Here is likely why they were selling : Too much long term debt:
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| Assets | | | | |
| Current assets: | | | | |
| Cash and cash equivalents | | $ | 12,440 | | | $ | 19,267 | |
| Accounts receivable, net of allowance of $435 and $93, respectively | | 7,135 | | | 5,507 | |
| Prepaid expenses | | 3,936 | | | 4,366 | |
| Other current assets | | 1,059 | | | 2,140 | |
| Total current assets | | 24,570 | | | 31,280 | |
| Property and equipment, net of accumulated depreciation of $6,204 and $6,252, respectively | | 9,982 | | | 11,418 | |
| Goodwill | | 134,759 | | | 156,582 | |
| Intangible assets, net of accumulated amortization of $15,159 and $18,631, respectively | | 44,834 | | | 58,999 | |
| Deferred tax assets | | 5,697 | | | 23,522 | |
| Other assets | | 8,521 | | | 8,642 | |
| Total assets | | $ | 228,363 | | | $ | 290,443 | |
| Liabilities and Shareholders' Equity | | | | |
| Current liabilities: | | | | |
| Current portion of long-term debt | | $ | 12,600 | | | $ | 19,037 | |
| Accounts payable | | 10,828 | | | 11,127 | |
| Deferred revenue | | 40,479 | | | 38,304 | |
| Accrued expenses and other current liabilities | | 26,738 | | | 28,429 | |
| Total current liabilities | | 90,645 | | | 96,897 | |
| Long-term debt, net of current portion | | 72,067 | | | 80,109 | |
| Deferred tax liabilities | | 6,382 | | | 993 | |
| Other liabilities | | 18,120 | | | 17,541 | |
| Total liabilities | | 187,214 | | | 195,540
|
Note 6. Long-term Debt
On July 1, 2019, in connection with the acquisition of Zoosk, the Company entered into a Loan Agreement with Zoosk, Spark Networks, Inc., the subsidiary guarantors party thereto, the lenders party thereto, and Blue Torch Finance LLC ("Administrative Agent"), as administrative agent and collateral agent (the "Senior Secured Facilities Agreement") that provides for a four-year $125.0 million Senior Secured Facility, maturing July 1, 2023 (the "Maturity Date"). The Senior Secured Facilities Agreement provides for a term loan facility in an aggregate amount equal to $120.0 million (the "Term Loan Facility") and a revolving
credit facility in an aggregate amount equal to $5.0 million (the "Revolving Credit Facility" and, together with the Term Loan Facility, the "Facilities"). Borrowings under the Facilities bear interest at a rate equal to either LIBOR plus an applicable margin of 8.0% per annum.
Term Loan Facility
On December 2, 2020, the Company entered into the Second Amendment to Loan Agreement (the "Second Amendment" and together with the Term Loan Facility, the "Amended Term Loan Facility"), which established an additional $6.0 million of term loan commitment to its existing Term Loan Facility. The additional borrowing was applied to pay the quarterly Term Loan Facility principal and interest payments on December 31, 2020 and March 31, 2021. The Second Amendment was accounted for as a modification of debt, and as such, the third-party costs incurred in connection with the Second Amendment of approximately $1.3 million were expensed as incurred. The debt issuance costs of $1.3 million that were paid directly to the lender at the closing date were capitalized and will be amortized using the effective interest method over the term of the loan. The effective interest rate on the modified loan is 11.3%. The Second Amendment requires repayment of the principal amount of $0.15 million quarterly, beginning on March 31, 2021, in addition to the $3.0 million quarterly principal repayment of the original Term Loan Facility and the modified interest.
On March 5, 2021, the Company entered into a Limited Waiver under Loan Agreement (the "Limited Waiver") with the Administrative Agent and the lenders pursuant to which certain defaults under the Senior Secured Facilities Agreement were waived. In consideration of the Limited Waiver, the Company agreed to pay the Administrative Agent, for the ratable benefit of the lenders, a fee of $0.5 million upon the execution of the Limited Waiver, plus $0.3 million paid in kind by capitalizing such amount into the principal balance under the Senior Secured Facilities Agreement. The aggregated fees were capitalized and will be amortized using the effective interest rate of 11.8%. The aggregated outstanding principal balance of the existing Term Loan Facility and the Second Amendment is $88.7 million and $104.7 million as of September 30, 2021 and December 31, 2020, respectively. The amortized cost basis of the Amended Term Loan Facility is $84.7 million and $99.1 million as of September 30, 2021 and December 31, 2020, respectively.
In addition, pursuant to the terms of the Amended Term Loan Facility, within 5 days after the annual financial statements are required to be delivered to the lender, the Company is required to make a prepayment of the loan principal in an amount equal to a percentage of the excess cash flow, as defined in the Term Loan Facilities, of the most recently completed fiscal year. For the nine months ended September 30, 2021 and 2020, the Company made a prepayment of $6.8 million and $3.3 million, respectively.
Revolving Credit Facility
The $5.0 million Revolving Credit Facility has a commitment fee of 0.75% per annum on the unutilized commitments thereunder payable on the Maturity Date. As the Revolving Credit Facility is not expected to be drawn down, transaction costs and upfront fees totaling $0.3 million related to the Revolving Credit Facility were deferred and are being amortized over the term of the agreement. There were no outstanding borrowings under the Revolving Credit Facility as of September 30, 2021 and December 31, 2020.