CARLSBAD, Calif., Oct. 30, 2019 /PRNewswire/ -- NTN Buzztime,
Inc. (NYSE American: NTN), reported financial results for the
third quarter ended September
30, 2019.
Allen Wolff, Interim CEO, said,
"Our overarching vision will continue to be delivering interactive
entertainment and innovative technology that helps customers
acquire, engage and retain patrons. Earlier this year, we launched
our mobile app, ad exchange and lighter product, and we continued
investment in our hardware solution. For the third quarter, we
reported 71% gross margin and posted our 14th
consecutive quarter of positive EBITDA. We secured a $3 million hardware follow-on contract with our
correctional facility partner, formed a partnership to deliver
tablets to a digital marketing and loyalty company, and grew our
hardware pipeline to over $30 million
at quarter end. Also, sites with our new, lighter product Buzztime
Basic grew and we increased volume on our ad exchange.
"Our team is committed to driving growth, executing on key
initiatives and operating efficiently. With this resolve and a more
diverse product suite, we are focused on delivering revenue on a
shorter horizon, scaling the business and achieving Buzztime's full
potential."
Financial Results for the Third Quarter Ended September 30, 2019
Total revenues were
$4.6 million, compared to
$5.2 million in the second quarter of
2019 and $6.0 million in the third
quarter of 2018, reflecting a decrease in subscription revenue due
to lower site count and in hardware revenue due to the timing of
deploying larger deals. Direct costs were $1.3 million, compared to $2.1 million for the same period in 2018. Gross
margin was 71%, compared to 65% for the same period in 2018,
reflecting product mix. Selling, general and administrative expense
was $3.5 million, relatively flat
compared to the prior year quarter. The company is reducing its
full-year 2019 SG&A forecast from $14
million to less than $13.5
million. Net loss attributable to common shareholders was
$351,000, or $0.12 per share, compared to a net income
attributable to common shareholders of $222,000, or $0.08
per share, in the prior year quarter. EBITDA was $465,000, compared to $1.1
million in the prior year quarter.
EBITDA is defined as earnings before interest, taxes,
depreciation and amortization and is not intended to represent a
measure of performance in accordance with accounting principles
generally accepted in the United
States (GAAP). Although EBITDA is positive this
quarter, it may not be positive in future quarters. A detailed
description and reconciliation of EBITDA and management's reasons
for using this measure is set forth at the end of this press
release.
Site Count for the Quarter Ended September 30 , 2019
Excluding the
Buzztime Basic locations, the site count was 2,565 at September 30, 2019, compared to 2,609 at
June 30, 2019. Management anticipates
that site count will continue to fluctuate.
Liquidity
Cash, cash equivalents and restricted cash
was $2.8 million at September 30, 2019, compared to $2.8 million at December
31, 2018. For the first nine months in 2019, cash flow from
operations was $1.8 million,
increasing from $528,000 for the same
period last year.
Conference Call
Management will review the results on
a conference call with a live question and answer session today,
October 30, 2019, at 4:30 p.m. ET. To access the call, please use
passcode 9388102 and dial:
- (877) 307-1373 for the live call and (855) 859-2056 for the
replay, if calling from the United
States or Canada; or
- (678) 224-7873 for the live call and (404) 537-3406 for the
replay, if calling internationally.
The call will also be accompanied live by webcast that will be
accessible at the company's website at
http://www.buzztime.com/investors. The replay of the call
will be available until November 6,
2019.
Forward-looking Statements
This release
contains forward-looking statements that reflect management's
current views of future events and operations, including statements
regarding full-year 2019 SG&A forecast. Among the factors
that could cause or contribute to material differences between the
Company's actual results and the expectations indicated by the
forward-looking statements are risks and uncertainties that
include, but are not limited to, the Company's ability
to raise additional funds in the future on favorable terms or at
all; the Company's ability to compete effectively within the highly
competitive interactive games, entertainment and marketing services
industries, including the Company's ability to successfully
commercially launch attractive product offerings; the Company's
ability to grow its subscription revenue and successfully implement
its other business strategies; the impact of new products and
technological change, especially in the mobile and wireless
markets, on the Company's operations and competitiveness; the
Company's ability to maintain an adequate supply of its tablets and
related equipment; the Company's ability to comply with its
financial covenants to Avidbank and its right to declare a default
if the Company does not, which could lead to all payment
obligations becoming immediately due and payable; the Company's
ability to adequately protect its proprietary rights and
intellectual property; the Company's ability to successfully and
efficiently manage the design, manufacturing and assembly process
of the tablet and related equipment used in its tablet platform;
and the other risks and uncertainties described in Part I, Item 1A
"Risk Factors" of the Company's Annual Report on Form 10-K for the
fiscal year ended December 31, 2018,
and described in other documents we file from time to time with the
Securities and Exchange Commission thereafter.Please see NTN
Buzztime, Inc.'s recent filings with the Securities and Exchange
Commission for information about these and other risks that may
affect the Company. All forward-looking statements included in this
release are based on information available to us on the date
hereof. These statements speak only as of the date hereof and NTN
Buzztime, Inc. does not undertake to publicly update or revise any
of its forward-looking statements, even if experience or future
changes show that the indicated results or events will not be
realized.
