CARLSBAD, Calif., May 19, 2020 /PRNewswire/ -- NTN Buzztime,
Inc. (NYSE American: NTN), reported financial results for the
first quarter ended March 31,
2020.
Allen Wolff, CEO, said, "We
started 2020 focused on growing our business in an efficient
manner. Shifting the Buzztime network to a mobile-based,
capital-light solution complemented with an expanded programmatic
advertising platform increased the scalability of our business. In
the first quarter of 2020, we were gaining traction, as evidenced
by sequential increases in quarterly advertising revenue, until we,
like many businesses in and around the restaurant and bar industry,
were adversely impacted by the COVID-19 pandemic. As a result of
government orders to shelter-in-place to help stop the spread of
COVID-19, approximately 70% our sites temporarily requested billing
freezes, significantly impacting our revenue streams. While it is
uncertain when, or if, these sites will resume their subscriptions
with us, we are encouraged that some states began to lift
restrictions in early May, and a small number of our customers
proactively reinstated their service and billing as Buzztime is a
key part of their venue offering.
"With the onset of the pandemic, we took immediate and decisive
action to further reduce expenses. To engage our players, we
quickly expanded our mobile app connectivity and launched
out-of-venue gaming. This transition had a significant increase on
mobile gameplay and Daily Active User engagement from March to
April.
"There is no doubt that 2020 will be a challenging year for us
and our venue partners in the restaurant and bar industry. In
that regard, our platform – driving guest frequency and enhancing
the experience – could be even more meaningful to our customers. We
look forward to supporting our sites as they re-open for business.
In the meantime, we are having proactive discussions with our
landlord and vendors to help manage our cash and we are carefully
monitoring our liquidity as we focus on maintaining operations,"
Wolff concluded.
Financial Results
For the first quarter 2020, total
revenues were $2.4 million, compared
to $4.8 million the first quarter of
2019. The change reflects sequential advertising revenue increases,
offset by decreases in subscription revenue related to lower site
count and the sale of our live events business in the first quarter
of 2020.
First quarter 2020 gross margin was 60%, compressed by a
non-cash equipment impairment charge of approximately $167,000, compared to 69% for the same period in
2019. Selling, general and administrative expense was $3.1 million for the first quarter 2020,
decreasing from $3.5 million in the
same period in 2019, reflecting management's efforts to reduce
operating expenses.
During the first quarter of 2020, NTN recognized two additional
non-cash impairment charges: $662,000
in goodwill related to the Canadian business and $138,000 for capitalized software. For the first
quarter 2020, net loss attributable to common shareholders was
$1.2 million, including the
$960,000 in the aforementioned
impairments, or $0.42 per share,
compared to $313,000, or $0.11 per share, in the prior year quarter.
Liquidity
Cash, cash equivalents and unrestricted cash
was $2.2 million at March 31, 2020, compared to $3.2 million at December
31, 2019. At March 31, 2020,
the principal balance of the term loan with Avidbank was
$2.0 million, and current liabilities
exceeded current assets by $87,000.
Subsequent to March 31, 2020,
the company received $1.6 million
under the Paycheck Protection Program of the CARES Act. For
additional information regarding our liquidity and capital
resources, please see our quarterly report on Form 10-Q expected to
be filed with the SEC within the next day or two.
Conference Call
Management will review the results on
a conference call with a live question and answer session today,
May 19, 2020, at 4:30 p.m. ET. To access the call, please use
passcode 9459128 and dial:
- (877) 307-1373 for the live call and (855) 859-2056 for the
replay, if calling from the United
States or Canada; or
- (678) 224-7873 for the live call and (404) 537-3406 for the
replay, if calling internationally.
The call will also be accompanied live by webcast that will be
accessible at the company's website at
http://www.buzztime.com/investors. The replay of the call
will be available until May 26,
2020
Forward-looking Statements
This release
contains forward-looking statements that reflect management's
current views of future events and operations, including challenges
that we and our customers will face during 2020 related to COVID-19
and the potential meaningfulness of our product platform to our
customers as they or if they re-open their businesses.
