dating application that was launched in 2008 and is currently available on the MySpace, Hi5 and Bebo social networking platforms. Flirt With Me is a dating application that allows users to exchange flirts with each other and also integrates a “Flirt With Me” profile box onto a user’s profiles to allow anyone who visits their profile the ability to send funny flirt messages. Flirt With Me has approximately 1 million total installations.

We will continue to enhance our current applications and products as well as consider building additional applications on Facebook and other mobile devices, including the iPhone.

Marketing Strategy
 
Our applications initially gained their user base primarily through leveraging the viral channels of the social networking platforms on which we built our products.  As a change in strategy, and in conjunction with the launch of our subscription-based revenue model, in late 2009 we increased expenditures in advertising and marketing for the purpose of acquiring users.  We believe this shift to a subscription model is in our best interest because of the increased revenue potential of a subscription-based online dating model as well as the changing landscape of the Facebook application platform.  Our initial viral growth occurred at a time when policies toward leveraging Facebook’s viral channels were less restrictive.  Facebook subsequently imposed limitations upon application providers that made it more difficult for application use to grow virally.  Having already established a substantial user base, we believe this policy change benefitted us by it creating a barrier to entry for start-up Facebook dating applications.

Throughout 2010 we increased the financial resources and capital expenditures in our user acquisition campaigns. We hired a full-time media buyer, developed in-house tools to track and measure the success of our advertising campaigns, and steadily increased our marketing expenditures as we developed the tools to identify profitable campaigns. We primarily advertise through Internet advertising and run hundreds of campaigns at any given time,  targeting various classifications of users. We expect to continue increasing our marketing expenditures with the focus on campaigns that we believe will produce a positive return over the lifetime of new users.

We believe we provide value to the social networks through our applications by providing users with functionality that is not otherwise available. In certain cases, social networks may generate revenue through the placement of advertisements on the perimeter of our application pages. Pursuant to Apple Inc.’s terms of service, Apple Inc. retains 30% of the revenue that is generated from sales on our iPhone applications through In-App purchases. To date, revenue from sales on our iPhone applications is currently minimal.

Competition

We face substantial competition from other social networking application providers as well as major online dating websites.  In the social networking application field, we believe our primary competition comes from other leading developers, including Zynga, Playfish, Crowdstar and Playdom, all of which have multiple applications that remain consistently among the leading applications on Facebook, as measured by Facebook’s published application statistics and third-party websites that report application traffic data.  In the dating category of social networking applications, we are consistently one of the leading dating applications as measured by both monthly active users and total installations.  Zoosk, Badoo and Cupid are application providers that have traffic totals for a dating application that compare with us at this time.  In the online dating industry, we face competition from established competitors, including Match.com and eHarmony.com. In the location-based tracking industry, we face competition from companies such as Foursquare, Google Inc. and Gowalla.
 
 
2

 
 
Achieving a critical mass of subscribers is crucial for online dating websites and online dating applications.  As a result of our user base, we believe we are well-positioned to continue as a leader in the online dating application market.  We believe that our user base will also allow us to compete favorably in the marketplace with future products that we offer.  Additionally, we hope to offset any advantages held by competitors with larger user bases by offering products and services that are unique in the industry, superior in quality, and more appealing than those of our competitors. Additionally, we believe that we have the tools and certain inherent efficiencies to attract new users on Facebook at a lower cost than what certain of our competitors that are traditional online dating sites pay.  We also believe that the industry offers substantial room for growth as social networking application platforms and mobile platforms continue to expand and as the Internet continues to become more of a socially-acceptable method for finding a mate.
 
Patent and Trademarks
 
Our trademark application for AreYouInterested is still pending. We plan to apply for trademark protection of WhoIsNear by the end of 2011.

Governmental Regulations
 
The online dating, social networking application and Internet industries are generally not subject to governmental regulation and there are no material governmental approvals that are necessary to conduct our current business. This permits us to provide our services without the time and expense of governmental supervision but also provides fewer barriers to would be competitors for entry into the social networking application industry.

Specific federal laws that might impact our business include The Communications Decency Act of 1996, The Children’s Online Privacy Protection Act of 1998 and The Electronic Communications Privacy Act of 1986, among others. If we were to violate any of these laws, we could be exposed to costly or time-consuming litigation or it could have an adverse effect on our current or future operations.

There are a number of proposals before Congress and various state legislatures regarding privacy issues related to the Internet generally. We are unable to determine if and when such legislation may be adopted. If certain proposals were to be adopted, it could have an adverse effect on our current or future operations.

In addition, certain states have enacted legislation requiring us to display safety warnings and disclosures to users that we do not conduct background checks.

Product Development
 
We have developed technologies and application development processes that are designed to enable us to rapidly and cost effectively develop and publish applications that meet the expectations and preferences of consumers and the requirements of the underlying third party platforms on which we offer our products. Because the markets for our applications are characterized by rapid technological change, particularly in the technical capabilities of mobile phones and changing end-user preferences, continuous investment is required to innovate and publish new applications, and to regularly update our dating applications, our social networking application and our stand-alone websites. We constantly monitor, update and maintain our existing applications.
 
As of December 31, 2010, we did not have any employees that were dedicated solely to product development activities for new applications. We cannot be certain that we will be able to successfully develop new dating or social networking applications that satisfy end user preferences and technological changes or that any such applications will achieve market acceptance and commercial success.
 
Employees
 
As of March 24, 2011, we had 21   total employees, all of whom are employed on a full-time basis. We believe that our future success depends in part on our continued ability to hire, assimilate and retain qualified personnel.
 
 
3

 
 
Item 1A.       Risk Factors

Investing in our common stock involves a high degree of risk. The risks below are those that we believe are the material risks that we currently face, but are not the only risks facing us and our business. If any of the events contemplated by the following discussion should occur, our business, financial condition and operating results could be adversely affected, and you could lose all or part of your investment.

Risks Relating to Our Business

We recently shifted our business focus to a subscription-based online dating model.

We recently shifted our revenue model from generating revenue through advertisements placed on our applications and website to generating revenue from subscription fees and premium sales.  Our management believes this revenue model will produce increased revenue and ultimately be profitable, however, we may not be able to overcome the challenges continually facing a company that recently completed a revenue model transition and there is no guarantee that we will be able to successfully implement our long-term growth strategy moving forward.  If we fail to maintain and grow our new revenue model it would have a material adverse effect on our sales and earnings.
 
We may need additional financing to execute our business plan. If we do not obtain additional financing it could have a material adverse effect on our business.
 
Revenues from subscriptions and premium sales and funds raised through private placements may be inadequate to support our expansion, marketing efforts and product development programs. Due to planned expansion and advertising expenditures, we do not anticipate that we will operate at a profit in the near-term. We may need substantial additional funds to:
 
  
effectuate our long-term growth strategy and expand our product development;
  
market our products to attract more paying subscribers; and
  
hire additional technical and managerial talent.

We may be unable to obtain future funding on favorable terms or at all. If we cannot obtain additional funding, we will need to reduce, defer or cancel development programs, planned initiatives, or overhead expenditures. The failure to fund our capital requirements could have a material adverse effect on our business, financial condition and results of operations.

Newly developed products may be incompatible with market needs resulting in an adverse effect on our sales and earnings.

Our business is particularly subject to changing consumer trends and preferences.  Our continued success depends in part on our ability to anticipate and respond to these changes, and we may not respond in a timely or commercially appropriate manner to such changes.  If we fail to understand consumer needs in the online dating market, we may face limited market acceptance of our products, which could have a material adverse effect on our sales and earnings.

Our limited operating history may not serve as an adequate basis to judge our future prospects and results of operations.
 
We were incorporated in Delaware in July of 2005, however, we only completed the transition to our current revenue model - a subscription-based online dating model - in the fourth quarter of 2009. Such a relatively limited operating history and risks in transitioning between revenue models make it difficult for investors to evaluate our businesses and future operating results. An investor in our securities must consider the risks, uncertainties, and difficulties frequently encountered by companies in new and rapidly evolving markets.  The risks and difficulties we face include challenges in accurate financial planning as a result of limited historical data and the uncertainties resulting from having had a relatively limited time period in which to implement and evaluate our business strategies as compared to older companies with longer operating histories.
 
 
4

 
 
Our future success is dependent, in part, on the performance and continued service of Clifford Lerner, our sole officer and director. Without his continued service, we may be forced to interrupt or eventually cease our operations.
 
We are dependent to a great extent upon the experience, abilities and continued services of Clifford Lerner, our sole officer and director. The loss of his services would delay our business operations substantially and could have a materially adverse effect on our business and products.

Our heavy reliance on third-party platforms where we build applications may negatively affect our ability to effectively and profitably provide services to users of our applications, maintain our existing markets and expand our business.
 
The various social networking platforms on which we build applications enjoy the sole ability and discretion to take action against applications on their platform, including restricting access to platform functionality or even removing us entirely from their platforms.  These third-party platforms have broad discretion to determine whether our applications are consistent with their policies and can remove our applications for violations of their policies. These third-party platforms could also force us to use their method of payment or restrict the methods of collecting payments through their platform. If any of these actions are taken against our applications, it could impede our ability to grow or generate revenue and would likely adversely affect our revenues and financial results.
 
Our success depends upon our ability to attract and hire key personnel. Our inability to hire qualified individuals will negatively affect our business, and we will not be able to implement or expand our business plan. 
 
Our business is greatly dependent on our ability to attract key personnel. We will need to attract, develop, motivate and retain highly skilled technical employees. Competition for qualified personnel is intense and we may not be able to hire or retain qualified personnel. Our management has limited experience in recruiting key personnel, which may hurt our ability to recruit qualified individuals. If we are unable to hire or retain such employees, we will not be able to implement or expand our business plan.

As an online dating company, we are in an intensely competitive industry and any failure to timely implement our business plan could diminish or suspend our development and possibly cease our operations.
 
The online dating industry is highly competitive, and has few barriers to entry. Additional competitors may enter into the online dating industry. There are numerous other companies that offer similar services, have established user bases that are similar in size or larger than ours, and have more capital than us. If we are unable to efficiently and effectively institute our business plan as a result of intense competition or a saturated market, we may not be able to continue the development and enhancement of our applications and websites and become profitable on a consistent basis.

Our competitors could develop more efficient products or undertake more aggressive and costly marketing campaigns than ours, which may adversely affect our marketing strategies and could have a material adverse effect on our business, results of operations and financial condition.

 Important factors affecting our ability to compete successfully include:
 
  
Our ability to hire and retain talented employees, including technical employees, executives, and marketing experts;
  
Competition for acquiring users that could result in increased user acquisition costs;
  
Reliance upon the platforms on which we build which maintain significant control over our activities on their platforms; and
  
Our ability to remain innovative in our fast-changing industry.
 

 
 
5

 
 
We face substantial competition from other social networking application providers as well as major online dating websites. In the social networking application field, we compete with a number of developers, such as Zynga, Playfish, Crowdstar, and Playdom, who have multiple applications that remain consistently among the leaders on Facebook. In the specific dating category of social networking applications, Zoosk, Badoo and Cupid are application providers that have traffic totals for a dating application that compare with us at this time. In the online dating industry we also face competition from long-established sites such as Match.com and eHarmony.com.  In the location-based tracking industry, we face competition from companies such as Foursquare, Google Inc. and Gowalla. Many of our current and potential competitors have longer operating histories, significantly greater financial, technical, marketing and other resources and larger customer bases than we do. These factors may allow our competitors to respond more quickly than we can to new or emerging technologies and changes in customer requirements. These competitors may engage in more extensive research and development efforts, undertake more far-reaching marketing campaigns and adopt more aggressive pricing policies that may allow them to build larger member and paying subscriber bases than ours. Our competitors may develop products or services that are equal or superior to our products and services or that achieve greater market acceptance than our products and services. These activities could attract members and paying subscribers away from our applications and websites and reduce our market share.
 
Our business depends on establishing and maintaining strong brands.  If we are unable to maintain and enhance our brands, we may be unable to expand or maintain our member and paying subscriber bases.
 
Establishing and maintaining our brands is critical to our efforts to attract and expand our member and paying subscriber bases. We believe that the importance of brand recognition will continue to increase, given the growing number of Internet sites and the low barriers to entry for companies offering online personals services. To attract and retain members and paying subscribers and to promote and maintain our brands in response to competitive pressures, we intend to substantially increase our financial commitment to creating and maintaining distinct brand loyalty among these groups. If paying subscribers to our products do not perceive our existing services to be of high quality, or if we introduce new services or enter into new business ventures that are not favorably received by such parties, the value of our brands could be diluted, thereby decreasing the attractiveness of our products to such parties. As a result, our results of operations may be adversely affected by decreased brand recognition.

We face certain risks related to the physical and emotional safety of our members and paying subscribers.

The nature of online personals services is such that we cannot control the actions of our members and paying subscribers in their communication or physical actions. There is a possibility that one or more of our members or paying subscribers could be physically or emotionally harmed following interaction with another one of our members or paying subscribers. We warn our members and paying subscribers that we do not and cannot screen other members and paying subscribers and, given our lack of physical presence, we do not take any action to ensure personal safety on a meeting between members or paying subscribers arranged following contact initiated via our applications or websites. If an unfortunate incident of this nature occurred in a meeting of two people following contact initiated on one of our applications or websites or a website of one of our competitors, any resulting negative publicity could materially and adversely affect us or the online personals industry in general. Any such incident involving one of our applications or websites could damage our reputation and our brands. This, in turn, could adversely affect our revenue and could cause the value of our common stock to decline. In addition, the affected members or paying subscribers could initiate legal action against us, which could cause us to incur significant expense, whether we were successful or not, and damage our reputation.

We face risks of litigation and regulatory actions if we are deemed a dating service as opposed to an online personals service.

We supply online personals services. In many jurisdictions, companies deemed dating service providers are subject to additional regulation, while companies that provide personals services are not generally subject to similar regulation. Because personals services and dating services can seem similar, we are exposed to potential litigation, including class action lawsuits, associated with providing our personals services. If we were considered to be a dating service provider, we would be required to comply with regulations that include, but are not limited to, providing language in our contracts that may allow members to (1) rescind their contracts within a certain period of time, (2) demand reimbursement of a portion of the contract price if the member dies during the term of the contract and/or (3) cancel their contracts in the event of disability or relocation. If a court holds that we have provided and are providing dating services of the type the dating services regulations are intended to regulate, we may be deemed to be out of compliance and required to comply with regulations associated with the dating services industry and be liable for any damages as a result of our past non-compliance.
 
 
6

 
 
Our market is characterized by rapid technological change, and if we fail to develop and market new technologies rapidly, we may not become profitable in the future.
 
The Internet and the social networking application industry are characterized by rapid technological change that could render our existing applications and websites obsolete. The development of our websites entails significant technical and business risks. We may be unable to successfully use new technologies effectively or adapt our websites to customer requirements or needs. If our management is unable, for technical, legal, financial, or other reasons, to adapt in a timely manner in response to changing market conditions or customer requirements, we may never become consistently profitable, which may result in the loss of all or part of your investment.

Interruption or failure of our programming code, servers, or technological infrastructure could hurt our ability to effectively provide our products and services, which could damage our reputation and harm our operating results.

The availability of our services depends on the continuing operation of our programming code, servers and technological infrastructure. Any damage to, or failure of, our systems could result in interruptions in our service, which could reduce our revenue and damage our brand. Our systems are vulnerable to damage or interruption from terrorist attacks, floods, fires, power loss, telecommunications failures, computer viruses, computer denial of service attacks or other attempts to harm our systems. Our data centers are subject to break-ins, sabotage and intentional acts of vandalism and to potential disruptions if the operators of these facilities have financial difficulties. Some of our systems are not fully redundant, and our disaster recovery planning cannot account for all eventualities. The occurrence of a natural disaster, a decision to close an information technology facility we are using without adequate notice, or other unanticipated problems at our data centers could result in lengthy interruptions in our service.
 
If we are unable to protect our intellectual property rights, we may be unable to compete with competitors developing similar technologies.
 
Our success and ability to compete are often dependent upon development of software technology for our applications and websites. While we rely on copyright, trade secret and trademark law to protect our technology, we believe that factors such as the technological and creative skills of our personnel, new service developments, frequent enhancements or our services and reliable maintenance are more essential to establishing a technology leadership position. There can be no assurance that others will not develop technologies that are similar or superior to our technology. Despite our efforts to protect our proprietary rights, unauthorized parties may attempt to copy or otherwise obtain and use our technology, making it more difficult for us to compete.
 
If we are subject to intellectual property infringement claims, it could cause us to incur significant expenses, pay substantial damages and prevent service delivery.
 
Third parties may claim that our products or services infringe or violate their intellectual property rights. Any such claims could cause us to incur significant expenses and, if successfully asserted against us, could require that we pay substantial damages and prevent us from using licensed technology that may be fundamental to our business service delivery. Even if we were to prevail, any litigation regarding intellectual property could be costly and time-consuming and divert the attention of our management and key personnel from our business operations. We may also be obligated to indemnify our business partners in any such litigation, which could further exhaust our resources. Furthermore, as a result of an intellectual property challenge, we may be prevented from providing some of our services unless we enter into royalty, license or other agreements. We may not be able to obtain such agreements at all or on terms acceptable to us, and as a result, we may be precluded from offering some of our products and services.
 
If we are unable to create secure sites and protect our technology from hackers, it could cause significant expenses and loss of revenue and adversely affect our business.
 
As we continue to grow and generate publicity, we become open to increased risk of attack from hackers against our applications, servers and websites.  Any successful security breaches against our products could have detrimental effects, including temporary or permanent loss of revenue, depending upon how quickly we are able to identify and resolve the issue.  Security measures to guard against such attacks could prove costly.  If we are unable to create sufficient security measures, we may face significant expenses and loss of revenue and adverse effects to our business.
 
 
7

 

 
If there are changes in regulations regarding privacy and protection of user data, or we fail to comply with such laws, we may face claims brought against us under any of these regulations and it could adversely affect our business.
 
Federal, state and international laws and regulations govern the collection, use, retention, sharing and security of data that we receive from and about our users. Any failure, or perceived failure, by us to comply with regulations of privacy and protection of user data or with any data-related consent orders, Federal Trade Commission requirements or orders, or other federal, state, or international privacy or consumer protection-related laws, regulations or industry self-regulatory principles could result in proceedings or actions against us by governmental entities or others, which could potentially have an adverse effect on our business. As a company that provides services over the Internet, we may be subject to a claim or class-action lawsuit brought under any of these or future laws governing online services. The successful assertion of these claims against us could result in potentially significant monetary damages, diversion of management resources and require us to make significant payments and incur substantial legal expenses.  Even if a claim is not successfully pursued to judgment by a claimant, we may still incur substantial legal expenses defending against such a claim.  In either situation, any claims with respect to violation of privacy or user data brought against us may adversely affect our business.

We hold a limited amount of insurance coverage, and if we were found liable for an uninsured claim, or claim in excess of our insurance limits, we may be forced to expend significant capital to resolve the uninsured claim.
 
We contract for a limited amount of insurance to cover potential risks and liabilities, including, but not limited to, Director and Officer insurance and Error and Omission insurance. If we decide to obtain additional insurance coverage in the future, it is possible that: (1) we may not be able to get enough insurance to meet our needs; (2) we may have to pay very high premiums for the additional coverage; (3) we may not be able to acquire any insurance for certain types of business risk; or (4) we may have gaps in coverage for certain risks. This could leave us exposed to potential uninsured claims for which we could have to expend significant amounts of capital resources. Consequently, if we were found liable for a significant uninsured claim in the future, we may be forced to expend a significant amount of our operating capital to resolve the uninsured claim.
 
If government regulation or taxation of the online dating, social networking or Internet industries increase, it may adversely affect our business and operating results.
 
We may be subject to additional operating restrictions and government regulations in the future. Companies engaging in e-commerce, online dating, social networking and related businesses face uncertainty related to future government regulation of the Internet. Due to the rapid growth and widespread use of the Internet, federal and state governments are enacting and considering various laws and regulations relating to the Internet in areas including, but not limited to, billing practices, online safety and taxation. Furthermore, the application of existing laws and regulations to Internet companies remains somewhat unclear. Our business and operating results may be negatively affected by new laws, and such existing or new regulations may expose us to substantial compliance costs and liabilities and may impede the growth in use of the Internet. In addition, sales tax for business conducted on the Internet is rapidly being legislated in the various states and abroad.  We may incur substantial liabilities or expenses necessary to comply with these laws and regulations or penalties for any failure to comply.
 
We are exposed to risks associated with credit card processors and related merchant account approvals that, if not properly addressed, could increase our operating expenses or preclude us from accepting credit cards as a method of payment.
 
We depend on the ability to accept credit and debit card payments from our customers and the related merchant account approval to process subscription payments.  Our reliance on credit card and related merchant account approvals exposes us to fraud and credit card chargebacks. We have suffered losses and may continue to suffer losses as a result of subscription orders placed with fraudulent credit card data as well as users who chargeback their purchases. Under current credit card practices, a merchant is liable for fraudulent credit card transactions when, as is the case with the transactions we process, that merchant does not obtain a cardholder’s signature. Our failure to adequately control fraudulent credit card transactions and keep our chargebacks under an acceptable threshold would result in significantly higher credit card-related costs and, therefore, increase our operating expenses or even preclude us from accepting credit cards as a means of payment.
 
 
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Risks Related to Our Common Stock

Our common stock is considered a “penny stock,” which is subject to restrictions on marketability, so you may not be able to sell your shares.
 
Because our common stock generally trades below a certain price threshold, our common stock is considered a “penny stock” under rules adopted by the Securities and Exchange Commission (the “SEC”). As a penny stock, our common stock is subject to SEC rules that require brokers to provide extensive disclosure to their customers prior to executing trades in penny stocks.
 
Section 15(g) of the Securities Exchange Act of 1934, as amended (the “Exchange Act”), and Rule 15g-2 promulgated thereunder by the SEC require broker-dealers dealing in penny stocks to provide potential investors with a document disclosing the risks of penny stocks and to obtain a manually signed and dated written receipt of the document before effecting any transaction in a penny stock for the investor’s account. Potential investors in our common stock are urged to obtain and read such disclosure carefully before purchasing any shares that are deemed to be “penny stocks.” Moreover, Rule 15g-9 requires broker-dealers in penny stocks to approve the account of any investor for transactions in such stocks before selling any penny stock to that investor. This procedure requires the broker-dealer to: (i) obtain from the investor information concerning his or her financial situation, investment experience and investment objectives; (ii) reasonably determine, based on that information, that transactions in penny stocks are suitable for the investor and that the investor has sufficient knowledge and experience as to be reasonably capable of evaluating the risks of penny stock transactions; (iii) provide the investor with a written statement setting forth the basis on which the broker-dealer made the determination in (ii) above; and (iv) receive a signed and dated copy of such statement from the investor, confirming that it accurately reflects the investor’s financial situation, investment experience and investment objectives. Compliance with these requirements may make it more difficult for holders of our common stock to resell their shares to third parties or to otherwise dispose of them in the market or otherwise.

The broker or dealer must also deliver, prior to any transaction in a penny stock, a disclosure schedule prepared by the SEC relating to the penny stock market, which, in highlight form, sets forth:
 
  
The basis on which the broker or dealer made the suitability determination, and
  
That the broker or dealer received a signed, written agreement from the investor prior to the transaction.
 
Disclosure also has to be made about the risks of investing in penny stocks in both public offerings and in secondary trading and commissions payable to both the broker-dealer and the registered representative, current quotations for the securities and the rights and remedies available to an investor in cases of fraud in penny stock transactions. Finally, monthly statements have to be sent disclosing recent price information for the penny stock held in the account and information on the limited market in penny stocks.
 
Because of these regulations, broker-dealers may not wish to engage in the above-referenced necessary paperwork and disclosures and/or may encounter difficulties in their attempt to sell shares of our common stock, which may affect the ability of selling shareholders or other holders to sell their shares in any secondary market and have the effect of reducing the level of trading activity in any secondary market. These additional sales practice and disclosure requirements could impede the sale of our common stock, if and when our common stock becomes publicly traded. In addition, the liquidity for our common stock may decrease, with a corresponding decrease in the price of our common stock. These disclosure requirements may cause a reduction in the trading activity of our common stock, which in all likelihood would make it difficult for our shareholders to sell their securities. Our common stock, in all probability, will be subject to such penny stock rules for the foreseeable future and our stockholders will, in all likelihood, find it difficult to sell their common stock.

There can be no assurance that our common stock will qualify for an exemption from the penny stock rule. In any event, even if our common stock were exempt from the penny stock rule, we would remain subject to Section 15(b)(6) of the Exchange Act, which gives the SEC the authority to restrict any person from participating in a distribution of a penny stock if the SEC determines that such a restriction would be in the public interest.

 
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Clifford Lerner’s control may prevent you from causing a change in the course of our operations and may affect the price of our common stock.
 
Clifford Lerner beneficially owns approximately 61% of our common stock as of March 24, 2011. Accordingly, for as long as Mr. Lerner continues to own more than 50% of our common stock, he will be able to elect our entire board of directors, control all matters that require a stockholder vote (such as mergers, acquisitions and other business combinations) and exercise a significant amount of influence over our management and operations. As such, the value attributable to the right to vote is limited.
 
This concentration of ownership could result in a reduction in value to the common shares you own because of the ineffective voting power, and could have the effect of preventing us from undergoing a change of control in the future.

Future sales of shares of our common stock by Clifford Lerner may negatively affect our stock price and our ability to raise funds in new stock offerings.
 
Clifford Lerner beneficially owns 25,500,000 shares of our common stock. Sales of our common stock by Mr. Lerner into the public market could decrease the prevailing market price of our common stock. If this is the case, investors in our shares of common stock may be forced to sell such shares at prices below the price they paid for their shares. In addition, a decreased market price may result in potential future investors losing confidence in us and failing to provide needed funding. This will have a negative effect on our ability to raise equity capital in the future.

The large number of recently issued shares to investors and shares issuable upon exercise of warrants could have an adverse affect on our stock price.

In a January 2011 private placement, the Company issued 4,250,000 shares of common stock, 2,125,000 warrants to investors with an exercise price of $2.50 per share and 255,000 warrants to the placement agent with an exercise price of $2.50 per share. The securities were sold subject to a registration rights agreement, which mandates that we use our best efforts to register the resale of such shares of common stock and common stock underlying the warrants with the SEC. Although not yet declared effective, on February 11, 2011, we filed a registration statement with the SEC to register the resale of such shares of common stock and the shares of common stock underlying the warrants.  If the registration statement is declared effective, the investors will have the ability to sell such shares without any volume restrictions.

The price of our common stock could significantly decline if such investors elect to sell their shares in the market at times when there are not a corresponding number of investors willing to purchase such shares at the asked prices. In addition, the large number of outstanding warrants may cause an overhang on the market and prevent the market price of the common stock from rising above the warrant exercise price.
 
We may obtain additional financing by the issuance of additional shares, which would dilute the ownership of our shareholders.
 
We may need to raise funds through either debt or sale of our shares in order to achieve our business goals. Although there are no present plans, agreements, commitments or undertakings with respect to the sale of additional shares or securities convertible into any such shares by us, any shares issued would further dilute the percentage ownership held by the stockholders.
 
At times when our common stock is thinly traded, you may be unable to sell at or near ask prices or at all if you need to liquidate your shares, and the price of our common stock may be volatile.
 
In the past, the shares of our common stock were thinly-traded on the Over the Counter Bulletin Board (the “OTC Bulletin Board”), meaning that the number of persons interested in purchasing our common shares at or near ask prices at any given time may be relatively small or non-existent. This situation is attributable to a number of factors, including the fact that we are a small company that is relatively unknown to stock analysts, stock brokers, institutional investors and others in the investment community that generate or influence sales volume, and that even if we came to the attention of such persons, they tend to be risk-averse and would be reluctant to follow an unproven, early stage company such as ours or purchase or recommend the purchase of our shares until such time as we became more seasoned and viable. As a consequence, there may be periods of several days or more when trading activity in our shares is minimal or non-existent, as compared to a seasoned issuer that has a large and steady volume of trading activity that will generally support continuous sales without an adverse effect on share price. A broader or more active public trading market for our common shares may not develop or be sustained, and the current trading level of our common stock may not be sustained. Due to these conditions, you may be unable to sell your shares at or near ask prices or at all if you need money or otherwise desire to liquidate your shares.
 
 
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Because of the limited trading market expected to develop for our common stock, and because of the possible price volatility, you may not be able to sell your shares of common stock when you desire to do so. The inability to sell your shares in a rapidly declining market may substantially increase your risk of loss because of such illiquidity and because the price for our common stock may suffer greater declines because of its price volatility.
 
Certain factors, some of which are beyond our control, may cause our share price to fluctuate significantly, including the following:
  
  
Variations in our quarterly operating results;
  
Loss of a key relationship or failure to complete significant transactions;
  
Additions or departures of key personnel; and
  
Fluctuations in stock market price and volume.
 
Additionally, in recent years the stock market in general, and the over-the-counter markets in particular, have experienced extreme price and volume fluctuations. In some cases, these fluctuations are unrelated or disproportionate to the operating performance of the underlying company. These market and industry factors may materially and adversely affect our stock price, regardless of our operating performance. In the past, class action litigation often has been brought against companies following periods of volatility in the market price of those companies’ common stock. If we become involved in this type of litigation in the future, it could result in substantial costs and diversion of management attention and resources, which could have a further negative effect on your investment in our stock.

If we fail to remain current on our reporting requirements, we could be removed from the OTC Bulletin Board, which would limit the ability of broker-dealers to sell our securities and the ability of shareholders to sell their securities in the secondary market.

Companies trading on the OTC Bulletin Board must be reporting issuers under Section 12 of the Exchange Act and, to maintain price quotation privileges on the OTC Bulletin Board, must be current in their quarterly and annual reports due under Section 13 of the Exchange Act. If we fail to remain current on our reporting requirements, we could be removed from the OTC Bulletin Board. As a result, the market liquidity for our securities could be adversely affected by limiting the ability of broker-dealers to sell our securities and the ability of shareholders to sell their securities in the secondary market.

We do not expect to pay dividends and investors should not buy our common stock expecting to receive dividends.
 
We have not paid any dividends on our common stock in the past, and do not anticipate that we will declare or pay any dividends in the foreseeable future. Consequently, investors will only realize an economic gain on their investment in our common stock if the price appreciates. Investors should not purchase our common stock expecting to receive cash dividends. Because we do not pay dividends, and there may be limited trading, investors may not have any manner to liquidate or receive any payment on their investment. Therefore, our failure to pay dividends may cause investors to not see any return on your investment even if we are successful in our business operations. In addition, because we do not pay dividends we may have trouble raising additional funds which could affect our ability to expand our business operations.

Item 1B.       Unresolved Staff Comments

Not applicable.
 
 
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Item 2.           Properties.

Our principal executive office is located at 363 Seventh Ave, 13th Floor, New York, NY 10001.  We currently do not own any real property.  We lease 3,400 square feet of office space and our office rental expense on a monthly basis is approximately $8,710.  The office lease term runs through March 2012.  Our wholly owned subsidiaries, SNAP Mobile Limited and eTwine Inc., also operate out of our principal executive office.

Item 3.           Legal Proceedings .
 
To the best of our knowledge, there are no material pending legal proceedings to which we are a party or of which any of our property is the subject.  

Item 4.           Removed and Reserved .
 
 
 
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PART II
 
Item 5.           Market for Registrant’s Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities.

Market Information

Our common stock has traded on the OTC Bulletin Board under the symbol “STVI.OB” since December 14, 2007.  We changed our symbol in conjunction with our name change to “SNAP Interactive, Inc.” at that time.  The following table sets forth the range of the quarterly high and low bid price information for the fiscal years ended December 31, 2010 and 2009 as reported by the OTC Bulletin Board.
 
   
High Bid* ($)
 
 
Low Bid* ($)
 
2010
               
Fourth quarter
 
$
3.20
     
0.12
 
Third quarter
 
$
0.48
     
0.10
 
Second quarter
 
0.33
     
0.10
 
First quarter
 
0.47
     
0.10
 
                 
2009
               
Fourth quarter
 
0.15
     
0.07
 
Third quarter
 
0.17
     
0.07
 
Second quarter
 
0.27
     
0.13
 
First quarter
 
0.35
     
0.17
 

* The quotations of the closing prices reflect inter-dealer prices, without retail mark-up, markdown or commission and are adjusted to reflect the 3-for-1 forward stock split of our common stock (effected as a stock dividend) that occurred in January 2010.
 
The market price of our common stock is subject to significant fluctuations in response to variations in our quarterly operating results, general trends in the market, and other factors, over many of which we have little or no control. In addition, broad market fluctuations, as well as general economic, business and political conditions, may adversely affect the market for our common stock, regardless of our actual or projected performance.

