PALTALK, INC. - Quarter Report: 2008 September (Form 10-Q)

f10q0908_snap.htm

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, D.C. 20549

_______________

FORM 10-Q

_______________

x	QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended September 30, 2008

o	TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from ______to______.

SNAP INTERACTIVE, INC.

(Exact name of registrant as specified in Charter)

DELAWARE		000-52176		20-3191847
(State or other jurisdiction of incorporation or organization)		(Commission File No.)		(IRS Employee Identification No.)

366 North Broadway, Suite 41042, Jericho, New York 11753

(Address of Principal Executive Offices)

_______________

(516) 942-2030

(Issuer Telephone number)

_______________

(Former Name or Former Address if Changed Since Last Report)

Check whether the issuer (1) has filed all reports required to be filed by Section 13 or 15(d) of the Exchange Act during the preceding 12 months (or for such shorter period that the issuer 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 is a large accelerated filer, an accelerated filer, a non-accelerated filer or a smaller reporting company filer. See definition of “accelerated filer” and “large accelerated filer” in Rule 12b-2 of the Exchange Act (Check one):

Large Accelerated Filer o

Accelerated Filer o

Non-Accelerated Filer 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

State the number of shares outstanding of each of the issuer’s classes of common equity, as of as of November 11, 2008: 10,662,395 shares of common stock.

SNAP INTERACTIVE, INC.

FORM 10-Q

September 30, 2008

INDEX

PART I-- FINANCIAL INFORMATION

Item 1.	Financial Statements
Item 2.	Management’s Discussion and Analysis of Financial Condition
Item 3	Quantitative and Qualitative Disclosures About Market Risk
Item 4T.	Control and Procedures

PART II-- OTHER INFORMATION

Item 1	Legal Proceedings
Item 1A	Risk Factors
Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds
Item 3.	Defaults Upon Senior Securities
Item 4.	Submission of Matters to a Vote of Security Holders
Item 5.	Other Information
Item 6.	Exhibits and Reports on Form 8-K

SIGNATURE

Item 1. Financial Information

SNAP INTERACTIVE, INC AND SUBSIDIARY

(F/K/A eTwine Holdings, Inc.)

CONTENTS


PAGE	1	CONDENSED CONSOLIDATED BALANCE SHEETS AS OF SEPTEMBER 30, 2008 (UNAUDITED) AND DECEMBER 31, 2007.

PAGE	2	CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS FOR THE THREE AND NINE MONTHS ENDED SEPTEMBER 30, 2008 AND 2007 (UNAUDITED).

PAGE	3	CONDENSED CONSOLIDATED STATEMENT OF CHANGES IN STOCKHOLDERS’ EQUITY FOR THE NINE MONTHS ENDED SEPTEMBER 30, 2008 (UNAUDITED).

PAGE	4	CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS FOR THE NINE MONTHS ENDED SEPTEMBER 30, 2008 AND 2007 (UNAUDITED).

PAGES	5 – 17	NOTES TO CONDENSED CONSOLIDATED UNAUDITED FINANCIAL STATEMENTS

Snap Interactive, Inc. and Subsidiary
(f/k/a eTwine Holdings, Inc. and Subsidiary)
Condensed Consolidated Balance Sheets

ASSETS



		9/30/2008
		(Unaudited)		12/31/2007
Current Assets
Cash	$	1,045,487	$	318,143
Accounts receivable, net		421,686		248,902
Prepaid Expense		2,683		24,904
Total Current Assets		1,469,856		591,949

Property and Equipment, net		27,044		16,640

Other Assets
Security Deposit		18,750		1,210
Total Other Assets		18,750		1,210

Total Assets	$	1,515,650	$	609,799

LIABILITIES AND STOCKHOLDERS' EQUITY


Current Liabilities
Accounts payable and accrued liabilities	$	69,932	$	26,131
Settlement Payable		21,563		45,589
Convertible Notes Payable - Related Party		35,348		35,348
Accrued interest		18,058		16,039
Total Current Liabilities		144,901		123,107

Long Term Liabilities
Settlement Payable		28,833		45,126
Convertible Notes Payable - Related Party		10,138		10,138

Total Liabilities		183,872		178,371

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,
10,412,395 and 10,333,895 shares issued and outstanding, respectively		10,413		10,334
Additional paid-in capital		2,240,142		2,048,525
Accumulated deficit		(873,887)		(1,619,541)
Less: deferred compensation		(44,890)		(7,890)
Total Stockholders' Equity		1,331,778		431,428

Total Liabilities and Stockholders' Equity	$	1,515,650	$	609,799

See accompanying notes to condensed consolidated unaudited financial statements.

-1-

Snap Interactive, Inc. and Subsidiary
(f/k/a eTwine Holdings, Inc. and Subsidiary)
Condensed Consolidated Statements of Operations
(Unaudited)

	For the Three Months Ended						For the Nine Months Ended
	September 30, 2008			September 30, 2007			September 30, 2008			September 30, 2007

Revenue	$	871,324		$	35,383		$	1,924,483		$	35,669

Operating Expenses
Depreciation and Amortization		3,570			2,428			8,931			6,741
Research and Development		-			29,900			-			137,200
Compensation expense		213,118			15,000			581,548			15,000
Consulting Fees		13,209			-			28,396			-
Advertising expense		-			-			10,470			-
Professional Fees		17,500			4,568			54,255			15,789
Hosting expense		57,676			-			145,188			-
General and administrative		118,594			65,062			312,228			219,862
Total Operating Expenses		423,667			116,958			1,141,016			394,592

Income/(Loss) from Operations		447,657			(81,575	)		783,467			(358,923	)

Other Income (Expense)
Interest Expense		(1,481	)		(672	)		(4,700	)		(2,717	)
Interest Income		1,708			2,709			4,488			4,103
Total Other Expense, net		227			2,037			(212	)		1,386

Income/(Loss) Before Provision For Income Taxes		447,884			(79,538	)		783,255			(357,537	)

Provision for Income Taxes		(37,601	)		-			(37,601	)		-

Net Income/(Loss)	$	410,283		$	(79,538	)	$	745,654		$	(357,537	)

Net Income/(Loss) Per Share - Basic		0.04			(0.01	)		0.07			(0.04	)

Net Income/(Loss) Per Share - Diluted		0.04			(0.01	)		0.07			(0.04	)

Weighted average number of shares outstanding
during the period - Basic		10,359,560			10,047,355			10,343,824			9,475,672

Weighted average number of shares outstanding
during the period - Diluted		11,437,686			10,047,355			11,421,950			9,475,672

See accompanying notes to condensed consolidated unaudited financial statements.