About Buzztime:
Buzztime (NYSE American: NTN) delivers
interactive entertainment and innovative technology that helps its
customers acquire, engage and retain its patrons. Most frequently
used in bars and restaurants in North
America, the Buzztime tablets, mobile app and technology
offer engaging solutions to establishments that have guests who
experience dwell time, such as casinos, senior living, and more.
Casual dining venues license Buzztime's customizable solution to
differentiate themselves via competitive fun by offering guests
trivia, card, sports and arcade games. Buzztime's platform creates
connections among the players and venues and amplifies guests'
positive experiences. Buzztime's in-venue TV network creates
one of the largest digital out of home ad audiences in the US and
Canada. Buzztime hardware
solutions leverages the company's experience manufacturing durable
tablets and charging systems, enabling a diverse group of
businesses including corrections, point-of-sale and loyalty with
product implementation. Buzztime games have also been
recently licensed by other businesses serving other markets.
For more information, please
visit http://www.buzztime.com or follow us
on Facebook or Twitter@buzztime.
IR AGENCY CONTACT:
Kirsten
Chapman, LHA Investor Relations, buzztime@lhai.com
415-433-3777
NTN BUZZTIME, INC.
AND SUBSIDIARIES
|
CONSOLIDATED
BALANCE SHEETS
|
(In thousands,
except par value amount)
|
|
ASSETS
|
September
30, 2019
|
|
December
31,
2018
|
Current
Assets:
|
(unaudited)
|
|
|
Cash and cash
equivalents
|
$
2,533
|
|
$
2,536
|
Restricted
cash
|
51
|
|
50
|
Accounts receivable,
net
|
777
|
|
1,143
|
Site equipment to be
installed
|
1,601
|
|
2,539
|
Prepaid expenses and
other current assets
|
585
|
|
517
|
Total current
assets
|
5,547
|
|
6,785
|
|
|
|
|
Restricted cash,
long-term
|
200
|
|
200
|
Operating lease
right-of-use assets
|
2,176
|
|
--
|
Fixed assets,
net
|
3,365
|
|
4,667
|
Software development
costs, net
|
2,504
|
|
2,018
|
Deferred
costs
|
340
|
|
424
|
Goodwill
|
687
|
|
667
|
Other
assets
|
100
|
|
103
|
|
|
|
|
Total
assets
|
$
14,919
|
|
$
14,864
|
|
|
|
|
LIABILITIES AND
SHAREHOLDERS' EQUITY
|
|
|
|
Current
Liabilities:
|
|
|
|
Accounts
payable
|
$
335
|
|
$
271
|
Accrued
compensation
|
450
|
|
572
|
Accrued
expenses
|
322
|
|
444
|
Sales taxes
payable
|
71
|
|
87
|
Income taxes
payable
|
6
|
|
1
|
Current portion of
long-term debt
|
1,000
|
|
1,000
|
Current portion of
obligations under operating leases
|
412
|
|
--
|
Current portion of
obligations under financing leases
|
22
|
|
45
|
Current portion of
deferred revenue
|
743
|
|
1,267
|
Other current
liabilities
|
171
|
|
337
|
Total current
liabilities
|
3,532
|
|
4,024
|
|
|
|
|
Long-term
debt
|
1,987
|
|
2,729
|
Obligations under
operating leases
|
2,992
|
|
--
|
Obligations under
financing leases
|
25
|
|
41
|
Deferred
revenue
|
13
|
|
30
|
Deferred
rent
|
--
|
|
1,123
|
Other
liabilities
|
25
|
|
--
|
Total
liabilities
|
8,574
|
|
7,947
|
|
|
|
|
Commitments and
contingencies
|
|
|
|
|
|
|
|
Shareholders'
equity:
|
|
|
|
Series A 10%
cumulative convertible preferred stock, $0.005 par value, $156
liquidation preference, 156 shares authorized; 156 shares issued
and outstanding at September 30, 2019 and December 31,
2018
|
1
|
|
1
|
Common stock, $0.005
par value, 15,000 shares authorized at September 30, 2019 and
December 31, 2018; 2,895 and 2,875 shares issued at September 30,
2019 and December 31, 2018, respectively
|
14
|
|
14
|
Treasury stock, at
cost, 10 shares at September 30, 2019 and December 31,
2018
|
(456 )
|
|
(456 )
|
Additional paid-in
capital
|
136,695
|
|
136,552
|
Accumulated
deficit
|
(130,156 )
|
|
(129,394 )
|
Accumulated other
comprehensive income
|
247
|
|
200
|
Total shareholders'
equity
|
6,345
|
|
6,917
|
|
|
|
|
Total liabilities and
shareholders' equity
|
$
14,919
|
|
$
14,864
|
NTN BUZZTIME, INC.