Holders

As of March 24, 2011, there were approximately 37 holders of record of our common stock. This does not reflect the number of persons or entities who held stock in nominee or street name through various brokerage firms.
 
Dividends

To date, we have not declared or paid any dividends on our common stock. We currently do not anticipate paying any cash dividends in the foreseeable future on our common stock. Although we intend to retain our earnings, if any, to finance the exploration and growth of our business, our Board of Directors has the discretion to declare and pay dividends in the future.
 
Payment of dividends in the future will depend upon our earnings, capital requirements, and any other factors that our Board of Directors deems relevant.
 
 
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Equity Compensation Plan Information
 
The following table provides information as of December 31, 2010 about compensation plans under which shares of our common stock may be issued to employees, executive officers or members of our Board of Directors upon the exercise of options, warrants or rights under all of our existing equity compensation plans.
 
 
 
Number of securities to be
issued upon exercise of
outstanding options,
warrants, and rights
 
Weighted-average exercise
price of outstanding
options, warrants and
rights
Number of securities
remaining available for
future issuance under equity
compensation plans
(excluding securities
reflected in column (a))
Plan category
(a)
(b)
(c)
Equity compensation plans approved by security holders
Equity compensation plans not approved by security holders
5,705,000
$0.23
Total
5,705,000
$0.23
 
In December 2008, our Board of Directors approved the Equity Incentive Compensation Plan and, in December 2010, terminated the plan as to all unallocated shares of common stock thereunder. The purpose of the Equity Incentive Compensation Plan was to provide an incentive to attract, retain and motivate employees, officers, directors, consultants and advisors with the ability to participate in our future performance. Under the Equity Incentive Compensation Plan, we were authorized to issue incentive stock options and non-qualified stock options. The Equity Incentive Compensation Plan was administered by our Board of Directors.  All options previously granted under the Equity Incentive Compensation Plan remained in full force and effect following the plan’s termination.
 
Item 6.           Selected Financial Data .

Not applicable.

Item 7.           Management’s Discussion and Analysis of Financial Condition and Results of Operations .

Overview

We develop, own and operate dating and social networking software applications that can be accessed by users on various social networking websites and platforms, such as Facebook, and iPhone users, as well as an online dating website and a location-based social networking application and website. Applications that we have created include AreYouInterested, WhoIsNear, Meet New People and Flirt With Me . Our portfolio of applications is designed to appeal to a broad base of Internet and iPhone users. We switched our leading application AreYouInterested from an advertising-based to a subscription-based revenue model in late 2009, and in 2010, we primarily generated revenue from subscription fees and premium sales on our AreYouInterested Facebook application and our AreYouInterested.com Internet website. As of March 24, 2011, we had approximately 84,000 active subscribers on AreYouInterested and in excess of 40 million total installations across all of our applications.

Our key operating performance highlights for 2010 include more than 16 million new installations of the AreYouInterested Facebook   application in 2010 and the development of the location-based service WhoIsNear , with a fully integrated web, mobile, iPhone and social networking application.
 
 
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Our key financial highlights for 2010 include:

  
Revenue increased 110% to $6,668,627 for 2010 compared to $3,170,725 for 2009;
  
Cost of revenue increased 11% to $1,581,332 for 2010 compared to $1,423,585 for 2009;
  
Deferred revenue at December 31, 2010 increased 589% to $1,937,915 compared to $281,049 at December 31, 2009; and
  
Net cash provided by operating activities increased 169% to $1,145,694 for 2010 compared to $426,230 for 2009.

Key Performance Indicators

Management believes that the following financial and operating measurements are key indicators of the strength of our business:

  
Subscription sales and revenue;
  
Subscriber retention rate; and
  
Website and application traffic.

How We Generate Revenue

In the fourth quarter of 2009, we implemented a subscription-based revenue model into our AreYouInterested Facebook application as well as AreYouInterested.com in order to generate additional revenue.  We had previously generated the majority of our revenue through advertisements placed on our products.  Since the beginning of 2010, subscription fees and premium sales have been our primary sources of revenue.  Our subscription-based offering on the AreYouInterested brand provides users with unlimited messaging, unlimited access to communicate with their matches, the ability to see who viewed their profile,  the ability to send an unlimited number of premium virtual gifts, and access to several other premium features.
 
We recognize revenue from monthly premium subscription fees in the month in which the services are provided. Revenues are presented net of refunds, credits and known credit card chargebacks.  Our subscriptions are currently offered in durations of one- three- and six-month terms.  Longer-term plans, those with durations longer than one month, are generally available at discounted monthly rates.  All subscription fees, however, are collected at the time of purchase regardless of the length of the subscription term.  Revenues from longer-term plans are recognized pro-rata over the subscription term.  Pursuant to our terms of service, most subscriptions automatically renew for periods of the same length as the original subscription term until subscribers terminate them.

We also recognize revenue from the direct sale of “points” over two months. Members can either purchase or earn points by performing activities, such as by browsing profiles, that can be used in exchange for accessing certain premium features on our applications. Determining whether the criteria for spending points has been satisfied often involves management making assumptions and judgments that may have an impact on the timing and amount of revenue we recognize in each period. At this time, we believe that our assumptions and judgments are fair and we will continue to monitor them in order to determine if there are significant changes in usage patterns.
 
We currently offer several different payment method options and maintain relationships with multiple payment processors in order to: (i) diversify our risk and reliance on a single payment processor, (ii) ensure competitive rates and (iii) offer our users as many payment options as possible.  We intend to research and explore relationships with multiple payment processors in the future.

Our Business Objectives

During 2011, our business objectives include: 

Upgrading and developing our AreYouInterested and WhoIsNear products with new features, enhancements and optimizations;
   
 
 
 
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Continuing to integrate and expand the relationship between the AreYouInterested Facebook application, AreYouInterested.com website and AreYouInterested iPhone application for a single user experience across all platforms;
   
Refining our marketing and statistical tracking tools on the AreYouInterested brand;
   
Determining whether to build new applications on social networking platforms and whether to develop and explore new mobile platforms and products; and
   
Identifying and exploring new opportunities that emerge in our rapidly evolving industry.
 
Results of Operations  — Fiscal Year Ended December 31, 2010 Compared to Fiscal Year Ended December 31, 2009

Revenues
 
Revenue increased to $6,668,627 for the year ended December 31, 2010 from $3,170,725 for the year ended December 31, 2009, an increase of $3,497,902.

We experienced an increase in revenue versus the previous year as a result of an increase in the amount of subscriptions sold in 2010 as compared to 2009 when the majority of our revenue was advertising revenue. Our revenue generated from subscription sales and advertising was $6,413,874 and $254,753, respectively, for the year ended December 31, 2010, compared to $133,439 and $3,037,286, for the year ended December 31, 2009.

Our revenue is primarily generated from subscription sales on the AreYouInterested brand.  Our revenue generated from subscription sales on the AreYouInterested brand was approximately $6,413,874 for the year ended December 31, 2010, compared to $133,439 for the year ended December 31, 2009.

As we continued developing our subscription model in 2010 and refined our marketing approach in order to buy traffic more effectively, we experienced quarterly increases in subscription sales for each quarter in 2010.

Cost of Revenue

Cost of revenue increased to $1,581,332 for the year ended December 31, 2010 from $1,423,585 for the year ended December 31, 2009, an increase of $157,747.  The increase in cost of revenue is primarily attributable to increased salary expenses due to expansion of our staff.

Operating Expenses
 
Operating expenses increased to $6,271,724 for the year ended December 31, 2010 from $1,831,918 for the year ended December 31, 2009, representing an increase of $4,439,806.  The increase in operating expenses is primarily attributable to a significant increase in advertising and marketing expenditures for user acquisition campaigns.  Other operating expenses include compensation expense, credit card processing fees, general and administrative expenses and professional fees.

Advertising and marketing expenses increased to $3,906,317 for the year ended December 31, 2010 from $306,140 for the year ended December 31, 2009, representing an increase of $3,600,177. The increase in advertising and marketing expenses was due to an increase in user acquisition campaigns, and we anticipate experiencing further increases in marketing expenses throughout the remainder of 2011.

Compensation expense increased to $1,108,137 for the year ended December 31, 2010 from $749,637 for the year ended December 31, 2009, representing an increase of $358,500.  The increase in compensation expense was due to primarily an increase in retention bonuses as well as an increase in staff and related payroll taxes.
   
General and administrative expenses increased to $1,097,918 for the year ended December 31, 2010 from $655,039 for the year ended December 31, 2009, representing an increase of $442,879.  The increase in general and administrative expenses is attributable to increased costs associated with the overall expansion of our business.
 
 
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Professional fees increased to $159,352 for the year ended December 31, 2010 from $121,102 for the year ended December 31, 2009, representing an increase of $38,250.  The increase in professional fees was due to increased legal and accounting requirements as a result of the overall expansion of our business and the transition to a subscription-based revenue model for our AreYouInterested offering. 
 
Net Loss
 
As a result of the foregoing, net loss increased to $1,167,070 for the year ended December 31, 2010 from a net loss of $101,919 for the year ended December 31, 2009, an increase in net loss of $1,065,151.
 
Liquidity and Capital Resources
 
We are currently financing our operations through cash generated by our recent financing, subscription fees received from our applications and online dating website, fees for premium features of our applications and revenues derived from advertisements purchased on our various applications.
 
As of December 31, 2010, we had $3,018,876 in cash. In January 2011, we raised net proceeds of approximately $8.0 million in cash through a private placement. See “Subsequent Event.” Historically, our working capital has been generated through operations. If we continue to grow and expand our operations, our need for working capital will increase. For the near-term, we do not anticipate being profitable because we intend to increase our acquisition costs related to marketing and advertising and through hiring additional employees, primarily programmers. We expect to finance our internal growth with cash on hand, cash provided from operations, borrowings, debt or equity offerings, or some combination thereof.
 
Our net loss for the year ended December 31, 2010 was $1,167,070.  Net cash provided by operating activities was $1,145,694 during year ended December 31, 2010 as compared to net cash provided by operating activities of $426,230 for the year ended December 31, 2009. Cash provided by operating activities for the year ended December 31, 2010 primarily consisted of, each as compared to the year ended December 31, 2009, an increase in deferred revenue of $1,656,866, an increase in accounts payable and accrued expenses of $424,082, an increase in credit card holdback receivable of $224,456 and a decrease in prepaid expenses of $149,111. We intend to use our cash to continue to fund our operations going forward.

We currently have no lines of credit or access to short-term borrowing or financing options.  We are using cash generated from operations as well as cash from our private placement to fund our operations.  Because we have no lines of credit from which to finance operations, we would be dependent upon third-party financing or obtaining such borrowing facilities if the need for immediate capital were to arise. For additional information, see Note 5 to our consolidated financial statements “Convertible Notes Payable—Related Party” .

Subsequent Event

On January 19, 2011 (the “Closing Date”), for total subscription proceeds of $8,500,000 (the “Offering”) we issued: (i) 4,250,000 shares of our common stock (the “Purchased Shares”) and (ii) warrants (the “Warrants”) exercisable into 2,125,000 shares of common stock (the “Warrant Shares”) at an exercise price of $2.50 per share to certain accredited investors (the “Investors”).  The number of shares of common stock to be received upon the exercise of the Warrants and the exercise price of the Warrants are subject to adjustment for stock splits, stock dividends, stock combinations and other similar transactions that occur after the Closing Date.
 
In connection with the Offering, we granted the Investors registration rights pursuant to a registration rights agreement dated as of the Closing Date (the “Registration Rights Agreement”). Under the Registration Rights Agreement, we agreed to register (i) all of the Purchased Shares; (ii) the Warrant Shares issuable upon exercise of the Warrants and (iii) any securities issued or then issuable upon any stock split, dividend or other distribution, recapitalization or similar event with respect to the foregoing on a registration statement or registration statements to be initially filed with the SEC within thirty (30) calendar days after the Closing Date and to use our best efforts to have it declared effective within 120 calendar days after the Closing Date or within such other applicable Effectiveness Date (as defined in the Registration Rights Agreement).
 
 
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In connection with the Offering, we paid a cash placement agency fee to the placement agent equal to 6% of the aggregate purchase price paid by the Investors.  We further agreed to pay a cash fee equal to 6% of the aggregate cash exercise price received by us upon the exercise of the Warrants.

For a more detailed description of the Offering, please refer to our Current Report on Form 8-K filed with the SEC the on January 21, 2011.
 
Critical Accounting Policies

We account for income taxes under the Financial Accounting Standards Board (“FASB”) Accounting Standards Codification (“ASC”) No. 740, Income Taxes (“ASC 740”).  Under ASC 740, deferred tax assets and liabilities are recognized for the future tax consequences attributable to differences between the financial statement carrying amounts of existing assets and liabilities and their respective tax bases.  Deferred tax assets and liabilities are measured using enacted tax rates expected to apply to taxable income in the years in which those temporary differences are expected to be recovered or settled.  Under ASC 740, the effect on deferred tax assets and liabilities of a change in tax rates is recognized in income in the period that includes the enactment date.

In accordance with ASC No. 718, Compensation – Stock Compensation (“ASC 718”), we measure the compensation costs of share-based compensation arrangements based on the grant-date fair value and recognize the costs in the financial statements over the period during which employees are required to provide services. Share-based compensation arrangements include stock options, restricted share plans, performance-based awards, share appreciation rights and employee share purchase plans.  As such, compensation cost is measured on the date of grant at their fair value.  Such compensation amounts, if any, are amortized over the respective vesting periods of the option grant.  We apply this statement prospectively. Equity instruments (“instruments”) issued to other than employees are recorded on the basis of the fair value of the instruments, as required by ASC 718.  ASC No. 505, Equity Based Payments to Non-Employees (“ASC 505”)   defines the measurement date and recognition period for such instruments.  In general, the measurement date is (a) when a performance commitment, as defined, is reached or (b) when the earlier of (i) the non-employee performance is complete or (ii) the instruments are vested. The measured value related to the instruments is recognized over a period based on the facts and circumstances of each particular grant as defined in the ASC 505.

Recent Accounting Pronouncements

In October 2009, the FASB issued an Accounting Standard Update (“ASU”) No. 2009-13, which addresses the accounting for multiple-deliverable arrangements to enable vendors to account for products or services separately rather than as a combined unit and modifies the manner in which the transaction consideration is allocated across the separately identified deliverables. The ASU significantly expands the disclosure requirements for multiple-deliverable revenue arrangements. The ASU will be effective for the first annual reporting period beginning on or after June 15, 2010, and may be applied retrospectively for all periods presented or prospectively to arrangements entered into or materially modified after the adoption date. Early adoption is permitted, provided that the guidance is retroactively applied to the beginning of the year of adoption. The Company does not expect the adoption of ASU No. 2009-13 to have any effect on its financial statements upon its required adoption on January 1, 2011. 
 
In January 2010, the FASB issued guidance to amend the disclosure requirements related to recurring and nonrecurring fair value measurements. The guidance requires new disclosures on the transfers of assets and liabilities between Level 1 (quoted prices in active market for identical assets or liabilities) and Level 2 (significant other observable inputs) of the fair value measurement hierarchy, including the reasons and the timing of the transfers. Additionally, the guidance requires a roll forward of activities on purchases, sales, issuance, and settlements of the assets and liabilities measured using significant unobservable inputs (Level 3 fair value measurements). The guidance became effective for the Company with the reporting period beginning January 1, 2010, except for the disclosure on the roll forward activities for Level 3 fair value measurements, which will become effective for the Company with the reporting period beginning July 1, 2011. Other than requiring additional disclosures, adoption of this new guidance did not have a material impact on the Company’s financial statements.
 
In February 2010, the FASB issued ASU No. 2010-9, which amends the Subsequent Events Topic of the Accounting Standards Codification to eliminate the requirement for public companies to disclose the date through which subsequent events have been evaluated. The Company will continue to evaluate subsequent events through the date of the issuance of the financial statements; however, consistent with the guidance, this date will no longer be disclosed. ASU 2010-09 does not have any impact on the Company’s results of operations, financial condition or liquidity.
 
 
18

 
 
In April 2010, the FASB issued ASU No. 2010-13—Effect of Denominating the Exercise Price of a Share-Based Payment Award in the Currency of the Market in Which the Underlying Equity Security Trades as codified in ASC 718—Compensation—Stock Compensation (“ASC 718”). This update addresses the classification of a share-based payment award with an exercise price denominated in the currency of a market in which the underlying equity security trades. ASC 718 is amended to clarify that a share-based payment award with an exercise price denominated in the currency of a market in which a substantial portion of the entity’s equity securities trades shall not be considered to contain a market, performance, or service condition. Therefore, such an award is not to be classified as a liability if it otherwise qualifies as equity classification. This ASU is effective for fiscal years beginning on or after December 15, 2010, and the Company is currently assessing the potential impact, if any, the adoption of this update may have on its Consolidated Financial Statements.
 
Off-Balance Sheet Arrangements
 
As of December 31, 2010, we did not have any off-balance sheet arrangements.
 
 
Not applicable. 
 
 
 
 
19

 
 

CONTENTS

PAGE
F-2
REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
     
PAGE
F-3
CONSOLIDATED BALANCE SHEETS AS OF DECEMBER 31, 2010 AND 2009
     
PAGE
F-4
CONSOLIDATED STATEMENTS OF OPERATIONS FOR THE YEARS ENDED DECEMBER 31, 2010 AND 2009
     
PAGE
F-5
CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS’ EQUITY FOR THE YEARS ENDED DECEMBER 31, 2010 AND 2009.
     
PAGE
F-6/F-7
CONSOLIDATED STATEMENTS OF CASH FLOWS FOR THE YEARS ENDED DECEMBER 31, 2010 AND 2009
     
PAGES
F-8/
F-24
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
 
 
 
F-1

 
 

 
REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

To the Board of Directors of:
Snap Interactive, Inc. and Subsidiaries
 
We have audited the accompanying consolidated balance sheets of Snap Interactive, Inc. and Subsidiaries as of December 31, 2010 and 2009, and the related statements of operations, changes in stockholders’ equity and cash flows for the years ended December 31, 2010 and 2009. These financial statements are the responsibility of the Company’s management. Our responsibility is to express an opinion on these financial statements based on our audits.
 
We conducted our audits in accordance with the standards of the Public Company Accounting Oversight Board (United States). Those standards require that we plan and perform the audits to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audits provide a reasonable basis for our opinion.
 
In our opinion, the consolidated financial statements referred to above present fairly in all material respects, the consolidated financial position of Snap Interactive, Inc. and Subsidiaries as of December 31, 2010 and 2009 and the results of its operations and its cash flows for the years ended December 31, 2010 and 2009 in conformity with accounting principles generally accepted in the United States of America.
 
 
WEBB & COMPANY, P.A.
Certified Public Accountants

Boynton Beach, Florida
March 31, 2011
 
 
 
F-2

 
 
Snap Interactive, Inc. and Subsidiaries
 
Consolidated Balance Sheets
 
         
             
ASSETS
 
             
             
             
             
   
December 31, 2010
   
December 31, 2009
 
Current Assets
           
Cash
  $ 3,018,876     $ 1,895,449  
Credit Card Holdback Receivable
    239,452       14,996  
Accounts Receivable, net
    185,585       322,351  
Prepaid Expenses
    74,260       223,372  
  Total Current Assets
    3,518,173       2,456,168  
                 
Equipment and Intangibles, net
    89,506       86,633  
                 
Other Assets
               
Security Deposit
    18,185       33,435  
Total Other Assets
    18,185       33,435  
                 
Total Assets
  $ 3,625,864     $ 2,576,236  
                 
                 
LIABILITIES AND STOCKHOLDERS' EQUITY
 
                 
                 
Current Liabilities
               
     Accounts Payable and Accrued Expenses
  $ 953,651     $ 529,570  
     Deferred Revenue
    1,937,915       281,049  
     Settlement Payable
    -       23,238  
     Convertible Notes Payable - Related Party
    45,486       45,486  
     Accrued Interest - Related Party
    24,115       21,423  
Total Current Liabilities
    2,961,167       900,766  
                 
Commitments and Contingencies
               
                 
Stockholders' Equity
               
     Preferred Stock, $0.001 par value, 10,000,000 shares authorized, none
               
        issued and outstanding
    -       -  
     Common Stock,  $0.001 par value; 100,000,000 shares authorized,
               
33,210,756 and 32,628,969 shares issued and outstanding, respectively
    33,211       32,629  
     Additional Paid-In Capital
    2,730,659       2,568,652  
     Accumulated Deficit
    (2,091,570 )     (924,500 )
     Less: Deferred Compensation
    (7,603 )     (1,311 )
Total Stockholders' Equity
    664,697       1,675,470  
                 
Total Liabilities and Stockholders' Equity
  $ 3,625,864     $ 2,576,236  
                 
 
See accompanying notes to consolidated financial statements
 
 
 
F-3

 

Snap Interactive, Inc. and Subsidiaries
 
Consolidated Statements of Operations
 
             
             
       
   
For the Year Ended
 
   
December 31, 2010
   
December 31, 2009
 
             
 Revenue
  $ 6,668,627     $ 3,170,725  
                 
 Cost of Revenue
    1,581,332       1,423,585  
                 
 Gross Profit
    5,087,295       1,747,140  
                 
Operating Expenses
               
Compensation expense
    1,108,137       749,637  
Professional fees
    159,352       121,102  
Advertising and marketing expense
    3,906,317       306,140  
General and administrative
    1,097,918       655,039  
Total Operating Expenses
    6,271,724       1,831,918  
                 
Loss from Operations
    (1,184,429 )     (84,778 )
                 
Other Income (Expense)
               
Interest Expense
    (3,732 )     (4,831 )
Other Income
    12,892       22,404  
Interest Income
    8,199       16,269  
Total Other Income (Expense)
    17,359       33,842  
                 
Loss Before Provision For Income Taxes
    (1,167,070 )     (50,936 )
                 
Provision for Income Taxes
    -       (50,983 )
                 
Net Loss
  $ (1,167,070 )   $ (101,919 )
                 
Net Loss Per Share  - Basic
    (0.04 )     (0.00 )
                 
Net Loss Per Share  - Diluted
    (0.04 )     (0.00 )
                 
Weighted average number of shares outstanding
               
  during the period - Basic
    33,053,030       32,479,746  
                 
Weighted average number of shares outstanding
               
  during the period - Diluted
    33,053,030       32,479,746  
                 
See accompanying notes to consolidated financial statements
 
 
 
F-4

 
 
Snap Interactive, Inc. and Subsidiaries
 
Consolidated Statements of Changes in Stockholders' Equity
 
For the year ended December 31, 2010
 
                                                 
                                                 
   
Preferred Stock
   
Common stock
                         
   
$0.001 Par Value
   
$0.001 Par Value
   
Additional
               
Total
 
                           
paid-in
   
Accumulated
   
Deferred
   
Stockholders'
 
         
Amount
   
Shares
   
Amount
   
capital
   
Deficit
   
Compensation
   
Equity
 
                                                 
Balance, for the year ended December 31, 2008
    -     $ -       32,101,185     $ 32,101     $ 2,346,995     $ (822,581 )   $ (32,284 )   $ 1,524,231  
                                                                 
Deferred compensation realized
    -       -       -       -       -       -       45,330       45,330  
                                                                 
Stock options granted for services
    -       -       -       -       70,893       -       -       70,893  
                                                                 
Share based compensation
    -       -       -       -       67,079       -       -       67,079  
                                                                 
Shares issued for services
    -       -       482,784       483       68,880       -       (14,357 )     55,006  
                                                                 
Shares issued for domain name
    -       -       45,000       45       14,805       -       -       14,850  
                                                                 
Net Income,  for the year ended December 31, 2009
    -       -       -       -       -       (101,919 )     -       (101,919 )
                                                                 
Balance, December 31, 2009
    -       -       32,628,969       32,629       2,568,652       (924,500 )     (1,311 )     1,675,470  
                                                                 
Deferred compensation realized
    -       -       -       -       -       -       1,311       1,311  
                                                                 
Stock options granted for services
    -       -       -       -       49,293       -       -       49,293  
                                                                 
Share based compensation
    -       -                       25,243       -       -       25,243  
                                                                 
Shares issued for services to third parties
    -       -       300,000       300       74,700       -       (7,603 )     67,397  
                                                                 
Shares issued for services to employees
    -       -       281,787       282       12,771       -       -       13,053  
                                                                 
Net Loss, for the year ended December 31, 2010
    -       -       -       -       -       (1,167,070 )     -       (1,167,070 )
                                                                 
Balance, December 31, 2010
    -     $ -       33,210,756     $ 33,211     $ 2,730,659     $ (2,091,570 )   $ (7,603 )   $ 664,697  
 
 
 
 
See accompanying notes to consolidated financial statements
 
 
 
F-5

 
 
Snap Interactive, Inc. and Subsidiaries
Consolidated Statements of Cash Flows
             
             
             
   
For the Year Ended December 31,
 
   
2010
   
2009
 
Cash Flows From Operating Activities:
           
Net Loss
  $ (1,167,070 )   $ (101,919 )
  Adjustments to reconcile net loss to net cash provided by operations
               
    Depreciation and amortization
    18,674       19,649  
    Stock based compensation
    156,297       238,300  
    Loss on disposal of assets
    720       -  
    (Increase) Decrease in:
               
       Credit card holdback receivable
    (224,456 )     (14,996 )
       Accounts receivable
    136,766       64,156  
       Prepaid expense
    149,111       (222,974 )
       Security deposit
    15,250       (14,684 )
    Increase (Decrease) in:
               
       Accounts payable and accrued expenses
    424,082       196,845  
       Deferred revenue
    1,656,866       281,049  
       Settlement payable
    (23,238 )     (21,888 )
       Accrued interest payable - related party
    2,692       2,692  
Net Cash Provided by Operating Activities
    1,145,694       426,230  
                 
Cash Flows From Investing Activities:
               
Purchase of Fixed Assets and Domain Name
    (22,267 )     (60,135 )
Net Cash Used In Investing Activities
    (22,267 )     (60,135 )
                 
Net Cash Provided By Financing Activities
    -       -  
                 
Net Increase in Cash
    1,123,427       366,095  
                 
Cash at Beginning of Period
    1,895,449       1,529,354  
                 
Cash at End of Period
  $ 3,018,876     $ 1,895,449  
                 
 
See accompanying notes to consolidated financial statements
 
 
 
F-6

 
 
 
Supplemental disclosure of cash flow information:
               
                 
Cash paid for interest
  $ 860     $ 2,112  
Cash paid for taxes
  $ 17,275     $ 200,680  
                 
Supplemental disclosure of non-cash investing and financing activities:
               
                 
45,000 shares of common stock with a fair value of $14,850 were issued during the year ended December 31, 2010 for a domain name.
 
See accompanying notes to consolidated financial statements
 
 
F-7

 
 
SNAP INTERACTIVE, INC. AND SUBSIDIARIES
 
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
 
DECEMBER 31, 2010 AND 2009
 
  NOTE 1 - ORGANIZATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
 
(A) Organization
 
Snap Interactive, Inc. (“the Company”) was incorporated under the laws of the State of Delaware on July 19, 2005.  eTwine, Inc. was incorporated under the laws of the State of New York on May 7, 2004.  Snap Mobile Limited is a United Kingdom corporation, and was incorporated on September 10, 2009.
 
The Company was organized to operate an online dating and social networking website that is proactive in understanding the singles environment.
 
(B) Principles of Consolidation
 
The accompanying 2010 and 2009 consolidated financial statements include the accounts of Snap Interactive, Inc. and its wholly owned subsidiaries, eTwine, Inc. and Snap Mobile Limited.  All intercompany accounts have been eliminated in the consolidation.
 
(C) Use of Estimates
 
In preparing financial statements in conformity with generally accepted accounting principles, management is required to make estimates and assumptions that affect the reported amounts of assets and liabilities and the disclosure of contingent assets and liabilities at the date of the financial statements and revenues and expenses during the reported period.  Actual results could differ from those estimates.

Our most significant estimates are for potential credit card chargebacks and refunds based on our historical chargeback and refund experience.  We evaluate our estimates on an ongoing basis. Actual results may differ from these estimates under different assumptions or conditions.  Sales are reduced by the amount of these estimates.
 
(D) Cash and Cash Equivalents
 
For purposes of the cash flow statements, the Company considers all highly liquid investments with original maturities of three months or less at the time of purchase to be cash equivalents.
 
(E) Income Taxes
 
The Company accounts for income taxes under the Financial Accounting Standards Board (“FASB”) Accounting Standards Codification (“ASC”) No. 740, Income Taxes (“ASC 740”).  Under ASC 740, deferred tax assets and liabilities are recognized for the future tax consequences attributable to differences between the financial statement carrying amounts of existing assets and liabilities and their respective tax bases.  Deferred tax assets and liabilities are measured using enacted tax rates expected to apply to taxable income in the years in which those temporary differences are expected to be recovered or settled.  Under ASC 740, the effect on deferred tax assets and liabilities of a change in tax rates is recognized in income in the period that includes the enactment date.

 
F-8

 
 
SNAP INTERACTIVE, INC. AND SUBSIDIARIES
 
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
 
DECEMBER 31, 2010 AND 2009
 
             
             
   
Years Ended December 31,
 
   
2010
   
2009
 
             
Deferred tax liability:
           
     Equipment And Intangibles
  $ 6,851     $ 3,225  
Deferred tax asset
               
     Stock options for services
    (420,505 )     (398,771 )
     Net operating loss carryforward
    (484,591 )     -  
     Valuation allowance
    905,096       398,771  
     Net deferred tax asset
    -       -  
     Net deferred tax liability
  $ 6,851     $ 3,225  
                 
The deferred tax liability results primarily from the use of accelerated methods of depreciation of equipment for tax purposes.
 
                 
The valuation allowance was established to reduce the deferred tax asset to the amount that will more likely than not be realized. This reduction is necessary due to the use of the prior year's net operating loss carryovers and the uncertainty of the exercising of the outstanding stock options. The net change in the valuation allowance for the year ended December 31, 2010 was an increase of $506,325
 
                 
The components of income tax expense related to continuing operations are as follows:
         
      Years Ended December 31,  
      2010       2009  
Federal
               
     Current
  $ -     $ 30,587  
     Deferred
    -       2,275  
      -       32,862  
State and Local
               
     Current
    12,596       10,691  
     Deferred
    -       7,430  
      12,596       18,121  
    $ 12,596     $ 50,983  
                 
The Company's income tax expense differed from the statutory rates (federal 34% and state 10.9%) as follows:
 
                 
   
Years Ended December 31,
 
      2010       2009  
                 
Statutory rate applied to loss before income taxes:
  $ (395,571 )   $ (22,413 )
Increase (decrease) in income taxes resulting from:
               
     State and local income taxes
    (104,812 )     (6,652 )
     Change in deferred tax asset valuation allowance
    484,591       -  
     Stock based compensation
    21,734       -  
     Non deductible expenses
    16,896       -  
     Other
    (10,242 )     80,048  
Income Tax Expense
  $ 12,596     $ 50,983  
                 
                 
 
 
 
F-9

 
 
SNAP INTERACTIVE, INC. AND SUBSIDIARIES
 
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
 
DECEMBER 31, 2010 AND 2009

 
(F) Equipment
 
The Company values property and equipment at cost and depreciates these assets using the straight-line method over their expected useful life. The Company depreciates software, website costs and leasehold improvements over a three-year useful life and computer equipment over a five-year useful life.
 
In accordance with ASC No. 360, Property, Plant and Equipment , the Company carries long-lived assets at the lower of the carrying amount or fair value. Impairment is evaluated by estimating future undiscounted cash flows expected to result from the use of the asset and its eventual disposition. If the sum of the expected undiscounted future cash flow is less than the carrying amount of the assets, an impairment loss is recognized. Fair value, for purposes of calculating impairment, is measured based on estimated future cash flows, discounted at a market rate of interest.
 
There were no impairment losses recorded during the years ended December 31, 2010 and 2009, respectively.
 
(G) Intangible Assets
 
In accordance with FASB ASC No. 350, Intangibles, Goodwill and Other , the Company requires that intangible assets with a finite life be amortized over their life and requires that goodwill and intangible assets be reviewed for impairment annually or more frequently if impairment indicators arise.
 
(H) Stock-Based Compensation
 
In December 2004, the FASB issued FASB ASC No. 718, Compensation – Stock Compensation (“ASC 718”).  Under ASC 718, companies are required to measure the compensation costs of share-based compensation arrangements based on the grant-date fair value and recognize the costs in the financial statements over the period during which employees are required to provide services. Share-based compensation arrangements include stock options, restricted share plans, performance-based awards, share appreciation rights and employee share purchase plans.  As such, compensation cost is measured on the date of grant at their fair value.  Such compensation amounts, if any, are amortized over the respective vesting periods of the option grant.  The Company applies this statement prospectively.
 