-2-

Snap Interactive, Inc. and Subsidiary
(f/k/a eTwine Holdings, Inc. and Subsidiary)
Condensed Consolidated Statement of Changes in Stockholders' Equity
(Unaudited)

	Preferred Stock				Common stock
	$.001 Par Value				$.001 Par Value				Additional								Total
									paid-in		Accumulated			Deferred			Stockholder's
			Amount		Shares		Amount		capital		Deficit			Compensation			Equity

Balance, for the year ended December 31, 2007 (Audited)		-	$	-		10,333,895	$	10,334	$	2,048,525	$	(1,619,541	)	$	(7,890	)	$	431,428

Deferred compensation realized		-		-		-		-		-		-			7,500			7,500

Share based compensation		-		-		25,000		26		144,055		-			(3,708	)		140,373

Stock issued for services		-		-		50,000		50		44,450		-			(40,792	)		3,708

Stock issued for services		-		-		3,500		3		3,112		-			-			3,115

Net Income, for the nine months ended September 30, 2008		-		-		-		-		-		745,654			-			745,654

Balance, September 30, 2008 (Unaudited)		-	$	-		10,412,395	$	10,413	$	2,240,142	$	(873,887	)	$	(44,890	)	$	1,331,778

See accompanying notes to condensed consolidated unaudited financial statements.

-3-

Snap Interactive, Inc. and Subsidiary
(f/k/a eTwine Holdings, Inc. and Subsidiary)
Condensed Consolidated Statements of Cash Flows
(Unaudited)

	For the Nine Months Ended September 30,
	2008			2007
Cash Flows From Operating Activities:
Net Income/(Loss)	$	745,654		$	(357,537	)
Adjustments to reconcile Net Income (loss) to Net Cash provided by (used in) operations
Depreciation/Amortization		8,931			6,742
Amortization of stock based compensation		(37,000	)		15,800
Deferred Compensation		-			4,500
Stock based compensation		191,693			47,500
(Increase) Decrease in:
Accounts Receivable		(172,784	)		(15,244	)
Prepaid Expense		22,221			(8,828	)
Security Deposit		(17,540	)		(1,210	)
Increase (Decrease) in:
Accounts payable and accrued expenses		3,485			22,165
Accrued salaries		-			-
Accrued interest payable		2,019			2,718
Net Cash Provided/(Used In) by Operating Activities		746,679			(283,394	)

Cash Flows From Investing Activities:
Purchase of Fixed Assets		(19,335	)		(2,861	)
Net Cash Used In Investing Activities		(19,335	)		(2,861	)

Cash Flows From Financing Activities:
Proceeds from issuance of stock, net of subscriptions receivable		-			424,000
Net Cash Provided By Financing Activities		-			424,000

Net Increase in Cash		727,344			137,745

Cash at Beginning of Period		318,143			215,792

Cash at End of Period	$	1,045,487		$	353,537

Supplemental disclosure of cash flow information:

Cash paid for interest	$	-		$	-
Cash paid for taxes	$	1,909		$	-


Supplemental disclosure of non-cash investing and financing activities:

$50,000 of a convertible note payable was converted to 200,000 shares of Common Stock during March 2007.

See accompanying notes to condensed consolidated unaudited financial statements.

-4-

SNAP INTERACTIVE, INC. AND SUBSIDIARY

F/K/A ETWINE HOLDINGS, INC. AND SUBSIDIARY

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

SEPTEMBER 30, 2008

(Unaudited)

NOTE 1

SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES AND ORGANIZATION

(A) Basis of Presentation

The accompanying unaudited financial statements have been prepared in accordance with accounting principles generally accepted in the United States of America and the rules and regulations of the Securities and Exchange Commission for interim financial information. Accordingly, they do not include all the information necessary for a comprehensive presentation of financial position and results of operations.

It is management’s opinion however, that all material adjustments (consisting of normal recurring adjustments) have been made, which are necessary for a fair financial statements presentation. The results for the interim period are not necessarily indicative of the results to be expected for the year.

(B) Organization

Snap Interactive, Inc. f/k/a eTwine Holdings, 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.

On November 20, 2007 the eTwine Holdings, Inc changed its name to Snap Interactive, Inc.

The Company was organized to operate an online dating and social community website that is proactive in understanding the singles environment.

The accompanying 2008 and 2007 consolidated financial statements include the accounts of Snap Interactive, Inc. and its 100% owned subsidiary eTwine, Inc. All intercompany accounts have been eliminated in the consolidation.

(D) 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.

-5-

SNAP INTERACTIVE, INC. AND SUBSIDIARY

F/K/A ETWINE HOLDINGS, INC. AND SUBSIDIARY

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

SEPTEMBER 30, 2008

(Unaudited)

(E) 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.

(F) Income Taxes

The Company accounts for income taxes under the Statement of Financial Accounting Standards No. 109, “Accounting for Income Taxes” (“Statement 109”). Under Statement 109, 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 Statement 109, 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.

(G) Property and 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 uses a three year life for software and five year life for computer equipment.

(H) Stock-Based Compensation

In December 2004, the FASB issued SFAS No. 123(R), "Share-Based Payment," which replaces SFAS No. 123 and supersedes APB Opinion No. 25. Under SFAS No. 123(R), 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. In March 2005 the SEC issued Staff Accounting Bulletin No. 107, or "SAB 107". SAB 107 expresses views of the staff regarding the interaction between SFAS No. 123(R) and certain SEC rules and regulations and provides the staff's views regarding the valuation of share-based payment arrangements for public companies. SFAS No. 123(R) permits public companies to adopt its requirements using one of two methods. On April 14, 2005, the SEC adopted a new rule amending the compliance dates for SFAS 123R. Companies may elect to apply this statement either prospectively, or on a modified version of retrospective application under which financial statements for prior periods are adjusted on a basis consistent with the pro forma disclosures required for those periods under SFAS 123. Effective January 1, 2006, the Company has fully adopted the provisions of SFAS No. 123R and related interpretations as provided by SAB 107. 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.