Among the factors that could cause or contribute to
material differences between our actual results and the
expectations indicated by the forward-looking statements are risks
and uncertainties that include, but are not limited to: (1) our
ability to raise substantial capital in the very near-term to allow
us to maintain operations and sustain the negative impact of the
COVID-19 pandemic on our business and financial condition, and if
we are able to sustain such impact, our ability to recover from the
impact; (2) our ability to successfully manage our liquidity and
our working capital deficit by managing the timing of payments to
our third parties; (3) our ability to comply with our financial
covenants in our loan and security agreement with Avidbank and its
right to declare a default if we do not, which could lead to all
payment obligations becoming immediately due and payable and which
could lead to a foreclosure on our assets; (4) when, and the extent
to which, the negative impact of the pandemic will improve,
including when restaurants will be permitted to offer on-site
dining or when bars will be permitted to re-open and to what
degree, when our customers will re-open, or if they will subscribe
to our service if and when they do; (5) the negative impact that
measures we implemented and may implement to reduce our operating
expenses and planned capital expenses (including investments in our
business) may have on our ability to effectively manage and operate
our business; (5) our ability to maintain or grow our revenue; (6)
our ability to compete effectively within the highly competitive
interactive games, entertainment and marketing services industries,
including our ability to successfully commercially launch
attractive product offerings, and the impact of new products and
technological change, especially in the mobile and wireless
markets, on our operations and competitiveness; (7) our ability to
adequately protect our proprietary rights and intellectual property
; and (8) the other risks and uncertainties described in Part I,
Item 1A "Risk Factors" of the Company's Annual Report on Form 10-K
for the fiscal year ended December 31,
2019, and described in other documents we filed or file from
time to time with the Securities and Exchange Commission
thereafter, including in the Company's Current Reports on Form 8-K
filed with the SEC on March 30, 2020
and April 21, 2020, and the Company's
Quarterly Report on Form 10-Q for the quarter ended March 31, 2020, expected to be filed within the
next day or two. Please see NTN Buzztime, Inc.'s recent
filings with the Securities and Exchange Commission for information
about these and other risks that may affect the Company. All
forward-looking statements included in this release are based on
information available to us on the date hereof. These statements
speak only as of the date hereof and NTN Buzztime, Inc. does not
undertake to publicly update or revise any of its forward-looking
statements, even if experience or future changes show that the
indicated results or events will not be realized.
About Buzztime:
Buzztime (NYSE American: NTN) delivers
interactive entertainment and innovative technology that helps its
customers acquire, engage and retain its patrons. Most frequently
used in bars and restaurants in North
America, the Buzztime tablets, mobile app and technology
offer engaging solutions to establishments that have guests who
experience dwell time, such as casinos, senior living, and more.
Casual dining venues license Buzztime's customizable solution to
differentiate themselves via competitive fun by offering guests
trivia, card, sports and arcade games. Buzztime's platform creates
connections among the players and venues and amplifies guests'
positive experiences. Buzztime's in-venue TV network creates
one of the largest digital out of home ad audiences in the US and
Canada. Buzztime hardware
solutions leverages the company's experience manufacturing durable
tablets and charging systems, enabling a diverse group of
businesses including corrections, point-of-sale and loyalty with
product implementation. Buzztime games have also been
recently licensed by other businesses serving other markets.
For more information, please
visit http://www.buzztime.com or follow us
on Facebook or Twitter@buzztime.
IR AGENCY CONTACT: Kirsten
Chapman, LHA Investor Relations, buzztime@lhai.com
415-433-3777
NTN BUZZTIME, INC.
