Filed
Pursuant to Rule 424(b)(5)
Registration
No. 333-215271
The
information in this preliminary prospectus supplement and the accompanying prospectus, relating to an effective registration statement
under the Securities Act of 1933, as amended, is not complete and may be changed. This preliminary prospectus supplement and the
accompanying prospectus are not an offer to sell these securities and we are not soliciting an offer to buy these securities in
any jurisdiction where the offer or sale is not permitted.
SUBJECT
TO COMPLETION, DATED JUNE 26, 2018
PROSPECTUS
SUPPLEMENT
(to the Prospectus Dated February 2, 2017)
[__]
Shares of Common Stock
We
are offering shares of our common stock. Shares of our common stock trade on the NYSE American under the symbol “NTN.”
On June 25, 2018, the last reported sale price of our common stock was $4.51 per share.
Investing
in our common stock involves a high degree of risk. See “Risk Factors” beginning on page S-6 of this prospectus supplement.
Based
on the last reported sale price of $5.74 of our common stock on the NYSE American on May 14, 2018, the aggregate market value
of our outstanding common stock held by non-affiliates, calculated according to General Instruction I.B.6 of Form S-3, is approximately
$9.4 million, based on 2,520,554 shares of outstanding common stock as of June 26, 2018, of which 1,632,814 shares are held by
non-affiliates. Under the registration statement to which this prospectus supplement forms a part, we may not sell our securities
in a primary offering with a value exceeding one-third of our public float in any 12-month period, or $3.1 million (unless our
public float rises to $75.0 million or more). We have not offered any securities pursuant to General Instruction I.B.6. of Form
S-3 during the prior 12 calendar month period that ends on, and includes, the date of this prospectus supplement.
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Per
Share
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Total
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Public
Offering Price
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$
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$
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Placement
Agent Fees (1)
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$
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$
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Proceeds
to NTN Buzztime (before estimated offering expenses)
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$
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$
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(1)
We have agreed to reimburse the placement agent for certain of their expenses up to $40,000 as described under the “Plan
of Distribution” on page S-16 of this prospectus supplement.
We
have retained Roth Capital Partners, LLC to act as placement agent in connection with the securities offered by this prospectus
supplement and the accompanying prospectus. The placement agent has agreed to use its reasonable best efforts to sell the securities
offered by this prospectus supplement and the accompanying prospectus. We have agreed to pay the placement agent the placement
agent fees set forth in the table above, which assumes that we sell all of the securities we are offering.
We
anticipate that delivery of the shares of our common stock will be made on or about June [__], 2018, subject to customary closing
conditions.
Neither
the Securities and Exchange Commission nor any state securities commission has approved or disapproved of these securities or
determined if this prospectus supplement or the accompanying prospectus is truthful or complete. Any representation to the contrary
is a criminal offense.
Roth
Capital Partners
The
date of this prospectus supplement is June [__], 2018
TABLE
OF CONTENTS
Prospectus
Supplement
ABOUT
THIS PROSPECTUS SUPPLEMENT
This
document is in two parts. The first part is this prospectus supplement, which describes the specific terms of this common stock
offering and also adds to and updates information contained in the accompanying prospectus and the documents incorporated by reference
herein. The second part, the accompanying prospectus, provides more general information. Generally, when we refer to this prospectus,
we are referring to both parts of this document combined. To the extent there is a conflict between the information contained
in this prospectus supplement and the information contained in the accompanying prospectus or any document incorporated by reference
therein filed prior to the date of this prospectus supplement, you should rely on the information in this prospectus supplement;
provided that if any statement in one of these documents is inconsistent with a statement in another document having a later date—for
example, a document incorporated by reference in the accompanying prospectus—the statement in the document having the later
date modifies or supersedes the earlier statement.
You
should rely only on the information contained in this prospectus supplement or the accompanying prospectus, or incorporated by
reference herein. We have not authorized, and the placement agent has not authorized, anyone to provide you with information that
is different. The information contained in this prospectus supplement or the accompanying prospectus, or incorporated by reference
herein is accurate only as of the respective dates thereof, regardless of the time of delivery of this prospectus supplement and
the accompanying prospectus or of any sale of our common stock. It is important for you to read and consider all information contained
in this prospectus supplement and the accompanying prospectus, including the documents incorporated by reference herein and therein,
in making your investment decision. You should also read and consider the information in the documents to which we have referred
you in the sections entitled “Where You Can Find More Information” and “Information Incorporated by Reference”
in this prospectus supplement and in the accompanying prospectus.
We
are offering to sell, and seeking offers to buy, shares of our common stock only in jurisdictions where offers and sales are permitted.
The distribution of this prospectus supplement and the accompanying prospectus and the offering of the common stock in certain
jurisdictions may be restricted by law. Persons outside the United States who come into possession of this prospectus supplement
and the accompanying prospectus must inform themselves about, and observe any restrictions relating to, the offering of the common
stock and the distribution of this prospectus supplement and the accompanying prospectus outside the United States. This prospectus
supplement and the accompanying prospectus do not constitute, and may not be used in connection with, an offer to sell, or a solicitation
of an offer to buy, any securities offered by this prospectus supplement and the accompanying prospectus by any person in any
jurisdiction in which it is unlawful for such person to make such an offer or solicitation.
This
prospectus supplement, the accompanying prospectus, and the information incorporated herein and therein by reference, include
trademarks, service marks and trade names owned by us or other companies. All trademarks, service marks and trade names included
or incorporated by reference into this prospectus supplement or the accompanying prospectus are the property of their respective
owners.
PROSPECTUS
SUPPLEMENT SUMMARY
This
summary highlights the information contained elsewhere in or incorporated by reference into this prospectus supplement. Because
this is only a summary, it does not contain all of the information that you should consider before investing in our common stock.
You should carefully read this entire prospectus supplement and the accompanying prospectus,, including the information contained
under the heading “Risk Factors” in this prospectus supplement beginning on page S-6, and all other information included
or incorporated by reference into this prospectus supplement and accompany prospectus, and the information included in any free
writing prospectus we have authorized for use in connection with this offering, in their entirety before you invest in our securities.
Unless
otherwise indicated or the context otherwise requires, references to: (a) “Buzztime,” “NTN,” “we,”
“us” and “our” refer to NTN Buzztime, Inc. and its consolidated subsidiaries; (b) “network subscribers”
or “customers” refer to venues that subscribe to our network service; (c) “consumers” or “players”
refer to the individuals that engage in our games, events, and entertainment experiences available at our customers’ venues,
and (d) “venues” or “sites” refer to locations (such as a bar or restaurant) of our customers at which
our games, events, and entertainment experiences are available to consumers.
Business
Overview
We
deliver interactive entertainment and innovative dining technology to bars and restaurants in North America. Customers subscribe
to our customizable solution to differentiate themselves via competitive fun by offering guests trivia, card, sports and single
player games, nationwide competitions, and by offering self-service dining features including dynamic menus, touchscreen ordering
and secure payment. Our platform can improve operating efficiencies, create connections among the players and venues and amplify
guests’ positive experiences. Built on an extended network platform, our interactive entertainment system has historically
allowed multiple players to interact at the venue and more recently allows for competition between venues, referred to as massively
multiplayer gaming. Our current platform, which we refer to as Buzztime Entertainment On Demand, or BEOND, was commercially launched
during 2013 and then scaled during 2014. We continue to enhance our network architecture and the BEOND tablet platform and player
engagement paradigms. We also continue to support our legacy network product line, which we refer to as Classic.
We
currently generate revenue by charging subscription fees for our service to our network subscribers, by leasing equipment (including
tablets used in our BEOND tablet platform and the cases and charging trays for the tablets) to certain network subscribers, by
hosting live trivia events, by selling advertising aired on in-venue screens and as part of customized games, from providing professional
services (such as developing certain functionality within our platform for customers), and from pay-to-play single player games.
Since
2015, over 115 million games have been played on our network annually, and as of March 31, 2018, approximately 56% of our network
subscriber venues are affiliated with national and regional restaurant brands, including Buffalo Wild Wings, Buffalo Wings &
Rings, Old Chicago, Native Grill & Wings, Houlihans, Beef O’Brady’s, Boston Pizza, and Arooga’s.
We
own several trademarks and consider the Buzztime®, Playmaker®, Mobile Playmaker, and BEOND Powered by Buzztime trademarks
to be among our most valuable assets. These and our other registered and unregistered trademarks used in this document are our
property. Other trademarks are the property of their respective owners.
Our
Strategy and Business Updates
Grow
business beyond restaurant and bar industry
. One of our major initiatives is to expand our business beyond the restaurant
and bar industry. During the first quarter of 2018, we agreed to sell our tablets to a third-party who will use our tablets and
operating system to deliver their services in a non-restaurant or bar industry. Earlier in 2017, we began a relationship with
a third-party who is licensing our trivia content for use in casino gaming machines and is leasing our tablets for use in retail
settings to complete loyalty/reward program transactions.
Launch
expanded product offerings
. We continue to focus on bringing new experiences and promotions to our customers. We are developing
new products that we believe will help differentiate our offerings from those of our competitors, and which are expected to provide
an ability to scale our business beyond our traditional entertainment offering.
New
Hub
. A piece of the equipment we install in our customers’ venues is a personal computer that acts as a server from
which our content is streamed to the tablets within the venue. We are working on a smaller form factor for the personal computer
that, in addition to being physically smaller, would be less expensive and would reduce labor-intensive installation costs. We
believe that this “hub” will lead to new opportunities, which could include the ability to display video, highlights,
dynamic web content, and app content, in addition to being able to deliver our historical offerings within venues.
Mobile
Live Trivia
. We have completed a market-ready, mobile version of our live trivia product that allows customers, trivia hosts,
and individuals to start their own trivia events. When mobile trivia becomes available, it will be our easiest to adopt, lowest
cost of entry solution, and may serve as a test for a venue contemplating a more significant investment.
Single
Player Games
. We will be releasing new single player games that we have developed for our BEOND tablet platform. Previously,
we purchased these types of games from third party aggregators, sometimes at significant cost.
Buffalo
Wild Wings
. In March 2017, Buffalo Wild Wings chose us to be its provider of digital menu, order, and payment functionality.
In November 2017, we expected to begin rolling out our improved tablet platform system at certain Buffalo Wild Wings locations
during the first quarter of 2018 and, after an initial set of locations was running smoothly, throughout the rest of the Buffalo
Wild Wings corporate and franchise locations with which we had partnered. Due to the acquisition of Buffalo Wild Wings by Arby’s
Restaurant Group, Inc. (which renamed itself Inspire Brands Inc.) in February 2018 and to the attendant changes with Buffalo Wild
Wings’ operations, the rollout of our expanded functionality tablet platform system was put on hold to allow its new ownership
to assess all the programs at Buffalo Wild Wings. Since that time, we have been working with Inspire Brands as it integrates Buffalo
Wild Wings into its portfolio and determines its brand priorities. Our updated tablet platform system is currently live at 31
Buffalo Wild Wings locations with our order, payment and guest insights functionality. We continue to believe that a long-term
relationship with Inspire Brands presents numerous opportunities as it intends to add several more brands to its portfolio, and
that our discussions with Inspire Brands have been going well. At this time we are not certain to what extent or which of our
offerings, if any, will fit within its updated brand strategy, or when it will make this determination. Aside from existing contractual
obligations under agreements we have entered into in the ordinary course of business, Inspire Brands has no obligation to continue
or to expand our current relationship. We continue to believe our player engagement and loyalty as well as expanded product offerings
will offer us a way to continue supporting the Buffalo Wild Wings brand under the Inspire Brands umbrella. See “RISK FACTORS—Risks
That May Affect our Business—We receive a significant portion of our revenues from Buffalo Wild Wings, and any decrease
in the amount of their business could materially and adversely affect our cash flow and revenue,” below.
Advertising
Partnerships
. We believe that if we lower the price of our BEOND tablet platform, we will be able to acquire more market share.
We are currently working with advertising sales companies to help us improve our advertisement sales and with an advertisement
technology company to improve our ad loading, management, and delivery and testing capabilities. Advertising partnerships offers
the possibility of subsidizing the system by lowering costs to our venues.
Recent
Developments
Non-compliance
with NYSE American continued listing standard.
On April 26, 2018, the NYSE Regulation Inc. notified us that it has accepted
our plan to regain compliance with Section 1003(a)(iii) of the Company Guide (the “Company Guide”) and granted us
a plan period that extends through March 20, 2019 to regain compliance. As previously reported, we are not in compliance with
NYSE American LLC listing standards, specifically, Section 1003(a)(iii), because we reported stockholders’ equity of less
than $6 million as of December 31, 2017 and had net losses in five of our most recent fiscal years ended December 31, 2017.
The
listing of our common stock on the NYSE American is being continued during the plan period pursuant to an extension. The NYSE
Regulation staff will review us periodically for compliance with initiatives outlined in our plan. If we are not in compliance
with Section 1003(a)(iii) by March 20, 2019 or if we do not make progress consistent with our plan during the plan period, NYSE
Regulation staff will initiate delisting proceedings as appropriate. See “RISK FACTORS—Risks Relating to the Market
for Our Common Stock—Our common stock could be delisted or suspended from trading on the NYSE American if we do not regain
compliance with continued listing criteria with which we are currently not compliant or if we fail to meet any other continued
listing criteria,” below.
Amendment
to East West Bank Credit Facility
. In March 2018, we entered into an amendment to the amended and restated loan and security
agreement we entered into with East West Bank on November 29, 2017. This amendment (i) waived our minimum fixed charge coverage
ratio covenant default for the fiscal quarter ended December 31, 2017; (ii) suspended the minimum fixed charge coverage ratio
covenant until the quarter ending March 31, 2019; and (iii) added a minimum adjusted EBITDA covenant on a trailing six-month period
ending March 31, 2018, June 30, 2018, September 30, 2018 and December 31, 2018. Based on information available to us at this time,
the amount of our adjusted EBITDA for the six-month period ending June 30, 2018 may be less than the target amount of the minimum
adjusted EBITDA for such period under the applicable covenant, which is $1.2 million. The shortfall is not expected to be a significant
amount and, if we are not compliant with such covenant, we will request a waiver from the lender for such default. Based on current
discussions with the lender, we anticipate that such waiver will be granted, however, no assurances can be given in this regard.
In accordance with the terms of the amended and restated loan and security agreement, beginning with the payment due on June 30,
2018, our payments under this credit facility will become principal and interest, whereas they have historically been interest
only. See “RISK FACTORS—Risks That May Affect our Business—Our cash flow may not cover our capital needs and
we may need to raise additional funds in the future. Such funds may not be available when needed, on acceptable terms or at all
and, if available, may dilute current stockholders,” and “—If we fail to satisfy our financial covenants to
our primary lender, the lender may declare a default, which could lead to all payment obligations becoming immediately due and
payable and have a material adverse effect on our financial condition and business,” below.
Risk
Factors
An
investment in our common stock is subject to a number of risks and uncertainties. Before investing in our common stock, you should
carefully consider the following, as well as the more detailed discussion of risk factors and other information included in this
prospectus supplement.
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Our
success depends on our ability to compete effectively within the highly competitive interactive
games, entertainment and marketing services industries.
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The
impact of new products and technological change, especially in the mobile and wireless
markets, on our operations and competitiveness.
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Our
ability to maintain or improve our relationship with Buffalo Wild Wings, who together
with its franchisees, has accounted for a significant portion of our revenues and any
decrease in the amount of their business could materially and adversely affect our cash
flow and revenue.
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Our
cash flow may not cover our capital needs and we may need to raise additional funds to
support operations, execute on our business strategy and maintain our listing on the
NYSE American, which funds may not be available when we need it, on acceptable terms
or at all and, if available, may dilute current stockholders. We have borrowed substantially
all amounts available to us under existing credit facilities and, subject to limited
exceptions, our loan and security agreement with East West Bank prohibits us from borrowing
additional amounts from other lenders.
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Our
ability to satisfy our payment obligations and comply with financial and other covenants
under our amended and restated loan agreement with East West Bank, which lender has a
first-priority security interest in all our existing and future personal property, including
our intellectual property, subject to limited exceptions. Based on information available
to us at this time, the amount of our adjusted EBITDA for the six-month period ending
June 30, 2018 may be less than the target amount of the minimum adjusted EBITDA for such
period under the applicable covenant, which is $1.2 million. The shortfall is not expected
to be a significant amount and, if we are not compliant with such covenant, we will request
a waiver from the lender for such default. Based on current discussions with the lender,
we anticipate that such waiver will be granted, however, no assurances can be given in
this regard.
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Our
ability to meet financial and other growth expectations of our investors, analysts and
other market participants and commentators, including expectations relating to our site
count, cash flow and EBITDA.
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Our
ability to maintain an adequate supply of the tablet and related equipment used in our
BEOND product line may affect our business and operating results.
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Our
growth depends in part on our ability to significantly grow our subscription and other
revenue and implement our other business strategies.
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Our
common stock could be delisted or suspended from trading on the NYSE American if we do
not regain compliance with continued listing criteria with which we are currently not
compliant or if we fail to meet any other continued listing criteria.
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The
market price of our common stock historically has been and likely will continue to be
highly volatile and our common stock is thinly traded.
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Corporate
Information
Our
principal office is located at 2231 Rutherford Road, Carlsbad, California 92008, and the telephone number at that address is (760)
438-7400. Our website address is www.buzztime.com. Except for those filings we make with the Securities and Exchange Commission,
or the SEC, that are incorporated by reference in this prospectus supplement, none of the information contained on, or that may
be accessed through, our website is a prospectus or constitutes part of, or is otherwise incorporated into, this prospectus supplement.
The
Offering
Common
stock offered in this offering
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[__]
shares
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Number
of shares of common stock to be outstanding immediately after this offering
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[__]
shares
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Use
of proceeds
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We
estimate that the net proceeds from the sale of our common stock in this offering will
be approximately $[__], after deducting estimated offering expenses, including placement
agent fees.
We
intend to use the net proceeds from this offering for general corporate purposes, which may include working capital, general
and administrative expenses, capital expenditures and implementation of our strategic priorities. See “Use of Proceeds”
on page S-15.
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Risk
factors
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Investing
in our common stock involves a high degree of risk. See “Risk Factors” beginning on page S-6 of this prospectus
supplement.