Equity instruments (“instruments”) issued to other than employees are recorded on the basis of the fair value of the instruments, as required by FASB ASC 718.  FASB ASC No. 505, Equity Based Payments to Non-Employees (“ASC 505”)   defines the measurement date and recognition period for such instruments.  In general, the measurement date is (a) when a performance commitment, as defined, is reached or (b) when the earlier of (i) the non-employee performance is complete or (ii) the instruments are vested. The measured value related to the instruments is recognized over a period based on the facts and circumstances of each particular grant as defined in the ASC 505.
 
 
 
 
F-10

 
 
SNAP INTERACTIVE, INC. AND SUBSIDIARIES
 
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
 
DECEMBER 31, 2010 AND 2009
 
 
  (I) Business Segments
 
The Company operates in one segment, and therefore segment information is not presented.
 
(J) Income (Loss) Per Share
 
Basic income per common share is computed based upon the weighted average common shares outstanding as defined by FASB ASC No. 260, Earnings Per Share .
 
Diluted income per share includes the dilutive effects of stock options, warrants, and stock equivalents.  To the extent stock options, stock equivalents and warrants are anti-dilutive, they are excluded from the calculation of diluted income per share.  For the year ended December 31, 2009, 10,350,000 shares issuable upon the exercise of stock options and warrants and 525,555 shares issuable upon the conversion of convertible debt were not included in the computation of income per share because their inclusion is anti-dilutive.   For the year ended December 31, 2010, 5,580,000 shares issuable upon the exercise of stock options and 525,555 shares issuable upon the conversion of convertible debt were not included in the computation of diluted loss per share because their inclusion is anti-dilutive.
 
The following table sets forth the computation of basic earnings per share:
 
             
 
For the
 
For the
 
year ended
 
year ended
 
December 31, 2010
 
December 31, 2009
 
Net income (loss) for the year
  $ (1,167,070 )   $ (101,919 )
                 
Weighted average number of shares outstanding
    33,053,030       32,479,746  
                 
                 
Basic earnings per share
  $ (0.04 )   $ (0.00 )
                 
The following table sets for the computation of diluted earnings per share:
 
                 
                 
For the
 
For the
 
year ended
 
year ended
 
December 31, 2010
 
December 31, 2009
 
Net income (loss) for the year
  $ (1,167,070 )   $ (101,919 )
Add: Adjustment for interest on 6% convertible notes
    -       -  
                 
Adjusted net income (loss)
  $ (1,167,070 )   $ (101,919 )
                 
Weighted average number of shares outstanding
    33,053,030       32,479,746  
Add: Weighted average shares assumed to be issued upon conversion of 6% convertible notes as of the date of issuance
    -       -  
Warrants and options as of beginning of period
    -       -  
Weighted average number of common and common equivalent shares
    33,053,030       32,479,746  
                 
Diluted earnings (loss) per share
  $ (0.04 )   $ (0.00 )
                 
 
 
 
F-11

 
 
SNAP INTERACTIVE, INC. AND SUBSIDIARIES
 
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
 
DECEMBER 31, 2010 AND 2009


(K) Fair Value of Financial Instruments
 
The carrying amounts reported in the balance sheet for accounts receivable, prepaid expenses, accounts payable and accrued expenses, deferred revenue, accrued interest - related party and convertible notes payable - related party is the approximate fair value based on the short-term maturity of these instruments.
 
(L) Research and Development
 
The Company has adopted the provisions of FASB ASC No. 350, Intangibles – Goodwill & Other .  Costs incurred in the planning stage of a website are expensed as research and development expenses while costs incurred in the development stage are capitalized and amortized over the life of the asset, estimated to be five years.  Expenses subsequent to the launch have been expensed as research and development expenses.
 
(M) Concentration of Credit Risk
 
At December 31, 2010, 83% of accounts receivable is due from a payment processing company. This represents thousands of customer charges that primarily occurred at the end of 2010, but were not remitted to the Company as of December 31, 2010 because the settlement of credit card sales typically occurs several days after the date of the charge.

At December 31, 2009, 44% of Accounts Receivable is due from Customer A and 45% are due from Customer B.
 
The Company at times has cash in banks in excess of FDIC insurance limits. The Company had approximately $2,052,693 and $593,430 in excess of FDIC insurance limits as of December 31, 2010 and December 31, 2009, respectively.  The Company also has a credit card holdback receivable of $225,942, which is held by a payment processor and is not FDIC insured.
 
(N) Revenue Recognition
 
The Company recognizes revenue on arrangements in accordance with FASB ASC No. 605, Revenue Recognition.   In all cases, revenue is recognized only when the price is fixed or determinable, persuasive evidence of an arrangement exists, the service is performed and collectability is reasonably assured.
 
The Company has multiple revenue streams:  subscriptions, advertisements, and the sale of points.

The Company recognizes advertising revenue as earned on a click-through, impression, and registration/subscription basis.  When a user clicks an advertisement (“CPC basis”), views an advertisement impression (“CPM basis”), registers for an external website via an advertisement clicked on through the Company’s applications (“CPA basis”), or clicks on an offer to subscribe to premium features on the Company’s applications, the contract amount is recognized as revenue.
 
 
The Company recognizes revenue from monthly premium subscription fees in the month in which the services are used. Revenues are presented net of refunds, credits and known credit card chargebacks.   Subscriptions are currently offered in durations of varying length from one month to six months – generally in one, three and six month terms.
 
 
F-12

 
 
SNAP INTERACTIVE, INC. AND SUBSIDIARIES
 
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
 
DECEMBER 31, 2010 AND 2009

Revenues from multi-month subscriptions are recognized over the length of the subscription term rather than when the subscription is purchased. Because a significant amount of our subscription sales occurred from subscriptions with a term of three or six months, we apportion that revenue over the duration of the subscription term even though it is collected in full at the time of purchase. The difference between the gross cash receipts collected and the recognized revenue from those sales during that reporting period will appear as deferred revenue.
 
The Company recognizes revenue from the direct sale of “points” over two months.  Points can be used in exchange for premium features on products. 
 
Our payment processors have established routine reserve accounts to secure the performance of our obligations under our service agreements.  This is standard practice within the payment processing industry.  These reserve accounts withhold a small percentage of our sales in a segregated account in the form of a six-month rolling reserve.  Each month’s withheld funds are returned to us on a monthly basis after six months of being held in the reserve account and any remaining funds will be returned to us after 90 to 180 days following termination of such agreements.  These funds are classified as Credit Card holdback receivables and totaled $239,452 and $14,996 as at December 31, 2010 and 2009, respectively.
 
For the years ended December 31, 2010 and 2009, the Company had the following revenues:
 
   
As of
December 31,
2010
   
As of
December 31,
2009
 
             
Advertising revenue
 
$
254,753
   
$
3,037,286
 
Subscription/points revenue
   
6,413,874
     
133,439
 
                 
Total revenue
 
$
6,668,627
   
$
3,170,725
 
  
( O) Cost of Revenue
 
Cost of revenue includes the expenses associated with the operation of data centers, including labor, consulting, hosting, server, web design and programming expenses.
 
(P) Reclassification
 
Certain amounts from prior periods have been reclassified to conform to the current period presentation.
 
 
 
F-13

 
 
SNAP INTERACTIVE, INC. AND SUBSIDIARIES
 
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
 
DECEMBER 31, 2010 AND 2009
 
(Q) Advertising and Marketing
 
Advertising and marketing costs are expensed as incurred.  Advertising and marketing expenses were $3,906,317 and $306,140 for the years ended December 31, 2010 and 2009, respectively.
 
(R) Recent Accounting Pronouncements
 
In October 2009, the FASB issued an Accounting Standard Update (“ASU”) No. 2009-13, which addresses the accounting for multiple-deliverable arrangements to enable vendors to account for products or services separately rather than as a combined unit and modifies the manner in which the transaction consideration is allocated across the separately identified deliverables. The ASU significantly expands the disclosure requirements for multiple-deliverable revenue arrangements. The ASU will be effective for the first annual reporting period beginning on or after June 15, 2010, and may be applied retrospectively for all periods presented or prospectively to arrangements entered into or materially modified after the adoption date. Early adoption is permitted, provided that the guidance is retroactively applied to the beginning of the year of adoption. The Company does not expect the adoption of ASU No. 2009-13 to have any effect on its financial statements upon its required adoption on January 1, 2011. I n January 2010, the FASB issued guidance to amend the disclosure requirements related to recurring and nonrecurring fair value measurements. The guidance requires new disclosures on the transfers of assets and liabilities between Level 1 (quoted prices in active market for identical assets or liabilities) and Level 2 (significant other observable inputs) of the fair value measurement hierarchy, including the reasons and the timing of the transfers. Additionally, the guidance requires a roll forward of activities on purchases, sales, issuance, and settlements of the assets and liabilities measured using significant unobservable inputs (Level 3 fair value measurements). The guidance became effective for the Company with the reporting period beginning January 1, 2010, except for the disclosure on the roll forward activities for Level 3 fair value measurements, which will become effective for the Company with the reporting period beginning July 1, 2011. Other than requiring additional disclosures, adoption of this new guidance did not have a material impact on the Company’s financial statements.
 
In February 2010, the FASB issued ASU No. 2010-9, which amends the Subsequent Events Topic of the Accounting Standards Codification to eliminate the requirement for public companies to disclose the date through which subsequent events have been evaluated. The Company will continue to evaluate subsequent events through the date of the issuance of the financial statements; however, consistent with the guidance, this date will no longer be disclosed. ASU 2010-09 does not have any impact on the Company’s results of operations, financial condition or liquidity.
 
In April 2010, the FASB issued ASU No. 2010-13—Effect of Denominating the Exercise Price of a Share-Based Payment Award in the Currency of the Market in Which the Underlying Equity Security Trades as codified in ASC 718—Compensation—Stock Compensation (“ASC 718”). This update addresses the classification of a share-based payment award with an exercise price denominated in the currency of a market in which the underlying equity security trades. ASC 718 is amended to clarify that a share-based payment award with an exercise price denominated in the currency of a market in which a substantial portion of the entity’s equity securities trades shall not be considered to contain a market, performance, or service condition. Therefore, such an award is not to be classified as a liability if it otherwise qualifies as equity classification. This ASU is effective for fiscal years beginning on or after December 15, 2010, and the Company is currently assessing the potential impact, if any, the adoption of this update may have on its Consolidated Financial Statements.
 
 
F-14

 
 
SNAP INTERACTIVE, INC. AND SUBSIDIARIES
 
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
 
DECEMBER 31, 2010 AND 2009
 
NOTE 2 - ACCOUNTS RECEIVABLE

During the year ended December 31, 2010 and December 31, 2009, the Company had the following accounts receivable:
   
As of
December 31,
2010
 
As of
December 31,
2009
 
           
Accounts receivable
 
$
185,585
   
$
322,351
 
Less:   Allowance for doubtful accounts
   
-
 
   
-
 
Accounts receivable, net
 
$
185,585
   
$
322,351
 
 
During the year ended December 31, 2010, the Company wrote off $123,392 of accounts receivable as uncollectible.

Payments for subscriptions and point purchases typically settle several days after the date of purchase.  As of December 31, 2010, the amount of unsettled transactions from payment processors amounted to $165,991.  This amount is included in our accounts receivable.

  NOTE 3 - EQUIPMENT
 
At December 31, 2010 and December 31, 2009, equipment and intangible assets were as follows:
 
   
As of
December 31,
2010
   
As of
December 31, 2009
 
             
Computer/equipment and furniture
 
$
96,779
   
$
81,187
 
Website domain name
   
24,938
     
24,938
 
Software
   
2,701
     
1,353
 
Website costs
   
40,500
     
40,500
 
Less accumulated depreciation and amortization
   
(75,412
)
   
(61,345
)
                 
Total property and equipment
 
$
89,506
   
$
86,633
 
 
Depreciation and amortization expense for the years ended December 31, 2010 and 2009, was $18,674, and $19,649, respectively.
 
 
 
F-15

 
 
SNAP INTERACTIVE, INC. AND SUBSIDIARIES
 
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
 
DECEMBER 31, 2010 AND 2009

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

Year
 
Amount
 
       
2011
    20,504  
2012
    18,610  
2013
    15,485  
2014
    11,278  
2015 and thereafter
    23,629  
    $ 89,506  

 
NOTE 4 - STOCKHOLDERS’ EQUITY
 
(A)   Common Stock Issued for Services
 
 
During the year ended December 31, 2010, 281,787 shares of previously granted common stock were fully vested and issued.  The Company recognized an expense of $13,053 for the value of these services.
 
During the year ended December 31, 2010, an expense of $25,243 was recorded for shares granted under various employment agreements for services to be performed through January 1, 2013.  The fair value of the granted shares is being expensed over the life of the agreements.
 
On February 1, 2010, the Company entered into a one-year consulting agreement with an unrelated third party to provide legal services.  In exchange for the services provided, the Company was required to issue 300,000 shares of the Company’s common stock with a fair value of $75,000.  As of December 31, 2010, $67,397 is recorded as legal fees and $7,603 is recorded as deferred compensation.
 
On January 1, 2010, the Company authorized the issuance of 300,000 shares of the Company's common stock as part of an employment agreement with its Co-Founder in exchange for 3,000,000 options previously issued.  The shares issued will vest upon the earlier of three years or in the event that there is a change in control of the Company.  As of December 31, 2010, the shares have not vested and have not been issued (See Note 7(A) and 8).
 
During the year ended December 31, 2010, $1,311 of deferred compensation was recognized for shares issued in the prior year.
   
(B)  Stock Options and Warrants Issued for Services
 
The following tables summarize all stock option and warrant grants to employees and consultants for the year ended December 31, 2010 and 2009, and the related changes during these periods are presented below.
 
 
 
F-16

 
 
SNAP INTERACTIVE, INC. AND SUBSIDIARIES
 
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
 
DECEMBER 31, 2010 AND 2009
 
   
Number of Options
   
Weighted Average Exercise Price
 
             
Stock Options
           
Balance at December 31, 2008
   
9,540,000
         
Granted
   
150,000
         
Exercised
   
-
         
Forfeited
   
(90,000)
         
Balance at December 31, 2009
   
9,600,000
         
Granted
   
95,000
   
$
0.27
 
Exercised
   
-
         
Forfeited
   
(3,450,000
)
       
Balance at December 31, 2010
   
6,245,000
         
Options Exercisable at December 31, 2010
   
5,580,000
   
$
0.31
 
Weighted Average Fair Value of Options Granted During 2010
         
$
0.26
 
 
Of the total options granted, 5,580,000 are fully vested, exercisable and non-forfeitable.
 
   
Number of Warrants
   
Weighted Average Exercise Price
 
Stock Warrants
           
Balance at December 31, 2008
   
750,000
         
Granted
   
-
         
Exercised
   
-
         
Expired
   
-
         
Balance at December 31, 2009
   
750,000
   
 $
0.40
 
Granted
   
-
         
Exercised
   
-
         
Expired
   
(750,000)
         
Balance at December 31, 2010
   
-
         
Warrants Exercisable at December 31, 2010
   
-
   
$
-
 
Weighted Average Fair Value of Warrants Granted During 2010
         
$
-
 
 
 
 
 
F-17

 
 
SNAP INTERACTIVE, INC. AND SUBSIDIARIES
 
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
 
DECEMBER 31, 2010 AND 2009
 
 The following table summarizes information about stock options and warrants for the Company as of December 31, 2010 and 2009:
 
2010 Options Outstanding
   
Options Exercisable
Range of Exercise Price
   
Number
Outstanding at
December 31, 2010
   
Weighted Average Remaining Contractual Life
   
Weighted Average Exercise Price
   
Number
Exercisable at
December 31, 2010
 
Weighted Average Exercise Price
$
0.00-0.13
     
4,650,000
     
1.97
   
$
0.13
     
4,500,000
 
$
0.13
$
0.17 - 1.00
     
1,595,000
     
1.78
   
$
0.75
     
1,080,000
 
$
0.81
       
 
 
 
2009 Options Outstanding
   
Options Exercisable
Range of Exercise Price
   
Number
Outstanding at
December 31, 2009
   
Weighted Average Remaining Contractual Life
   
Weighted Average Exercise Price
   
Number
Exercisable at
December 31, 2009
 
Weighted Average Exercise Price
$
0.00-0.13
     
4,650,000
     
4
   
$
0.13
     
4,500,000
 
$
0.13
$
0.17 - 1.00
     
4,950,000
     
2.26
   
$
0.48
     
4,515,000
 
$
0.47
 
 
2010 Warrants Outstanding
   
Warrants Exercisable
 
Range of Exercise Price
   
Number
Outstanding at
December 31, 2010
   
Weighted Average Remaining Contractual Life
   
Weighted Average Exercise Price
   
Number
Exercisable at
December 31, 2010
 
Weighted Average Exercise Price
 
$
-
     
-
     
-
   
$
-
     
-
 
$
-
 
 
 
2009 Warrants Outstanding
   
Warrants Exercisable
 
Range of Exercise Price
   
Number
Outstanding at
December 31, 2009
   
Weighted Average Remaining Contractual Life
   
Weighted Average Exercise Price
   
Number
Exercisable at
December 31, 2009
 
Weighted Average Exercise Price
 
$
0.40
     
750,000
     
0.53
   
$
0.40
     
750,000
 
$
0.40
 
 
 
 
F-18

 
 
SNAP INTERACTIVE, INC. AND SUBSIDIARIES
 
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
 
DECEMBER 31, 2010 AND 2009
 
On August 16, 2010, the Company granted 25,000 options having an exercise price of $0.35 per share. The options vest after one year of employment.  The Company has valued these options at their fair value using the Black-Scholes option pricing method.  The assumptions used were as follows:
 
         Expected life:
           5 years
         Expected volatility:
           282.30%
         Risk free interest rate:
           0.11%
         Expected dividends: 
           0%
 
On September 13, 2010, the Company granted 20,000 options having an exercise price of $0.22 per share.  10,000 of the options vest after one year of employment and 10,000 of the options vest after two years of employment. The Company has valued these options at their fair value using the Black-Scholes option pricing method.  The assumptions used were as follows:
 
         Expected life:
           1-2 years
         Expected volatility: 
           284.86%
         Risk free interest rate:
           0.17%
         Expected dividends: 
           0%
 
On December 6, 2010, the Company granted 50,000 options having an exercise price of $0.24 per share.  25,000 of the options vest after one year of employment and 25,000 of the options vest after two years of employment. The Company has valued these options at their fair value using the Black-Scholes option pricing method.  The assumptions used were as follows:
 
         Expected life:
           1-2 years
         Expected volatility: 
           283.93%
         Risk free interest rate:
           1.53%
         Expected dividends: 
           0%
 
(C) Stock Split
 
On January 12, 2010, the Company’s Board of Directors declared a three-for-one forward stock split (effected as a stock dividend) effective to stockholders of record on January 14, 2010.  Per share and weighted average amounts have been retroactively restated in the accompanying financial statements and related notes to reflect this stock split.
 
NOTE 5 - CONVERTIBLE NOTES PAYABLE – RELATED PARTY
 
On December 29, 2005, $92,648 of stockholder advances from our Co-Founder  were converted into an unsecured convertible note payable, due December 31, 2008 (extended to December 31, 2011) and bearing interest at a rate of 6% per annum. The note can be converted at the rate of $0.08 per share for each $1.00 of debt.  The cash offering price at that time was $0.08 and therefore there was no beneficial conversion feature on the note as the market price and conversion price were equivalent.  During 2006, the stockholder exchanged $7,300 of the note payable in full payment of a subscription receivable.  On March 27, 2007, the stockholder converted additional debt totaling $50,000 in exchange for 600,000 shares of common stock.  The fair value of the common stock was $0.08 per share based upon the terms of the convertible note entered into on December 29, 2005.  Accordingly, no gain or loss is recognized in this transaction. At December 31, 2010, the Company had a remaining balance due of $35,348.
 
 
F-19

 
 
SNAP INTERACTIVE, INC. AND SUBSIDIARIES
 
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
 
DECEMBER 31, 2010 AND 2009
 
On March 1, 2007, $10,138 of a second stockholder advance from our Co-Founder  was converted into an unsecured convertible note payable, due March 1, 2010 (extended to March 1, 2011) and bearing interest at a rate of 6% per annum.  All debt can be converted at the rate of $0.10 per share for each $1.00 of debt.  There was no beneficial conversion recognized on the conversion.  At December 31, 2010, the Company had a remaining balance of $10,138 due March 1, 2011.
 
NOTE 6 - SETTLEMENT PAYABLE
 
On January 5, 2008, the Company entered into an agreement with a service provider requiring a total payment of $97,000. $25,000 was paid on January 5, 2008 and the remaining $72,000 is payable in 36 monthly installments with imputed interest at a rate of 6% starting January 5, 2008.  As of December 31, 2010, the amount was fully repaid.
 
NOTE 7 - COMMITMENTS
 
(A) Employment Agreements
 
In January and February 2009, the Company entered into various agreements with several employees whereby the Company is required to issue up to 300,000 shares of the Company’s common stock in various increments over the following two years subject to conditions including continued employment with the Company at the time of issuance.
 
On October 12, 2009, the Company authorized the issuance of 30,000 shares of common stock to be issued in 2010 and 2011 as compensation pursuant to the terms of an agreement, having a fair value of $3,500 subject to certain terms and vesting requirements being met during that time period.
 
The Company has entered into employment agreements with employees for various terms through June 30, 2013 requiring a commitment of salaries and bonuses totaling $694,583.  These agreements are subject to various conditions including continued employment with the Company at the time of scheduled payment of bonuses.  The agreements also call for the employees to receive health benefits as well as various stock and option awards (See Note 4(A) and (B)).
 
On December 1, 2007, the Company entered into a one-year employment agreement with its Co-Founder, with the initial term of the employment agreement expiring on December 1, 2008. Pursuant to the employment agreement, the Company issued 300,000 shares of common stock, an option to purchase 3,000,000 shares of common stock. In addition, the employment agreement provides him with annual compensation of $160,000 per year, with annual bonus and salary increases determined by the Company.  The agreement also calls for its Co-Founder to receive health benefits, monthly membership for a health and fitness facility as well as a complete annual physical.  In addition, upon a change in control of the Company, the employee will receive severance payments equal to the remaining amounts due under the employment agreement plus a minimum of two years base compensation, plus any prorated share of incentive compensation and stock options associated with any signing bonus, plus health benefits up to two years and up to $50,000 in job search costs.  On October 10, 2008, the Company issued 750,000 shares of common stock for professional services rendered having a fair value of $50,000 on the date of grant. As of December 31, 2010, the employment agreement has not been extended, however the employment relationship has continued under the same terms with an increased annual salary of $180,000, effective January 1, 2010. Beginning February 28, 2009, the employee receives $750 per month as a transportation allowance.  
 
 
F-20

 
 
SNAP INTERACTIVE, INC. AND SUBSIDIARIES
 
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
 
DECEMBER 31, 2010 AND 2009
 
On January 1, 2010, the Company and its Co-Founder revised his employment agreement and agreed to issue 300,000 shares to him in exchange for 3,000,000 options (1,500,000 @ $.23 and 1,500,000 @ $.50) previously issued and expensed on December 1, 2007.  The shares issued will vest upon the earlier of three years or in the event that there is a change in control in the Company due to reorganization, merger, consolidation, or sale of the Company.  

In March 2010, an amendment to the employment agreement was signed that requires the Company to indemnify its Co-Founder  against any action or suit brought against him as a result of the performance of his job duties (See Note 4(A)).
 
In accordance with FASB ASC No. 718, paragraph 35-3, this transaction should be treated as a modification of an award.  As per ASC 718, incremental compensation cost shall be measured as the excess, if any, of the fair value of the 300,000 shares issued over the fair value of the exchanged options immediately before its terms are modified, measured based on the share price and other pertinent factors at that date.
 
The Company has valued the exchanged options at their fair value on March 1, 2010, using the Black-Scholes option pricing method.  The assumptions used were as follows:
 
   Expected life:
      1 year
   Expected volatility:
      141.34%
   Risk free interest rate:
      3.31%
   Expected dividends:
      0%
 
Based on the above calculation, the Company has determined that there is no additional compensation to be realized as result of this modification.
 
On December 13, 2006, the Company executed an employment agreement with its President and Chief Executive Officer with an initial term of the employment agreement expiring on December 1, 2007.  The employment agreement was renewed for a period of one additional year through December 1, 2008, and has not been subsequently extended.  As compensation for services the President and Chief Executive Officer received a salary of $200,000 in 2009 and a salary of $210,000 in 2010.  The President and Chief Executive Officer also receives health benefits, a monthly membership for a health and fitness facility as well as a complete annual physical.  For the year ended December 31, 2010 a $200,000 cash year-end bonus was also issued.  We have also agreed to indemnify him against any action or suit brought against the employee as a result of the performance of his job duties.
 
 
 
F-21

 
SNAP INTERACTIVE, INC. AND SUBSIDIARIES
 
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
 
DECEMBER 31, 2010 AND 2009
 
(B) Consulting Agreements
 
On June 30, 2010, the Company entered into a two-year (from the start date) agreement with an unrelated third party to provide certain payment-related services.  The start date of the agreement is September 30, 2010.   In the event of early termination by the Company, the Company will pay a termination fee to the vendor based upon a formula determined by the fees generated during the term of the agreement based on the six months prior to termination of the agreement.
 
On June 1, 2010, the Company entered into a two-year consulting agreement with a related party to provide consulting services.  In exchange for the services provided the Company will pay a consulting fee of $8,000 per month and a transportation allowance of $600 per month. (See Note 8)
 
On March 25, 2010, the Company entered into a fifteen-month agreement with an unrelated third party to provide online monitoring and transaction services.  In exchange for the services provided the Company will pay a minimum fee of $2,500 per month and additional transaction fees based on the level of usage.
 
On February 1, 2010, the Company entered into a one-year legal agreement with an unrelated third party to provide legal services.  In exchange for services provided, the Company issued 300,000 shares of common stock having a fair value of $75,000 based upon fair value on the date of grant. As of December 31, 2010, $67,397 is recorded as compensation expense and $7,603 is recorded as deferred compensation (See Note 4(A)).
 
(C) Operating Lease Agreements
 
On February 25, 2009, the Company executed a three-year non-cancelable operating lease for its new corporate office space. The lease began on April 1, 2009 and expires on March 31, 2012.  Total base rent due during the term of the lease is $313,680.

Year 2011                                                                        $106,500
Year 2012                                                                        $26,790
Total future minimum lease payments                       $133,290

The rent expense for the years ending December 31, 2010 and 2009 were $125,882 and $138,762, respectively.

(D)   Financial Consulting
 
On December 28, 2009, the Company entered into a one-year agreement with a firm to serve as financial advisor on certain transactions. Pursuant to this Agreement, a $50,000 non-refundable cash retainer fee was paid.  In addition the firm will also receive a standard fee based on a formula that includes cash and warrants in the event of a successful transaction.  No such transactions have taken place to date and no additional cash or warrants have been paid out. 
 
 
 
F-22

 
SNAP INTERACTIVE, INC. AND SUBSIDIARIES
 
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
 
DECEMBER 31, 2010 AND 2009
 
NOTE 8 - RELATED PARTY TRANSACTIONS
 
On December 1, 2007, the Company entered into a one-year employment agreement with its Co-Founder, with the initial term of the employment agreement expiring on December 1, 2008.  Pursuant to the employment agreement, the Company issued the employee 300,000 shares of common stock and an option to purchase 3,000,000 shares. In addition, the employment agreement provides him with annual compensation of $160,000 per year. As of December 31 2010, the employment agreement was not extended, however the employment relationship has continued under the same terms with an annual salary of $180,000, effective January 1, 2010. (See Note 7(A))

On January 1, 2010, the Company executed an amendment to the employment agreement and agreed to issue 300,000 shares to its Co-Founder in exchange for 3,000,000 options (1,500,000 at $0.23 and 1,500,000 at $0.50) previously issued and expensed on December 1, 2007.  The shares issued vest upon the earlier of three years or in the event that there is a change in control in the Company due to reorganization, merger, consolidation, or sale of the Company. (See Note 7(A))

In March 2010, the Company executed an amendment to the employment agreement that requires it to indemnify its Co-Founder against any action or suit brought against him as a result of the performance of his job duties.  (See Note 7(A)).  
 
On December 29, 2005, $92,648 of stockholder advances from the Company’s Co-Founder were converted into an unsecured convertible note payable, due December 31, 2008 (extended to December 31, 2011) and bearing interest at a rate of 6% per annum.  The note can be converted at the rate of $0.08 per share for each $1 of debt.  The cash offering price at that time was $0.08 and therefore there was no beneficial conversion feature on the note as the market price and conversion price were equivalent.  During 2006, the employee exchanged $7,300 of the note payable in full payment of a subscription receivable.  On March 27, 2007, the employee converted additional debt totaling $50,000 in exchange for 600,000 shares of common stock.  The fair value of the common stock was $0.08 per share based upon the terms of the convertible note entered into on December 29, 2005.  Accordingly, no gain or loss is recognized in this transaction. At December 31, 2010, the Company had a remaining balance due of $35,348. (See Note 5)
 
On March 1, 2007, $10,138 of the stockholder advances from the Company’s Co-Founder were converted into an unsecured convertible note payable, due March 1, 2010 and bearing interest at a rate of 6% per annum.  All debt can be converted at the rate of $0.10 per share for each $1 of debt.  There was no beneficial conversion recognized on the conversion.  At December 31, 2010, the Company had a remaining balance of $10,138 due March 1, 2011. (See Note 5)

On June 1, 2010, the Company entered into a two-year consulting agreement with a related party to provide consulting services.  In exchange for the services provided, the Company will pay a consulting fee of $8,000 per month and a transportation allowance of $600 per month. (See Note 7(B))

 
F-23

 
 
SNAP INTERACTIVE, INC. AND SUBSIDIARIES
 
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
 
DECEMBER 31, 2010 AND 2009
 
NOTE 9 - SUBSEQUENT EVENTS

On January 12, 2011, the Company issued 4,250,000 units, each unit consisted of one share of common stock and a warrant to purchase 0.5 shares of common stock (2,125,000 warrants) for a total of $8,500,000. Each warrant is exercisable on or prior to January 19, 2016   and has an exercise price of $2.50 per share. The Company collected $8,500,000, less offering expenses of $538,500.
 
On January 22, 2011, the Company authorized the issuance of 125,000 shares of common stock as part of the bonus compensation pursuant to the employment agreements with a fair value of $261,250.

 
 
 
 
 
F-24

 
 
 
 
None.
 
 
Evaluation of Disclosure Controls and Procedures
 
Pursuant to Rule 13a-15(b) under the Exchange Act, as of December 31, 2010, the end of the period covered by this report, our management concluded its evaluation of the effectiveness of the design and operation of our disclosure controls and procedures. As of the evaluation date, our President, Chief Executive Officer and Chief Financial and Accounting Officer concluded that there is a material weakness in internal control in management’s failure to issue stock certificates in a timely manner to shareholders, upon their meeting of all requirements to earn such shares, and therefore disclosure controls and procedures are not effective in providing reasonable assurance that information required to be disclosed in our reports under the Exchange Act is recorded, processed, summarized and reported within the time periods prescribed by SEC rules and regulations, and that such information is accumulated and communicated to our management to allow timely decisions regarding required disclosure.
 
Management's Annual Report on Internal Control Over Financial Reporting.

Our management is responsible for establishing and maintaining adequate internal control over financial reporting.  Our internal control system was designed to, in general, provide reasonable assurance to our management and Board of Directors regarding the preparation and fair presentation of published financial statements, but because of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements.  

Our management assessed the effectiveness of our internal control over financial reporting as of December 31, 2010.  The framework used by management in making that assessment was the criteria set forth in the document entitled “Internal Control – Integrated Framework” issued by the Committee of Sponsoring Organizations of the Treadway Commission. Based on that assessment, our management has determined that as of December 31, 2010, our internal control over financial reporting was not effective.

A material weakness is a deficiency, or combination of deficiencies, in internal control over financial reporting, such that there is a reasonable possibility that a material misstatement of the Company’s annual or interim financial statements will not be prevented or detected on a timely basis. In its assessment of the effectiveness of internal control over financial reporting as of December 31, 2010, the Company determined that there were control deficiencies that constituted material weaknesses, as described below.

Management failed to issue stock certificates to certain employees that met all requirements necessary to earn such shares, in a timely manner.   As of December 31, 2010 there were approximately 300,000 shares earned and authorized, for which certificates were not yet issued.  These shares are properly included in the authorized, issued and outstanding share figures in the Company’s December 31, 2010 financial statements.

Management does not believe that this control deficiency has had a material effect on the financial reporting as of December 31, 2010 and has begun evaluating and implementing processes to reduce this deficiency.

Changes in Internal Control over Financial Reporting

No change in our internal control over financial reporting occurred during the fourth fiscal quarter of the year ended December 31, 2010 that has materially affected, or is reasonably likely to materially affect, our internal control over financial reporting.
 
 
None.
 
