DELAWARE
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31-1103425
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(State of incorporation)
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(I.R.S. Employer Identification No.)
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2231 RUTHERFORD ROAD, CARLSBAD, CALIFORNIA
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92008
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(Address of principal executive offices)
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(Zip Code)
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Large accelerated filer
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¨
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Accelerated filer
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¨
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Non-accelerated filer
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¨
(Do not check if a smaller reporting company)
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Smaller reporting company
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x
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Item
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Page
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PART I
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1.
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Financial Statements
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Condensed Consolidated Balance Sheets as of June 30, 2011 (unaudited) and December 31, 2010
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1
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Condensed Consolidated Statements of Operations for the three and six months ended June 30, 2011 and 2010 (unaudited)
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2
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Condensed Consolidated Statements of Cash Flows for the six months ended June 30, 2011 and 2010 (unaudited)
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3
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Notes to Condensed Consolidated Financial Statements (unaudited)
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4
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2.
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Management’s Discussion and Analysis of Financial Condition and Results of Operations
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9
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3.
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Quantitative and Qualitative Disclosures About Market Risk
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15
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4.
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Controls and Procedures
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15
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PART II
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1.
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Legal Proceedings
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15
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1A.
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Risk Factors
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15
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2.
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Unregistered Sales of Equity Securities and Use of Proceeds
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15
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3.
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Defaults Upon Senior Securities
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16
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4.
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(Removed and Reserved)
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16
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5.
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Other Information
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16
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6.
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Exhibits
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16
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Signatures
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17
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June 30,
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December 31,
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|||||||
2011
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2010
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|||||||
(unaudited) | ||||||||
ASSETS
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Current Assets:
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||||||||
Cash and cash equivalents
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$ | 3,085 | $ | 3,906 | ||||
Accounts receivable, net of allowances of $161 and $220, respectively
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475 | 549 | ||||||
Investments available-for-sale (Note 5)
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45 | 184 | ||||||
Prepaid expenses and other current assets
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535 | 588 | ||||||
Total current assets
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4,140 | 5,227 | ||||||
Broadcast equipment and fixed assets, net
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4,319 | 3,638 | ||||||
Software development costs, net of accumulated amortization of
$1,602 and $1,591, respectively
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1,115 | 1,094 | ||||||
Deferred costs
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1,093 | 839 | ||||||
Goodwill (Note 3)
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1,291 | 1,261 | ||||||
Intangible assets, net (Note 3)
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827 | 1,025 | ||||||
Other assets
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89 | 41 | ||||||
Total assets
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$ | 12,874 | $ | 13,125 | ||||
LIABILITIES AND SHAREHOLDERS' EQUITY
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||||||||
Current Liabilities:
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Accounts payable and accrued expenses
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$ | 1,556 | $ | 874 | ||||
Accrued compensation
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729 | 628 | ||||||
Sales taxes payable
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758 | 856 | ||||||
Income taxes payable
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- | 8 | ||||||
Obligations under capital lease - current portion
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291 | 376 | ||||||
Deferred revenue
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567 | 520 | ||||||
Other current liabilities
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19 | 74 | ||||||
Total current liabilities
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3,920 | 3,336 | ||||||
Obligations under capital leases, excluding current portion
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74 | 105 | ||||||
Deferred revenue, excluding current portion
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160 | 124 | ||||||
Deferred rent
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568 | - | ||||||
Other liabilities
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31 | 99 | ||||||
Total liabilities
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4,753 | 3,664 | ||||||
Commitments and contingencies (Note 8)
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||||||||
Shareholders' Equity:
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||||||||
Series A 10% cumulative convertible preferred stock, $.005 par value,
$161 liquidation preference, 5,000 shares authorized; 161 shares issued and
outstanding at June 30, 2011 and December 31, 2010
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1 | 1 | ||||||
Common stock, $.005 par value, 84,000 shares authorized; 60,892 and 60,751
shares issued and outstanding at June 30, 2011 and December 31, 2010,
respectively
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304 | 304 | ||||||
Treasury stock, at cost, 503 shares at June 30, 2011 and
December 31, 2010
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(456 | ) | (456 | ) | ||||