AND SUBSIDIARIES
|
CONSOLIDATED
STATEMENTS OF OPERATIONS AND COMPREHENSIVE (LOSS)
INCOME
|
(unaudited)
|
(In thousands,
except per share data)
|
|
|
Three months
ended September
30,
|
|
Nine months
ended September
30,
|
|
2019
|
|
2018
|
|
2019
|
|
2018
|
Revenues
|
|
|
|
|
|
|
|
Subscription
revenue
|
$
3,723
|
|
$
4,005
|
|
$
11,356
|
|
$ 12,111
|
Hardware
revenue
|
11
|
|
1,158
|
|
811
|
|
2,427
|
Other
revenue
|
846
|
|
841
|
|
2,471
|
|
2,878
|
Total
revenues
|
4,580
|
|
6,004
|
|
14,638
|
|
17,416
|
|
|
|
|
|
|
|
|
Operating
expenses:
|
|
|
|
|
|
|
|
Direct operating costs
(includes depreciation and amortization)
|
1,344
|
|
2,115
|
|
4,545
|
|
6,109
|
Selling, general and
administrative
|
3,464
|
|
3,444
|
|
10,355
|
|
11,123
|
Depreciation and
amortization (excluding depreciation and amortization included in
direct costs
|
88
|
|
75
|
|
273
|
|
244
|
Total operating
expenses
|
4,896
|
|
5,634
|
|
15,173
|
|
17,386
|
Operating (loss)
income
|
(316 )
|
|
370
|
|
(535 )
|
|
30
|
Other expense,
net
|
(16 )
|
|
(138 )
|
|
(189 )
|
|
(305 )
|
(Loss) income before
income taxes
|
(331 )
|
|
232
|
|
(724 )
|
|
(275 )
|
Income tax
provision
|
(19 )
|
|
(10 )
|
|
(30 )
|
|
(36 )
|
Net (loss)
income
|
(351 )
|
|
222
|
|
(754 )
|
|
(311 )
|
Series A preferred
stock dividend
|
--
|
|
--
|
|
(8 )
|
|
(8 )
|
Net (loss) income
attributable to common shareholders
|
$
(351 )
|
|
$
222
|
|
$
(762 )
|
|
$ (319
)
|
|
|
|
|
|
|
|
|
Net (loss) income per
common share – basic and diluted
|
$ (0.12
)
|
|
$
0.08
|
|
$ (0.27
)
|
|
$ (0.12
)
|
|
|
|
|
|
|
|
|
Weighted average
shares outstanding – basic and diluted
|
2,874
|
|
2,857
|
|
2,870
|
|
2,628
|
|
|
|
|
|
|
|
|
Comprehensive (loss)
income:
|
|
|
|
|
|
|
|
Net (loss)
income
|
$
(351 )
|
|
$
222
|
|
$
(754 )
|
|
$ (311
)
|
Foreign currency
translations adjustment
|
(18 )
|
|
39
|
|
47
|
|
(52 )
|
Total comprehensive
(loss) income
|
$
(369 )
|
|
$
261
|
|
$
(707 )
|
|
$ (363
)
|
NTN BUZZTIME, INC.