-6-

SNAP INTERACTIVE, INC. AND SUBSIDIARY

F/K/A ETWINE HOLDINGS, INC. AND SUBSIDIARY

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

SEPTEMBER 30, 2008

(Unaudited)

Equity instruments (“instruments”) issued to other than employees are recorded on the basis of the fair value of the instruments, as required by SFAS No. 123(R). EITF Issue 96-18, “Accounting for Equity Instruments That Are Issued to Other Than Employees for Acquiring, or in Conjunction with Selling, Goods or Services.” defines the measurement date and recognition period for such instruments. In general, the measurement date is when either a (a) performance commitment, as defined, is reached or (b) 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 EITF.

(I) Business Segments

The Company operates in one segment and therefore segment information is not presented.

(J) Income (Loss) Per Share

Basic income (loss) per common share is computed based upon the weighted average common shares outstanding as defined by Financial Accounting Standards No. 128, “Earnings per Share.”

Diluted income per share includes the dilutive effects of stock options, warrants, and stock equivalents. To the extent stock options, warrants, and stock equivalents are anti-dilutive, they are excluded from the calculation of diluted income per share. For the three and nine months ended September 30, 2007 the 175,185 shares issuable upon conversion of notes payable and 1,500,000 shares issuable upon the exercise of stock options were not included in the computation of loss per share because their inclusion is anti-dilutive. For the three and nine months ended September 30, 2008, 1,330,000 shares issuable upon the exercise of stock options and warrants were not included in the computation of diluted income per share because their inclusion is anti-dilutive.

(K) Fair Value of Financial Instruments

The carrying amounts reported in the balance sheet for accounts receivable, accounts payable, advances from stockholder and notes payable approximate fair value based on the short-term maturity of these instruments.

-7-

SNAP INTERACTIVE, INC. AND SUBSIDIARY

F/K/A ETWINE HOLDINGS, INC. AND SUBSIDIARY

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

SEPTEMBER 30, 2008

(Unaudited)

(L) Research and Development

The Company has adopted the provisions of Emerging Issues Task Force 00-2, “Accounting for Web Site Development Costs.” Costs incurred in the planning stage of a website are expensed as research and development 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 September 30, 2008, 31.88% of sales earned were due from Customer A, 18.51% were due from Customer B, and 11.17% were due from Customer C.

At September 30, 2008 10% of Accounts Receivable are due from Customer C, 57.6% are due from Customer P and 17.6% are due from Customer S.

At September 30, 2007, 33.6% of sales were earned from Customer A, 28.3% of sales were earned from Customer B, and 11.8% of sales were earned from Customer C. At

September 30, 2007, 45.4% of accounts receivable were due from Customer D and 24.2% were due from Customer C.

The Company at times has cash in banks in excess of FDIC insurance limits. The Company had approximately $858,538 in excess of FDIC insurance limits as of September 30, 2008.

(N) Revenue Recognition

The Company recognizes revenue on arrangements in accordance with Securities and Exchange Commission Staff Accounting Bulletin No. 101, “Revenue Recognition in Financial Statements” and No. 104, “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 recognizes 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”), or registers for an external website via an advertisement clicked on through the Company’s applications (“CPA basis”), or purchases “points” or completes an offer to subscribe to premium features on the Company’s applications, the contract amount is recognized as revenue.

The Company also recognizes revenue based on the terms of a content licensing agreement. The Company receives 50% of gross revenue of initial and renewing customer subscriptions where the initial subscriptions occurred through June 11, 2008. After June 11, 2008, the agreement was amended so that the Company receives a one-time payment of $4 per customer registration where such registration first occurs after June 12, 2008. Gross revenues are delivered to the Company within 30 days after each calendar month. Additionally, on August 20, 2008, the agreement was further amended to include a one time payment of $1,412 for all registrations during the period June 11, 2008 to August 20, 2008 for U.K registered uses not covered by the contract. This was a one time payment and will not be paid in the future.

-8-

SNAP INTERACTIVE, INC. AND SUBSIDIARY

F/K/A ETWINE HOLDINGS, INC. AND SUBSIDIARY

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

SEPTEMBER 30, 2008

(Unaudited)

(O) Reclassification

Certain amounts from prior periods have been reclassified to conform to the current period presentation.

(P) Recent Accounting Pronouncements

In December 2007, the Financial Accounting Standards Board (FASB) issued SFAS No. 160, “Noncontrolling Interests in Consolidated Financial Statements – an amendment of ARB No. 51”. This statement improves the relevance, comparability, and transparency of the financial information that a reporting entity provides in its consolidated financial statements by establishing accounting and reporting standards that require; the ownership interests in subsidiaries held by parties other than the parent and the amount of consolidated net income attributable to the parent and to the noncontrolling interest be clearly identified and presented on the face of the consolidated statement of income, changes in a parent’s ownership interest while the parent retains its controlling financial interest in its subsidiary be accounted for consistently, when a subsidiary is deconsolidated, any retained noncontrolling equity investment in the former subsidiary be initially measured at fair value, entities provide sufficient disclosures that clearly identify and distinguish between the interests of the parent and the interests of the noncontrolling owners. SFAS No. 160 affects those entities that have an outstanding noncontrolling interest in one or more subsidiaries or that deconsolidate a subsidiary. SFAS No. 160 is effective for fiscal years, and interim periods within those fiscal years, beginning on or after December 15, 2008. Early adoption is prohibited. The adoption of this statement is not expected to have a material effect on the Company's financial statements.