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NYSE
American ticker symbol
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NTN
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The
number of shares of common stock to be outstanding immediately after this offering as shown above assumes that all of the shares
offered hereby are sold and is based on 2,520,554 shares of common stock outstanding as of June 13, 2018 and excludes, as of June
13, 2018:
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152,321
shares of common stock issuable upon the exercise of outstanding stock options, having
a weighted average exercise price of $17.89 per share;
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52,500
shares of common stock subject to outstanding restricted stock units;
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72,000
shares of our common stock issuable upon the exercise of outstanding warrants with a
weighted-average exercise price of $20.00 per share;
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11,470
shares of common stock issuable upon conversion of the outstanding shares of our Series
A Convertible Preferred Stock as of that date, assuming such shares were converted at
the conversion price in effect as of that date; and
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58,979
shares of our common stock available for future grants under equity award plans.
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Unless
otherwise indicated, all information in this prospectus supplement assumes no options, restricted stock awards, restricted stock
units, warrants, or shares of common stock were issued after June 13, 2018, no outstanding options or warrants were exercised
after such date and no outstanding restricted stock units settled after such date.
RISK
FACTORS
An
investment in our common stock involves a high degree of risk. Before deciding whether to invest in our common stock, you should
consider carefully the risks described below, together with other information in this prospectus supplement, the accompanying
prospectus, the information and documents incorporated by reference, and in any free writing prospectus that we have authorized
for use in connection with this offering. If any of these risks actually occurs, our business, financial condition, results of
operations or cash flow could be seriously harmed. This could cause the trading price of our common stock to decline, resulting
in a loss of all or part of your investment. The risks and uncertainties described below are not the only ones facing us. Additional
risks and uncertainties not presently known to us, or that we currently see as immaterial, may also harm our business.
Risk
Factors That May Affect Our Business
We
may not be able to compete effectively within the highly competitive and evolving interactive games, entertainment and marketing
services industries.
We
face intense competition in the markets in which we operate. We face significant competition for entertainment and marketing services
in hospitality venues from other companies offering similar content and services. Our services also compete with games, apps and
other forms of entertainment offerings available directly to consumers on their smart phones and tablets. Some of our current
and potential competitors enjoy substantial competitive advantages, including greater financial resources for competitive activities,
such as content development and programming, research and development, strategic acquisitions, alliances, joint ventures, and
sales and marketing. As a result, our current and potential competitors may be able to respond more quickly and effectively than
we can to new or changing opportunities, technologies, standards, or consumer preferences.
The
increased availability of the internet and wireless networks provides consumers with an increasing number of alternatives to our
entertainment offerings. With this increasing competition and the rapid pace of change in product and service offerings, we must
be able to compete in terms of technology, content, and management strategy. If we fail to provide competitive, engaging, quality
services and products, we will lose revenues to competing companies and technologies. Increased competition may also result in
price reductions, fewer customer orders, reduced gross margins, longer sales cycles, reduced revenues, and loss of market share.
New
products and rapid technological change, especially in the mobile and wireless markets, may render our operations obsolete or
noncompetitive.
The
emergence of new entertainment products and technologies, changes in consumer preferences, the adoption of new industry standards,
and other factors may limit the life cycle and market penetration of our technologies, products, and services. In particular,
the mobile and wireless device, content, applications, social media, and entertainment markets are highly competitive and rapidly
changing. Accordingly, our future performance will depend on our ability to:
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identify
emerging technological trends and industry standards in our market;
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identify
changing consumer needs, desires, or tastes;
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develop
and maintain competitive technology, including new hardware and content products and
service offerings;
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improve
the performance, features, and reliability of our existing products and services, particularly
in response to changes in consumer preferences, technological changes, and competitive
offerings; and
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bring
technology that is appealing to consumers to the market quickly at cost-effective prices.
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If
we do not compete successfully in developing new products and keep pace with rapid technological change, we will be unable to
achieve profitability or sustain a meaningful market position.
We
may not be successful in developing and marketing new products and services that respond to technological and competitive developments,
changing customer needs, and consumer preferences. We may have to incur substantial costs to modify or adapt our products or services
to respond to these developments, customer needs, and changing preferences. We must be able to incorporate new technologies into
the products we design and develop in order to address the increasingly complex and varied needs of our customer base. Any significant
delay or failure in developing new or enhanced technology, including new product and service offerings, could result in a loss
of actual or potential market share and a decrease in revenues.
We
receive a significant portion of our revenues from Buffalo Wild Wings, and any decrease in the amount of their business could
materially and adversely affect our cash flow and revenue.
For
the year ended December 31, 2017, Buffalo Wild Wings corporate-owned restaurants and its franchisees accounted for approximately
41%, or $8,678,000, of our total revenue. For the three months ended March 31, 2018, Buffalo Wild Wings corporate-owned restaurants
and its franchisees accounted for approximately 49%, or $2,798,000, of our total revenue. As of March 31, 2018 and December 31,
2017, approximately $504,000 and $191,000, respectively, was included in accounts receivable from Buffalo Wild Wings corporate-owned
restaurants and its franchisees.
In
March 2017, Buffalo Wild Wings chose us to be its provider of digital menu, order, and payment functionality. In November 2017,
we expected to begin rolling out our improved tablet platform system at certain Buffalo Wild Wings locations during the first
quarter of 2018 and, after an initial set of locations was running smoothly, throughout the rest of the Buffalo Wild Wings corporate
and franchise locations with which we had partnered. Due to the acquisition of Buffalo Wild Wings by Arby’s Restaurant Group,
Inc. (which renamed itself Inspire Brands Inc.) in February 2018 and to the attendant changes with Buffalo Wild Wings’ operations,
the rollout of our expanded functionality tablet platform system was put on hold to allow its new ownership to assess all the
programs at Buffalo Wild Wings. Since that time, we have been working with Inspire Brands as it integrates Buffalo Wild Wings
into its portfolio and determines its brand priorities. Our updated tablet platform system is currently live at 31 Buffalo Wild
Wings locations with our order, payment and guest insights functionality. We continue to believe that a long-term relationship
with Inspire Brands presents numerous opportunities as it intends to add several more brands to its portfolio, and that our discussions
with Inspire Brands have been going well. At this time we are not certain to what extent or which of our offerings, if any, will
fit within its updated brand strategy, or when it will make this determination. Aside from existing contractual obligations under
agreements we have entered into in the ordinary course of business, Inspire Brands has no obligation to continue or to expand
our current relationship. We continue to believe our player engagement and loyalty as well as expanded product offerings will
offer us a way to continue supporting the Buffalo Wild Wings brand under the Inspire Brands umbrella.
If
we are unable to maintain or expand our current relationship with Buffalo Wild Wings (now under the Inspire Brands umbrella) or
its franchisees, we could lose a significant portion of our revenues, which could materially and adversely affect our operating
results and cash flows. In addition, inability to demonstrate Buffalo Wild Wings as a strategic user of our expanded functionality
tablet platform system could negatively impact achievement of our chain customer site growth goals. Likewise, if any other customer
who may in the future represent a significant portion of our revenue were to breach or terminate their subscriptions or otherwise
decrease the amount of business they transact with us, we could lose a significant portion of our revenues and cash flow.
Our
cash flow may not cover our capital needs and we may need to raise additional funds in the future. Such funds may not be available
when needed, on acceptable terms or at all and, if available, may dilute current stockholders.
As
of March 31, 2018, we had cash and cash equivalents of $2,635,000. We have borrowed substantially all amounts available to us
under existing credit facilities and, subject to limited exceptions, our loan and security agreement with East West Bank prohibits
us from borrowing additional amounts from other lenders. As of March 31, 2018, $4,500,000 was outstanding under that loan agreement,
of which $1,500,000 is recorded in current portion of long-term debt and $3,000,000 is recorded in long-term debt on our consolidated
balance sheet. The loan matures on November 29, 2020. Payments are interest only until the payment due on June 30, 2018, at which
time we are required to make principal plus interest payments. In addition, as of March 31, 2018, $442,000 was outstanding under
a financing arrangement with an equipment lender and recorded in current portion of long-term debt on our consolidated balance
sheet.
Our
ability to meet our debt service obligations and to fund working capital, capital expenditures and investments in our business,
will depend upon our future performance, which will depend on many factors, including:
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our
ability to generate cash from operating activities;
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acceptance
of, and demand for, our interactive games and entertainment;
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the
costs of continuing to develop and implement our BEOND tablet platform and product line;
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the
costs of developing new entertainment content, products, or technology or expanding our
offering to new media platforms such as the internet and mobile phones;
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the
extent to which we invest in the creation of new entertainment content and new technology;
and
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the
number and timing of acquisitions and other strategic transactions, if any.
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In
addition, in order to fully execute on our long-term strategic initiatives, we believe we will likely require additional funding
in the future.
We
cannot ensure that we will generate cash flow from operations in an amount sufficient to enable us to meet our debt service obligations
or to fund our working capital needs, capital expenditures and investments in our business. East West Bank has a first-priority
security interest in all our existing and future personal property, including our intellectual property, subject to limited exceptions,
and our equipment lender has a first-priority security interest in the equipment we purchased with the funds borrowed, subject
to a subordination agreement with East West Bank. If we default on our monthly payment obligations to our lenders, and our debt
obligations become immediately due and payable in full, our lenders may dispose of our personal property to satisfy our payment
obligations. If we need to raise additional funds in the future, such funds may not be available when needed, on acceptable terms,
or at all. Furthermore, if we issue equity or debt securities to raise additional funds, our existing stockholders may experience
dilution, and the new equity or debt securities may have rights, preferences, and privileges senior to those of our existing stockholders.
If we cannot raise funds on acceptable terms, or at all, we may not be able to continue to develop and implement our BEOND technology
platform and product line, develop or enhance our other products and services, successfully execute our business plan or any or
all of our strategic initiatives, take advantage of future opportunities, or respond to competitive pressures or unanticipated
customer requirements.
If
we fail to satisfy our financial covenants to our primary lender, the lender may declare a default, which could lead to all payment
obligations becoming immediately due and payable and have a material adverse effect on our financial condition and business.
Our
amended and restated loan and security agreement with East West Bank contains certain financial covenants with which we must comply,
including minimum adjusted EBITDA, minimum liquidity and a maximum senior leverage ratio, and beginning with the quarter ending
March 31, 2019, a minimum fixed charge coverage ratio. If we fail to satisfy these covenants, East West Bank may declare a default,
which could lead to all payment obligations becoming immediately due and payable and have a material adverse effect on our financial
condition and business. East West Bank has a first-priority security interest in all our existing and future personal property,
including our intellectual property, subject to limited exceptions. Accordingly, in an event of a default, East West Bank could
dispose of such assets to satisfy our payment obligations.
As
of March 31, 2018, we were in compliance with all covenants. However, there can be no assurance we will be in compliance with
all covenants in the future, including due to including due to events or conditions outside of our control. For example, fluctuations
in our operating results, such as may result from delays in or failure on the part of Inspire Brands Inc. to maintain or expand
our relationship with Buffalo Wild Wings as was anticipated before its acquisition, could result in violation of the adjusted
EBITDA covenant under our amended and restated loan and security agreement. Even though it has done so previously, East West Bank
may not be willing to waive future incidences of covenant default. Based on information available to us at this time, the amount
of our adjusted EBITDA for the six-month period ending June 30, 2018 may be less than the target amount of the minimum adjusted
EBITDA for such period under the applicable covenant, which is $1.2 million. The shortfall is not expected to be a significant
amount and, if we are not compliant with such covenant, we will request a waiver from East West Bank for such default. There is
no assurance that East West Bank will grant such waiver.
A
disruption in the supply of equipment could negatively impact our subscriptions and revenue.
During
the fourth quarter of 2016, we began having an unaffiliated third party manufacture an Android-based tablet customized to our
specifications. Other than a small amount of inventory of the third-party tablet we have historically used in our BEOND platform,
we expect to use our customized tablet on a going-forward basis. This third-party manufacturer also manufactures our tablet equipment—tablet
charging trays and tablet cases. We currently do not have an alternative manufacturing source for our customized tablet or the
tablet equipment or alternatives for the tablet equipment.
If
our sole manufacturer is delayed in delivering tablets to us, becomes unavailable, has product quality issues, or shortages occur,
in addition to not realizing the benefits of having a tablet manufactured to our specifications, we would need to return to the
historical third-party tablets or find an alternative device. Similarly, if our sole manufacturer is delayed in delivering the
tablet equipment to us, becomes unavailable, has product quality issues, or shortages occur, we may be unable to timely obtain
replacement tablet equipment. Delays, unavailability of the tablet or tablet equipment, product quality issues and shortages could
damage our reputation and customer loyalty, cause subscription cancellations, increase our expense and reduce our revenue. See
also “Our business could be adversely impacted if the sole manufacturer of our customized tablet and tablet equipment is
not able to meet our manufacturing quality standards,” below.
If
our sole manufacturer and/or suppliers were to go out of business or otherwise become unable to meet our needs for reliable equipment,
the process of locating and qualifying alternate sources could take months, during which time our production could be delayed,
and may, in some cases, require us to redesign our products and systems. Such delays and potentially costly re-sourcing and redesign
could have a material adverse effect on our business, operating results, and financial condition.
Our
business could be adversely impacted if the sole manufacturer of our customized tablet and our tablet equipment is not able to
meet our manufacturing quality standards.
As
discussed above, one unaffiliated third party manufactures our customized tablet and our tablet equipment. Continued improvement
in supply-chain management and in manufacturing of our customized tablet and tablet equipment and manufacturing quality and product
testing are important to our business. Flaws in the design and manufacturing of our customized tablet or tablet equipment or both
(by us or our supplier) could result in substantial delays in shipment and in substantial repair, replacement or service costs,
could damage our reputation and customer loyalty, could cause subscription cancellations, and could increase our expense and reduce
our revenue. Costs associated with tablet or tablet equipment defects due to, for example, problems in our design and manufacturing
processes, could include: (a) writing off the value of inventory; (b) disposing of items that cannot be fixed; (c) recalling items
that have been shipped; and (d) providing replacements or modifications. These costs could be significant and may increase expenses
and lower gross margin. There can be no assurance that our efforts to monitor, develop, modify and implement appropriate test
and manufacturing processes for our tablet and related equipment will be sufficient to permit us to avoid quality issues. Significant
quality issues could have a material adverse effect on our business, results of operations or financial condition.
If
we do not adequately protect our proprietary rights and intellectual property or we are subjected to intellectual property claims
by others, our business could be seriously damaged.
We
rely on a combination of trademarks, copyrights, patents, and trade secret laws to protect our proprietary rights in our products.
We have a small number of patents and patent applications pending in jurisdictions related to our business activities. Our pending
patent applications and any future applications might not be approved. Moreover, our patents might not provide us with competitive
advantages. Third parties might challenge our patents or trademarks or attempt to use infringing technologies or brands which
could harm our ability to compete and reduce our revenues, as well as create significant litigation expense. In addition, patents
and trademarks held by third parties might have an adverse effect on our ability to do business and could likewise result in significant
litigation expense. Furthermore, third parties might independently develop similar products, duplicate our products or, to the
extent patents are issued to us, design around those patents. Others may have filed and, in the future may file, patent applications
that are similar or identical to ours. Such third-party patent applications might have priority over our patent applications.
To determine the priority of inventions, we may have to participate in interference proceedings declared by the United States
Patent and Trademark Office. Such interference proceedings could result in substantial cost to us.
We
believe that the success of our business also depends on such factors as the technical expertise and innovative capabilities of
our employees. It is our policy that all employees and consultants sign non-disclosure agreements and assignment of invention
agreements. Our competitors, former employees, and consultants may, however, misappropriate our technology or independently develop
technologies that are as good as or better than ours. Our competitors may also challenge or circumvent our proprietary rights.
If we have to initiate or defend against an infringement claim to protect our proprietary rights, the litigation over any such
claim, with or without merit, could be time-consuming and costly to us, adversely affecting our financial condition.
From
time to time, we hire or retain employees or consultants who may have worked for other companies developing products similar to
those that we offer. These other companies may claim that our products are based on their products and that we have misappropriated
their intellectual property. Any such claim, with or without merit, could be time-consuming and costly to us, adversely affecting
our financial condition.
We
may be liable for the content and services we make available on our Buzztime network and the internet.
We
make content and entertainment services available on our Buzztime network and the internet which includes games and game content,
software, and a variety of other entertainment content. The availability of this content and services and our branding could result
in claims against us based on a variety of theories, including defamation, obscenity, negligence, or copyright or trademark infringement.
We could also be exposed to liability for third-party content accessed through the links from our websites to other websites.
Federal laws may limit, but not eliminate, our liability for linking to third-party websites that include materials that infringe
copyrights or other rights, so long as we comply with certain statutory requirements. We may incur costs to defend against claims
related to either our own content or that of third parties, and our financial condition could be materially adversely affected
if we are found liable for information that we make available. Implementing measures to reduce our exposure may require us to
spend substantial resources and may limit the attractiveness of our services to users which would impair our profitability and
harm our business operations.
We
have experienced significant losses, and we may incur significant losses in the future.
We
have a history of significant losses, including net losses of $1,077,000 and $2,923,000 for the years ended December 31, 2017
and 2016, respectively, and $409,000 and $90,000 for the periods ended March 31, 2018 and 2017, respectively. We had an accumulated
deficit of $129,119,000 and $129,528,000 as of December 31, 2017 and March 31, 2018, respectively. We may also incur future operating
and net losses, due in part to expenditures required to continue to implement our business strategies, including the continued
development and implementation of our BEOND technology platform and product line. Despite significant expenditures, we may not
be able to achieve or maintain profitability. Moreover, even if we do achieve profitability, the level of any profitability cannot
be predicted and may vary significantly from quarter to quarter and year to year. See also “—Risks Relating to the
Market for Our Common Stock— Our common stock could be delisted or suspended from trading on the NYSE American if we do
not regain compliance with continued listing criteria with which we are currently not compliant or if we fail to meet any other
continued listing criteria,” below.
We
may not be able to significantly grow our subscription revenue and implement our other business strategies.
Our
success depends on our ability to increase market awareness and encourage the adoption of the Buzztime brand and our Buzztime
network among hospitality venues such as restaurants, sports bars, taverns and pubs, and within the interactive game player community.
Our success also depends on our ability to improve customer retention. We may not be able to leverage our resources to expand
awareness of and demand for our Buzztime network. In addition, our efforts to improve our game platform and content may not succeed
in generating additional demand for our products or in strengthening the loyalty and retention of our existing customers. The
degree of market adoption of our Buzztime network will depend on many factors, including consumer preferences, the availability
and quality of competing products and services, and our ability to leverage our brand.