Additional paid-in capital
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116,310 | 116,114 | ||||||
Accumulated deficit
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(108,835 | ) | (107,284 | ) | ||||
Accumulated other comprehensive income (Note 9)
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797 | 782 | ||||||
Total shareholders' equity
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8,121 | 9,461 | ||||||
Total shareholders' equity and liabilities
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$ | 12,874 | $ | 13,125 |
Three months ended
June 30,
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Six months ended
June 30,
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|||||||||||||||
2011
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2010
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2011
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2010
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Revenues
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$ | 5,893 | $ | 6,191 | $ | 11,894 | $ | 12,462 | ||||||||
Operating expenses:
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Direct operating costs (includes depreciation and amortization
of $611 and $646 for the three months ended June 30, 2011
and 2010, respectively, and $1,259 and $1,254 for the six months
ended June 30, 2011 and 2010, respectively)
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1,408 | 1,527 | 2,932 | 3,067 | ||||||||||||
Selling, general and administrative
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5,374 | 4,898 | 10,206 | 9,816 | ||||||||||||
Depreciation and amortization (excluding depreciation and
amortization included in direct operating costs)
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164 | 173 | 329 | 345 | ||||||||||||
Total operating expenses
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6,946 | 6,598 | 13,467 | 13,228 | ||||||||||||
Operating loss
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(1,053 | ) | (407 | ) | (1,573 | ) | (766 | ) | ||||||||
Other income (expense), net
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69 | (63 | ) | 41 | (57 | ) | ||||||||||
Loss before income taxes
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(984 | ) | (470 | ) | (1,532 | ) | (823 | ) | ||||||||
(Provision) benefit for income taxes
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- | 13 | (11 | ) | (23 | ) | ||||||||||
Net loss
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$ | (984 | ) | $ | (457 | ) | $ | (1,543 | ) | $ | (846 | ) | ||||
Net loss per common share - basic and diluted
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$ | (0.02 | ) | $ | (0.01 | ) | $ | (0.03 | ) | $ | (0.01 | ) | ||||
Weighted average shares outstanding - basic and diluted
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60,388 | 60,188 | 60,387 | 60,045 |
Six months ended
June 30,
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||||||||
2011
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2010
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Cash flows provided by operating activities:
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Net loss
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$ | (1,543 | ) | $ | (846 | ) | ||
Adjustments to reconcile net loss to net cash provided by
operating activities:
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Depreciation and amortization
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1,588 | 1,599 | ||||||
Provision for doubtful accounts
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(16 | ) | 158 | |||||
Gain on contract termination
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- | (11 | ) | |||||
Stock-based compensation
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154 | 156 | ||||||
Loss on sales of securities available-for-sale
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18 | - | ||||||
Loss from disposition of equipment and capitalized software
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142 | 173 | ||||||
Changes in assets and liabilities:
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Accounts receivable
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93 | (99 | ) | |||||
Prepaid expenses and other assets
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6 | 27 | ||||||
Accounts payable and accrued expenses
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560 | (364 | ) | |||||
Income taxes payable
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(11 | ) | 5 | |||||
Deferred costs
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(253 | ) | 153 | |||||
Deferred revenue
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82 | (83 | ) | |||||
Deferred rent
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(1 | ) | - | |||||
Net cash provided by operating activities
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819 | 868 | ||||||
Cash flows used in investing activities:
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Capital expenditures
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(1,062 | ) | (535 | ) | ||||
Software development expenditures
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(458 | ) | (520 | ) | ||||
Proceeds from sales on securities available-for-sale
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90 | - | ||||||
Trademark license
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- | (35 | ) | |||||
Net cash used in investing activities
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(1,430 | ) | (1,090 | ) | ||||
Cash flows used in financing activities:
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Principal payments on capital lease
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(241 | ) | (190 | ) | ||||
Proceeds from exercise of stock options
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34 | 56 | ||||||
Net cash used in financing activities
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(207 | ) | (134 | ) | ||||
Net decrease in cash and cash equivalents
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(818 | ) | (356 | ) | ||||
Effect of exchange rate on cash
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(3 | ) | (13 | ) | ||||
Cash and cash equivalents at beginning of period
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3,906 | 3,637 | ||||||
Cash and cash equivalents at end of period
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$ | 3,085 | $ | 3,268 | ||||
Supplemental disclosures of cash flow information:
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Cash paid during the period for:
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Interest
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$ | 28 | $ | 50 | ||||
Income taxes
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$ | 25 | $ | 18 | ||||
Supplemental disclosure of non-cash investing and financing activities:
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Unrealized holding loss on investments available-for-sale
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$ | 31 | $ | 18 | ||||
Equipment acquired under capital lease
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$ | 125 | $ | 310 | ||||
Issuance of common stock in lieu of payment of preferred dividends
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$ | 8 | $ | 8 | ||||
Lease incentive paid by landlord
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$ | 569 | $ | - |
Three months ended June 30,
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Six months ended June 30,
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|||||||||||||||
2011
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2010
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2011
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2010
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Weighted-average risk-free rate
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1.56% | 1.70% | 1.60% | 1.70% | ||||||||||||
Weighted-average volatility
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97.63% | 93.66% | 97.49% | 93.66% | ||||||||||||
Dividend yield
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0.00% | 0.00% | 0.00% | 0.00% | ||||||||||||
Expected life
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5.41 years
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6.55 years
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5.09 years
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6.55 years