In March 2008, the FASB issued SFAS No. 161, “Disclosures about Derivative Instruments and Hedging Activities, an amendment of FASB Statement No. 133” (SFAS 161). This statement is intended to improve transparency in financial reporting by requiring enhanced disclosures of an entity’s derivative instruments and hedging activities and their effects on the entity’s financial position, financial performance, and cash flows. SFAS 161 applies to all derivative instruments within the scope of SFAS 133, “Accounting for Derivative Instruments and Hedging Activities” (SFAS 133) as well as related hedged items, bifurcated derivatives, and nonderivative instruments that are designated and qualify as hedging instruments. Entities with instruments subject to SFAS 161 must provide more robust qualitative disclosures and expanded quantitative disclosures. SFAS 161 is effective prospectively for financial statements issued for fiscal years and interim periods beginning after November 15, 2008, with early application permitted. We are currently evaluating the disclosure implications of this statement.

-9-

SNAP INTERACTIVE, INC. AND SUBSIDIARY

F/K/A ETWINE HOLDINGS, INC. AND SUBSIDIARY

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

SEPTEMBER 30, 2008

(Unaudited)

In May 2008, the FASB issued SFAS No. 162, “The Hierarchy of Generally Accepted Accounting Principles.” SFAS No. 162 identifies the sources of accounting principles and provides entities with a framework for selecting the principles used in preparation of financial statements that are presented in conformity with GAAP. The current GAAP hierarchy has been criticized because it is directed to the auditor rather than the entity, it is complex, and it ranks FASB Statements of Financial Accounting Concepts, which are subject to the same level of due process as FASB Statements of Financial Accounting Standards, below industry practices that are widely recognized as generally accepted but that are not subject to due process. The Board believes the GAAP hierarchy should be directed to entities because it is the entity (not its auditors) that is responsible for selecting accounting principles for financial statements that are presented in conformity with GAAP. The adoption of FASB 162 is not expected to have a material impact on the Company’s financial position.

In May 2008, the FASB issued SFAS No. 163, “Accounting for Financial Guarantee Insurance Contracts-an interpretation of FASB Statement No. 60.” Diversity exists in practice in accounting for financial guarantee insurance contracts by insurance enterprises under FASB Statement No. 60, Accounting and Reporting by Insurance Enterprises. This results in inconsistencies in the recognition and measurement of claim liabilities. This Statement requires that an insurance enterprise recognize a claim liability prior to an event of default (insured event) when there is evidence that credit deterioration has occurred in an insured financial obligation. This Statement requires expanded disclosures about financial guarantee insurance contracts. The accounting and disclosure requirements of the Statement will improve the quality of information provided to users of financial statements. The adoption of FASB 163 is not expected to have a material impact on the Company’s financial position.

NOTE 2

STOCKHOLDERS’ EQUITY

(A) Common Stock Issued for Services

On September 15, 2008 the Company issued 50,000 shares of common stock as compensation for legal services for a one year period having a fair value of $44,500. As of September 30, 2008 $3,708 is recorded as professional fees and $40,792 is recorded as deferred compensation.

On September 2, 2008 the Company issued 3,500 shares of common stock for consulting services having a fair value of $3,115 based upon fair value on the date of grant (See Note 5 (B)).

-10-

SNAP INTERACTIVE, INC. AND SUBSIDIARY

F/K/A ETWINE HOLDINGS, INC. AND SUBSIDIARY

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

SEPTEMBER 30, 2008

(Unaudited)

On September 2, 2008 the Company issued 12,500 shares of common stock for consulting services having a fair value of $11,125 based upon fair value on the date of grant. As of September 30, 2008 $7,417 is recorded as compensation and $3,708 is recorded as deferred compensation (See Note 5 (B)).

On June 1, 2008 the Company issued 12,500 shares of common stock for consulting services having a fair value of $9,875 based upon fair value on the date of grant. As of September 30, 2008 $9,875 is recorded as compensation . (See Note 5(B)).

On January 5, 2008 the Company granted 50,000 shares of common stock as compensation having a fair value of $47,500. The shares vest equally on January 5, 2010 and January 5, 2011. As of September 30, 2008 $14,844 is recorded as compensation expense.

On January 5, 2008 the Company granted 10,000 shares of common stock as compensation having a fair value of $9,500. The shares vest on January 5, 2010. As of September 30, 2008 $3,563 is recorded as compensation expense.

On January 1, 2008 the Company granted 50,000 shares of common stock for consulting services having a fair value of $37,500 based upon fair value on the date of grant. The shares vest on January 1, 2009 and as of September 30, 2008 $28,125 is recorded as compensation expense.

On October 15, 2007, the Company issued 14,286 shares of common stock as compensation having a fair value of $10,000 based upon fair value on the date of grant. The stock vests on October 13, 2008 and as of September 30, 2008, $390 is recorded as deferred compensation and $7,500 has been recognized for the nine months ended September 30, 2008.

(B) Stock Options Issued for Services

On January 1, 2008, the Company issued 50,000 options having an exercise price of $2 per share. The options vest one year after grant. For the nine months ended September 30, 2008 the Company recorded compensation expense of $19,770 with an offsetting credit to additional paid in capital. 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	3 years
	Expected volatility	148.90%
	Risk free interest rate	2.89%
	Expected dividends	0%

-11-

SNAP INTERACTIVE, INC. AND SUBSIDIARY

F/K/A ETWINE HOLDINGS, INC. AND SUBSIDIARY

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

SEPTEMBER 30, 2008

(Unaudited)

On January 5, 2008, the Company issued 20,000 options having an exercise price of $2 The options vest one year after grant. For the nine months ended September 30, 2008 the Company recorded compensation expense of $4,320 with an offsetting credit to additional paid in capital. 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	2-3 years
	Expected volatility	150.99%
	Risk free interest rate	2.76%
	Expected dividends	0%

On January 5, 2008, the Company issued 250,000 options having an exercise price of $1, $2 and $3, per share (50,000 options at $1, 100,000 options at $2 and 100,000 options at $3). The options vest at various dates ranging from two years to three years. For the nine months ended September 30, 2008 and the Company recorded compensation expense of $48,573 with an offsetting credit to additional paid in capital. 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	2-3 years
	Expected volatility	150.99%
	Risk free interest rate	2.76%
	Expected dividends	0%

On January 9, 2008, the Company issued 10,000 options having an exercise price of $1 per share. The options vest over a one year term. For the six months ended September 30, 2008 the Company recorded compensation expense of $3,884 with an offsetting credit to additional paid in capital. 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 years
	Expected volatility	150.69%
	Risk free interest rate	3.04%
	Expected dividends	0%

The following tables summarize all stock option grants to employees and consultants as of September 30, 2008, and the related changes during these periods are presented below.