Our
success also depends on our ability to implement our other business strategies, which include developing our BEOND tablet platform
that allows for consumer play across the digital platform, developing more premium content that allow us to grow the revenue stream
directly from consumers, developing dynamic menuing and point-of-sale, or POS, integration competency, and growing our marketing
services and sponsorship revenues. Implementing these strategies will require us to dedicate significant resources to, among other
things, fully developing and implementing our BEOND tablet platform and product line, expanding our other product offerings, customizing
our products and services to meet the unique needs of select accounts, and expanding and improving our marketing services and
promotional efforts. We may be unable to successfully implement these strategies as currently planned.
Our
products and services are subject to government regulations that may restrict our operations or cause demand for our products
to decline significantly.
In
addition to laws and regulations applicable to businesses generally, we are also subject to laws and regulations that apply specifically
to the interactive entertainment and product marketing industries. In addition, we operate games of chance and, in some instances,
we may provide items of nominal value (e.g., key chains, etc.) to the venue that hosts a game, and the venue may award such items
to consumers. These games are regulated in many jurisdictions and the laws and regulations vary from jurisdiction to jurisdiction.
We
may find it necessary to eliminate, modify, suspend, or cancel certain features of our products (including the games we offer)
in certain jurisdictions based on the adoptions of new laws and regulations or changes in law or regulations or the enforcement
thereof, which could result in additional development costs and/or the loss of customers and revenue.
Communication
or other system failures could result in customer cancellations and a decrease in our revenues.
We
rely on continuous operation of our information technology and communications systems, and those of a variety of third parties,
to communicate with and to distribute our services to the locations of our network subscribers. We currently transmit our data
to our customers via broadband internet connections including telephone and cable TV networks. Both our communications systems
and those of third parties on which we rely are vulnerable to damage or interruption from earthquakes, terrorist attacks, floods,
storms, fires, power loss, telecommunications and other network failures, equipment failures, computer viruses, computer denial
of service or other attacks, and other causes. These systems are also subject to break-ins, sabotage, vandalism, and to other
disruptions, for example if we or the operators of these systems and system facilities have financial difficulties. Some of our
systems are not fully redundant, and our system protections and disaster recovery plans cannot prevent all outages, errors, or
data losses. In addition, our services and systems are highly technical and complex and may contain errors or other vulnerabilities.
Any errors or vulnerabilities in our products and services, damage to or failure of our systems, any natural or man-made disaster,
or other unanticipated problems at our facilities or those of a third party, could result in lengthy interruptions in our service
to our customers, which could reduce our revenues and cash flow, and damage our brand. Any interruption in communications or failure
of proper hardware or software function at our or our customers’ venues could also decrease customer loyalty and satisfaction
and result in a cancellation of our services.
Our
success depends on our ability to recruit and retain skilled professionals.
Our
business requires experienced programmers, creative designers, application developers, and sales and marketing personnel. Our
success will depend on identifying, hiring, training, and retaining such experienced and knowledgeable professionals. We must
recruit and retain talented professionals in order for our business to grow. There is significant competition for the individuals
with the skills required to develop the products and perform the services we offer. We may be unable to attract a sufficient number
of qualified individuals in the future to sustain and grow our business, and we may not be successful in motivating and retaining
the individuals we are able to attract. If we cannot attract, motivate, and retain qualified technical and sales and marketing
professionals, our business, financial condition, and results of operations will suffer.
We
have incurred significant net operating loss carryforwards that we will likely be unable to use.
As
of December 31, 2017, we had federal income tax net operating loss (“NOL”) carryforwards of approximately $66,554,000,
portions of which will continue expiring in 2018. As of December 31, 2017, we had state income tax NOL carryforwards of approximately
$29,185,000, portions of which will continue expiring in 2018. We believe that our ability to utilize our NOL carryforwards may
be substantially restricted by the passage of time and the limitations of Section 382 of the Internal Revenue Code, which apply
when there are certain changes in ownership of a corporation. To the extent we begin to realize significant taxable income, these
Section 382 limitations may result in our incurring federal income tax liability notwithstanding the existence of otherwise available
NOL carryforwards. We have established a full valuation allowance for substantially all of our deferred tax assets, including
the NOL carryforwards, since we do not believe we are likely to generate future taxable income to realize these assets.
We
are subject to cybersecurity risks and incidents.
Our
business involves transmitting payment information of our customers and certain personal information of consumers (such as their
name, date of birth, and email address). In the future, we may store and transmit additional personal information of consumers,
particularly as the services of the BEOND tablet platform become more advanced to include POS integration. While we have implemented
measures designed to prevent security breaches and cyber incidents, any failure of these measures and/or any material security
breaches, theft, misplaced or lost data, programming errors, employee errors and/or malfeasance could potentially lead to the
compromise of sensitive, confidential or personal data or information, improper use of our systems, software solutions or networks,
unauthorized access, use, disclosure, modification or destruction of information, system downtimes, and operational disruptions.
In addition, a cyber-related attack could result in other negative consequences, including damage to our reputation or competitiveness,
remediation or increased protection costs, litigation or regulatory action.
We
could become subject to additional regulations and compliance requirements as we introduce features in direct payments from consumers.
In
preparation for expanding features and functionality to our BEOND tablet platform that involve us accepting credit card and other
forms of payments directly from consumers, we certified our compliance with Payment Card Industry (“PCI”) Data Security
Standard v3.1 as a service provider, and will be required to do so annually. Compliance with additional regulations and requirements
may be difficult for us; thereby limiting our ability to grow the amount of revenue we receive directly from consumers. In addition
to these additional regulations and requirements, if we fail to comply with the rules or requirements of any provider of a payment
method we accept, if the volume of fraud in our transactions limits or terminates our rights to use payment methods we accept,
or if a data breach occurs relating to our payment systems, we may, among other things, be subject to fines or higher transaction
fees and may lose, or face restrictions placed upon, our ability to accept credit card and debit card payments from consumers.
Risks
Relating to the Market for Our Common Stock
Our
common stock could be delisted or suspended from trading on the NYSE American if we do not regain compliance with continued listing
criteria with which we are currently not compliant or if we fail to meet any other continued listing criteria.
As
previously reported, in March 2018, we received a letter from the NYSE Regulation Inc. stating that we are not in compliance with
NYSE American LLC continued listing standards. Specifically, we are not in compliance with Section 1003(a)(iii) of the NYSE American
Company Guide because we reported stockholders’ equity of less than $6 million as of December 31, 2017 and had net losses
in five of our most recent fiscal years ended December 31, 2017. Our stockholders’ equity was $5.5 million as of December
31, 2017. As a result, we are now subject to the procedures and requirements of Section 1009 of the Company Guide.
On
April 26, 2018, the NYSE Regulation Inc. notified us that it has accepted our plan to regain compliance with Section 1003(a)(iii)
of the Company Guide and granted us a plan period that extends through March 20, 2019 to regain compliance. The listing of our
common stock on the NYSE American is being continued during the plan period pursuant to an extension. The NYSE Regulation staff
will review us periodically for compliance with initiatives outlined in our plan. If we are not in compliance with Section 1003(a)(iii)
by March 20, 2019 or if we do not make progress consistent with our plan during the plan period, NYSE Regulation staff will initiate
delisting proceedings as appropriate.
We
can give no assurances that we will be able to address our non-compliance with the NYSE American continued listing standards or,
even if we do, that we will be able to maintain the listing of our common stock on the NYSE American. Our common stock could be
delisted because we do not make progress consistent with our plan during the plan period, because we do not regain compliance
by March 20, 2019, or because we fall below compliance with other NYSE American listing standards. In addition, we may determine
to pursue business opportunities or grow our business at levels or on timelines that reduces our stockholders’ equity below
the level required to maintain compliance with NYSE American continued listing standards. The delisting of our common stock for
whatever reason could, among other things, substantially impair our ability to raise additional capital; result in a loss of institutional
investor interest and fewer financing opportunities for us; and/or result in potential breaches of representations or covenants
in agreements pursuant to which we made representations or covenants relating to our compliance with applicable listing requirements.
Claims related to any such breaches, with or without merit, could result in costly litigation, significant liabilities and diversion
of our management’s time and attention and could have a material adverse effect on our financial condition, business and
results of operations. In addition, the delisting of our common stock for whatever reason may materially impair our stockholders’
ability to buy and sell shares of our common stock and could have an adverse effect on the market price of, and the efficiency
of the trading market for, our common stock.
If
our common stock were delisted and determined to be a “penny stock,” a broker-dealer may find it more difficult to
trade our common stock and an investor may find it more difficult to acquire or dispose of our common stock in the secondary market.
If
our common stock were delisted or suspended from trading on the NYSE American, it may be subject to the so-called “penny
stock” rules. The SEC has adopted regulations that define a “penny stock” to be any equity security that has
a market price per share of less than $5.00, subject to certain exceptions, such as any securities listed on a national securities
exchange. For any transaction involving a “penny stock,” unless exempt, the rules impose additional sales practice
requirements on broker-dealers, subject to certain exceptions. If our common stock were delisted and determined to be a “penny
stock,” a broker-dealer may find it more difficult to trade our common stock and an investor may find it more difficult
to acquire or dispose of our common stock.
The
market price of our common stock historically has been and likely will continue to be highly volatile and our common stock is
thinly traded.
The
market price for our common stock historically has been highly volatile, and the market for our common stock has from time to
time experienced significant price and volume fluctuations, based both on our operating performance and for reasons that appear
to us unrelated to our operating performance. Our stock is also thinly traded, which can affect market volatility, which could
significantly affect the market price of our common stock without regard to our operating performance. In addition, the market
price of our common stock may fluctuate significantly in response to a number of factors, including:
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the
level of our financial resources;
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announcements
of entry into or consummation of a financing;
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announcements
of new products or technologies, commercial relationships or other events by us or our
competitors;
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announcements
of difficulties or delays in entering into commercial relationships with our customers;
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changes
in securities analysts’ estimates of our financial performance or deviations in
our business and the trading price of our common stock from the estimates of securities
analysts;
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fluctuations
in stock market prices and trading volumes of similar companies;
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sales
of large blocks of our common stock, including sales by significant stockholders, our
executive officers or our directors or pursuant to shelf or resale registration statements
that register shares of our common stock that may be sold by us or certain of our current
or future stockholders;
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discussion
of us or our stock price by the financial press and in online investor communities;
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announcement
of non-compliance with any of the NYSE American continued listing standards;
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commencement
of delisting proceedings by NYSE Regulation; and
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additions
or departures of key personnel.
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The
realization of any of the foregoing could have a dramatic and adverse impact on the market price of our common stock.
Future
sales of substantial amounts of our common stock in the public market or the anticipation of such sales could have a material
adverse effect on then-prevailing market prices.
In
April 2017, March 2017, and November 2016, we sold an aggregate of approximately 642,000 shares of our common stock in registered
direct offerings. In a private placement we completed in November 2013, we issued approximately 120,000 shares of our common stock
and warrants to purchase approximately 72,000 shares of our common stock at an exercise price of $20.00 per share. A registration
statement registering the resale of the shares we issued in such private placement and the shares issuable upon exercise of the
warrants we issued in such private placement is currently effective, and we are obligated to use commercially reasonable efforts
to maintain such registration statement continuously effective until all such registered shares have been sold.
In
addition, as of March 31, 2018, there were approximately 156,000 shares of our Series A Preferred Stock outstanding. The holders
of such shares may elect to convert them into shares of our common stock at any time. Based on the current conversion price, we
would issue approximately 11,000 shares of our common stock if all of the outstanding shares of our Series A Preferred Stock were
so converted. Generally, all of the shares of common stock we may issue upon conversion of the Series A Preferred Stock may be
sold under Rule 144 of the Securities Act of 1933.
As
of March 31, 2018, there were also approximately 152,000 shares of common stock reserved for issuance upon the exercise of outstanding
stock options at exercise prices ranging from $5.10 to $30.50 per share, and there were approximately 53,000 shares of common
stock reserved for issuance upon the vesting of outstanding restricted stock units. Registration statements registering such shares
of common stock are currently effective.
Accordingly,
a significant number of shares of our common stock could be sold at any time. Depending upon market liquidity at the time our
common stock is resold by the holders thereof, such resales could cause the trading price of our common stock to decline. In addition,
the sale of a substantial number of shares of our common stock, or anticipation of such sales, could make it more difficult for
us to obtain future financing. To the extent the trading price of our common stock at the time of exercise of any of our outstanding
options or warrants exceeds their exercise price, such exercise will have a dilutive effect on our stockholders.
Raising
additional capital may cause dilution to our existing stockholders and may restrict our operations.
We
may raise additional capital at any time and may do so through one or more financing alternatives, including public or private
sales of equity or debt securities directly to investors or through underwriters or placement agents. As discussed above, we are
exploring options to address our non-compliance with the NYSE American continued listing standards, in particular, options to
address our low stockholders’ equity. We have a shelf registration statement on file under which we could currently sell
up to approximately $23.2 million worth of securities, including the $[__] worth of shares of our common stock we are offering
for sale in this offering. See also “Our ability to raise capital may be limited by applicable laws and regulations,”
below. Raising capital through the issuance of common stock (or securities convertible into or exchangeable or exercisable for
shares of our common stock) may depress the market price of our stock and may substantially dilute our existing stockholders.
In addition, our board of directors may issue preferred stock with rights, preferences and privileges that are senior to those
of the holders of our common stock. Debt financings could involve covenants that restrict our operations. These restrictive covenants
may include limitations on additional borrowing and specific restrictions on the use of our assets, as well as prohibitions on
our ability to create liens or make investments and may, among other things, preclude us from making distributions to stockholders
(either by paying dividends or redeeming stock) and taking other actions beneficial to our stockholders. In addition, investors
could impose more one-sided investment terms and conditions on companies that have or are perceived to have limited remaining
funds or limited ability to raise additional funds. The lower our cash balance, the more difficult it is likely to be for us to
raise additional capital on commercially reasonable terms, or at all.
Our
ability to raise capital may be limited by applicable laws and regulations.
Over
the past few years we have raised capital through the sale of our equity securities. The offerings we completed in April 2014,
November 2016, March 2017 and April 2017 were equity offerings conducted under the “shelf” registration statement
on Form S-3. Using a shelf registration statement on Form S-3 to raise additional capital generally takes less time and is less
expensive than other means, such as conducting an offering under a Form S-1 registration statement. However, our ability to raise
capital using a shelf registration statement may be limited by, among other things, current SEC rules and regulations. Under current
SEC rules and regulations, we must meet certain requirements to use a Form S-3 registration statement to raise capital without
restriction as to the amount of the market value of securities sold thereunder. One such requirement is that we periodically evaluate
the market value of our outstanding shares of common stock held by non-affiliates, or public float, and if, at an evaluation date,
our public float is less than $75.0 million, then the aggregate market value of securities sold by us or on our behalf under a
Form S-3 in any 12-month period is limited to an aggregate of one-third of our public float. Our public float is currently approximately
$9.4 million and therefore we are currently subject to the one-third of our public float limitation. Accordingly, we are currently
only able to sell up to approximately $3.1 million using a “shelf” registration statement in any 12-month period,
and the amount we sell in this offering, if any, will reduce such amount accordingly. If our ability to use a Form S-3 registration
statement for a primary offering of our securities continues to be limited to one-third of our public float, we may instead conduct
such an offering pursuant to an exemption from registration under the Securities Act or under a Form S-1 registration statement,
and we would expect either of those alternatives to increase the cost of raising additional capital relative to utilizing a Form
S-3 registration statement.
In
addition, under current SEC rules and regulations, our common stock must be listed and registered on a national securities exchange
in order to utilize a Form S-3 registration statement (i) for a primary offering, if our public float is not at least $75.0 million
as of a date within 60 days prior to the date of filing the Form S-3 or a re-evaluation date, whichever is later, and (ii) to
register the resale of our securities by persons other than us (i.e., a resale offering). While currently our common stock is
listed on the NYSE American, there can be no assurance that we will be able to maintain such listing. See “Our common stock
could be delisted or suspended from trading on the NYSE American if we do not regain compliance with continued listing criteria
with which we are currently not compliant or if we fail to meet any other continued listing criteria,” above.
Our
ability to timely raise sufficient additional capital also may be limited by the NYSE American’s stockholder approval requirements
for transactions involving the issuance of our common stock or securities convertible into our common stock. For instance, the
NYSE American requires that we obtain stockholder approval of any transaction involving the sale, issuance or potential issuance
by us of our common stock (or securities convertible into our common stock) at a price less than the greater of book or market
value, which (together with sales by our officers, directors and principal stockholders) equals 20% or more of our then outstanding
common stock, unless the transaction is considered a “public offering” by the NYSE American staff. In addition, certain
prior sales by us may be aggregated with any offering we may propose in the future, further limiting the amount we could raise
in any future offering that is not considered a public offering by the NYSE American staff and involves the sale, issuance or
potential issuance by us of our common stock (or securities convertible into our common stock) at a price less than the greater
of book or market value. The NYSE American also requires that we obtain stockholder approval if the issuance or potential issuance
of additional shares will be considered by the NYSE American staff to result in a change of control of our company.
Obtaining
stockholder approval is a costly and time-consuming process. If we are required to obtain stockholder approval for a potential
transaction, we would expect to spend substantial additional money and resources. In addition, seeking stockholder approval would
delay our receipt of otherwise available capital, which may materially and adversely affect our ability to execute our business
strategy, and there is no guarantee our stockholders ultimately would approve a proposed transaction. A public offering under
the NYSE American rules typically involves broadly announcing the proposed transaction, which often times has the effect of depressing
the issuer’s stock price. Accordingly, the price at which we could sell our securities in a public offering may be less,
and the dilution existing stockholders experience may in turn be greater, than if we were able to raise capital through other
means.
Our
charter contains provisions that may hinder or prevent a change in control of our company, which could result in our inability
to approve a change in control and potentially receive a premium over the current market value of your stock.
Certain
provisions of our certificate of incorporation could make it more difficult for a third party to acquire control of us, even if
such a change in control would benefit our stockholders, or to make changes in our board of directors. For example, our certificate
of incorporation (i) prohibits stockholders from filling vacancies on our board of directors, calling special stockholder meetings,
or taking action by written consent, and (ii) requires a supermajority vote of at least 80% of the total voting power of our outstanding
shares, voting together as a single class, to remove our directors from office or to amend provisions relating to stockholders
taking action by written consent or calling special stockholder meetings.
Additionally,
our certificate of incorporation and restated bylaws contain provisions that could delay or prevent a change of control of our
company. Some of these provisions:
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authorize
the issuance of preferred stock which can be created and issued by our board of directors
without prior stockholder approval, with rights senior to those of the common stock;
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prohibit
our stockholders from making certain changes to our bylaws except with 66 2/3% stockholder
approval; and
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require
advance written notice of stockholder proposals and director nominations.