 
20

 
 
 
PART III
 
Item 10.        Directors, Executive Officers and Corporate Governance .

Director and Executive Officer

Our sole executive officer and director is as follows:
 
NAME
 
AGE
 
POSITION
         
Clifford Lerner
 
33
 
President, Chief Executive Officer, Chief Financial and Accounting Officer, Chairman of the Board of Directors

A brief description of the background and business experience of our sole executive officer and director for the past five years is as follows:
 
CLIFFORD LERNER  is our President, Chief Executive Officer, Chief Financial and Accounting Officer and Chairman of our Board of Directors. Mr. Lerner has served as our President and Chief Executive Officer since joining us in 2005. Prior to joining us in 2005, Mr. Lerner spent his professional career from 2000 to 2005 at Lehman Brothers Inc. as an Analyst in its Equities division. Mr. Lerner worked as an Analyst in the Product Management Group where his duties included, among other things, coordinating the morning and afternoon equity research calls. Mr. Lerner has a strong knowledge and understanding of the online dating and social networking industries and has managed the product development and growth for all of our applications and websites since their inception. Mr. Lerner received a bachelor’s degree in Applied Economics and Business Management from Cornell University in 2000.

We believe that Mr. Lerner is qualified to serve on our Board of Directors because he brings a broad base of knowledge and experience in the online dating and social networking application industries.
 
Term of Office

Our sole director is appointed for a one-year term to hold office until the next annual general meeting of our stockholders or until removed from office in accordance with our bylaws. Our sole officer is appointed by our Board of Directors and holds office until removed by the Board of Directors.
 
Mr. Lerner has been the sole director since his appointment at the inception of the Company and will remain in office until the next annual meeting of our stockholders (or until a successor has been duly elected and qualified) or until he is removed in accordance with our bylaws. There are no agreements or understandings between Mr. Lerner and any other person pursuant to which Mr. Lerner was selected as a director or executive officer.

In March 2010, we agreed to indemnify Mr. Lerner against any action or suit brought against him as a result of the performance of his job duties.

Family Relationships

Because Mr. Lerner serves as our sole executive officer and director, there are no family relationships between our director and executive officer.

Involvement in Legal Proceedings

To our knowledge, there have been no material legal proceedings that would require disclosure under the federal securities laws that are material to an evaluation of the ability of our director or executive officer.
 
Potential Conflicts of Interest

We are not aware of any current or potential conflicts of interest with our director or executive officer.
 
 
21

 

 
Board Committees

We have not formed an Audit Committee, Compensation Committee or Nominating and Corporate Governance Committee as of the filing of this Annual Report. Our Board of Directors performs the principal functions of an Audit Committee. We currently do not have an audit committee financial expert on our Board of Directors.  We believe that an audit committee financial expert is not required because the cost of hiring an audit committee financial expert to act as one of our directors and to be a member of an Audit Committee outweighs the benefits of having an audit committee financial expert at this time.
 
Section 16(a) Beneficial Ownership Reporting Compliance
 
Section 16(a) of the Exchange Act requires our directors, officers and persons who beneficially own more than 10% of a registered class of our equity securities, to file reports of ownership and changes in ownership with the SEC and are required to furnish us with copies of these reports. Based solely on our review of the reports filed with the SEC, we believe that all persons subject to Section 16(a) of the Exchange Act timely filed all required reports in 2010.
 
Code of Ethics
 
We have adopted a Code of Ethics that is applicable to our Chief Executive Officer and Chief Financial Officer. This Code of Ethics was previously filed as an exhibit to our Annual Report on Form 10-K for the fiscal year ended December 31, 2008 that was filed with the SEC on March 25, 2009.

Item 11.         Executive Compensation

Summary Compensation Table

The following summary compensation table sets forth all compensation awarded to, earned by, or paid to, Mr. Lerner during the years ended December 31, 2010 and 2009 as our only named executive officer:
 
Name and Principal Position
 
Year
 
Salary
($)
   
Bonus
($)
   
Stock
 Awards
($)
   
Option Awards
($)
   
Non-Equity Incentive Plan Compensation ($)
   
Non-Qualified Deferred Compensation Earnings
($)
   
All Other Compensation
($)
   
Totals
($)
 
Clifford Lerner,
 
2010
 
$
210,000
   
$
200,000
     
0
     
0
     
0
     
0
     
0
   
$
410,000
 
President,
 
2009
 
$
200,000
   
$
100,000
     
0
     
0
     
0
     
0
     
0
   
$
300,000
 
CEO, CFO and CAO
                                                                   
                                                                     
  
Narrative Disclosure to Summary Compensation Table

For the year ended December 31, 2010, Mr. Lerner received annual compensation of $210,000 as well as a cash year-end bonus of $200,000. For the year ended December 31, 2009, Mr. Lerner received annual compensation of $200,000, as well as a cash year-end bonus of $100,000. Mr. Lerner also received health benefits, a monthly membership for a health and fitness facility as well as a complete annual physical. We previously entered into an employment agreement with Mr. Lerner that expired in accordance with its terms on December 1, 2008, and has not been subsequently extended. We have also agreed to indemnify Mr. Lerner against any action or suit brought against him as a result of the performance of his job duties.

Pursuant to a prior employment agreement, we previously granted Mr. Lerner a stock option to purchase 4,500,000 shares of our common stock in December 2006. In January 2010, we declared a three-for-one forward stock split (effected as a stock dividend) for each share of common stock outstanding. The number of shares of common stock underlying the stock option and the exercise price of the stock option were both adjusted to reflect the three-for-one stock split.
 
 
22

 

 
Outstanding Equity Awards at Fiscal Year-End Table
 
The following table summarizes the outstanding option awards held by our named executive officer on December 31, 2010.
 
       
Option Awards
Name
 
Grant Date
 
Number of
Securities
Underlying
Unexercised
Options Exercisable
(#)
 
Number of
Securities
Underlying
Unexercised
Options
Unexercisable
(#)
 
Option Exercise
Price
($)
 
Option
Expiration
Date
Clifford Lerner
 
12/13/2006 (1)
 
4,500,000 (2)
 
 
0.13
 
01/01/2012
(1)  
Vested immediately upon the date of grant.
(2)  
The number of shares of common stock underlying the stock option and the option exercise price have been adjusted to reflect the three-for-one stock split (effected as a stock dividend) that occurred on January 14, 2010.

Director Compensation

Our directors are permitted to receive fixed fees and other compensation for their services as directors. Our Board of Directors has the authority to fix the compensation of directors. No amounts have been paid to, or accrued to, Mr. Lerner in his capacity as a director. We currently do not have an established policy to provide compensation to members of our Board of Directors for services rendered in that capacity.  We plan to develop such a policy in the near future.

Item 12.        Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters .
  
The following table shows the number of our securities beneficially owned by our named executive officers, our director, our executive officers and directors as a group, and each person known to us to own more than 5% of our outstanding shares of common stock as of March 24, 2011. Except as otherwise indicated, all shares are owned directly and the shareholders possess sole voting and investment power with respect to the shares listed below. As of March 24, 2011, 37,585,756 shares of our common stock were issued and outstanding. Unless otherwise stated, the business address of the person listed below is c/o Snap Interactive, Inc., 363 7th Avenue, 13th Floor, New York, NY 10001.
 
Name
 
Number of Shares
Beneficially Owned (1)
 
Percent of Shares (2)
Clifford Lerner
   
25,500,000
  (3)
   
60.6%
 
Officers and Directors as a Group (1)
   
25,500,000
  (3)
   
60.6%
 
 
 (1)  
A person is considered to beneficially own any shares: (i) over which such person, directly or indirectly, exercises sole or shared voting or investment power, or (ii) of which such person has the right to acquire beneficial ownership at any time within 60 days through such as exercise of stock options or warrants. Unless otherwise indicated, voting and investment power relating to the shares shown in the table for our directors and executive officers is exercised solely by the beneficial owner or shared by the owner and the owner’s spouse or children.
 
(2)  
For purposes of this table, a person or group of persons is deemed to have “beneficial ownership” of any shares of common stock that such person has the right to acquire within 60 days of March 24, 2011.  For purposes of computing the percentage of outstanding shares of our common stock held by each person or group of persons named above, any shares that such person or persons has the right to acquire within 60 days of March 24, 2011 is deemed to be outstanding, but is not deemed to be outstanding for the purpose of computing the percentage ownership of any other person.  The inclusion herein of any shares listed as beneficially owned does not constitute an admission of beneficial ownership.
 
(3)  
Includes 4,500,000 shares of common stock issuable to Mr. Lerner pursuant to the exercise of a stock option.
 
 
 
23

 
 
Item 13.        Certain Relationship and Related Transactions, and Director Independence .

Related Party Transactions

Darrell Lerner, the brother of Clifford Lerner, our President, Chief Executive Officer, Chief Financial and Accounting Officer and sole director, is our Co-Founder and performs a variety of general business, corporate and administrative functions for us.  He received aggregate compensation of $264,000 for his services in 2010.

On December 1, 2007, we entered into a one year employment agreement with our Co-Founder, with the initial term of the employment agreement expiring on December 1, 2008.  Pursuant to the employment agreement, we issued 300,000 shares of common stock and an option to purchase 3,000,000 shares of common stock. In addition, the employment agreement provides him with annual compensation of $160,000 per year. As of December 31, 2010, the employment agreement was not extended, however the employment relationship has continued under the same terms with an annual salary of $180,000, effective January 1, 2010.

On January 1, 2010, we agreed to issue 300,000 shares to our Co-Founder in exchange for 3,000,000 options previously issued and expensed on December 1, 2007.  The shares issued will vest upon the earlier of three years or in the event that there is a change in control in the Company due to reorganization, merger, consolidation, or sale of the Company. 
 
In March 2010, we executed an amendment to the employment agreement that requires us to indemnify our Co-Founder against any action or suit brought against him as a result of the performance of his job duties.  
 
On December 29, 2005, $92,648 of stockholder advances from our Co-Founder  were converted into an unsecured convertible note payable, due December 31, 2008 (extended to December 31, 2011) and bearing interest at a rate of 6% per annum.  The note can be converted at the rate of $0.08 per share for each $1 of debt.  The cash offering price at that time was $0.08 and therefore there was no beneficial conversion feature on the note as the market price and conversion price were equivalent.  We did not pay any principal but paid $2,120 in interest on this note in 2010. At December 31, 2010, we had a remaining balance due of $35,348.
 
On March 1, 2007, $10,138 of the stockholder advances from our Co-Founder  were converted into an unsecured convertible note payable, due March 1, 2010 and bearing interest at a rate of 6% per annum.  All debt can be converted at the rate of $0.10 per share for each $1 of debt.  There was no beneficial conversion recognized on the conversion.  We did not pay any principal but paid $608 in interest on this note in 2010. At December 31, 2010, we had a remaining balance of $10,138 due March 1, 2011.

On June 1, 2010, we entered into a two-year consulting agreement with a related party to provide consulting services. In exchange for the services provided, we will pay a consulting fee of $8,000 per month and a transportation allowance of $600 per month.

Previous Legal Proceedings

Although not an executive officer or director, Darrell Lerner is our Co-Founder and currently performs a variety of general business, corporate and administrative functions.  While no longer pending or active, the NASD initiated a regulatory action against him in July 2006.  He submitted an Offer of Settlement that was accepted by the NASD in April 2007.  Without admitting or denying the allegations against him listed in the publicly available Decision and Order of Offer of Settlement, he consented to being permanently barred from association with any NASD member firm.  Darrell Lerner did not have an active registration as a broker with any NASD member firm at the time the action was initiated or settled.  The matter initially arose because he was registered as a broker with an NASD member firm during 2004, and although he was completely inactive in the NASD member firm’s investment banking and securities business, he failed to provide prompt written notice to his firm when he engaged in outside business activities for compensation and private securities transactions during 2004 and never functioned as a representative thereof.
 
 
24

 

 
Director Independence

Clifford Lerner, the sole member of our Board of Directors, is not independent using the definition of independence under the rules of the SEC.

Item 14.          Principal Accountant Fees and Services .
 
Fees paid to Webb & Company, P.A.
 
The following table shows the aggregate fees we paid for professional services provided to us by Webb & Company, P.A. for 2010 and 2009:
 
   
2010
   
2009
 
  Audit Fees
  $ 45,622     $ 43,813  
  Audit-Related Fees
    0       0  
  Tax Fees
    4,548       3,775  
  All Other Fees
    0       0  
                 
  Total
  $ 50,170     $ 47,588  
                 

Audit Fees
 
For the fiscal years ended December 31, 2010 and 2009, we paid approximately $45,622 and $43,813, respectively, for professional services rendered for the audit and review of our financial statements.

Audit Related Fees

There were no fees for audit related services for the years ended December 31, 2010 and 2009.
  
Tax Fees
 
For our fiscal years ended December 31, 2010 and 2009, we paid $4,548 and $3,775, respectively, for professional services rendered for tax compliance, tax advice, and tax planning. 

All Other Fees
 
We did not incur any other fees related to services rendered by our independent registered public accounting firm for the fiscal years ended December 31, 2010 and 2009.
 
The SEC requires that before our independent registered public accounting firm is engaged by us to render any auditing or permitted non-audit related service, the engagement be either: (i) approved by our Audit Committee or (ii) entered into pursuant to pre-approval policies and procedures established by the Audit Committee, provided that the policies and procedures are detailed as to the particular  service,  the  Audit Committee is informed of each service, and such policies and procedures do not include delegation of the Audit Committee’s responsibilities to management.

We do not have an Audit Committee.  Our Board of Directors pre-approves all services provided by our independent registered public accounting firm. All of the above services and fees during 2010 were pre-approved by our Board of Directors. We do not have a record of the percentage of the above fees that were pre-approved in 2009. However, all of the above services in 2009 were reviewed and approved by our Board of Directors either before or after the respective services were rendered. 
 
 
25

 
 
PART IV

Item 15.        Exhibits and Financial Statement Schedules .
 
(a) Documents filed as part of this Annual Report.
 
1.  
Report of Independent Registered Public Accounting Firm
 Consolidated Balance Sheets as of December 31, 2010 and 2009
Consolidated Statements of Operations for the years ended December 31, 2010 and 2009
Consolidated Statements of Changes in Stockholders’ Equity for the years ended December 31, 2010 and 2009
Consolidated Statements of Cash Flows for the years ended December 31, 2010 and 2009
Notes to Consolidated Financial Statements

2.  
Financial Statement Schedules
 
3.  
Exhibits required to be filed by Item 601 of Regulation S-K

Please see the “Exhibit Index,” which is incorporated herein by reference, following the signature page for a list of our exhibits. 
 
 
 
26

 
 
SIGNATURES
 
Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934 the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.
 
Dated: March 31, 2011
 
By /s/ Clifford Lerner                                                                                         
         Clifford Lerner,
President, Chief Executive Officer,
Chief Financial and Accounting Officer

 
Pursuant to the requirements of the Securities Exchange Act of 1934 this report has been signed below by the following persons on behalf of the registrant and in the capacities and on the dates indicated.
 
Signature
 
Title
 
Date
         
 /s/ Clifford Lerner
 
President, Chief Executive Officer,
 
March 31, 2011
Clifford Lerner
 
Chief Financial and Accounting Officer
   

 
 
 
 
27

 
 
 
 
EXHIBIT INDEX
 
3.1
Certificate of Incorporation, dated July 19, 2005 (incorporated by reference to Exhibit 3.1 to the Registration Statement on Form S-1 of the Company filed February 11, 2011 by the Company with the SEC).
3.2
Amendment to Certificate of Incorporation, dated November 20, 2007 (incorporated by reference to Exhibit 3.2 to the Registration Statement on Form S-1 of the Company filed February 11, 2011 by the Company with the SEC).
3.3
By-Laws of the Company (incorporated by reference to Exhibit 3.3 to the Registration Statement on Form S-1 of the Company filed February 11, 2011 by the Company with the SEC).
10.1*
Statement of Rights and Responsibilities, by and between Snap Interactive, Inc. and Facebook.
10.2*
Registered Apple Developer Agreement, by and between Snap Interactive, Inc. and Apple Inc.
10.3*
iOS Developer Program License Agreement, by and between Snap Interactive, Inc. and Apple Inc.
10.4
Employment Agreement (incorporated by reference to Exhibit 10.1 to the Registration Statement on Form S-1 of the Company filed February 11, 2011 by the Company with the SEC).
10.5
Amendment No. 1 to Employment Agreement (incorporated by reference to Exhibit 10.2 to the Registration Statement on Form S-1 of the Company filed February 11, 2011 by the Issuer with the SEC).
10.6
Amendment No. 2 to Employment Agreement (incorporated by reference to Exhibit 10.3 to the Registration Statement on Form S-1 of the Company filed February 11, 2011 by the Company with the SEC).
10.7
Stock Option Agreement (incorporated by reference to Exhibit 99.3 to the Schedule 13D filed March 4, 2011 with the SEC).
10.8
Equity Incentive Plan (incorporated by reference to Exhibit 10.1 to the Registration Statement on Form S-8 filed December 16, 2008 with the SEC).
14.1
Code of Ethics (incorporated by reference to Exhibit 14.1 to the Annual Report on Form 10-K of the Company filed March 25, 2009 by the Company with the SEC).
21.1
Subsidiaries of the Company (incorporated by reference to Exhibit 21.1 to the Registration Statement on Form S-1 of the Company filed February 11, 2011 by the Company with the SEC).
31.1*
Certification of the Chief Executive Officer and Chief Financial Officer of the Company, pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.
 
32.1*
Certification of the Chief Executive Officer and Chief Financial Officer of the Company, pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.
 

* Filed herewith.
† Management contract.
 
 
 
 
Exhibit 10.1
 
Statement of Rights and Responsibilities
 
This Statement of Rights and Responsibilities ("Statement") derives from the Facebook Principles , and governs our relationship with users and others who interact with Facebook. By using or accessing Facebook, you agree to this Statement.
 
1.  
Privacy
 
 
Your privacy is very important to us. We designed our Privacy Policy to make important disclosures about how you can use Facebook to share with others and how we collect and can use your content and information.  We encourage you to read the Privacy Policy, and to use it to help make informed decisions.
 
2.  
Sharing Your Content and Information
 
 
You own all of the content and information you post on Facebook, and you can control how it is shared through your privacy and application settings . In addition:
 
1.  
For content that is covered by intellectual property rights, like photos and videos ("IP content"), you specifically give us the following permission, subject to your privacy and application settings : you grant us a non-exclusive, transferable, sub-licensable, royalty-free, worldwide license to use any IP content that you post on or in connection with Facebook ("IP License"). This IP License ends when you delete your IP content or your account unless your content has been shared with others, and they have not deleted it.
 
2.  
When you delete IP content, it is deleted in a manner similar to emptying the recycle bin on a computer. However, you understand that removed content may persist in backup copies for a reasonable period of time (but will not be available to others).
 
3.  
When you use an application, your content and information is shared with the application.  We require applications to respect your privacy, and your agreement with that application will control how the application can use, store, and transfer that content and information.  (To learn more about Platform, read our Privacy Policy and Platform Page .)
 
4.  
When you publish content or information using the "everyone" setting, it means that you are allowing everyone, including people off of Facebook, to access and use that information, and to associate it with you (i.e., your name and profile picture).
 
5.  
We always appreciate your feedback or other suggestions about Facebook, but you understand that we may use them without any obligation to compensate you for them (just as you have no obligation to offer them).
 
3.  
Safety
 
 
We do our best to keep Facebook safe, but we cannot guarantee it. We need your help to do that, which includes the following commitments:
 
1.  
You will not send or otherwise post unauthorized commercial communications (such as spam) on Facebook.
 
 
1

 
 
2.  
You will not collect users' content or information, or otherwise access Facebook, using automated means (such as harvesting bots, robots, spiders, or scrapers) without our permission.
 
3.  
You will not engage in unlawful multi-level marketing, such as a pyramid scheme, on Facebook.
 
4.  
You will not upload viruses or other malicious code.
 
5.  
You will not solicit login information or access an account belonging to someone else.
 
6.  
You will not bully, intimidate, or harass any user.
 
7.  
You will not post content that: is hateful, threatening, or pornographic; incites violence; or contains nudity or graphic or gratuitous violence.
 
8.  
You will not develop or operate a third-party application containing alcohol-related or other mature content (including advertisements) without appropriate age-based restrictions.
 
9.  
You will not offer any contest, giveaway, or sweepstakes ("promotion") on Facebook without our prior written consent. If we consent, you take full responsibility for the promotion, and will follow our Promotions Guidelines and all applicable laws.
 
10.  
You will not use Facebook to do anything unlawful, misleading, malicious, or discriminatory.
 
11.  
You will not do anything that could disable, overburden, or impair the proper working of Facebook, such as a denial of service attack.
 
12.  
You will not facilitate or encourage any violations of this Statement.
 
4.  
Registration and Account Security
 
 
Facebook users provide their real names and information, and we need your help to keep it that way. Here are some commitments you make to us relating to registering and maintaining the security of your account:
 
1.  
You will not provide any false personal information on Facebook, or create an account for anyone other than yourself without permission.
 
2.  
You will not create more than one personal profile.
 
3.  
If we disable your account, you will not create another one without our permission.
 
4.  
You will not use your personal profile for your own commercial gain (such as selling your status update to an advertiser).
 
5.  
You will not use Facebook if you are under 13.
 
6.  
You will not use Facebook if you are a convicted sex offender.
 
7.  
You will keep your contact information accurate and up-to-date.
 
8.  
You will not share your password, (or in the case of developers, your secret key), let anyone else access your account, or do anything else that might jeopardize the security of your account.
 
9.  
You will not transfer your account (including any page or application you administer) to anyone without first getting our written permission.
 
10.  
If you select a username for your account we reserve the right to remove or reclaim it if we believe appropriate (such as when a trademark owner complains about a username that does not closely relate to a user's actual name).
 
 
2

 
 
5.  
Protecting Other People's Rights
 
 
We respect other people's rights, and expect you to do the same.
 
1.  
You will not post content or take any action on Facebook that infringes or violates someone else's rights or otherwise violates the law.
 
2.  
We can remove any content or information you post on Facebook if we believe that it violates this Statement.
 
3.  
We will provide you with tools to help you protect your intellectual property rights. To learn more, visit our How to Report Claims of Intellectual Property Infringement page.
 
4.  
If we remove your content for infringing someone else's copyright, and you believe we removed it by mistake, we will provide you with an opportunity to appeal.
 
5.  
If you repeatedly infringe other people's intellectual property rights, we will disable your account when appropriate.
 
6.  
You will not use our copyrights or trademarks (including Facebook, the Facebook and F Logos, FB, Face, Poke, Wall and 32665), or any confusingly similar marks, without our written permission.
 
7.  
If you collect information from users, you will: obtain their consent, make it clear you (and not Facebook) are the one collecting their information, and post a privacy policy explaining what information you collect and how you will use it.
 
8.  
You will not post anyone's identification documents or sensitive financial information on Facebook.
 
9.  
You will not tag users or send email invitations to non-users without their consent.
 
6.  
Mobile
 
1.  
We currently provide our mobile services for free, but please be aware that your carrier's normal rates and fees, such as text messaging fees, will still apply.
 
2.  
In the event you change or deactivate your mobile telephone number, you will update your account information on Facebook within 48 hours to ensure that your messages are not sent to the person who acquires your old number.
 
3.  
You provide all rights necessary to enable users to sync (including through an application) their contact lists with any basic information and contact information that is visible to them on Facebook, as well as your name and profile picture.
 
7.  
Payments
 
 
If you make a payment on Facebook or use Facebook Credits, you agree to our Payments Terms .
 
8.  
Special Provisions Applicable to Share Links
 
 
If you include our Share Link button on your website, the following additional terms apply to you:
 
 
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1.  
We give you permission to use Facebook's Share Link button so that users can post links or content from your website on Facebook.
 
2.  
You give us permission to use and allow others to use such links and content on Facebook.
 
3.  
You will not place a Share Link button on any page containing content that would violate this Statement if posted on Facebook.
 
9.  
Special Provisions Applicable to Developers/Operators of Applications and Websites
 
 
If you are a developer or operator of a Platform application or website, the following additional terms apply to you:
 
1.  
You are responsible for your application and its content and all uses you make of Platform. This includes ensuring your application or use of Platform meets our Facebook Platform Policies and our Advertising Guidelines .
 
2.  
Your access to and use of data you receive from Facebook, will be limited as follows:
 
1.  
You will only request data you need to operate your application.
 
2.  
You will have a privacy policy that tells users what user data you are going to use and how you will use, display, share, or transfer that data and you will include your privacy policy URL in the Developer Application .
 
3.  
You will not use, display, share, or transfer a user’s data in a manner inconsistent with your privacy policy.
 
4.  
You will delete all data you receive from us concerning a user if the user asks you to do so, and will provide a mechanism for users to make such a request.
 
5.  
You will not include data you receive from us concerning a user in any advertising creative.
 
6.  
You will not directly or indirectly transfer any data you receive from us to (or use such data in connection with) any ad network, ad exchange, data broker, or other advertising related toolset, even if a user consents to that transfer or use.
 
7.  
You will not sell user data.  If you are acquired by or merge with a third party, you can continue to use user data within your application, but you cannot transfer user data outside of your application. 
 
8.  
We can require you to delete user data if you use it in a way that we determine is inconsistent with users’ expectations.
 
9.  
We can limit your access to data.
 
10.  
You will comply with all other restrictions contained in our Facebok Platform Policies .
 
3.  
You will not give us information that you independently collect from a user or a user's content without that user's consent.
 
4.  
You will make it easy for users to remove or disconnect from your application.
 
5.  
You will make it easy for users to contact you. We can also share your email address with users and others claiming that you have infringed or otherwise violated their rights.
 
6.  
You will provide customer support for your application.
 
7.  
You will not show third party ads or web search boxes on Facebook.
 
 
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8.  
We give you all rights necessary to use the code, APIs, data, and tools you receive from us.
 
9.  
You will not sell, transfer, or sublicense our code, APIs, or tools to anyone.
 
10.  
You will not misrepresent your relationship with Facebook to others.
 
11.  
You may use the logos we make available to developers or issue a press release or other public statement so long as you follow our Facebook Platform Policies .
 
12.  
We can issue a press release describing our relationship with you.
 
13.  
You will comply with all applicable laws. In particular you will (if applicable):
 
1.  
have a policy for removing infringing content and terminating repeat infringers that complies with the Digital Millennium Copyright Act.
 
2.  
comply with the Video Privacy Protection Act ("VPPA"), and obtain any opt-in consent necessary from users so that user data subject to the VPPA may be shared on Facebook.  You represent that any disclosure to us will not be incidental to the ordinary course of your business.
 
14.  
We do not guarantee that Platform will always be free.
 
15.  
You give us all rights necessary to enable your application to work with Facebook, including the right to incorporate content and information you provide to us into streams, profiles, and user action stories.
 
16.  
You give us the right to link to or frame your application, and place content, including ads, around your application.
 
17.  
We can analyze your application, content, and data for any purpose, including commercial (such as for targeting the delivery of advertisements and indexing content for search).
 
18.  
To ensure your application is safe for users, we can audit it.
 
19.  
We can create applications that offer similar features and services to, or otherwise compete with, your application.
 
10.  
About Advertisements and Other Commercial Content Served or Enhanced by Facebook
 
 
Our goal is to deliver ads that are not only valuable to advertisers, but also valuable to you. In order to do that, you agree to the following:
 
1.  
You can use your privacy settings to limit how your name and profile picture may be associated with commercial, sponsored, or related content (such as a brand you like) served or enhanced by us. You give us permission to use your name and profile picture in connection with that content, subject to the limits you place.
 
2.  
We do not give your content or information to advertisers without your consent.
 
3.  
You understand that we may not always identify paid services and communications as such.
 
11.  
Special Provisions Applicable to Advertisers
 
 
You can target your specific audience by buying ads on Facebook or our publisher network. The following additional terms apply to you if you place an order through our online advertising portal ("Order"):
 
1.  
When you place an Order, you will tell us the type of advertising you want to buy, the amount you want to spend, and your bid. If we accept your Order, we will deliver your ads as inventory becomes available. When serving your ad, we do our best to deliver the ads to the audience you specify, although we cannot guarantee in every instance that your ad will reach its intended target.
 
 
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2.  
In instances where we believe doing so will enhance the effectiveness of your advertising campaign, we may broaden the targeting criteria you specify.
 
3.  
You will pay for your Orders in accordance with our Payments Terms . The amount you owe will be calculated based on our tracking mechanisms.
 
4.  
Your ads will comply with our Advertising Guidelines .
 
5.  
We will determine the size, placement, and positioning of your ads.
 
6.  
We do not guarantee the activity that your ads will receive, such as the number of clicks you will get.
 
7.  
We cannot control how people interact with your ads, and are not responsible for click fraud or other improper actions that affect the cost of running ads.  We do, however, have systems to detect and filter certain suspicious activity, learn more here .
 
8.  
You can cancel your Order at any time through our online portal, but it may take up to 24 hours before the ad stops running.  You are responsible for paying for those ads.
 
9.  
Our license to run your ad will end when we have completed your Order. You understand, however, that if users have interacted with your ad, your ad may remain until the users delete it.
 
10.  
We can use your ads and related content and information for marketing or promotional purposes.
 
11.  
You will not issue any press release or make public statements about your relationship with Facebook without written permission.
 
12.  
We may reject or remove any ad for any reason.
 
13.  
If you are placing ads on someone else's behalf, we need to make sure you have permission to place those ads, including the following:
 
1.  
You warrant that you have the legal authority to bind the advertiser to this Statement.
 
2.  
You agree that if the advertiser you represent violates this Statement, we may hold you responsible for that violation.
 
12.  
Special Provisions Applicable to Pages
 
 
If you create or administer a Page on Facebook, you agree to our Pages Terms .
 
13.  
Amendments
 
1.  
We can change this Statement if we provide you notice (by posting the change on the Facebook Site Governance Page ) and an opportunity to comment.  To get notice of any future changes to this Statement, visit our Facebook Site Governance Page and become a fan.
 
2.  
For changes to sections 7, 8, 9, and 11 (sections relating to payments, application developers, website operators, and advertisers), we will give you a minimum of three days notice. For all other changes we will give you a minimum of seven days notice. All such comments must be made on the Facebook Site Governance Page .
 
3.  
If more than 7,000 users comment on the proposed change, we will also give you the opportunity to participate in a vote in which you will be provided alternatives. The vote shall be binding on us if more than 30% of all active registered users as of the date of the notice vote.
 
4.  
We can make changes for legal or administrative reasons, or to correct an inaccurate statement, upon notice without opportunity to comment.
 
 
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14.  
Termination
 
 
If you violate the letter or spirit of this Statement, or otherwise create risk or possible legal exposure for us, we can stop providing all or part of Facebook to you. We will notify you by email or at the next time you attempt to access your account. You may also delete your account or disable your application at any time. In all such cases, this Statement shall terminate, but the following provisions will still apply: 2.2, 2.4, 3-5, 8.2, 9.1-9.3, 9.9, 9.10, 9.13, 9.15, 9.18, 10.3, 11.2, 11.5, 11.6, 11.9, 11.12, 11.13, and 14-18.
 
15.  
Disputes
 
1.  
You will resolve any claim, cause of action or dispute ("claim") you have with us arising out of or relating to this Statement or Facebook exclusively in a state or federal court located in Santa Clara County. The laws of the State of California will govern this Statement, as well as any claim that might arise between you and us, without regard to conflict of law provisions. You agree to submit to the personal jurisdiction of the courts located in Santa Clara County, California for the purpose of litigating all such claims.
 
2.  
If anyone brings a claim against us related to your actions, content or information on Facebook, you will indemnify and hold us harmless from and against all damages, losses, and expenses of any kind (including reasonable legal fees and costs) related to such claim.
 