AND SUBSIDIARIES
|
Consolidated
Balance Sheets
|
(In thousands,
except par value amount)
|
|
ASSETS
|
March
31, 2020
|
|
December
31, 2019
|
Current
Assets:
|
(unaudited)
|
|
|
Cash and cash
equivalents
|
$
2,221
|
|
$
3,209
|
Restricted
cash
|
50
|
|
50
|
Accounts receivable,
net
|
383
|
|
1,195
|
Site equipment to be
installed
|
856
|
|
1,090
|
Prepaid expenses and
other current assets
|
755
|
|
526
|
Total current
assets
|
4,265
|
|
6,070
|
|
|
|
|
Restricted cash,
long-term
|
150
|
|
150
|
Operating lease
right-of-use assets
|
2,002
|
|
2,101
|
Fixed assets,
net
|
2,489
|
|
2,822
|
Software development
costs, net
|
1,749
|
|
1,915
|
Deferred
costs
|
239
|
|
274
|
Goodwill
|
--
|
|
696
|
Other
assets
|
120
|
|
97
|
|
|
|
|
Total
assets
|
$
11,014
|
|
$
14,125
|
|
|
|
|
LIABILITIES AND
SHAREHOLDERS' EQUITY
|
|
|
|
Current
Liabilities:
|
|
|
|
Accounts
payable
|
$
787
|
|
$
835
|
Accrued
compensation
|
236
|
|
588
|
Accrued
expenses
|
237
|
|
490
|
Sales taxes
payable
|
19
|
|
131
|
Income taxes
payable
|
8
|
|
3
|
Current portion of
long-term debt
|
1,990
|
|
2,739
|
Current portion of
obligations under operating leases
|
385
|
|
409
|
Current portion of
obligations under financing leases
|
21
|
|
21
|
Current portion of
deferred revenue
|
383
|
|
460
|
Other current
liabilities
|
286
|
|
419
|
Total current
liabilities
|
4,352
|
|
6,095
|
|
|
|
|
Long-term
debt
|
--
|
|
--
|
Obligations under
operating leases
|
2,782
|
|
2,891
|
Obligations under
financing leases
|
15
|
|
20
|
Deferred
revenue
|
1
|
|
2
|
Other
liabilities
|
15
|
|
26
|
Total
liabilities
|
7,165
|
|
9,034
|
|
|
|
|
Commitments and
contingencies
|
|
|
|
|
|
|
|
Shareholders'
equity:
|
|
|
|
Series A 10%
cumulative convertible preferred stock, $0.005 par value, $156
liquidation preference, 156 shares authorized; 156 shares issued
and outstanding at March 31, 2020 and December 31, 2019
|
1
|
|
1
|
Common stock, $0.005
par value, 15,000 shares authorized at March 31, 2020 and December
31, 2019; 2,926 and 2,901 shares issued at March 31, 2020 and
December 31, 2019
|
15
|
|
14
|
Treasury stock, at
cost, 10 shares at March 31, 2020 and December 31, 2019
|
(456)
|
|
(456)
|
Additional paid-in
capital
|
136,800
|
|
136,721
|
Accumulated
deficit
|
(132,675)
|
|
(131,457)
|
Accumulated other
comprehensive income
|
164
|
|
268
|
Total shareholders'
equity
|
3,849
|
|
5,091
|
|
|
|
|
Total liabilities and
shareholders' equity
|
$
11,014
|
|
$
14,125
|
NTN BUZZTIME, INC.
AND SUBSIDIARIES
|
CONSOLIDATED
STATEMENTS OF OPERATIONS AND COMPREHENSIVE LOSS
|
(unaudited)
|
(In thousands,
except per share data)
|
|
|
Three months
ended March
31,
|
|
2020
|
|
2019
|
Revenues
|
|
|
|
Subscription
revenue
|
$
1,999
|
|
$
3,833
|
Hardware
revenue
|
16
|
|
205
|
Other
revenue
|
379
|
|
794
|
Total
revenues
|
2,394
|
|
4,832
|
|
|
|
|
Operating
expenses:
|
|
|
|
Direct operating costs
(includes depreciation and amortization)
|
950
|
|
1,484
|
Selling, general and
administrative
|
3,080
|
|
3,469
|
Impairment of
capitalized software
|
138
|
|
1
|
Impairment of
goodwill
|
662
|
|
--
|
Depreciation and
amortization (excluding depreciation and amortization included in
direct costs
|
85
|
|
96
|
Total operating
expenses
|
4,915
|
|
5,049
|
Operating
loss
|
(2,521)
|
|
(217)
|
Other income
(expense), net
|
1,284
|
|
(85)
|
Loss before income
taxes
|
(1,237)
|
|
(302)
|
Benefit (provision)
for income taxes
|
19
|
|
(11)
|
Net loss
|
$
(1,218)
|
|
$
(313)
|
|
|
|
|
Net loss per common
share – basic and diluted
|
$
(0.42)
|
|
$
(0.11)
|
|
|
|
|
Weighted average
shares outstanding – basic and diluted
|
2,901
|
|
2,866
|
|
|
|
|
Comprehensive
loss:
|
|
|
|
Net loss
|
$
(1,218)
|
|
$
(313)
|
Foreign currency
translations adjustment
|
(104)
|
|
33
|
Total comprehensive
loss
|
$
(1,322)
|
|
$
(280)
|
NTN BUZZTIME, INC.