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June 30,
2011
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December 31,
2010
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Unrealized (loss) gain on investment available-for-sale
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$ | (11,000 | ) | $ | 20,000 | |||
Foreign currency translation adjustment
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808,000 | 762,000 | ||||||
Ending balance
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$ | 797,000 | $ | 782,000 |
Three months ended
June 30,
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Six months ended
June 30,
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|||||||||||||||
2011
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2010
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2011
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2010
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|||||||||||||
United States
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$ | 5,367,000 | $ | 5,593,000 | $ | 10,823,000 | $ | 11,217,000 | ||||||||
Canada
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526,000 | 598,000 | 1,071,000 | 1,245,000 | ||||||||||||
Total revenue
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$ | 5,893,000 | $ | 6,191,000 | $ | 11,894,000 | $ | 12,462,000 |
June 30,
2011
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December 31,
2010
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United States
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$ | 4,252,000 | $ | 3,529,000 | ||||
Canada
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67,000 | 109,000 | ||||||
Total assets
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$ | 4,319,000 | $ | 3,638,000 |
Network Subscribers
as of June 30,
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||||||||
2011
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2010
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|||||||
United States
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3,657 | 3,695 | ||||||
Canada
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247 | 314 | ||||||
Total
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3,904 | 4,009 |
For the three months ended
June 30,
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||||||||
2011
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2010
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Revenues
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$ | 5,893,000 | $ | 6,191,000 | ||||
Direct Costs
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1,408,000 | 1,527,000 | ||||||
Gross Margin
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$ | 4,485,000 | $ | 4,664,000 | ||||
Gross Margin Percentage
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76 | % | 75 | % |
For the three months ended
June 30,
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||||||||
2011
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2010
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Net loss per GAAP
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$ | (984,000 | ) | $ | (457,000 | ) | ||
Interest expense, net
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12,000 | 28,000 | ||||||
Depreciation and amortization
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775,000 | 819,000 | ||||||
Income taxes
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- | (13,000 | ) | |||||
EBITDA
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$ | (197,000 | ) | $ | 377,000 |
For the six months ended
June 30,
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||||||||
2011
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2010
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Revenues
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$ | 11,894,000 | $ | 12,462,000 | ||||
Direct Costs
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2,932,000 | 3,067,000 | ||||||
Gross Margin
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$ | 8,962,000 | $ | 9,395,000 | ||||
Gross Margin Percentage
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75 | % | 75 | % |
For the six months ended
June 30,
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||||||||
2011
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2010
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Net loss per GAAP
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$ | (1,543,000 | ) | $ | (846,000 | ) | ||
Interest expense, net
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28,000 | 55,000 | ||||||
Depreciation and amortization
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1,588,000 | 1,599,000 | ||||||
Income taxes
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11,000 | 23,000 | ||||||
EBITDA
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$ | 84,000 | $ | 831,000 |
Increase
(Decrease)
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Working capital as of December 31, 2010
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$ | 1,891,000 | ||
Changes in current assets:
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Cash and cash equivalents
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(821,000 | ) | ||
Accounts receivable, net of allowance
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(74,000 | ) | ||
Investment available-for-sale
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(139,000 | ) | ||
Prepaid expenses and other current assets
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(53,000 | ) | ||
Total current assets
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(1,087,000 | ) | ||
Changes in current liabilities:
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Accounts payable and accrued liabilities
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682,000 | |||
Accrued compensation
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101,000 | |||
Sales taxes payable
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(98,000 | ) | ||
Income taxes payable
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(8,000 | ) | ||
Obligations under capital lease - current portion
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(85,000 | ) | ||
Deferred revenue
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47,000 | |||
Other current liabilities
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(55,000 | ) | ||
Total current liabilities
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584,000 | |||
Net change in working capital
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(1,671,000 | ) | ||
Working capital as of June 30, 2011
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$ | 220,000 |
For the six months ended
June 30,
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||||||||
2011
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2010
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|||||||
Cash provided by (used in):
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||||||||
Operating activities
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$ | 819,000 | $ | 868,000 | ||||
Investing activities
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(1,430,000 | ) | (1,090,000 | ) | ||||
Financing activities
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(207,000 | ) | (134,000 | ) | ||||
Effect of exchange rates
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(3,000 | ) | (13,000 | ) | ||||
Net decrease in cash and cash equivalents
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$ | (821,000 | ) | $ | (369,000 | ) |
Item 3.
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Quantitative and Qualitative Disclosures About Market Risk
.
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Item 4.
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Controls and Procedures
.
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Item 1.
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Legal Proceedings
.
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Item 1A.
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Risk Factors
.
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Item 2.
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Unregistered Sales of Equity Securities and Use of Proceeds.
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Item 3.
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Defaults Upon Senior Securities.
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Item 4.