3.  
WE TRY TO KEEP FACEBOOK UP, BUG-FREE, AND SAFE, BUT YOU USE IT AT YOUR OWN RISK. WE ARE PROVIDING FACEBOOK "AS IS" WITHOUT ANY EXPRESS OR IMPLIED WARRANTIES INCLUDING, BUT NOT LIMITED TO, IMPLIED WARRANTIES OF MERCHANTABILITY, FITNESS FOR A PARTICULAR PURPOSE, AND NON-INFRINGEMENT. WE DO NOT GUARANTEE THAT FACEBOOK WILL BE SAFE OR SECURE. FACEBOOK IS NOT RESPONSIBLE FOR THE ACTIONS, CONTENT, INFORMATION, OR DATA OF THIRD PARTIES, AND YOU RELEASE US, OUR DIRECTORS, OFFICERS, EMPLOYEES, AND AGENTS FROM ANY CLAIMS AND DAMAGES, KNOWN AND UNKNOWN, ARISING OUT OF OR IN ANY WAY CONNECTED WITH ANY CLAIM YOU HAVE AGAINST ANY SUCH THIRD PARTIES. IF YOU ARE A CALIFORNIA RESIDENT, YOU WAIVE CALIFORNIA CIVIL CODE §1542, WHICH SAYS: "A GENERAL RELEASE DOES NOT EXTEND TO CLAIMS WHICH THE CREDITOR DOES NOT KNOW OR SUSPECT TO EXIST IN HIS FAVOR AT THE TIME OF EXECUTING THE RELEASE, WHICH IF KNOWN BY HIM MUST HAVE MATERIALLY AFFECTED HIS SETTLEMENT WITH THE DEBTOR." WE WILL NOT BE LIABLE TO YOU FOR ANY LOST PROFITS OR OTHER CONSEQUENTIAL, SPECIAL, INDIRECT, OR INCIDENTAL DAMAGES ARISING OUT OF OR IN CONNECTION WITH THIS STATEMENT OR FACEBOOK, EVEN IF WE HAVE BEEN ADVISED OF THE POSSIBILITY OF SUCH DAMAGES. OUR AGGREGATE LIABILITY ARISING OUT OF THIS STATEMENT OR FACEBOOK WILL NOT EXCEED THE GREATER OF ONE HUNDRED DOLLARS ($100) OR THE AMOUNT YOU HAVE PAID US IN THE PAST TWELVE MONTHS. APPLICABLE LAW MAY NOT ALLOW THE LIMITATION OR EXCLUSION OF LIABILITY OR INCIDENTAL OR CONSEQUENTIAL DAMAGES, SO THE ABOVE LIMITATION OR EXCLUSION MAY NOT APPLY TO YOU. IN SUCH CASES, FACEBOOK'S LIABILITY WILL BE LIMITED TO THE FULLEST EXTENT PERMITTED BY APPLICABLE LAW.
 
 
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16.  
Special Provisions Applicable to Users Outside the United States
 
 
We strive to create a global community with consistent standards for everyone, but we also strive to respect local laws. The following provisions apply to users outside the United States:
 
1.  
You consent to having your personal data transferred to and processed in the United States.
 
2.  
If you are located in a country embargoed by the United States, or are on the U.S. Treasury Department's list of Specially Designated Nationals you will not engage in commercial activities on Facebook (such as advertising or payments) or operate a Platform application or website.
 
3.  
Certain specific terms that apply only for German users are available here .
 
17.  
Definitions
 
1.  
By "Facebook" we mean the features and services we make available, including through (a) our website at www.facebook.com and any other Facebook branded or co-branded websites (including sub-domains, international versions, widgets, and mobile versions); (b) our Platform; (c) social plugins such as the like button, the share button and other similar offerings and (d) other media, software (such as a toolbar), devices, or networks now existing or later developed.
 
2.  
By "Platform" we mean a set of APIs and services that enable others, including application developers and website operators, to retrieve data from Facebook or provide data to us.
 
3.  
By "information" we mean facts and other information about you, including actions you take.
 
4.  
By "content" we mean anything you post on Facebook that would not be included in the definition of "information."
 
5.  
By "data" we mean content and information that third parties can retrieve from Facebook or provide to Facebook through Platform.
 
6.  
By "post" we mean post on Facebook or otherwise make available to us (such as by using an application).
 
7.  
By "use" we mean use, copy, publicly perform or display, distribute, modify, translate, and create derivative works of.
 
8.  
By "active registered user" we mean a user who has logged into Facebook at least once in the previous 30 days.
 
9.  
By "application" we mean any application or website that uses or accesses Platform, as well as anything else that receives or has received data from us.  If you no longer access Platform but have not deleted all data from us, the term application will apply until you delete the data.
 
18.  
Other
 
1.  
If you are a resident of or have your principal place of business in the US or Canada, this Statement is an agreement between you and Facebook, Inc.  Otherwise, this Statement is an agreement between you and Facebook Ireland Limited.  References to “us,” “we,” and “our” mean either Facebook, Inc. or Facebook Ireland Limited, as appropriate.
 
2.  
This Statement makes up the entire agreement between the parties regarding Facebook, and supersedes any prior agreements.

 
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3.  
If any portion of this Statement is found to be unenforceable, the remaining portion will remain in full force and effect.
 
4.  
If we fail to enforce any of this Statement, it will not be considered a waiver.
 
5.  
Any amendment to or waiver of this Statement must be made in writing and signed by us.
 
6.  
You will not transfer any of your rights or obligations under this Statement to anyone else without our consent.
 
7.  
All of our rights and obligations under this Statement are freely assignable by us in connection with a merger, acquisition, or sale of assets, or by operation of law or otherwise.
 
8.  
Nothing in this Statement shall prevent us from complying with the law.
 
9.  
This Statement does not confer any third party beneficiary rights.
 
10.  
You will comply with all applicable laws when using or accessing Facebook.
 
 
 
 
 
 9

Exhibit 10.2
 
APPLE INC.
 
REGISTERED APPLE DEVELOPER AGREEMENT
 
THIS IS A LEGAL AGREEMENT BETWEEN YOU AND APPLE INC. (“APPLE”) STATING THE TERMS THAT GOVERN YOUR PARTICIPATION AS A REGISTERED APPLE DEVELOPER. PLEASE READ THIS REGISTERED APPLE DEVELOPER AGREEMENT (“AGREEMENT”) BEFORE PRESSING THE “AGREE” BUTTON AND CHECKING THE BOX AT THE BOTTOM OF THIS PAGE. BY PRESSING “AGREE,” YOU ARE AGREEING TO BE BOUND BY THE TERMS OF THIS AGREEMENT. IF YOU DO NOT AGREE TO THE TERMS OF THIS AGREEMENT, PRESS “CANCEL” AND YOU WILL BE UNABLE TO BECOME A REGISTERED APPLE DEVELOPER.
 
Registered Apple Developer Agreement
 
1. Relationship With Apple; Apple ID and Password. You understand and agree that by becoming a Registered Apple Developer, no legal partnership or agency relationship is created between you and Apple. Neither you nor Apple is a partner, an agent or has any authority to bind the other. You agree not to represent otherwise. You also certify that you are of the legal age of majority in the jurisdiction in which you reside (at least 18 years of age in many countries) and you represent that you are legally permitted to become a Registered Apple Developer. This Agreement is void where prohibited by law and the right to become a Registered Apple Developer is not granted in such jurisdictions. Unless otherwise agreed or permitted by Apple in writing, you cannot share or transfer any benefits you receive from Apple in connection with being a Registered Apple Developer. The Apple ID and password you use to login as a Registered Apple Developer cannot be shared in any way or with any one. You are responsible for maintaining the confidentiality of your Apple ID and password and for any activity in connection with your account. Notwithstanding the foregoing restrictions in this Section 1, if you are the parent or legal guardian of individuals between the ages of 13 and the legal age of majority in the jurisdiction in which you reside, you may allow such individuals to share your Apple ID and password for their use solely under your supervision and only in accordance with this Agreement. You are responsible for such individuals’ compliance with and violations of this Agreement and any other Apple agreements.
 
2. Developer Benefits. As a Registered Apple Developer, you may have the opportunity to attend certain Apple developer conferences, technical talks, and other events (including online or electronic broadcasts of such events) (“ Apple Events ”). In addition, Apple may offer to provide you with certain services (“ Services ”), as described more fully herein and on the Registered Apple Developer web pages (“ Site ”), solely for your own use (except as otherwise permitted in the last two sentences of Section 1) in connection with your participation as a Registered Apple Developer. Services may include, but not be limited to, any services Apple offers at Apple Events or on the Site as well as the offering of any content or materials displayed on the Site (“ Content ”). Apple may change, suspend or discontinue providing the Services, Site and Content to you at any time, and may impose limits on certain features and materials offered or restrict your access to parts or all of materials without notice or liability.
 
3. Restrictions. You agree not to exploit the Site, or any Services, Apple Events or Content provided to you as a Registered Apple Developer, in any unauthorized way, including but not limited to, by trespass, burdening network capacity or using the Services, Site or Content other than for authorized purposes. Copyright and other intellectual property laws protect the Site and Content provided to you, and you agree to abide by and maintain all notices, license information, and restrictions contained therein. Unless expressly permitted herein or otherwise permitted in a separate agreement with Apple, you may not modify, publish, network, rent, lease, loan, transmit, sell, participate in the transfer or sale of, reproduce, create derivative works based on, redistribute, perform, display, or in any way exploit any of the Site, Content or Services in whole or in part. You may not decompile, reverse engineer, disassemble, attempt to derive the source code of any software or security components of the Services, Site, or of the Content (except as and only to the extent any foregoing restriction is prohibited by applicable law or to the extent as may be permitted by any licensing terms accompanying the foregoing). Use of the Site, Content or Services to violate, tamper with, or circumvent the security of any computer network, software, passwords, encryption codes, technological protection measures, or to otherwise engage in any kind of illegal activity, or to enable others to do so, is expressly prohibited. Apple retains ownership of all its rights in the Site, Content, Apple Events and Services, and except as expressly set forth herein, no other rights or licenses are granted or to be implied under any Apple intellectual property.
 
4. Confidentiality. You agree that any Apple pre-release software and/or hardware (including related documentation and materials) provided to you as a Registered Apple Developer (“ Pre-Release Materials ”) and any information disclosed by Apple to you in connection with Apple Events or Paid Content (defined below) will be considered and referred to as “Apple Confidential Information”. Notwithstanding the foregoing, Apple Confidential Information will not include: (i) information that is generally and legitimately available to the public through no fault or breach of yours, (ii) information that is generally made available to the public by Apple, (iii) information that is independently developed by you without the use of any Apple Confidential Information, (iv) information that was rightfully obtained from a third party who had the right to transfer or disclose it to you without limitation, or (v) any third party software and/or documentation provided to you by Apple and accompanied by licensing terms that do not impose confidentiality obligations on the use or disclosure of such software and/or documentation.
 
5. Nondisclosure and Nonuse of Apple Confidential Information. Unless otherwise expressly agreed or permitted in writing by Apple, you agree not to disclose, publish, or disseminate any Apple Confidential Information to anyone other than to other Registered Apple Developers who are employees and contractors working for the same entity as you and then only to the extent that Apple does not otherwise prohibit such disclosure. Except for your authorized purposes as a Registered Apple Developer or as otherwise expressly agreed or permitted by Apple in writing, you agree not to use Apple Confidential Information in any way, including, without limitation, for your own or any third party’s benefit without the prior written approval of an authorized representative of Apple in each instance. You further agree to take reasonable precautions to prevent any unauthorized use, disclosure, publication, or dissemination of Apple Confidential Information. You acknowledge that unauthorized disclosure or use of Apple Confidential Information could cause irreparable harm and significant injury to Apple that may be difficult to ascertain. Accordingly, you agree that Apple will have the right to seek immediate injunctive relief to enforce your obligations under this Agreement in addition to any other rights and remedies it may have. If you are required by law, regulation or pursuant to the valid binding order of a court of competent jurisdiction to disclose Apple Confidential Information, you may make such disclosure, but only if you have notified Apple before making such disclosure and have used commercially reasonable efforts to limit the disclosure and to seek confidential, protective treatment of such information. A disclosure pursuant to the previous sentence will not relieve you of your obligations to hold such information as Apple Confidential Information.
 

 
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6. Confidential Pre-Release Materials License and Restrictions. If Apple provides you with Pre-Release Materials, then subject to your compliance with the terms and conditions of this Agreement, Apple hereby grants you a nonexclusive, nontransferable, right and license to use the Pre-Release Materials only for the limited purposes set forth in this Section 6; provided however that if such Pre-Release Materials are accompanied by a separate license agreement, you agree that the license agreement accompanying such materials in addition to Sections 4 and 5 of this Agreement shall govern your use of the Pre-Release Materials. You further agree that in the event of any inconsistency between Section 4 and 5 of this Agreement and the confidentiality restrictions in the license agreement, the license agreement shall govern. You agree not to use the Pre-Release Materials for any purpose other than testing and/or development by you of a product designed to operate in combination with the same operating system for which the Pre-Release Materials are designed. This Agreement does not grant you any right or license to incorporate or make use of any Apple intellectual property (including for example and without limitation, trade secrets, patents, copyrights, trademarks and industrial designs) in any product. Except as expressly set forth herein, no other rights or licenses are granted or to be implied under any Apple intellectual property. You agree not to decompile, reverse engineer, disassemble, or otherwise reduce the Pre-Release Materials to a human-perceivable form, and you will not modify, network, rent, lease, transmit, sell, or loan the Pre-Release Materials in whole or in part.
 
7. Paid Content License and Restrictions. As a Registered Apple Developer, you may have access to certain proprietary content (including, without limitation, video presentations and audio recordings) that Apple may make available to you from time to time for a separate fee (“ Paid Content ”). Paid Content shall be considered Apple Confidential Information, unless otherwise agreed or permitted in writing by Apple. You may not share the Paid Content with anyone, including, without limitation, employees and contractors working for the same entity as you, regardless of whether they are Registered Apple Developers. Subject to these terms and conditions, Apple grants you a personal and nontransferable license to access and use the Paid Content for authorized purposes as a Registered Apple Developer; provided that you may only download one (1) copy of the Paid Content and such download must be completed within the time period specified by Apple for such download. Except as expressly permitted by Apple, you shall not modify, translate, reproduce, distribute, or create derivative works of the Paid Content or any part thereof. You shall not rent, lease, loan, sell, sublicense, assign or otherwise transfer any rights in the Paid Content. Apple and/or Apple’s licensor(s) retain ownership of the Paid Content itself and any copies or portions thereof. The Paid Content is licensed, not sold, to you by Apple for use only under this Agreement, and Apple reserves all rights not expressly granted to you. Your rights under this license to use and access the Paid Content will terminate automatically without notice from Apple if you fail to comply with any of these provisions.
 
8. Compatibility Labs; Developer Technical Support (DTS). As a Registered Apple Developer, You may have access to Apple’s software and hardware compatibility testing labs (“ Compatibility Labs ”) and/or developer technical support incidents (“ DTS Services ”) that Apple may make available to you from time to time as an Apple developer benefit or for a separate fee. You agree that all use of such Compatibility Labs and DTS Services will be in accordance with Apple’s usage policies for such services, which are subject to change from time to time, with or without prior notice to you. Without limiting the foregoing, Apple may post on the Site and/or send an email to you with notices of such changes. It is your responsibility to review the Site and/or check your email address registered with Apple for any such notices. You agree that Apple shall not be liable to you or any third party for any modification or cessation of such services. As part of the DTS Services, Apple may supply you with certain code snippets, sample code, software, and other materials (“ Materials ”). You agree that any Materials that Apple provides as part of the DTS Services are licensed to you and shall be used by you only in accordance with the terms and conditions accompanying the Materials. Apple retains ownership of all of its right, title and interest in such Materials and no other rights or licenses are granted or to be implied under any Apple intellectual property. You have no right to copy, decompile, reverse engineer, sublicense or otherwise distribute such Materials, except as may be expressly provided in the terms and conditions accompanying the Materials. You agree that when requesting and receiving TECHNICAL SUPPORT FROM DTS SeRVICES, you will not provide Apple with any INFORMATION, including that incorporated in your software, that is confidential to you or any third party. YOU AGREE THAT Any notice, legend, or label to the contrary contained in any SUCH materials provided by you to Apple shall be without effect. Apple shall be free to use all information it receives from you in any manner it deems appropriate, subject to any applicable patents or copyrights. Apple reserves the right to reject a request for DTS Services at any time and for any reason, in which event Apple may credit you for the rejected support request. You shall be solely responsible for any restoration of lost or altered files, data, programs or other materials provided.
 
9. Amendment; Communication. Apple reserves the right, at its discretion, to modify this Agreement, including any rules and policies at any time. You will be responsible for reviewing and becoming familiar with any such modifications (including new terms, updates, revisions, supplements, modifications, and additional rules, policies, terms and conditions)(“ Additional Terms ”) communicated to you by Apple. All Additional Terms are hereby incorporated into this Agreement by this reference and your continued use of the Site will indicate your acceptance of any Additional Terms. In addition, Apple may be sending communications to you from time to time. Such communications may be in the form of phone calls and/or emails and may include, but not be limited to, marketing materials, technical information, and updates and/or changes regarding your participation as a Registered Apple Developer. By agreeing to this Agreement, you consent that Apple may provide you with such communications.
 
10. Term and Termination. Apple may terminate or suspend you as a Registered Apple Developer at any time in Apple’s sole discretion. If Apple terminates you as a Registered Apple Developer, Apple reserves the right to deny your reapplication at any time in Apple’s sole discretion. You may terminate your participation as a Registered Apple Developer at any time, for any reason, by notifying Apple in writing of your intent to do so. Upon any termination or, at Apple’s discretion, suspension, all rights and licenses granted to you by Apple will cease, including your right to access the Site, and you agree to destroy any and all Apple Confidential Information that is in your possession or control. At Apple’s request, you agree to provide certification of such destruction to Apple. No refund or partial refund of any fees paid hereunder or any other fees will be made for any reason. Following termination of this Agreement, Sections 1, 3-5, 7 (but only for so long as the duration specified by Apple for such usage), 10-19 shall continue to bind the parties.
 
11. Apple Independent Development. Nothing in this Agreement will impair Apple’s right to develop, acquire, license, market, promote or distribute products, software or technologies that perform the same or similar functions as, or otherwise compete with, any other products, software or technologies that you may develop, produce, market, or distribute. In the absence of a separate written agreement to the contrary, Apple will be free to use any information, suggestions or recommendations you provide to Apple pursuant to this Agreement for any purpose, subject to any applicable patents or copyrights.
 
 

 
2

 
 
12. Use Of Apple Trademarks, Logos, etc. You agree to follow Apple’s Guidelines For Using Apple Trademarks and Copyrights as published on Apple’s website at www.apple.com/legal/guidelinesfor3rdparties.html (“ Guidelines ”) and as may be modified from time to time. You agree not to use the marks “Apple,” the Apple Logo, “Mac”, “iPhone,” “iPod touch” or any other marks belonging or licensed to Apple in any way except as expressly authorized in writing by Apple in each instance or as permitted in Apple’s Guidelines. You agree that all goodwill arising out of your authorized use of Apple’s marks shall inure to the benefit of and belong to Apple.
 
13. No Warranty. APPLE AND ITS AFFILIATES, SUBSIDIARIES, OFFICERS, DIRECTORS, EMPLOYEES, AGENTS, PARTNERS, AND LICENSORS (COLLECTIVELY, “ APPLE ” FOR PURPOSES OF THIS SECTION 13 AND 14) DO NOT PROMISE THAT THE SITE, CONTENT, SERVICES (INCLUDING, FUNCTIONALITY OR FEATURES OF THE FOREGOING), COMPATIBILITY LABS, DTS SERVICES, OR ANY OTHER INFORMATION OR MATERIALS THAT YOU RECEIVE AS A REGISTERED APPLE DEVELOPER (COLLECTIVELY, THE “ SERVICE ” FOR PURPOSES OF THIS SECTION 13 AND 14) WILL BE ACCURATE, RELIABLE, TIMELY, SECURE, ERROR-FREE OR UNINTERRUPTED, OR THAT ANY DEFECTS WILL BE CORRECTED. THE SERVICE IS PROVIDED ON AN “AS-IS” AND “AS-AVAILABLE” BASIS AND THE SERVICE IS SUBJECT TO CHANGE WITHOUT NOTICE. APPLE CANNOT ENSURE THAT ANY CONTENT (INCLUDING FILES, INFORMATION OR OTHER DATA) YOU ACCESS OR DOWNLOAD FROM THE SERVICE WILL BE FREE OF VIRUSES, CONTAMINATION OR DESTRUCTIVE FEATURES. FURTHER, APPLE DOES NOT GUARANTEE ANY RESULTS OR IDENTIFICATION OR CORRECTION OF PROBLEMS AS PART OF THE SERVICE AND APPLE DISCLAIMS ANY LIABILITY RELATED THERETO. APPLE DISCLAIMS ALL WARRANTIES, EXPRESS OR IMPLIED, INCLUDING ANY WARRANTIES OF ACCURACY, NON-INFRINGEMENT, MERCHANTABILITY AND FITNESS FOR A PARTICULAR PURPOSE. APPLE DISCLAIMS ANY AND ALL LIABILITY FOR THE ACTS, OMISSIONS AND CONDUCT OF ANY THIRD PARTIES IN CONNECTION WITH OR RELATED TO YOUR USE OF THE SERVICE. YOU ASSUME TOTAL RESPONSIBILITY AND ALL RISKS FOR YOUR USE OF THE SERVICE, INCLUDING, BUT NOT LIMITED TO, ANY INFORMATION OBTAINED THEREON. YOUR SOLE REMEDY AGAINST APPLE FOR DISSATISFACTION WITH THE SERVICE IS TO STOP USING THE SERVICE. THIS LIMITATION OF RELIEF IS A PART OF THE BARGAIN BETWEEN THE PARTIES. To the extent that Apple makes any pre-release or other products, services or information related thereto available to you as a Registered Apple Developer, you understand that Apple is under no obligation to provide updates, enhancements, or corrections, or to notify you of any product or services changes that Apple may make, or to publicly announce or introduce the product(s) or service at any time in the future.
 
14. Disclaimer of Liability. TO THE EXTENT NOT PROHIBITED BY LAW, UNDER NO CIRCUMSTANCES SHALL APPLE BE LIABLE WITH RESPECT TO THE SERVICE FOR SPECIAL, INDIRECT, INCIDENTAL, OR CONSEQUENTIAL DAMAGES, INCLUDING WITHOUT LIMITATION, DAMAGES RESULTING FROM DELAY OF DELIVERY OR FROM LOSS OF PROFITS, DATA, BUSINESS OR GOODWILL, ON ANY THEORY OF LIABILITY, WHETHER ARISING UNDER TORT (INCLUDING NEGLIGENCE), CONTRACT OR OTHERWISE, WHETHER OR NOT APPLE HAS BEEN ADVISED OR IS AWARE OF THE POSSIBILITY OF SUCH DAMAGES. IF, NOTWITHSTANDING ANY OTHER PROVISIONS OF THIS AGREEMENT, APPLE IS FOUND TO BE LIABLE TO YOU FOR ANY DAMAGE OR LOSS THAT ARISES OUT OF OR IS IN ANY WAY CONNECTED TO YOUR USE OF THE SERVICE, APPLE’S ENTIRE LIABILITY FOR DIRECT DAMAGES UNDER THIS AGREEMENT SHALL BE LIMITED TO FIFTY DOLLARS ($50.00).
 
15. Third-Party Notices. Third party software provided by Apple to you as a Registered Apple Developer may be accompanied by its own licensing terms, in which case such licensing terms will govern your use of that particular third party software. Mention of third parties and third party products in any materials, advertising, promotions or coupons provided to you as a Registered Apple Developer is for informational purposes only and constitutes neither an endorsement nor a recommendation. All third party product specifications and descriptions are supplied by the respective vendor or supplier, and Apple shall have no responsibility with regard to the selection, performance, or use of these vendors or products. All understandings, agreements, or warranties, if any, take place directly between the vendors and the prospective users.
 
16. Export Control. You may not use or otherwise export or re-export any Apple Confidential Information received from Apple except as authorized by United States law and the laws of the jurisdiction in which the Apple Confidential Information was obtained. In particular, but without limitation, the Apple Confidential Information may not be exported or re-exported (a) into any U.S. embargoed countries or (b) to anyone on the U.S. Treasury Department’s list of Specially Designated Nationals or the U.S. Department of Commerce Denied Person’s List or Entity List. By becoming a Registered Apple Developer or using any Apple Confidential Information, you represent and warrant that you are not located in any such country or on any such list. You also agree that you will not use any Apple Confidential Information for any purposes prohibited by United States law, including, without limitation, the development, design, manufacture or production of nuclear, chemical or biological weapons.
 
17. Governing Law. This Agreement will be governed by and construed in accordance with the laws of the State of California, excluding its conflict of law provisions. The parties further submit to and waive any objections to personal jurisdiction of and venue in any of the following forums: U.S. District Court for the Northern District of California, California Superior Court for Santa Clara County, Santa Clara County Municipal Court, or any other forum in Santa Clara County, for any disputes arising out of this Agreement.
 
18. Government End Users. Certain Apple Confidential Information may be considered “Commercial Items”, as that term is defined at 48 C.F.R. §2.101, consisting of “Commercial Computer Software” and “Commercial Computer Software Documentation”, as such terms are used in 48 C.F.R. §12.212 or 48 C.F.R. §227.7202, as applicable. Consistent with 48 C.F.R. §12.212 or 48 C.F.R. §227.7202-1 through 227.7202-4, as applicable, the Commercial Computer Software and Commercial Computer Software Documentation are being licensed to U.S. Government end users (a) only as Commercial Items and (b) with only those rights as are granted to all other end users pursuant to the terms and conditions herein. Unpublished-rights reserved under the copyright laws of the United States.
 
19. Miscellaneous. No delay or failure to take action under this Agreement will constitute a waiver unless expressly waived in writing, signed by a duly authorized representative of Apple, and no single waiver will constitute a continuing or subsequent waiver. This Agreement will bind your successors but may not be assigned, in whole or part, by you without the written approval of an authorized representative of Apple. Any nonconforming assignment shall be null and void. If any provision is found to be unenforceable or invalid, that provision shall be limited or eliminated to the minimum extent necessary so that this Agreement shall otherwise remain in full force and effect and enforceable. This Agreement constitutes the entire agreement between the parties with respect to its subject matter and supersedes all prior or contemporaneous understandings regarding such subject matter. No addition to or removal or modification of any of the provisions of this Agreement will be binding upon Apple unless made in writing and signed by an authorized representative of Apple. The parties hereto confirm that they have requested that this Agreement and all attachments and related documents be drafted in English. Les parties ont exigé que le présent contrat et tous les documents connexes soient rédigés en anglais.

 
 
 
 
 3

Exhibit 10.3
 
PLEASE READ THE FOLLOWING LICENSE AGREEMENT TERMS AND CONDITIONS CAREFULLY BEFORE DOWNLOADING OR USING THE APPLE SOFTWARE. THESE TERMS AND CONDITIONS CONSTITUTE A LEGAL AGREEMENT BETWEEN YOU AND APPLE.
 
iOS Developer Program License Agreement
 
Purpose
You would like to use the Apple Software (as defined below) to develop one or more Applications (as defined below) for Apple-branded products running the iOS. Apple is willing to grant You a limited license to use the Apple Software to develop and test Your Applications on the terms and conditions set forth in this Agreement.
 
Applications developed under this Agreement can be distributed in two ways: (1) through the App Store, if selected by Apple, and (2) on a limited basis for use on Registered Devices (as defined below).
 
Applications that meet Apple’s Documentation and Program Requirements may be submitted for consideration by Apple for distribution via the App Store. If submitted by You and selected by Apple, Your Applications will be digitally signed by Apple and distributed through the App Store. Distribution of free (no charge) Applications that do not make use of the In App Purchase API will be subject to the distribution terms contained in Schedule 1 to this Agreement. If You would like to distribute Applications for which You will charge a fee or would like to use the In App Purchase API in free Applications, You must enter into a separate agreement with Apple (“Schedule 2”).
   
1. Accepting this Agreement; Definitions
 
1.1 Acceptance
In order to use the Apple Software and related services, You must first agree to this License Agreement. If You do not or cannot agree to this License Agreement, You are not permitted to use the Apple Software or related services. Do not download or use the Apple Software or any related services in that case.
 
You accept and agree to the terms of this License Agreement on Your own behalf and/or on behalf of Your company, organization, educational institution, or agency, instrumentality, or department of the federal government as its authorized legal representative, by doing either of the following:
(a) checking the box displayed at the end of this Agreement if You are reading this on an Apple website; or
(b) clicking an “Agree” or similar button, where this option is provided by Apple.

1.2 Definitions
Whenever capitalized in this Agreement:
 
“Advertising API” means the Documented API that enables You to use Apple’s advertising service to deliver advertising to Your Application.
 
“Agreement” means this iOS Developer Program License Agreement, including any attachments, Schedule 1 and any exhibits thereto which are hereby incorporated by this reference.
 
“App Store” means an electronic store and its storefronts branded, and owned and/or controlled by Apple or an affiliate of Apple.
 
“Apple” means Apple Inc., a California corporation with its principal place of business at One Infinite Loop, Cupertino, California 95014, U.S.A.

 
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“Apple Push Notification” or “APN” means the Apple Push Notification service that Apple may provide to You to enable You to transmit Push Notifications to Your Application.
 
“APN API” means the Documented API that enables You to use the APN to deliver a Push Notification to Your Application.
 
“Apple Software” collectively means: (a) the SDK, (b) the iOS, and (c) the Provisioning Profiles, and includes any Updates to any of the foregoing that may be provided to You by Apple.
 
“Apple Subsidiary” means a corporation at least fifty percent (50%) of whose outstanding shares or securities (representing the right to vote for the election of directors or other managing authority) are owned or controlled, directly or indirectly, by Apple, and that is involved in the operation of or otherwise affiliated with the App Store, including without limitation Apple Pty Limited, iTunes S.à.r.l., and iTunes K.K.
 
“Application” means one or more software programs developed by You in compliance with the Documentation and the Program Requirements, under Your own trademark or brand, and for specific use with an iOS Product, including bug fixes, updates, upgrades, modifications, enhancements, supplements to, revisions, new releases and new versions of such software programs.
 
“Authorized Developers” means Your employees and contractors, members of Your organization or, if You are an educational institution, Your faculty and staff who (a) each have an active and valid Registered Apple Developer account with Apple, (b) have a demonstrable need to know or use the Apple Software in order to develop and test Applications, and (c) to the extent such individuals will have access to Apple Confidential Information, each have written and binding agreements with You to protect the unauthorized use and disclosure of such Apple Confidential Information.
 
“Authorized Test Devices” means iOS Products owned or controlled by You that have been designated by You for testing and development purposes and specifically registered with Apple under this Program.
 
“Documentation” means any technical or other specifications or documentation that Apple may provide to You for use in connection with the Apple Software.
 
“Documented API(s)” means the Application Programming Interface(s) documented by Apple in published Apple Documentation and which are contained in the Apple Software.
 
“FOSS” (Free and Open Source Software) means any software that is subject to terms that, as a condition of use, copying, modification or redistribution, require such software and/or derivative works thereof to be disclosed or distributed in source code form, to be licensed for the purpose of making derivative works, or to be redistributed free of charge, including without limitation software distributed under the GNU General Public License or GNU Lesser/Library GPL.
 
“Game Center” means the gaming community service and related APIs provided by Apple for use by You only in connection with Your Application. The Game Center may consist of an Apple confidential, pre-release version of the Game Center service or a production, non-Apple confidential, commercially-available version of such service.
 
“In App Purchase API” means the Documented API that enables additional content, functionality or services to be purchased and delivered or made available for use within an Application.
 
“iOS” means the iOS operating system software provided by Apple for use by You only in connection with Your Application development and testing, which, from time to time during the Term, may consist of an Apple confidential, pre-release version of the iOS operating system software or a gold master “GM” production, non-Apple confidential, commercially-available version of the iOS operating system software (or any successor thereto).

 
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“iOS Accessory” means a non-Apple branded hardware device that interfaces, communicates, or otherwise interoperates with or controls an iOS Product through the iPod Accessory Protocol.
 
“iOS Product” means an Apple-branded product that runs the iOS.
 
“iPod Accessory Protocol” or “iAP” means Apple’s proprietary protocol for communicating with iOS Products and which is licensed under Apple’s MFi Licensing Program.
 
“iTunes Connect” means Apple’s proprietary online content management tool for Applications.
 
“Licensed Application” means an Application that (a) meets and complies with all of the Documentation and Program Requirements, and (b) has been selected and digitally signed by Apple for production distribution.
 
“Licensed Application Information” means screen shots, images, artwork, icons and/or any other copyrighted text, descriptions, representations or information relating to a Licensed Application that You provide to Apple for use in accordance with Schedule 1, or, if applicable, Schedule 2.
 
“Local Notification” means a message, including any content or data therein, that Your Application delivers to end users at a pre-determined time or when Your Application is running in the background and another application is running in the foreground.
 
“MFi Licensing Program” means a separate Apple program that offers iOS Accessory developers, among other things, a license to incorporate certain Apple technology into a hardware device to interface, communicate or otherwise interoperate with or control iOS Products.
 
“MFi Licensee” means a party who has been granted a license by Apple under the MFi Licensing Program.
 
“Maps API” means the Documented API that enables You to add mapping functionality to Applications.
 
“Multitasking” means the ability of Applications to run in the background while other Applications are running on the iOS.
 
“Program” means the overall iOS application development, testing, digital signing, and distribution program contemplated in this Agreement.
 
“Program Requirements” mean the technical, human interface, design, product category, security, performance, and other criteria and requirements specified by Apple, including but not limited to the current set of requirements set forth in Section 3.3, as they may be modified from time to time by Apple in accordance with this Agreement.
 