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These
provisions could discourage third parties from taking control of our company. Such provisions may also impede a transaction in
which you could receive a premium over then current market prices and your ability to approve a transaction that you consider
in your best interest.
In
addition, we are governed by the provisions of Section 203 of the Delaware General Corporate Law, which may prohibit certain business
combinations with stockholders owning 15% or more of our outstanding voting stock. These and other provisions in our certificate
of incorporation, restated bylaws and Delaware law could make it more difficult for stockholders or potential acquirers to obtain
control of our board of directors or initiate actions that are opposed by the then-current board of directors, including delaying
or impeding a merger, tender offer, or proxy contest involving our company. Any delay or prevention of a change of control transaction
or changes in our board of directors could cause the market price of our common stock to decline.
Risks
Related to This Offering
We
will have broad discretion as to the use of the net proceeds from this offering, and we may not use the proceeds effectively.
Our
management will have broad discretion in the application of the net proceeds from this offering and could spend the proceeds in
ways that do not improve our results of operations or enhance the value of our common stock. Our failure to apply these funds
effectively could have a material adverse effect on our business, delay or hinder our growth and cause the price of our common
stock to decline.
You
will experience immediate and substantial dilution in the net tangible book value per share of the common stock you purchase.
The
public offering price of the securities offered hereby is likely to be substantially higher than the book value per share of our
common stock. Investors purchasing securities in this offering may, therefore, incur immediate dilution in net tangible book value
per share of the common stock issued in this offering. See “Dilution” below for a more detailed discussion of the
dilution you will incur if you purchase common stock in this offering.
If
securities and/or industry analysts fail to continue publishing research about our business, if they change their recommendations
adversely or if our results of operations do not meet their expectations, our stock price and trading volume could decline.
The
trading market for our common stock will be influenced by the research and reports that industry or securities analysts publish
about us or our business. If one or more of these analysts cease coverage of our company or fail to publish reports on us regularly,
we could lose visibility in the financial markets, which in turn could cause our stock price or trading volume to decline. In
addition, it is likely that in some future period our operating results will be below the expectations of securities analysts
or investors. If one or more of the analysts who cover us downgrade our stock, or if our results of operations do not meet their
expectations, our stock price could decline.
Our
stockholders may be diluted by the exercise of outstanding warrants or options to purchase common stock, the settlement of outstanding
restricted stock units and the payment of dividends on the outstanding shares of our preferred stock.
As
of March 31, 2018, there were outstanding warrants to purchase an aggregate of 72,000 shares of common stock at an exercise price
of $20.00 per share , approximately 152,000 shares of common stock reserved for issuance upon the exercise of outstanding stock
options at exercise prices ranging from $5.10 to $30.50 per share (with a weighted average exercise price of $17.95 per share),
and approximately 53,000 shares of common stock reserved for issuance upon the settlement of outstanding restricted stock units.
We have also historically paid the dividends that accrue with respect to our Series A Convertible Preferred Stock in shares of
our common stock. You may incur dilution upon the issuance of shares upon exercise of outstanding warrants and options, the issuance
of shares upon settlement of outstanding restricted stock units and upon the payment of the dividends with respect to our Series
A Convertible Preferred Stock.
CAUTIONARY
NOTE REGARDING FORWARD-LOOKING STATEMENTS
This
prospectus supplement and the accompanying prospectus and the documents incorporated herein and therein by reference contain,
or will contain, “forward-looking statements” within the meaning of Section 27A of the Securities Act and Section
21E of the Exchange Act, which include information relating to future events, future financial performance, strategies, expectations
and competitive environment. Words such as “believes,” “anticipates,” “estimates,” “expects,”
“projections,” “may,” “potential,” “plan,” “continue” and similar
expressions are intended to identify forward-looking statements, but are not the exclusive means of identifying forward-looking
statements. All statements, other than statements of historical fact, are statements that could be deemed forward-looking statements,
including but not limited to statements regarding our future financial performance or position, our business strategy, plans or
expectations, and our objectives for future operations, including relating to our products and services. Forward-looking statements
are inherently subject to risks and uncertainties and our actual results and outcomes may be materially different from those expressed
or implied by the forward-looking statements. Our actual results and outcomes may differ materially from those projected in the
forward-looking statements due to risks and uncertainties that exist in our operations, development efforts and business environment,
including those set forth under the heading “Risk Factors” in this prospectus supplement, and other documents we file
with the SEC that are incorporated by reference herein. We cannot guarantee future results, levels of activity, performance or
achievements. Readers are urged not to place undue reliance on these forward-looking statements, which speak only as of the date
of this prospectus supplement or for forward-looking statements in other documents we file with the SEC that are incorporated
by reference herein, as of the date of such document. Except as required by law, we do not undertake any obligation to revise
or update any such forward-looking statement to reflect future events or circumstances.
USE
OF PROCEEDS
We
estimate that the net proceeds to us from the sale of the securities offered under this prospectus supplement, after deducting
estimated offering expenses, including placement agent fees, will be approximately $[__] million.
We
intend to use the net proceeds from this offering for general corporate purposes, which may include working capital, general and
administrative expenses, capital expenditures and implementation of our strategic priorities. We may also use a portion of the
net proceeds to acquire or invest in businesses, products and technologies that are complementary to our current business, although
we have no present commitments or agreements for any such transactions. Pending the application of the net proceeds, we may invest
the proceeds in short-term, interest bearing, investment-grade marketable securities or money market obligations.
As
of the date of this prospectus supplement, we cannot specify with certainty all of the particular uses of the proceeds from this
offering. Accordingly, we will retain broad discretion over the use of such proceeds.
DIVIDEND
POLICY
We
have never declared or paid any dividends on our common stock and do not anticipate paying any in the foreseeable future. We currently
intend to retain all of our future earnings, if any, to finance the operation and growth of our business. Any future determination
relating to our dividend policy will be made at the discretion of our board of directors and will depend on a number of factors,
including future earnings, capital requirements, financial conditions, future prospects, contractual restrictions and covenants
and other factors that our board of directors may deem relevant.
DILUTION
If
you purchase shares of our common stock in this offering, your interest will be diluted to the extent of the difference between
the offering price per share and the net tangible book value per share of our common stock after this offering. Our net tangible
book value as of March 31, 2018 was approximately $2.6 million, or $1.05 per share. Net tangible book value per share is determined
by dividing our total tangible assets, less total liabilities, by the number of shares of our common stock outstanding as of March
31, 2018. Dilution in net tangible book value per share represents the difference between the amount per share paid by purchasers
of shares of common stock in this offering and the net tangible book value per share of our common stock immediately after this
offering.
After
giving effect to the sale in this offering of [__] shares of common stock at the purchase price of $[__] per share, less estimated
offering expenses, including placement agent fees, our pro forma net tangible book value (unaudited) as of March 31, 2018, would
have been approximately $[__] million, or approximately $[__] per share. This represents an immediate increase of approximately
$[__] in net tangible book value per share to our existing stockholders and an immediate dilution of approximately $[__] per share
to investors in this offering. The following table illustrates this per share dilution.
Public
offering price per share
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$
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[__]
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Net
tangible book value per share as of March 31, 2018
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$
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1.05
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Increase
in net tangible book value per share attributable to this offering
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$
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[__]
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Pro
forma net tangible book value per share as of March 31, 2018, after giving effect to this offering
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$
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[__]
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Dilution
in net tangible book value per share to investors in this offering
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$
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([__]
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)
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The
above is based on 2,520,554 shares of our common stock outstanding as of March 31, 2018 (as adjusted for [__] shares of common
stock to be issued in this offering), and excludes, as of that date:
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152,094
shares of common stock issuable upon the exercise of outstanding stock options, having
a weighted average exercise price of $17.95 per share;
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52,500
shares of common stock subject to outstanding restricted stock units;
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72,000
shares of our common stock issuable upon the exercise of outstanding warrants with a
weighted-average exercise price of $20.00 per share;
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11,467
shares of common stock issuable upon conversion of the outstanding shares of our Series
A Convertible Preferred Stock as of that date, assuming such shares were converted at
the conversion price in effect as of that date; and
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59,206
shares of our common stock available for future grants under equity award plans.
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To
the extent that any options or warrants are exercised, new options or other equity awards are issued under our equity incentive
plans, or we otherwise issue additional shares of common stock in the future, there will be further dilution to new investors.
PLAN
OF DISTRIBUTION
Roth
Capital Partners, LLC, which we refer to as the placement agent, has agreed to act as the exclusive placement agent in connection
with this offering subject to the terms and conditions of a placement agency agreement dated June [__], 2018. The placement agent
is not purchasing or selling any shares of our common stock offered by this prospectus, nor is it required to arrange the purchase
or sale of any specific number or dollar amount of the shares of our common stock, but has agreed to use its reasonable “best
efforts” to arrange for the sale of all of the shares of our common stock offered hereby. The placement agency agreement
does not give rise to any commitment by the placement agent to purchase any of our shares of common stock or warrants, and the
placement agent will have no authority to bind us by virtue of the placement agent agreement. Further, the placement agent does
not guarantee that it will be able to raise new capital in any prospective offering. The placement agent may engage sub-agents
or selected dealers to assist with the offering.
We
will enter into subscription agreements directly with investors in connection with this offering and we may not sell the entire
amount of shares offered pursuant to this prospectus. The public offering price set forth on the cover page of this prospectus
has been determined based upon arm’s-length negotiations between the placement agent, the investors and us.
Our
obligation to issue and sell to a purchaser, and a purchaser’s obligation to purchase, the shares offered hereby is subject
to the conditions set forth in the subscription agreements, which may be waived by us or the purchaser, as applicable, in the
applicable party’s discretion.
We
currently anticipate that the sale of the shares offered by this prospectus will be completed on or about June [__], 2018. We
estimate the total offering expenses of this offering that will be payable by us, excluding the placement agent’s fees,
will be approximately $[__], which includes legal and printing costs, various other fees and reimbursement of the placements agent’s
expenses. At the closing, The Depository Trust Company will credit the shares of common stock to the respective accounts of the
purchasers.
Placement
Agent’s Fees and Expenses
We
have agreed to pay the placement agent an aggregate cash placement fee equal to 5.0% of the gross proceeds from the sale of the
shares in this offering.
The
following table shows the per share and total cash placement agent’s fees we will pay to the placement agent in connection
with the sale of the shares of our common stock offered pursuant to this prospectus, assuming the purchase of all of the shares
offered hereby:
Per
Share
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$
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[__]
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Total
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$
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[__]
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Because
there is no minimum offering amount required as a condition to closing in this offering, the actual total placement agent fees,
if any, are not presently determinable and may be substantially less than the maximum amount set forth above. We have also agreed
to reimburse the placement agent for certain of its actual out-of-pocket expenses in an aggregate amount not to exceed $40,000.
Electronic
Distribution
This
prospectus supplement and the accompanying prospectus in electronic format may be made available on websites or through other
online services maintained by the placement agent or its affiliates. Other than this prospectus supplement and the accompanying
prospectus in electronic format, the information on the placement agent’s website and any information contained in any other
website maintained by the placement agent is not part of this prospectus supplement, the accompanying prospectus or the registration
statement of which this prospectus supplement and the accompanying prospectus form a part, has not been approved and/or endorsed
by us or the placement in its capacity as placement agent, and should not be relied upon by investors.
Other
From
time to time, the placement agent and/or its affiliates have provided, and may in the future provide, various investment banking
and other financial services for us for which services they have received and, may in the future receive, customary fees. In the
course of their businesses, the placement agent and its affiliates may actively trade our securities for their own account or
for the accounts of customers, and, accordingly, the placement agent and its affiliates may at any time hold long or short positions
in such securities.
We
have agreed to indemnify the placement agent against liabilities under the Securities Act. We have also agreed to contribute to
payments the placement agent may be required to make in respect of such liabilities.
The
placement agent may be deemed to be an underwriter within the meaning of Section 2(a)(11) of the Securities Act, and any commissions
received by it and any profit realized on the resale of the securities sold by it while acting as principal might be deemed to
be underwriting discounts or commissions under the Securities Act. As an underwriter, the placement agent would be required to
comply with the requirements of the Securities Act and the Exchange Act, including, without limitation, Rule 415(a)(4) under the
Securities Act and Rule 10b-5 and Regulation M under the Exchange Act. These rules and regulations may limit the timing of purchases
and sales of shares of common stock and warrants by the placement agent acting as principal. Under these rules and regulations,
the placement agent:
●
may not engage in any stabilization activity in connection with our securities; and
●
may not bid for or purchase any of our securities or attempt to induce any person to purchase any of our securities, other than
as permitted under the Exchange Act, until it has completed its participation in the distribution
Listing
and Transfer Agent
Our
common stock is traded on the NYSE American under the symbol “NTN.” The transfer agent for our common stock is American
Stock Transfer & Trust Company.
LEGAL
MATTERS
The
validity of the common stock being offered by this prospectus supplement and accompanying prospectus will be passed upon for us
by Breakwater Law Group, LLP, Del Mar, California. Lowenstein Sandler LLP, New York, New York, is acting as counsel for the placement
agent in connection with this offering.
EXPERTS
Our
consolidated balance sheets as of December 31, 2017 and December 31, 2016, and the related consolidated statement of operations,
comprehensive loss, shareholders’ equity and cash flows for the years ended December 31, 2017 and December 31, 2016 incorporated
in this prospectus supplement by reference to our annual report on Form 10-K for the year ended December 31, 2017 have been so
included in reliance on the report of Squar, Milner, Peterson, Miranda & Williamson, LLP, an independent registered public
accounting firm, given on the authority of said firm as experts in auditing and accounting.
INFORMATION
INCORPORATED BY REFERENCE
We
disclose important information to you by referring you to documents that we have previously filed with the SEC or documents that
we will file with the SEC in the future. The information incorporated by reference is considered to be part of this prospectus
supplement, and information in documents that we file later with the SEC will automatically update and supersede information in
this prospectus supplement. We incorporate by reference the documents listed below into this prospectus supplement, and any future
filings made by us with the SEC under Section 13(a), 13(c), 14 or 15(d) of the Exchange Act until the termination of this offering
(in each case, except for the information furnished under Item 2.02 or Item 7.01 in any current report on Form 8-K and Form 8-K/A):
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our
Annual Report on Form 10-K for the fiscal year ended December 31, 2017, filed with the
SEC on March 9, 2018;
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our
Quarterly Report on Form 10-Q for the fiscal quarter ended March 31, 2018, filed with
the SEC on May 11, 2018;
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our
Current Reports on Form 8-K filed with the SEC on June 11, 2018, April 30, 2018, March
23, 2018, March 22, 2018, March 13, 2018, March 2, 2018;
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those
portions of our Definitive Proxy Statement on Schedule 14A deemed incorporated into our
Annual Report on Form 10-K for the fiscal year ended December 31, 2017, filed with the
SEC on April 27, 2018; and
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●
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the
description of our common stock contained in our registration statement on Form 8-A,
registering our common stock under the Exchange Act, filed with the SEC on October 14,
1992, pursuant to Section 12 of the Exchange Act, including any amendment or report filed
for the purpose of updating such description.
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Any
statement contained in a document incorporated or deemed to be incorporated by reference in this prospectus supplement is modified
or superseded for purposes of this prospectus supplement to the extent that a statement contained in this prospectus supplement
or in any other subsequently filed document that also is or is deemed to be incorporated by reference herein modifies or supersedes
such statement. Any statement so modified or superseded does not, except as so modified or superseded, constitute a part of this
prospectus supplement.
Upon
written or oral request made to us at the address or telephone number below, we will, at no cost to the requester, provide to
each person, including any beneficial owner, to whom this prospectus supplement and accompanying prospectus is delivered, a copy
of any or all of the information that has been incorporated by reference in this prospectus supplement and the accompanying prospectus
but not delivered with it:
NTN
Buzztime, Inc.
2231
Rutherford Road, Suite 200
Carlsbad,
California 92008
(760)
438-7400
Attention:
Corporate Secretary
WHERE
YOU CAN FIND MORE INFORMATION
We
have filed with the SEC a registration statement on Form S-3, which includes amendments and exhibits, under the Securities Act
and the rules and regulations under the Securities Act for the registration of securities described in this prospectus supplement
and the accompanying prospectus. This prospectus supplement and the accompanying prospectus, which constitutes a part of the registration
statement, does not contain all the information that is in the registration statement and its exhibits and schedules. Certain
portions of the registration statement have been omitted as allowed by SEC rules and regulations. Statements in this prospectus
supplement and the accompanying prospectus that summarize documents are not necessarily complete, and in each case you should
refer to the copy of the document filed as an exhibit to the registration statement. You may read and copy the registration statement,
including exhibits and schedules filed with it, and reports or other information we may file with the SEC at the public reference
facilities maintained by the SEC as described below.
We
are subject to the information reporting requirements of the Exchange Act, and, in accordance with these requirements, we are
required to file periodic reports and other information with the SEC. The reports and other information filed by us with the SEC
may be inspected and copied at the public reference facilities maintained by the SEC as described below.
The
public may read and copy any materials that we file with the SEC at the SEC’s Public Reference Room at 100 F Street, N.E.,
Washington, D.C. The public may obtain information on the operation of the Public Reference Room by calling the SEC at 1-800-SEC-0330.
The SEC also maintains an internet website at http://www.sec.gov that contains our filed reports, proxy and information statements,
and other information that we file electronically with the SEC. Additionally, we make these filings available, free of charge,
on our website at http://www.buzztime.com/investor-relations/-sec-filings.html as soon as reasonably practicable after we electronically
file such materials with, or furnish them to, the SEC. The information on our website, other than these filings, is not, and should
not be, considered part of this prospectus supplement or the accompanying prospectus, is not incorporated by reference into this
prospectus supplement or the accompanying prospectus, and should not be relied upon in connection with making any investment decision
with respect to our common stock.
You
should rely only on the information in and incorporated by reference into this prospectus supplement and the accompanying prospectus.
We have not authorized anyone else to provide you with different information. You should not assume that the information in this
prospectus supplement or the accompanying prospectus is accurate as of any date other than the date on the front cover of these
documents.
PROSPECTUS
$25,000,000
Common
Stock
Preferred
Stock
Debt
Securities
Warrants
Units
We
may, from time to time in one or more offerings, offer and sell up to $25,000,000 in the aggregate of common stock, preferred
stock, debt securities, warrants to purchase common stock, preferred stock or debt securities, or any combination of the foregoing,
either individually or as units comprised of one or more of the other securities.