-12-

SNAP INTERACTIVE, INC. AND SUBSIDIARY

F/K/A ETWINE HOLDINGS, INC. AND SUBSIDIARY

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

SEPTEMBER 30, 2008

(Unaudited)

	Number of Options	Weighted Average Exercise Price
Stock Options
Balance at December 31, 2007	2,800,000	0.81
Granted	330,000	2.12
Exercised	-
Forfeited	-
Balance at September 30, 2008	3,130,000
Options exercisable at September 30, 2008	2,800,000	$ 0.95
Weighted average fair value of options granted during 2008		$ 2.12

Of the total options granted, all 2,800,000 are fully vested, exercisable and non-forfeitable.

NOTE 3 CONVERTIBLE NOTES PAYABLE – RELATED PARTY

On December 29, 2005, $92,648 of stockholder advances were converted into an unsecured convertible note payable, due December 31, 2008 and bearing interest at a rate of 6% per annum. All debt can be converted at the rate of $0.25 per share for each $1 of debt. The cash offering price at that time was $0.25 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, a stockholder converted additional debt totaling $50,000 in exchange for 200,000 shares of common stock. The fair value of the common stock was $0.25 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 September 30, 2008, the Company had a remaining balance due of $35,348.

On March 1, 2007, $10,138 of the stockholder advances 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 $0.30 per share for each $1 of debt. There was no beneficial conversion recognized on the conversion. At September 30, 2008, the Company had a remaining balance due March 1, 2010 of $10,138.

NOTE 4 SETTLEMENT PAYABLE

On January 5, 2008 the Company entered into a $72,000 settlement agreement with a vendor. The settlement is payable in 36 monthly installments with imputed interest at a rate of 6%.

-13-

SNAP INTERACTIVE, INC. AND SUBSIDIARY

F/K/A ETWINE HOLDINGS, INC. AND SUBSIDIARY

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

SEPTEMBER 30, 2008

(Unaudited)

NOTE 5 COMMITMENTS

(A) Employment Agreements

In January 2008, the Company entered into agreements with employees for two-year terms at annual salaries for the first year totaling $169,000 and minimum bonuses of $25,000 subject to performance requirements. The annual salaries and bonuses for the second year will be determined at a rate no less than the first year rate. In addition, the Company will issue the 25,000 shares of stock and 125,000 options (25,000 at $1.00, 50,000 at $2.00, and 50,000 at $3.00) over the term in each of the two years, and up to an additional 35,000 shares of stock and 145,000 options (25,000 at $1.00, 70,000 at $2.00, and 50,000 at $3.00) subject to performance requirements. The agreements also call for the employees to receive health benefits (See Note 2(A) and (B)).

On December 1, 2007 the Company entered into a one year employment agreement with its co-founder. As compensation for services received, the Company is required to issue 100,000 shares of common stock, an option to purchase 1,000,000 shares and annual compensation of $160,000 a year beginning January 2008 with annual bonus and salary increases determined by the Company. The agreement also calls for the employee 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 December 13, 2006 the Company executed an employment agreement with its President and CEO. The term ceases December 1, 2007 but it was renewed for a period of one additional year through December 1, 2008. As compensation for services, the President will receive annual compensation of $160,000 a year beginning January 1, 2008. The agreement also calls for the employee 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.

(B) Consulting Agreements

On September 11, 2008, 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 50,000 shares of the Company’s common stock (See Note (2(A)).

-14-

SNAP INTERACTIVE, INC. AND SUBSIDIARY

F/K/A ETWINE HOLDINGS, INC. AND SUBSIDIARY

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

SEPTEMBER 30, 2008

(Unaudited)

On September 4, 2008, the Company entered into a one year consulting agreement with an unrelated third party to provide professional services. In exchange for the services provided the Company will be required to issue 42,000 shares of the Company’s common stock on a monthly basis of 3,500 shares per month, and a monthly payment of $3,000 for September through November and $7,500 per month for December 2008 through August 2009. In addition, upon satisfactory performance of services for the initial three month period the Company will issue 18,000 shares of stock or a cash payment of $13,500 on a one-time basis. The additional payment will be issued no later then December 31, 2008 (See Note 2(A)).

On May 1, 2008, the Company entered into a one year consulting agreement with an unrelated third party to provide professional services. In exchange for the services provided the Company will be required to issue 50,000 shares of the Company’s common stock; with such stock to be distributed in amounts of 12,500 shares on a quarterly basis beginning with May 1, 2008 and continuing on September 1, 2008, December 1, 2008 and March 1, 2009 (See note 2(A)).

Effective January 9, 2008, the Company entered into a consulting agreement with an unrelated third party to provide marketing and advertising services. In exchange for consulting services the Company granted an option to purchase 10,000 shares of the Company’s common stock at an exercise price of $1. These options vest immediately and have an expiration date of 3 years. (See Note 2(B)).

On October 1, 2007, the company entered in to a three month consulting agreement with a public-relations company. The company is required to issue 50,000 shares of common stock and $17,000 payable in two installments. The first payment of $10,000 is to be paid upon entering into the agreement and $7,000 shall be paid seventy five days after the first payment. On October 1, 2007 $10,000 was paid and on October 2, 2007 50,000 shares of common stock have been issued. As of December 31, 2007 the $7,000 payment has not been made and is being disputed by the Company due to breach of contract.

During May 2007, the Company entered into an agreement with a consultant to issue the consultant up to 50,000 shares of common stock and up to 50,000 common stock options at an exercise price of $2.00 per share expiring in 2011 at the discretion of the Company based on services performed through December 31, 2007. The stock and options will vest 1 year from issuance. On January 1, 2008 50,000 stock options and 50,000 shares of stock have been awarded. (See Note 2( A and B )).