“Provisioning Profiles” means the provisioning profiles provided by Apple for use by You in connection with Your Application development and testing, and limited distribution of Your Applications for use on Registered Devices.
 
“Push Application ID” means the unique identification number or other identifier that Apple assigns to an Application in order to permit it to access and use the APN.
 
“Push Notification” means a message, including any content or data therein, that You transmit to end users and that is delivered in Your Application.

 
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“Registered Devices” means iOS Products owned or controlled by You, or owned by individuals who are affiliated with You, that You have specifically registered with Apple under this Program.
 
“Security Solution” means the proprietary Apple content protection system marketed as Fairplay, to be applied to Licensed Applications distributed on the App Store to administer Apple’s standard usage rules for Licensed Applications, as such system and rules may be modified by Apple from time to time.
 
“SDK” (Software Development Kit) means the Documentation, software (source code and object code), applications, sample code, simulator, tools, libraries, APIs, data, files, and materials provided by Apple for use by You in connection with Your Application development, and includes any Updates that may be provided by Apple to You pursuant to this Agreement. “Term” means the period described in Section 12.
 
“Updates” means bug fixes, updates, upgrades, modifications, enhancements, supplements, and new releases or versions of the Apple Software, or to any part of the Apple Software.
 
“You”, “Your” and “Licensee” means and refers to the person(s) or legal entity using the Apple Software or otherwise exercising rights under this Agreement. If You are entering into this Agreement on behalf of Your company, organization, educational institution, or an agency, instrumentality, or department of the federal government, “You” or “Your” refers to such entity or organization as well.
 
2. Internal Use License and Restrictions
 
2.1 Permitted Uses and Restrictions
Subject to the terms and conditions of this Agreement, Apple hereby grants You during the Term, a limited, non-exclusive, personal, revocable, non-sublicensable and non-transferable license to:
 
(a) Install a reasonable number of copies of the SDK portion of the Apple Software on Apple-branded computers owned or controlled by You, to be used internally by You or Your Authorized Developers for the sole purpose of developing or testing Applications;
 
(b) Make and distribute a reasonable number of copies of the Documentation to Authorized Developers for their internal use only and for the sole purpose of developing or testing Applications;
 
(c) Install one (1) copy of the iOS and a Provisioning Profile on each of Your Authorized Test Devices, up to the number of Authorized Test Devices that You have registered and acquired licenses for, to be used internally by You or Your Authorized Developers for the sole purpose of developing and testing Your Applications; and
 
(d) Install a Provisioning Profile on each of Your Registered Devices, up to the limited number of Registered Devices that You have registered and acquired licenses for, for the sole purpose of enabling the distribution and use of Your Applications on such Registered Devices.
 
Apple reserves the right to set the limited number of iOS Products that each Licensee may register with Apple and obtain licenses for under this Program (a “Block of Registered Device Licenses”), as specified on the Program web portal. For the purposes of limited distribution on Registered Devices under Section 7.2, each company, organization, educational institution or affiliated group may only acquire one (1) Block of Registered Device Licenses per company, organization, educational institution or group, unless otherwise agreed in writing by Apple. You therefore agree not to knowingly acquire, or to cause others to acquire, more than one Block of Registered Device Licenses for the same company, organization, educational institution or group.
 
 
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2.2 Authorized Test Devices
As long as an Authorized Test Device contains any pre-release versions of the Apple Software or uses pre-release versions of services, You agree to restrict access to such Authorized Test Device to Your Authorized Developers and to not disclose, show, rent, lease, lend, sell or otherwise transfer such Authorized Test Device to any third party. You further agree to take reasonable precautions to safeguard, and to instruct Your Authorized Developers to safeguard, all Authorized Test Devices from loss or theft.
 
You acknowledge that by installing any pre-release Apple Software or using any pre-release services on Your Authorized Test Devices, these Devices may be “locked” into testing mode and may not be capable of being restored to their original condition. Any use of any pre-release Apple Software or pre-release services are for evaluation and development purposes only, and You should not use any pre-release Apple Software or pre-release services in a commercial operating environment or with important data. You should back up any data prior to using the pre-release Apple Software or pre-release services. Apple shall not be responsible for any costs, expenses or other liabilities You may incur as a result of provisioning Your Authorized Test Devices and Registered Devices, Your Application development or the installation or use of this Apple Software, including but not limited to any damage to any equipment, software or data.
 
2.3 Confidential Nature of Pre-Release Apple Software and services
From time to time during the Term, Apple may provide You with pre-release versions of the Apple Software or related services that constitute Apple Confidential Information and are subject to the confidentiality obligations of this Agreement. Such pre-release Apple Software and related services should not be relied upon to perform in the same manner as a final-release commercial-grade product, nor used with data that is not sufficiently and regularly backed up, and may include features, functionality or APIs for software or services that are not yet available. You acknowledge that Apple may not have publicly announced the availability of such pre-release Apple Software or related services, that Apple has not promised or guaranteed to You that such pre-release software or services will be announced or made available to anyone in the future, and that Apple has no express or implied obligation to You to announce or commercially introduce such software or services or any similar or compatible technology. You expressly acknowledge and agree that any research or development that You perform with respect to pre-release versions of the Apple Software or related services is done entirely at Your own risk.
 
2.4 Copies
You agree to retain and reproduce in full the Apple copyright, disclaimers and other proprietary notices (as they appear in the Apple Software and related services and Documentation provided) in all copies of the Apple Software and Documentation that You are permitted to make under this Agreement.
 
2.5 Ownership
Apple retains all rights, title, and interest in and to the Apple Software and any Updates it may make available to You under this Agreement. You agree to cooperate with Apple to maintain Apple’s ownership of the Apple Software, and, to the extent that You become aware of any claims relating to the Apple Software, You agree to use reasonable efforts to promptly provide notice of any such claims to Apple. The parties acknowledge that this Agreement does not give Apple any ownership interest in Your Applications.
 
 
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2.6 No Other Permitted Uses
Except as otherwise set forth in this Agreement, You agree not to rent, lease, lend, upload to or host on any website or server, sell, redistribute, or sublicense the Apple Software or any services, in whole or in part, or to enable others to do so. You may not use the Apple Software or any services provided hereunder for any purpose not expressly permitted by this Agreement. You agree not to install, use or run the SDK on any non-Apple-branded computer, not to install, use or run the iOS and Provisioning Profiles on or in connection with devices other than iOS Products, or to enable others to do so. You may not and You agree not to, or to enable others to, copy (except as expressly permitted under this Agreement), decompile, reverse engineer, disassemble, attempt to derive the source code of, modify, decrypt, or create derivative works of the Apple Software or any services provided by the Apple Software or otherwise provided hereunder, or any part thereof (except as and only to the extent any foregoing restriction is prohibited by applicable law or to the extent as may be permitted by licensing terms governing use of open-sourced components or sample code included with the Apple Software). You agree not to exploit any services provided hereunder in any unauthorized way whatsoever, including but not limited to, by trespass or burdening network capacity. Any attempt to do so is a violation of the rights of Apple and its licensors of the Apple Software or services. If You breach any of the foregoing restrictions, You may be subject to prosecution and damages. All licenses not expressly granted in this Agreement are reserved and no other licenses, immunity or rights, express or implied are granted by Apple, by implication, estoppel, or otherwise. This Agreement does not grant You any rights to use any trademarks, logos or service marks belonging to Apple, including but not limited to the iPhone or iPod word marks. If You make reference to any Apple products or technology or use Apple’s trademarks, You agree to comply with the published guidelines at http://www.apple.com/legal/trademark/guidelinesfor3rdparties.html, as modified by Apple from time to time.
 
2.7 Updates; No Support or Maintenance
Apple may extend, enhance, or otherwise modify the Apple Software or services provided hereunder at any time without notice, but Apple shall not be obligated to provide You with any Updates to the Apple Software. If Updates are made available by Apple, the terms of this Agreement will govern such Updates, unless the Update is accompanied by a separate license in which case the terms of that license will govern. Apple is not obligated to provide any maintenance, technical or other support for the Apple Software or services. You acknowledge that Apple has no express or implied obligation to announce or make available any Updates to the Apple Software or to any services to anyone in the future. Should an Update be made available, it may have APIs, features, services or functionality that are different from those found in the Apple Software licensed hereunder or the services provided hereunder.
 
3. Your Obligations
 
3.1 General
You certify to Apple and agree that:
(a) You are of the legal age of majority in the jurisdiction in which You reside (at least 18 years of age in many countries) and have the right and authority to enter into this Agreement on Your own behalf, or if You are entering into this Agreement on behalf of Your company, organization, educational institution, or agency, instrumentality, or department of the federal government, that You have the right and authority to legally bind such entity or organization to the terms and obligations of this Agreement;
(b) All information provided by You to Apple or Your end users in connection with this Agreement or Your Application, including without limitation Licensed Application Information, will be current, true, accurate, supportable and complete and, with regard to information You provide to Apple, You will promptly notify Apple of any changes to such information. Further, You agree that Apple may share such information (including email address and mailing address) with third parties who have a need to know for purposes related to Your Application (e.g., intellectual property questions, customer service inquiries, etc.);
(c) You will comply with the terms of and fulfill Your obligations under this Agreement and You agree to monitor and be responsible for Your Authorized Developers’ use of the Apple Software and services and Authorized Test Devices and their compliance with the terms of this Agreement;
(d) You will be solely responsible for all costs, expenses, losses and liabilities incurred, and activities undertaken by You and Authorized Developers in connection with the Apple Software and services, the Registered Devices, Your Applications and Your related development and distribution efforts, including, but not limited to, any related development efforts, network and server equipment, Internet service(s), or any other hardware, software or services used by You in connection with Your use of any services;

 
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(e) For the purposes of Schedule 1(if applicable), You represent and warrant that You own or control the necessary rights in order to appoint Apple and Apple Subsidiaries as Your worldwide agent for the delivery of Your Licensed Applications, and that the fulfillment of such appointment by Apple and Apple Subsidiaries shall not violate or infringe the rights of any third party; and (f) You will not act in any manner which conflicts or interferes with any existing commitment or obligation You may have and no agreement previously entered into by You will interfere with Your performance of Your obligations under this Agreement.
 
3.2 Use of the Apple Software
As a condition to using the Apple Software and any services, You agree that:
(a) You will only use the Apple Software and any services for the purposes and in the manner expressly permitted by this Agreement and in accordance with all applicable laws and regulations;
(b) You will not use the Apple Software or any services for any unlawful or illegal activity, nor to develop any Application which would commit or facilitate the commission of a crime, or other tortious, unlawful or illegal act;
(c) Your Application will be developed in compliance with the Documentation and the Program Requirements, the current set of which is set forth in Section 3.3 below;
(d) To the best of Your knowledge and belief, Your Application and Licensed Application Information do not and will not violate, misappropriate, or infringe any Apple or third party copyrights, trademarks, rights of privacy and publicity, trade secrets, patents, or other proprietary or legal rights (e.g. musical composition or performance rights, video rights, photography or image rights, logo rights, third party data rights, etc. for content and materials that may be included in Your Application);
(e) You will not, through use of the Apple Software, services or otherwise, create any Application or other program that would disable, hack or otherwise interfere with the Security Solution, or any security, digital signing, digital rights management, verification or authentication mechanisms implemented in or by the iOS, this Apple Software, any services or other Apple software or technology, or enable others to do so;
(f) You will not, directly or indirectly, commit any act intended to interfere with the Apple Software or related services, the intent of this Agreement, or Apple’s business practices including, but not limited to, taking actions that may hinder the performance or intended use of the App Store or the Program (e.g., submitting fraudulent reviews of Your own Application or any third party application, choosing a name for Your Application that is substantially similar to the name of a third party application in order to create consumer confusion, or squatting on application names to prevent legitimate third party use); and
(g) Applications developed using the Apple Software may only be distributed if selected by Apple (in its sole discretion) for distribution via the App Store or for limited distribution on Registered Devices (ad hoc distribution) as contemplated in this Agreement.
 
3.3 Program Requirements for Applications
Any Application developed using this Apple Software must meet all of the following criteria and requirements, as they may be modified by Apple from time to time:
 
APIs and Functionality:
3.3.1 Applications may only use Documented APIs in the manner prescribed by Apple and must not use or call any private APIs.
 
3.3.2 An Application may not download or install executable code. Interpreted code may only be used in an Application if all scripts, code and interpreters are packaged in the Application and not downloaded. The only exception to the foregoing is scripts and code downloaded and run by Apple’s built-in WebKit framework.
 
3.3.3 Without Apple’s prior written approval or as permitted under Section 3.3.23 (In App Purchase API), an Application may not provide, unlock or enable additional features or functionality through distribution mechanisms other than the App Store.

 
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3.3.4 An Application may only read data from or write data to an Application’s designated container area on the device, except as otherwise specified by Apple.
 
3.3.5 An Application must have at least the same features and functionality when run by a user in compatibility mode on an iPad (e.g., an iPhone app running in an equivalent iPhone-size window on an iPad must perform in substantially the same manner as when run on the iPhone; provided that this obligation will not apply to any feature or functionality that is not supported by a particular hardware device, such as a video recording feature on a device that does not have a camera). Further, You agree not to interfere or attempt to interfere with the operation of Your Application in compatibility mode.
 
3.3.6 You may use the Multitasking services only for their intended purposes as described in the Documentation.
 
User Interface, Data Collection, Local Laws and Privacy:
 
3.3.7 Applications must comply with the Human Interface Guidelines and other Documentation provided by Apple.
 
3.3.8 Any form of user or device data collection, or image, picture or voice capture or recording (collectively “Recordings”), and any form of data, content or information collection, processing, maintenance, uploading, syncing, storage, transmission, sharing, disclosure or use performed by, through or in connection with Your Application must comply with all applicable privacy laws and regulations as well as any related Program Requirements, including but not limited to any notice or consent requirements. In particular, a reasonably conspicuous audio, visual or other indicator must be displayed to the user as part of the Application to indicate that a Recording is taking place.
 
3.3.9 You and Your Applications may not collect user or device data without prior user consent, and then only to provide a service or function that is directly relevant to the use of the Application, or to serve advertising. You may not use analytics software in Your Application to collect and send device data to a third party.
 
3.3.10 You must provide clear and complete information to users regarding Your collection, use and disclosure of user or device data. Furthermore, You must take appropriate steps to protect such data from unauthorized use, disclosure or access by third parties. If a user ceases to consent or affirmatively revokes consent for Your collection, use or disclosure of his or her user or device data, You must promptly cease all such use.
 
3.3.11 Applications must comply with all applicable criminal, civil and statutory laws and regulations, including those in any jurisdictions in which Your Applications may be offered or made available. In addition:
 
- You and the Application must comply with all applicable privacy and data collection laws and regulations with respect to any collection, use or disclosure of user or device data.
 
- Applications may not be designed or marketed for the purpose of harassing, abusing, spamming, stalking, threatening or otherwise violating the legal rights (such as the rights of privacy and publicity) of others.
 
- Neither You nor Your Application may perform any functions or link to any content, services, information or data or use any robot, spider, site search or other retrieval application or device to scrape, mine, retrieve, cache, analyze or index software, data or services provided by Apple or its licensors, or obtain (or try to obtain) any such data, except the data that Apple expressly provides or makes available to You in connection with such services. You agree that You will not collect, disseminate or use any such data for any unauthorized purpose.

 
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3.3.12 For Applications that use location-based APIs or otherwise provide location-based services, such Applications may not be designed or marketed for automatic or autonomous control of vehicles, aircraft, or other mechanical devices; dispatch or fleet management; or emergency or life-saving purposes. In addition:
 
- Applications that offer location-based services or functionality must notify and obtain consent from an individual before his or her location data is collected, transmitted or otherwise used by the Application.
 
3.3.13 For Applications that use location-based APIs for real-time route guidance (including, but not limited to, turn-by-turn route guidance and other routing that is enabled through the use of a sensor), You must have an end user license agreement that includes the following notice: YOUR USE OF THIS REAL TIME ROUTE GUIDANCE APPLICATION IS AT YOUR SOLE RISK. LOCATION DATA MAY NOT BE ACCURATE.
 
3.3.14 Applications must not disable, override or otherwise interfere with any Apple-implemented system alerts, warnings, display panels, consent panels and the like, including, but not limited to, those that are intended to notify the user that the user’s location data is being collected, transmitted, maintained, processed or used, or intended to obtain consent for such use. If consent is denied or withdrawn, Applications may not collect, transmit, maintain, process or utilize the user’s location data or perform any other actions for which the user’s consent has been denied or withdrawn.
 
3.3.15 If Your Application accesses the Google Mobile Maps (GMM) service through the Maps API, use of the GMM Service is subject to Google’s Terms of Service which will be set forth at: http://code.google.com/apis/maps/terms/iPhone.html. If You do not accept such Google Terms of Service, including, but not limited to all limitations and restrictions therein, You may not use the GMM service in Your Application. You acknowledge and agree that use of the GMM Service in Your Application will constitute Your acceptance of such Terms of Service.
 
Content and Materials:
 
3.3.16 Any master recordings and musical compositions embodied in Your Application must be wholly-owned by You or licensed to You on a fully paid-up basis and in a manner that will not require the payment of any fees, royalties and/or sums by Apple to You or any third party. In addition, if Your Application will be distributed outside of the United States, any master recordings and musical compositions embodied in Your Application (a) must not fall within the repertoire of any mechanical or performing/communication rights collecting or licensing organization now or in the future and (b) if licensed, must be exclusively licensed to You for Your Application by each applicable copyright owner.
 
3.3.17  If Your Application includes or will include any other content, You must either own all such content or have permission from the content owner to use it in Your Application.
 
3.3.18 Applications may be rejected if they contain content or materials of any kind (text, graphics, images, photographs, sounds, etc.) that in Apple’s reasonable judgment may be found objectionable, for example, materials that may be considered obscene, pornographic, or defamatory.
 
3.3.19 Applications must not contain any malware, malicious or harmful code, program, or other internal component (e.g. computer viruses, trojan horses, “backdoors”) which could damage, destroy, or adversely affect the Apple Software, services, iOS Products or other software, firmware, hardware, data, systems, services, or networks.

 
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3.3.20  If Your Application includes any FOSS, You agree to comply with all applicable FOSS licensing terms. You also agree not to use any FOSS in the development of Your Application in such a way that would cause the non-FOSS portions of the Apple Software to be subject to any FOSS licensing terms or obligations.
 
3.3.21 Your Application may include promotional sweepstake or contest functionality provided that You are the sole sponsor of the promotion and that You and Your Application comply with any applicable laws and fulfill any applicable registration requirements in the country or territory where You make Your Application available and the promotion is open. You agree that You are solely responsible for any promotion and any prize, and also agree to clearly state in binding official rules for each promotion that Apple is not a sponsor of, or responsible for conducting, the promotion.
 
3.3.22 Your Application may include a direct link to a page on Your web site where you include the ability for an end user to make a charitable contribution, provided that You comply with any applicable laws (which may include providing a receipt), and fulfill any applicable regulation or registration requirements, in the country or territory where You enable the charitable contribution to be made. You also agree to clearly state that Apple is not the fundraiser.
 
In App Purchase API:
 
3.3.23 All use of the In App Purchase API must be in accordance with the terms of this Agreement (including the Program Requirements) and Attachment 2 (Additional Terms for Use of the In App Purchase API).
 
Advertising API:
 
3.3.24 If You choose to use the Advertising API in Your Application, then You must enter into a separate written agreement with Apple and/or an Apple Subsidiary before any distribution of Your Licensed Application that uses the Advertising API may take place via the App Store.
 
iOS Accessories:
 
3.3.25 Your Application may interface, communicate, or otherwise interoperate with or control an iOS Accessory (as defined above) through Bluetooth or Apple’s 30-pin dock connector only if (i) such iOS Accessory is licensed under Apple’s MFi Licensing Program at the time that You initially submit Your Application, (ii) the MFi Licensee has added Your Application to a list of those approved for interoperability with their iOS Accessory, and (iii) the MFi Licensee has received approval from the Apple MFi Licensing Program for such addition.
 
Regulatory Compliance for Health, Medical and Related Apps:
 
3.3.26 You will fulfill any applicable regulatory requirements, including full compliance with all applicable laws, regulations, and policies related to the manufacturing, marketing, sale and distribution of Your Application in the United States, and in particular the requirements of the U.S. Food and Drug Administration (“FDA”), and the laws, regulations and policies of any other applicable regulatory bodies in any countries or territories where You use or make Your Application available. However, You agree that you will not seek any regulatory marketing permissions or make any determinations that may result in any Apple products being deemed regulated or that may impose any obligations or limitations on Apple. By submitting Your Application to Apple for selection for distribution via the App Store, You represent and warrant that You are in full compliance with any applicable laws, regulations, and policies, including but not limited to all FDA laws, regulations and policies, related to the manufacturing, marketing, sale and distribution of Your Application in the United States, as well as in other countries or territories where You plan to make Your Application available via the App Store. You also represent and warrant that You will market Your Application only for its cleared or approved intended use/indication for use, and only in strict compliance with applicable regulatory requirements. Upon Apple’s request, You agree to promptly provide any such clearance documentation to support the marketing of Your Application. You agree to promptly notify Apple in accordance with the procedures set forth in Section 15.6 of any complaints or threats of complaints regarding Your Application in relation to any such regulatory requirements, in which case Apple may remove Your Application from the App Store.

 
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Cellular Network:
 
3.3.27 If an Application requires or will have access to the cellular network, then additionally such Application:
 
- Must comply with Apple’s best practices and other guidelines on how Applications should access and use the cellular network; and
 
- Must not in Apple’s reasonable judgment excessively use or unduly burden network capacity or bandwidth.
 
3.3.28 Because some mobile network operators may prohibit or restrict the use of Voice over Internet Protocol (VoIP) functionality over their network, such as the use of VoIP telephony over a cellular network, and may also impose additional fees, or other charges in connection with VoIP, You agree to inform end users, prior to purchase, to check the terms of agreement with their operator, for example, by providing such notice in the marketing text that You provide accompanying Your Application on the App Store. In addition, if Your Application allows end users to send SMS messages, then You must inform the end user, prior to use of such functionality, that standard text messaging rates or other carrier charges may apply to such use.
 
APN (Apple Push Notification service) and Local Notifications:
 
3.3.29 All use of Push Notifications via the APN or Local Notifications must be in accordance with the terms of this Agreement (including the Program Requirements) and Attachment 1 (Additional Terms for Apple Push Notification service and Local Notifications).
 
Game Center:
 
3.3.30 All use of the Game Center must be in accordance with the terms of this Agreement (including the Program Requirements) and Attachment 3 (Additional Terms for the Game Center).
 
Additional Services:
 
3.3.31 From time to time, Apple may provide access to additional services for You to use in connection with Your Applications. Some of these additional services may be subject to separate terms and conditions in addition to this Agreement. If You elect to use such services, Your usage will also be subject to those separate terms and conditions. In addition, such services may not be available in all languages or in all countries. Apple makes no representation that such services are appropriate or available for use in any particular location. To the extent You choose to access such services, You do so at Your own initiative and are responsible for compliance with any applicable laws, including but not limited to applicable local laws. Certain services made accessible to You through the Apple Software may be provided by third parties. You acknowledge that Apple will not have any liability or responsibility to You or any other person (including to any end user) for any third-party services or for any Apple services. Apple and its licensors reserve the right to change, suspend, remove, or disable access to any services at any time. In no event will Apple be liable for the removal of or disabling of access to any such services.
 
 
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4. Changes to Program Requirements or Terms
Apple may change the Program Requirements or the terms of this Agreement at any time. New or modified Program Requirements will not retroactively apply to Applications already in distribution. In order to continue using the Apple Software or any services, You must accept and agree to the new Program Requirements and/or new terms of this Agreement. If You do not agree to new Program Requirements or new terms, Your use of the Apple Software and any services will be suspended or terminated by Apple. You agree that Your acceptance of such new Agreement terms or Program Requirements may be signified electronically, including without limitation, by Your checking a box or clicking on an “agree” or similar button. Nothing in this Section shall affect Apple’s rights under Section 8 below.
 
5. Digital Signing of Applications; Restrictions on Certificates
All Applications must be signed with an Apple-issued certificate in order to be installed on Registered Devices. During the Term of this Agreement, You may obtain development-related digital certificates from Apple, subject to a maximum number as reasonably determined by Apple, that will allow Your Application to be installed and tested on Authorized Test Devices. You may also obtain, during the Term, one or more production digital certificates from Apple, subject to a maximum number as reasonably determined by Apple, to be used for the sole purpose of signing Your Application(s) prior to submission of Your Application to Apple or limited distribution of Your Application for use on Registered Devices.
 
In relation to this, You represent and warrant to Apple that: (a) You will not take any action to interfere with the normal operation of any Apple-issued digital certificates or Provisioning Profiles; (b) You are solely responsible for preventing any unauthorized person from having access to Your digital certificates and corresponding private keys and You will use best efforts to safeguard Your digital certificates and corresponding private keys from compromise; (c) You agree to immediately notify Apple in writing if You have any reason to believe there has been a compromise of any of Your digital certificates or corresponding private keys; (d) You will not provide or transfer Apple-issued digital certificates provided under this Program to any third party, nor use Your digital certificate to sign a third party’s application; and (e) You will use Apple-issued certificates provided under this Program exclusively for the purpose of signing Your Applications for testing, submission to Apple and/or limited distribution for use on Registered Devices as contemplated under this Program, and only in accordance with this Agreement.
 
You further represent and warrant to Apple that the licensing terms governing Your Application, or governing any third party code or FOSS included in Your Application, will be consistent with and not conflict with the digital signing or content protection aspects of the Program or any of the terms, conditions or requirements of the Program or this Agreement. In particular, such licensing terms will not purport to require Apple (or its agents) to disclose or make available any of the keys, authorization codes, methods, procedures, data or other information related to the Security Solution, digital signing or digital rights management mechanisms utilized as part of the Program. If You discover any such inconsistency or conflict, You agree to immediately notify Apple of it and will cooperate with Apple to resolve such matter. Apple may immediately cease distribution of any affected Licensed Applications and refuse to accept any subsequent Application submissions from You until such matter is resolved to Apple’s reasonable satisfaction.
 
 
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6. Application Submission and Selection
 
6.1 Submission to Apple
You may submit Your Application for consideration by Apple for distribution via the App Store once You decide that Your Application has been adequately tested and is complete. By submitting Your Application, You represent and warrant that Your Application complies with the Documentation and Program Requirements then in effect as well as with any additional guidelines that Apple may post on the Program web portal. You further agree that You will not attempt to hide, misrepresent or obscure any features, content, services or functionality in Your submitted Applications from Apple’s review or otherwise hinder Apple from being able to fully review such Applications. In addition, You agree to inform Apple in writing through iTunes Connect if Your Application connects to a physical device, including an iOS Accessory, and, if so, to disclose the means of such connection (whether iAP, the headphone jack, or any other communication protocol or standard) and identify at least one physical device with which Your Application is designed to communicate. If requested by Apple, You agree to provide access to or samples of any such devices at your expense (samples will not be returned). You agree to cooperate with Apple in this submission process and to answer questions and provide information and materials reasonably requested by Apple regarding Your submitted Application, including insurance information You may have relating to Your Application, the operation of Your business, or Your obligations under this Agreement. Apple may require You to carry certain levels of insurance for certain types of Applications and name Apple as an additional insured.
 
If You make any changes to an Application (including to any functionality made available through use of the In App Purchase API) after submission to Apple, You must resubmit the Application to Apple. Similarly all bug fixes, updates, upgrades, modifications, enhancements, supplements to, revisions, new releases and new versions of Your Application must be submitted to Apple for review in order for them to be considered for distribution via the App Store. Further, if Your Application is accepted for distribution via the App Store, You agree that Apple may use Your Application for the limited purpose of compatibility testing of Your Application with the iOS, for finding and fixing bugs in the iOS and for purposes of providing other information to You (e.g. crash logs).
 
6.2 Selection by Apple for Distribution
You understand and agree that Apple may, in its sole discretion:
(a) determine that Your Application does not meet all or any part of the Documentation or Program Requirements then in effect;
(b) reject Your Application for distribution for any reason, even if Your Application meets the Documentation and Program Requirements; or
(c) select and digitally sign Your Application for distribution via the App Store.
 
Apple shall not be responsible for any costs, expenses, damages, losses (including without limitation lost business opportunities or lost profits) or other liabilities You may incur as a result of Your Application development, use of this Apple Software, use of any services, or participation in the Program, including without limitation the fact that Your Application may not be selected for distribution via the App Store. You will be solely responsible for developing Applications that are safe, free of defects in design and operation, and comply with applicable laws and regulations. You will also be solely responsible for any documentation and end user customer support and warranty of Your Applications. The fact that Apple may have reviewed, tested, approved or selected an Application will not relieve You of any of these responsibilities.
 
7. Distribution
Applications developed under this Agreement may be distributed in two ways: (1) through the App Store, if selected by Apple, and (2) distribution for use on a limited number of Registered Devices.
 
7.1 Delivery of Freely Available Licensed Applications via the App Store
If Your Application qualifies as a Licensed Application, it is eligible for delivery to end users via the App Store by Apple and/or an Apple Subsidiary. If You would like Apple and/or an Apple Subsidiary to deliver Your Licensed Application to end users for free (no charge), then You appoint Apple and Apple Subsidiaries as Your legal agent pursuant to the terms of Schedule 1, for Licensed Applications designated by You as free of charge applications.
 
If Your Application qualifies as a Licensed Application and You intend to charge end users a fee of any kind for Your Licensed Application or within Your Licensed Application through the use of the In App Purchase API, You must enter into a separate agreement (Schedule 2) with, and provided by, Apple and/or an Apple Subsidiary before any such commercial distribution of Your Licensed Application may take place via the App Store or before any such commercial delivery of additional content, functionality or services may be made available through the use of the In App Purchase API in Your Licensed Application. To the extent that You enter (or have previously entered) into Schedule 2 with Apple and/or an Apple Subsidiary, the terms of Schedule 2 will be deemed incorporated into this Agreement by this reference.

 
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7.2 Distribution on Registered Devices (Ad Hoc Distribution)
Subject to the terms and conditions of this Agreement, You may also distribute Your Applications to individuals within Your company, organization, educational institution, group, or who are otherwise affiliated with You for use solely on a limited number of Registered Devices (as specified on the Program web portal), if Your Application has been digitally signed using Your Apple-issued digital certificate as described in this Agreement. By distributing Your Application in this manner, You represent and warrant to Apple that Your Application complies with the Documentation and Program Requirements then in effect and You agree to cooperate with Apple and to answer questions and provide information about Your Application, as reasonably requested by Apple.
 
You also agree to be solely responsible for determining which individuals within Your company, organization, educational institution or affiliated group should have access to and use of Your Applications and Registered Devices, and for managing such Registered Devices. Apple shall not be responsible for any costs, expenses, damages, losses (including without limitation lost business opportunities or lost profits) or other liabilities You may incur as a result of distributing Your Applications in this manner, or for Your failure to adequately manage, limit or otherwise control the access to and use of Your Applications and Registered Devices.
 
You will be responsible for attaching or otherwise including, at Your discretion, any relevant usage terms with Your Applications. Apple will not be responsible for any violations of Your usage terms. You will be solely responsible for all user assistance, warranty and support of Your Applications.
 
7.3 No Other Distribution Authorized Under this Agreement
Except for the distribution of freely available Licensed Applications and the distribution of Applications for use on Registered Devices as set forth in Sections 7.1 and 7.2 above, no other distribution of programs or applications developed using the Apple Software is authorized or permitted hereunder. In the absence of a separate agreement with Apple, You agree not to distribute Your Application to third parties via other distribution methods or to enable or permit others to do so.
 
8. Revocation
You understand and agree that Apple may cease distribution of Your Licensed Application(s) and/or Licensed Application Information or revoke the digital certificate of any of Your Applications at any time. By way of example only, Apple might choose to do this if at any time:
(a) Any of Your Provisioning Profiles, digital certificates or corresponding private keys has been compromised or Apple has reason to believe that either has been compromised;
(b) Apple has been notified or otherwise has reason to believe that Your Application violates, misappropriates, or infringes the rights of a third party or of Apple;
(c) Apple has reason to believe that Your Application contains malicious or harmful code, malware, programs or other internal components (e.g. software virus);
(d) Apple has reason to believe that Your Application damages, corrupts, degrades, destroys or otherwise adversely affects the devices it operates on, or any other software, firmware, hardware, data, systems, or networks accessed or used by the Application;
(e) You breach any term or condition of this Agreement or the Registered Apple Developer terms and conditions;
(f) Any information or documents provided by You to Apple for the purpose of verifying Your identity or obtaining Provisioning Profiles or Apple-issued digital certificates is false or inaccurate;
(g) Any representation, warranty or certification provided by You to Apple in this Agreement is untrue or inaccurate;
(h) Apple is required by law, regulation or other governmental or court order to take such action;
(i) You request that Apple take such action in accordance with Schedule 1;
(j) You misuse or overburden any services provided hereunder;
(k) You fail to renew this Agreement and pay the applicable renewal fee; or
(l) Apple has reason to believe that such action is prudent or necessary.