This
prospectus provides a general description of the securities we may offer. We will provide the specific terms of the securities
offered in one or more supplements to this prospectus. We may also authorize one or more free writing prospectuses to be provided
to you in connection with these offerings. The prospectus supplement and any applicable free writing prospectus may add, update
or change information contained in this prospectus. You should read carefully this prospectus, the applicable prospectus supplement
and any applicable free writing prospectus, as well as any documents incorporated by reference before you invest in any of our
securities. This prospectus may not be used to offer or sell any securities unless accompanied by the applicable prospectus supplement.
Our
common stock is listed on the NYSE MKT under the symbol “NTN.” On December 19, 2016, the closing sale price for our
common stock was $9.78 per share.
The
aggregate market value of our outstanding common stock held by non-affiliates was approximately $15.0 million, based on 2,260,668
shares of outstanding common stock as of December 19, 2013, of which 852,990 shares are held by affiliates, and a price of $10.65
per share, which was the last reported sale price of our common stock on the NYSE MKT on December 1, 2016. As of the date of this
prospectus, we have offered and sold shares of common stock with an aggregates sales price of $2,736,151 pursuant to General Instruction
I.B.6. of Form S-3 during the prior 12 calendar month period that ends on, and includes, the date of this prospectus.
Investing
in our securities involves a high degree of risk. See the section entitled “Risk Factors” on page 4 of this prospectus
and as updated in the applicable prospectus supplement, any applicable free writing prospectus and other future filings we make
with the Securities and Exchange Commission that are incorporated by reference into this prospectus. See “Information Incorporated
by Reference.”
Neither
the Securities and Exchange Commission nor any state securities commission has approved or disapproved of these securities or
determined if this prospectus is truthful or complete. Any representation to the contrary is a criminal offense.
The
date of this prospectus is February 2, 2017
ABOUT
THIS PROSPECTUS
This
prospectus is part of a registration statement that we filed with the Securities and Exchange Commission, or the SEC, under the
Securities Act of 1933, as amended, or the Securities Act, using a “shelf” registration process. Under this shelf
registration process, we may from time to time sell common stock, preferred stock, debt securities or warrants to purchase common
stock, preferred stock or debt securities, or any combination of the foregoing, either individually or as units comprised of one
or more of the other securities, in one or more offerings up to a total dollar amount of $25,000,000. We have provided to you
in this prospectus a general description of the securities we may offer. Each time we sell securities under this shelf registration,
we will, to the extent required by law, provide a prospectus supplement that will contain specific information about the terms
of that offering. We may also authorize one or more free writing prospectuses to be provided to you that may contain material
information relating to these offerings. The prospectus supplement and any applicable free writing prospectus that we may authorize
to be provided to you may also add, update or change information contained in this prospectus or in any documents that we have
incorporated by reference into this prospectus. To the extent there is a conflict between the information contained in this prospectus
and the prospectus supplement or any applicable free writing prospectus, you should rely on the information in the prospectus
supplement or the applicable free writing prospectus; provided that if any statement in one of these documents is inconsistent
with a statement in another document having a later date — for example, a document filed after the date of this prospectus
and incorporated by reference into this prospectus or any prospectus supplement or any applicable free writing prospectus —
the statement in the document having the later date modifies or supersedes the earlier statement.
We
have not authorized any dealer, agent or other person to give any information or to make any representation other than those contained
or incorporated by reference in this prospectus and any accompanying prospectus supplement, or any applicable free writing prospectus
that we may authorize to be provided to you. You must not rely upon any information or representation not contained or incorporated
by reference in this prospectus or an accompanying prospectus supplement. This prospectus and the accompanying prospectus supplement,
if any, do not constitute an offer to sell or the solicitation of an offer to buy any securities other than the registered securities
to which they relate, nor do this prospectus and the accompanying prospectus supplement constitute an offer to sell or the solicitation
of an offer to buy securities in any jurisdiction to any person to whom it is unlawful to make such offer or solicitation in such
jurisdiction. You should not assume that the information contained in this prospectus, any applicable prospectus supplement or
any applicable free writing prospectus is accurate on any date subsequent to the date set forth on the front of the document or
that any information we have incorporated by reference is correct on any date subsequent to the date of the document incorporated
by reference (as our business, financial condition, results of operations and prospects may have changed since that date), even
though this prospectus, any applicable prospectus supplement or any applicable free writing prospectus is delivered or securities
are sold on a later date.
As
permitted by SEC rules, the registration statement of which this prospectus forms a part includes additional information not contained
in this prospectus. You may read that registration statement and the other reports we file with the SEC at its web site or at
its offices described below under “Where You Can Find Additional Information.”
SUMMARY
This
summary highlights the information contained elsewhere in or incorporated by reference into this prospectus. Because this
is only a summary, it does not contain all of the information that you should consider before investing in our securities.
You should carefully read this entire prospectus, including the information contained under the heading “Risk Factors,”
and all other information included or incorporated by reference into this prospectus in their entirety before you invest
in our securities.
References
to “we,” “us,” “our,” “our company,” “the Company,” and “Buzztime”
refers to NTN Buzztime, Inc. and its subsidiaries, unless the context requires otherwise.
Company
Overview
We
deliver interactive entertainment and innovative dining technology to bars and restaurants in North America. Customers
license our customizable solution to differentiate themselves via competitive fun by offering guests trivia, card, sports
and arcade games, nationwide competitions, and by offering self-service dining features including dynamic menus, touchscreen
ordering and secure payment. Our platform can improve operating efficiencies, create connections among the players and
venues and amplify guests’ positive experiences. Built on an extended network platform, our interactive entertainment
system has historically allowed multiple players to interact at the venue, and now also enables competition between venues,
referred to as massively multiplayer gaming. Our current platform, which we refer to as Buzztime Entertainment On Demand,
or BEOND, was first introduced as a pilot program in December 2012, was expanded commercially during 2013, and the expansion
was scaled during 2014. We continue to enhance its network architecture and the BEOND tablet platform and player engagement
paradigms. We also continue to support its legacy network product line, which it refers to as Classic.
We
currently generate revenue by charging subscription fees for our service to our network subscribers, by leasing
equipment (including tablets used in its BEOND tablet platform and the cases and charging trays for the tablets) to certain
network subscribers, by hosting live trivia events, and by selling advertising aired on in-venue screens and as part of
customized games. In 2014, we began offering pay-to-play premium content to certain customers, such as paid arcade. During
the second quarter of 2015, we made a strategic change in our premium content model by making arcade available on both
a free-to-consumer (in exchange for an increased subscription fee) and pay-to-play basis. This change required us to delay
the general availability of pay-to-play arcade as we retooled its content, workflow and positioning. As a result, during
2015, we generated additional subscription fee revenue from those venues offering free-to-consumer arcade. We began rolling
out the new pay-to-play arcade during the second quarter of 2016. At September 30, 2016, 2,848 venues in the U.S. and
Canada subscribed to our interactive entertainment network, of which approximately 69% were using the BEOND tablet platform.
Our
principal office is located at 2231 Rutherford Road, Carlsbad, California 92008, and the telephone number at that address
is (760) 438-7400. Our website address is www.buzztime.com. Except for those filings we make with the Securities and Exchange
Commission, or the SEC, that are incorporated by reference in this prospectus, none of the information contained on, or
that may be accessed through, our website is a prospectus or constitutes part of, or is otherwise incorporated into, this
prospectus.
The
Securities We May Offer
We
may offer shares of our common stock and preferred stock, various series of debt securities and warrants to purchase any
of such securities, either individually or in units, with a total value of up to $25,000,000 from time to time under this
prospectus, together with any applicable prospectus supplement and applicable free writing prospectus, at prices and on
terms to be determined by market conditions at the time of offering. If we issue any debt securities at a discount from
their original stated principal amount, then, for purposes of calculating the total dollar amount of all securities issued
under this prospectus, we will treat the initial offering price of the debt securities as the total original principal
amount of the debt securities. Each time we offer securities under this prospectus, we will provide offerees with a prospectus
supplement that will describe the specific amounts, prices and other important terms of the securities being offered,
including, to the extent applicable:
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designation
or classification;
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aggregate
principal amount or aggregate offering price;
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maturity,
if applicable;
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original
issue discount, if any;
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rates
and times of payment of interest or dividends, if any;
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redemption,
conversion, exchange or sinking fund terms, if any;
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conversion
or exchange prices or rates, if any, and, if applicable, any provisions for changes to or adjustments in the conversion or
exchange prices or rates and in the securities or other property receivable upon conversion or exchange;
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ranking;
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restrictive
covenants, if any;
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voting
or other rights, if any; and
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important
United States federal income tax considerations.
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The
prospectus supplement and any applicable free writing prospectus that we may authorize to be provided to you may also
add, update or change information contained in this prospectus or in documents we have incorporated by reference. However,
no prospectus supplement or free writing prospectus will offer a security that is not registered and described in this
prospectus at the time of the effectiveness of the registration statement of which this prospectus is a part.
We
may sell the securities to or through underwriters, dealers or agents or directly to purchasers. We, as well as any agents
acting on our behalf, reserve the sole right to accept and to reject in whole or in part any proposed purchase of securities.
Each prospectus supplement will set forth the names of any underwriters, dealers or agents involved in the sale of securities
described in that prospectus supplement and any applicable fee, commission or discount arrangements with them, details
regarding any over-allotment option granted to them, and net proceeds to us. The following is a summary of the securities
we may offer with this prospectus.
Common
Stock
We
currently have authorized 168,000,000 shares of common stock, par value $0.005 per share, of which 2,260,668 shares
were issued and outstanding as of December 16, 2016. We may offer shares of our common stock either alone or underlying
other registered securities convertible into or exercisable for our common stock. Holders of our common stock are entitled
to such dividends as our board of directors may declare from time to time out of legally available funds, subject to the
preferential rights of the holders of any shares of our preferred stock that are outstanding or that we may issue in the
future. Currently, we do not pay any dividends on our common stock. Each holder of our common stock is entitled to one
vote per share. In this prospectus, we provide a general description of, among other things, the rights and restrictions
that apply to holders of our common stock.
Preferred
Stock
We
currently have authorized 10,000,000 shares of preferred stock, par value $0.005 per share, 5,000,000 of which have been
designated as Series A Convertible Preferred Stock, of which 156,112 are outstanding as of December 16, 2016.
Any
authorized and undesignated shares of preferred stock may be issued with such rights and powers as the board of directors
may designate. Under our restated certificate of incorporation, our board of directors has the authority to issue shares
of our preferred stock in one or more series and to fix or alter the rights, preferences, privileges and restrictions
granted to or imposed upon any series of preferred stock. The particular terms of each class or series of preferred stock,
including redemption privileges, liquidation preferences, voting rights, dividend rights and/or conversion rights, will
be more fully described in the applicable prospectus supplement relating to the preferred stock offered thereby.
The
rights, preferences, privileges and restrictions granted to or imposed upon any series of preferred stock that we offer
and sell under this prospectus and applicable prospectus supplements will be set forth in a certificate of designation
relating to the series. We file as an exhibit to the registration statement of which this prospectus is a part, or will
incorporate by reference from another report that we file with the SEC, the form of any certificate of designation that
describes the terms of any series of preferred stock we offer under this prospectus before the issuance of shares of that
series of preferred stock. You should read any prospectus supplement and any free writing prospectus that we may authorize
to be provided to you related to the series of preferred stock being offered, as well as the complete certificate of designation
that contains the terms of the applicable series of preferred stock.
Debt
Securities
We
may offer general debt obligations, which may be secured or unsecured, senior or subordinated and convertible into shares
of our common stock. In this prospectus, we refer to the senior debt securities and the subordinated debt securities together
as the “debt securities.” We may issue debt securities under a note purchase agreement or under an indenture
to be entered between us and a trustee; forms of the senior and subordinated indentures are included as an exhibit to
the registration statement of which this prospectus is a part. The indentures do not limit the amount of securities that
may be issued under it and provides that debt securities may be issued in one or more series. The senior debt securities
will have the same rank as all of our other indebtedness that is not subordinated. The subordinated debt securities will
be subordinated to our senior debt on terms set forth in the applicable prospectus supplement. In addition, the subordinated
debt securities will be effectively subordinated to creditors and preferred stockholders of our subsidiaries. Our board
of directors will determine the terms of each series of debt securities being offered. This prospectus contains only general
terms and provisions of the debt securities. The applicable prospectus supplement will describe the particular terms of
the debt securities offered thereby. You should read any prospectus supplement and any free writing prospectus that we
may authorize to be provided to you related to the series of debt securities being offered, as well as the complete note
agreements and/or indentures that contain the terms of the debt securities. Forms of indentures have been filed as exhibits
to the registration statement of which this prospectus is a part, and supplemental indentures and forms of debt securities
we offer under this prospectus will be filed as exhibits to the registration statement of which this prospectus is a part,
or will be incorporated by reference from another report we file with the SEC.
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Warrants
We
may offer warrants for the purchase of shares of our common stock or preferred stock or of debt securities. We may issue
the warrants by themselves or together with common stock, preferred stock or debt securities, and the warrants may be
attached to or separate from any offered securities. Each series of warrants will be issued under a separate warrant agreement
to be entered into between us and the investors or a warrant agent. Our board of directors will determine the terms of
the warrants. This prospectus contains only general terms and provisions of the warrants. The applicable prospectus supplement
will describe the particular terms of the warrants being offered thereby. You should read any prospectus supplement and
any free writing prospectus that we may authorize to be provided to you related to the series of warrants being offered,
as well as the complete warrant agreements that contain the terms of the warrants. Specific warrant agreements will contain
additional important terms and provisions and we will file as an exhibit to the registration statement of which this prospectus
is a part, or will incorporate by reference from another report we file with the SEC, the form of each warrant agreement
relating to the warrants offered under this prospectus.
Units
We
may offer units consisting of our common stock or preferred stock, debt securities and/or warrants to purchase any of
these securities in one or more series. We may evidence each series of units by unit certificates that we will issue under
a separate agreement. We may enter into unit agreements with a unit agent. Each unit agent will be a bank or trust company
that we select. We will indicate the name and address of the unit agent in the applicable prospectus supplement relating
to a particular series of units. This prospectus contains only a summary of certain general features of the units. The
applicable prospectus supplement will describe the particular features of the units being offered thereby. You should
read any prospectus supplement and any free writing prospectus that we may authorize to be provided to you related to
the series of units being offered, as well as the complete unit agreements that contain the terms of the units. Specific
unit agreements will contain additional important terms and provisions and we will file as an exhibit to the registration
statement of which this prospectus is a part, or will incorporate by reference from another report we file with the SEC,
the form of each unit agreement relating to the units offered under this prospectus.
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RISK
FACTORS
Investing
in our securities involves a high degree of risk. You should carefully consider the risk factors set forth under “Risk Factors”
in Item 1A of our annual report on Form 10-K for the year ended December 31, 2015, which is incorporated by reference in this
prospectus, together with all other information contained or incorporated by reference in this prospectus, as may be updated by
our subsequent filings under the Securities Exchange Act of 1934, as amended, or the Exchange Act, and the risk factors and other
information contained in any applicable prospectus supplement and in any applicable free writing prospectus in connection with
a specific offering, before deciding whether to purchase any of the securities being registered pursuant to the registration statement
of which this prospectus is a part. Each of the risk factors could adversely affect our business, operating results and financial
condition, as well as adversely affect the value of an investment in our securities, and the occurrence of any of these risks
might cause you to lose all or part of your investment. Additional risks and uncertainties that we do not presently know about
or that we currently believe are not material may also adversely affect our business.
CAUTIONARY
NOTE REGARDING FORWARD-LOOKING STATEMENTS
This
prospectus and the documents incorporated by reference herein contain, or will contain, “forward-looking statements”
within the meaning of Section 27A of the Securities Act and Section 21E of the Exchange Act, which include information relating
to future events, future financial performance, strategies, expectations and competitive environment. Words such as “believes,”
“anticipates,” “estimates,” “expects,” “projections,” “may,” “potential,”
“plan,” “continue” and similar expressions are intended to identify forward-looking statements, but are
not the exclusive means of identifying forward-looking statements. All statements, other than statements of historical fact, are
statements that could be deemed forward-looking statements, including but not limited to statements regarding our future financial
performance or position, our business strategy, plans or expectations, and our objectives for future operations, including relating
to our products and services. Forward-looking statements are inherently subject to risks and uncertainties and our actual results
and outcomes may be materially different from those expressed or implied by the forward-looking statements. Our actual results
and outcomes may differ materially from those projected in the forward-looking statements due to risks and uncertainties that
exist in our operations, development efforts and business environment, including those set forth under the heading “Risk
Factors” in this prospectus, and other documents we file with the SEC that are incorporated by reference herein. We cannot
guarantee future results, levels of activity, performance or achievements. Readers are urged not to place undue reliance on these
forward-looking statements, which speak only as of the date of this prospectus or for forward-looking statements in other documents
we file with the SEC that are incorporated by reference herein, as of the date of such document. Except as required by law, we
do not undertake any obligation to revise or update any such forward-looking statement to reflect future events or circumstances.
SECURITIES
WE MAY OFFER
We
may offer shares of common stock, shares of preferred stock, debt securities or warrants to purchase common stock, preferred stock
or debt securities, or any combination of the foregoing, either individually or as units comprised of one or more of the other
securities. We may offer up to $25,000,000 of securities under this prospectus. If securities are offered as units, we will describe
the terms of the units in a prospectus supplement.
USE
OF PROCEEDS
Except
as described in any prospectus supplement and any free writing prospectus in connection with a specific offering, we currently
intend to use the net proceeds from the sale of the securities for working capital and other general corporate purposes. We may
also use the net proceeds to repay any debts and/or invest in or acquire complementary businesses, products or technologies, although
we have no current commitments or agreements with respect to any such investments or acquisitions as of the date of this prospectus.
We have not determined the amount of net proceeds to be used specifically for the foregoing purposes. If a material part of the
net proceeds is to be used to repay indebtedness, we will set forth the interest rate and maturity of such indebtedness in a prospectus
supplement. As a result, our management will have broad discretion in the allocation of the net proceeds and investors will be
relying on the judgment of our management regarding the application of the proceeds of any sale of the securities. Pending use
of the net proceeds, we intend to invest the proceeds in short-term, investment-grade, interest-bearing instruments.
We
may set forth additional information on the use of net proceeds from the sale of securities we offer under this prospectus in
a prospectus supplement relating to the specific offering.