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(Removed and Reserved).
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Item 5.
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Other Information
.
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Item 6.
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Exhibits.
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Exhibit
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Description
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3.1
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Amended and Restated Certificate of Incorporation of the Company, as amended (2)
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3.2
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Certificate of Designations, Rights and Preferences of Series B Convertible Preferred Stock (3)
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3.3
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Bylaws of the Company, as amended (4)
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10.1*
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NTN Buzztime, Inc. Corporate Incentive Plan for Eligible Employees of NTN Buzztime, Inc. Fiscal Year 2011 (5)
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10.2
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Confirmation of Lease Term, dated June 24, 2011, by and between Beckman/Carlsbad I, LLC and the Company (1)
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31.1
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Certification of Chief Executive Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002 (1)
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31.2
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Certification of Chief Financial Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002 (1)
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32.1#
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Certification of Chief Executive Officer pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 (1)
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32.2#
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Certification of Chief Financial Officer pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 (1)
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101.INS**
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XBRL Instance Document
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101.SCH**
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XBRL Taxonomy Extension Schema Document
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101.CAL**
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XBRL Taxonomy Extension Calculation Linkbase Document
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101.DEF**
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XBRL Taxonomy Extension Definition Linkbase Document
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101.LAB**
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XBRL Taxonomy Extension Label Linkbase Document
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101.PRE**
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XBRL Taxonomy Extension Presentation Linkbase Document
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*
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Indicates management contract or compensatory plan.
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#
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These exhibits are being furnished solely to accompany this report pursuant to U.S.C. § 1350, and is not being filed for purposes of Section 18 of the Securities Exchange Act of 1934, as amended, and is not to be incorporated herein by reference into any filing of the Company whether made before or after the date hereof, regardless of any general incorporation language in such filing.
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**
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Pursuant to Rule 406T of Regulation S-T, the Interactive Data Files on Exhibit 101 hereto are deemed not filed or part of a registration statement or prospectus for purposes of Sections 11 or 12 of the Securities Act of 1933, as amended, are deemed not filed for purposes of Section 18 of the Securities and Exchange Act of 1934, as amended, and otherwise are not subject to liability under those sections.
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(1)
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Filed herewith
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(2)
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Previously filed as an exhibit to the registrant’s report on Form 10-Q for the quarter ended June 30, 2008 and incorporated herein by reference.
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(3)
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Previously filed as an exhibit to the registrant’s report on Form 8-K filed on November 7, 1997 and incorporated herein by reference.
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(4)
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Previously filed as an exhibit to the registrant’s report on Form 10-K for the fiscal year ended December 31, 2007 and incorporated herein by reference.
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(5)
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Previously filed as an exhibit to the registrant’s report on Form 10-Q for the quarter ended March 31, 2011 and incorporated herein by reference.
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NTN BUZZTIME, INC.
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Date: August 12, 2011
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By:
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/s/
Kendra Berger
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Kendra Berger
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Chief Financial Officer
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(on behalf of the Registrant, and as its Principal Financial and Accounting Officer)
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1.
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Lease Term
. Landlord and Tenant agree that the Lease Term as defined in the Lease commences on June 24, 2011 (“Lease Commencement Date”) and ends on November 30, 2018 (“Lease Expiration Date”).
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(a)
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designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;
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(b)
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designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;
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(c)
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evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and
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(d)
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disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and
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(a)
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all significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and
|
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(b)
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any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.
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Dated: August 12, 2011
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/s/
Michael Bush
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Michael Bush
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President and Chief Executive Officer
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NTN Buzztime, Inc.
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(a)
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designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;
|
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(b)
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designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;
|
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(c)
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evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and
|
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(d)
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disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and
|
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(a)
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all significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and
|
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(b)
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any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.
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Dated: August 12, 2011
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/s/
Kendra Berger
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Kendra Berger
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Chief Financial Officer
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NTN Buzztime, Inc.
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(1)
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the Quarterly Report on Form 10-Q of the Registrant for the period ended June 30, 2011, as filed with the Securities and Exchange Commission (the “Report”), fully complies with the requirements of Section 13(a) of the Securities Exchange Act of 1934; and
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(2)
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the information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Registrant.
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Dated: August 12, 2011
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/s/
Michael Bush
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Michael Bush
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President and Chief Executive Officer
|
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NTN Buzztime, Inc.
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(1)
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the Quarterly Report on Form 10-Q of the Registrant for the period ended June 30, 2011, as filed with the Securities and Exchange Commission (the “Report”), fully complies with the requirements of Section 13(a) of the Securities Exchange Act of 1934; and
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(2)
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the information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Registrant.
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Dated: August 12, 2011
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/s/
Kendra Berger
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Kendra Berger
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Chief Financial Officer
|
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NTN Buzztime, Inc.
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