AND SUBSIDIARIES
|
CONSOLIDATED
STATEMENTS OF CASH FLOWS
|
(unaudited)
|
(In
thousands)
|
|
|
Nine months
ended
September
30,
|
|
2019
|
|
2018
|
Cash flows provided
by operating activities:
|
|
|
|
Net loss
|
$ (754
)
|
|
$
(311)
|
Adjustments to
reconcile net loss to net cash provided by operating
activities:
|
|
|
|
Depreciation and
amortization
|
2,191
|
|
2,068
|
Provision for doubtful
accounts
|
144
|
|
53
|
Amortization of
operating lease right-of-use assets
|
217
|
|
--
|
Scrap
expense
|
5
|
|
30
|
Transfer of fixed
assets to sales-type lease
|
7
|
|
10
|
Stock-based
compensation
|
172
|
|
368
|
Amortization of debt
issuance costs
|
7
|
|
57
|
Loss from disposition
of equipment and capitalized software
|
42
|
|
53
|
Changes in assets and
liabilities:
|
|
|
|
Accounts
receivable
|
222
|
|
(617 )
|
Site equipment to be
installed
|
475
|
|
(267 )
|
Operating lease
liabilities
|
(111 )
|
|
--
|
Prepaid expenses and
other liabilities
|
(66 )
|
|
40
|
Accounts payable and
accrued expenses
|
(196 )
|
|
69
|
Income
taxes
|
4
|
|
24
|
Deferred
costs
|
84
|
|
305
|
Deferred
revenue
|
(541 )
|
|
(1,209 )
|
Deferred
rent
|
--
|
|
(148 )
|
Other
liabilities
|
(141 )
|
|
3
|
Net cash provided by
operating activities
|
1,761
|
|
528
|
|
|
|
|
Cash flows used in
investing activities:
|
|
|
|
Capital
expenditures
|
(111 )
|
|
(291 )
|
Capitalized software
development expenditures
|
(882 )
|
|
(690 )
|
Proceeds from sale of
equipment
|
29
|
|
--
|
Net cash used in
investing activities
|
(964 )
|
|
(981 )
|
|
|
|
|
Cash flows (used in)
provided by financing activities:
|
|
|
|
Net proceeds from
issuance of common stock related to registered direct offering
|
--
|
|
1,375
|
Proceeds from
long-term debt
|
--
|
|
4,000
|
Payment on long-term
debt
|
(750 )
|
|
(5,019 )
|
Principal payments on
financing leases
|
(39 )
|
|
(132 )
|
Payment of preferred
stockholder dividends
|
(8 )
|
|
(8 )
|
Tax withholding
related to net share settlement of vested restricted stock units
|
(29 )
|
|
(12 )
|
Net cash (used in)
provided by financing activities
|
(826)
|
|
181
|
|
|
|
|
Effect of exchange
rate on cash
|
27
|
|
(28 )
|
Net decrease in cash
and cash equivalents
|
(2)
|
|
(300 )
|
Cash, cash
equivalents and restricted cash at beginning of period
|
2,786
|
|
3,378
|
Cash, cash
equivalents and restricted cash at end of period
|
$
2,784
|
|
$
3,078
|
NTN BUZZTIME, INC. AND
SUBSIDIARIES
RECONCILIATION of GAAP TO
NON-GAAP
(unaudited)
(In thousands)
A schedule reconciling the Company's consolidated net (loss)
income calculated in accordance with GAAP to EBITDA is included in
the supplemental table below. The Company defines EBITDA as
earnings before interest, taxes, depreciation and amortization.
EBITDA is not intended to represent a measure of performance in
accordance with GAAP, nor should EBITDA be considered as an
alternative to statements of cash flows as a measure of liquidity.
EBITDA is included herein because the Company believes it is a
measure of operating performance that financial analysts, lenders,
investors and other interested parties find to be a useful tool for
analyzing companies like Buzztime that carry significant levels of
non-cash depreciation and amortization charges in comparison to
their net income or loss calculation in accordance with GAAP.
The following table reconciles our net (loss) income per GAAP
(in thousands) to EBITDA:
|
Three months
ended September
30,
|
|
Nine months
ended
September
30,
|
|
2019
|
|
2018
|
|
2019
|
|
2018
|
Net (loss) income per
GAAP
|
$
(351 )
|
|
$
222
|
|
$
(754 )
|
|
$
(311 )
|
Interest expense,
net
|
60
|
|
118
|
|
196
|
|
305
|
Income tax
provision
|
19
|
|
10
|
|
30
|
|
36
|
Depreciation and
amortization
|
737
|
|
732
|
|
2,191
|
|
2,068
|
Total
EBITDA
|
$
465
|
|
$
1,082
|
|
$
1,663
|
|
$
2,098
|
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SOURCE NTN Buzztime, Inc.