DESCRIPTION
OF COMMON STOCK AND PREFERRED STOCK
The
following description of our common stock and preferred stock, together with any additional information we include in any applicable
prospectus supplement or any applicable free writing prospectus, summarizes the material terms and provisions of our common stock
and the preferred stock that we may offer under this prospectus. While the terms we have summarized below will apply generally
to any future common stock or preferred stock that we may offer, we will describe the particular terms of any class or series
of these securities in more detail in the applicable prospectus supplement. For the complete terms of our common stock and preferred
stock, please refer to our restated certificate of incorporation and our bylaws that are incorporated by reference into the registration
statement of which this prospectus is a part or may be incorporated by reference in this prospectus or any applicable prospectus
supplement. The terms of these securities may also be affected by the Delaware General Corporation Law, or the DGCL. The summary
below and that contained in any applicable prospectus supplement or any applicable free writing prospectus are qualified in their
entirety by reference to our restated certificate of incorporation and our bylaws.
Common
Stock
We
are authorized to issue 168,000,000 shares of common stock, par value $0.005 per share, of which 2,260,668 shares were issued
and outstanding as of December 16, 2016. Additional shares of authorized common stock may be issued, as authorized by our board
of directors from time to time, without stockholder approval, except as may be required by applicable securities exchange requirements.
The holders of common stock possess exclusive voting rights in us, except to the extent our board of directors specifies voting
power with respect to any other class of securities issued in the future. Each holder of our common stock is entitled to one vote
for each share held of record on each matter submitted to a vote of stockholders, including the election of directors. Stockholders
do not have any right to cumulate votes in the election of directors.
Subject
to preferences that may be granted to the holders of preferred stock, each holder of our common stock is entitled to share ratably
in distributions to stockholders and to receive ratably such dividends as may be declared by our board of directors out of funds
legally available therefor. In the event of our liquidation, dissolution or winding up, the holders of our common stock will be
entitled to receive, after payment of all of our debts and liabilities and of all sums to which holders of any preferred stock
may be entitled, the distribution of any of our remaining assets. Holders of our common stock have no conversion, exchange, sinking
fund or redemption rights and have no preemptive rights to subscribe for any of our securities.
All
of the outstanding shares of our common stock are fully paid and non-assessable. The shares of common stock offered by this prospectus
or upon the conversion of any preferred stock or debt securities or exercise of any warrants offered pursuant to this prospectus,
when issued and paid for, will also be, fully paid and non-assessable.
Securities
Exchange Listing
Our
common stock is listed on the NYSE MKT under the symbol “NTN.”
Transfer
Agent and Registrar
The
transfer agent and registrar for our common stock is American Stock Transfer & Trust Company.
Preferred
Stock
We
currently have authorized 10,000,000 shares of preferred stock, par value $0.005 per share, 5,000,000 of which have been designated
as Series A Convertible Preferred Stock, of which 156,112 are outstanding as of December 16, 2016.
Pursuant
to our restated certificate of incorporation, our board of directors has the authority to provide for the issuance, in one or
more series, of our authorized preferred stock and to fix or alter the rights, preferences, privileges and restrictions granted
to or imposed upon any series of our preferred stock. The rights, privileges, preferences and restrictions of any such series
of our preferred stock may be subordinated to, pari passu with (including, without limitation, inclusion in provisions with respect
to liquidation and acquisition preferences, redemption or approval of matters by vote or written consent), or senior to any of
those of any present or future class or series of preferred stock or common stock. Our board of directors is also expressly authorized
to increase or decrease the number of shares of any series prior or subsequent to the issue of that series, but not below the
number of shares of such series then outstanding. The issuance of preferred stock may have the effect of decreasing the market
price of our common stock and may adversely affect the voting power of holders of our common stock and reduce the likelihood that
holders of our common stock will receive dividend payments and payments upon liquidation.
The
particular terms of each class or series of preferred stock that we may offer under this prospectus, including redemption privileges,
liquidation preferences, voting rights, dividend rights and/or conversion rights, will be more fully described in the applicable
prospectus supplement relating to the preferred stock offered thereby. The rights, preferences, privileges and restrictions of
the preferred stock of each series will be fixed by the certificate of designation relating to each series. We will incorporate
by reference into the registration statement of which this prospectus is a part the form of any certificate of designation that
describes the terms of the series of preferred stock we are offering before the issuance of the related series of preferred stock.
The applicable prospectus supplement will specify the terms of the series of preferred stock we may offer, including, but not
limited to:
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distinctive designation and the maximum number of shares in the series;
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the
number of shares we are offering and purchase price per share;
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the
liquidation preference, if any;
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the
terms on which dividends, if any, will be paid;
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the
voting rights, if any, on the shares of the series;
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the
terms and conditions, if any, on which the shares of the series shall be convertible into, or exchangeable for, shares of
any other class or classes of capital stock;
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the
terms on which the shares may be redeemed, if at all;
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any
listing of the preferred stock on any securities exchange or market;
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a
discussion of any material or special United States federal income tax considerations applicable to the preferred stock; and
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any
or all other preferences, rights, restrictions, including restrictions on transferability, and qualifications of shares of
the series.
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The
issuance of preferred stock may delay, deter or prevent a change in control.
The
description of preferred stock above and the description of the terms of a particular series of preferred stock in any applicable
prospectus supplement are not complete. You should refer to the applicable certificate of designation for complete information.
The
DGCL provides that the holders of preferred stock will have the right to vote separately as a class on any proposal involving
fundamental changes in the rights of holders of that preferred stock. This right is in addition to any voting rights that may
be provided for in the applicable certificate of designation.
Anti-Takeover
Effects of Provisions of our Charter Documents and Delaware Law
Provisions
of the DGCL, our restated certificate of incorporation and our bylaws could make it more difficult to acquire us by means of a
tender offer, a proxy contest or otherwise, or to remove incumbent officers and directors. These provisions, summarized below,
are expected to discourage certain types of coercive takeover practices and takeover bids that our board of directors may consider
inadequate and to encourage persons seeking to acquire control of us to first negotiate with our board of directors. We believe
that the benefits of increased protection of our ability to negotiate with the proponent of an unfriendly or unsolicited proposal
to acquire or restructure us outweigh the disadvantages of discouraging takeover or acquisition proposals because, among other
things, negotiation of these proposals could result in an improvement of their terms. This summary does not purport to be complete
and is qualified in its entirety by reference to the DGCL and our restated certificate of incorporation and bylaws.
Certificate
of Incorporation and Bylaws
Preferred
Stock
. Under our restated certificate of incorporation, our board of directors has the power to authorize the issuance of
up to 10,000,000 shares of preferred stock, and to determine the price, rights, preferences, privileges and restrictions, including
voting rights, of those shares without further vote or action by our stockholders. As of December 16, 2016, 5,000,000 shares of
our authorized preferred stock have been designated as Series A Convertible Preferred Stock, of which 156,112 are outstanding.
The
issuance of preferred stock may:
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delay,
defer or prevent a change in control;
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discourage
bids for our common stock at a premium over the market price of our common stock;
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adversely
affect the voting and other rights of the holders of our common stock; and
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discourage
acquisition proposals or tender offers for our shares and, as a consequence, inhibit fluctuations in the market price of our
shares that could result from actual or rumored takeover attempts.
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Advance
Notice Requirement
. Stockholder nominations of individuals for election to our board of directors and stockholder proposals
of other matters to be brought before an annual meeting of our stockholders must comply with the advance notice procedures set
forth in our bylaws. Our bylaws provide that advance notice of a stockholder’s proposal must be delivered to our secretary
at our principal executive offices not less than 90 calendar days or more than 120 calendar days in advance of the anniversary
of the date the proxy statement for the previous year’s annual meeting of stockholders was released to our stockholders.
However, our bylaws also provide that in the event that no annual meeting was held in the previous year or the date of the annual
meeting is advanced by more than 30 days or delayed by more than 30 days after the anniversary of the previous year’s annual
meeting, this advance notice must be received no later than the close of business on the later of the 90th day before such annual
meeting or the 10th day following the day on which public announcement of the date of such meeting is first made.
Special
Meeting Requirements
. Our restated certificate of incorporation provides that except as required by law, special meetings
of stockholders may be called only by our board of directors acting pursuant to a resolution adopted by a majority of the entire
board of directors.
Stockholder
Action by Written Consent.
Our restated certificate of incorporation provides that stockholder action must be effected at
a duly called annual or special meeting of stockholders and may not be effected by written consent of stockholders.
No
Cumulative Voting
. Our restated certificate of incorporation does not include a provision for cumulative voting for directors.
Indemnification
.
Our restated certificate of incorporation and our bylaws provide that we will indemnify our officers and directors against losses
as they incur in investigations and legal proceedings resulting from their services to us, which may include service in connection
with takeover defense measures.
Removal
of Directors; Vacancies
. Our bylaws provide that directors may be removed from office, with our without cause, only by the
affirmative vote of the holders of at least 80% of our common stock, and that vacancies on our board of directors shall be filled
solely by the affirmative vote of the majority of the remaining directors then in office, even though less than a quorum of our
board of directors.
Amending
our Bylaws and Certain Provisions of our Restated Certificate of Incorporation
. The stockholder vote required to amend or
repeal the provisions in our bylaws is at least 66.6% of the voting power of our common stock. The stockholder vote required to
alter, amend or repeal the provisions in our restated certificate of incorporation requiring that special meetings of stockholders
be called only by our board of directors and prohibiting stockholder action by written consent or to adopt any provision inconsistent
with such provisions is at least 80% of the voting power of our common stock.
Delaware
Anti-Takeover Statute
We
are subject to Section 203 of the DGCL, an anti-takeover law. In general, Section 203 prohibits, with some exceptions, a publicly
held Delaware corporation from engaging in a “business combination” with any “interested stockholder”
for a period of three years following the date that stockholder became an interested stockholder, unless:
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prior
to that date, the board of directors of the corporation approved either the business combination or the transaction that resulted
in the stockholder becoming an interested stockholder;
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upon
consummation of the transaction that resulted in the stockholder becoming an interested stockholder, the interested stockholder
owned at least 85% of the voting stock of the corporation outstanding at the time the transaction commenced, excluding for
purposes of determining the number of shares of voting stock outstanding (but not the voting stock owned by the interested
stockholder) those shares owned by persons who are directors and officers and by excluding employee stock plans in which employee
participants do not have the right to determine whether shares held subject to the plan will be tendered in a tender or exchange
offer; or
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on
or subsequent to that date, the business combination is approved by the board of directors of the corporation and authorized
at an annual or special meeting of stockholders, and not by written consent, by the affirmative vote of at least 66-2/3% of
the outstanding voting stock that is not owned by the interested stockholder.
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Section
203 defines “business combination” to include any of the following:
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any
merger or consolidation involving the corporation and the interested stockholder;
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any
sale, transfer, pledge or other disposition of 10% or more of the assets of the corporation involving the interested stockholder;
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subject
to certain exceptions, any transaction that results in the issuance or transfer by the corporation of any stock of the corporation
to the interested stockholder;
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any
transaction involving the corporation that has the effect of increasing the proportionate share of the stock of any class
or series of the corporation beneficially owned by the interested stockholder; or
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the
receipt by the interested stockholder of the benefit of any loans, advances, guarantees, pledges or other financial benefits
provided by or through the corporation.
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In
general, Section 203 defines an “interested stockholder” as any person who, together with the person’s affiliates
and associates, beneficially owns, or within three years prior to the determination of interested stockholder status did beneficially
own, 15% or more of the outstanding voting stock of the corporation.
The
above provisions may deter a hostile takeover or delay a change in control of management or us.
DESCRIPTION
OF DEBT SECURITIES
General
The
debt securities that we may issue may constitute debentures, notes, bonds or other evidences of indebtedness of our company, and
may be issued in one or more series, which may include senior debt securities, subordinated debt securities and senior subordinated
debt securities. The particular terms of any series of debt securities we may offer, including the extent to which the general
terms set forth below may be applicable to a particular series, will be described in a prospectus supplement relating to such
series.
Debt
securities that we may issue may be issued under a senior indenture between us and a trustee, or a subordinated indenture between
us and a trustee (collectively, the “indentures”). We have filed forms of the indentures as exhibits to the registration
statement of which this prospectus is a part. Supplemental indentures and forms of debt securities containing the terms of the
debt securities being offered will be filed as exhibits to the registration statement of which this prospectus is a part or will
be incorporated by reference from reports that we file with the SEC.
THE
FOLLOWING DESCRIPTION IS A SUMMARY OF THE MATERIAL PROVISIONS OF THE INDENTURES. IT DOES NOT RESTATE THE INDENTURES IN THEIR ENTIRETY.
THE INDENTURES ARE GOVERNED BY THE TRUST INDENTURE ACT OF 1939. THE TERMS OF THE DEBT SECURITIES INCLUDE THOSE STATED IN THE INDENTURES
AND THOSE MADE PART OF THE INDENTURES BY REFERENCE TO THE TRUST INDENTURE ACT. WE URGE YOU TO READ THE INDENTURES BECAUSE THEY,
AND NOT THIS DESCRIPTION, DEFINE YOUR RIGHTS AS A HOLDER OF THE DEBT SECURITIES. EXCEPT AS WE MAY OTHERWISE INDICATE, THE TERMS
OF THE SENIOR INDENTURE AND THE SUBORDINATED INDENTURE ARE IDENTICAL.
The
indentures contain no covenant or provision which affords debt holders protection in the event of a highly leveraged transaction.
Information
You Will Find in the Prospectus Supplement
The
indentures provide that we may issue debt securities from time to time in one or more series by resolution of our board of directors
or by means of a supplemental indenture, and that we may denominate the debt securities and make them payable in foreign currencies.
The indentures do not limit the aggregate principal amount of debt securities that can be issued thereunder. We may specify a
maximum aggregate principal amount for the debt securities of any series. We will describe in the applicable prospectus supplement
the terms of the series of debt securities being offered, including:
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title;
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the
principal amount being offered, and if a series, the total amount authorized and the total amount outstanding;
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any
limit on the amount that may be issued;
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whether
or not we will issue the series of debt securities in global form, and, if so, the terms and who the depositary will be;
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the
maturity date;
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whether
and under what circumstances, if any, we will pay additional amounts on any debt securities held by a person who is not a
United States person for tax purposes, and whether we can redeem the debt securities if we have to pay such additional amounts;
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the
annual interest rate, which may be fixed or variable, or the method for determining the rate and the date interest will begin
to accrue, the dates interest will be payable and the regular record dates for interest payment dates or the method for determining
such dates;
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whether
or not the debt securities will be secured or unsecured, and the terms of any secured debt;
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the
terms of the subordination of any series of subordinated debt;
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the
place where payments will be payable;
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restrictions
on transfer, sale or other assignment, if any;
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our
right, if any, to defer payment of interest and the maximum length of any such deferral period;
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the
date, if any, after which, and the price at which, we may, at our option, redeem the series of debt securities pursuant to
any optional or provisional redemption provisions and the terms of those redemption provisions;
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the
date, if any, on which, and the price at which we are obligated, pursuant to any mandatory sinking fund or analogous fund
provisions or otherwise, to redeem, or at the holder’s option, to purchase, the series of debt securities and the currency
or currency unit in which the debt securities are payable;
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whether
the indenture will restrict our ability or the ability of our subsidiaries to:
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incur
additional indebtedness;
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issue
additional securities;
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create
liens;
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pay
dividends or make distributions in respect of our capital stock or the capital stock of our subsidiaries, or redeem capital
stock;
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place
restrictions on our subsidiaries’ ability to pay dividends, make distributions or transfer assets;
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make
investments or other restricted payments;
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sell
or otherwise dispose of assets;
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enter
into sale-leaseback transactions;
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engage
in transactions with stockholders or affiliates;
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issue
or sell stock of our subsidiaries;
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effect
a consolidation or merger;
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whether
the indenture will require us to maintain any interest coverage, fixed charge, cash flow-based, asset-based or other financial
ratios;
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a
discussion of certain material or special United States federal income tax considerations applicable to the debt securities;
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information
describing any book-entry features;
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provisions
for a sinking fund purchase or other analogous fund, if any;
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the
applicability of the provisions in the indenture on discharge;
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whether
the debt securities are to be offered at a price such that they will be deemed to be offered at an “original issue discount”
as defined in paragraph (a) of Section 1273 of the Internal Revenue Code of 1986, as amended;
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the
denominations in which we will issue the series of debt securities, if other than denominations of $1,000 and any integral
multiple thereof;
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the
currency of payment of debt securities if other than U.S. dollars and the manner of determining the equivalent amount in U.S.
dollars; and
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any
other specific terms, preferences, rights or limitations of, or restrictions on, the debt securities, including any additional
events of default or covenants provided with respect to the debt securities, and any terms that may be required by us or advisable
under applicable laws or regulations.
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Conversion
or Exchange Rights
We
will set forth in the applicable prospectus supplement the terms on which a series of debt securities may be convertible into
or exchangeable for our common stock, our preferred stock or other securities (including securities of a third-party). We will
include provisions as to whether conversion or exchange is mandatory, at the option of the holder or at our option. We may include
provisions pursuant to which the number of shares of our common stock, our preferred stock or other securities (including securities
of a third-party) that the holders of the series of debt securities receive would be subject to adjustment.
Consolidation,
Merger or Sale
Unless
we provide otherwise in the prospectus supplement applicable to a particular series of debt securities, the indentures will not
contain any covenant that restricts our ability to merge or consolidate, or sell, convey, transfer or otherwise dispose of all
or substantially all of our assets. However, any successor to or acquirer of such assets must assume all of our obligations under
the indentures or the debt securities, as appropriate. If the debt securities are convertible into or exchangeable for our other
securities or securities of other entities, the person with whom we consolidate or merge or to whom we sell all of our property
must make provisions for the conversion of the debt securities into securities that the holders of the debt securities would have
received if they had converted the debt securities before the consolidation, merger or sale.
Events
of Default under the Indentures
Unless
otherwise indicated in the applicable prospectus supplement, the following will be events of default under the indentures with
respect to each series of debt securities issued under the indenture:
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if
we fail to pay interest when due and payable and our failure continues for 90 days and the time for payment has not been extended;
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if
we fail to pay the principal, premium or sinking fund payment, if any, when due and payable at maturity, upon redemption or
repurchase or otherwise, and the time for payment has not been extended;
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if
we fail to observe or perform any other covenant contained in the debt securities or the indentures, other than a covenant
specifically relating to another series of debt securities, and our failure continues for 90 days after we receive notice
from the trustee or we and the trustee receive notice from the holders of at least 25% in aggregate principal amount of the
outstanding debt securities of the applicable series; and
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if
specified events of bankruptcy, insolvency or reorganization occur.
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We
will describe in each applicable prospectus supplement any additional events of default relating to the relevant series of debt
securities.