 
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9. Program Fees
As consideration for the rights and licenses granted to You under this Agreement and Your participation in the Program, You agree to pay Apple the requisite annual program fees as set forth on the Program website. The fees are non-refundable. Any taxes that may be levied on the Apple Software or Your use of it shall be Your responsibility. Your program fees must be paid up and not in arrears at the time You submit (or resubmit) Applications to Apple under this Agreement, and Your continued use of the Program web portal is subject to Your payment of such fees.
 
10. Confidentiality
10.1 Information Deemed Apple Confidential
You agree that all pre-release versions of the Apple Software (including pre-release Documentation) and services, any terms and conditions contained herein that disclose pre-release features of the Apple Software or services, and the terms and conditions of Schedule 2 (available separately to cover distribution of paid-for Licensed Applications via the App Store) will be deemed “Apple Confidential Information”; provided however that upon the commercial release of the Apple Software the terms and conditions that disclose pre-release features of the Apple Software or services will no longer be confidential. Notwithstanding the foregoing, Apple Confidential Information will not include: (i) information that is generally and legitimately available to the public through no fault or breach of Yours, (ii) information that is generally made available to the public by Apple, (iii) information that is independently developed by You without the use of any Apple Confidential Information, (iv) information that was rightfully obtained from a third party who had the right to transfer or disclose it to You without limitation, or (v) any FOSS included in the Apple Software and accompanied by licensing terms that do not impose confidentiality obligations on the use or disclosure of such FOSS.
 
10.2 Obligations Regarding Apple Confidential Information
You agree to protect Apple Confidential Information using at least the same degree of care that You use to protect Your own confidential information of similar importance, but no less than a reasonable degree of care. You agree to use Apple Confidential Information solely for the purpose of exercising Your rights and performing Your obligations under this Agreement and agree not to use Apple Confidential Information for any other purpose, for Your own or any third party’s benefit, without Apple’s prior written consent. You further agree not to disclose or disseminate Apple Confidential Information to anyone other than: (i) those of Your employees and contractors, or those of Your faculty and staff if You are an educational institution, who have a need to know and who are bound by a written agreement that prohibits unauthorized use or disclosure of the Apple Confidential Information; or (ii) except as otherwise agreed or permitted in writing by Apple. You may disclose Apple Confidential Information to the extent required by law, provided that You take reasonable steps to notify Apple of such requirement before disclosing the Apple Confidential Information and to obtain protective treatment of the Apple Confidential Information. You acknowledge that damages for improper disclosure of Apple Confidential Information may be irreparable; therefore, Apple is entitled to seek equitable relief, including injunction and preliminary injunction, in addition to all other remedies.
 
 
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10.3 Information Submitted to Apple Not Deemed Confidential
Apple works with many application and software developers and some of their products may be similar to or compete with Your Applications. Apple may also be developing its own similar or competing applications and products or may decide to do so in the future. To avoid potential misunderstandings, Apple cannot agree, and expressly disclaims, any confidentiality obligations or use restrictions, express or implied, with respect to any information that You may provide in connection with this Agreement or the Program, including information about Your Application, Licensed Application Information and metadata (such disclosures will be referred to as “Licensee Disclosures”). You agree that any such Licensee Disclosures will be non-confidential. Apple will be free to use and disclose any Licensee Disclosures on an unrestricted basis without notifying or compensating You. You release Apple from all liability and obligations that may arise from the receipt, review, use, or disclosure of any portion of any Licensee Disclosures. Any physical materials You submit to Apple will become Apple property and Apple will have no obligation to return those materials to You or to certify their destruction.
 
10.4 Press Releases and Other Publicity
You may not issue any press releases or make any other public statements regarding this Agreement, its terms and conditions, or the relationship of the parties without Apple’s express prior written approval, which may be withheld at Apple’s discretion.
 
11. Indemnification
To the extent permitted by applicable law, You agree to indemnify and hold harmless, and upon Apple’s request, defend, Apple, its directors, officers, employees, independent contractors and agents (each an “Apple Indemnified Party”) from any and all claims, losses, liabilities, damages, taxes, expenses and costs, including without limitation, attorneys’ fees and court costs (collectively, “Losses”), incurred by an Apple Indemnified Party and arising from or related to any of the following: (i) Your breach of any certification, covenant, obligation, representation or warranty in this Agreement, including Schedule 2 (if applicable); (ii) any claims that Your Application or the distribution, sale, offer for sale, use or importation of Your Application (whether alone or as an essential part of a combination), Licensed Application Information or metadata, violate or infringe any third party intellectual property or proprietary rights; (iii) Your breach of any of Your obligations under the EULA (as defined in Schedule 1 or Schedule 2 (if applicable)) for Your Licensed Application; (iv) Apple’s permitted use, promotion or delivery of Your Licensed Application, Licensed Application Information, metadata, related trademarks and logos, or images and other materials that You provide to Apple under this Agreement, including Schedule 2 (if applicable); or (vi) Your use of the Apple Software or services, Your Application, Licensed Application Information, metadata, Registered Devices, or Your development and distribution of any Application.
 
You acknowledge that neither the Apple Software nor any services are intended for use in the development of Applications in which errors or inaccuracies in the content, functionality, services, data or information provided by the Application or the failure of the Application, could lead to death, personal injury, or severe physical or environmental damage, and, to the extent permitted by law, You hereby agree to indemnify, defend and hold harmless each Apple Indemnified Party from any Losses incurred by such Apple Indemnified Party by reason of any such use.
 
In no event may You enter into any settlement or like agreement with a third party that affects Apple’s rights or binds Apple in any way, without the prior written consent of Apple.
 
12. Term and Termination
 
12.1 Term
The Term of this Agreement shall extend until the one (1) year anniversary of the original activation date of Your Program account (“Effective Date”). Thereafter, subject to Your payment of annual renewal fees and compliance with the terms of this Agreement, the Term will automatically renew for successive one (1) year terms, unless sooner terminated in accordance with this Agreement.
 
12.2 Termination
This Agreement and all rights and licenses granted by Apple hereunder and any services provided hereunder will terminate, effective immediately upon notice from Apple:
(a) if You or any of Your Authorized Developers fail to comply with any term of this Agreement other than those contained in Section 10 (Confidentiality) and fail to cure such breach within 30 days after becoming aware of or receiving notice of such breach;
(b) if You or any of Your Authorized Developers fail to comply with the terms of Section 10;
(c) in the event of the circumstances described in the subsection entitled “Severability” below;
(d) if You, at any time during the Term, commence an action for patent infringement against Apple;
(e) if You become insolvent, fail to pay Your debts when due, dissolve or cease to do business, file for bankruptcy, or have filed against You a petition in bankruptcy; or
(f) if You engage, or encourage others to engage, in any misleading, fraudulent, improper, unlawful or dishonest act relating to this Agreement, including, but not limited to, misrepresenting the nature of Your submitted Application (e.g., hiding or trying to hide functionality from Apple’s review, falsifying consumer reviews for Your Application, etc.).
 
Apple may also terminate this Agreement, or suspend Your rights to use the Apple Software or services, if You fail to accept any new Program Requirements or Agreement terms as described in Section 4.
 
Either party may terminate this Agreement for its convenience, for any reason or no reason, effective 30 days after providing the other party with written notice of its intent to terminate.

 
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12.3 Effect of Termination
Upon the termination of this Agreement for any reason, You agree to immediately cease all use of the Apple Software and services and erase and destroy all copies, full or partial, of the Apple Software and any information pertaining to the services (including Your Push Application ID) and all copies of Apple Confidential Information in Your and Your Authorized Developers’ possession or control. At Apple’s request, You agree to provide written certification of such destruction to Apple. Upon the expiration of the Delivery Period defined and set forth in Schedule 1, all Licensed Applications and Licensed Application Information in Apple’s possession or control shall be deleted or destroyed within a reasonable time thereafter, excluding any archival copies maintained in accordance with Apple’s standard business practices or required to be maintained by applicable law, rule or regulation. The following provisions shall survive any termination of this Agreement: Sections 1, 2.5, 2.6, 3.1(d), 3.1(e), 3.1(f), 3.2(d), 3.2(e), 3.2(f), 3.2(g), 3.3, 5 (second and third paragraphs), 6.1, 6.2, 7.1 (Schedule 1 for the Delivery Period), 7.3, 8, and 10 through 15 inclusive; within Attachment 1, the third sentence of Section 1.1, Section 2, the second and third sentences of Section 3, Section 4, the second and third sentences of Section 5, and Section 7; within Attachment 2, Sections 1.3, 2, 3, 4, 5, the second and third sentence of 6, 7, and 8; and within Attachment 3, Section 1, 2 (except the second sentence of Section 2.1), 3 and 5. For the avoidance of doubt, upon any termination of this Agreement, You may not make available any content, functionality, or services through the use of the In App Purchase API. Apple will not be liable for compensation, indemnity, or damages of any sort as a result of terminating this Agreement in accordance with its terms, and termination of this Agreement will be without prejudice to any other right or remedy Apple may have, now or in the future.
 
13. NO WARRANTY
The Apple Software may contain inaccuracies or errors that could cause failures or loss of data and it may be incomplete. Apple or its licensors may provide or make available through the Apple Software or as part of the Program, certain web-based applications, certificate-issuance services, App Store services or other services for Your use (collectively the “Services” for purposes of this Section 13 and 14). Apple and its licensors reserve the right to change, suspend, remove, or disable access to any Services at any time without notice. In no event will Apple or its licensors be liable for the removal of or disabling of access to any such Services. Apple or its licensors may also impose limits on the use of or access to certain Services, in any case and without notice or liability. YOU EXPRESSLY ACKNOWLEDGE AND AGREE THAT USE OF THE APPLE SOFTWARE, SECURITY SOLUTION, SERVICE-RELATED SOFTWARE AND ANY SERVICES IS AT YOUR SOLE RISK AND THAT THE ENTIRE RISK AS TO SATISFACTORY QUALITY, PERFORMANCE, ACCURACY AND EFFORT IS WITH YOU. THE APPLE SOFTWARE, SECURITY SOLUTION, SERVICE-RELATED SOFTWARE AND ANY SERVICES ARE PROVIDED “AS IS” AND “AS AVAILABLE”, WITH ALL FAULTS AND WITHOUT WARRANTY OF ANY KIND, AND APPLE, APPLE’S AGENTS AND APPLE’S LICENSORS (COLLECTIVELY REFERRED TO AS “APPLE” FOR THE PURPOSES OF SECTIONS 13 AND 14) HEREBY DISCLAIM ALL WARRANTIES AND CONDITIONS WITH RESPECT TO THE APPLE SOFTWARE, SECURITY SOLUTION, SERVICE-RELATED SOFTWARE AND SERVICES, EITHER EXPRESS, IMPLIED OR STATUTORY, INCLUDING WITHOUT LIMITATION THE IMPLIED WARRANTIES AND CONDITIONS OF MERCHANTABILITY, SATISFACTORY QUALITY, FITNESS FOR A PARTICULAR PURPOSE, ACCURACY, TIMELINESS, AND NON-INFRINGEMENT OF THIRD PARTY RIGHTS. APPLE DOES NOT WARRANT AGAINST INTERFERENCE WITH YOUR ENJOYMENT OF THE APPLE SOFTWARE, SERVICE-RELATED SOFTWARE OR SERVICES, THAT THE APPLE SOFTWARE, SECURITY SOLUTION, SERVICE-RELATED SOFTWARE OR SERVICES WILL MEET YOUR REQUIREMENTS, THAT THE OPERATION OF THE APPLE SOFTWARE, SECURITY SOLUTION, SERVICE-RELATED SOFTWARE OR THE PROVISION OF SERVICES WILL BE UNINTERRUPTED, TIMELY, SECURE OR ERROR-FREE, THAT DEFECTS OR ERRORS IN THE APPLE SOFTWARE, SECURITY SOLUTION, SERVICE-RELATED SOFTWARE OR SERVICES WILL BE CORRECTED, OR THAT THE APPLE SOFTWARE, SECURITY SOLUTION, SERVICE-RELATED SOFTWARE OR SERVICES WILL BE COMPATIBLE WITH FUTURE APPLE PRODUCTS, SERVICES OR SOFTWARE, OR THAT ANY INFORMATION STORED OR TRANSMITTED THROUGH ANY APPLE SOFTWARE, SERVICE-RELATED SOFTWARE OR SERVICES WILL NOT BE LOST, CORRUPTED OR DAMAGED. NO ORAL OR WRITTEN INFORMATION OR ADVICE GIVEN BY APPLE OR AN APPLE AUTHORIZED REPRESENTATIVE WILL CREATE A WARRANTY NOT EXPRESSLY STATED IN THIS AGREEMENT. SHOULD THE APPLE SOFTWARE, SECURITY SOLUTION, SERVICE-RELATED SOFTWARE OR SERVICES PROVE DEFECTIVE, YOU ASSUME THE ENTIRE COST OF ALL NECESSARY SERVICING, REPAIR OR CORRECTION. Location data provided by any Services is for basic navigational purposes only and is not intended to be relied upon in situations where precise location information is needed or where erroneous, inaccurate or incomplete location data may lead to death, personal injury, property or environmental damage. Neither Apple nor any of its licensors guarantees the availability, accuracy, completeness, reliability, or timeliness of location data or any other data or information displayed by any Services.

 
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14. LIMITATION OF LIABILITY
TO THE EXTENT NOT PROHIBITED BY APPLICABLE LAW, IN NO EVENT WILL APPLE BE LIABLE FOR PERSONAL INJURY, OR ANY INCIDENTAL, SPECIAL, INDIRECT, CONSEQUENTIAL OR PUNITIVE DAMAGES WHATSOEVER, INCLUDING, WITHOUT LIMITATION, DAMAGES FOR LOSS OF PROFITS, LOSS OF DATA, BUSINESS INTERRUPTION OR ANY OTHER COMMERCIAL DAMAGES OR LOSSES, ARISING OUT OF OR RELATED TO THIS AGREEMENT, YOUR USE OR INABILITY TO USE THE APPLE SOFTWARE, SECURITY SOLUTION OR SERVICES, OR Your DEVELOPMENT EFFORTS OR PARTICIPATION IN THE PROGRAM, HOWEVER CAUSED, WHETHER UNDER A THEORY OF CONTRACT, WARRANTY, TORT (INCLUDING NEGLIGENCE), PRODUCTS LIABILITY, OR OTHERWISE, EVEN IF APPLE HAS BEEN ADVISED OF THE POSSIBILITY OF SUCH DAMAGES, AND NOTWITHSTANDING THE FAILURE OF ESSENTIAL PURPOSE OF ANY REMEDY. In no event shall Apple’s total liability to You under this Agreement for all damages (other than as may be required by applicable law in cases involving personal injury) exceed the amount of fifty dollars ($50.00).
 
15. General Legal Terms
 
15.1 Third Party Notices . Portions of the Apple Software or services may utilize or include third party software and other copyrighted material. Acknowledgements, licensing terms and disclaimers for such material are contained in the electronic documentation for the Apple Software and services, and Your use of such material is governed by their respective terms.
 
15.2 Consent to Collection and Use of Non-Personal Data. You agree that Apple and its subsidiaries may collect and use technical and related information, including but not limited to information about Your Applications, computer, system software, other software and peripherals, that is gathered periodically to facilitate the provision of software updates and other services to You (if any) related to the Apple Software, and to verify compliance with the terms of this Agreement. Apple may use this information, as long as it is in a form that does not personally identify You, to improve the Apple Software, our products or to provide services or technologies to You and our customers.

 
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15.3 Assignment. This Agreement may not be assigned, nor may any of Your obligations under this Agreement be delegated, in whole or in part, by You by operation of law, merger, or any other means without Apple’s express prior written consent and any attempted assignment without such consent will be null and void.
 
15.4 Relationship of Parties. Except for the agency appointment as specifically set forth in Schedule 1 (if applicable), this Agreement will not be construed as creating any other agency relationship, or a partnership, joint venture, fiduciary duty, or any other form of legal association between You and Apple, and You will not represent to the contrary, whether expressly, by implication, appearance or otherwise. This Agreement is not for the benefit of any third parties.
 
15.5 Independent Development. Nothing in this Agreement will impair Apple’s right to develop, acquire, license, market, promote, or distribute products or technologies that perform the same or similar functions as, or otherwise compete with, Applications, Licensed Applications or any other products or technologies that You may develop, produce, market, or distribute.
 
15.6 Notices. Any notices relating to this Agreement shall be in writing. Notices will be deemed given by Apple when sent to You at the email address or mailing address You provided during the sign-up process. All notices to Apple relating to this Agreement will be deemed given (a) when delivered personally, (b) three business days after having been sent by commercial overnight carrier with written proof of delivery, and (c) five business days after having been sent by first class or certified mail, postage prepaid, to this Apple address: iOS Developer Program Licensing, Apple Inc., 12545 Riata Vista Circle, MS 198-3SW, Austin, TX 78727, U.S.A. You consent to receive notices by email and agree that any such notices that Apple sends You electronically will satisfy any legal communication requirements. A party may change its email or mailing address by giving the other written notice as described above.
 
15.7 Severability. If a court of competent jurisdiction finds any clause of this Agreement to be unenforceable for any reason, that clause of this Agreement shall be enforced to the maximum extent permissible so as to effect the intent of the parties, and the remainder of this Agreement shall continue in full force and effect. However, if applicable law prohibits or restricts You from fully and specifically complying with, or appointing Apple and Apple Subsidiaries as Your agent under, Schedule 1 or the Sections of this Agreement entitled “Internal Use License and Restrictions”, “Your Obligations” or “Digital Signing of Applications; Restrictions on Certificates”, or prevents the enforceability of any of those Sections or Schedule 1, this Agreement will immediately terminate and You must immediately discontinue any use of the Apple Software as described in the Section entitled “Term and Termination.”
 
15.8 Waiver and Construction. Failure by Apple to enforce any provision of this Agreement shall not be deemed a waiver of future enforcement of that or any other provision. Any laws or regulations that provide that the language of a contract will be construed against the drafter will not apply to this Agreement. Section headings are for convenience only and are not to be considered in construing or interpreting this Agreement.
 
15.9 Export Control. You may not use, export, re-export, import, sell or transfer the Apple Software except as authorized by United States law, the laws of the jurisdiction in which You obtained the Apple Software, and any other applicable laws and regulations. In particular, but without limitation, the Apple Software may not be exported or re-exported (a) into any U.S. embargoed countries or (b) to anyone on the U.S. Treasury Department’s list of Specially Designated Nationals or the U.S. Department of Commerce Denied Person’s List or Entity List.

 
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By using the Apple Software, You represent and warrant that You are not located in any such country or on any such list. You also agree that You will not use the Apple Software for any purposes prohibited by United States law, including, without limitation, the development, design, manufacture or production of nuclear, missiles, or chemical or biological weapons. You certify that pre-release versions of the Apple Software will only be used for development and testing purposes, and will not be rented, sold, leased, sublicensed, assigned, or otherwise transferred. Further, You certify that You will not transfer or export any product, process or service that is a direct product of such pre-release Apple Software.
 
15.10 Government End Users. The Apple Software and Documentation are “Commercial Items”, as that term is defined at 48 C.F.R. §2.101, consisting of “Commercial Computer Software” and “Commercial Computer Software Documentation”, as such terms are used in 48 C.F.R. §12.212 or 48 C.F.R. §227.7202, as applicable. Consistent with 48 C.F.R. §12.212 or 48 C.F.R. §227.7202-1 through 227.7202-4, as applicable, the Commercial Computer Software and Commercial Computer Software Documentation are being licensed to U.S. Government end users (a) only as Commercial Items and (b) with only those rights as are granted to all other end users pursuant to the terms and conditions herein. Unpublished-rights reserved under the copyright laws of the United States.
 
15.11 Dispute Resolution; Governing Law. Any litigation or other dispute resolution between You and Apple arising out of or relating to this Agreement, the Apple Software, or Your relationship with Apple will take place in the Northern District of California, and You and Apple hereby consent to the personal jurisdiction of and exclusive venue in the state and federal courts within that District with respect any such litigation or dispute resolution. This Agreement will be governed by and construed in accordance with the laws of the United States and the State of California, except that body of California law concerning conflicts of law.
 
Notwithstanding the foregoing, if You are an agency, instrumentality or department of the federal government of the United States, then this Agreement shall be governed in accordance with the laws of the United States of America, and in the absence of applicable federal law, the laws of the State of California will apply. Further, and notwithstanding anything to the contrary in this Agreement (including but not limited to Section 11 (Indemnification)), all claims, demands, complaints and disputes will be subject to the Contract Disputes Act (41 U.S.C. §§601-613), the Tucker Act (28 U.S.C. § 1346(a) and § 1491), or the Federal Tort Claims Act (28 U.S.C. §§ 1346(b), 2401-2402, 2671-2672, 2674-2680), as applicable, or other applicable governing authority.
 
If You (as an entity entering into this Agreement) are a U.S. public and accredited educational institution, then (a) this Agreement will be governed and construed in accordance with the laws of the state (within the U.S.) in which Your educational institution is domiciled, except that body of state law concerning conflicts of law; and (b) any litigation or other dispute resolution between You and Apple arising out of or relating to this Agreement, the Apple Software, or Your relationship with Apple will take place in federal court within the Northern District of California, and You and Apple hereby consent to the personal jurisdiction of and exclusive venue of such District unless such consent is expressly prohibited by the laws of the state in which Your educational institution is domiciled.
 
This Agreement shall not be governed by the United Nations Convention on Contracts for the International Sale of Goods, the application of which is expressly excluded.
 
15.12 Entire Agreement; Governing Language. This Agreement constitutes the entire agreement between the parties with respect to the use of the Apple Software licensed hereunder and supersedes all prior understandings and agreements regarding its subject matter, including the iOS SDK Agreement (clickwrap) accompanying the SDK. This Agreement may be modified only: (a) by a written amendment signed by both parties, or (b) to the extent expressly permitted by this Agreement (for example, by Apple by written or email notice to You). Any translation of this Agreement is done for local requirements and in the event of a dispute between the English and any non-English version, the English version of this Agreement shall govern. If You are located in the province of Quebec, Canada, the following clause applies: The parties hereby confirm that they have requested that this Agreement and all related documents be drafted in English. Les parties ont exigé que le présent contrat et tous les documents connexes soient rédigés en anglais.

 
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Attachment 1
(to the Agreement)
Additional Terms for Apple Push Notification service and Local Notifications
 
The following terms are in addition to the terms of the Agreement and apply to any use of the APN (Apple Push Notification service) in Your Application or the delivery of Local Notifications to Your Application:
 
1. Use of the APN and Local Notifications
 
1.1 Your Application may only access the APN via the APN API and only if You have been assigned a Push Application ID by Apple. You agree not to share your Push Application ID with any third party. You understand that Your Application will not be permitted to access or use the APN after expiration or termination of Your Agreement.
 
1.2 You are only permitted to use the APN and the APN APIs for the purpose of sending Push Notifications to Your Application on an iOS Product as expressly permitted by the Agreement (including but not limited to this Attachment 1) and the APN Documentation, and You must only do so in accordance with all applicable laws and regulations (including all intellectual property laws). You further agree that You must disclose to Apple any use of the APN as part of the submission process for Your Application.
 
1.3 You understand that before You send an end user any Push Notifications through the APN, the end user must provide consent to receive such Notifications. You agree not to disable, override or otherwise interfere with any Apple-implemented consent panels or any Apple system preferences for enabling or disabling Notifications functionality. If the end user’s consent to receive Push Notifications is denied or later withdrawn, You may not send the end user Push Notifications.
 
2. Additional Requirements
 
2.1 You may not use the APN or Local Notifications for the purpose of sending unsolicited messages to end users or for the purpose of phishing or spamming, including, but not limited to, engaging in any types of activities that violate anti-spamming laws and regulations, or that are otherwise improper, inappropriate or illegal.
 
2.2 You may not use the APN or Local Notifications for the purposes of advertising, product promotion, or direct marketing of any kind (e.g. up-selling, cross-selling, etc.), including, but not limited to, sending any messages to promote the use of Your Application or advertise the availability of new features or versions.
 
2.3 You may not excessively use the overall network capacity or bandwidth of the APN, or unduly burden an iOS Product with excessive Push Notifications or Local Notifications, as may be determined by Apple in its reasonable discretion. In addition, You agree not to harm or interfere with Apple’s networks or servers, or any third party servers or networks connected to the APN, or otherwise disrupt other developers’ use of the APN.
 
2.4 You may not use the APN or Local Notifications to send material that contains any obscene, pornographic, offensive or defamatory content or materials of any kind (text, graphics, images, photographs, sounds, etc.), or other content or materials that in Apple’s reasonable judgment may be found objectionable by the end user of Your Application.
 
2.5 You may not transmit, store or otherwise make available any material that contains viruses or any other computer code, files or programs that may harm, disrupt or limit the normal operation of the APN or an iOS Product, and You agree not to disable, spoof, hack or otherwise interfere with any security, digital signing, verification or authentication mechanisms that are incorporated in or used by the APN, or enable others to do so.
 
 
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3. Delivery by the APN or via Local Notifications
 
You understand and agree that in order to provide the APN and make Your Push Notifications available on iOS Products, Apple may transmit Your Push Notifications across various public networks, in various media, and modify or change Your Push Notifications to comply with the technical and other requirements for connecting to networks or devices. You acknowledge and agree that the APN is not, and is not intended to be, a guaranteed or secure delivery service, and You shall not use or rely upon it as such. Further, as a condition to using the APN or delivering Local Notifications, You agree not to transmit sensitive personal or confidential information belonging to an individual (e.g. a social security number, financial account or transactional information, or any information where the individual may have a reasonable expectation of secure transmission) as part of any such Notification, and You agree to comply with any applicable notice or consent requirements with respect to any collection, transmission, maintenance, processing or use of an end user’s personal information.
 
4. Your Acknowledgements
 
You acknowledge and agree that:
 
4.1 Apple may at any time, and from time to time, with or without prior notice to You (a) modify the APN, including changing or removing any feature or functionality, or (b) modify, deprecate, reissue or republish the APN APIs. You understand that any such modifications may require You to change or update Your Applications at Your own cost. Apple has no express or implied obligation to provide, or continue to provide, the APN and may suspend or discontinue all or any portion of the APN at any time. Apple shall not be liable for any losses, damages or costs of any kind incurred by You or any other party arising out of or related to any such service suspension or discontinuation or any such modification of the APN or APN APIs.
 
4.2 The APN is not available in all languages or in all countries and Apple makes no representation that the APN is appropriate or available for use in any particular location. To the extent You choose to access and use the APN, You do so at Your own initiative and are responsible for compliance with any applicable laws, including but not limited to any local laws.
 
4.3 Apple provides the APN to You for Your use with Your Application, and does not provide the APN directly to any end user. You acknowledge and agree that any Push Notifications are sent by You, not Apple, to the end user of Your Application, and You are solely liable and responsible for any data or content transmitted therein and for any use of the APN in Your Application. Further, You acknowledge and agree that any Local Notifications are sent by You, not Apple, to the end user of Your Application, and You are solely liable and responsible for any data or content transmitted therein.
 
4.4 Apple makes no guarantees to You in relation to the availability or uptime of the APN and is not obligated to provide any maintenance, technical or other support for the APN.
 
4.5 Apple reserves the right to remove Your access to the APN or revoke Your Push Application ID at any time in its sole discretion.
 
4.6 Apple may monitor and collect information (including but not limited to technical and diagnostic information) about Your usage of the APN to aid Apple in improving the APN and other Apple products or services and to verify Your compliance with this Agreement; provided however that Apple will not access or disclose the content of any Push Notification unless Apple has a good faith belief that such access or disclosure is reasonably necessary to: (a) comply with legal process or request; (b) enforce the terms of this Agreement, including investigation of any potential violation hereof; (c) detect, prevent or otherwise address security, fraud or technical issues; or (d) protect the rights, property or safety of Apple, its developers, customers or the public as required or permitted by law.
 
 
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5. Third Party Service Providers
 
You are permitted to employ or retain a third party (“Service Provider”) to assist You in accessing and using the APN in Your Applications including, but not limited to, engaging any such Service Provider to maintain and administer Your Applications’ servers on Your behalf, provided any such Service Provider’s access to and use of the APN is only done on Your behalf in providing such services to You for Your Application and in accordance with these terms, and is subject to a binding written agreement between You and the Service Provider with terms at least as restrictive and protective of Apple as those set forth herein, including, but not limited to, confidentiality for pre-release versions of the APN and indemnity obligations to Apple. Any actions undertaken by any such Service Provider in relation to Your Push Application and/or arising out of this Agreement shall be deemed to have been taken by You, and You (in addition to the Service Provider) shall be responsible to Apple for all such actions (or any inactions), including but not limited to indemnifying Apple against any harm caused by the Service Provider acting on Your behalf. In the event of any actions or inactions that would constitute a violation of this Agreement or otherwise cause any harm, Apple reserves the right to require You to change Service Providers.
 
6. Changes to Attachment 1
 
Apple may change the terms of this Attachment 1 at any time by providing notice to You. In order to continue using the APN, You must accept and agree to the new terms of this Agreement or, if presented separately to You by Apple, to the new terms for this Attachment 1. You agree that any new terms for Attachment 1 (whether agreed to separately by You or as part of the Program Agreement) will be incorporated into the Program Agreement. If You do not agree to new terms of this Agreement or Attachment 1, Your use of the APN will be suspended or terminated by Apple. You agree that Your acceptance of such new Agreement terms or revised Attachment 1 may be signified electronically, including without limitation, by Your checking a box or clicking on an “agree” or similar button which may be presented to You in a dialog box that is separate from this Agreement.
 
7. Additional Liability Disclaimer
 
APPLE SHALL NOT BE LIABLE FOR ANY DAMAGES OR LOSSES ARISING FROM ANY INTERRUPTIONS TO THE APN OR ANY USE OF NOTIFICATIONS, INCLUDING, BUT NOT LIMITED TO, ANY POWER OUTAGES, SYSTEM FAILURES, NETWORK ATTACKS, SCHEDULED OR UNSCHEDULED MAINTENANCE, OR OTHER INTERRUPTIONS. YOU ACKNOWLEDGE THAT THE SERVICE IS NOT INTENDED OR SUITABLE FOR USE IN SITUATIONS OR ENVIRONMENTS WHERE ERRORS, DELAYS, FAILURES OR INACCURACIES IN THE TRANSMISSION OF DATA OR INFORMATION THROUGH THE SERVICE COULD LEAD TO DAMAGE OF ANY KIND INCLUDING BUT NOT LIMITED TO, DEATH, PERSONAL INJURY, OR FINANCIAL, PHYSICAL, PROPERTY OR ENVIRONMENTAL DAMAGE.

 
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Attachment 2
(to the Agreement)
Additional Terms for Use of the In App Purchase API
 
The following terms are in addition to the terms of the Agreement and apply to any use of the In App Purchase API in Your Application:
 
1. Use of the In App Purchase API
 
1.1 You may use the In App Purchase API only to enable end users to purchase content, functionality, or services that You make available for use within Your Application (e.g. digital books, additional game levels, access to a turn-by-turn map service). You may not use the In App Purchase API to offer goods or services to be used outside of Your Application.
 
1.2 You must submit to Apple for review and approval all content, functionality, or services that You plan to provide through the use of the In App Purchase API in accordance with these terms and the processes set forth in Section 6 of the Agreement. For all submissions, You must provide the name, text description, price, unique identifier number, and other information that Apple reasonably requests (collectively, the “Submission Description”). Apple reserves the right to review the actual content, functionality or service that has been described in the Submission Descriptions at any time, including, but not limited to, in the submission process and after approval of the Submission Description by Apple. If You would like to provide additional content, functionality or services through the In App Purchase API that are not described in Your Submission Description, then You must first submit a new or updated Submission Description for review and approval by Apple prior to making such items available through the use of the In App Purchase API. Apple reserves the right to withdraw its approval of content, functionality, or services previously approved, and You agree to stop making any such content, functionality, or services available for use within Your Application.
 
1.3 All content, functionality, and services offered through the In App Purchase API are subject to the Program Requirements for Applications, and after such content, services or functionality are added to a Licensed Application, they will be deemed part of the Licensed Application and will be subject to all the same obligations and requirements.
 
2. Additional Restrictions
 
2.1 You may not use the In App Purchase API to enable an end user to set up a pre-paid account to be used for subsequent purchases of content, functionality, or services, or otherwise create balances or credits that end users can redeem or use to make purchases at a later time.
 