On May 15, 2007, the Company entered into a service agreement with an unrelated third party to provide public relations services. The term of the services to be provided is from May 15, 2007 to September 15, 2007. As compensation for services received the Company will be required to pay $6,500 per month. The agreement was terminated effective November 9, 2007. During December, 2007 the Company renewed the agreement for an additional four months for a fee of $6,500. On June 13, 2008 the Company terminated the agreement, effective July 13, 2008. For the period ended September 30, 2008, in total $39,339 in compensation has been paid.

-15-

SNAP INTERACTIVE, INC. AND SUBSIDIARY

F/K/A ETWINE HOLDINGS, INC. AND SUBSIDIARY

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

SEPTEMBER 30, 2008

(Unaudited)

On November 27, 2007 the Company entered into a twelve month computer hosting agreement. The Company is required to pay $8,812 per month for the services provided. Effective March 1, 2008, the monthly payment increased to $9,902 due to additional hardware and software being added by the Company.

(D) Operating Lease Agreements

On April 4, 2008, the Company executed a two-year non-cancelable operating lease for its corporate office space. The lease expires on April 30, 2010.

Future minimum annual rental payments are as follows:

Year 1	$	60,996
Year 2		50,830

Total minimum lease payments	$	111,826

(E) Investment Agreement

On November 22, 2006, we entered into an Investment Agreement (the “Agreement”) with Dutchess Private Equities Fund, Ltd. (“Dutchess”) to provide us with an equity line of credit. Pursuant to this Agreement, Dutchess is contractually obligated to purchase up to $10,000,000 of the Company’s Stock over the course of 36 months (“Line Period”), after our registration statement was declared effective (“Effective Date”). The amount that the Company is entitled to request from each of the purchase “Puts”, is equal to either 1) $100,000 or 2) 200% of the average daily volume (U.S market only) (“ADV”), multiplied by the average of the three (3) daily closing prices immediately preceding the Put Date. The ADV is computed using the ten (10) trading days prior to the Put Date. The Purchase Price for the common stock identified in the Put Notice is set at ninety-five percent (95%) of the lowest closing bid price of the common stock during the Pricing Period. The Pricing Period is equal to the period beginning on the Put Notice Date and ending on and including the date that is five (5) trading days after such Put Notice Date. As of September 30, 2008, we have never accessed this line of credit.

NOTE 6 RELATED PARTY TRANSACTIONS

On December 1, 2007 the Company entered into a one year employment agreement. As compensation for services received the Company is required to issue 100,000 shares of common stock, an option to purchase 1,000,000 shares and an annual compensation of $160,000 per year beginning January 2008.

On March 27, 2007, a stockholder converted $50,000 of a convertible note payable into 200,000 shares of common stock.

On March 1, 2007, $10,138 of the stockholder advances were converted into an unsecured convertible note payable, due March 1, 2010 and bearing interest at a rate of 6% per annum.

-16-

SNAP INTERACTIVE, INC. AND SUBSIDIARY

F/K/A ETWINE HOLDINGS, INC. AND SUBSIDIARY

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

SEPTEMBER 30, 2008

(Unaudited)

NOTE 7 SUBSEQUENT EVENT

On October 10, 2008, the Company issued 250,000 shares of common stock to an executive as a bonus for services rendered having a fair value of $50,000 based upon the fair value on the date of grant.

-17-

ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

Caution Regarding Forward-Looking Information

The following discussion contains forward-looking statements within the meaning of Section 27A of the Securities Act of 1933 and Section 21E of the Securities Exchange Act of 1934 relating to future events or our future performance. Actual results may materially differ from those projected in the forward-looking statements as a result of certain risks and uncertainties set forth in this prospectus. Although management believes that the assumptions made and expectations reflected in the forward-looking statements are reasonable, there is no assurance that the underlying assumptions will, in fact, prove to be correct or that actual results will not be different from expectations expressed in this report.

Overview

We were incorporated under the laws of the State of Delaware on July 19, 2005. Clifford Lerner is our sole officer and director, as well as our controlling stockholder. On December 30, 2005, we obtained all of the shares of eTwine, Inc., a New York Corporation pursuant to a Stock Purchase Agreement and Share Exchange between eTwine, Inc. and us in consideration for the issuance of 8,227,000 shares to the eTwine, Inc. shareholders. Clifford Lerner remained our sole officer and director after the agreement and pursuant to the agreement eTwine, Inc. became our wholly owned subsidiary. The purpose of this merger was to create a holding company in the event we decide to acquire other entities in this industry in the future. In addition, the purpose was for the public entity to be a Delaware corporation which has provisions of its laws that are more favorable to our shareholders than New York laws.

In November 2006, we launched an online dating website located at http://www.IamFreeTonight.com. IamFreeTonight.com offers several unique features for singles and utilizes the latest technologies to give singles an enhanced user experience compared to other online dating sites currently on the market. In December 2006, IamFreeTonight.com introduced the popular concept of the 'Wingman' into its dating application. In January 2007, IamFreeTonight.com launched its unique ‘Date Now!’ concept. The ‘Date Now!’ concept offers singles a new way to meet online by enabling them to find and schedule dates in a matter of seconds. IamFreeTonight.com's Date Now! feature gives users the ability to post when they're actually free to go out on a date as well as what they'd like to do on their date.

In June 2007 we launched our first application on Facebook Platform (R) called Meet New People.

In August 2007 we launched our second application on Facebook Platform (R) called Are You Interested

In December 2007 we changed our name from eTwine Holdings, Inc. to Snap Interactive, Inc. and changed our symbol from ETWI to STVI to reflect the company’s shifting focus on producing dating applications for Social Networking websites.

Throughout 2008 we have continued to focus on our existing dating applications on Facebook Platform (R) as well as new applications on Myspace, Hi5, & Bebo. Collectively we have 8 applications across 4 Social Networking Platforms, with more than 16 Million total installs.

Our Applications

ARE YOU INTERESTED: Are You Interested was launched on Facebook Platform (R) in August 2007. Since its launch, Are You Interested has consistently been one of the leading pure-dating applications on Facebook as defined by Most Daily Active Users and Most Monthly Active Users, as well as Total Users. Are You Interested allows users to view pictures of other members and indicate if they are “interested” by clicking “yes” on the picture. We notify members when there is a mutual match. In March 2008 we launched Are You Interested on Myspace, in April 2008 we launched Are You Interested on Hi5, and we recently launched Are You Interested on Bebo. Are You Interested now has approximately 12 Million total installs and receives over 1 Million visits per day on average.