If
an event of default with respect to debt securities of any series occurs and is continuing, other than an event of default specified
in the last bullet point above, the trustee or the holders of at least 25% in aggregate principal amount of the outstanding debt
securities of that series, by notice to us in writing, and to the trustee if notice is given by such holders, may declare the
unpaid principal, premium, if any, and accrued interest, if any, due and payable immediately. If an event of default specified
in the last bullet point above occurs with respect to us, the unpaid principal, premium, if any, and accrued interest, if any,
of each issue of debt securities then outstanding shall be due and payable without any notice or other action on the part of the
trustee or any holder.
The
holders of a majority in principal amount of the outstanding debt securities of an affected series may waive any default or event
of default with respect to the series and its consequences, except defaults or events of default regarding payment of principal,
premium, if any, or interest, unless we have cured the default or event of default in accordance with the indenture. Any waiver
shall cure the default or event of default.
Subject
to the terms of the indentures, if an event of default under an indenture shall occur and be continuing, the trustee will be under
no obligation to exercise any of its rights or powers under such indenture at the request or direction of any of the holders of
the applicable series of debt securities, unless such holders have offered the trustee reasonable indemnity or security satisfactory
to it against any loss, liability or expense. The holders of a majority in principal amount of the outstanding debt securities
of any series will have the right to direct the time, method and place of conducting any proceeding for any remedy available to
the trustee, or exercising any trust or power conferred on the trustee, with respect to the debt securities of that series, provided
that:
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the
direction so given by the holder is not in conflict with any law or the applicable indenture; and
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subject
to its duties under the Trust Indenture Act, the trustee need not take any action that might involve it in personal liability
or might be unduly prejudicial to the holders not involved in the proceeding.
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The
indentures provide that if an event of default has occurred and is continuing, the trustee will be required in the exercise of
its powers to use the degree of care that a prudent person would use in the conduct of its own affairs. The trustee, however,
may refuse to follow any direction that conflicts with law or the indenture, or that the trustee determines is unduly prejudicial
to the rights of any other holder of the relevant series of debt securities, or that would involve the trustee in personal liability.
Prior to taking any action under the indentures, the trustee will be entitled to indemnification against all costs, expenses and
liabilities that would be incurred by taking or not taking such action.
A
holder of the debt securities of any series will have the right to institute a proceeding under the indentures or to appoint a
receiver or trustee, or to seek other remedies only if:
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the
holder has given written notice to the trustee of a continuing event of default with respect to that series;
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the
holders of at least 25% in aggregate principal amount of the outstanding debt securities of that series have made written
request, and such holders have offered reasonable indemnity to the trustee or security satisfactory to it against any loss,
liability or expense or to be incurred in compliance with instituting the proceeding as trustee; and
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the
trustee does not institute the proceeding, and does not receive from the holders of a majority in aggregate principal amount
of the outstanding debt securities of that series other conflicting directions within 90 days after the notice, request and
offer.
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These
limitations do not apply to a suit instituted by a holder of debt securities if we default in the payment of the principal, premium,
if any, or interest on, the debt securities, or other defaults that may be specified in the applicable prospectus supplement.
We
will periodically file statements with the trustee regarding our compliance with specified covenants in the indentures.
The
indentures provide that if a default occurs and is continuing and is actually known to a responsible officer of the trustee, the
trustee must mail to each holder notice of the default within the earlier of 90 days after it occurs and 30 days after it is known
by a responsible officer of the trustee or written notice of it is received by the trustee, unless such default has been cured
or waived. Except in the case of a default in the payment of principal or premium of or interest on any debt security or certain
other defaults specified in an indenture, the trustee shall be protected in withholding such notice if and so long as the board
of directors, the executive committee or a trust committee of directors, or responsible officers of the trustee, in good faith
determine that withholding notice is in the best interests of holders of the relevant series of debt securities.
Modification
of Indenture; Waiver
Subject
to the terms of the indenture for any series of debt securities that we may issue, we and the trustee may change an indenture
without the consent of any holders with respect to the following specific matters:
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to
fix any ambiguity, defect or inconsistency in the indenture;
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to
comply with the provisions described above under “—Consolidation, Merger or Sale”;
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to
comply with any requirements of the SEC in connection with the qualification of any indenture under the Trust Indenture Act;
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to
add to, delete from or revise the conditions, limitations, and restrictions on the authorized amount, terms, or purposes of
issue, authentication and delivery of debt securities, as set forth in the indenture;
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to
provide for the issuance of and establish the form and terms and conditions of the debt securities of any series as provided
under “Description of Debt Securities — General,” to establish the form of any certifications required to
be furnished pursuant to the terms of the indenture or any series of debt securities, or to add to the rights of the holders
of any series of debt securities;
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to
evidence and provide for the acceptance of appointment hereunder by a successor trustee;
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to
provide for uncertificated debt securities and to make all appropriate changes for such purpose;
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to
add to our covenants such new covenants, restrictions, conditions or provisions for the benefit of the holders, to make the
occurrence, or the occurrence and the continuance, of a default in any such additional covenants, restrictions, conditions
or provisions an event of default or to surrender any right or power conferred to us in the indenture; or
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to
change anything that does not adversely affect the interests of any holder of debt securities of any series in any material
respect.
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In
addition, under the indentures, the rights of holders of a series of debt securities may be changed by us and the trustee with
the written consent of the holders of at least a majority in aggregate principal amount of the outstanding debt securities of
each series that is affected. However, subject to the terms of the indenture for any series of debt securities that we may issue
or otherwise provided in the prospectus supplement applicable to a particular series of debt securities, we and the trustee may
only make the following changes with the consent of each holder of any outstanding debt securities affected:
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extending
the stated maturity of the series of debt securities;
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reducing
the principal amount, reducing the rate of or extending the time of payment of interest, or reducing any premium payable upon
the redemption or repurchase of any debt securities; or
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reducing
the percentage of debt securities, the holders of which are required to consent to any amendment, supplement, modification
or waiver.
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Discharge
Each
indenture provides that, subject to the terms of the indenture and any limitation otherwise provided in the prospectus supplement
applicable to a particular series of debt securities, we can elect to be discharged from our obligations with respect to one or
more series of debt securities, except for specified obligations, including obligations to:
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register
the transfer or exchange of debt securities of the series;
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replace
stolen, lost or mutilated debt securities of the series;
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maintain
paying agencies;
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hold
monies for payment in trust;
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recover
excess money held by the trustee;
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compensate
and indemnify the trustee; and
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appoint
any successor trustee.
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In
order to exercise our rights to be discharged, we must deposit with the trustee money or government obligations sufficient to
pay all the principal of, any premium and interest on, the debt securities of the series on the dates payments are due.
Form,
Exchange and Transfer
We
will issue the debt securities of each series only in fully registered form without coupons and, unless we otherwise specify in
the applicable prospectus supplement, in denominations of $1,000 and any integral multiple thereof. The indentures provide that
we may issue debt securities of a series in temporary or permanent global form and as book-entry securities that will be deposited
with, or on behalf of, The Depository Trust Company or another depositary named by us and identified in a prospectus supplement
with respect to that series. See “Legal Ownership of Securities” below for a further description of the terms relating
to any book-entry securities.
At
the option of the holder, subject to the terms of the indentures and the limitations applicable to global securities described
in the applicable prospectus supplement, the holder of the debt securities of any series can exchange the debt securities for
other debt securities of the same series, in any authorized denomination and of like tenor and aggregate principal amount.
Subject
to the terms of the indentures and the limitations applicable to global securities set forth in the applicable prospectus supplement,
holders of the debt securities may present the debt securities for exchange or for registration of transfer, duly endorsed or
with the form of transfer endorsed thereon duly executed if so required by us or the security registrar, at the office of the
security registrar or at the office of any transfer agent designated by us for this purpose. Unless otherwise provided in the
debt securities that the holder presents for transfer or exchange, we will make no service charge for any registration of transfer
or exchange, but we may require payment of any taxes or other governmental charges.
We
will name in the applicable prospectus supplement the security registrar, and any transfer agent in addition to the security registrar,
that we initially designate for any debt securities. We may at any time designate additional transfer agents or rescind the designation
of any transfer agent or approve a change in the office through which any transfer agent acts, except that we will be required
to maintain a transfer agent in each place of payment for the debt securities of each series.
If
we elect to redeem the debt securities of any series, we will not be required to:
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issue,
register the transfer of, or exchange any debt securities of that series during a period beginning at the opening of business
15 days before the day of mailing of a notice of redemption of any debt securities that may be selected for redemption and
ending at the close of business on the day of the mailing; or
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register
the transfer of or exchange any debt securities so selected for redemption, in whole or in part, except the unredeemed portion
of any debt securities we are redeeming in part.
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Information
Concerning the Trustee
The
trustee, other than during the occurrence and continuance of an event of default under an indenture, undertakes to perform only
those duties as are specifically set forth in the applicable indenture and is under no obligation to exercise any of the powers
given it by the indentures at the request of any holder of debt securities unless it is offered reasonable security and indemnity
against the costs, expenses and liabilities that it might incur. However, upon an event of default under an indenture, the trustee
must use the same degree of care as a prudent person would exercise or use in the conduct of his or her own affairs.
Payment
and Paying Agents
Unless
we otherwise indicate in the applicable prospectus supplement, we will make payment of the interest on any debt securities on
any interest payment date to the person in whose name the debt securities, or one or more predecessor securities, are registered
at the close of business on the regular record date for the interest.
We
will pay principal of and any premium and interest on the debt securities of a particular series at the office of the paying agents
designated by us, except that unless we otherwise indicate in the applicable prospectus supplement, we will make interest payments
by check that we will mail to the holder or by wire transfer to certain holders. Unless we otherwise indicate in the applicable
prospectus supplement, we will designate the corporate trust office of the trustee as our sole paying agent for payments with
respect to debt securities of each series. We will name in the applicable prospectus supplement any other paying agents that we
initially designate for the debt securities of a particular series. We will maintain a paying agent in each place of payment for
the debt securities of a particular series.
All
money we pay to a paying agent or the trustee for the payment of the principal of or any premium or interest on any debt securities
that remains unclaimed at the end of two years after such principal, premium or interest has become due and payable will be repaid
to us, and the holder of the debt security thereafter may look only to us for payment thereof.
Governing
Law
The
indentures and the debt securities will be governed by and construed in accordance with the laws of the State of New York, except
to the extent that the Trust Indenture Act is applicable.
Ranking
Debt Securities
The
subordinated debt securities will be unsecured and will be subordinate and junior in priority of payment to certain other indebtedness
to the extent described in a prospectus supplement. The subordinated indenture does not limit the amount of subordinated debt
securities that we may issue. It also does not limit us from issuing any other secured or unsecured debt.
The
senior debt securities will be unsecured and will rank equally in right of payment to all our other senior unsecured debt. The
senior indenture does not limit the amount of senior debt securities that we may issue. It also does not limit us from issuing
any other secured or unsecured debt.
Existing
Debt
As
of December 16, 2016, we had approximately $1.6 million existing subordinated debt and approximately $6.5 million secured debt.
DESCRIPTION
OF WARRANTS
We
may issue warrants for the purchase of common stock, preferred stock or debt securities. Warrants may be offered independently
or together with common stock, preferred stock or debt securities offered by any prospectus supplement and may be attached to
or separate from those securities. While the terms we have summarized below will apply generally to any warrants that we may offer
under this prospectus, we will describe in particular the terms of any series of warrants that we may offer in more detail in
the applicable prospectus supplement and any applicable free writing prospectus. The terms of any warrants offered under a prospectus
supplement may differ from the terms described below.
We
will file as an exhibit to the registration statement of which this prospectus is a part, or will incorporate by reference from
another report that we file with the SEC, the form of warrant agreement, which may include a form of warrant certificate, that
describes the terms of the particular series of warrants we may offer before the issuance of the related series of warrants. We
may issue the warrants under a warrant agreement that we will enter into with a warrant agent to be selected by us. The warrant
agent will act solely as our agent in connection with the warrants and will not assume any obligation or relationship of agency
or trust for or with any registered holders of warrants or beneficial owners of warrants. The following summary of material provisions
of the warrants and warrant agreements are subject to, and qualified in their entirety by reference to, all the provisions of
the warrant agreement and warrant certificate applicable to a particular series of warrants. We urge you to read the applicable
prospectus supplement and any applicable free writing prospectus, as well as the complete warrant agreements and warrant certificates
that contain the terms of the warrants.
The
particular terms of any issue of warrants will be described in the prospectus supplement relating to the issue. Those terms may
include:
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the
title of such warrants;
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the
aggregate number of such warrants;
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the
price or prices at which such warrants will be issued;
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the
currency or currencies (including composite currencies) in which the price of such warrants may be payable;
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the
terms of the securities purchasable upon exercise of such warrants and the procedures and conditions relating to the exercise
of such warrants;
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the
price at which the securities purchasable upon exercise of such warrants may be purchased;
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the
date on which the right to exercise such warrants will commence and the date on which such right shall expire;
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any
provisions for adjustment of the number or amount of securities receivable upon exercise of the warrants or the exercise price
of the warrants;
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if
applicable, the minimum or maximum amount of such warrants that may be exercised at any one time;
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if
applicable, the designation and terms of the securities with which such warrants are issued and the number of such warrants
issued with each such security;
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if
applicable, the date on and after which such warrants and the related securities will be separately transferable;
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information
with respect to book-entry procedures, if any;
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the
terms of any rights to redeem or call the warrants;
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United
States federal income tax consequences of holding or exercising the warrants, if material; and
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any
other terms of such warrants, including terms, procedures and limitations relating to the exchange or exercise of such warrants.
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Each
warrant will entitle its holder to purchase the principal amount of debt securities or the number of shares of preferred stock
or common stock at the exercise price set forth in, or calculable as set forth in, the applicable prospectus supplement. Unless
we otherwise specify in the applicable prospectus supplement, holders of the warrants may exercise the warrants at any time up
to the specified time on the expiration date that we set forth in the applicable prospectus supplement. After the close of business
on the expiration date, unexercised warrants will become void.
We
will specify the place or places where, and the manner in which, warrants may be exercised in the warrant agreement or warrant
certificate and applicable prospectus supplement. Upon receipt of payment and the warrant certificate properly completed and duly
executed at the corporate trust office of the warrant agent or any other office indicated in the applicable prospectus supplement,
we will, as soon as practicable, issue and deliver the purchased securities. If less than all of the warrants represented by the
warrant certificate are exercised, a new warrant certificate will be issued for the remaining amount of warrants. If we so indicate
in the applicable prospectus supplement, holders of the warrants may surrender securities as all or part of the exercise price
for warrants.
Prior
to the exercise of any warrants to purchase common stock, preferred stock or debt securities, holders of the warrants will not
have any of the rights of holders of the common stock, preferred stock or debt securities purchasable upon exercise, including
(i) in the case of warrants for the purchase of common stock or preferred stock, the right to vote or to receive any payments
of dividends or payments upon our liquidation, dissolution or winding up on the common stock or preferred stock purchasable upon
exercise, if any; or (ii) in the case of warrants for the purchase of debt securities, the right to receive payments of principal
of, any premium or interest on the debt securities purchasable upon exercise or to enforce covenants in the applicable indenture.
As
of December 16, 2016, there were outstanding warrants to purchase 132,000 shares of our common stock.
DESCRIPTION
OF UNITS
The
following description, together with the additional information we may include in any applicable prospectus supplement, summarizes
the material terms and provisions of the units that we may offer under this prospectus. While the terms we have summarized below
will apply generally to any units that we may offer under this prospectus, we will describe the particular terms of any series
of units in more detail in the applicable prospectus supplement and any applicable free writing prospectus. The terms of any units
offered under a prospectus supplement may differ from the terms described below. However, no prospectus supplement will fundamentally
change the terms that are set forth in this prospectus or offer a security that is not registered and described in this prospectus
at the time of its effectiveness.
We
will file as an exhibit to the registration statement of which this prospectus is a part, or will incorporate by reference from
another report we file with the SEC, the form of unit agreement that describes the terms of the series of units we may offer under
this prospectus, and any supplemental agreements, before the issuance of the related series of units. The following summaries
of material terms and provisions of the units are subject to, and qualified in their entirety by reference to, all the provisions
of the unit agreement and any supplemental agreements applicable to a particular series of units. We urge you to read the applicable
prospectus supplement and any applicable free writing prospectus, as well as the complete unit agreement and any supplemental
agreements that contain the terms of the units.
General
We
may issue units comprised of one or more debt securities, shares of common stock, shares of preferred stock and warrants in any
combination. Each unit will be issued so that the holder of the unit is also the holder of each security included in the unit.
Thus, the holder of a unit will have the rights and obligations of a holder of each included security. The unit agreement under
which a unit is issued may provide that the securities included in the unit may not be held or transferred separately, at any
time or at any time before a specified date.
We
will describe in the applicable prospectus supplement the terms of the series of units, including, but not limited to:
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the
designation and terms of the units and of the securities comprising the units, including whether and under what circumstances
those securities may be held or transferred separately;
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any
provisions of the governing unit agreement that differ from those described below; and
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any
provisions for the issuance, payment, settlement, transfer or exchange of the units or of the securities comprising the units.
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The
provisions described in this section, as well as those described under “Description of Common Stock and Preferred Stock,”
“Description of Debt Securities” and “Description of Warrants” will apply to each unit and to any common
stock, preferred stock, debt security or warrant included in each unit, respectively.
Issuance
in Series
We
may issue units in such amounts and in numerous distinct series as we determine.
Enforceability
of Rights by Holders of Units
Each
unit agent will act solely as our agent under the applicable unit agreement and will not assume any obligation or relationship
of agency or trust with any holder of any unit. A single bank or trust company may act as unit agent for more than one series
of units. A unit agent will have no duty or responsibility in case of any default by us under the applicable unit agreement or
unit, including any duty or responsibility to initiate any proceedings at law or otherwise, or to make any demand upon us. Any
holder of a unit may, without the consent of the related unit agent or the holder of any other unit, enforce by appropriate legal
action its rights as holder under any security included in the unit.
We,
the unit agents and any of their agents may treat the registered holder of any unit certificate as an absolute owner of the units
evidenced by that certificate for any purpose and as the person entitled to exercise the rights attaching to the units so requested,
despite any notice to the contrary.
LEGAL
OWNERSHIP OF SECURITIES
We
can issue securities in registered form or in the form of one or more global securities. We describe global securities in greater
detail below. We refer to those persons who have securities registered in their own names on the books that we or any applicable
trustee or depositary or warrant agent maintain for this purpose as the “holders” of those securities. These persons
are the legal holders of the securities. We refer to those persons who, indirectly through others, own beneficial interests in
securities that are not registered in their own names, as “indirect holders” of those securities. As we discuss below,
indirect holders are not legal holders, and investors in securities issued in book-entry form or in “street name”
will be indirect holders.