2.2 You may not enable end users to purchase Currency of any kind through the In App Purchase API, including but not limited to any Currency for exchange, gifting, redemption, transfer, trading or use in purchasing or obtaining anything within or outside of Your Application. “Currency” means any form of currency, points, credits, resources, content or other items or units recognized by a group of individuals or entities as representing a particular value and that can be transferred or circulated as a medium of exchange.
 
2.3 Content and services may be offered through the In App Purchase API on a subscription basis (e.g., subscriptions to newspapers and magazines). Rentals of content, services or functionality through the In App Purchase API are not allowed (e.g., use of particular content may not be restricted to a pre-determined, limited period of time).
 
Notwithstanding the provisions of Section 3.3.9 of the Agreement, if Your Licensed Application is content based (e.g., magazines and newspapers) and offered on a subscription basis, You may collect certain user data (e.g., user name, email address, zip code), provided that You clearly and conspicuously notify the user of Your privacy policy and that its terms will govern the ways that You may use such information, and further provided that the user consents to Your collection and use prior to gathering such data. You agree to maintain, and strictly comply with the terms of, Your privacy policy.

 
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2.4 You may not use the In App Purchase API to send any software updates to Your Application or otherwise add any additional executable code to Your Application. An In App Purchase item must either already exist in Your Application waiting to be unlocked, be streamed to Your Application after the purchase transaction has been completed, or be downloaded to Your Application solely as data after the purchase transaction has been completed.
 
2.5 You may not use the In App Purchase API to deliver any items that contain content or materials of any kind (text, graphics, images, photographs, sounds, etc.) that in Apple’s reasonable judgment may be found objectionable, for example, materials that may be considered obscene, pornographic, or defamatory.
 
2.6 With the exception of items of content that an end user consumes or uses up within Your Application (e.g. poker chips or virtual supplies such as construction materials) (a “Consumable”), any other content, functionality, services or subscriptions purchased through the use of the In App Purchase API must be made available to end users in accordance with the same usage rules as Licensed Applications (e.g. any such content, services or functionality must be available to all of the devices associated with an end user’s account). You will be responsible for identifying Consumable items to Apple and for disclosing to end users that Consumables will not be available for use on other devices.
 
3. Your Responsibilities
 
3.1 For each successfully completed transaction made using the In App Purchase API, Apple will provide You with a transaction receipt. It is Your responsibility to verify the validity of such receipt prior to the delivery of any content, functionality, or services to an end user and Apple will not be liable for Your failure to verify that any such transaction receipt came from Apple.
 
3.2 Unless Apple provides You with user interface elements, You are responsible for developing the user interface Your Application will display to end users for purchases made through the In App Purchase API. You agree not to misrepresent, falsely claim, mislead or engage in any unfair or deceptive acts or practices regarding the promotion and sale of items through Your use of the In App Purchase API, including, but not limited to, in the Licensed Application Information and any metadata that You submit through iTunes Connect. You agree to comply with all applicable laws and regulations, including those in any jurisdictions in which you make content, functionality, services or subscriptions available through the use of the In App Purchase API, including but not limited to consumer laws and export regulations.
 
3.3 You are responsible for providing items purchased through the In App Purchase API in a timely manner (i.e., promptly after Apple issues the transaction receipt, except in cases where You have disclosed to Your end user that the item will be made available at a later time) and for complying with all applicable laws in connection therewith, including but not limited to, laws, rules and regulations related to cancellation or delivery of ordered items. You are responsible for maintaining Your own records for all such transactions.
 
3.4 You will not issue any refunds to end users of Your Application, and You agree that Apple may issue refunds to end users in accordance with the terms of Schedule 2.
 
4. Apple Services
 
4.1 From time to time, Apple may choose to offer additional services and functionality relating to In App Purchase API transactions. Apple makes no guarantees that the In App Purchase API or any related services will continue to be made available to You or that they will meet Your requirements, be uninterrupted, timely, secure or free from error, that any information that You obtain from the In App Purchase API or any related services will be accurate or reliable or that any defects will be corrected.

 
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4.2 You understand that You will not be permitted to access or use the In App Purchase API after expiration or termination of Your Agreement.
 
5. Your Acknowledgements
 
You acknowledge and agree that:
 
5.1 Apple may at any time, and from time to time, with or without prior notice to You (a) modify the In App Purchase API, including changing or removing any feature or functionality, or (b) modify, deprecate, reissue or republish the In App Purchase API. You understand that any such modifications may require You to change or update Your Applications at Your own cost in order to continue to use the In App Purchase API. Apple has no express or implied obligation to provide, or continue to provide, the In App Purchase API and may suspend or discontinue all or any portion of thereof at any time. Apple shall not be liable for any losses, damages or costs of any kind incurred by You or any other party arising out of or related to any suspension, discontinuation or modification of the In App Purchase API or any services related thereto.
 
5.2 Apple provides the In App Purchase API to You for Your use with Your Application, and Apple is not responsible for providing or unlocking any content, functionality, services or subscriptions that an end user purchases through Your use of the In App Purchase API. You acknowledge and agree that any such items are made available by You, not Apple, to the end user of Your Application, and You are solely liable and responsible for purchased items and for any such use of the In App Purchase API in Your Application.
 
5.3 Apple makes no guarantees to You in relation to the availability or uptime of the In App Purchase API or any other services that Apple may provide to You in connection therewith.
 
6. Third Party Service Providers
 
You are permitted to employ or retain a Service Provider to assist You in delivery of content, functionality, services or subscriptions through the In App Purchase API including, but not limited to, engaging any such Service Provider to maintain and administer Your Applications’ servers on Your behalf, provided any such Service Provider’s access to and use of the In App Purchase API is only done on Your behalf in providing such services to You for Your Application and in accordance with these terms, and is subject to a binding written agreement between You and the Service Provider with terms at least as restrictive and protective of Apple as those set forth herein, including, but not limited to, confidentiality for pre-release versions of the Apple Software and indemnity obligations to Apple. Any actions undertaken by any such Service Provider in relation to Your Application, Your use of the In App Purchase API, and/or arising out of this Agreement shall be deemed to have been taken by You, and You (in addition to the Service Provider) shall be responsible to Apple for all such actions (or any inactions), including but not limited to indemnifying Apple against any harm caused by the Service Provider acting on Your behalf. In the event of any actions or inactions that would constitute a violation of this Agreement or otherwise cause any harm, Apple reserves the right to require You to change Service Providers.
 
7. Use of Digital Certificates for In App Purchase
 
When an end user completes a purchase using the In App Purchase API in Your Application, Apple will provide You with a transaction receipt signed with an Apple-issued certificate. It is Your responsibility to verify that such certificate and receipt were issued by Apple, as set forth in the Documentation. You are solely responsible for Your decision to rely on any such certificates and receipts. YOUR USE OF OR RELIANCE ON SUCH CERTIFICATES AND RECEIPTS IN CONNECTION WITH THE IN APP PURCHASE API IS AT YOUR SOLE RISK. APPLE MAKES NO WARRANTIES OR REPRESENTATIONS, EXPRESS OR IMPLIED, AS TO MERCHANTABILITY OR FITNESS FOR ANY PARTICULAR PURPOSE, ACCURACY, RELIABILITY, SECURITY, OR NON-INFRINGEMENT OF THIRD PARTY RIGHTS WITH RESPECT TO SUCH DIGITAL CERTIFICATES AND RECEIPTS. You agree that You will only use such receipts and certificates in accordance with the Documentation, and that You will not interfere or tamper with the normal operation of such digital certificates or receipts, including but not limited to any falsification or other misuse.

 
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8. Additional Liability Disclaimer
 
APPLE SHALL NOT BE LIABLE FOR ANY DAMAGES OR LOSSES ARISING FROM THE USE OF THE IN APP PURCHASE API AND ANY RELATED SERVICES, INCLUDING, BUT NOT LIMITED TO, (I) ANY LOSS OF PROFIT (WHETHER INCURRED DIRECTLY OR INDIRECTLY), ANY LOSS OF GOODWILL OR BUSINESS REPUTATION, ANY LOSS OF DATA SUFFERED, OR OTHER INTANGIBLE LOSS, (II) ANY CHANGES WHICH APPLE MAY MAKE TO THE IN APP PURCHASE API, OR FOR ANY PERMANENT OR TEMPORARY CESSATION IN THE PROVISION OF THE IN APP PURCHASE API OR ANY SERVICES (OR ANY FEATURES WITHIN THE SERVICES) PROVIDED THEREWITH, OR (III) THE DELETION OF, CORRUPTION OF, OR FAILURE TO PROVIDE ANY DATA TRANSMITTED BY OR THROUGH YOUR USE OF THE IN APP PURCHASE API OR SERVICES.
 
9. Changes to Attachment 2
 
Apple may change the terms of this Attachment 2 at any time by providing notice to You. In order to continue using the In App Purchase API, You must accept and agree to the new terms of this Agreement or, if presented separately to You by Apple, to the new terms for this Attachment 2. You agree that any new terms for Attachment 2 (whether agreed to separately by You or as part of the Program Agreement) will be incorporated into the Program Agreement. If You do not agree to the new terms of this Agreement or Attachment 2, Your use of the In App Purchase API will be suspended or terminated by Apple. You agree that Your acceptance of such new Agreement terms or revised Attachment 2 may be signified electronically, including without limitation, by Your checking a box or clicking on an “agree” or similar button which may be presented to You in a dialog box that is separate from this Agreement.

 
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Attachment 3
(to the Agreement)
Additional Terms for the Game Center
 
The following terms are in addition to the terms of the Agreement and apply to any use of the Game Center service by You or Your Application; provided however that You may only use confidential, pre-release versions of the Game Center service for testing and development of Your Application and may not use such pre-release service in Your Licensed Application or disclose it in any way until it is publicly released by Apple.
 
1. Use of the Game Center service
 
1.1 You and Your Application may not connect to or use the Game Center service in any way not expressly authorized by Apple. You agree to only use the Game Center service in accordance with this Agreement (including this Attachment 3), the Game Center Documentation and in accordance with all applicable laws. You understand that neither You nor Your Application will be permitted to access or use the Game Center service after expiration or termination of Your Agreement.
 
1.2 Apple may provide You with a unique identifier which is associated with an end user’s alias as part of the Game Center service (the “Player ID”). You agree to not display the Player ID to the end user or to any third party, and You agree to only use the Player ID for differentiation of end users in connection with Your Application’s use of the Game Center. You agree not to reverse look-up, trace, relate, associate, mine, harvest, or otherwise exploit the Player ID, aliases or other data or information provided by the Game Center service, except to the extent expressly permitted herein. For example, You will not attempt to determine the real identity of an end user.
 
1.3 You will only use information provided by the Game Center service as necessary for providing services and functionality for Your Application. For example, You will only use leaderboard scores within Your Application, and You will not host or export any such information to a third party service. Further, You agree not to transfer or copy any user information or data (whether individually or in the aggregate) obtained through the Game Center service to a third party except as necessary for providing services and functionality for Your Application, and then only with express user consent and only if not otherwise prohibited in this Agreement.
 
1.4 You will not attempt to gain (or enable others to gain) unauthorized use or access to the Game Center service (or any part thereof) in any way, including but not limited to obtaining information from the Game Center service using any method not expressly permitted by Apple. For example, You may not use packet sniffers to intercept any communications protocols from systems or networks connected to the Game Center, scrape any data or user information from the Game Center, or use any third party software to collect information through the Game Center about players, game data, accounts, or service usage patterns.
 
2. Additional Restrictions
 
2.1 You agree not to harm or interfere with Apple’s networks or servers, or any third party servers or networks connected to the Game Center service, or otherwise disrupt other developers’ or end users’ use of the Game Center. You agree that, except for testing and development purposes, You will not create false accounts through the use of the Game Center service or otherwise use the Game Center service to misrepresent information about You or Your Application in a way that would interfere with an end users’ use of the Game Center service, e.g., creating inflated high scores through the use of cheat codes or falsifying the number of user accounts for Your Application.
 
2.2 You will not institute, assist, or enable any disruptions of the Game Center, such as through a denial of service attack, through the use of an automated process or service such as a spider, script, or bot, or through exploiting any bug in the Game Center service or Apple Software. You agree not to probe, test or scan for vulnerabilities in the Game Center service. You further agree not to disable, spoof, hack, undermine or otherwise interfere with any data protection, security, verification or authentication mechanisms that are incorporated in or used by the Game Center service, or enable others to do so.

 
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2.3 You will not transmit, store or otherwise make available any material that contains viruses or any other computer code, files or programs that may harm, disrupt or limit the normal operation of the Game Center or an iOS Product.
 
2.4 You agree not to use any portion of the Game Center service for sending any unsolicited messages to end users or for the purpose of poaching, phishing or spamming of Game Center users. You will not reroute (or attempt to reroute) users of the Game Center to another related service using any information You obtain through the use of the Game Center service.
 
2.5 You shall not charge any fees to end users for access to the Game Center service or for any data or information provided therein.
 
3. Your Acknowledgements
 
You acknowledge and agree that:
 
3.1 Apple may at any time, and from time to time, with or without prior notice to You (a) modify the Game Center service, including changing or removing any feature or functionality, or (b) modify, deprecate, reissue or republish the Game Center APIs or related APIs. You understand that any such modifications may require You to change or update Your Applications at Your own cost. Apple has no express or implied obligation to provide, or continue to provide, the Game Center service and may suspend or discontinue all or any portion of the Game Center service at any time. Apple shall not be liable for any losses, damages or costs of any kind incurred by You or any other party arising out of or related to any such service suspension or discontinuation or any such modification of the Game Center service or Game Center APIs.
 
3.2 As long as the Game Center service is a confidential, pre-release service, You will only allow it to be used for testing and development purposes by Your Authorized Developers and only for use on Your Authorized Test Devices, and You will not use any Game Center APIs in Your Licensed Applications. You agree to restrict access to such Authorized Test Devices in accordance with the terms of the Agreement.
 
3.3 Apple makes no guarantees to You in relation to the availability or uptime of the Game Center service and is not obligated to provide any maintenance, technical or other support for such service.
 
3.4 Apple reserves the right to remove Your access to the Game Center service at any time in its sole discretion.
 
3.5 Apple may monitor and collect information (including but not limited to technical and diagnostic information) about Your usage of the Game Center service to aid Apple in improving the Game Center and other Apple products or services and to verify Your compliance with this Agreement.
 
4. Changes to Attachment 3
 
Apple may change the terms of this Attachment 3 at any time by providing notice to You. In order to continue using the Game Center, You must accept and agree to the new terms of this Agreement or, if presented separately to You by Apple, to the new terms for this Attachment 3. You agree that any new terms for Attachment 3 (whether agreed to separately by You or as part of the Program Agreement) will be incorporated into the Program Agreement. If You do not agree to new terms of this Agreement or Attachment 3, Your use of the Game Center will be suspended or terminated by Apple. You agree that Your acceptance of such new Agreement terms or revised Attachment 3 may be signified electronically, including without limitation, by Your checking a box or clicking on an “agree” or similar button which may be presented to You in a dialog box that is separate from this Agreement.
 
5. Additional Liability Disclaimer
 
APPLE SHALL NOT BE LIABLE FOR ANY DAMAGES OR LOSSES ARISING FROM ANY INTERRUPTIONS TO THE GAME CENTER OR ANY SYSTEM FAILURES, NETWORK ATTACKS, SCHEDULED OR UNSCHEDULED MAINTENANCE, OR OTHER INTERRUPTIONS. YOU ACKNOWLEDGE THAT THE SERVICE IS NOT INTENDED OR SUITABLE FOR USE IN SITUATIONS OR ENVIRONMENTS WHERE ERRORS, DELAYS, FAILURES OR INACCURACIES IN THE SERVICE COULD LEAD TO DAMAGE OF ANY KIND INCLUDING BUT NOT LIMITED TO, DEATH, PERSONAL INJURY, OR FINANCIAL, PHYSICAL, PROPERTY OR ENVIRONMENTAL DAMAGE.

 
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Schedule 1
 
1. Appointment of Agent
 
1.1 You hereby appoint Apple and Apple Subsidiaries (collectively “Apple”) as Your worldwide agent for the delivery of the Licensed Applications to end-users, during the Delivery Period. You hereby acknowledge that Apple will deliver the Licensed Applications to end users in Apple’s own name, through one or more App Stores, but for You and on Your behalf.
 
1.2 In furtherance of Apple’s appointment under Section 1.1 of this Schedule 1, You hereby authorize and instruct Apple to:
(a) solicit and obtain orders on Your behalf for Licensed Applications from end-users located in the countries You designate under Section 2.1 hereof;
(b) provide hosting services to You, in order to allow for the storage of, and end-user access to, the Licensed Applications;
(c) make copies of, format, and otherwise prepare Licensed Applications for acquisition and download by end-users, including adding the Security Solution;
(d) allow end-users to access copies of the Licensed Applications, so that end-users may acquire from You and electronically download those Licensed Applications, Licensed Application Information, and associated metadata to end-users through one or more App Stores;
(e) use (i) screen shots and/or up to 30 second excerpts of the Licensed Applications; (ii) trademarks and logos associated with the Licensed Applications; and (iii) Licensed Application Information, for promotional purposes in marketing materials and gift cards, excluding those portions of the Licensed Applications, trademarks or logos, or Licensed Application Information which You do not have the right to use for promotional purposes, and which You identify in writing at the time that the Licensed Applications are delivered by You to Apple under Section 2.1 of this Schedule 1, and use images and other materials that You may provide to Apple, at Apple’s reasonable request, for promotional purposes in marketing materials and gift cards; and
(f) otherwise use Licensed Applications, Licensed Application Information and associated metadata as may be reasonably necessary in the delivery of the Licensed Applications in accordance with this Schedule 1. You agree that no royalty or other compensation is payable for the rights described above in Section 1.2 of this Schedule 1.
 
1.3 The parties acknowledge and agree that their relationship under this Schedule 1 is, and shall be, that of principal and agent, and that You, as principal, are, and shall be, solely responsible for any and all claims and liabilities involving or relating to, the Licensed Applications, as provided in this Schedule 1. The parties acknowledge and agree that Your appointment of Apple as its agent under this Schedule 1 is non-exclusive.
 
1.4 For purposes of this Schedule 1, the “Delivery Period” shall mean the period beginning on the Effective Date of the Agreement, and expiring on the last day of the Agreement or any renewal thereof; provided, however, that Apple’s appointment as Your agent shall survive expiration of the Agreement for a reasonable phase-out period not to exceed thirty (30) days.
 
1.5 All of the Licensed Applications delivered by You to Apple under Section 2.1 of this Schedule 1 shall be made available by Apple for download by end-users at no charge. Apple shall have no duty to collect any fees for the Licensed Applications for any end-user and shall have no payment obligation to You with respect to any of those Licensed Applications under this Schedule 1. In the event that You intend to charge end-users a fee for any Licensed Application, You must enter (or have previously entered) into a separate agreement (Schedule 2) with Apple with respect to that Licensed Application.
 
 
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2. Delivery of the Licensed Applications to Apple
2.1 You will deliver to Apple, at Your sole expense, using the iTunes Connect site, the Licensed Applications, Licensed Application Information and associated metadata, in a format and manner prescribed by Apple, as required for the delivery of the Licensed Applications to end-users in accordance with this Schedule 1. Metadata You deliver to Apple under this Schedule 1 will include: (i) the title and version number of each of the Licensed Applications; (ii) the countries You designate, in which You wish Apple to allow end-users to download those Licensed Applications; (iii) any copyright or other intellectual property rights notices; and (iv) Your end-user license agreement (“EULA”), if any, in accordance with Section 3.2 of this Schedule 1.
 
2.2 All Licensed Applications will be delivered by You to Apple using software tools, a secure FTP site address and/or such other delivery methods as prescribed by Apple.
 
2.3 You hereby certify that all of the Licensed Applications You deliver to Apple under this Schedule 1 are authorized for export from the United States to each of the countries designated by You under Section 2.1 hereof, in accordance with the requirements of the United States Export Administration Regulations, 15 C.F.R. Parts 730-774. Without limiting the generality of this Section 2.3, You certify that (i) none of the Licensed Applications contains, uses or supports any data encryption or cryptographic functions; or (ii) in the event that any Licensed Application contains, uses or supports any such data encryption or cryptographic functionality, You have qualified that Licensed Application for export as a “mass market encryption item” in accordance with section 742.15(b)(2) of the Export Administration Regulations, and You will provide Apple with a PDF copy of the mass market export classification ruling (CCATS) issued by the United States Commerce Department, Bureau of Industry and Security for that Licensed Application. For purposes of determining the proper export classification and export control status of each Licensed Application, You should consult the export compliance decision tree in the iTunes Connect tool. You acknowledge that Apple is relying upon Your certification in this Section 2.3 in allowing end-users to access and download the Licensed Applications under this Schedule 1. Except as provided in this Section 2.3, Apple will be responsible for compliance with the requirements of the Export Administration Regulations in allowing end-users to access and download the Licensed Applications under this Schedule 1.
 
3. Ownership and End-User Licensing
3.1 The parties acknowledge and agree that Apple shall not acquire any ownership interest in or to any of the Licensed Applications or Licensed Applications Information, and title, risk of loss, responsibility for, and control over the Licensed Applications shall, at all times, remain with You. Apple may not use any of the Licensed Applications or Licensed Application Information for any purpose, or in any manner, except as specifically authorized in this Schedule 1.
 
3.2 You may deliver to Apple Your own EULA for any Licensed Application at the time that You deliver that Licensed Application to Apple, in accordance with Section 2.1 of this Schedule 1; provided, however, that Your EULA must include and may not be inconsistent with the minimum terms and conditions specified on Exhibit A to this Schedule 1 and must comply with all applicable laws in all countries where You wish Apple to allow end-users to download that Licensed Application. Apple shall allow each end-user to which Apple allows access to any such Licensed Application to review Your EULA (if any) at the time that Apple delivers that Licensed Application to that end-user, and Apple shall notify each end-user that the end-user’s use of that Licensed Application is subject to the terms and conditions of Your EULA (if any). In the event that You do not furnish Your own EULA for any Licensed Application to Apple, You acknowledge and agree that each end-user’s use of that Licensed Application shall be subject to Apple’s standard EULA (which is part of the App Store Terms of Service).
 
3.3 You hereby acknowledge that the EULA for each of the Licensed Applications is solely between You and the end-user and conforms to applicable law, and Apple shall not be responsible for, and shall not have any liability whatsoever under, any EULA or any breach by You or any end-user of any of the terms and conditions of any EULA.
 
4. Content Restrictions and Software Rating

 
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4.1 You represent and warrant that: (a) You have the right to enter into this Agreement, to reproduce and distribute each of the Licensed Applications, and to authorize Apple to permit end-users to download and use each of the Licensed Applications through one or more App Stores; (b) none of the Licensed Applications, or Apple’s or end-users’ permitted uses of those Licensed Applications, violate or infringe any patent, copyright, trademark, trade secret or other intellectual property or contractual rights of any other person, firm, corporation or other entity; (c) each of the Licensed Applications is authorized for distribution, sale and use in, export to, and import into each of the countries designated by You under Section 2.1 of this Schedule 1, in accordance with the laws and regulations of those countries and all applicable export/import regulations; (d) none of the Licensed Applications contains any obscene, offensive or other materials that are prohibited or restricted under the laws or regulations of any of the countries You designate under Section 2.1 of this Schedule 1; and (e) all information You provide using the iTunes Connect tool, including any information relating to the Licensed Applications, is accurate and that, if any such information ceases to be accurate, You will promptly update it to be accurate using the iTunes Connect tool.
 
4.2 You shall use the software rating tool set forth on iTunes Connect to supply information regarding each of the Licensed Applications delivered by You for marketing and fulfillment by Apple through the App Store under this Schedule 1 in order to assign a rating to each such Licensed Application. For purposes of assigning a rating to each of the Licensed Applications, You shall use Your best efforts to provide correct and complete information about the content of that Licensed Application with the software rating tool. You acknowledge and agree that Apple is relying on: (i) Your good faith and diligence in accurately and completely providing the requested information for each Licensed Application; and (ii) Your representations and warranties in Section 4.1 hereof, in making that Licensed Application available for download by end-users in each of the countries You designate hereunder. Furthermore, You authorize Apple to correct the rating of any Licensed Application of Yours that has been assigned an incorrect rating; and You agree to any such corrected rating.
 
4.3 In the event that any country You designate hereunder requires the approval of, or rating of, any Licensed Application by any government or industry regulatory agency as a condition for the distribution and/or use of that Licensed Application, You acknowledge and agree that Apple may elect not to make that Licensed Application available for download by end-users in that country from any App Store.
 
5. Responsibility and Liability
5.1 Apple shall have no responsibility for the installation and/or use of any of the Licensed Applications by any end-user. You shall be solely responsible for any and all product warranties, end-user assistance and product support with respect to each of the Licensed Applications.
 
5.2 You shall be solely responsible for, and Apple shall have no responsibility or liability whatsoever with respect to, any and all claims, suits, liabilities, losses, damages, costs and expenses arising from, or attributable to, the Licensed Applications and/or the use of those Licensed Applications by any end-user, including, but not limited to: (i) claims of breach of warranty, whether specified in the EULA or established under applicable law; (ii) product liability claims; and (iii) claims that any of the Licensed Applications and/or the end-user’s possession or use of those Licensed Applications infringes the copyright or other intellectual property rights of any third party.
 
6. Termination
6.1 This Schedule 1, and all of Apple’s obligations hereunder, shall terminate upon the expiration or termination of the Agreement.
 
6.2 In the event that You no longer have the legal right to distribute the Licensed  Applications, or to authorize Apple to allow access to those Licensed Applications by end-users, in accordance with this Schedule 1, You shall promptly withdraw those Licensed Applications from the App Store using the tools provided on the iTunes Connect site; provided, however, that such withdrawal by You under this Section 6.2 shall not relieve You of any of Your obligations to Apple under this Schedule 1, or any liability to Apple and/or any end-user with respect to those Licensed Applications.

 
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6.3 Apple reserves the right to cease allowing download by end-users of the Licensed Applications at any time, with or without cause, by providing notice of termination to You. Without limiting the generality of this Section 6.3, You acknowledge that Apple may cease allowing download by end-users of some or all of the Licensed Applications if Apple reasonably believes that: (i) those Licensed Applications are not authorized for export to one or more of the countries designated by You under Section 2.1 hereof, in accordance with the Export Administration Regulations; (ii) those Licensed Applications and/or any end-user’s possession and/or use of those Licensed Applications, infringe patent, copyright, trademark, trade secret or other intellectual property rights of any third party; or (iii) the distribution and/or use of those Licensed Applications violates any applicable law in any country You designate under Section 2.1 of this Schedule 1. An election by Apple to cease allowing download of any Licensed Applications, pursuant to this Section 6.3, shall not relieve You of Your obligations under this Schedule 1.
 
6.4 You may withdraw any or all of the Licensed Applications from the App Store, at any time, and for any reason, by using the tools provided on the iTunes Connect site.
 
7. Legal Consequences
The relationship between You and Apple established by this Schedule 1 may have important legal consequences for You. You acknowledge and agree that it is Your responsibility to consult with Your legal advisors with respect to Your legal obligations hereunder.

 
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EXHIBIT A
(to Schedule 1)
Instructions for Minimum Terms of Developer’s
End-User License Agreement
 
1. Acknowledgement: You and the end-user must acknowledge that the EULA is concluded between You and the end-user only, and not with Apple, and You, not Apple, are solely responsible for the Licensed Application and the content thereof. The EULA may not provide for usage rules for Licensed Applications that are less restrictive than the Usage Rules set forth for Licensed Applications in, or otherwise be in conflict with, the App Store Terms of Service as of the Effective Date (which You acknowledge You have had the opportunity to review).
 
2. Scope of License: The license granted to the end-user for the Licensed Application must be limited to a non-transferable license to use the Licensed Application on an iOS Product that the end-user owns or controls and as permitted by the Usage Rules set forth in the App Store Terms of Service.
 
3. Maintenance and Support: You must be solely responsible for providing any maintenance and support services with respect to the Licensed Application, as specified in the EULA, or as required under applicable law. You and the end-user must acknowledge that Apple has no obligation whatsoever to furnish any maintenance and support services with respect to the Licensed Application.
 
4. Warranty: You must be solely responsible for any product warranties, whether express or implied by law, to the extent not effectively disclaimed. The EULA must provide that, in the event of any failure of the Licensed Application to conform to any applicable warranty, the end-user may notify Apple, and Apple will refund the purchase price for the Licensed Application to that end-user; and that, to the maximum extent permitted by applicable law, Apple will have no other warranty obligation whatsoever with respect to the Licensed Application, and any other claims, losses, liabilities, damages, costs or expenses attributable to any failure to conform to any warranty will be Your sole responsibility.
 
5. Product Claims: You and the end-user must acknowledge that You, not Apple, are responsible for addressing any claims of the end-user or any third party relating to the Licensed Application or the end-user’s possession and/or use of that Licensed Application, including, but not limited to: (i) product liability claims; (ii) any claim that the Licensed Application fails to conform to any applicable legal or regulatory requirement; and (iii) claims arising under consumer protection or similar legislation. The EULA may not limit Your liability to the end-user beyond what is permitted by applicable law.
 
6. Intellectual Property Rights: You and the end-user must acknowledge that, in the event of any third party claim that the Licensed Application or the end-user’s possession and use of that Licensed Application infringes that third party’s intellectual property rights, You, not Apple, will be solely responsible for the investigation, defense, settlement and discharge of any such intellectual property infringement claim.
 
7. Legal Compliance: The end-user must represent and warrant that (i) he/she is not located in a country that is subject to a U.S. Government embargo, or that has been designated by the U.S. Government as a “terrorist supporting” country; and (ii) he/she is not listed on any U.S. Government list of prohibited or restricted parties.
 
8. Developer Name and Address: You must state in the EULA Your name and address, and the contact information (telephone number; E-mail address) to which any end-user questions, complaints or claims with respect to the Licensed Application should be directed.

 
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9. Third Party Terms of Agreement: You must state in the EULA that the end-user must comply with applicable third party terms of agreement when using Your Application, e.g., if You have a VoIP application, then the end-user must not be in violation of their wireless data service agreement when using Your Application.
 
10. Third Party Beneficiary: You and the end-user must acknowledge and agree that Apple, and Apple’s subsidiaries, are third party beneficiaries of the EULA, and that, upon the end-user’s acceptance of the terms and conditions of the EULA, Apple will have the right (and will be deemed to have accepted the right) to enforce the EULA against the end-user as a third party beneficiary thereof.
 
Rev. 2-15-11
EA0707
 
 
 
 
 
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Exhibit 31.1
 
CERTIFICATION
 
I, Clifford Lerner, certify that:
 
1.  
I have reviewed this Annual Report on Form 10-K of Snap Interactive, Inc.;
 
2.  
Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;
 
3.  
Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;
 
4.  
The registrant’s other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:
 
(a)  
Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;
 
(b)  
Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;
 
(c)  
Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and
 
(d)  
Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and
 
5.  
The registrant’s other certifying officer(s) and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):
 
(a)  
All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and
 
(b)  
Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.
 
  March 31, 2011
 
/s/ Clifford Lerner
   
Clifford Lerner
   
Chief Executive Officer
Chief Financial and Accounting Officer
 
 
Exhibit 32.1
 
CERTIFICATION PURSUANT TO 18 U.S.C. SECTION 1350,
AS ADOPTED PURSUANT TO SECTION 906
OF THE SARBANES-OXLEY ACT OF 2002
 
In connection with the Annual Report of Snap Interactive, Inc. (the “Company”) on Form 10-K for the year ended December 31, 2010 as filed with the Securities and Exchange Commission on the date hereof (the “Form 10-K”), I, Clifford Lerner, Chief Executive Officer and Chief Financial and Accounting Officer of the Company, hereby certify, pursuant to 18 U.S.C. § 1350, as adopted pursuant to § 906 of the Sarbanes-Oxley Act of 2002, that to the best of my knowledge:
 
(1) The Form 10-K fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934; and
 
(2) The information contained in the Form 10-K fairly presents, in all material respects, the financial condition and results of operations of the Company.
 
     
     
  Dated: March 31, 2011
 
/s/ Clifford Lerner
   
Clifford Lerner
   
Chief Executive Officer
Chief Financial and Accounting Officer
 
A signed original of this written statement required by Section 906 has been provided to Snap Interactive, Inc. and will be retained by Snap Interactive, Inc. and furnished to the Securities and Exchange Commission or its staff upon request.
 
The foregoing certification is being furnished as an exhibit to the Form 10-K pursuant to Item 601(b)(32) of Regulation S-K and Section 906 of the Sarbanes-Oxley Act of 2002 (subsections (a) and (b) of Section 1350, Chapter 63 of Title 18, United States Code) and, accordingly, is not being filed as part of the Form 10-K for purposes of Section 18 of the Securities Exchange Act of 1934, as amended, and is not incorporated by reference into any filing of the Company, whether made before or after the date hereof, regardless of any general incorporation language in such filing.