MEET NEW PEOPLE: Meet New People was launched on Facebook Platform (R) in June 2007 and substantially revamped in December 2007. Meet New People allows users to flirt with each other by messaging online and post when they are free to hang out. Meet New People has in excess of 3.5 Million total installs and is one of the leading dating applications on Facebook.

FLIRT WITH ME: Flirt With Me was launched on Myspace in March 2008, on Hi5 in April 2008, and recently on Bebo . Flirt With Me is a fun 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. As of September 30, 2008, Flirt With Me had approximately 750,000 total installs.

In the coming months we will continue to enhance our current applications as well as consider building additional dating application on other large social networking sites and mobile platforms as they launch or gain additional traction with their developer platforms.

-18-

How We Generate Revenue

Presently we generate the majority of our revenue from advertisements placed on our applications on Facebook. We run various different types of advertisements through a number of advertising networks. Depending on the type of advertisement, we are generally paid when a user either views the advertisement, clicks the link in the advertisement, or signs up for the product or service that is being advertised. Our revenue has increased by virtue of the growth we have experienced in our applications over the past year. While advertising payouts can vary greatly, and are subject to numerous external factors, advertising revenue generally increases as the total number of visits and total number of page views on our applications increase. We do not presently employ any direct advertising salesmen. Negotiating direct advertising deals and targeting and optimizing our advertisements would likely increase the payouts we receive and this is something we hope to do in the future as resources permit. We have now begun running limited advertisements on several of our applications on Myspace, Hi5, & Bebo and may expand those monetization efforts at a later date.

In the future we may derive a larger percentage of our revenue from sources other than advertisements. We have recently begun implementing premium fee-based content and will consider converting our applications to a subscription-based pay model at some point in the next 12 months. Our decision to convert to a pay model and/or charge for premium content is dependent upon a variety of factors. Some of these factors include how much activity there is on the applications, the nature of the payment processing tools available on the underlying Social Networking websites, as well as the success and popularity of new features we add in the coming months. Each application will be evaluated on a case-by-case basis in light of the above factors. We have begun to explore other revenue sources that have proven successful in the industry including the introduction of a “virtual currency” and the sale of premium “virtual goods,” and will consider incorporating these revenue sources into more of our applications in the future.

Our Business Objectives for the Remainder of 2008

· Continue to upgrade our existing applications

· Consider building new applications on additional social networking platforms and explore mobile platforms

· Identify & explore new opportunities that emerge in our rapidly evolving industry

· Expand our programming resources

Results of Operations for the Three and Nine Months Ended September 30, 2008 Compared to the Three and Nine Months Ended September 30, 2007

Revenues

Revenue increased from $35,383 for the three months ended September 30, 2007 to $871,324 for the three months ended September 30, 2008, an increase of $835,941.

Revenue increased from $35,669 for the nine months ended September 30, 2007 to $1,924,483 for the nine months ended September 30, 2008, an increase of $1,888,814.

These revenues are primarily generated from advertisements placed on our Are You Interested & Meet New People applications as well as premium features on our Are You Interested application on Facebook. The increase in revenue was primarily due to the growth of our applications and the increased usage in the third quarter of 2008 compared to the same time period in 2007, which resulted in more traffic to our applications which produced more impressions and clicks on advertisements displayed on our applications as well as use of our premium features.

Operating Expenses

Operating Expenses for the three months ended September 30, 2008 increased to $423,667 from $116,958 for the three months ended September 30, 2007, representing an increase of $306,709.

Operating Expenses for the nine months ended September 30, 2008 increased to $1,141,016 from $394,592 for the nine months ended September 30, 2007, representing an increase of $746,424.

The increase in Operating Expenses is primarily attributable to the overall expansion of our operations as compared to the previous year, at which time we were a development stage company. Primary Operating Expenses include Compensation Expense, General & Administrative Expenses, and Hosting costs.

Compensation Expense for the three months ended September 30, 2008 increased to $213,118 from $15,000 for the three months ended September 30, 2007, representing an increase of $198,118. Compensation Expense for the nine months ended September 30, 2008 increased to $581,548 from $15,000 for the nine months ended September 30, 2007, representing an increase of $566,548. The increase in Compensation Expense was due to the hiring of new employees and the implementation of a regular payroll for the first time in 2008.

-19-

General and Administrative Expenses for the three months ended September 30, 2008 increased to $118,594 from $65,062 for the three months ended September 30, 2007, representing an increase of $53,532. General and Administrative Expenses for the nine months ended September 30, 2008 increased to $312,228 from $219,862 for the nine months ended September 30, 2007, representing an increase of $92,366. The increase in General and Administrative Expense is due to the overall expansion of our operations as compared to last year, at which time we were a development stage company.

Hosting Expense for the three months ended September 30, 2008 increased to $57,676 from $0 for the three months ended September 30, 2007, representing an increase of $57,676. Hosting Expense for the nine months ended September 30, 2008 increased to $145,188 from $0 for the nine months ended September 30, 2007, representing an increase of $145,188. These increases are attributable to the need for substantial hosting infrastructure and server capacity to handle the high volume of traffic that our applications receive. Our need for a customized hosting solution was minimal at this time last year and as such, our hosting costs were minimal during the same period last year.

Professional fees for the three months ended September 30, 2008 increased to $17,500 from $4,568 for the three months ended September 30, 2007, representing an increase of $12,932. Professional fees for the nine months ended September 30, 2008 increased to $54,255 from $15,789 for the nine months ended September 30, 2007, representing an increase of $38,466. The increase in professional fees was due to the overall expansion of our operations as compared to the previous year, at which time we were a development stage company.

Net Income

Net Income increased to $410,283 for the three months ended September 30, 2008 from a loss of $79,538 for the three months ended September 30, 2007, an increase of $489,821.

Net Income increased to $745,654 for the nine months ended September 30, 2008 from a loss of $357,537 for the nine months ended September 30, 2007, an increase of $1,103,491.