Book-Entry
Holders
We
may issue securities in book-entry form only, as we will specify in the applicable prospectus supplement. This means securities
may be represented by one or more global securities registered in the name of a financial institution that holds them as depositary
on behalf of other financial institutions that participate in the depositary’s book-entry system. These participating institutions,
which are referred to as participants, in turn, hold beneficial interests in the securities on behalf of themselves or their customers.
Only
the person in whose name a security is registered is recognized as the holder of that security. Global securities will be registered
in the name of the depositary. Consequently, for global securities, we will recognize only the depositary as the holder of the
securities, and we will make all payments on the securities to the depositary. The depositary passes along the payments it receives
to its participants, which in turn pass the payments along to their customers who are the beneficial owners. The depositary and
its participants do so under agreements they have made with one another or with their customers; they are not obligated to do
so under the terms of the securities.
As
a result, investors in a global security will not own securities directly. Instead, they will own beneficial interests in a global
security, through a bank, broker or other financial institution that participates in the depositary’s book-entry system
or holds an interest through a participant. As long as the securities are issued in global form, investors will be indirect holders,
and not legal holders, of the securities.
Street
Name Holders
We
may terminate a global security or issue securities that are not issued in global form. In these cases, investors may choose to
hold their securities in their own names or in “street name.” Securities held by an investor in street name would
be registered in the name of a bank, broker or other financial institution that the investor chooses, and the investor would hold
only a beneficial interest in those securities through an account he or she maintains at that institution.
For
securities held in street name, we or any applicable trustee or depositary will recognize only the intermediary banks, brokers
and other financial institutions in whose names the securities are registered as the holders of those securities, and we or any
such trustee or depositary will make all payments on those securities to them. These institutions pass along the payments they
receive to their customers who are the beneficial owners, but only because they agree to do so in their customer agreements or
because they are legally required to do so. Investors who hold securities in street name will be indirect holders, not legal holders,
of those securities.
Legal
Holders
Our
obligations, as well as the obligations of any applicable trustee or third party employed by us or a trustee, run only to the
legal holders of the securities. We do not have obligations to investors who hold beneficial interests in global securities, in
street name or by any other indirect means. This will be the case whether an investor chooses to be an indirect holder of a security
or has no choice because we are issuing the securities only in global form.
For
example, once we make a payment or give a notice to the legal holder, we have no further responsibility for the payment or notice
even if that holder is required, under agreements with its participants or customers or by law, to pass it along to the indirect
holders but does not do so. Similarly, we may want to obtain the approval of the legal holders to amend an indenture, to relieve
us of the consequences of a default or of our obligation to comply with a particular provision of an indenture, or for other purposes.
In such an event, we would seek approval only from the legal holders, and not the indirect holders, of the securities. Whether
and how the legal holders contact the indirect holders is up to the legal holders.
Special
Considerations for Indirect Holders
If
you hold securities through a bank, broker or other financial institution, either in book-entry form because the securities are
represented by one or more global securities or in street name, you should check with your own institution to find out:
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how
it handles securities payments and notices;
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whether
it imposes fees or charges;
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how
it would handle a request for the legal holders’ consent, if ever required;
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whether
and how you can instruct it to send you securities registered in your own name so you can be a legal holder, if that is permitted
in the future;
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how
it would exercise rights under the securities if there were a default or other event triggering the need for legal holders
to act to protect their interests; and
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if
the securities are in book-entry form, how the depositary’s rules and procedures will affect these matters.
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Global
Securities
A
global security is a security that represents one or any other number of individual securities held by a depositary. Generally,
all securities represented by the same global securities will have the same terms.
Each
security issued in book-entry form will be represented by a global security that we issue to, deposit with and register in the
name of a financial institution or its nominee that we select. The financial institution that we select for this purpose is called
the depositary. Unless we specify otherwise in the applicable prospectus supplement, The Depository Trust Company, New York, New
York, known as DTC, will be the depositary for all securities issued in book-entry form.
A
global security may not be transferred to or registered in the name of anyone other than the depositary, its nominee or a successor
depositary, unless special termination situations arise. We describe those situations below under “—Special Situations
When A Global Security Will Be Terminated.” As a result of these arrangements, the depositary, or its nominee, will be the
sole registered owner and legal holder of all securities represented by a global security, and investors will be permitted to
own only beneficial interests in a global security. Beneficial interests must be held by means of an account with a broker, bank
or other financial institution that in turn has an account with the depositary or with another institution that does. Thus, an
investor whose security is represented by a global security will not be a legal holder of the security, but only an indirect holder
of a beneficial interest in the global security.
If
the prospectus supplement for a particular security indicates that the security will be issued as a global security, then the
security will be represented by a global security at all times unless and until the global security is terminated. If termination
occurs, we may issue the securities through another book-entry clearing system or decide that the securities may no longer be
held through any book-entry clearing system.
Special
Considerations For Global Securities
As
an indirect holder, an investor’s rights relating to a global security will be governed by the account rules of the investor’s
financial institution and of the depositary, as well as general laws relating to securities transfers. We do not recognize an
indirect holder as a holder of securities and instead deal only with the depositary that holds the global security.
If
securities are issued only as global securities, an investor should be aware of the following:
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an
investor cannot cause the securities to be registered in his or her name, and cannot obtain non-global certificates for his
or her interest in the securities, except in the special situations we describe below;
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an
investor will be an indirect holder and must look to his or her own bank or broker for payments on the securities and protection
of his or her legal rights relating to the securities, as we describe above;
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an
investor may not be able to sell interests in the securities to some insurance companies and to other institutions that are
required by law to own their securities in non-book-entry form;
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an
investor may not be able to pledge his or her interest in the global security in circumstances where certificates representing
the securities must be delivered to the lender or other beneficiary of the pledge in order for the pledge to be effective;
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the
depositary’s policies, which may change from time to time, will govern payments, transfers, exchanges and other matters
relating to an investor’s interest in the global security. We and any applicable trustee have no responsibility for
any aspect of the depositary’s actions or for its records of ownership interests in the global security. We and the
trustee also do not supervise the depositary in any way;
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the
depositary may, and we understand that DTC will, require that those who purchase and sell interests in the global security
within its book-entry system use immediately available funds, and your broker or bank may require you to do so as well; and
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financial
institutions that participate in the depositary’s book-entry system, and through which an investor holds its interest
in the global security, may also have their own policies affecting payments, notices and other matters relating to the securities.
There may be more than one financial intermediary in the chain of ownership for an investor. We do not monitor and are not
responsible for the actions of any of those intermediaries.
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Special
Situations When a Global Security Will Be Terminated
In
a few special situations described below, a global security will terminate and interests in it will be exchanged for physical
certificates representing those interests. After that exchange, the choice of whether to hold securities directly or in street
name will be up to the investor. Investors must consult their own banks or brokers to find out how to have their interests in
securities transferred to their own names, so that they will be direct holders. We have described the rights of holders and street
name investors above.
A
global security will terminate when the following special situations occur:
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if
the depositary notifies us that it is unwilling, unable or no longer qualified to continue as depositary for that global security
and we do not appoint another institution to act as depositary within 90 days;
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if
we notify any applicable trustee that we wish to terminate that global security; or
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if
an event of default has occurred with regard to securities represented by that global security and has not been cured or waived.
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The
applicable prospectus supplement may also list additional situations for terminating a global security that would apply only to
the particular series of securities covered by the prospectus supplement. When a global security terminates, the depositary, and
neither we nor any applicable trustee, is responsible for deciding the names of the institutions that will be the initial direct
holders.
PLAN
OF DISTRIBUTION
We
may sell the securities to or through underwriters or dealers, through agents, or directly to one or more purchasers. A prospectus
supplement or supplements (and any applicable free writing prospectus that we may authorize to be provided to you) will describe
the terms of the offering of the securities, including, to the extent applicable:
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the
name or names of any agents or underwriters;
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the
purchase price of the securities being offered and the proceeds we will receive from the sale;
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any
over-allotment options under which underwriters may purchase additional securities from us;
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any
agency fees or underwriting discounts and other items constituting agents’ or underwriters’ compensation;
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any
public offering price;
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any
discounts or concessions allowed or reallowed or paid to dealers; and
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any
securities exchanges or markets on which such securities may be listed.
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We
may distribute the securities from time to time in one or more transactions at:
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fixed
price or prices, which may be changed from time to time;
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market
prices prevailing at the time of sale;
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prices
related to such prevailing market prices; or
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negotiated
prices.
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Agents
We
may designate agents who agree to use their reasonable efforts to solicit purchases of our securities for the period of their
appointment or to sell our securities on a continuing basis. We will name any agent involved in the offering and sale of securities
and we will describe any commissions we will pay the agent in the applicable prospectus supplement.
Underwriters
If
we use underwriters for a sale of securities, the underwriters will acquire the securities for their own account. The underwriters
may resell the securities in one or more transactions, including negotiated transactions, at a fixed public offering price or
at varying prices determined at the time of sale. The obligations of the underwriters to purchase the securities will be subject
to the conditions set forth in the applicable underwriting agreement. Subject to certain conditions, the underwriters will be
obligated to purchase all the securities of the series offered if they purchase any of the securities of that series. We may change
from time to time any public offering price and any discounts or concessions the underwriters allow or reallow or pay to dealers.
We may use underwriters with whom we have a material relationship. We will describe the nature of any such relationship in any
applicable prospectus supplement naming any such underwriter. Only underwriters we name in the prospectus supplement are underwriters
of the securities offered by the prospectus supplement.
We
may provide agents and underwriters with indemnification against civil liabilities related to offerings under this prospectus,
including liabilities under the Securities Act, or contribution with respect to payments that the agents or underwriters may make
with respect to these liabilities.
Direct
Sales
We
may also sell securities directly to one or more purchasers without using underwriters or agents. Underwriters, dealers and agents
that participate in the distribution of the securities may be underwriters as defined in the Securities Act, and any discounts
or commissions they receive from us and any profit on their resale of the securities may be treated as underwriting discounts
and commissions under the Securities Act. We will identify in the applicable prospectus supplement any underwriters, dealers or
agents and will describe their compensation. We may have agreements with the underwriters, dealers and agents to indemnify them
against specified civil liabilities, including liabilities under the Securities Act. Underwriters, dealers and agents may engage
in transactions with or perform services for us in the ordinary course of their businesses.
Trading
Markets and Listing of Securities
Unless
otherwise specified in the applicable prospectus supplement, each class or series of securities will be a new issue with no established
trading market, other than our common stock, which is currently listed on the NYSE MKT. We may elect to list any other class or
series of securities on any exchange or market, but we are not obligated to do so. It is possible that one or more underwriters
may make a market in a class or series of securities, but the underwriters will not be obligated to do so and may discontinue
any market making at any time without notice. We cannot give any assurance as to the liquidity of the trading market for any of
the securities.
Stabilization
Activities
Any
underwriter may engage in overallotment, stabilizing transactions, short covering transactions and penalty bids in accordance
with Regulation M under the Exchange Act. Overallotment involves sales in excess of the offering size, which create a short position.
Stabilizing transactions permit bids to purchase the underlying security so long as the stabilizing bids do not exceed a specified
maximum. Short covering transactions involve purchases of the securities in the open market after the distribution is completed
to cover short positions. Penalty bids permit the underwriters to reclaim a selling concession from a dealer when the securities
originally sold by the dealer are purchased in a covering transaction to cover short positions. Those activities may cause the
price of the securities to be higher than it would otherwise be. If commenced, the underwriters may discontinue any of these activities
at any time.
Passive
Market Making
Any
underwriters who are qualified market makers on the NYSE MKT may engage in passive market making transactions in the securities
on the NYSE MKT in accordance with Rule 103 of Regulation M, during the business day prior to the pricing of the offering, before
the commencement of offers or sales of the securities. Passive market makers must comply with applicable volume and price limitations
and must be identified as passive market makers. In general, a passive market maker must display its bid at a price not in excess
of the highest independent bid for such security. If all independent bids are lowered below the passive market maker’s bid,
however, the passive market maker’s bid must then be lowered when certain purchase limits are exceeded.
FINRA
Matters
In
compliance with the guidelines of the Financial Regulatory Authority, or FINRA, the maximum aggregate value of all compensation
to be received by any FINRA member or independent broker-dealer will not exceed 8% of the gross proceeds from the sale of securities
pursuant to this prospectus and any applicable prospectus supplement.
If
more than 10% of the net proceeds of any offering of securities made under this prospectus will be received by FINRA members participating
in the offering or affiliates or associated persons of such FINRA members, the offering will be conducted in accordance with FINRA
Conduct Rule 5110(h).
LEGAL
MATTERS
The
validity of the securities being offered by this prospectus will be passed upon for us by Breakwater Law Group, LLP, Del Mar,
California. If the validity of any securities is also passed upon by counsel any underwriters, dealers or agents, that counsel
will be named in the prospectus supplement relating to that specific offering.
EXPERTS
The consolidated
financial statements of NTN Buzztime, Inc. as of December 31, 2015 and for each of the years in the two year period ended
December 31, 2015 incorporated in this Prospectus by reference from the NTN Buzztime, Inc. Annual Report on Form 10-K for the
year ended December 31, 2015 have been audited by Squar Milner LLP, an independent registered public accounting firm, as
stated in their report thereon, incorporated herein by reference, and have been incorporated in this Prospectus and
Registration Statement in reliance upon such report and upon the authority of such firm as experts in accounting and
auditing.
INFORMATION
INCORPORATED BY REFERENCE
The
SEC allows us to “incorporate by reference” into this prospectus the information we file with the SEC. This means
that we can disclose important information to you by referring you to those documents. Any statement contained in a document incorporated
by reference in this prospectus shall be deemed to be modified or superseded for purposes of this prospectus to the extent that
a statement contained herein, or in any subsequently filed document, which also is incorporated by reference herein, modifies
or supersedes such earlier statement. Any such statement so modified or superseded shall not be deemed, except as so modified
or superseded, to constitute a part of this prospectus.
We
hereby incorporate by reference into this prospectus the following documents that we have filed with the SEC under the Exchange
Act File No. 001-11460 (other than current reports on Form 8-K, or portions thereof, furnished under Items 2.02 or 7.01 of Form
8-K):
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our
Annual Report on Form 10-K for the fiscal year ended December 31, 2015, filed with the SEC on March 15, 2016;
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those
portions of our Definitive Proxy Statement on Schedule 14A deemed incorporated into our Annual Report on Form 10-K for the
fiscal year ended December 31, 2015, filed with the SEC on April 22, 2016;
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our
Quarterly Reports on Form 10-Q for the fiscal quarters ended March 31, 2016, June 30, 2016 and September 30, 2016 filed with
the SEC on May 9, 2016, August 4, 2016 and November 9, 2016, respectively;
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our
Current Reports on Form 8-K filed with the SEC on January 22, 2016, January 28, 2016, February 2, 2016, February 11, 2016,
February 29, 2016, March 11, 2016 (as amended by our Form 8-K/A filed on March 14, 2016), March 16, 2016, April 13, 2016, May
12, 2016, June 7, 2016, June 17, 2016, September 7, 2016, November 1, 2016, November 4, 2016 and December 7, 2016; and
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the
description of our common stock contained in our registration statement on Form 8-A, registering our common stock under the
Exchange Act, filed with the SEC on October 14, 1992, pursuant to Section 12 of the Exchange Act, including any amendment
or report filed for the purpose of updating such description.
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All
documents that we file with the SEC pursuant to Section 13(a), 13(c), 14 or 15(d) of the Exchange Act (other than current reports
on Form 8-K, or portions thereof, furnished under Items 2.02 or 7.01 of Form 8-K) (i) after the initial filing date of the registration
statement of which this prospectus forms a part and prior to the effectiveness of such registration statement and (ii) after the
date of this prospectus and prior to the termination of the offering shall be deemed to be incorporated by reference in this prospectus
from the date of filing of the documents, unless we specifically provide otherwise. Information that we file with the SEC will
automatically update and may replace information previously filed with the SEC. To the extent that any information contained in
any current report on Form 8-K or any exhibit thereto, was or is furnished to, rather than filed with the SEC, such information
or exhibit is specifically not incorporated by reference.
Upon
written or oral request made to us at the address or telephone number below, we will, at no cost to the requester, provide to
each person, including any beneficial owner, to whom this prospectus is delivered, a copy of any or all of the information that
has been incorporated by reference in this prospectus (other than an exhibit to a filing, unless that exhibit is specifically
incorporated by reference into that filing), but not delivered with this prospectus. You may also access this information on our
website at http://www.buzztime.com/investor-relations/-sec-filings.html. No additional information on our website is deemed to
be part of or incorporated by reference into this prospectus. We have included our website address in this prospectus solely as
an inactive textual reference.
NTN
Buzztime, Inc.
2231
Rutherford Road, Suite 200
Carlsbad,
California 92008
(760)
438-7400
Attention:
Corporate Secretary
WHERE
YOU CAN FIND MORE INFORMATION
As
permitted by SEC rules, this prospectus omits certain information that is included in the registration statement of which this
prospectus forms a part and its exhibits. Since this prospectus may not contain all of the information that you may find important,
you should review the full text of these documents. If we have filed a contract, agreement or other document as an exhibit to
the registration statement of which this prospectus forms a part, you should read the exhibit for a more complete understanding
of the document or matter involved. Each statement in this prospectus, including statements incorporated by reference as discussed
above, regarding a contract, agreement or other document is qualified in its entirety by reference to the actual document.
We
are subject to the information reporting requirements of the Exchange Act, and, in accordance with these requirements, we file
annual, quarterly and current reports, proxy statements, and other information with the SEC. You may inspect, read and copy the
reports and other information we file with the SEC at the SEC’s Public Reference Room located at 100 F Street, N.E., Washington,
D.C. You may obtain information on the operation of the Public Reference Room by calling the SEC at 1-800-SEC-0330. The SEC also
maintains an internet website at http://www.sec.gov that contains our filed reports, proxy and information statements, and other
information that we file electronically with the SEC. Additionally, we make these filings available, free of charge, on our website
at http://www.buzztime.com/investor-relations/-sec-filings.html as soon as reasonably practicable after we electronically file
such materials with, or furnish them to, the SEC. The information on our website, other than these filings, is not, and should
not be, considered part of this prospectus, is not incorporated by reference into this prospectus, and should not be relied upon
in connection with making any investment decision with respect to our securities.
NTN
Buzztime, Inc.
Common
Stock
PROSPECTUS
SUPPLEMENT
Roth
Capital Partners
June
[__], 2018
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