AND SUBSIDIARIES
|
CONDENSED
CONSOLIDATED STATEMENTS OF CASH FLOWS
|
(unaudited)
|
(In
thousands)
|
|
|
Three months
ended March
31,
|
|
2020
|
|
2019
|
Cash flows (used in)
provided by operating activities:
|
|
|
|
Net loss
|
$ (1,218)
|
|
$
(313)
|
Adjustments to
reconcile net loss to net cash provided by (used in) operating
activities:
|
|
|
|
Depreciation and
amortization
|
546
|
|
747
|
Provision for doubtful
accounts
|
189
|
|
30
|
Amortization of
operating lease right-of-use assets
|
73
|
|
72
|
Common stock issued
for compensation in lieu of cash payment
|
61
|
|
--
|
Stock-based
compensation
|
39
|
|
59
|
Gain from the sale of
assets
|
(1,265)
|
|
--
|
Loss from disposition
of fixed assets
|
188
|
|
9
|
Loss from disposition
of capitalized software
|
138
|
|
1
|
Loss from impairment
of goodwill
|
662
|
|
--
|
Amortization of debt
issuance costs
|
3
|
|
3
|
Changes in assets and
liabilities:
|
|
|
|
Accounts
receivable
|
723
|
|
264
|
Site equipment to be
installed
|
1
|
|
87
|
Operating lease
liabilities
|
(106)
|
|
(28)
|
Prepaid expenses and
other liabilities
|
(254)
|
|
58
|
Accounts payable and
accrued expenses
|
(765)
|
|
2
|
Income taxes
payable
|
7
|
|
10
|
Deferred
costs
|
34
|
|
(3)
|
Deferred
revenue
|
(77)
|
|
(184)
|
Other
liabilities
|
(144)
|
|
(34)
|
Net cash (used in)
provided by operating activities
|
(1,165)
|
|
780
|
|
|
|
|
Cash flows used in
investing activities:
|
|
|
|
Capital
expenditures
|
(19)
|
|
(41)
|
Capitalized software
development expenditures
|
(121)
|
|
(355)
|
Net cash used in
investing activities
|
(140)
|
|
(396)
|
|
|
|
|
Cash flows provided
by (used in) financing activities:
|
|
|
|
Net proceeds from the sale of
assets
|
1,166
|
|
--
|
Payment on long-term
debt
|
(750)
|
|
(250)
|
Principal payments on
financing leases
|
(5)
|
|
(18)
|
Tax withholding
related to net share settlement of vested restricted stock units
|
(20)
|
|
(5)
|
Net cash provided by
(used in) financing activities
|
388
|
|
(273)
|
|
|
|
|
Effect of exchange
rate on cash
|
(71)
|
|
19
|
Net (decrease)
increase in cash and cash equivalents
|
(988)
|
|
130
|
Cash, cash
equivalents and restricted cash at beginning of period
|
3,409
|
|
2,786
|
Cash, cash
equivalents and restricted cash at end of period
|
2,421
|
|
2,916
|
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SOURCE NTN Buzztime, Inc.