The increase in net income was primarily due to the increased revenue from the growth of our applications and the increased usage in the third quarter of 2008 compared to the same time period in 2007, which resulted in more traffic to our applications which produced more impressions and clicks on advertisements displayed on our applications and use of our premium features.

Liquidity and Capital Resources

The Company is currently financing its operations primarily through cash generated by its previous financing activities and revenues derived from advertisements placed on our Facebook applications.

As of September 30, 2008, the Company had $1,045,487 in cash. Historically, the Company’s principal working capital needs have been met through continuing operations. As the Company grows and expands its operations, the need for working capital will increase. The Company expects to finance its internal growth with cash provided from operations, borrowings, debt or equity offerings, or some combination thereof.

The Company’s net income for the three months ended September 30, 2008 was $410,283. During this period we received a total of $871,324 in revenue and had total operating expenses of $423,667. Net cash provided by operating activities was $746,679 during the nine months ended September 30, 2008 as compared to cash used in operating activities of $283,394 for nine months ended September 30, 2007. Cash provided by operating activities mainly consisted of net income of $746,679 and accounts receivable of $172,784. The Company has an operating profit at this time and intends to use its cash to continue to funds its operations going forward.

-20-

Transaction with Dutchess Private Equities Fund II, LLP

Critical Accounting Pronouncements

Our significant accounting policies are summarized in Note 1 of our financial statements.

We have adopted the following accounting standards. While all of these significant accounting policies impact our financial condition, our views of these policies are critical. Policies determined to be critical are those policies that have the most significant impact on our financial statements and require management to use a greater degree of judgment and estimates. Actual results may differ from those estimates. Our management believes that given current facts and circumstances, it is unlikely that applying any other reasonable judgments or estimate methodologies would cause effect on our consolidated results of operations, financial position or liquidity for the periods presented in this report:

We account for income taxes under the Statement of Financial Accounting Standards No. 109, “Accounting for Income Taxes” (“Statement 109”). Under Statement 109, 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.

-21-

We value property and equipment at cost and depreciates these assets using the straight-line method over their expected useful life. We use a three year life for software and five year life for computer equipment.

SFAS No. 123(R) permits public companies to adopt its requirements using one of two methods. On April 14, 2005, the SEC adopted a new rule amending the compliance dates for SFAS 123R. Companies may elect to apply this statement either prospectively, or on a modified version of retrospective application under which financial statements for prior periods are adjusted on a basis consistent with the pro forma disclosures required for those periods under SFAS 123. Effective January 1, 2006, the Company has fully adopted the provisions of SFAS No. 123R and related interpretations as provided by SAB 107. 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.

We have adopted the provisions of Emerging Issues Task Force 00-2, “Accounting for Web Site Development Costs.” Costs incurred in the planning stage of a website are expensed as research and development 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.

We recognize revenue on arrangements in accordance with Securities and Exchange Commission Staff Accounting Bulletin No. 101, “Revenue Recognition in Financial Statements” and No. 104, “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.

Recent Accounting Pronouncements

-22-

Off-Balance Sheet Arrangements

We do not have any off-balance sheet arrangements, financings, or other relationships with unconsolidated entities or other persons, also known as “special purpose entities” (SPEs).

Item 3. Quantitative and Qualitative Disclosures About Market Risk

The Company is subject to certain market risks, including changes in interest rates. The Company does not undertake any specific actions to limit those exposures.

Item 4T. Controls and Procedures

a) Evaluation of Disclosure Controls. Clifford Lerner, our Chief Executive Officer and Chief Financial Officer, evaluated the effectiveness of our disclosure controls and procedures as of the end of our third fiscal quarter 2008 pursuant to Rule 13a-15(b) of the Securities and Exchange Act. Disclosure controls and procedures are controls and other procedures that are designed to ensure that information required to be disclosed by us in the reports that we file or submit under the Exchange Act is recorded, processed, summarized and reported within the time periods specified in the SEC’s rules and forms. Disclosure controls and procedures include, without limitation, controls and procedures designed to ensure that information required to be disclosed by us in the reports that we file under the Exchange Act is accumulated and communicated to our management, as appropriate to allow timely decisions regarding required disclosure. Based on his evaluation, Mr. Lerner concluded that our disclosure controls and procedures were effective as of September 30, 2008.

It should be noted that any system of controls, however well designed and operated, can provide only reasonable, and not absolute, assurance that the objectives of the system are met. In addition, the design of any control system is based in part upon certain assumptions about the likelihood of future events. Because of these and other inherent limitations of control systems, there can be no assurance that any design will succeed in achieving its stated goals under all potential future conditions

(b) Changes in internal control over financial reporting. There have been no changes in our internal control over financial reporting that occurred during the last fiscal quarter that has materially affected, or is reasonably likely to materially affect, our internal control over financial reporting. Our management team will continue to evaluate our internal control over financial reporting in 2008 as we implement our Sarbanes Oxley Act testing.

-23-

PART II - OTHER INFORMATION

Item 1. Legal Proceedings.

Currently we are not aware of any litigation pending or threatened by or against the Company.

Item 1A. Risk Factors.

None.

Item 2. Unregistered Sales of Equity Securities and Use of Proceeds

On September 2, 2008 the Company issued 3,500 shares of common stock for consulting services having a fair value of $3,115 based upon fair value on the date of grant. The issuance of these shares was exempt from registration, pursuant to Section 4(2) of the Securities Act of 1933.

Item 3. Defaults Upon Senior Securities.

None

Item 4. Submission of Matters to a Vote of Security Holders.

None.

Item 5. Other Information.

None

Item 6. Exhibits and Reports of Form 8-K.

(a) Exhibits

31.1 Certifications pursuant to Section 302 of Sarbanes Oxley Act of 2002

32.1 Certifications pursuant to Section 906 of Sarbanes Oxley Act of 2002

(b) Reports of Form 8-K

None

-24-

SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, as amended, the registrant caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.

	SNAP INTERACTIVE, INC.

Date: November 11, 2008	By:	/s/ CLIFFORD LERNER
		CLIFFORD LERNER
		President, Chief Executive Officer, Chief Financial Officer

-25-